What changed in this filing

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Item 1. Financial Statements

2025-05-13 compared with 2024-11-12 · 426 added, 460 removed, 729 unchanged (55% of the section changed)

3 unchanged sentences

(in thousands, except share data)

September 30, 2024

March 31, 2025

December 31, 2024

2 unchanged sentences

32,516 51,917

19,464 11,866

Restricted investments

9 unchanged sentences

17,203 14,732

Lease intangible assets, net

$ 553,671 $ 556,556

15 unchanged sentences

$ 0.0001 par value;

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

10,000,000 shares authorized as of March 31, 2025;

none issued and outstanding

1 unchanged sentence

200,000,000 shares authorized;

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

33,793,886 and 33,456,227 shares issued and outstanding as of March 31, 2025 and December 31, 2024, 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 September 30, 2024 and December 31, 2023, respectively

42,046,356 and 42,046,356 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

15 unchanged sentences

Three Months Ended

Nine months ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

Rental revenue

Total revenue

General and administrative

Campus operating expenses

Fuel expenses

Ground lease expenses

Depreciation and amortization

Pursuit and marketing expenses

Employee compensation and benefits

General and administrative expenses

Total expenses

2 unchanged sentences

Interest expense

Unrealized (gain) loss on warrants

Unrealized loss on warrants

Total other (income) expense

8 unchanged sentences

Three Months Ended

Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

Unrealized gains on available-for-sale securities

10 unchanged sentences

Balance at December 31, 2024

33,456,227 $ 3 42,046,356 $ 4 $ 168,634 $ ( 64,592 ) $ 53 104,102 $ 55,716 $ 159,818

Share-based compensation

- - - - 1,193 - - 1,193 45 1,238

Vesting of restricted stock units

201,207 - - - - - - - - -

Shares withheld for payment of employee taxes

Exercise of warrants

( 59,548 ) - - - ( 661 ) - - ( 661 ) - ( 661 )

Payment of equity issuance costs

Other comprehensive income

Balance at March 31, 2024

Share-based compensation

Vesting of restricted stock units

Shares withheld for payment of employee taxes

Exercise of warrants

Issuance of stock through ATM Facility

Exchange of Sky Incentive Units

Other comprehensive loss

Net income (loss)

Balance at June 30, 2024

Share-based compensation

Vesting of restricted stock units

Shares withheld for payment of employee taxes

- - - - ( 65 ) - - ( 65 ) - ( 65 )

Exchange of Sky Incentive Units

Payment of equity issuance costs

196,000 - - - 75 - - 75 ( 75 ) -

Other comprehensive income

Balance at September 30, 2024

- - - - - - ( 53 ) ( 53 ) - ( 53 )

- - - - - ( 6,376 ) - ( 6,376 ) ( 2,750 ) ( 9,126 )

Balance at March 31, 2025

33,793,886 $ 3 42,046,356 $ 4 $ 169,176 $ ( 70,968 ) $ - $ 98,215 $ 52,936 $ 151,151

Accumulated Other

3 unchanged sentences

Balance at December 31, 2023

Share-based compensation

Exchange of Class B Common Stock

Other comprehensive income

Balance at March 31, 2023

24,165,523 $ 2 42,046,356 $ 4 $ 88,198 $ ( 19,361 ) $ 312 69,155 $ 63,091 $ 132,246

Share-based compensation

- - - - 987 - - 987 45 1,032

Vesting of restricted stock units

176,166 - - - - - - - -

Shares withheld for payment of employee taxes

( 57,833 ) - - - ( 686 ) - - ( 686 ) - ( 686 )

Exercise of warrants

Other comprehensive income

Net income (loss)

Balance at June 30, 2023

Share-based compensation

Vesting of restricted stock units

253,703 - - - 3,332 - - 3,332 - 3,332

Payment of equity issuance costs

- - - - ( 43 ) - - ( 43 ) - ( 43 )

Other comprehensive income

Balance at September 30, 2023

- - - - - - 378 378 - 378

- - - - - ( 18,940 ) - ( 18,940 ) ( 2,259 ) ( 21,199 )

Balance at March 31, 2024

24,537,559 $ 2 42,046,356 $ 4 $ 91,788 $ ( 38,301 ) $ 690 $ 54,183 $ 60,877 $ 115,060

See accompanying Notes to Unaudited Consolidated Financial Statements

2 unchanged sentences

(in thousands)

Nine months ended

September 30, 2024

September 30, 2023

Three months ended

March 31, 2025

March 31, 2024

Cash flows from operating activities:

5 unchanged sentences

Realized gain on available for sale investments

Gain on disposition of assets

Loss on disposition of assets

Unrealized loss on warrants

9 unchanged sentences

Investment in notes receivable, net

Net cash provided by acquisition of business

Purchases of available for sale investments

Purchases of held-to-maturity investments

Proceeds from available for sale investments

Proceeds from held-to-maturity investments

Net cash provided by investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

4 unchanged sentences

Payments of employee taxes related to vested equity awards

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

Net increase (decrease) in cash and restricted cash

4 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

(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 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”).

As of March 31, 2025 , SHG owned approximately 44.6 % of the Sky Common Units and the prior holders of Sky Common Units (the “LLC Interests”) owned approximately 55.4 % 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

1 unchanged sentence

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

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

All intercompany balances and transactions have been eliminated in consolidation.

2 unchanged sentences

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

Amounts previously presented as rental revenue are now separately disclosed as rental revenue and fuel revenue within the consolidated statement of operations.

Amounts previously presented as operating expenses are now separately disclosed as campus operating expenses, fuel expenses, and ground lease expenses within the consolidated statement of operations.

Amounts previously presented as general and administrative expenses are now separately disclosed as pursuit and marketing expenses, compensation and benefits, and general and administrative expenses within the consolidated statement of operations.

These reclassifications had no effect on total revenue, total expenses, net loss, net loss per common share and had no impact on the Company’s consolidated balance sheets, statement of stockholders’ equity and statement of cash flows for the prior year period.

Use of Estimates

16 unchanged sentences

Cost of Construction

Cost of construction on the consolidated balance sheets is carried at cost.

Cost of construction on the accompanying consolidated balance sheets is carried at cost.

The cost of acquiring an asset includes the costs necessary to bring a capital project to the condition necessary for its intended use.

20 unchanged sentences

The Company leases the hangar facilities that it constructs to third parties.

The Company determines whether a contract contains a lease at the inception of the contract.

The lease agreements are either on a month-to-month basis or have a defined term and may have options to extend the term.

Some of the leases contain options to terminate the lease by either party with given notice.

The Company expects to continue to derive benefit from the underlying assets after the end of the lease term through further leasing arrangements.

The underlying assets are the leasehold interest that the Company has in connection with its ground leases.

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

Rental revenue is recognized in accordance with ASC Topic 842, Leases (see Note 8 — Leases ) and includes fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and is recognized on a straight-line basis over the term of the lease.

Rental revenue is recognized in accordance with ASC 842 and includes fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and is recognized on a straight-line basis over the term of the lease.

Rental revenue and the corresponding rent and other receivables are recorded net of any concessions and uncollectible tenant receivables for all periods presented.

3 unchanged sentences

Variable lease payments are charged based on the terms and conditions included in the respective tenant leases and are recognized in the same period as the expenses are incurred.

For the three and nine months ended September 30, 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.

For the three months ended March 31, 2025 , rental revenue and fuel revenue includes $ 325 and $ 426 of variable lease payments, respectively.

For the three months ended March 31, 2024 , rental revenue and fuel revenue includes $ 114 and $ 266 of variable lease payments, respectively.

As of March 31, 2025 and December 31, 2024 , the deferred rent receivable included in prepaid expenses and other assets was $ 834 and $ 594 , 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 $ 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.

Rent received in advance consisted of $ 510 and $ 390 as of March 31, 2025 and December 31, 2024 , respectively.

At certain of the Company's hangar campuses, the Company recognizes revenue from ground-based services, such as the fueling and towing of aircraft.

Revenue for the sale of aircraft fuel is recognized at the time customer obtains control of the fuel.

Revenue for the sale of other ground-based services is recognized at the time the service is performed and provided to customers.

Customers are invoiced at the time the services are performed and the associated revenue is recognized in the period it is earned.

The Company's fueling arrangements generally are unique at each location it operates, and may be accounted for on a gross or net basis.

The Company determines whether to recognize fuel and services revenue on a gross or net basis based on consideration of various factors, including whether the Company has control of the products or services prior to delivery to customers, the Company's degree of latitude in establishing the sales price, whether the Company carries the associated inventory risk, and which party is the primary obligor within such sales arrangements.

For the three months ended March 31, 2025 and March 31, 2024, the Company did not derive 10% of its revenue from any single tenant.

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 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.

The Company recorded income tax expense of $ 0 and the effective tax rate was 0.0 % for the three months ended March 31, 2025 and 2024.

The effective income tax rate for the three months ended March 31, 2025 and 2024 differs from the federal statutory rate of 21 % primarily due to a full valuation allowance against net deferred tax assets as it is more likely than not that the deferred tax assets will not be realized due to the cumulative losses sustained by the Company to date.

Recently Issued Accounting Pronouncements

Segment Reporting (Topic 280 )

In November 2023, the FASB issued ASU No.

2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The disclosure requirements included in ASU No.

2023 - 07 are required for all public entities, including entities with a single reportable segment.

2023 - 07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted.

The guidance is required to be applied on a retrospective basis.

The Company is currently evaluating the impact of the standard on our consolidated financial statement disclosures.

Income Taxes (Topic 740 )

8 unchanged sentences

The Company is currently evaluating the impact of this updated standard on its disclosures to the consolidated financial statements.

Rapidbuilt Acquisition

On May 12, 2023 ( the “Option Exercise Date”), Sky exercised its option to acquire a 51 % equity interest in Overflow Ltd., a Texas limited partnership (“Overflow”), and its wholly-owned operating subsidiary, Rapidbuilt, Inc., a Texas corporation (“Rapidbuilt”), for nominal consideration (the “Rapidbuilt Acquisition”).

As a result of the Rapidbuilt Acquisition, Weatherford Steel Buildings Holdings LLC, a Delaware limited liability company and wholly-owned subsidiary of Sky (“WSBH”), owns a 50 % limited partnership interest in Overflow, and Weatherford Steel Buildings GP LLC, a Delaware limited liability company and wholly-owned subsidiary of Sky (“WSB GP”), owns a 1 % general partnership interest in Overflow.

Rapidbuilt is a manufacturer of pre-engineered steel buildings that previously entered into a supplier arrangement with Sky.

Rapidbuilt and Sky’s strategic partnership has resulted in a standard set of proprietary prototype hangar designs, which are intended to deliver high-quality business aviation facilities, lower construction costs, minimize development risk, expedite permit issuance, and facilitate the implementation of refinements across Sky’s portfolio.

The Company had pre-existing relationships with Rapidbuilt through a vendor agreement entered into in July 2022 to acquire construction materials related to the Company's development projects (the “Rapidbuilt Vendor Agreement”) and a revolving line of credit loan and security agreement (the “Rapidbuilt Loan Agreement”) to fund the working capital requirement of Rapidbuilt.

These pre-existing relationships were effectively settled in the acquisition and the net receivable balance of $ 44 is included within the consideration transferred.

No gain or loss was recognized in the effective settlement of the Rapidbuilt Vendor Agreement and the Rapidbuilt Loan Agreement.

The total cash purchase consideration was nominal.

The Company accounted for the acquisition using the acquisition method of accounting, whereby the total purchase price was allocated to assets acquired and liabilities assumed based on respective estimated fair values.

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

Restricted Cash 1,500

Long-lived assets

Total assets 12,545

Accounts payable, accrued expenses and other liabilities 1,427

Loans payable and finance lease liabilities

Total liabilities 12,501

Total fair value of net assets acquired 44

Effective settlement of net receivable from Rapidbuilt 44

Total consideration transferred

Following the Rapidbuilt Acquisition, substantially all of Overflow and Rapidbuilt's activities relate to the manufacturing of pre-engineering hangar structures for Sky's hangar development projects.

As such, the pro-forma effect of this acquisition on revenues and earnings was not material.

Investments and Restricted Investments

6 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 nine months ended September 30, 2024 .

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

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.

As of March 31, 2025 , 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 September 30, 2024 and December 31, 2023 :

September 30, 2024

The following tables set forth summaries of the amortized cost, unrealized gains, unrealized losses, and fair value by investment type as of March 31, 2025 and December 31, 2024 :

March 31, 2025

Amortized Cost

19 unchanged sentences

Total restricted investments $ 13,816 $ 85 $ ( 353 ) $ 13,548

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

The following table sets forth the maturity profile of the Company's investments and restricted investments as of March 31, 2025 :

Restricted Investments

Due within one year

$ 19,464 $ 5,279

Due one year through five years

$ 19,464 $ 16,741

Cost of Construction and Constructed Assets

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

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

Bradley International Airport (“BDL”), Windsor Locks, CT (Hartford area);

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

Chicago Executive Airport (“PWK”), Wheeling, IL (Chicago area);

Hudson Valley Regional Airport (“POU”), Wappingers Falls, NY (New York area);

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

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

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

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

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

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

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

Washington Dulles International Airport (“IAD”), Dulles, VA (Washington, DC area).

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

September 30, 2024

March 31, 2025

December 31, 2024

Constructed assets, net of accumulated depreciation:

BNA, OPF Phase I, SGR, and SJC Renovation

BNA, CMA, DVT Phase I, OPF Phase I, SGR, and SJC Renovation

$ 179,240 $ 115,151

3 unchanged sentences

Cost of construction:

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

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

$ 103,721 $ 144,900

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

Depreciation expense for the three months ended March 31, 2025 and 2024 totaled $ 803 and $ 448 , respectively.

Long-lived Assets and Lease Intangible Assets

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

September 30, 2024

March 31, 2025

December 31, 2024

8 unchanged sentences

$ 17,203 $ 14,732

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.

Depreciation expense for the three months ended March 31, 2025 and 2024 totaled $ 222 and $ 181 , respectively.

Capitalized depreciation of long-lived assets included in cost of construction totaled $ 301 and $ 136 for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025 and December 31, 2024, long-lived assets included approximately $ 3,939 and $ 2,380 , respectively, of purchase deposits towards long-lived assets which are not being depreciated as the assets have not been placed into service.

Lease intangible assets, net, consists of the following:

March 31, 2025

December 31, 2024

Acquired in-place lease

$ 1,878 $ 1,878

Above market leases

Accumulated amortization

( 98 ) ( 24 )

Total operating lease expense

$ 2,931 $ 3,005

Amortization expense for the three months ended March 31, 2025 and 2024 totaled $ 74 and $ 0 , respectively.

Supplemental Balance Sheet and Cash Flow Information

1 unchanged sentence

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

September 30, 2024

March 31, 2025

December 31, 2024

3 unchanged sentences

Professional fees

Property Taxes

Tenant security deposits

2 unchanged sentences

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

Nine months ended

September 30, 2024

September 30, 2023

Three months ended

March 31, 2025

March 31, 2024

Accrued costs of construction, including capitalized interest

1 unchanged sentence

Accrued costs of long-lived assets

Proceeds receivable from exercise of warrants

Debt issuance costs and premium amortized to cost of construction

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

Nine months ended

September 30, 2024

September 30, 2023

Three months ended

March 31, 2025

March 31, 2024

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

$ 2,373 $ 46,422

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

$ 70 $ ( 206 )

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

The following table summarizes interest paid:

Nine months ended

September 30, 2024

September 30, 2023

Three months ended

March 31, 2025

March 31, 2024

Interest paid

1 unchanged sentence

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

Nine months ended

September 30, 2024

September 30, 2023

Three months ended

March 31, 2025

March 31, 2024

Cash, beginning of year

10 unchanged sentences

$ 83,650 $ 102,009

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:

The table below sets forth a summary of operating lease expense for the three months ended March 31, 2025 and 2024 recorded in the captions within our consolidated statement of operations:

Three months ended

Nine months ended

September 30, 2024

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

Operating expenses

March 31, 2025

March 31, 2024

Ground lease expenses

$ 2,904 $ 1,231

Fuel expenses 164 44

General and administrative expenses

4 unchanged sentences

As the Company’s lease agreements do not provide a readily determinable implicit rate, nor is the rate available to the Company from its lessors, the Company uses its incremental borrowing rate to determine the present value of the lease payments.

In addition to the Company’s ground leases, the Company has operating leases for office space and ground support vehicles, and finance leases for vehicles supporting operations at Rapidbuilt.

In addition to the Company’s ground leases, the Company has operating leases for office space and ground support vehicles, and finance leases for vehicles supporting operations at our pre-engineered metal building subsidiary.

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

1 unchanged sentence

These variable payments were excluded from the calculation of the ROU asset and operating lease liability balances since they are not fixed or in-substance fixed payments.

These variable payments were not material in amount for the three and nine months ended September 30, 2024 and 2023 .

These variable payments were not material in amount for the three months ended March 31, 2025 and 2024 .

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.

4 unchanged sentences

Certain of the Company's ground leases contain options to lease additional parcels of land at the Company's option within a specified period of time.

In March 2024, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “SJC Lease”) at SJC with the City of San Jose.

The SJC Lease covers approximately 7 acres of property that contains an approximately 38,000 square foot hangar, approximately 19,000 square feet of office space, and approximately 108,000 square feet of apron and ramp space.

The property at SJC includes additional land on which the Company intends to develop approximately 28,000 square feet of additional hangar space.

The initial term of the SJC Lease will be 20 years from May 1, 2024, and contains a mutual option to extend the SJC Lease an additional 5 years following the expiration of the initial term.

In March 2024, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “ORL Lease”) at ORL with the Greater Orlando Aviation Authority (“GOAA”).

The ORL Lease covers a parcel containing approximately 20 acres of land at ORL.

The initial term of the ORL Lease will be 30 years from expiration of construction period, with lease payments commencing contemporaneously with the term.

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

In May 2024, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “IAD Lease”) at IAD with the Metropolitan Washington Airports Authority (“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 the Company to extend the IAD Lease an additional 10 years following the expiration of the initial term.

The property covered by the IAD Lease is split between two parcels, with rent payments associated with the first parcel (“IAD Phase I”) commencing the earlier of certificate of occupancy or 36 months from the issuance of permits for IAD Phase I, and rent payments associated with the second parcel (“IAD Phase II”) commencing the earlier of issuance of permits for IAD Phase II or five years from certificate of occupancy associated with IAD Phase I.

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.

On January 1, 2025, the Company executed a lease amendment with respect to its ground lease at APA to add an approximately 1 acre parcel of land to the existing lease (the “APA Lease Amendment”).

The land associated with the APA Lease Amendment became immediately available for possession in January 2025 and is co-terminus with the other parcels covered by the Company's ground lease at APA.

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

Nine months ended

September 30,

Three months ended

Cash paid for amounts included in measurement of lease liabilities:

5 unchanged sentences

Weighted Average Remaining Lease Term (in years)

September 30, 2024

March 31, 2025

December 31, 2024

20 unchanged sentences

4.98 % 4.98 %

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

The Company’s future minimum lease payments required under leases as of March 31, 2025 were as follows:

Year Ending December 31, Operating Leases

2 unchanged sentences

2026 7,602 17

2026 6,545 17

Thereafter 490,013 -

12 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 September 30, 2024 :

Tenant leases to which the Company is the lessor require the following non-cancelable future minimum lease payments from tenants as of March 31, 2025 :

Year Ending December 31,

22 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 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

As of March 31, 2025 and December 31, 2024 , the fair value of the Company’s Series 2021 - 1 Bonds was approximately $ 141.8 million and $ 143.8 million, respectively.

As of March 31, 2025 and December 31, 2024 , the fair value of the Company’s bonds is estimated utilizing Level 2 inputs including prices for the bonds on inactive markets.

The following table summarizes the Company’s Bonds payable as of March 31, 2025 and December 31, 2024 :

March 31, 2025

December 31, 2024

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Loans Payable and Finance Leases

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

The following table summarizes the Company's loans payable and finance lease liabilities as of March 31, 2025 and December 31, 2024 :

March 31, 2025 December 31, 2024

Maturity Dates

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Finance leases

September 2024 - July 2027

August 2026 - July 2027

4.98 % 36 5.00 % 41

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Three months ended

Nine months ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

$ 1,873 $ 1,929

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

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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”).

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The terms of the Private Warrants are identical to those of the Public Warrants, except for that so long as the Private Warrants are held by the Sponsor or its permitted transferees, they may be exercised on a cashless basis.

In connection with the Securities Purchase Agreement (the “Private Placement Purchase Agreement”) entered into on November 1, 2023 with certain investors, the Company issued to third -party investors 1,541,600 warrants (the “PIPE Warrants”, and together with the Public Warrants and the Private Warrants, the “Warrants”).

In connection with the Securities Purchase Agreement (the “2023 Purchase Agreement”) entered into on November 1, 2023 with certain investors, the Company issued to third -party investors 1,541,600 warrants (the “PIPE Warrants”, and together with the Public Warrants and the Private Warrants, the “Warrants”).

The PIPE Warrants are equivalent in form and substance to the Company’s Public Warrants.

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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 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.

No Warrants were exercised during the three months ended March 31, 2025 .

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

As of March 31, 2025 , 15,798,155 Warrants remain outstanding.

The closing price of the Warrants was $ 3.08 and $ 2.92 per warrant on March 31, 2025 and December 31, 2024 , respectively.

The aggregate fair value of the outstanding Warrants was approximately $ 48.7 million and $ 46.1 million as of March 31, 2025 and December 31, 2024 , respectively.

During the three months ended March 31, 2025 and 2024, the Company recorded an unrealized loss associated with the change in fair value of the Warrants of approximately $ 2.5 million and $ 16.2 million, respectively.

Common Equity

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.

As of March 31, 2025 , there were 33,793,886 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.

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The holders of Class B Common Stock do not have any right to receive dividends other than stock dividends consisting of shares of Class B Common Stock, as applicable, in each case paid proportionally with respect to each outstanding share of Class B Common Stock.

At-the-Market Facility

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

Riley Securities, Inc.

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

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

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

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

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

The Company will pay B.

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

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.

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

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

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

Riley terminated (the “B.

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

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

As a result of the B.

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

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

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

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 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’ ownership in Sky is presented as non-controlling interests within the Equity section of the consolidated balance sheet as of March 31, 2025 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 of the Company.

The LLC Interests do not have the option to redeem their Sky Common Units for cash or a variable number of Class A Common Shares, nor does SHG have the option to settle a redemption in such a manner.

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

As of March 31, 2025 , the LLC interests owned approximately 55.4 % of the Sky Common Units outstanding.

Equity Compensation

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437,930 of time-based awards were granted at a grant date fair value of $ 11.15 , which will vest ratably over a four -year period beginning on the first anniversary of the grant date and ending on February 18, 2029.

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.

During the three months ended March 31, 2025 and 2024, the Company recognized stock compensation expense of approximately $ 1.0 million and $ 0.9 million, respectively, associated with all RSU awards, which is recorded within employee compensation and benefits within the statement of operations.

As of March 31, 2025, there are 1,132,444 unvested RSUs outstanding with a weighted average grant date fair value of $ 9.75 .

The unrecognized compensation costs associated with all unvested RSUs at March 31, 2025 was approximately $ 10.8 million that is expected to be recognized over a weighted-average future period of 3.0 years.

Non-qualified Stock Options (“NSOs”)

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The options were valued at $ 6.33 using a Black -Scholes pricing model.

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.

During the three months ended March 31, 2025 and 2024, the Company recognized stock compensation expense of approximately $ 0.2 million and $ 0.1 million, respectively, associated with all NSO awards.

The unrecognized compensation costs associated with all unvested NSOs at March 31, 2025 was approximately $ 7.2 million that is expected to be recognized over a weighted-average future period of 8.5 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 $ 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 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.

The Company recognized equity-based compensation expense relating to awarded equity units of Sky (the “Sky Incentive Units”) of $ 45 and $ 45 for the three months ended March 31, 2025 and 2024, respectively.

Expense associated with the Sky Incentive Units is recorded within compensation and benefits within the statement of operations, and as a component of the non-controlling interest in the consolidated statement of changes in stockholders’ equity.

As of March 31, 2025 , there was less than $ 0.1 million of total unrecognized compensation expense that is expected to be recognized over a weighted-average future period of 0.2 years.

Earnings (loss) per Share

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Three Months Ended

Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

March 31, 2025 March 31, 2024

$ ( 9,126 ) $ ( 21,199 )

Net loss attributable to non-controlling interests

( 2,750 ) ( 2,259 )

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

( 6,376 ) ( 18,940 )

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

33,665 24,274

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

$ ( 0.19 ) $ ( 0.78 )

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

Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

March 31, 2025 March 31, 2024

Shares subject to unvested restricted stock units

1 unchanged sentence

Shares issuable upon the exercise of Warrants

15,798 15,807

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

6 unchanged sentences

Amounts reclassified to other (income) expense

Balance as of September 30, 2024

( 53 ) ( 53 )

Balance as of March 31, 2025

Unrealized gain on

3 unchanged sentences

Amounts reclassified to other (income) expense

Balance as of September 30, 2023

( 17 ) ( 17 )

Balance as of March 31, 2024

Segment Information

The Company has one consolidated reportable segment.

This segment derives revenues from customers through the leasing of home-basing aircraft hangars and through services and products ancillary to its leasing activities.

As of March 31, 2025, the Company drives revenue entirely within the United States and manages the business activities on a consolidated basis.

The determination of reportable operating segments is based on the Chief Operating Decision Maker’s (“CODM’s”) use of financial information provided for the purposes of assessing performance and making operating decisions.

The Company's CODM is its founder and Chief Executive Officer.

The CODM uses net income (loss) to allocate resources and assess the performance of the Company by comparing actual results to historical results and previously forecasted financial information and the allocation of budget between the expenses presented within the consolidated statement of operations.

The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets.

All required significant financial segment information can be found within the consolidated financial statements.

Commitments and Contingencies

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

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

Construction began on the APA Phase I project in October 2022.

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

Construction began on the DVT Phase I project in December 2022.

The Company has committed to spend $ 10.0 million in capital improvements on the ADS construction project.

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

The DVT Lease requires approximately $ 14.6 million of improvements to be made for the DVT Phase II project within 12 -months after receiving permitting documents, but in no event later than May 2026.

The PWK Lease contains a requirement that the Company must commence construction within six months of the issuance of permits and must complete construction within 18 months of construction commencement.

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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.

The TTN Lease requires that the Company make minimum capital improvements of $ 30 million.

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

The Company may terminate any of the contracts or suspend construction without cause.

There are no termination penalties under the construction contracts.

There are no termination penalties under such construction contracts.

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

1 unchanged sentence

Related Party Transactions

Loan and Security Agreement

On December 6, 2024, the Company entered into a revolving line of credit loan and security agreement (the “Loan and Security Agreement”), with a company controlled by the former owner of the Company's acquired subsidiaries at Camarillo Airport (“CMA”), who also serves as an independent contractor of the Company.

The Company provided an initial loan commitment of $ 1.0 million and agreed to provide an additional $ 2.0 million of availability under a revolving line of credit to fund the working capital requirements of such company.

The Loan and Security Agreement matures on December 6, 2029, and bears interest at a the standard overnight financing right plus 2 % per annum.

As of March 31, 2025 and December 31, 2024, the Company had loaned a total of $ 1.1 million and $ 1.0 million, respectively, to such company, the balance of which is presented as a component of accounts receivable, prepaid expenses, and other assets within the Company's consolidated balance sheet.

Echo Echo Agreement

On September 20, 2021, the Company entered into a non-exclusive agreement with Echo Echo, LLC, a related party to the Founder and CEO, for the use of a Beechcraft Baron G58 aircraft.

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The Company is charged per flight hour of use along with all direct operating costs.

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

Additionally, the Company will also incur the 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.

2 unchanged sentences

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.

For the three and three months ended March 31, 2025 and 2024, the Company recognized $ 149 and $ 69 of expense, respectively, within pursuit and marketing expenses under the terms of these agreements.

The related liability is included in Accounts payable, accrued expenses and other liabilities on the consolidated balance sheet as of March 31, 2025 .

Subsequent Events

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.

In April 2025, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “HIO Lease”) at Hillsboro Airport (“HIO”) with the Port of Portland.

The HIO Lease covers approximately 13 acres of property at HIO.

The initial term of the HIO Lease will be 35 years from the later of certificate of occupancy or 18 months from the expiration of the diligence period, as defined in the HIO Lease, with lease payments commencing contemporaneously with the term.

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

In April 2025, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “SWF Lease”) at New York Stewart International Airport (“SWF”) with the Port Authority of New York and New Jersey.

The SWF Lease covers approximately 16 acres of property at SWF.

The initial term of the SWF Lease will be 30 years, with lease payments commencing on the earlier of hangar occupancy or 36 months from the receipt of certain environmental approvals.

The SWF Lease contains three options exercisable by the Company to extend the SWF Lease for an additional total of 15 years following the expiration of the initial term.

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

24 unchanged sentences

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

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

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

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

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

The physical footprint of the U.S.

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

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

business aviation fleet grew by almost 36 million square feet in the past fourteen years, with hangar supply lagging dramatically, especially in key growth markets.

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

The cumulative square footage of the business aircraft fleet in the United States increased 61% between 2010 and 2023.

Moreover, over that same period, there was an 102% increase in the square footage of larger private jets – those with greater than a 24-foot tail height.

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

These larger footprint aircraft do not fit in much of the existing hangar infrastructure and impose stacking challenges and constraints in the traditional shared or community hangars operated by FBOs.

A recent study conducted by a business aircraft manufacturer forecasted that business aircraft will only continue to grow in the next ten years, with up to 8,500 new business jet deliveries worth over $285 billion expected to be delivered between 2025 and 2034, with over two-thirds of the deliveries expected to be comprised of larger private jets.

This forecast is further supported by data from the major business aviation manufacturers that suggest the current order backlog for new business aviation aircraft as of December 31, 2024 is over $52 billion, an increase of approximately 6% over the prior year.

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

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

We believe our scalable, real estate-centric business model is uniquely optimized to capture this market opportunity and address the increased imbalance between the supply and demand for private jet storage.

We believe our scalable, real estate-centric business model is uniquely positioned to capture this market opportunity and address the increased imbalance between the supply and demand for private jet storage.

We intend to capitalize on the existing hangar supply constraints at major U.S.

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

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

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

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

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

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

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

Bradley International Airport (“BDL”), Windsor Locks, CT (Hartford area);

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

Chicago Executive Airport (“PWK”), Wheeling, IL (Chicago area);

Hudson Valley Regional Airport (“POU”), Wappingers Falls, NY (New York area);

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

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

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

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

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

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

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

Washington Dulles International Airport (“IAD”), Dulles, VA (Washington, DC area).

The table below presents certain information with respect to our portfolio of ground leases as of March 31, 2025.

Location (City, State)

Location (Metropolitan Center)

Ground Lessor

Ground Lease Acres

Ground Lease Exp.

Addison Airport

Town of Addison

Bradley International Airport

Windsor Locks, CT

Connecticut Airport Authority

Camarillo Airport

Camarillo, CA

Los Angeles, CA

County of Ventura

Centennial Airport

Englewood, CO

Arapahoe County Public Airport Authority

Chicago Executive Airport

Village of Wheeling and City of Prospect Heights

Hudson Valley Regional Airport

Wappingers Falls, NY

County of Duchess

Miami-Opa Locka Executive Airport

Opa Locka, FL

Miami-Dade County

Nashville International Airport

Nashville, TN

Metropolitan Nashville Airport Authority

Orlando Executive Airport

Greater Orlando Aviation Authority

Phoenix Deer Valley Airport

City of Phoenix

Salt Lake City International Airport

Salt Lake City, UT

Salt Lake City Corporation

San José Mineta International Airport

City of San José

Sugar Land Regional Airport

Sugar Land, TX

City of Sugar Land

Trenton-Mercer Airport

New York, NY - Philadelphia, PA

County of Mercer

Washington Dulles International Airport

Washington, DC

Metropolitan Washington Airports Authority

The following tables provide supplemental information regarding each of our home basing hangar campus properties in operation and in development:

PROPERTIES IN OPERATION

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Square Footage

September 30, 2024

March 31, 2025

December 2020

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February 2023

SJC Renovation

Existing facility

Total/Weighted Average

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Predevelopment

In Development

Predevelopment

In Construction

Predevelopment

POU Phase II (2)

Predevelopment

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Predevelopment

$619.0 - 686.1

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

We have not yet formed preliminary estimates regarding the projected construction timeline, total construction costs, or hangar mix associated with our POU Phase II development project.

Recent Developments

In August 2024, we entered into the SLC Lease at 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 us to extend the SLC Lease for an additional 20 years following the expiration of the initial term.

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.

In March 2025, we entered into a rental agreement at King County International Airport (Boeing Field) with King County, Washington (the “BFI Lease”).

The BFI Lease includes an approximately 92,495 square foot hangar complex and its initial term expires in February 2026.

We intend to pursue the execution of a longer-term lease with King County during the initial term of the BFI Lease.

In April 2025, we entered into the HIO Lease at HIO with the Port of Portland.

The HIO Lease covers approximately 13 acres of property at HIO.

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

In April 2025, we entered into the SWF Lease at SWF with the Port Authority of New York and New Jersey.

The SWF Lease covers approximately 16 acres of property at SWF.

The initial term of the SWF Lease will be 30 years, with lease payments commencing on the earlier of hangar occupancy or 36 months from the receipt of certain environmental approvals.

The SWF Lease contains three options exercisable by the Company to extend the SWF Lease for an additional total of 15 years following the expiration of the initial term.

Factors That May Influence Future Results of Operations

Our revenues are derived from rents we earn pursuant to the lease agreements we enter into with our tenants.

Our ability to expand through new ground leases and tenant 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.

Our ability to enter into new ground leases and tenant leases on favorable terms, or at all, may be adversely affected by a number of factors.

We believe that the business environment of the industry segments in which our tenants operate is generally positive for tenants.

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

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

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

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

Ground Lease Expense

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

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.

GAAP regardless of whether our ground leases defer cash rent payments until completion of construction.

As we enter into new ground leases at new airport sites, our ground lease expense and associated cash payments to airport landlords will ultimately continue to increase into the future.

If airport landlords increase the per acre cost of the ground lease of our target campuses, the operating margins at potential target developments may be impacted negatively.

Interest Expense

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.

As a non-rated issuer, increases in general of credit spreads in the market, or for us, may result in a higher cost of borrowing in the future.

We intend to access the bond market on an opportunistic basis.

In addition, we may hedge against rising benchmark interest rates by entering into hedging strategies with high quality counterparties.

General and Administrative Expenses

The general and administrative expenses reflected in our statement of operations are reflective of the professional, legal and consulting fees, payroll costs, and other general and administrative expenses, including those necessary to support our business as a public company such as expenses associated with corporate governance, SEC reporting, and other compliance matters.

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

Airfield and Tenant Portfolio Growth

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 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.

The level and volatility of fuel prices may also impact the general aviation industry and our ability to attract and retain tenants.

In addition, our ability to attract and retain customers may be dependent on other factors outside of our control, including the future trend of private aircraft sizes and the availability of alternative hangars, including size, location and/or services provided.

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 ability to expand through new ground leases at airports is also 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.

Our ability to enter into new ground leases on favorable terms, or at all, may be adversely affected by certain significant factors.

We may not be able to negotiate new ground leases with airport authorities on attractive terms or at all, and we may encounter competition from other potential ground lessors, which could significantly increase the lease rate for properties we seek to lease.

In our efforts to secure new ground leases, we may incur significant costs and divert management attention in connection with evaluating and negotiating such ground leases, including ground leases that we are subsequently unable to execute.

In addition, 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.

Construction Material Costs and Labor

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

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

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

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

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

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

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

Typically, the materials and most of the components used to construct our hangar campuses are readily available in the United States, and we attempt to procure such materials from domestic sources where and when possible.

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

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

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 tariffs will have on the cost of our construction materials.

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.

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

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

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

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

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

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

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

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.

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

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

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

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

Our updated estimates of total construction costs do not include projections of potential cost reductions due to such efficiencies, and we continue to reevaluate our preliminary and updated estimates from time to time over the course of the development lifecycle.

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

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

Increases in Market Interest Rates and Future Costs of Borrowing

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 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.

As a non-rated issuer, increases in general of credit spreads in the market, or for us, may result in a higher cost of borrowing in the future.

We intend to access the bond market on an opportunistic basis.

In addition, we may hedge against rising benchmark interest rates by entering into hedging strategies with high quality counterparties.

Current Capital Requirements and Future Expenditures for Expansion

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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 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 previously raised equity capital, along with potential future debt and further equity issuances, including the 2024 Purchase Agreement and 2023 Purchase Agreement (as defined herein) 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 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.

On average, each future campus is anticipated to be composed of 200,000 rentable square feet and is expected to cost approximately $60 million per campus, with 65% to 75% 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.

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

Key Business Metrics

We focus on a variety of indicators and key operating and financial metrics to monitor the financial condition and performance of the continuing operations of our business.

These metrics include:

The majority of our revenue is generated from rents and fees we earn pursuant to the lease and service agreements we enter into with our tenants.

Our ability to achieve revenue growth 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 operations.

Rental revenue is recognized in accordance with ASC Topic 842, Leases , and includes (i) fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and is recognized on a straight-line basis over the term of the lease and (ii) variable payments of tenant reimbursements, which are recoveries of all or a portion of the common area maintenance and operating expenses of the property and are recognized in the same period as the expenses are incurred.

We derive all of our revenue from tenants in the United States.

Operating Expenses

In addition to changes in our revenue, our operating results are affected by, among other things, the level of our operating expenses.

One of our largest expenses are the payments payable under our ground leases.

For the three months ended March 31, 2025 and 2024, we recognized expense related to ground leases of approximately $2.9 million and $1.2 million, respectively.

We elect to expense rather than capitalize ground lease expense incurred at hangar campus sites under development and will incur expense under GAAP regardless of whether our ground leases defer cash rent payments until completion of construction.

As we enter into new ground leases at new airport sites, our ground lease expense and associated cash payments to airport landlords will ultimately continue to increase into the future.

If airport landlords increase the per acre cost of the ground lease of our target campuses, the operating margins at potential target developments may be impacted negatively.

Other operating expenses reflected in our consolidated statement of operations are reflective of the professional, legal and consulting fees, compensation costs, and other general and administrative expenses, including those necessary to support our business as a public company such as expenses associated with corporate governance, SEC reporting, and other compliance matters.

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

Operating Income (Loss)

The presentation of operating income (loss) provides a measure of performance which is useful for investors, analysts and other interested parties in company-to-company operating performance comparisons.

Operating income (loss) is computed by deducting operating expenses from revenue.

Net Income (Loss)

The presentation of net income provides a measure of performance which are useful for investors, analysts and other interested parties in company-to-company operating performance comparisons.

Adjusted EBITDA

We utilize Adjusted EBITDA to evaluate our operating and financial performance, which is supplemental in nature and a financial measure not calculated in accordance with GAAP.

We define Adjusted EBITDA as net income before (i) depreciation and amortization expense, (ii) interest expense, (iii) interest income, (iv) non-cash stock-based compensation expense, (v) non-cash gains and losses resulting from the change in fair value of our liability-classified warrants, (vi) non-cash operating lease expense, (vii) non-cash operating lease income, (viii) provision for income taxes, (ix) other non-cash expenses, including, but not limited to, the impairment of long-lived assets, gains or losses arising from the disposition of assets, losses on extinguishment of debt, and other non-cash non-operating expenses.

We believe Adjusted EBITDA is useful for investors, analysts and other interested parties as it provides a view of our operating performance, analyzes our ability to meet debt service obligations, and facilitates company-to-company operating performance comparisons by excluding potential differences caused by variations in capital structures, the age and book depreciation of assets, and equity-based incentive plans.

Our method of calculating Adjusted EBITDA may differ from that utilized by other companies and therefore its comparability may be limited.

See the section titled “Non-GAAP Financial Measures” below for more information and reconciliations to the most directly comparable GAAP financial measure.

Net Cash Provided From (Used In) Operating Activities

We focus on measures designed to monitor cash flow, including net cash provided from (used in) operating activities.

The presentation of net cash provided from (used in) operating activities provides a measure of performance which are useful for investors, analysts and other interested parties in company-to-company operating performance comparisons.

Critical Accounting Policies and Estimates

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Results of Operations

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

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

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

Three months ended

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

Rental revenue

Total revenue

General and administrative

Campus operating expenses

Fuel expenses

Ground lease expenses

Depreciation and amortization

Pursuit and marketing expenses

Employee compensation and benefits

General and administrative expenses

Total expenses

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Total other (income) expense

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.

Rental revenues for the three months ended March 31, 2025 were approximately $4.4 million, compared to approximately $2.1 million for the three months ended March 31, 2024.

The $2.3 million, or 109%, increase was primarily the result of operations at CMA, which was acquired during the three months ended December 31, 2024, the commencement of operations at SJC during the three months ended June 30, 2024, and the cumulative impact of increased occupancy at our BNA and OPF hangar campuses.

Fuel revenues for the three months ended March 31, 2025 were approximately $1.1 million, compared to approximately $0.3 million for the three months ended March 31, 2024.

The approximately $0.8 million, or 326%, increase was primarily the result of fuel sales at our CMA hangar campus, where our fuel revenues and related expenses are recognized on a gross basis.

Operating Expenses

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.

Other operating expenses increased by approximately $0.2 million, primarily driven by increased utility, insurance, and other start-up expenses associated with the commencement of operations at our SJC hangar campus.

Depreciation Expense

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 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.

Campus operating expenses increased approximately $1.1 million, or 142%, from approximately $0.8 million for the three months ended March 31, 2024, to approximately $1.9 million for the three months ended March 31, 2025.

Salaries, wages, and benefits associated with our hangar campus personnel increased approximately $0.6 million, primarily driven by headcount increases in anticipation of the commencement of operations at our DVT, APA, and ADS hangar campuses, the acquisition of a hangar campus at CMA during December 2024, and the commencement of operations at our SJC hangar campus in April 2024.

Other campus operating expenses increased approximately $0.5 million, primarily driven by increased insurance, property taxes, and utilities associated with operations at CMA and SJC, where our operations commenced in December 2024 and April 2024, respectively.

Fuel expenses for the three months ended March 31, 2025 were approximately $0.7 million, compared to approximately $0.1 million for the three months ended March 31, 2024.

The approximately $0.6 million, or 906%, increase was primarily the result of the CMA Transaction during the three months ended December 31, 2024, and the related impact of recognizing certain fuel revenue and expenses on a gross basis.

Ground lease expenses increased approximately $1.7 million, or 136%, from approximately $1.2 million for the three months ended March 31, 2024, to approximately $2.9 million for the three months ended March 31, 2025.

The increase in ground lease expense was driven primarily by expense recognized 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 ORL during the three months ended March 31, 2024, IAD during the three months ended June 30, 2024, SLC during the three months ended September 30, 2024, and the ground leases assumed as part of the CMA Transaction during the three months ended December 31, 2024.

Depreciation and amortization increased approximately $0.5 million, or 75%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

The increase was primarily driven by our acquisition of a hangar campus at CMA during the three months ended December 31, 2024 .

Operating Expenses - Continued

Pursuit and marketing expenses for the three months ended March 31, 2025 were approximately $0.6 million, compared to approximately $0.4 million for the three months ended March 31, 2024.

The approximately $0.2 million, or 64%, increase was primarily the result of investment in our growth strategy in securing airport site acquisitions and potential tenants throughout the year.

Employee compensation and benefits expenses increased approximately $0.7 million, or 18%, to $4.2 million for the three months ended March 31, 2025, as compared to approximately $3.6 million for the three months ended March 31, 2024.

The increase was primarily driven by an increase in corporate headcount and expense recognized associated with our equity compensation programs.

Headcount and compensation expenses increased approximately $0.5 million, and non-cash equity compensation expense increased approximately $0.2 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 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.

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).

Nine months ended

September 30, 2024

September 30, 2023

Rental revenue

Total revenue

General and administrative

Total expenses

Operating loss

For the three months ended March 31, 2025 and 2024, other general and administrative expenses were approximately $1.1 million and approximately $1.0 million, respectively.

The approximately $0.1 million increase was primarily driven by slight increases in professional fees and technology costs due to the expansion of the business and headcount, offset by a slight decrease in corporate insurance premiums.

Other (Income) Expense

Other expense decreased from approximately $16.0 million of expense for the three months ended March 31, 2024, to approximately $2.3 million of expense for the three months ended March 31, 2025.

This decrease was primarily due to an approximately $13.7 million difference in the mark-to-market adjustment of the outstanding warrants at March 31, 2025 as compared to March 31, 2024.

Non-GAAP Financial Measures

To supplement our results presented in accordance with GAAP, we utilize Adjusted EBITDA, a non-GAAP financial measure that excludes or adjusts certain items.

We define Adjusted EBITDA as net income before (i) depreciation and amortization expense, (ii) interest expense, (iii) other income, predominantly consisting of interest income and realized gains from sales of available-for-sale securities, (iv) non-cash equity-based compensation expense, (v) non-cash gains and losses resulting from the change in fair value of our liability-classified warrants, (vi) non-cash operating lease expense, (vii) non-cash operating lease income, (viii) provision for income taxes, (ix) other non-cash expenses, including, but not limited to, the impairment of long-lived assets, gains or losses arising from the disposition of assets, losses on extinguishment of debt, and other non-cash non-operating expenses.

Management uses Adjusted EBITDA to facilitate operating performance comparisons from period to period.

We believe this non-GAAP financial measure provide investors, analysts and other interested parties useful information to evaluate our business performance as the removal of certain non-cash expenses and income, they facilitate company-to-company operating performance comparisons.

While we believe this non-GAAP financial measure is useful in evaluating our business, it should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.

In addition, this non-GAAP financial measures may not be the same as a similarly entitled measure reported by other companies, limiting their usefulness as comparative measures.

See below for a reconciliation of net income (loss) to Adjusted EBITDA, as well as “Key Business Metrics” for further discussion of Adjusted EBITDA.

Adjusted EBITDA

A reconciliation of net income (loss) to Adjusted EBITDA is presented below:

Three months ended

March 31, 2025

March 31, 2024

Add (subtract):

Depreciation and amortization

Interest expense

Unrealized loss on warrants

Total other (income) expense

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 $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 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 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.

Headcount and compensation expenses increased approximately $1.6 million, and non-cash equity compensation expense increased approximately $1.4 million.

Other (Income) Expense

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.

Changes in fair value of warrant liabilities

Equity-based compensation

Non-cash operating lease expense

Non-cash operating lease income

Adjusted EBITDA

Liquidity and Capital Resources

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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 shelf registration statement on Form S-3 to access the capital markets.

We also have the ability to utilize our 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.

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

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

Treasury securities as of March 31, 2025.

The following table summarizes our cash and cash equivalents, restricted cash, investments, and restricted investments as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

December 31, 2024

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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.

On September 16, 2024, we entered into a Securities Purchase Agreement (the “2024 Purchase Agreement”) with certain investors (collectively, the “Initial 2024 Investors”) relating to, among other things, the issuance and sale to the Initial 2024 Investors at an initial closing an aggregate of 3,352,106 shares (the “Initial 2024 PIPE Shares”) of our Class A Common Stock for an aggregate purchase price of $31.8 million (the “Initial 2024 Closing” .

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

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

In December 2024, we sold and issued to the 2024 Investors an aggregate of 3,955,790 shares (the “Second Closing 2024 PIPE Shares”) for an aggregate purchase price of approximately $37.6 million (the “Second 2024 Closing”).

Inclusive of the Initial 2024 Closing, we issued and sold an aggregate of 7,911,580 shares of Class A Common Stock for an aggregate purchase price of approximately $75.2 million.

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.

Together with the 2023 Initial Financing, the aggregate PIPE financing through the 2023 Private Placement Purchase Agreement totaled approximately $57.8 million.

On November 1, 2023, we entered into a Securities Purchase Agreement (the “2023 Purchase Agreement”) with certain investors (collectively, the “2023 Investors”), pursuant to which we sold and issued to the 2023 Investors at an initial closing an aggregate of 6,586,154 shares of our Class A Common Stock (the “Initial 2023 PIPE Shares”) and accompanying warrants to purchase up to 1,141,600 shares of Class A Common Stock (the “Initial PIPE Warrants”), for an aggregate purchase price of $42.8 million (the "Initial 2023 Financing").

On November 29, 2023, pursuant to the terms of the 2023 Purchase Agreement, we sold and issued to the 2023 Investors 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.

The aggregate PIPE financing through the 2023 Purchase Agreement totaled approximately $57.8 million.

At-the-Market Facility

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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 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.

During the three months ended March 31, 2025, we sold no shares of Class A Common Stock under the ATM Facility.

During the twelve months ended December 31, 2024, we sold 79,676 shares of Class A Common Stock under the ATM Facility at a weighted-average sales price of $13.75.

As a result, we have approximately $98.9 million in remaining capacity under our ATM Facility.

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

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

As of September 30, 2024, we were in compliance with all debt covenants.

As of March 31, 2025, we were in compliance with all debt covenants.

Lease Commitments

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

The Company’s future minimum lease payments required under leases as of March 31, 2025 were as follows:

Year Ending December 31,

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Less imputed interest

Contractual Obligations

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

Principal payments on bonds payable

Interest payments on bonds payable

Contractual payments on other long-term indebtedness

Lease commitments

Funds to meet interest payments through the first half of 2025 on the Series 2021 PABs are held in reserve as restricted cash and restricted investments.

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet arrangements.

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

Nine months ended

September 30, 2024

September 30, 2023

The following table summarizes our sources and uses of cash for the three months ended March 31, 2025 and 2024 (in thousands):

Three months ended

March 31, 2025

March 31, 2024

Cash and restricted cash at beginning of period

Net cash used in operating activities

Net cash provided by investing activities

Net cash provided by (used in) financing activities

Net cash (used in) provided by investing activities

Net cash (used in) provided by financing activities

Cash and restricted cash at end of period

3 unchanged sentences

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

Net cash used in operating activities was approximately $6.6 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.

Net cash used in operating activities was approximately $5.0 million for the three months ended March 31, 2025, as compared to cash used in operating activities of approximately $4.4 million for the same period in 2024.

The $0.6 million increase in cash used in operating activities was primarily attributable to an approximately $0.5 million increase in net loss, net of non-cash adjustments and an approximately $0.1 million unfavorable change in working capital.

The increase in net loss, net of non-cash adjustments was primarily driven by the impact of increases in headcount at both the corporate and hangar campus level, including start-up expenses incurred in anticipation of commencing operations at DVT, APA, and ADS.

The unfavorable change in working capital was primarily driven by the timing of spending commitments and payments of our accounts payable and other accrued expenses.

Investing Activities

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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 $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.

Net cash used in investing activities was approximately $4.5 million for the three months ended March 31, 2025, as compared to cash provided by investing activities of approximately $33.9 million for the same period in 2024.

The decrease of approximately $38.4 million of cash provided by investing activities was driven primarily by a decrease in proceeds received from held-to-maturity investments of approximately $68.0 million and an increase of capital expenditures of approximately $14.3 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

These impacts were offset by an approximately $44.8 million decrease in purchases of available for sale investments.

Financing Activities

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

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.

Net cash used in financing activities was approximately $1.2 million for the three months ended March 31, 2025, as compared to net cash provided by financing activities of approximately $0.3 million for the same period in 2024.

The approximately $1.5 million increase in net cash used in financing activities was primarily driven by a decrease of $1.5 million in proceeds received from the exercise of Warrants during the three months ended March 31, 2024.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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-Q

Item 1. Financial Statements