UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO |
Commission File Number:
Sky Harbour Group Corporation
(Exact name of registrant as specified in its Charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
| Westchester County Airport (Address of principal executive offices) | (Zip Code) |
| ( Registrant’s telephone number, including area code | |
| Securities registered pursuant to Section 12(b) of the Act: | ||||
| Title of Class | Trading Symbols | Name of Exchange on Which Registered | ||
| | | The | ||
| Warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 per share | | The |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. (See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act).
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| | ☒ | Smaller reporting company | | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 5, 2025,
TABLE OF CONTENTS
| Page |
||
| 2 | ||
| Item 1. |
2 | |
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 |
| Item 3. |
37 | |
| Item 4. |
37 | |
| 38 | ||
| Item 1. |
38 | |
| Item 1A. |
38 | |
| Item 2. |
38 | |
| Item 3. |
38 | |
| Item 4. |
38 | |
| Item 5. |
38 | |
| Item 6. |
39 | |
| 39 | ||
| FINANCIAL STATEMENTS |
SKY HARBOUR GROUP CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| June 30, 2025 | December 31, 2024 | |||||||
| (unaudited) | (audited) | |||||||
| Assets | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Investments | ||||||||
| Restricted investments | ||||||||
| Accounts receivable, prepaid expenses, and other assets | ||||||||
| Cost of construction | ||||||||
| Constructed assets, net | ||||||||
| Right-of-use assets | ||||||||
| Long-lived assets, net | ||||||||
| Lease intangible assets, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and equity | ||||||||
| Accounts payable, accrued expenses and other liabilities | $ | $ | ||||||
| Operating lease liabilities | ||||||||
| Loans payable and finance lease liabilities | ||||||||
| Bonds payable, net of debt issuance costs and premiums | ||||||||
| Warrants liability | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 15) | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock; $ par value; shares authorized as of June 30, 2025; issued and outstanding | ||||||||
| Class A common stock, $ par value; shares authorized; and shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively | ||||||||
| Class B common stock, $ par value; shares authorized; and shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total Sky Harbour Group Corporation stockholders’ equity | ||||||||
| Non-controlling interests | ||||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
See accompanying Notes to Unaudited Consolidated Financial Statements
SKY HARBOUR GROUP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
| Three Months Ended |
Six months ended |
|||||||||||||||
| June 30, 2025 |
June 30, 2024 |
June 30, 2025 |
June 30, 2024 |
|||||||||||||
| Revenue: |
||||||||||||||||
| Rental revenue |
$ | $ | $ | $ | ||||||||||||
| Fuel revenue |
||||||||||||||||
| Total revenue |
||||||||||||||||
| Expenses: |
||||||||||||||||
| 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 |
||||||||||||||||
| Operating loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other (income) expense: |
||||||||||||||||
| Interest expense |
||||||||||||||||
| Unrealized (gain) loss on warrants |
( |
) | ( |
) | ( |
) | ||||||||||
| Other income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Total other (income) expense |
( |
) | ( |
) | ( |
) | ||||||||||
| Net income (loss) |
( |
) | ||||||||||||||
| Net loss attributable to non-controlling interests |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net income (loss) attributable to Sky Harbour Group Corporation shareholders |
$ | $ | $ | $ | ( |
) | ||||||||||
| Earnings (loss) per share |
||||||||||||||||
| Basic |
$ | $ | $ | $ | ( |
) | ||||||||||
| Diluted |
$ | $ | $ | $ | ( |
) | ||||||||||
| Weighted average shares |
||||||||||||||||
| Basic |
||||||||||||||||
| Diluted |
||||||||||||||||
See accompanying Notes to Unaudited Consolidated Financial Statements
SKY HARBOUR GROUP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(Unaudited)
| Three Months Ended |
Six Months Ended | |||||||||||||||
| June 30, 2025 |
June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Net income (loss) |
$ | $ | $ | $ | ( |
) | ||||||||||
| Unrealized gains on available-for-sale securities |
||||||||||||||||
| Realized gains on available-for-sale securities reclassified to the consolidated statements of operations |
( |
) | ( |
) | ( |
) | ||||||||||
| Total comprehensive income (loss) |
$ | $ | $ | $ | ( |
) | ||||||||||
See accompanying Notes to Unaudited Consolidated Financial Statements
SKY HARBOUR GROUP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(Unaudited)
| Class A |
Class B |
Additional |
Accumulated Other |
Total |
Non- |
|||||||||||||||||||||||||||||||||||
| Common Stock |
Common Stock |
Paid-in |
Accumulated |
Comprehensive |
Stockholders’ |
Controlling |
Total |
|||||||||||||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Income (Loss) |
Equity |
Interests |
Equity |
|||||||||||||||||||||||||||||||
| Balance at December 31, 2024 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||||||||
| Share-based compensation |
- | - | ||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units |
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Shares withheld for payment of employee taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| Payment of equity issuance costs |
- | - | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| Exchange of Sky Incentive Units |
( |
) | ||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss |
- | - | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Balance at March 31, 2025 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Share-based compensation |
- | - | ||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units |
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Shares withheld for payment of employee taxes |
( |
) | ( |
) | ( |
) | - | ( |
) | |||||||||||||||||||||||||||||||
| Issuance of stock through ATM Facility |
||||||||||||||||||||||||||||||||||||||||
| Payment of equity issuance costs |
- | - | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| Other comprehensive income |
- | - | ||||||||||||||||||||||||||||||||||||||
| Net income (loss) |
- | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Class A |
Class B |
Additional |
Accumulated Other |
Total |
Non- |
Total |
||||||||||||||||||||||||||||||||||
| Common Stock |
Common Stock |
Paid-in |
Accumulated |
Comprehensive |
Stockholders’ |
Controlling |
Equity |
|||||||||||||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Income (Loss) |
Equity |
Interests |
(Deficit) |
|||||||||||||||||||||||||||||||
| Balance at December 31, 2023 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||||||||
| Share-based compensation |
- | - | ||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units |
- | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Shares withheld for payment of employee taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| Exercise of warrants |
||||||||||||||||||||||||||||||||||||||||
| Payment of equity issuance costs |
- | - | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| Other comprehensive income |
- | - | ||||||||||||||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| 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 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
See accompanying Notes to Unaudited Consolidated Financial Statements
SKY HARBOUR GROUP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| Six months ended |
||||||||
| June 30, 2025 |
June 30, 2024 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | $ | ( |
) | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
||||||||
| Straight-line rent adjustments, net |
( |
) | ||||||
| Equity-based compensation |
||||||||
| Non-cash operating lease expense |
||||||||
| Realized gain on available for sale investments |
( |
) | ( |
) | ||||
| Loss on disposition of assets |
||||||||
| Unrealized (gain) loss on warrants |
( |
) | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable, prepaid expenses, and other assets |
( |
) | ( |
) | ||||
| Right-of-use asset initial direct costs |
( |
) | ||||||
| Accounts payable, accrued expenses, and other liabilities |
( |
) | ||||||
| Net cash used in operating activities |
( |
) | ( |
) | ||||
| Cash flows from investing activities: |
||||||||
| Purchases of long-lived assets |
( |
) | ( |
) | ||||
| Payments for cost of construction |
( |
) | ( |
) | ||||
| Proceeds from disposition of long-lived assets |
||||||||
| Investment in notes receivable, net |
( |
) | ||||||
| Purchases of available for sale investments |
( |
) | ( |
) | ||||
| Proceeds from available for sale investments |
||||||||
| Proceeds from held-to-maturity investments |
||||||||
| Net cash (used in) provided by investing activities |
( |
) | ||||||
| Cash flows from financing activities: |
||||||||
| Proceeds from exercise of warrants |
||||||||
| Proceeds from ATM Facility |
||||||||
| Principal payments for loans payable and finance leases |
( |
) | ( |
) | ||||
| Payments for equity issuance costs |
( |
) | ( |
) | ||||
| Payments of employee taxes related to vested equity awards |
( |
) | ( |
) | ||||
| Net cash (used in) provided by financing activities |
( |
) | ||||||
| Net increase (decrease) in cash and restricted cash |
( |
) | ||||||
| Cash and restricted cash, beginning of period |
||||||||
| Cash and restricted cash, end of period |
$ | $ | ||||||
See accompanying Notes to Unaudited Consolidated Financial Statements
SKY HARBOUR GROUP CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(in thousands, except share data)
| 1. | Organization and Business Operations |
Sky Harbour Group Corporation (“SHG”) is a holding company organized under the laws of the State of Delaware and, through its main operating subsidiary, Sky Harbour LLC and its subsidiaries (collectively, “Sky”), is an aviation infrastructure development company that develops, leases and manages general aviation hangars for business aircraft across the United States. Sky Harbour Group Corporation and its consolidated subsidiaries are collectively referred to as the “Company.”
The Company is organized as an umbrella partnership-C corporation, or “Up-C”, structure in which substantially all of the operating assets of the Company are held by Sky and SHG’s only substantive assets are its equity interests in Sky (the “Sky Common Units”). As of June 30, 2025, SHG owned approximately
| 2. | Basis of Presentation and Summary of Significant Accounting Policies |
Basis of Presentation
The accompanying unaudited consolidated financial statements and the related notes (the “Financial Statements”) have been prepared in conformity with the U.S. Securities and Exchange Commission (the “SEC”) requirements for quarterly reports on Form 10-Q, and consequently exclude certain disclosures normally included in audited consolidated financial statements prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).These Financial Statements include the accounts of SHG and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Financial Statements should be read in conjunction with the audited consolidated financial statements and the notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, which includes additional disclosures and a summary of the Company's significant accounting policies. In the Company’s opinion, these Financial Statements include all adjustments, consisting of normal recurring items, considered necessary by management to fairly state the Company’s results of operation, financial position, and cash flows.
Certain historical amounts have been reclassified to conform to the current year’s presentation. 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
The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include assumptions used within impairment analyses, estimated useful lives of depreciable assets and amortizable costs, estimates of inputs utilized in determining the fair value of financial instruments such as warrants, estimates and assumptions related to right-of-use assets and operating lease liabilities, and estimates and assumptions used in the determination of the fair value of assets acquired and liabilities assumed in the business combination. Actual results could differ materially from those estimates.
Risks and Uncertainties
The Company’s operations have been limited to-date. For most of its history, the Company has been engaged in securing access to land through ground leases and developing and constructing aviation hangars. The major risks faced by the Company is its future ability to obtain additional tenants for the facilities that it constructs, and to contract with such tenants for rental income in an amount that is sufficient to meet the Company’s financial obligations, including increasing construction costs due to inflation and increased borrowing costs to the extent that the Company incurs additional indebtedness.
Liquidity and Capital Resources
As a result of ongoing construction projects and business development activities, including the development of aircraft hangars and the leasing of available hangar space, the Company has incurred recurring losses and negative cash flows from operating activities since its inception. The Company expects to continue to invest in such activities and generate operating losses in the near future.
The Company obtained long-term financing through bond and equity offerings and has the ability to utilize the “at the market” offering program to fund its construction, lease, and operational commitments, and believes its liquidity is sufficient to allow continued operations for more than one year after the date these financial statements are issued.
Significant Accounting Policies
Basis of Consolidation
SHG is deemed to have a controlling interest of Sky through its appointment as the managing member of Sky, in which SHG has control over the affairs and decision-making of Sky. The interests in Sky not owned by the Company are presented as non-controlling interests. Sky’s ownership percentage in each of its consolidated subsidiaries is
Cost of Construction
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. Costs are capitalized once the construction of a specific capital project is probable. Construction labor and other direct costs of construction are capitalized. Professional fees for engineering, procurement, consulting, and other soft costs that are directly identifiable with the project and are considered an incremental direct cost are capitalized. Activities associated with internally manufactured hangar buildings, including materials, direct manufacturing labor, and manufacturing overhead directly identifiable with such activities are allocated to our construction projects and capitalized. The Company allocates a portion of its internal salaries to both capitalized cost of construction and to general and administrative expense based on the percentage of time certain employees worked in the related areas. Interest, net of the amortization of debt issuance costs and premiums, and net of interest income earned on bond proceeds, is also capitalized until the capital project is completed.
Once a capital project is complete, the Company begins to depreciate the constructed asset on a straight-line basis over the lesser of the life of the asset or the remaining term of the related ground lease, including expected renewal terms.
Leases
The Company accounts for leases under Accounting Standards Codification (“ASC”) Topic 842, Leases. The Company determines whether a contract contains a lease at the inception of the contract. ASC Topic 842 requires lessees to recognize lease liabilities and right-of-use (“ROU”) assets for all operating leases with terms of more than 12 months on the consolidated balance sheets. The Company has made an accounting policy election to not recognize leases with an initial term of 12 months or less on the Company’s consolidated balance sheets and will result in recognizing those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. When management determines that it is reasonably certain that the Company will exercise its options to renew the leases, the renewal terms are included in the lease term and the resulting ROU asset and lease liability balances.
The Company has lease agreements with lease and non-lease components; the Company has elected the accounting policy to not separate lease and non-lease components for all underlying asset classes. The Company has not elected to capitalize any interest cost that is implicit within its operating leases into cost of construction on the consolidated balance sheet, but instead, expenses its ground lease cost as a component of operating expenses in the consolidated statements of operations.
Warrants liability
The Company accounts for its Warrants (as defined in Note 9 — Warrants) in accordance with the guidance contained in ASC Topic 815, “Derivatives and Hedging” (“ASC 815”), under which warrants that do not meet the criteria for equity classification and must be recorded as derivative liabilities. Accordingly, the Company classifies the Warrants as liabilities carried at their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the warrants are exercised or expire, and any change in fair value is recognized in the consolidated statement of operations.
Revenue recognition
The Company leases the hangar facilities that it constructs to third parties. The Company determines whether a contract contains a lease at the inception of the contract. The lease agreements are either on a month-to-month basis or have a defined term and may have options to extend the term. Some of the leases contain options to terminate the lease by either party with given notice. The Company expects to continue to derive benefit from the underlying assets after the end of the lease term through further leasing arrangements. The underlying assets are the leasehold interest that the Company has in connection with its ground leases. There are no options given to the lessee to purchase the underlying assets.
Rental revenue is recognized in accordance with ASC 842 and includes fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and is recognized on a straight-line basis over the term of the lease. Rental revenue and the corresponding rent and other receivables are recorded net of any concessions and uncollectible tenant receivables, if any, for all periods presented. The Company evaluates the collectability of tenant receivables for payments required under the lease agreements. If the Company determines that collectability is not probable, the Company recognizes any difference between revenue amounts recognized to date under ASC 842 and payments that have been collected from the lessee, including any additional rent or lease termination fees, as a current period adjustment to rental revenue.
Variable payments consist of tenant reimbursements for common area maintenance, utilities, and operating expenses of the property, and various other fees, including fees associated with the delivery of aircraft fuel, late fees, and lease termination fees. Variable 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.
The table below sets forth a summary of variable payments for the three and six months ended June 30, 2025 and 2024 recorded in the captions within our consolidated statement of operations:
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Variable payments included in rental revenue | $ | $ | $ | $ | ||||||||||||
| Variable payments included in fuel revenue | ||||||||||||||||
| Total variable payments included in revenue | $ | $ | $ | $ | ||||||||||||
As of June 30, 2025 and December 31, 2024, the deferred rent receivable included in accounts receivable, prepaid expenses, and other assets was $
At certain of the Company’s hangar campuses, the Company recognizes revenue from ground-based services, such as the fueling and towing of aircraft under ASC Topic 606, Revenue from Contracts with Customers. 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 and six months ended June 30, 2025 and the three and six months ended June 30, 2024, the Company did derive 10% of its revenue from any single tenant.
Income Taxes
SHG is classified as a corporation for U.S. Federal income tax purposes and is subject to U.S. Federal and state income taxes. SHG includes in income, for U.S. Federal income tax purposes, its allocable portion of income from the “pass-through” entities in which it holds an interest, including Sky. The “pass-through” entities are not subject to U.S. Federal and certain state income taxes at the entity level, and instead, the tax liabilities with respect to taxable income are passed through to the members, including SHG. As a result, prior to the transactions contemplated by that certain Equity Purchase Agreement, dated as of August 1, 2021, by and among Yellowstone Acquisition Company (“YAC”) and Sky, which we refer to as the Yellowstone Transaction, Sky was not subject to U.S. Federal and certain state income taxes at the entity level.
The Company follows the asset and liability method of accounting for income taxes. This method gives consideration to the future tax consequences associated with the differences between the financial accounting and tax basis of the assets and liabilities as well as the ultimate realization of any deferred tax asset resulting from such differences, as well as from net operating losses and other tax-basis carryforwards. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. When a valuation allowance is increased or decreased, a corresponding tax expense or benefit is recorded.
The Company recorded income tax expense of $
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update apply to all entities that are subject to Topic 740, Income Taxes. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The amendments in this update are effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. The Company is currently evaluating the impact of this updated standard on its disclosures to the consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement — Reporting Comprehensive Income: Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires public business entities to disclose in the notes to financial statements specific categories within relevant expense captions presented on the face of the income statement. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied on a prospective basis with retrospective application permitted. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.
| 3. | Investments and Restricted Investments |
Investments of the Company’s cash in various U.S. Treasury securities have been classified as available-for-sale and are carried at estimated fair value utilizing Level 1 inputs as determined based upon quoted market prices.
Pursuant to provisions within the Master Indenture of the Series 2021 Bonds, as defined in Note 8 — Bonds payable, loans payable, and interest, the Company invests the funds held in the restricted trust bank accounts in various U.S. Treasury securities. Therefore, such investments are reported as “Restricted investments” in the accompanying consolidated balance sheets. Unrealized losses on certain of the Company’s investments and restricted investments are primarily attributable to changes in interest rates. The Company does not believe the unrealized losses represent impairments because the unrealized losses are due to general market factors. The Company has recognized an allowance for expected credit losses related to its investments or restricted investments as the Company has identified any unrealized losses attributable to credit factors during the three and six months ended June 30, 2025. The held-to-maturity restricted investments are carried on the consolidated balance sheet at amortized cost. As of June 30, 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 June 30, 2025 and December 31, 2024:
| June 30, 2025 | ||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
| Investments, available for sale: | ||||||||||||||||
| U.S. Treasuries | $ | $ | $ | $ | ||||||||||||
| Total investments | $ | $ | $ | $ | ||||||||||||
| Restricted investments, held-to-maturity: | ||||||||||||||||
| U.S. Treasuries | ( | ) | ||||||||||||||
| Total restricted investments | $ | $ | $ | ( | ) | $ | ||||||||||
| December 31, 2024 | ||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
| Investments, available for sale: | ||||||||||||||||
| U.S. Treasuries | $ | $ | $ | $ | ||||||||||||
| Total investments | $ | $ | $ | $ | ||||||||||||
| Restricted investments, held-to-maturity: | ||||||||||||||||
| U.S. Treasuries | ( | ) | ||||||||||||||
| Total restricted investments | $ | $ | $ | ( | ) | $ | ||||||||||
The following table sets forth the maturity profile of the Company’s investments and restricted investments as of June 30, 2025:
| Investments | Restricted Investments | |||||||
| Due within one year | $ | $ | ||||||
| Due one year through five years | ||||||||
| Total | $ | $ | ||||||
| 4. | Cost of Construction and Constructed Assets |
Constructed assets, net, and cost of construction, consists of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| Constructed assets, net of accumulated depreciation: | ||||||||
| Buildings: ADS Phase I, BNA, CMA, DVT Phase I, OPF Phase I, SGR, and SJC Renovation | $ | $ | ||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| $ | $ | |||||||
| Cost of construction: | ||||||||
| ADS Phase II, APA Phase I, BDL Phase I, OPF Phase II, ORL Phase I, and PWK Phase I | $ | $ | ||||||
Depreciation expense for the three and six months ended June 30, 2025 totaled $
| 5. | Long-lived Assets and Lease Intangible Assets |
Long-lived assets, net, consists of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| Ground support equipment | $ | $ | ||||||
| Machinery and equipment | ||||||||
| Buildings | ||||||||
| Land | ||||||||
| Other equipment and fixtures | ||||||||
| Purchase deposits and construction in progress | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Depreciation expense for the three and six months ended June 30, 2025 totaled $
Lease intangible assets, net, consists of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| Acquired in-place lease | $ | $ | ||||||
| Above market leases | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Total operating lease expense | $ | $ | ||||||
Amortization expense for the three and six months ended June 30, 2025 totaled $
| 6. |
Supplemental Balance Sheet and Cash Flow Information |
Accounts payable, accrued expenses and other liabilities
Accounts payable, accrued expenses and other liabilities, consists of the following:
| June 30, 2025 |
December 31, 2024 |
|||||||
| Costs of construction |
$ | $ | ||||||
| Employee compensation and benefits |
||||||||
| Interest |
||||||||
| Professional fees |
||||||||
| Property Taxes |
||||||||
| Tenant security deposits |
||||||||
| Other |
||||||||
| $ | $ | |||||||
Supplemental Cash Flow Information
The following table summarizes non-cash investing and financing activities:
| Six months ended |
||||||||
| June 30, 2025 |
June 30, 2024 |
|||||||
| Accrued costs of construction, including capitalized interest |
$ | $ | ||||||
| Accrued costs of long-lived assets |
||||||||
| Debt issuance costs and premium amortized to cost of construction |
||||||||
The following table summarizes non-cash activities associated with the Company’s operating leases:
| Six months ended |
||||||||
| June 30, 2025 |
June 30, 2024 |
|||||||
| Right-of-use assets obtained in exchange for operating lease liabilities |
$ | $ | ||||||
| Net increase in right-of-use assets and operating lease liabilities due to lease remeasurement |
||||||||
The following table summarizes interest paid:
| Six months ended |
||||||||
| June 30, 2025 |
June 30, 2024 |
|||||||
| Interest paid |
$ | $ | ||||||
The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets to the total shown within the consolidated statements of cash flows:
| Six months ended |
||||||||
| June 30, 2025 |
June 30, 2024 |
|||||||
| Cash, beginning of year |
$ | $ | ||||||
| Restricted cash, beginning of year |
||||||||
| Cash and restricted cash, beginning of year |
$ | $ | ||||||
| Cash, end of period |
$ | $ | ||||||
| Restricted cash, end of period |
||||||||
| Cash and restricted cash, end of period |
$ | $ | ||||||
| 7. | Leases |
Lessee
The table below sets forth a summary of operating lease expense for the three and six months ended June 30, 2025 and 2024 recorded in the captions within our consolidated statement of operations:
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Ground lease expenses | $ | $ | $ | $ | ||||||||||||
| Fuel expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total operating lease expense | $ | $ | $ | $ | ||||||||||||
The Company’s ground leases at airports are classified as operating leases under ASC Topic 842. Management has determined that it is reasonably certain that the Company will exercise its options to renew the leases, and therefore the renewal options are included in the lease term and the resulting ROU asset and operating lease liability balances. As the Company’s lease agreements do not provide a readily determinable implicit rate, nor is the rate available to the Company from its lessors, the Company uses its incremental borrowing rate to determine the present value of the lease payments. 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. The Company has operating leases that contain variable payments, most commonly in the form of common area maintenance and operating expense charges, which are based on actual costs incurred. These variable payments were excluded from the calculation of the ROU asset and operating lease liability balances since they are not fixed or in-substance fixed payments. These variable payments were not material in amount for the three and six months ended June 30, 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. For one of the leases, the shortfall (if any) must be paid to the lessor. See Note 15 — Commitments and Contingencies.
The Company’s ground leases have remaining terms ranging between
In January 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.
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
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
Supplemental consolidated cash flow information related to the Company’s leases was as follows:
| Six months ended | ||||||||
| June 30, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Cash paid for amounts included in measurement of lease liabilities: | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| Operating cash flows from finance leases | ||||||||
| Financing cash flows from finance leases | ||||||||
Supplemental consolidated balance sheet information related to the Company’s leases was as follows:
| Weighted Average Remaining Lease Term (in years) | June 30, 2025 | December 31, 2024 | ||||||
| Operating leases | ||||||||
| Ground leases - Unimproved at commencement | ||||||||
| Ground leases - Existing improvements | ||||||||
| Equipment leases | ||||||||
| Office leases | ||||||||
| All operating leases | ||||||||
| Finance leases | ||||||||
| Weighted Average Discount Rate | ||||||||
| Operating leases | ||||||||
| Ground leases - Unimproved at commencement | % | % | ||||||
| Ground leases - Existing improvements | % | % | ||||||
| Equipment leases | % | % | ||||||
| Office leases | % | % | ||||||
| All operating leases | % | % | ||||||
| Finance leases | % | % | ||||||
The Company’s future minimum lease payments required under leases as of June 30, 2025 were as follows:
| Year Ending December 31, | Operating Leases |
| ||||||
| 2025 (remainder of year) | $ | $ | ||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| Thereafter | ||||||||
| Total lease payments | ||||||||
| Less imputed interest | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Lessor
The Company leases the hangar facilities that it constructs or rents from municipal landlords to third-party tenants. These leases have been classified as operating leases. The Company does not have any leases classified as sales-type or direct financing leases. Lease agreements with tenants are either on a month-to-month basis or have a defined term with an option to extend the term. The defined term leases vary in length from one to ten years with options to renew for additional term(s) given to the lessee. There are no options given to the lessee to purchase the underlying assets.
The leases may contain variable fees, most commonly in the form of tenant reimbursements, which are recoveries of the common area maintenance and operating expenses of the property and are recognized as income in the same period as the expenses are incurred. The leases did not have any initial direct costs. The leases do not contain any restrictions or covenants to incur additional financial obligations by the lessee.
Tenant leases to which the Company is the lessor require the following non-cancelable future minimum lease payments from tenants as of June 30, 2025:
| Year Ending December 31, | Operating Leases | |||
| 2025 (remainder of year) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ | |||
| 8. | Bonds payable, Loans payable, and Interest |
Bonds payable
On May 20, 2021, Sky formed a new wholly-owned subsidiary, Sky Harbour Capital LLC (“SHC”), as a parent corporation to its wholly-owned subsidiaries that operate each of the aircraft hangar development sites under its ground leases. SHC and these subsidiaries form an Obligated Group (the “Obligated Group” or the “Borrowers”) under a series of bonds that were issued in September 2021 with a principal amount of $
The Series 2021 Bonds are payable pursuant to a loan agreement dated September 1, 2021 between the Public Finance Authority (of Wisconsin) and the Borrowers. The payments by the Borrowers under the loan agreement are secured by a Senior Master Indenture Promissory Note, Series 2021-1 issued by the Obligated Group under an indenture (the “Master Indenture”). The obligations of the Borrowers are collateralized by certain leasehold and subleasehold deeds of trust or mortgages on the Borrowers’ interests in the development sites and facilities being constructed at each airport where the Borrowers hold ground leases. In addition, the Borrowers have assigned, pledged and granted a first priority security interest in all funds held under the Master Indenture and all right, title and interest in the gross revenues of the Borrowers. Furthermore, Sky, Sky Harbour Holdings LLC and SHC have each pledged as collateral its respective ownership interest in any of the Borrowers.
The Series 2021 Bonds have principal amounts, interest rates, and maturity dates as follow: $
On March 22, 2023, SHC elected to modify the scope of the Series 2021 Bonds pursuant to the terms of the Master Indenture, in order to reallocate a portion of the proceeds of the Series 2021 Bonds to its project site located at ADS (the “ADS Project”) . In connection with the election to modify the scope of the Series 2021 PABs to include the ADS Project, (i) Addison Hangars LLC (“Sky Harbour Addison”) and OPF Hangars Landlord LLC (“OPF Hangars”) joined as members of the Obligated Group, (ii) Sky Harbour Holdings LLC contributed its membership interest in OPF Hangars to SHC, (iii) SHC pledged its equity interest in each of Sky Harbour Addison and OPF Hangars to the Master Trustee as security for the obligations under the Series 2021 Bonds, (iv) Sky Harbour Addison granted to the Master Trustee a mortgage on its leasehold interest in the real property comprising the ADS Project, (v) OPF Hangars granted the Master Trustee a mortgage on its leasehold interest in the real estate comprising the project located in Opa Locka, Florida, and (vi) Sky Harbour Services LLC, a wholly-owned subsidiary of the Company, has agreed to waive all management fees and development fees during the construction period of the projects associated with the Series 2021 Bonds.
As of June 30, 2025 and December 31, 2024, the fair value of the Company’s Series 2021-1 Bonds was approximately $
The following table summarizes the Company’s Bonds payable as of June 30, 2025 and December 31, 2024:
| June 30, 2025 | December 31, 2024 | |||||||
| Bonds payable: | ||||||||
| Series 2021 Bonds Principal | $ | $ | ||||||
| Premium on bonds | ||||||||
| Bond proceeds | ||||||||
| Debt issuance costs | ( | ) | ( | ) | ||||
| Accumulated amortization of debt issuance costs and accretion of bond premium | ||||||||
| Total Bonds payable, net | $ | $ | ||||||
Loans Payable and Finance Leases
The following table summarizes the Company’s loans payable and finance lease liabilities as of June 30, 2025 and December 31, 2024:
| June 30, 2025 | December 31, 2024 | ||||||||||||||||
| Maturity Dates | Weighted-Average Interest Rates | Balance | Weighted-Average Interest Rates | Balance | |||||||||||||
| Vista Loan | December 2025 | % | $ | % | $ | ||||||||||||
| Equipment loans | August 2026 - September 2028 | % | % | ||||||||||||||
| Finance leases | August 2026 - July 2027 | % | % | ||||||||||||||
| Total Loans payable and finance leases | % | $ | % | $ | |||||||||||||
Interest
The following table sets forth the details of interest expense:
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Interest | $ | $ | $ | $ | ||||||||||||
| Accretion of bond premium and amortization of debt issuance costs | ||||||||||||||||
| Total interest incurred | ||||||||||||||||
| Less: capitalized interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense | $ | $ | $ | $ | ||||||||||||
| 9. | Warrants |
SHG’s legal predecessor, YAC, issued to third-party investors
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
The Warrants contain an exercise price of $
The closing price of the Warrants was $
| 10. | Equity |
Common Equity
As of June 30, 2025, there were
The holders of Class A Common Stock are entitled to receive dividends, as and if declared by the Company’s Board of Directors out of legally available funds. With respect to stock dividends, holders of Class A Common Stock must receive Class A Common Stock. The holders of Class B Common Stock do not have any right to receive dividends other than stock dividends consisting of shares of Class B Common Stock, as applicable, in each case paid proportionally with respect to each outstanding share of Class B Common Stock.
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. (“B. 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 $
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.
Non-controlling interests
The LLC Interests’ ownership in Sky is presented as non-controlling interests within the Equity section of the consolidated balance sheet as of June 30, 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 June 30, 2025, the LLC interests owned approximately
| 11. | Equity Compensation |
Restricted Stock Units (“RSUs”)
In February 2025 and June 2025, the Company granted time-based RSUs to certain employees under the Company’s 2022 Incentive Award Plan.
During the three and six months ended June 30, 2025, the Company recognized stock compensation expense of approximately $
Non-qualified Stock Options (“NSOs”)
In February 2025, the Company granted to certain employees options to purchase
During the three and six months ended June 30, 2025, the Company recognized stock compensation expense of approximately $
Sky Incentive Units
The Company recognized equity-based compensation expense relating to awarded equity units of Sky (the “Sky Incentive Units”) of $
| 12. |
Earnings (loss) per Share |
Basic earnings (loss) per share of Class A Common Stock is computed by dividing net income (loss) attributable to SHG by the weighted-average number of shares of Class A Common Stock outstanding during the period. Diluted net income (loss) per share of Class A Common Stock is computed by dividing net income (loss) attributable to SHG, adjusted for the assumed exchange of all potentially dilutive securities, by the weighted-average number of shares of Class A Common Stock outstanding adjusted to give effect to potentially dilutive shares using the treasury stock or if-converted method as appropriate. Shares of the Company’s Class B Common Stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B Common Stock under the two-class method has not been presented.
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| June 30, 2025 |
June 30, 2024 |
June 30, 2025 |
June 30, 2024 |
|||||||||||||
| Numerator: |
||||||||||||||||
| Net income (loss) |
$ | $ | $ | $ | ( |
) | ||||||||||
| Less: Net loss attributable to non-controlling interests |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Basic net income (loss) attributable to Sky Harbour Group Corporation shareholders |
( |
) | ||||||||||||||
| Less: Net (loss) attributable to LLC Interests |
( |
) | ( |
) | ( |
) | ||||||||||
| Diluted net income (loss) attributable to Sky Harbour Group Corporation shareholders |
$ | $ | $ | $ | ( |
) | ||||||||||
| Denominator: |
||||||||||||||||
| Basic weighted average shares of Class A Common Stock outstanding |
||||||||||||||||
| Effect of dilutive exchange of Class B Common Stock |
||||||||||||||||
| Effect of dilutive exchange of Sky Incentive Units |
||||||||||||||||
| Effect of dilutive restricted stock |
||||||||||||||||
| Diluted weighted average shares outstanding |
||||||||||||||||
| Earnings (loss) per share of Class A Common Stock – Basic |
$ | $ | $ | $ | ( |
) | ||||||||||
| Earnings (loss) per share of Class A Common Stock – Diluted |
$ | $ | $ | $ | ( |
) | ||||||||||
Potentially dilutive shares excluded from the weighted-average shares used to calculate the diluted net earnings (loss) per common share were as follows (in thousands):
| Three Months Ended |
Six Months Ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Shares subject to unvested restricted stock units |
||||||||||||||||
| Shares issuable upon the exercise of unvested stock options | ||||||||||||||||
| Shares issuable upon the exercise of Warrants |
||||||||||||||||
| Shares issuable upon the exchange of Class B Common Stock |
||||||||||||||||
| Shares issuable upon the exercise and exchange of Sky Incentive Units |
||||||||||||||||
| 13. |
Accumulated Other Comprehensive Income |
The following table summarizes the components of Accumulated other comprehensive income:
| Unrealized gain on Available-for-sale Securities |
Total |
|||||||
| Balance as of December 31, 2024 |
$ | $ | ||||||
| Other comprehensive income before reclassifications | ||||||||
| Amounts reclassified to other (income) expense |
( |
) | ( |
) | ||||
| Balance as of June 30, 2025 |
$ | $ | ||||||
| Unrealized gain on Available-for-sale Securities |
Total |
|||||||
| Balance as of December 31, 2023 |
$ | $ | ||||||
| Other comprehensive income before reclassifications | ||||||||
| Amounts reclassified to other (income) expense |
( |
) | ( |
) | ||||
| Balance as of June 30, 2024 |
$ | $ | ||||||
| 14. | Segment Information |
The Company has 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 June 30, 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.
| 15. | Commitments and Contingencies |
The DVT Lease requires approximately $
The PWK Lease contains a requirement that the Company must commence construction within six months of the issuance of permits and must complete construction within 18 months of construction commencement. If the Company is unable to adhere to the prescribed timeline and unable to receive an extension from PWK, the PWK Lease is subject to termination.
The SJC Lease contains customary milestones by which the Company must complete additional construction.
The ORL Lease requires that the Company construct $
The SLC Lease requires that the Company make minimum capital improvements of $
The TTN Lease requires that the Company make minimum capital improvements of $
The SWF Lease requires that the Company make minimum capital improvements of $
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
In addition to the matters described in this note, the Company is involved is various legal proceedings and claims in the ordinary course of its business. Although the Company cannot predict with certainty the ultimate resolution of these matters, which involve judgements that are inherently subjective, the Company does not expect that the ultimate disposition of such other contingencies or matters will materially affect its financial condition, results of operations or cash flows.
| 16. | 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 $
As of June 30, 2025 and December 31, 2024, the Company had loaned a total of $
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. The effective date of the agreement was September 8, 2021 and the agreement automatically renews annually. The agreement can be terminated without penalty if either party provides 35 days’ written notice, or if the aircraft is sold or otherwise disposed of. The Company is charged per flight hour of use along with all direct operating costs. Additionally, the Company will also incur the pro rata share of maintenance, overhead and insurance costs of the aircraft.
On September 19, 2024, the Company entered into an additional non-exclusive agreement with Echo Echo, LLC for the use of an Epic E1000GX aircraft. The effective date of the agreement was August 30, 2024 and the agreement automatically renews annually. The agreement can be terminated without penalty if either party provides 30 days’ written notice, or if the aircraft is sold or otherwise disposed of. Additionally, the Company is responsible for reimbursing its pro rata share of the direct operating costs of the aircraft, exclusive of maintenance and insurance.
For the three and six months ended June 30, 2025, the Company recognized $
Other Relationships
For the three and six months ended June 30, 2025, the Company recognized $
On June 1, 2025, the Company hired an individual to serve as its head of construction and president of one of its wholly-owned subsidiaries, Ascend Aviation Services (“Ascend”). Such individual was previously employed by, and continues to hold a financial interest in, a company that provides construction services to the Company (the “General Contractor”). The General Contractor was previously engaged by the Company to serve as general contractor in connection with its APA Phase I development project. During three and six months ended June 30, 2025 the Company incurred $
Ascend shares office space, equipment, and various administrative services with the General Contractor. Costs incurred by the General Contractor are allocated between Ascend and the General Contractor and are charged at cost. During three and six months ended June 30, 2025 the allocated costs from the General Contractor to Ascend were $
| MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes included elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”), as well as the information contained in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities Exchange Commission (the “SEC”) on March 27, 2025 (the “Form 10-K”), which is accessible on the SEC’s website at www.sec.gov.
Cautionary Note Regarding Forward-Looking Statements
This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “might,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to:
| • |
expectations regarding the Company’s strategies and future financial performance, including the Company’s future business plans or objectives, prospective performance and commercial opportunities and competitors, services, pricing, marketing plans, operating expenses, market trends, revenues, liquidity, cash flows and uses of cash, capital expenditures, and the Company’s ability to invest in growth initiatives; |
|
|
|
| • |
the effects of general macroeconomic conditions, including inflation, interest rate volatility, changes in trade policies (including with respect to imposed and proposed tariffs), and a prolonged recession in the national economy; |
|
|
|
| • |
our limited operating history makes it difficult to predict future revenues and operating results; |
|
|
|
| • |
our ability to implement our construction costs mitigation strategies; |
|
|
|
| • |
changes in applicable laws or regulations; |
|
|
|
| • |
the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; and |
|
|
|
| • |
our financial performance. |
The forward-looking statements contained in this Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in the Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described in the Form 10-K may not be exhaustive.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this prospectus. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this prospectus, those results or developments may not be indicative of results or developments in subsequent periods.
Overview and Background
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 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 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 $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.
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 fixed-base operators (“FBO”). 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 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 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. Unlike a service company, our revenues are mostly derived from long-term rental agreements, offering stability and forward visibility of revenues and cash flows. This allows the Company to fund its development through the public bond market, providing capital efficiency and mitigating refinance risk.
We seek to develop our home basing hangar campuses on long-term ground leases (or sub-leases thereof) at airports with suitable infrastructure serving metropolitan centers across the United States. We lease each of our properties under long-term ground leases.
The table below presents certain information with respect to our portfolio of ground leases as of June 30, 2025.
| Airport |
IATA Code |
Location (City, State) |
Location (Metropolitan Center) |
Ground Lessor |
Ground Lease Acres |
Ground Lease Exp. Year(1) |
|||||||||
| Addison Airport |
ADS |
Addison, TX |
Dallas, TX |
Town of Addison |
12.5 | 2065 | |||||||||
| Bradley International Airport |
BDL |
Windsor Locks, CT |
Hartford, CT |
Connecticut Airport Authority |
8.0 | 2075 | |||||||||
| Camarillo Airport(2) |
CMA |
Camarillo, CA |
Los Angeles, CA |
County of Ventura |
17.1 | 2073 | |||||||||
| Centennial Airport |
APA |
Englewood, CO |
Denver, CO |
Arapahoe County Public Airport Authority |
|
19.7 |
|
2097 | |||||||
| Chicago Executive Airport |
PWK |
Wheeling, IL |
Chicago, IL |
Village of Wheeling and City of Prospect Heights |
15.0 | 2075 | |||||||||
| Hillsboro Airport | HIO | Hillsboro, OR | Portland, OR | Port of Portland | 13.2 | 2072 | |||||||||
| Hudson Valley Regional Airport |
POU |
Wappingers Falls, NY |
New York, NY |
County of Duchess |
7.1 | 2066 | |||||||||
| King County International Airport (Boeing Field) | BFI | Seattle, WA | Seattle, WA | King County | 5.0 | 2026 | |||||||||
| Miami-Opa Locka Executive Airport |
OPF |
Opa Locka, FL |
Miami, FL |
Miami-Dade County |
22.6 | 2079 | |||||||||
| Nashville International Airport |
BNA |
Nashville, TN |
Nashville, TN |
Metropolitan Nashville Airport Authority |
15.2 | 2070 | |||||||||
| New York Stewart International Airport | SWF | New Windsor, NY | New York, NY | The Port Authority of New York and New Jersey | 16.0 | 2070 | |||||||||
| Orlando Executive Airport |
ORL |
Orlando, FL |
Orlando, FL |
Greater Orlando Aviation Authority |
|
20.0 |
|
2074 | |||||||
| Phoenix Deer Valley Airport |
DVT |
Phoenix, AZ |
Phoenix, AZ |
City of Phoenix |
15.4 | 2061 | |||||||||
| Salt Lake City International Airport |
SLC |
Salt Lake City, UT |
Salt Lake City, UT |
Salt Lake City Corporation |
8.4 | 2077 | |||||||||
| San José Mineta International Airport |
SJC |
San José, CA |
San José, CA |
City of San José |
6.5 | 2044 | |||||||||
| Sugar Land Regional Airport |
SGR |
Sugar Land, TX |
Houston, TX |
City of Sugar Land |
8.1 | 2049 | |||||||||
| Trenton-Mercer Airport |
TTN |
Ewing, NJ |
New York, NY - Philadelphia, PA |
County of Mercer |
11.8 | 2078 | |||||||||
| Washington Dulles International Airport |
IAD |
Dulles, VA |
Washington, DC |
Metropolitan Washington Airports Authority |
18.0 | 2084 | |||||||||
| (1) |
Ground lease expiration years presented include estimates of term commencements based on the achievement of certain milestones and assume the exercise of all lease term extension options exercisable at our sole discretion. |
| (2) |
Our portfolio at Camarillo Airport consists of two ground leases which cover 6.2 and 10.9 acres, respectively. Such leases expire in 2071 and 2073, respectively. |
The following tables provide supplemental information regarding each of our home basing hangar campus properties in operation and in development:
PROPERTIES IN OPERATION
| Facility |
Completion Date |
Hangars |
Rentable Square Footage |
% of Total Rentable Square Footage |
Occupancy at June 30, 2025 |
|||||||||||||
| SGR |
December 2020 |
7 | 66,080 | 7.5 | % |
100.0 | % | |||||||||||
| BNA |
November 2022 |
10 | 149,069 | 16.7 | % |
88.9 | % | |||||||||||
| OPF Phase I | February 2023 | 12 | 160,092 | 17.9 | % | 100.0 | % | |||||||||||
| DVT Phase I | April 2025 | 8 | 134,270 | 15.0 | % | 25.0 | % | |||||||||||
| ADS Phase I | June 2025 | 6 | 120,836 | 13.5 | % | 26.5 | % | |||||||||||
| SJC Renovation | Existing facility | 1 | 50,431 | 5.7 | % | 100.0 | % | |||||||||||
| CMA | Existing facility | 4 | 121,931 | 13.7 | % | 77.6 | % | |||||||||||
| BFI | Existing facility | 4 | 89,609 | 10.0 | % | 50.5 | % | |||||||||||
| Total/Weighted Average |
52 | 892,318 | 100.0 | % |
68.9 | % |
||||||||||||
PROPERTIES IN DEVELOPMENT
| Projected | Projected | Estimated Total | ||||
| Construction | Completion | Project Cost | Rentable | |||
| Facility |
Status |
Start (1) |
Date (1) |
($mm) (1) |
Hangars (1) |
Square Footage (1) |
| ADS Phase II | In Development | Q2 2025 | Q3 2026 | 24.6 - 28.5 | 4 | 108,320 |
| APA Phase I |
In Construction |
Q4 2022 |
Q3 2025 |
48.4 - 48.6 |
9 |
132,000 |
| APA Phase II |
Predevelopment |
Q3 2026 |
Q4 2027 |
30.4 - 33.6 |
3 |
60,945 |
| BDL Phase I | In Development | Q3 2025 | Q4 2026 | 40.0 - 42.1 | 3 | 107,360 |
| DVT Phase II |
Predevelopment |
Q2 2026 |
Q2 2027 |
34.6 - 38.6 |
6 |
132,732 |
| HIO Phase I |
In Development |
Q3 2026 |
Q4 2027 |
39.9 - 44.1 |
3 |
128,640 |
| HIO Phase II | In Development | Q4 2027 | Q4 2029 | 20.0 - 22.1 | 2 | 64,480 |
| IAD Phase I | In Development | Q2 2026 | Q3 2027 | 55.0 - 60.8 | 4 | 171,520 |
| IAD Phase II | Predevelopment | Q3 2031 | Q4 2032 | 44.7 - 49.4 | 4 | 171,520 |
| OPF Phase II |
In Construction |
Q1 2025 |
Q2 2026 |
39.3 - 39.6 |
3 |
111,720 |
| ORL Phase I | In Development | Q1 2026 | Q2 2027 | 39.5 - 43.6 | 3 | 133,640 |
| ORL Phase II | Predevelopment | Q4 2034 | Q1 2036 | 35.2 - 39.0 | 3 | 128,640 |
| POU Phase I | In Development | Q2 2026 | Q3 2027 | 38.8 - 42.8 | 2 | 85,760 |
| POU Phase II | Predevelopment | Q1 2027 | Q2 2028 | 18.3 - 20.3 | 1 | 42,880 |
| PWK Phase I | In Development | Q2 2026 | Q3 2027 | 53.6 - 59.2 | 4 | 171,520 |
| PWK Phase II | Predevelopment | TBD | TBD | TBD | TBD | TBD |
| SJC Phase II | In Development | Q2 2027 | Q1 2028 | 11.8 - 13.0 | 1 | 28,000 |
| SLC | In Development | Q1 2026 | Q1 2027 | 59.2 - 65.5 | 4 | 171,520 |
| SWF | In Development | TBD | TBD | TBD | TBD | TBD |
| TTN | In Development | Q2 2026 | Q3 2027 | 40.1 - 44.3 | 3 | 128,640 |
| Total |
673.4 - 735.1 |
62 |
2,079,837 |
| (1) |
In June 2025, we updated our estimates of the estimated total construction cost, hangars, and rentable square footage of our properties in development to reflect updates in anticipated site plans, hangar specifications, and the impact of general macroeconomic conditions. Our projections associated with the commencement and completion of construction, estimated total construction cost, hangars, and rentable square footage of our properties in development are inherently subjective and require judgement to estimate. We believe that our estimates of construction costs and timelines are subject to variability based on various factors including, but not limited to, changes in anticipated site plans, hangar mix, hangar specifications, executed guaranteed maximum price construction contracts, and general market conditions. |
Recent Developments
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 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, 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
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
When constructing our home basing hangar campuses, we use various materials, assemblies, and labor components. We contract for our materials and labor with various general contractors under guaranteed maximum price (GMP) contracts upon receipt of building permits. This allows us to mitigate certain inflationary pressures associated with increases in certain building materials and labor costs between the time construction begins at a hangar campus and the time it is completed. Typically, the materials and most of the components used to construct our hangar campuses are readily available in the United States, 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. We believe internal building fabrication will provide us opportunities to aggressively target continued schedule compression at most of our development projects in the future. In December 2023, we engaged several structural engineering firms to perform an independent peer review of the hangar buildings designed for our DVT Phase I and APA Phase I development projects. The independent peer reviews determined a significant design defect existed within our prototype hangar building designs that 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.
Our projections associated with the commencement and completion of construction, estimated total construction cost, hangars, and rentable square footage of our properties in development are inherently subjective and require judgement to estimate. We believe that our estimates of construction costs and timelines are subject to variability based on various factors including, but not limited to, changes in anticipated site plans, hangar mix, hangar specifications, executed guaranteed maximum price construction contracts, and general market conditions. During 2024 and 2025, 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, 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. We currently structure our guaranteed maximum price construction contracts with shared savings clauses to incentivize the general contractors to reduce construction costs. No assurance can be given that our cost mitigation strategies will be successful, the costs of our ongoing and future projects will not exceed budgets or the guaranteed maximum price for such projects, or that the completion will not be delayed beyond the projected completion dates.
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
We previously funded SHC with over $200 million to fund the two phases at our initial five ground leased airport locations. We maintain the ability to include up to $50 million in new projects outside the original five locations to be funded with a portion of the existing proceeds held by the trustee as long as certain approvals and supplemental consultant reports are provided showing that such new project would result in better coverage of debt service than previously contemplated projects. We exercised this ability utilizing approximately $26 million of the $50 million available and received the requisite approvals and reports in March 2023 with respect to our ADS Phase I development project.
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 $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.
The cumulative 20 airport site business plan is estimated to cost approximately $1.2 billion, with approximately 65% to 75% anticipated from private activity bonds and the balance with equity or equity-linked financing. Our ability to raise additional equity and/or debt financing will be subject to a number of risks, including our ability to obtain financing upon reasonable terms, if at all, costs of construction, delays in constructing new facilities, operating results, and other risk factors. In the event that we are unable to obtain additional financing, we may be required to raise additional equity capital, creating additional dilution to existing stockholders. There can be no assurance that we would be successful in raising such additional equity capital on favorable terms, if at all. 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:
| Metric |
Description |
| Revenue |
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. 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. 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 six months ended June 30, 2025 and 2024, we recognized expense related to ground leases of approximately $6.5 million and $3.5 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
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include assumptions used within impairment analyses, estimated useful lives of depreciable assets and amortizable costs, estimates of inputs utilized in determining the fair value of financial instruments such as warrants, estimates and assumptions related to right-of-use assets and operating lease liabilities, and estimates and assumptions used in the determination of the fair value of assets acquired and liabilities assumed in the business combination. Actual results could differ materially from those estimates.
Cost of Construction
Cost of construction on the consolidated balance sheets is carried at cost. The cost of acquiring an asset includes the costs necessary to bring a capital project to the condition necessary for its intended use. Costs are capitalized once the construction of a specific capital project is probable. Construction labor and other direct costs of construction are capitalized. Professional fees for engineering, procurement, consulting, and other soft costs that are directly identifiable with the project and are considered an incremental direct cost are capitalized. We allocate a portion of our internal salaries to both capitalized cost of construction and to general and administrative expense based on the percentage of time certain employees worked in the related areas. Interest costs on the loans and bonds used to fund the capital projects are also capitalized until the capital project is completed. Once a capital project is complete, the cost of the capital project is reclassified to Constructed Assets on the accompanying balance sheet and we begin to depreciate the constructed asset on a straight-line basis over the lesser of the life of the asset or the remaining term of the related ground lease, including expected renewal terms.
Leases
We account for leases under Accounting Standards Codification (“ASC”) Topic 842, Leases. We determine whether a contract contains a lease at the inception of the contract. ASC Topic 842 requires lessees to recognize operating lease liabilities and right-of-use (“ROU”) assets for all leases with terms of more than 12 months on the consolidated balance sheets. We have made an accounting policy election that will keep leases with an initial term of 12 months or less off our consolidated balance sheets and will result in recognizing those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. When management determines that it is reasonably certain that we will exercise our options to renew the leases, the renewal terms are included in the lease term and the resulting ROU asset and operating lease liability balances. We have elected to not capitalize any interest cost that is implicit within our operating leases into cost of construction on the consolidated balance sheet, but instead, we expense our ground lease cost in the consolidated statements of operations.
We have lease agreements with lease and non-lease components; we have elected the accounting policy to not separate lease and non-lease components for all underlying asset classes.
Revenue Recognition
We lease hangar facilities that we construct to third parties. 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. There are no options given to the lessee to purchase the underlying assets. 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.
The Company evaluates the collectability of tenant receivables for payments required under the lease agreements. If the Company determines that collectability is not probable, the Company recognizes any difference between revenue amounts recognized to date under ASC 842 and payments that have been collected from the lessee, including any additional rent or lease termination fees, as a current period adjustment to rental revenue.
Recent Accounting Pronouncements
See Note 2 — Basis of Presentation and Significant Accounting Policies in the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements including the expected dates of adoption and effects on results of operations and financial condition.
Results of Operations
Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 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 |
||||||||||||
| June 30, 2025 |
June 30, 2024 |
Change |
||||||||||
| Revenue: |
||||||||||||
| Rental revenue |
$ | 5,225 | $ | 3,174 | $ | 2,051 | ||||||
| Fuel revenue |
1,363 | 444 | 919 | |||||||||
| Total revenue |
6,588 | 3,618 | 2,970 | |||||||||
| Expenses: |
||||||||||||
| Campus operating expenses |
2,226 | 1,004 | 1,222 | |||||||||
| Fuel expenses |
923 | 82 | 841 | |||||||||
| Ground lease expenses |
3,568 | 2,253 | 1,315 | |||||||||
| Depreciation and amortization |
1,479 | 642 | 837 | |||||||||
| Pursuit and marketing expenses |
585 | 373 | 212 | |||||||||
| Employee compensation and benefits |
4,294 | 3,415 | 879 | |||||||||
| General and administrative expenses |
1,041 | 807 | 234 | |||||||||
| Total expenses |
14,116 | 8,576 | 5,540 | |||||||||
| Operating loss |
(7,528 | ) | (4,958 | ) | (2,570 | ) | ||||||
| Other (income) expense: |
||||||||||||
| Interest expense |
133 | 187 | (54 | ) | ||||||||
| Unrealized gain on warrants |
(21,801 | ) | (8,219 | ) | (13,582 | ) | ||||||
| Other income |
(216 | ) | (1,089 | ) | 873 | |||||||
| Total other (income) expense |
(21,884 | ) | (9,121 | ) | (12,763 | ) | ||||||
| Net loss |
$ | 14,356 | $ | 4,163 | $ | 10,193 | ||||||
Revenues
Rental revenues for the three months ended June 30, 2025 were approximately $5.2 million, compared to approximately $3.2 million for the three months ended June 30, 2024. The $2.0 million, or 65%, increase was primarily the result of operations at CMA, which was acquired during the three months ended December 31, 2024 and the cumulative impact of increased occupancy at our BNA, OPF, and SJC hangar campuses.
Fuel revenues for the three months ended June 30, 2025 were approximately $1.3 million, compared to approximately $0.4 million for the three months ended June 30, 2024. The approximately $0.9 million, or 207%, 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
Campus operating expenses increased approximately $1.2 million, or 122%, from approximately $1.0 million for the three months ended June 30, 2024, to approximately $2.2 million for the three months ended June 30, 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 and the acquisition of a hangar campus at CMA during December 2024. Other campus operating expenses increased approximately $0.6 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 June 30, 2025 were approximately $0.9 million, compared to approximately $0.1 million for the three months ended June 30, 2024. The approximately $0.8 million, or 1,026%, increase was primarily the result of our acquisition of CMA 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 $1.3 million, or 59%, from approximately $2.3 million for the three months ended June 30, 2024, to approximately $3.6 million for the three months ended June 30, 2025. The increase in ground lease expense was driven by the ground leases signed at SLC during the three months ended September 30, 2024, the ground leases assumed as part of the CMA Transaction during the three months ended December 31, 2024, and the ground leases signed at SWF and HIO during the three months ended June 30, 2025.
Depreciation and amortization increased approximately $0.8 million, or 130%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The increase was primarily driven by our acquisition of a hangar campus at CMA during the three months ended December 31, 2024 and the commencement of operations at our DVT campus during the three months ended June 30, 2025.
Operating Expenses - Continued
Pursuit and marketing expenses for the three months ended June 30, 2025 were approximately $0.6 million, compared to approximately $0.4 million for the three months ended June 30, 2024. The approximately $0.2 million, or 57%, 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 $0.9 million, or 26%, to $4.3 million for the three months ended June 30, 2025, as compared to approximately $3.4 million for the three months ended June 30, 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 $0.7 million, and non-cash equity compensation expense increased approximately $0.2 million.
For the three months ended June 30, 2025 and 2024, other general and administrative expenses were approximately $1.0 million and approximately $0.8 million, respectively. The approximately $0.2 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 income increased from approximately $9.1 million of income for the three months ended June 30, 2024, to approximately $21.9 million of income for the three months ended June 30, 2025. This increase was primarily due to an approximately $13.6 million difference in the mark-to-market adjustment of the outstanding warrants at June 30, 2025 as compared to June 30, 2024 offset by an approximately $0.9 million decrease in other income driven by a reduction in interest income earned from investments in U.S. Treasuries.
Six months ended June 30, 2025 Compared to the Six months ended June 30, 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).
| Six months ended |
||||||||||||
| June 30, 2025 |
June 30, 2024 |
Change |
||||||||||
| Revenue: |
||||||||||||
| Rental revenue |
$ | 9,685 | $ | 5,312 | $ | 4,373 | ||||||
| Fuel revenue |
2,495 | 710 | 1,785 | |||||||||
| Total revenue |
12,180 | 6,022 | 6,158 | |||||||||
| Expenses: |
||||||||||||
| Campus operating expenses |
4,109 | 1,783 | 2,326 | |||||||||
| Fuel expenses |
1,657 | 155 | 1,502 | |||||||||
| Ground lease expenses |
6,472 | 3,484 | 2,988 | |||||||||
| Depreciation and amortization |
2,578 | 1,271 | 1,307 | |||||||||
| Pursuit and marketing expenses |
1,165 | 727 | 438 | |||||||||
| Employee compensation and benefits |
8,533 | 7,006 | 1,527 | |||||||||
| General and administrative expenses |
2,018 | 1,778 | 240 | |||||||||
| Total expenses |
26,532 | 16,204 | 10,328 | |||||||||
| Operating loss |
(14,352 | ) | (10,182 | ) | (4,170 | ) | ||||||
| Other (income) expense: |
||||||||||||
| Interest expense |
271 | 381 | (110 | ) | ||||||||
| Unrealized loss on warrants |
(19,274 | ) | 7,969 | (27,243 | ) | |||||||
| Other income |
(579 | ) | (1,496 | ) | 917 | |||||||
| Total other (income) expense |
(19,582 | ) | 6,854 | (26,436 | ) | |||||||
| Net loss |
$ | 5,230 | $ | (17,036 | ) | $ | 22,266 | |||||
Revenues
Rental revenues for the six months ended June 30, 2025 were approximately $9.7 million, compared to approximately $5.3 million for the six months ended June 30, 2024. The $4.4 million, or 82%, increase was primarily the result of operations at CMA, which was acquired during the three months ended December 31, 2024 and the cumulative impact of increased occupancy at our BNA, OPF, and SJC hangar campuses.
Fuel revenues for the six months ended June 30, 2025 were approximately $2.5 million, compared to approximately $0.7 million for the six months ended June 30, 2024. The approximately $1.8 million, or 251%, 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
Campus operating expenses increased approximately $2.3 million, or 130%, from approximately $1.8 million for the six months ended June 30, 2024, to approximately $4.1 million for the six months ended June 30, 2025. Salaries, wages, and benefits associated with our hangar campus personnel increased approximately $1.2 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 $1.1 million, primarily driven by increased insurance, property taxes, and utilities associated with operations at CMA where our operations commenced in December 2024, and start-up expenses associated with our DVT, APA, and ADS hangar campuses .
Fuel expenses for the six months ended June 30, 2025 were approximately $1.7 million, compared to approximately $0.2 million for the six months ended June 30, 2024. The approximately $1.5 million, or 969%, increase was primarily the result of our acquisition of CMA 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 $3.0 million, or 86%, from approximately $3.5 million for the six months ended June 30, 2024, to approximately $6.5 million for the six months ended June 30, 2025. The increase in ground lease expense was driven primarily by expense recognized associated with the ground lease signed at IAD during the three months ended June 30, 2024, SLC during the three months ended September 30, 2024, the ground leases assumed as part of the CMA Transaction during the three months ended December 31, 2024, and the ground leases signed at SWF and HIO during the three months ended June 30, 2025.
Depreciation and amortization increased approximately $1.3 million, or 103%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The increase was primarily driven by our acquisition of a hangar campus at CMA during the three months ended December 31, 2024 and the commencement of operations at our DVT campus during the three months ended June 30, 2025.
Operating Expenses - Continued
Pursuit and marketing expenses for the six months ended June 30, 2025 were approximately $1.1 million, compared to approximately $0.7 million for the six months ended June 30, 2024. The approximately $0.4 million, or 58%, 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 $1.5 million, or 22%, to $8.5 million for the six months ended June 30, 2025, as compared to approximately $7.0 million for the six months ended June 30, 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 $1.0 million, and non-cash equity compensation expense increased approximately $0.5 million.
For the six months ended June 30, 2025 and 2024, other general and administrative expenses were approximately $2.0 million and approximately $1.8 million, respectively. The approximately $0.2 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 income increased from approximately $6.9 million of expense for the six months ended June 30, 2024, to approximately $19.6 million of income for the six months ended June 30, 2025. This increase was primarily due to an approximately $27.2 million difference in the mark-to-market adjustment of the outstanding warrants at June 30, 2025 as compared to June 30, 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 | Six months ended |
|||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 |
June 30, 2024 |
|||||||||||||
| Net income (loss) |
$ | 14,356 | $ | 4,163 | $ | 5,230 | $ | (17,037 | ) | |||||||
| Add (subtract): |
||||||||||||||||
| Depreciation and amortization |
1,479 | 642 | 2,578 | 1,271 | ||||||||||||
| Interest expense |
133 | 187 | 271 | 381 | ||||||||||||
| Other income | (216 | ) | (1,089 | ) | (579 | ) | (1,496 | ) | ||||||||
| Changes in fair value of warrant liabilities |
(21,801 | ) | (8,219 | ) | (19,274 | ) | 7,969 | |||||||||
| Equity-based compensation |
1,323 | 1,076 | 2,561 | 2,108 | ||||||||||||
| Non-cash operating lease expense |
1,867 | 1,141 | 3,348 | 1,940 | ||||||||||||
| Non-cash operating lease income |
(157 | ) | 36 | (465 | ) | 17 | ||||||||||
| Adjusted EBITDA |
$ | (3,016 | ) | $ | (2,063 | ) | $ | (6,330 | ) | $ | (4,847 | ) | ||||
Liquidity and Capital Resources
Overview
Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund the construction of new assets, fund working capital and other general business needs. Our primary sources of cash include the potential issuance of equity and debt securities and rental payments from tenants. Our long-term liquidity requirements include lease payments under our ground leases with airport authorities, repaying principal and interest on outstanding borrowings, funding the construction costs of our hangar campus development projects (see “— Construction Material Costs and Labor”), funding for operations, and paying accrued expenses.
We believe that we have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional private activity bonds and other debt and the issuance of additional equity securities. We also have the ability to utilize our ATM Facility (as defined below) 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. Our ability to incur additional debt will depend on multiple factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that are or may be imposed by future lenders. Our ability to access the equity and debt capital markets will depend on multiple factors as well, including general market conditions for real estate companies, our degree of leverage, the trading price of our common stock and debt and market perceptions about our Company.
Our cash deposits may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and the majority are maintained with a major financial institution with reputable credit. Our restricted cash is held in trust at a major financial institution pursuant to the Series 2021 Bonds indenture. We monitor the relative credit standing of financial institutions with whom we transact and limit the amount of credit exposure with any one entity. Our portfolio of investments and restricted investments is composed entirely of U.S. Treasury securities as of June 30, 2025.
The following table summarizes our cash and cash equivalents, restricted cash, investments, and restricted investments as of June 30, 2025 and December 31, 2024 (in thousands):
| June 30, 2025 | December 31, 2024 |
|||||||
| Cash and cash equivalents |
$ | 8,610 | $ | 42,442 | ||||
| Restricted cash |
23,495 | 51,917 | ||||||
| Investments |
30,999 | 18,987 | ||||||
| Restricted investments | 11,457 | 13,816 | ||||||
| Total cash, restricted cash, investments, and restricted investments | $ | 74,561 | $ | 127,162 | ||||
2024 Private Placement and Securities Purchase Agreement
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 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
On March 27, 2024, we entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with B. Riley Securities, Inc. (“B. Riley”) with respect to an “at the market” offering program (the “ATM Facility”), under which we may, from time to time, at our sole discretion, issue and sell through B. Riley, acting as sales agent, up to $100 million of shares of Class A Common Stock. Pursuant to the ATM Agreement, we may sell the shares through B. Riley by any method permitted that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act. B. Riley will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon instructions from us, including any price or size limits or other customary parameters or conditions we may impose. We will pay B. Riley a commission of 3.0% of the gross sales price per share sold under the ATM Agreement, subject to certain reductions. During the three and six months ended June 30, 2025, we sold 20,472 shares of Class A Common Stock under the ATM Facility at a weighted-average sales price of $13.70. 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 $98.6 million in remaining capacity under our ATM Facility.
We are not obligated to sell any shares under the ATM Agreement. The offering of shares pursuant to the ATM Agreement will terminate upon the earlier to occur of (i) the issuance and sale, through B. Riley, of all of the shares subject to the ATM Agreement and (ii) termination of the ATM Agreement in accordance with its terms. We have made limited sales under the ATM Facility to date and will only do so when our stock price is at prices our board of directors deems appropriate.
Private Activity Bonds
On September 14, 2021, SHC completed an issuance through the Public Finance Authority (Wisconsin) of $166.3 million of Senior Special Facility Revenue Bonds (Aviation Facilities Project), Series 2021 (the “PABs”). The PABs are comprised of three maturities: $21.1 million bearing interest at 4.00%, due July 1, 2036; $30.4 million bearing interest at 4.00%, due July 1, 2041; and $114.8 million bearing interest at 4.25%, due July 1, 2054. The Series 2021 Bond that has a maturity date of July 1, 2036 was issued at a premium, and Sky received bond proceeds that were $0.2 million above its face value. The net proceeds from the issuance of the PABs proceeds are being used to (a) finance or refinance the construction of various aviation facilities consisting of general aviation aircraft hangars and storage facilities located and to be located on the SGR site, the OPF site, the BNA site, the APA site, and the DVT site; (b) fund debt service and other operating expenses such as ground lease expense during the initial construction period; (c) fund deposits to the Debt Service Reserve Fund; and (d) pay certain costs of issuance related to the PABs.
Debt Covenants
The PABs contain financial and non-financial covenants, including a debt service coverage ratio, a restricted payments test and limitations on the sale, lease, or distribution of assets. To the extent that SHC does not comply with these covenants, an event of default or cross-default may occur under one or more agreements, and we or our subsidiaries may be restricted in our ability to pay dividends, issue new debt or access our leased facilities. The PABs are collateralized on a joint and several basis with the property and revenues of all SHC subsidiaries and their assets financed or to be financed from the proceeds of the PABs.
Covenants in the PABs require SHC to maintain a debt service coverage ratio (as defined in the relevant documents) of at least 1.25 for each applicable test period, commencing with the quarter ending December 31, 2024. The PABs are subject to a Continuing Disclosure Agreement whereby SHC is obligated to provide electronic copies of (i) monthly construction reports, (ii) quarterly reports containing quarterly financial information of SHC and (iii) annual reports containing audited consolidated financial statements of SHC to the Municipal Securities Rulemaking Board. As of June 30, 2025, we were in compliance with all debt covenants.
Lease Commitments
The Company’s future minimum lease payments required under leases as of June 30, 2025 were as follows:
| Year Ending December 31, |
Operating Leases |
Finance Leases |
||||||
| 2025 (remainder of year) |
$ | 3,231 | $ | 12 | ||||
| 2026 |
7,143 | 17 | ||||||
| 2027 |
8,504 | 2 | ||||||
| 2028 |
9,701 | - | ||||||
| 2029 |
10,249 | - | ||||||
| Thereafter |
580,613 | - | ||||||
| Total lease payments |
619,441 | 31 | ||||||
| Less imputed interest |
(444,071 | ) | (1 | ) | ||||
| Total |
$ | 175,370 | $ | 30 | ||||
Off-Balance Sheet Arrangements
We do not maintain any off-balance sheet arrangements.
Cash Flows
The following table summarizes our sources and uses of cash for the six months ended June 30, 2025 and 2024 (in thousands):
| Six months ended |
||||||||
| June 30, 2025 |
June 30, 2024 |
|||||||
| Cash and restricted cash at beginning of period |
$ | 94,359 | $ | 72,266 | ||||
| Net cash used in operating activities |
(5,994 | ) | (5,472 | ) | ||||
| Net cash (used in) provided by investing activities |
(54,803 | ) | 54,535 | |||||
| Net cash (used in) provided by financing activities |
(1,457 | ) | 975 | |||||
| Cash and restricted cash at end of period |
$ | 32,105 | $ | 122,304 | ||||
Operating Activities
Net cash used in operating activities was approximately $6.0 million for the six months ended June 30, 2025, as compared to cash used in operating activities of approximately $5.5 million for the same period in 2024. The $0.5 million increase in cash used in operating activities was primarily attributable to an approximately $2.1 million increase in net loss, net of non-cash adjustments and an approximately $1.6 million favorable 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 favorable change in working capital was primarily driven by the timing of collections of accounts receivable as well as spending commitments and payments of our accounts payable and other accrued expenses.
Investing Activities
Our primary investing activities have consisted of payments related to the cost of construction at our various hangar campus development projects and investment in U.S. Treasury Securities. As our business expands, we expect to continue to invest in our current and anticipated future portfolio of hangar campus development projects.
Net cash used in investing activities was approximately $54.8 million for the six months ended June 30, 2025, as compared to cash provided by investing activities of approximately $54.5 million for the same period in 2024. The decrease of approximately $109.3 million of cash provided by investing activities was driven primarily by a decrease in proceeds received from held-to-maturity investments of approximately $69.1 million, an increase of capital expenditures of approximately $27.0 million, and an approximately $12.4 million increase in purchases of available for sale investments for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.
Financing Activities
Our primary financing activities have consisted of capital raised to fund the growth of our business and proceeds from debt obligations incurred to finance our hangar campus development projects. We expect to raise additional equity capital and issue additional indebtedness as our business grows.
Net cash used in financing activities was approximately $1.5 million for the six months ended June 30, 2025, as compared to net cash provided by financing activities of approximately $1.0 million for the same period in 2024. The approximately $2.5 million increase in net cash used in financing activities was primarily driven by a decrease of $3.0 million in proceeds received from the exercise of Warrants during the six months ended June 30, 2024.
| QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information under this item.
| CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
In connection with the preparation of this Form 10-Q, as required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2025. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the three months ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
| LEGAL PROCEEDINGS |
The Company is not currently a party to any material legal proceedings.
| RISK FACTORS |
There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
| UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
During the three months ended June 30, 2025, there were no unregistered sales of the Company’s securities that were not reported in a Current Report on Form 8-K.
| DEFAULTS UPON SENIOR SECURITIES |
Not applicable.
| MINE SAFETY DISCLOSURES |
Not applicable.
| OTHER INFORMATION |
During the three months ended June 30, 2025, director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K
| EXHIBITS |
| (a) |
See accompanying Exhibit Index included before the signature page of this report for a list of exhibits filed or furnished with this report. |
| Incorporated by Reference | ||||||||||
| Exhibit |
Description |
Schedule/ |
File No. |
Exhibit |
Filing Date |
|||||
| 3.1 |
Second Amended and Restated Certificate of Incorporation of Yellowstone Acquisition Company. |
8-K |
001-39648 |
3.1 |
January 31, 2022 |
|||||
| 3.2 |
8-K |
001-39648 |
3.2 |
January 31, 2022 |
||||||
| 101.INS (#) |
Inline XBRL Instance Document. |
|
| 101.SCH (#) |
Inline XBRL Taxonomy Extension Schema Document. |
|
| 101.CAL (#) |
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
|
| 101.DEF (#) |
Inline XBRL Taxonomy Extension Definition. |
|
| 101.LAB (#) |
Inline XBRL Taxonomy Extension Label Linkbase Document. |
|
| 101.PRE (#) |
Inline XBRL Taxonomy Presentation Linkbase Document. |
| 104 (#) |
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
| (#) |
Filed herewith. |
|
| (##) |
The certifications attached as Exhibits 32.1 and 32.2 that accompany this Report, are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Sky Harbour Group Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report irrespective of any general incorporation language contained in such filing. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SKY HARBOUR GROUP CORPORATION (Registrant) |
|||
| By: |
/s/ Tal Keinan |
||
| Tal Keinan Chief Executive Officer (Principal Executive Officer) |
|||
| August 12, 2025 | |||
| By: |
/s/ Francisco Gonzalez |
||
| Francisco Gonzalez Chief Financial Officer (Principal Financial Officer) |
|||
| August 12, 2025 | |||
| By: |
/s/ Michael W. Schmitt |
||
| Michael W. Schmitt Chief Accounting Officer (Principal Accounting Officer) |
|||
| August 12, 2025 | |||