What changed in this filing

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Item 1A. Risk Factors

2025-03-27 compared with 2024-03-27 · 91 added, 63 removed, 407 unchanged (27% of the section changed)

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Risks Relating to Our Business

Our growth depends in part upon our ability to enter into new ground leases at airports, and we may be unsuccessful in identifying and consummating attractive new ground leases or taking advantage of other investment opportunities, which would impede our growth and materially and adversely affect our business and results of operation.

Our ability to expand through new ground leases at airports is integral to our long-term business strategy and requires that we identify and consummate suitable new ground leases or investment opportunities in real estate properties for our portfolio that meet our investment criteria and are compatible with our growth strategy.

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we may encounter competition from other potential ground lessors, which could significantly increase the lease rate for properties we seek to lease;

we may incur significant costs and divert management attention in connection with evaluating and negotiating potential new ground leases, including ones that we are subsequently unable to complete;

we may incur significant costs and divert management attention in connection with evaluating and negotiating potential new ground leases, including ground leases that we are subsequently unable to execute;

even if we enter into letters of intent or conditional agreements for new ground leases of airport properties, these agreements are subject to customary closing conditions, including, but not limited to, the satisfactory results of our due diligence investigations and local government and municipal authority approvals;

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In addition, the ability of tenant leases to generate revenues may be adversely affected by competition from other facilities within or outside the airports where the facilities are located, including construction of new facilities at the airports at which we operate or the expansion of hangar facilities by competitors at nearby airports.

There can be no assurances that the airports or their competitors will not undertake future improvements that may adversely impact the ability of tenant leases to generate revenues.

There can be no assurances that the airports or their competitors will not undertake future improvements that may adversely affect the ability of tenant leases to generate revenues.

Moreover, the terms of our tenant leases currently in place do not extend past the final maturity date of our bond debt.

Our ability to make payments under the ground leases or under our debt service obligations through their final maturity will depend upon our success in renewing current tenants or in re-leasing these facilities.

The loss of one or more of our tenants may (without a similar tenant or tenants to replace such tenant or tenants) have a material adverse effect on our ability to collect rental revenue sufficient to meet our obligations.

We have a substantial amount of indebtedness outstanding, which may expose us to the risk of default under our debt obligations, restrict our operations and our ability to grow our business and revenues.

We have a substantial amount of indebtedness outstanding, which may expose us to the risk of default under our debt obligations and restrict our operations and our ability to grow our business and revenues.

The majority of our outstanding indebtedness is secured under the terms of the Series 2021 Bonds.

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Each constructed and in-construction facility in our portfolio is subject to secured indebtedness under the Series 2021 Bonds.

Secured debt obligations increase the risk of property losses because defaults on indebtedness secured by properties may result in foreclosure actions initiated by holders of the Series 2021 Bonds, its trustee, or other lenders and ultimately our loss of the property securing any loans for which it is in default.

Secured debt obligations increase the risk of property losses because defaults on indebtedness secured by properties may result in foreclosure actions initiated by holders of the Series 2021 Bonds, the bond trustee, or other lenders and ultimately our loss of the property securing any loans for which it is in default.

As described above, our current tenant leases do not extend past the maturity date of the Series 2021 Bonds, and as a result we will be required to re-lease hangars as vacancies arise in order to continue to generate revenue to meet our debt service obligations under the Series 2021 Bonds.

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and global economic conditions, and the general state of the capital markets.

We cannot assure you that we will be able to source external financing for our capital needs, and if we are unable to source financing on acceptable terms or at all, our business could be materially adversely affected.

If we cannot obtain capital from third-party sources, we may not be able to grow our business when strategic opportunities exist, meet the capital and operating needs of our existing properties or satisfy our debt service obligations.

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Increases in market interest rates or unavailability of additional indebtedness may make it difficult for us to finance or refinance our debt, which could have a material adverse effect on our financial condition, results of operations and growth prospects.

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 the Federal Reserve reduced interest rates in September, November, and December 2024 and has indicated the potential for further rate cuts, interest rates remain relatively high and there can be no certainty with respect to the occurrence, timing, or magnitude of further interest rate cuts by the Federal Reserve, and thus no certainty with respect to the ultimate impact on our potential borrowing costs.

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

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Furthermore, our ability to grow and lease new sites will be inhibited.

An epidemic, pandemic or contagious disease, such as COVID-19, could have a material adverse effect on our business and results of operations.

We face risks related to an epidemic, pandemic or contagious disease, such as COVID-19, which have impacted, and in the future could impact, the markets in which we operate and could materially and negatively impact our business and results of operations.

An epidemic, pandemic, or similar public threat, and the measures that federal, state, and local governments and other authorities implement to address it could have a material adverse effect on our business and results of operations.

We face risks related to an epidemic, pandemic, or similar public threat, and the measures that federal, state, and local governments and other authorities implement to address it, which have impacted, and in the future could impact, the markets in which we operate and could materially and negatively impact our business and results of operations.

The impact of such events and measures to prevent the spread of such an event could materially and adversely affect our business in a number of ways.

For example, reductions in passenger volumes and flights, as well as by the broader economic shutdown resulting from an epidemic, pandemic or contagious disease could materially and negatively impact our business and results of operations.

The demand for private air travel that increased during the pandemic may decrease, which may result in decreased demand for private airport hangar space and could materially and negatively impact our business and results of operations.

For example, reductions in passenger volumes and flights, as well as a broader economic shutdown resulting from an epidemic, pandemic or contagious disease could materially and negatively impact our business and results of operations.

We have in the past and may again in the future be required to record impairment charges to future earnings if our long-lived assets become impaired.

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Depending on the results of our review, we could be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our long-lived assets were determined, negatively impacting our results of operations.

For example, in June 2022, the Company evaluated the development progress related to its smart hangar app.

In connection with this evaluation, the Company recognized an impairment loss of approximately $0.2 million during the year ended December 31, 2022.

See “Note 7 — Long-lived assets ” in the Notes to our Consolidated Financial Statements for more information regarding our 2022 impairment of long-lived assets.

The industry in which we operate is subject to significant competition and our failure to effectively compete could have a material adverse effect on our business and results of operations.

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Competitors might seek acquisitions in regions and markets competitive to us.

Given the variety of factors that impact competitiveness within the home basing hangar campus industry, we can give no assurance that we will be able to successfully compete, which could, in turn, result in a decline in the trading price of our securities.

Given the variety of factors that impact competitiveness within the home basing hangar campus industry, we can give no assurance that we will be able to successfully compete, which could have a material adverse effect on our business and results of operations and, in turn, result in a decline in the trading price of our securities.

The growth and success of our business is subject to our ability to market, attract, and retain tenants.

Our future success depends upon our ability to attract and retain tenants for hangars at our home basing hangar campuses.

The extent to which we achieve growth in our customer base materially influences our business and results of operation.

The extent to which we achieve growth in our customer base materially influences our business and results of operations.

Any number of factors could affect our ability to grow our customer base, including tenant preferences for hangar space and related services, including size and location of the hangar, as well as general economic conditions.

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Any significant decline in our customer base, or in our rate of growth, could have a material adverse effect on our business and results of operations, which could, in turn, result in a decline in the trading price of our securities.

Our rental revenue is concentrated within a small number of tenants and the loss of or default by one or more significant tenants could have a material adverse effect on our business and results of operations.

Our rental revenue in the past has been concentrated within a small number of tenants and the loss of or default by one or more significant tenants could have a material adverse effect on our business and results of operations.

For the year ended December 31, 2023, our two largest tenants contributed 30% of our revenues.

Both of these tenants have ongoing leases with us that expire in December 2026 and November 2025, respectively (assuming no exercise of tenant option extensions).

If any of our most significant tenants, currently or in the future, were to discontinue or otherwise reduce their use of our home basing hangar campuses or other services, our business and results of operation would be materially and adversely affected.

Our capital projects are subject to uncertainties, including the possibility of delays, cost overruns, and inflation, which could have a material adverse effect on our business, results of operation and market reputation.

For the year ended December, 31, 2024, we did not derive 10% or more of our revenues from any single tenant.

The estimated costs of, and the projected schedule for, our capital projects are subject to a number of uncertainties.

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cost increases because of demand for labor and materials;

cost increases due to instituted or proposed changes in trade policies;

contractors’ difficulty in predicting costs over a lengthy construction period;

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Inflationary and supply chain pressures have previously led to increased construction materials costs, specifically associated with steel, concrete, and other materials.

Further inflationary and supply chain pressures, including those associated with changes in trade policies, could adversely affect our business.

In February 2025, the President of the United States issued an executive order reimposing tariffs on steel imports from all sources, ending country and product exemptions, and broadening the application of the tariffs to fabricated steel products.

This order became effective on March 12, 2025.

There can be no assurance as to when or if these or other import tariffs, quotas or other duties may be enacted, enforced, extended, modified or terminated in the future, or the extent of the impact of such will have on the cost of our construction materials.

Further, the countries involved in the recent imposition of tariffs by the United States, such tariffs may strain international trade relations and increase the risk that foreign governments implement retaliatory tariffs on goods imported by the United States.

For example, Canada and the European Union have recently announced their intention to implement retaliatory tariffs on the United States.

These actions could have a material adverse effect on our business, financial condition, cash flows, and results of operations.

We believe that it is possible that market conditions, including recent and proposed changes in trade policies, may lead to continued increases in construction costs and market rental rates for hangars within our development projects.

We believe we may continue to experience such pressures in future quarters, as well as delays in our subsidiaries’ and contractors’ ability to requisition such materials.

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The production of our hangar buildings is subject to design and construction defects, product liability, and other claims that could be significant and costly, which may delay our construction projects and could have a material adverse effect on our business and results of operations.

In May 2023, we acquired a controlling interest in a pre-engineered metal building manufacturer with the intention to design and manufacture our own hangar prototypes for our home basing hangar campuses.

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.

As a manufacturer of hangar buildings, we are subject to design and construction defects, product liability and other claims in the ordinary course of business.

These defects and claims are common in the pre-engineered metal building industry and can be significant and costly to remediate, and may cause delays to our home basing hangar campus construction projects.

These defect claims are common in the pre-engineered metal building industry and can be significant and costly to remediate.

For example, 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 that a significant design defect existed within our prototype hangar building designs that will require retrofitting to both meet and exceed our standards.

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 $26 to $28 million and require an additional three to five months of construction time for each project impacted.

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

The anticipated retrofitting efforts were also applied to ADS Phase I, and we believe the aggregate additional cost of such retrofits totaled between $26 to $28 million.

Such retrofitting efforts required an additional three to five months of construction duration for each project impacted.

Given the design enhancements implemented at our APA Phase I, DVT Phase I, and ADS Phase I development projects, our total construction costs for these projects were each greater than our original estimates, and outside of the scope of the original 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.

Future costs associated with our adherence to our standards and relevant local building codes could be significant, and may exceed our estimates of construction costs and timelines, which could have a material adverse effect on our business, cash flows, or results of operations.

In addition, our acquisition of a controlling interest in a pre-engineered metal building manufacturer may in the future subject us to a variety of legal proceedings and legal compliance risks in respect to various issues, including product liability, regulatory, safety, environmental, employment, and intellectual property matters that arise in the ordinary course of its business and in its industry, including matters that may have existed prior to our acquisition and claims that have not been asserted.

In addition, our ownership of a controlling interest in a pre-engineered metal building manufacturer may in the future subject us to a variety of legal proceedings and legal compliance risks with respect to various issues, including product liability, regulatory, safety, environmental, employment, and intellectual property matters that arise in the ordinary course of its business and in its industry, including matters that may have existed prior to our acquisition and claims that have not been asserted.

We and many of our subcontractors have general liability, property, workers compensation, professional, and other business insurance.

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Home basing hangar campuses and FBO operators compete, in part, based on the overall quality and attractiveness of their facilities.

Inadequate maintenance of any of the hangars or other assets comprising our home basing hangar campuses could result in customers’ electing not to utilize us where another provider operates, or to elect not to use a particular airport where an alternative operator in the same market exists.

The resulting decline in tenants or negative impact on our reputation could adversely impact revenue, including from more than one facility, which would have a material adverse effect on our business and results of operation.

Inadequate maintenance of any of the hangars or other assets comprising our home basing hangar campuses could result in customers electing not to utilize us where another provider operates, or electing not to use a particular airport where an alternative operator in the same market exists.

Aircraft owners and operators rely on home basing hangar campuses and FBO operators to control the quality of the fuel they provide.

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In the event we are unable to attract and retain talent sufficient to support our development plans, our business and results of operations may be adversely affected.

We previously identified material a weakness in our internal control over financial reporting, which was recently remediated.

We have identified material weaknesses in the past.

We may identify additional material weaknesses in the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements.

If we fail to remediate any material weaknesses or if we otherwise fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results could be adversely affected .

As previously disclosed, we identified a material weakness in our internal control over financial reporting in our internal control over financial reporting as of June 30, 2023 related to the classification of certain cash transactions made during the six months ended June 30, 2023 associated with the payment of construction retainage liabilities incurred and appropriately recognized during the years ended December 31, 2021 and December 31, 2022.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.

Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud.

With oversight from the audit committee of the Board (the “Audit Committee”) and input from management, in order to remediate the material weakness in internal control over financial reporting related to the ineffective operation of controls related to manual adjustments to the statement of cash flows, the Company designed and implemented changes in processes and controls to remediate the material weakness described above and to enhance our internal control over financial reporting, including a control to review non-standard manual adjustments to the statement of cash flows in accordance with applicable accounting guidance, and the contemporaneous preparation and review of the statement of cash flows at greater levels of disaggregation, including lower-level reporting units.

As of December 31, 2023, management has completed the implementation of our remediation efforts of the material weakness described above and has performed testing to evaluate the design and operating effectiveness of the controls.

As a result, management has determined that our completed remediation activities are sufficient to allow them to conclude that the previously-reported material weakness related to the identification and classification of certain manual cash flow adjustments has been remediated as of December 31, 2023.

Although the material weakness has been remediated as of December 31, 2023, if we identify additional control deficiencies that individually or in the aggregate constitute one or more material weaknesses or we otherwise fail to maintain effective disclosure controls and procedures or internal control over financial reporting in the future, our ability to accurately record, process, and report financial information and consequently, our ability to prepare financial statements within required time periods, could be adversely affected, which may negatively impact the confidence level of our stockholders and other market participants as well as our ability to remain listed on the NYSE American.

In the past, we identified a material weakness in our internal control over financial reporting as of June 30, 2023 related to the classification of certain cash transactions made during the six months ended June 30, 2023 associated with the payment of construction retainage liabilities incurred and appropriately recognized during the years ended December 31, 2021 and December 31, 2022.

With oversight from the audit committee of the Board (the “Audit Committee”) and input from management, the Company designed and implemented changes in processes and controls to remediate the material weakness described above and to enhance our internal control over financial reporting.

As of December 31, 2023, management completed its implementation of our remediation efforts of the material weakness described above and performed testing to evaluate the design and operating effectiveness of the controls.

As a result, management determined that our completed remediation activities were sufficient to allow them to conclude that the previously-reported material weakness related to the identification and classification of certain manual cash flow adjustments has been remediated as of December 31, 2023.

Although the material weakness had been remediated as of December 31, 2023, if we identify additional control deficiencies that individually or in the aggregate constitute one or more material weaknesses or we otherwise fail to maintain effective disclosure controls and procedures or internal control over financial reporting in the future, our ability to accurately record, process, and report financial information and consequently, our ability to prepare financial statements within required time periods, could be adversely affected, which may negatively impact the confidence level of our stockholders and other market participants as well as our ability to remain listed on the New York Stock Exchange.

The discovery of additional material weaknesses could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the market price of our Class A Common Stock.

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We do not directly own the sites we develop and lease to tenants.

Instead, we enter into ground leases at each site directly or indirectly (thru a sub-lessor) from airport authorities and other governmental agencies that regulate local airports.

Instead, we enter into ground leases at each site directly or indirectly (through a sub-lessor) from airport authorities and other governmental agencies that regulate local airports.

Airport authorities may choose not to renew a lease at all or to only renew the lease on terms that are unfavorable to us.

In addition, airport authorities may require us to participate in a bidding process to renew a lease, which could require unanticipated capital spending and could divert management’s attention during the pendency of the process.

At the conclusion of a lease, airport authorities may require us to participate in a bidding process to renew a lease, which could require unanticipated capital spending and could divert management’s attention during the pendency of the process.

In addition, certain of our ground leases provide airport authorities the right to increase our rent to market value as determined by the airport authority in their sole discretion on a periodic basis.

The loss or modification of any of our airport ground leases could adversely impact our business and results of operations.

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Instead, the sites are subject to long-term ground leases with airport authorities.

As a result, we will not be able to sell underlying real estate assets in order to meet liquidity requirements, including our debt service obligations, which could have a material and adverse impact on our liquidity position and ability to meet our obligations.

We may be unable to renew ground leases, lease vacant space or re-lease space as leases expire, or renewing existing leases may require significant concession, inducements and/or capital expenditures.

As a result, we will not be able to sell underlying real estate assets in order to meet liquidity requirements, including our debt service obligations, which could have a material and adverse effect on our liquidity position and ability to meet our obligations.

We may be unable to renew ground leases, lease vacant space or re-lease space as leases expire, or renewing existing leases may require significant concessions, inducements and/or capital expenditures.

We cannot assure you that our airport ground leases will be renewed or that our hangars will be re-leased at rental rates equal to or above the current average rental rates or that we will not offer substantial concessions or below-market renewal options to attract new tenants or retain existing tenants.

If the rental rates for our hangar campuses decrease, or if our existing tenants do not renew their leases or we do not re-lease a significant portion of our available space and space for which leases will expire, our business and results of operations could be adversely affected.

If the rental rates for our hangar campuses decrease, or if our existing tenants do not renew their leases or we do not re-lease a significant portion of our available space, our business and results of operations could be adversely affected.

In order to attract and retain tenants, we may be required to make rent or other concessions to tenants, accommodate requests for renovations and other improvements or provide additional services to our tenants.

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If we are unable to do so or if capital is otherwise unavailable, we may be unable to make the required expenditures.

This could result in non-renewals by tenants upon expiration of their leases and/or an inability to attract new tenants, which would have a material adverse effect on our business and results of operation.

Failure to succeed in new markets may have adverse consequences.

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When we develop properties located in new geographic areas in the United States, we may face risks associated with a lack of market knowledge or understanding of the local market, including the availability and identity of quality tenants, forging new business relationships in the area, and developing an understanding of local government requirements and procedures.

For example, we recently signed new ground leases at BDL, POU, and PWK, which represent our initial entries into the states of Connecticut, New York, and Illinois, respectively, and our first home basing hanger campuses in the broader Chicago and New York markets.

For example, we recently signed new ground leases at BDL, POU, PWK, and SJC, and assumed two ground leases at CMA as part of an asset acquisition.

These new leases represent our initial entries into the states of Connecticut, New York, Illinois, and California, respectively, and our first home basing hangar campuses in the broader Chicago, New York, San Jose, and Los Angeles markets.

Furthermore, the negotiation of a potential expansion into new markets may divert management time and other resources.

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We are subject to tenant credit risk.

Our home basing hangars are generally leased to single or multi hangar tenants, and certain of our tenants constitute a significant percentage of our revenues.

Our home basing hangars are generally leased to single or multi hangar tenants, and certain of our tenants constitute a material percentage of our revenues.

Therefore, the financial failure of, or other default by, a single tenant under its lease is likely to cause a significant or complete reduction in the operating cash flow generated by the property leased to that tenant.

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During the pendency of a bankruptcy proceeding, a debtor subsidiary may not, absent a court order, make any payments to the airport landlord or to us on account of goods and services provided prior to the bankruptcy.

Thus, the airport landlord or our stream of payments from a debtor subsidiary would be interrupted to the extent of pre-petition goods and services, including accrued loan and lease payments, which would have a material adverse effect on our business and results of operation.

In addition, with respect to tenant leases, under current bankruptcy law, in the event of a bankruptcy of such tenant, the tenant can generally assume or reject a lease within a certain number of days of filing its bankruptcy petition.

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Both the public and private data, however, has several limitations and challenges.

As a result, the use of such data may result in decisions in strategic planning or pricing that are incorrect or inefficient, which could have a material adverse effect on our business and results of operation.

Additionally, FAA staffing, and the data it collects and publishes, depends, in large part, on the annual appropriations process and the agency’s ability to retain and recruit sufficient resources with relevant experience and expertise.

Failure to pass an annual appropriation bill has in the past resulted in temporary government shutdowns.

A future shutdown, or a failure by Congress to pass an FAA reauthorization bill (or extension) could delay this data.

Additionally, recent focus on reducing the size of the federal workforce could negatively impact the availability of resources within the FAA which could significantly delay or limit the availability of this data.

We are subject to extensive governmental regulations that could require significant expenditures.

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For instance, there are certain types of losses, such as losses resulting from wars, terrorism or certain acts of God, that generally are not insured because they are either uninsurable or not economically insurable.

Further, as of December 31, 2024, two of our existing hangar campuses are located in California.

The west coast of the United States contains active earthquake zones and the greater Los Angeles area has recently experienced major fires, including the significant damage and lasting effects of the January 2025 wildfires, and may experience major fires in the future.

Certain insurance companies doing business in states in which we operate have and could continue to restrict, curtail or suspend the issuance of property insurance policies.

This could reduce the availability of hurricane, fire and other types of natural disaster insurance.

Should an uninsured loss or a loss in excess of insured limits occur, we could suffer disruption of rental income, potentially for an extended period of time, while remaining responsible for any financial obligations relating to the applicable home basing hangar campus, which would have a material adverse effect on our business and results of operations.

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However, if the frequency of extreme weather events increases due to climate change, our exposure to these events could increase.

For example, some of our properties are located in Florida and Texas and are situated in geographic areas that are periodically impacted by severe weather conditions such as hurricanes, flooding, and tornadoes, and one of our properties is located in the Los Angeles area, which has recently experienced the significant and damaging effects of the January 2025 wildfires.

The occurrence of these or other natural disasters could cause delays in the completion of our development projects or could adversely impact the ongoing operations at our home basing hangar campuses.

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Any such laws or regulations could also impose substantial costs on our tenants, thereby impacting the financial condition of our tenants and their ability to meet their lease obligations.

Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.

Our business may face public scrutiny related to environmental, social and governance (“ESG”) activities, which are considered to contribute to reducing a company’s operational risk, market risk and reputational risk, which may in turn impact the long-term sustainability of a company’s performance.

A variety of organizations measure the performance of companies on ESG topics, and the results of these assessments are widely publicized.

In addition, major institutional investors have publicly emphasized the importance of such ESG measures to their investment decisions.

However, regional and investor specific sentiment may differ in what constitutes a material positive or negative ESG corporate practice.

There is no guarantee that our corporate social responsibility practices will uniformly fit every investor’s definition of best practices for all ESG considerations across geographies and investor types.

Recently, “anti-ESG” sentiment has gained momentum across the U.S., with the proposal or enactment of “anti-ESG” policies, legislation or initiatives by several state legislatures and by the U.S.

Further, the President recently issued an executive order opposing diversity equity and inclusion (“DEI”) initiatives in the private sector.

We could be criticized by ESG stakeholders for our performance on ESG topics and could likewise be criticized by anti-ESG stakeholders for the scope or nature of our sustainability initiatives or goals or for any revisions to these goals.

Such anti-ESG and anti-DEI-related policies, legislation, initiatives and scrutiny could adversely affect our reputation, business, financial performance and growth.

Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, misappropriation of assets and/or damage to our business relationships, all of which could negatively impact our business and results of operations.

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Risks Relating to Our Organization and Structure

We are a “ controlled company ” within the meaning of the NYSE American listing standards and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements.

We are a “ controlled company ” within the meaning of the New York Stock Exchange listing standards and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements.

You do not have the same protections afforded to stockholders of companies that are subject to such requirements.

We qualify as a “controlled company” within the meaning of the corporate governance standards of the NYSE American.

We qualify as a “controlled company” within the meaning of the corporate governance standards of the New York Stock Exchange.

Under these rules, a listed company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirement that (i) a majority of our Board consist of independent directors, (ii) our compensation committee consist entirely of independent directors and (iii) our director nominees be selected or recommended to our Board by our independent directors.

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We may also rely on the other exemptions so long as we qualify as a controlled company.

To the extent we rely on any of these exemptions, holders of Class A Common Stock will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE American.

The Existing Sky Equityholders control the direction of our business, and the concentrated ownership of Common Stock prevent you and other stockholders from influencing significant decisions.

In connection with the Yellowstone Transaction, the Company, each of Tal Keinan, Due West Partners LLC and Center Sky Harbour LLC (collectively, “the Existing Sky Equityholders”), and the Sponsor (collectively the “Stockholder Parties”) entered into a stockholders’ agreement (the “Stockholders’ Agreement”).

In connection with the Yellowstone Transaction, the Company, the Existing Sky Equityholders, and the Sponsor (collectively the “Stockholder Parties”) entered into a stockholders’ agreement (the “Stockholders’ Agreement”).

Pursuant to the terms of the Stockholders’ Agreement, each of the parties thereto are required to take all necessary action to cause the specified designees of the Existing Sky Equityholders to be nominated to serve on our Board, and each of the holders are required, among other things, to vote all of the Company's securities held by such party in a manner necessary to elect the individuals designated by such holders.

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We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year (a) following the fifth anniversary of the completion of the Yellowstone Transaction, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are is deemed to be a large accelerated filer, which means the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three year period.

We cannot predict whether investors will find our securities less attractive because it will rely on these exemptions.

If some investors find our securities less attractive as a result of its reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.

If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

Because members of our senior management team hold most or all of their economic interest in Sky through other entities, conflicts of interest may arise between them and holders of shares of Class A Common Stock or us.

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The requirements of being a public company may strain our resources and divert management ’ s attention.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE American and other applicable securities rules and regulations.

Compliance with these rules and regulations increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the New York Stock Exchange and other applicable securities rules and regulations.

Compliance with these rules and regulations increases our legal and financial compliance costs, makes some activities more difficult, time-consuming or costly and increases demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.

In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required.

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When effective, it is possible that the minimum tax could result in an additional tax liability over the regular federal corporate tax liability in a given year based on differences between book and taxable income (including as a result of temporary differences).

The resulting tax liability could adversely impact the Company’s business, financial condition, results of operation and liquidity.

The resulting tax liability could adversely impact the Company’s business, financial condition, results of operations and liquidity.

The excise tax on share buybacks is currently not expected to have a material impact on the Company’s tax liability.

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In addition, the volume of trading of our Class A Common Stock has been inconsistent.

For example, on February 24, 2023 our Class A Common Stock had trading volume of 3,300 shares and on February 28, 2023 our Class A Common Stock had trading volume of 1,546,800 shares.

For example, on April 11, 2024 our Class A Common Stock had trading volume of 4,200 shares and on June 28, 2024 our Class A Common Stock had trading volume of 1,524,200 shares.

Our Public Warrants have not traded in tandem with our Class A Common Stock, and since the closing of the Yellowstone Transaction have traded within a range of $0.17 to $3.98 through December 31, 2024.

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the volume of Class A Common Stock available for public sale;

any major change in the Board of Directors or management;

any major change in the Board or management;

sales of substantial amounts of Class A Common Stock by directors, officers or significant stockholders or the perception that such sales could occur;

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other risk factors listed under this “Risk Factors” section.

The public float of our Class A Common Stock is very illiquid, and there may not be sufficient demand in the marketplace to absorb the sale of newly registered shares.

As of December 31, 2023, the public float of our Class A Common Stock listed in the NYSE American was approximately $105.1 million, which is 45.0% of the equity capitalization of the Company.

Given the company is recently listed, and does not have broad investor research coverage nor a seasoned established institutional investor base, any significant sale of newly registered shares may have a significant negative impact on the market price of our Class A Common Stock.

We cannot predict the impact our dual class structure may have on the market price of Class A Common Stock.

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The exercise of these outstanding Warrants will increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

As of December 31, 2023, there were 6,798,964 outstanding Public Warrants to purchase 6,798,694 shares of Class A Common Stock at an exercise price of $11.50 per share.

In addition, as of December 31, 2023, there were 7,719,779 Private Placement Warrants outstanding exercisable for 7,719,779 shares of Class A Common Stock at an exercise price of $11.50 per share and 1,541,600 outstanding PIPE Warrants to purchase 1,541,600 shares of Class A Common Stock at an exercise price of $11.50 per share.

To the extent such warrants are exercised, additional shares of Class A Common Stock will be issued, which will result in dilution to the holders of Class A Common Stock and increase the number of shares eligible for resale in the public market.

As of December 31, 2024, there were 15,798,155 outstanding Warrants to purchase 15,798,155 shares of Class A Common Stock at an exercise price of $11.50 per share.

To the extent the Warrants are exercised, additional shares of Class A Common Stock will be issued, which will result in dilution to the holders of Class A Common Stock and increase the number of shares eligible for resale in the public market.

In addition, as of December 31, 2024, there were 42,046,356 outstanding Sky Common Units held by the members of Sky (excluding the Company as Managing Member of Sky), which may be redeemed for shares of our Class A Common Stock on a one-for-one basis, and in connection with the redemption of such Sky Common Units, the corresponding shares of Class B Common Stock will be cancelled.

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In order to raise additional capital, we have offered in the past, and may offer in the future, additional shares of our Class A Common Stock or other securities convertible into or exchangeable for our Class A Common Stock at prices that may not be the same as the price per share paid by any investor.

For example, in November 2023, we sold and issued the PIPE Shares and PIPE Warrants pursuant to the Private Placement Purchase Agreement (as defined herein) at a purchase price equivalent to approximately $6.50 per PIPE Share and associated PIPE Warrant coverage.

We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by any investor, and investors purchasing shares or other securities in the future could have rights superior to you.

For example, in September and December 2024, we sold and issued an aggregate of 7,911,580 2024 PIPE Shares (as defined herein) pursuant to the 2024 Purchase Agreement (as defined herein) at a net purchase price of $9.50 per share, which may be sold by the holders thereof upon the expiration of the lock-up period on April 25, 2025.

Furthermore, we have registered the resale of all of the 2024 PIPE Shares by the holders thereof.

Sales of substantial numbers of such shares in the public market, or the perception that such sales may occur, could adversely affect the market price of Class A Common Stock, the impact of which is increased as the value of our stock price increases.

In addition, we may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by any investor, and investors purchasing shares or other securities in the future could have rights superior to you.

The price per share at which we sell additional shares of our Class A Common Stock, or securities convertible or exchangeable into Class A Common Stock, in future transactions may be higher or lower than the price per share paid by any investor.

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

What changed 10-K

Item 1A. Risk Factors