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What changed in Sky Harbour Group Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Sky Harbour Group Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+297 added−310 removedSource: 10-K (2025-03-27) vs 10-K (2024-03-27)

Top changes in Sky Harbour Group Corp's 2024 10-K

297 paragraphs added · 310 removed · 187 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

28 edited+7 added−78 removed27 unchanged
Biggest changePROPERTIES IN OPERATION Facility Completion Date ​ Hangars Rentable Square Footage % of Total Rentable Square Footage Occupancy at December 31, 2023 SGR December 2020 7 66,080 17.6 % 93.9 % BNA November 2022 10 149,069 39.7 % 90.9 % OPF Phase I February 2023 12 160,092 42.7 % 62.5 % Total/Weighted Average ​ 29 ​375,241 100.0 % 79.3 % PROPERTIES IN DEVELOPMENT Facility Status ​ Scheduled Construction Start ​ Scheduled Completion Date Estimated Total Construction Cost ($mm) Hangars Square Footage ADS Phase I In Construction Q4 2023 Q1 2025 32.9 - 34.9 6 115,506 ADS Phase II Predevelopment Q1 2025 Q1 2026 23.3 - 29.3 3 96,873 APA Phase I In Construction Q4 2022 Q4 2024 44.8 - 50.8 9 130,550 APA Phase II Predevelopment Q1 2025 Q2 2026 28.6 - 33.2 5 109,189 BDL Phase I Predevelopment Q2 2025 Q3 2026 26.6 - 30.8 3 101,400 DVT Phase I In Construction Q4 2022 Q1 2025 48.3 - 53.6 8 134,270 DVT Phase II Predevelopment Q4 2024 Q1 2026 28.2 - 32.8 6 125,556 OPF Phase II Predevelopment Q4 2024 Q1 2026 28.1 - 32.7 5 107,966 POU Predevelopment Q1 2025 Q2 2026 26.6 - 30.8 3 101,400 PWK Phase I Predevelopment Q1 2025 Q1 2026 39.7 - 45.6 5 149,400 Total $ 327.1 - 374.7 53 1,172,110 Each constructed facility is expected to consist of clusters of hangars comprising at least 100,000 rentable square feet.
Biggest changeSuch leases expire in 2071 and 2073, respectively. 9 Table of Contents 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 December 31, 2024 SGR December 2020 7 66,080 12.3 % 100.0 % BNA November 2022 10 149,069 27.7 % 91.6 % OPF Phase I February 2023 12 160,092 29.7 % 100.0 % SJC Renovation Existing facility 1 41,464 7.7 % 100.0 % CMA Existing facility 4 121,931 22.6 % 77.6 % Total/Weighted Average 34 538,636 100.0 % 92.6 % PROPERTIES IN DEVELOPMENT Facility Status ​ Projected Construction Start (1) ​ Projected Completion Date (1) Estimated Total Construction Cost ($mm) (1) Hangars (1) Rentable Square Footage (1) ADS Phase I In Construction Q4 2023 Q2 2025 $ 32.9 - 34.9 6 137,835 ADS Phase II Predevelopment Q2 2025 Q3 2026 21.3 - 25.2 4 116,420 APA Phase I In Construction Q4 2022 Q2 2025 44.8 - 50.8 9 130,550 APA Phase II Predevelopment Q4 2026 Q1 2028 34.3 - 38.3 3 107,135 BDL Phase I Predevelopment Q2 2025 Q3 2026 26.8 - 33.1 3 125,400 DVT Phase I In Construction Q4 2022 Q1 2025 51.3 - 56.6 8 134,270 DVT Phase II Predevelopment Q1 2027 Q2 2028 34.6 - 38.6 6 123,646 IAD Phase I Predevelopment Q4 2025 Q1 2027 61.6 - 67.3 4 206,800 IAD Phase II Predevelopment TBD TBD TBD TBD TBD OPF Phase II In Construction Q1 2025 Q2 2026 34.1 - 36.8 3 155,100 ORL Phase I Predevelopment Q3 2025 Q4 2026 36.8 - 41.5 3 155,100 ORL Phase II Predevelopment TBD TBD TBD TBD TBD POU Phase I Predevelopment Q2 2025 Q2 2026 29.6 - 33.1 2 103,400 POU Phase II Predevelopment Q3 2026 Q3 2027 14.8 - 16.5 1 51,700 PWK Phase I Predevelopment Q2 2026 Q2 2027 85.8 - 90.1 4 206,800 SJC Phase II Predevelopment Q2 2026 Q2 2027 21.0 - 24.0 1 28,235 SLC Predevelopment Q3 2025 Q3 2026 44.9 - 49.7 4 206,800 TTN Predevelopment Q4 2025 Q4 2026 44.4 - 49.6 3 171,300 Total $ 619.0 - 686.1 64 2,160,491 (1) Our projections associated with the commencement and completion of construction, estimated total construction cost as of December 31, 2024, hangars, and rentable square footage of our properties in development are inherently subjective and require judgement to estimate.
We expect to realize economies of scale in construction through a prototype hangar design replicated at 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.
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.
Although our tenants are generally responsible for all maintenance and repairs of the property pursuant to our leases, including compliance with the ADA and other similar laws or regulations, we could be held liable as the owner of the property for a failure of one of our tenants to comply with these laws or regulations. 14 Table of Contents Environmental Matters Our properties are subject to numerous statutes, rules and regulations relating to environmental protection and our business is exposed to various environmental risks, hazards, and environmental protection requirements, including those related to the storage and handling of jet fuel and compliance with firefighting regulations.
Although our tenants are generally responsible for all maintenance and repairs of the property pursuant to our leases, including compliance with the ADA and other similar laws or regulations, we could be held liable as the owner of the property for a failure of one of our tenants to comply with these laws or regulations. 12 Table of Contents Environmental Matters Our properties are subject to numerous statutes, rules and regulations relating to environmental protection and our business is exposed to various environmental risks, hazards, and environmental protection requirements, including those related to the storage and handling of jet fuel and compliance with firefighting regulations.
Legal Proceedings We may be involved from time to time in ordinary litigation, negotiation, and settlement matters that will not have a material effect on our operations or finances.
Legal Proceedings We may be involved from time to time in ordinary litigation, negotiation, and settlement matters that we expect will not have a material effect on our operations or finances.
The information on our website is not, and shall not be deemed to be, part of this Report or incorporated into any other filings we make with the SEC, except as shall be expressly set forth by specific reference in any such filings. 15 Table of Contents
The information on our website is not, and shall not be deemed to be, part of this Report or incorporated into any other filings we make with the SEC, except as shall be expressly set forth by specific reference in any such filings. 13 Table of Contents
Overview We are an aviation infrastructure development company building the first nationwide network of home basing hangar campuses for business aircraft. We develop, lease and manage general aviation hangars across the United States, targeting airfields in markets with significant aircraft populations and high hangar demand.
ITEM 1. BUSINESS Overview 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.
As the fleet of private jets in the United States continues to grow, with recent new aircraft deliveries exceeding retirements, demand for hangar space is at a premium in part because new jets require more square footage of hangar space and the pace of new hangar construction has lagged behind the demand.
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 Sky Harbour Academy aims to provide assistance with placement in aviation jobs, including full-time roles at Sky Harbour. Human capital strategies are developed and managed by our Chief Financial Officer, who reports to the Chief Executive Officer, and are overseen by the compensation committee and the Board.
The Sky Harbour Academy aims to provide assistance with placement in aviation jobs, including full-time roles and career development tracks at Sky Harbour. Human capital strategies are developed and managed by our Chief Financial Officer, who reports to the Chief Executive Officer, and are overseen by the compensation committee and the Board.
Base lease rents vary by location, but all leases feature annual rent escalation. Leases are structured as either gross or triple-net, with tenants covering insurance, taxes and utilities. The tenant leases generally do not have early termination options, and we expect renewals to be reset to prevailing fair market value.
Base lease rents vary by location, but substantially all leases feature annual rent escalation. Leases are structured as either gross or triple-net, with tenants covering insurance, taxes, common area maintenance, and utilities. The tenant leases generally do not have early termination options, and we expect renewals to be reset to prevailing fair market value.
This allows the Company to fund its development through the public bond market, providing capital efficiency and mitigating refinance risk. 7 Table of Contents In contrast with community hangars and other facilities provided by FBOs, the home basing hangar campuses we develop provide the following features and services: • private hangar space for exclusive use of the tenant; • adjoining configurable lounge and office suites; • line crews and services dedicated exclusively to tenants; • climate control to mitigate condensation and associated corrosion; • features to support in-hangar aircraft maintenance; • no-foam fire suppression; and • customized software to provide security, control access and monitor hangar space.
This allows the Company to fund its development through the public bond market, providing capital efficiency and mitigating refinance risk. 7 Table of Contents In contrast with community hangars and other facilities provided by FBOs, the home basing hangar campuses we develop provide the following features and services: • private hangar space for exclusive or semi-exclusive use of the tenant; • adjoining configurable lounge and office suites; • low-traffic campus environments free of transient aircraft and associated activities; • line crews and services dedicated exclusively to tenants; • climate control to mitigate condensation and associated corrosion; • features to support in-hangar aircraft maintenance; • no-foam fire suppression; and • customized software to provide security, control access and monitor hangar space.
Our executive management team regularly review and update our talent strategy, monitoring a variety of data, including turnover, diversity, and tenure, to design and implement effective recognition, training, development, succession, and benefit programs to meet the needs of our business and our employees.
Our executive management team regularly reviews and updates our talent strategy, monitoring a variety of data, including turnover, diversity, and tenure, to design and implement effective recognition, training, development, succession, and benefit programs to meet the needs of our business and our employees.
We require the tenants at our campuses to maintain aircraft physical damage, general liability, worker's compensation, and automobile liability insurance coverage. Human Capital As of December 31, 2023, we had 35 employees and 13 independent contractors, none of which were subject to collective bargaining agreements. We also engage consultants to supplement our permanent workforce.
We require the tenants at our campuses to maintain aircraft physical damage, general liability, worker's compensation, and automobile liability insurance coverage. Human Capital As of December 31, 2024, we had 84 employees, none of which were subject to collective bargaining agreements. We also engage contractors and consultants to supplement our permanent workforce.
Each Sky Harbour home basing hangar campus features the Sky Harbour Academy training program, which includes paid training for a career in the aviation industry. The Sky Harbour Academy recruits members of disadvantaged and underrepresented communities with an interest in aviation, ultimately providing such members full training and certification as line service technicians and customer service representatives.
Many Sky Harbour home basing hangar campuses feature the Sky Harbour Academy training program, which includes paid training for a career in the aviation industry. The Sky Harbour Academy recruits members of disadvantaged and underrepresented communities with an interest in aviation, ultimately providing such members full training and certification as line service technicians and customer service representatives.
The cumulative square footage of the business aircraft fleet in the United States increased 50% between 2010 and 2021. Moreover, over that same period, there was an 81% increase in the square footage of larger private jets – those with greater than a 24-foot tail height.
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.
See “ Risk Factors — Our rental income is initially concentrated within a small number of tenants and the loss of or default by one or more significant tenants could have a material adverse effect on our business and results of operations. ” Tenant lease terms are generally 1-10 years, with maturity dates staggered for purposes of risk management.
See “ Risk Factors — Our rental revenue in the past has been concentrated within a small number of tenants and the loss of or default by one or more significant tenants could have a material adverse effect on our business and results of operations. ” Tenant lease terms are generally 1-10 years, with maturity dates staggered for purposes of risk management.
We believe demand for home basing hangar campuses will be driven broadly by the growing size of the business aviation fleet in the United States and the delivery of larger aircraft with taller tail heights.
We believe demand for home basing hangar campuses will be driven broadly by the growing size of the business aviation fleet in the United States and the delivery of larger aircraft with taller tail heights, as well as the privacy and security inherent at our hangar campuses in comparison to operations focused on transient and commercial aircraft.
Our research has indicated our current and typical future tenants operate late model business jets that emit less noise than other based aircraft, leading to a decreased average noise footprint at our home basing hangar campuses.
We believe that with no transient traffic, our home basing hangar campuses offer a shorter time to wheels-up, even during periods of peak traffic. Our research has indicated our current and typical future tenants operate late model business jets that emit less noise than other based aircraft, leading to a decreased average noise footprint at our home basing hangar campuses.
We have not received notice requiring us to cease operations at any location or of any abatement proceeding by any government agency for failure to comply with applicable environmental laws and regulations.
We do not expect that compliance and related remediation work, if any, will have a material negative impact on our business. We have not received notice requiring us to cease operations at any location or of any abatement proceeding by any government agency for failure to comply with applicable environmental laws and regulations.
The discovery by first-time flyers in the convenience, control and comfort of general aviation has caused a shift in consumer behavior which we believe will also support increasing demand for home basing hangar campuses.
The discovery by first-time flyers in the convenience, control and comfort of general aviation has caused a shift in consumer behavior which we believe will also support increasing demand for home basing hangar campuses. 8 Table of Contents Our Properties We 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.
A recent study conducted by a business aircraft manufacturer forecasted that business aircraft will only continue to grow in the next ten years, with up to 8,500 new business jet deliveries worth over $275 billion expected to be delivered between 2024 and 2033, further supported by data from the major business aviation manufacturers that suggest the current order backlog for new business aviation aircraft is over $49 billion.
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.
Seasonality We do not experience substantial seasonal fluctuations in our revenues and the results of operations. Government Regulation FAA Regulation The industry is overseen primarily by the FAA. In addition, the Department of Homeland Security, Department of Transportation, Environmental Protection Agency, state and local environmental agencies, and local airport authorities contribute to the regulation of our home basing hangar campuses.
With respect to our ongoing hangar leasing operations, we do not experience substantial seasonal fluctuations in our revenues and the results of operations. Government Regulation FAA Regulation The industry is overseen primarily by the FAA.
Our product strategy aims to attract tenants with exclusive access to their aircraft, minimize the risk of damage to aircraft, provide increased access, security and control, facilitate maintenance, and improve pre-flight and post-flight convenience. We believe that with no transient traffic, our home basing hangar campuses offer a shorter time to wheels-up, even during periods of peak traffic.
Our product strategy aims to attract tenants with exclusive or semi-exclusive access to their aircraft, minimize the risk of damage to aircraft, provide increased access, security and control, facilitate maintenance, and improve pre-flight and post-flight convenience for owners, operators, and their support crews.
We intend to develop a diversified portfolio of tenants in terms of geography, type of tenant and length of lease term.
We intend to develop a diversified portfolio of tenants in terms of geography, type of tenant and length of lease term. Prior to the year ended December 31, 2024, much of our historical revenue had been concentrated with our two largest tenants.
While much of our historical revenue has been concentrated with our two largest tenants, longer term, we do not expect to depend on a single tenant or group of tenants, the loss of which would have a material adverse effect on our business.
Both presently and in the longer term, we do not expect to depend on a single tenant or group of tenants, the loss of which would have a material adverse effect on our business. We expect to continue to diversify our risk by having multiple types of tenants across multiple locations with varied term lengths throughout the country.
The physical footprint of the U.S. business aviation fleet grew by almost 28 million square feet in the ten years preceding the beginning of the COVID-19 pandemic, with hangar supply lagging dramatically, especially in key growth markets.
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.
We must comply with federal, state, and local environmental statutes, and regulations, including those associated in part with the operation of fuel storage tank systems and fuel trucks. These requirements include, among others, tank and pipe testing for tightness, soil sampling for evidence of leaking, and remediation of detected leaks and spills.
In addition, the Department of Homeland Security, Department of Transportation, Environmental Protection Agency, state and local environmental agencies, and local airport authorities contribute to the regulation of our home basing hangar campuses. We must comply with federal, state, and local environmental statutes, and regulations, including those associated in part with the operation of fuel storage tank systems and fuel trucks.
Environmental and Related Matters Our home basing hangar campuses are subject to regular inspection by local environmental agencies, as well as local fire marshals and other agencies. We do not expect that compliance and related remediation work, if any, will have a material negative impact on our business.
These requirements include, among others, tank and pipe testing for tightness, soil sampling for evidence of leaking, and remediation of detected leaks and spills. Environmental and Related Matters Our home basing hangar campuses are subject to regular inspection by local environmental agencies, as well as local fire marshals and other agencies.
Total Operations Forecasted Total Operations Average Annual 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Growth Addison Airport (ADS) 121,937 109,915 114,295 120,256 119,149 120,934 129,153 136,832 144,056 144,441 2.0 % Bradley International Airport (BDL) 91,383 58,142 72,807 79,385 79,626 78,153 80,947 81,339 85,445 86,921 0.8 % Centennial Airport (APA) 349,949 331,001 310,861 300,558 360,725 357,126 363,815 370,853 377,596 379,082 1.1 % Chicago Executive Airport (PWK) 74,204 77,377 99,795 97,456 98,111 99,322 99,513 99,703 99,898 100,093 3.7 % Hudson Valley Regional Airport (POU) 44,412 43,206 58,306 60,403 58,935 55,924 56,006 56,089 56,173 56,256 3.2 % Miami-Opa Locka Executive Airport (OPF) 170,067 134,683 163,215 157,286 173,897 173,218 182,009 182,984 183,971 184,970 1.5 % Nashville International Airport (BNA) 234,964 163,365 219,427 251,446 271,842 281,810 286,620 293,114 299,488 306,013 4.3 % Phoenix Deer Valley Airport (DVT) 456,790 402,444 271,979 275,153 344,393 381,169 426,303 432,230 439,063 440,614 0.9 % Sugar Land Regional Airport (SGR) 74,509 66,502 72,409 79,662 87,048 87,130 87,333 87,537 87,741 87,949 2.1 % Sources: Historic data derived from FAA OPSNET and forecast data from FAA TAF. 10 Table of Contents Addison Airport (ADS) The Airport.
The following table summarizes the total aircraft operations and forecasted total aircraft operations from 2020 through 2029 at each of our home basing hangar campus properties and development projects: Total Operations Forecasted Total Operations Average Annual 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Growth Addison Airport (ADS) 109,915 114,295 120,256 119,149 119,100 126,182 131,533 137,116 143,352 145,348 3.2 % Bradley International Airport (BDL) 58,142 72,807 79,385 79,626 83,238 90,381 91,870 93,261 94,696 95,974 6.0 % Camarillo Airport (CMA) 158,782 173,970 187,076 170,566 180,162 183,216 184,005 184,797 185,592 186,391 1.9 % Centennial Airport (APA) 331,001 310,861 300,558 360,725 340,411 353,641 360,640 367,636 374,108 379,174 1.8 % Chicago Executive Airport (PWK) 77,377 99,795 97,456 98,111 98,551 97,922 98,569 99,217 99,864 100,512 3.3 % Hudson Valley Regional Airport (POU) 43,206 58,306 60,403 58,935 79,227 79,824 81,092 82,363 83,638 84,915 8.6 % Miami-Opa Locka Executive Airport (OPF) 134,683 163,215 157,286 173,897 140,955 153,387 167,305 174,221 180,645 183,024 4.0 % Nashville International Airport (BNA) 163,365 219,427 251,446 271,842 275,116 278,841 285,345 291,760 298,633 305,381 7.6 % Orlando Executive Airport (ORL) 122,839 143,840 152,282 174,314 180,221 181,076 182,632 184,190 185,750 187,313 5.0 % Phoenix Deer Valley Airport (DVT) 402,444 271,979 275,153 344,393 432,874 428,445 447,756 452,885 457,296 459,527 2.9 % Salt Lake City International Airport (SLC) 276,816 342,505 321,941 318,998 326,687 335,923 343,133 351,791 360,551 367,654 3.5 % San José Mineta International Airport (SJC) 115,895 135,032 166,038 164,564 164,630 170,333 186,163 197,496 203,543 207,385 6.9 % Sugar Land Regional Airport (SGR) 66,502 72,409 79,662 87,048 79,122 80,068 81,546 81,927 82,308 82,690 2.6 % Trenton-Mercer Airport (TTN) 88,926 85,160 105,217 99,905 93,779 94,898 98,149 101,702 102,532 103,287 2.0 % Washington Dulles International Airport (IAD) 175,944 245,805 272,889 284,866 306,582 323,609 320,961 326,323 333,439 338,469 8.1 % Sources: Historic data derived from FAA OPSNET and forecast data from FAA TAF. 11 Table of Contents Customers, Sales and Marketing We seek to maximize hangar rental charges consistent with capacity utilization at our existing and future facilities.
Removed
ITEM 1. BUSINESS Yellowstone Transaction On January 25, 2022 (the “Closing Date”), we completed the Yellowstone Transaction pursuant to the Equity Purchase Agreement between us and Sky.
Added
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.
Removed
As contemplated by the Equity Purchase Agreement, the following occurred on the Closing Date: (a) YAC changed its name to “Sky Harbour Group Corporation”; (b) all outstanding shares of Sponsor Stock held by the Sponsor were converted into shares of Class A Common Stock of the Company; (c) Sky restructured its capitalization, issued to the Company 14,937,581 Sky Common Units, which was equal to the number of outstanding shares of Class A Common Stock immediately after giving effect to the Yellowstone Transaction (taking into account the redemption of Class A Common Stock and the Class A Common Stock issued under the BOC PIPE investment (the “BOC PIPE”)), reclassified the existing Sky Common Units (other than the Sky Incentive Units), existing Sky Series A Preferred Units and the existing Sky Series B Preferred Units into Sky Common Units; (d) certain adjustments to the number of Sky Incentive Units were effected to reflect the new capital structure; (e) the Company was appointed as the managing member of Sky; (f) the Sky Common Units issued to BOC YAC in respect of its Series B Preferred Units were converted into 5,500,000 shares of Class A Common Stock; (g) holders of Sky Common Units received one share of Class B Common Stock for each Sky Common Unit, and as consideration for the issuance of 14,937,581 Sky Common Units by Sky to the Company, YAC contributed to Sky the net amount held in the YAC trust account after redemptions and taking into account the BOC PIPE and the amount of various transaction costs; and (h) each YAC Warrant that was issued and outstanding immediately prior to the closing became a Warrant (the transactions referred to in clauses (a) through (h), collectively, the “Yellowstone Transaction”).
Added
Our portfolio of ground leases as of December 31, 2024 was as follows: Airport IATA Code Location (City, State) Location (Metropolitan Center) Ground Lessor Ground Lease Acres Ground Lease Exp.
Removed
As a result of the Yellowstone Transaction, the Company is organized as an “Up-C” structure in which substantially all of the operating assets of Sky’s business are held by Sky. The Company’s only assets are its equity interests in Sky.
Added
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 CMA Camarillo, CA Los Angeles, CA County of Ventura 17.1 (2) 2073 (2) 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 2074 Hudson Valley Regional Airport POU Wappingers Falls, NY New York, NY County of Duchess 7.1 2066 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 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 assume the exercise of all lease term extension options exercisable at our sole discretion.
Removed
As of January 26, 2022, the Class A Common Stock and Warrants of the Company began trading on the New York Stock Exchange American LLC (the “NYSE American”) as “SKYH” and “SKYH WS,” respectively. The disclosure in this section gives effect to the Yellowstone Transaction and includes the operations of Sky prior to the Yellowstone Transaction.
Added
(2) Our portfolio at Camarillo Airport consists of two ground leases which cover 6.2 and 10.9 acres, respectively.
Removed
Our home basing hangar campuses feature exclusive private hangars and a full suite of dedicated services specifically optimized for home based, versus transient, aircraft.
Added
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. 10 Table of Contents The following table identifies the latest available information on the number of aircraft based at each of our home basing hangar campus properties and development projects: Single Engine Multi Engine Jet Helicopters Military Total Addison Airport (ADS) 305 71 147 7 - 530 Bradley International Airport (BDL) - 2 27 5 18 52 Camarillo Airport (CMA) 301 35 24 22 - 382 Centennial Airport (APA) 574 91 191 30 - 886 Chicago Executive Airport (PWK) 128 16 83 4 - 231 Hudson Valley Regional Airport (POU) 108 7 2 3 2 122 Miami-Opa Locka Executive Airport (OPF) 42 13 103 7 5 170 Nashville International Airport (BNA) 18 9 79 2 15 123 Orlando Executive Airport (ORL) 155 47 36 19 - 257 Phoenix Deer Valley Airport (DVT) 754 84 18 21 2 879 Salt Lake City International Airport (SLC) 126 29 55 13 12 235 San José Mineta International Airport (SJC) 66 17 53 6 - 142 Sugar Land Regional Airport (SGR) 98 18 37 4 - 157 Trenton-Mercer Airport (TTN) 73 16 25 18 - 132 Washington Dulles International Airport (IAD) 7 - 46 - - 53 Sources: FAA Airport Master Records as of February 2025.
Removed
While private aircraft use generally was not affected to the extent of commercial aviation, we believe preferences for air travel and specifically general aviation continue to shift towards private aviation following the COVID-19 pandemic, as industry data suggests that nearly 95% of the entrants who began flying privately during the COVID-19 pandemic are continuing to fly privately through 2023.
Added
We have, and believe we can continue to, achieve economic occupancy greater than 100% at most of our hangar campuses as certain space within semi-exclusive hangars is rented to multiple tenants, and we also seek to maximize our ability to rent available ramp space outside of our hangars, where permitted.
Removed
See “ Risk Factors — An epidemic, pandemic or contagious disease, such as COVID-19, could have a material adverse effect on our business and results of operations." 8 Table of Contents Our Properties 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.
Added
Seasonality Adverse weather conditions, particularly during the winter months, can cause delays in the development and construction of our home basing hangar projects. The geographic diversity of our development portfolio helps mitigate this risk through exposure to various geographies and climates.
Removed
We lease each of our properties under long-term ground leases.
Removed
The tables below present certain information with respect to our portfolio in development and in operation as of December 31, 2023. ● Addison Airport ("ADS"), Addison, TX (Dallas area); ● Bradley International Airport ("BDL"), Windsor Locks, CT (Hartford area); ● Centennial Airport ("APA"), Englewood, CO (Denver area); ● Chicago Executive Airport ("PWK"), Wheeling, IL (Chicago area); ● Hudson Valley Regional Airport ("POU"), Wappingers Falls, NY (New York area); ● Miami-Opa Locka Executive Airport ("OPF"), Opa Locka, FL (Miami area); ● Nashville International Airport ("BNA"), Nashville, TN; ● Phoenix Deer Valley Airport ("DVT"), Phoenix, AZ; and ● Sugar Land Regional Airport ("SGR"), Sugar Land, TX (Houston area).
Removed
Our hangars vary in size and format, however, on average, each hangar provides over 14,000 square feet of hangar space and 1,300 to 2,000 square feet of office space. Once completed, these facilities are expected to provide an infrastructure of over 1.5 million square feet expected to be completed in the next five years.
Removed
We intend to lease each respective hangar to one or more tenants, who will use all or a portion of such facility for general aviation aircraft storage and related uses permitted under the respective ground leases and will pay rent and other charges derived from home basing services on the respective sites to us pursuant to a sublease. 9 Table of Contents The following table identifies the latest available information on the number of aircraft based at each of our home basing hangar campus properties.
Removed
Single Engine Multi Engine Jet* Helicopters Military Total Addison Airport (ADS) 326 86 123 7 - 542 Bradley International Airport (BDL) - 2 34 5 18 59 Centennial Airport (APA) 561 104 143 22 - 830 Chicago Executive Airport (PWK) 128 18 95 4 - 245 Hudson Valley Regional Airport (POU) 82 4 1 4 2 93 Miami-Opa Locka Executive Airport (OPF) 35 13 193 3 5 249 Nashville International Airport (BNA) 18 11 72 1 15 117 Phoenix Deer Valley Airport (DVT) 754 84 15 21 2 876 Sugar Land Regional Airport (SGR) 98 18 39 4 - 159 Sources: JETNET and AirNav. * Jet data current as of February 2024 from JETNET.
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AirNav data current as of February 2024. The following table summarizes the total aircraft operations and forecasted total aircraft operations from 2019 through 2028 at each of our home basing hangar campus properties.
Removed
ADS is owned and operated by the Town of Addison, Texas. The airport serves the Dallas/Fort Worth Metroplex market and is in close proximity to the residential and business districts where aircraft owners and operators live and work, located only nine miles north of the central business district of Dallas.
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ADS does not cater to commercial flights, making it preferable for basing business aircraft as it provides for the quickest “time-to-wheels-up” in the Dallas area. ADS is currently home to nearly 550 based aircraft, including over 120 jet aircraft.
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Between 2021 and 2022, ADS experienced a 5.2% increase in overall operations, followed by a 0.9% decrease in operations from 2022 to 2023. FAA TAF forward-looking data forecasts a rebound in total operations beginning in 2024 and increasing each year thereafter, including increases of 1.5%. 6.8%, and 5.9% for 2024, 2025, and 2026, respectively.
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Facilities at ADS include a 7,203 foot runway equipped with high-intensity lighting and a full length parallel taxiway. Operations are supported by Instrument Landing System (ILS) and RNAV (GPS) instrument approaches. The airport offers an FAA control tower, 24-hour U.S.
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Customs services for international arrivals, no landing fees, and over 70 businesses including maintenance providers, flight schools, and various other aviation-related service providers. According to the Texas Department of Transportation, as of 2018 the airport contributes over 1,000 on-airport jobs to the Town of Addison. Aircraft hangar rental providers currently on the airport consist of three FBOs.
Removed
Additionally, multiple smaller private hangars exist on the airport, primarily owned by operators or for flight schools and other airport businesses. We believe the existing hangar facilities at ADS are overcapacity and predominantly older with low door heights, which creates little opportunity for attracting newer larger private jet aircraft to the airport.
Removed
Though a new FBO brought additional community hangar square footage to the airport, the combination of older current facilities, lack of private hangar space on the airport, increased wealth migration to the north side of Dallas, and substantial popularity of the airport make for an attractive target for our private and exclusive home basing hangars. Addison Site Facilities.
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We obtained lease rights to approximately six acres on the northeast side of the primary runway. As part of our development plan, the existing facilities on the site, including a terminal, ramp and automobile parking, have been demolished. We anticipate developing six hangars with adjoining office and support space constituting 115,506 rentable square feet.
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Anticipated project completion for the ADS site is in the first calendar quarter of 2025.
Removed
In January 2023, we amended our existing ground lease agreement with the Town of Addison, TX to include additional parcels of land that will effectively double the land available for development at our ADS home basing hangar campus project, with the second phase anticipated to include three hangars comprising an additional 96,873 of rentable square footage.
Removed
Bradley International Airport (BDL) The Airport. BDL is owned and operated by the Connecticut Airport Authority and is located in Windsor Locks, Connecticut, situated between Hartford, Connecticut and Springfield, Massachusetts.
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BDL is classified as a medium-hub primary commercial service airport and is the second-busiest commercial airport in the New England region and major airport serving the states of Connecticut, Massachusetts, and New York. BDL is situated on over 2,400 acres and includes two runways of 9,510 feet and 6,847, respectively.
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General airport facilities at BDL include fuel services, multiple cargo and maintenance facilities, and U.S. Customs facilities. BDL is home to the Connecticut Air National Guard, the New England Air Museum, and has hosted both the 103rd Airlift Wing and the 118th Airlift Squadron since 1946.
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Between 2021 and 2022, total operations at BDL increased 9.0%, followed by a slight 0.3% increase in total operations from 2022 to 2023. FAA TAF forward-looking data forecasts a slight decrease of 1.8% in 2024, followed by increases each year thereafter, including annual growth projections of 3.6%, and 0.5% for 2025 and 2026, respectively.
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The only aircraft hangar rental providers at BDL are two FBOs, both of which provide standard amenities. In addition, there are several private hangars at BDL owned by local corporations which generally provide storage for business aircraft, office space, maintenance space, and lounges. Bradley Site Facilities.
Removed
We obtained lease rights to approximately eight acres of land on the north side of BDL. Our projected development at BDL will consist of 3 NFPA Group III hangars with adjoining office space, with a combined leasable area of 101,400 square feet.
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We anticipate the completion of construction and occupancy for our BDL home basing hangar campus in the third calendar quarter of 2026. Centennial Airport (APA) The Airport. APA is owned and operated by the Arapahoe County Public Airport Authority.
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The airport serves Denver, Colorado, and surrounding areas and is classified as a National airport according to the FAA National Asset Report. APA is the largest general aviation airport in the Denver Airport System, and was the fourth busiest general aviation airport in 2023 based on data from FAA OPSNET. APA covers approximately 1,315 acres and has three runways.
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Other facilities at the airport include hangars and tie-downs for aircraft parking and fuel services. Services available at APA include aircraft repair and maintenance services, including airframe, power plant and avionics repair. The airport also includes a U.S. Customs facility. APA is currently home to over 800 based aircraft, including over 140 jet aircraft.
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Between 2021 and 2022, APA experienced a 3.3% decrease in overall operations according to FAA OPSNET as the lingering effects of the pandemic continued to be evident. However, from 2022 to 2023, total operations at APA increased by 20.0%, reflecting a significant rebound from the decreased operational activity.
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FAA TAF forward looking data forecasts a slight decrease of 1.0% in 2024, further followed by increases each year thereafter, including annual growth projections of 1.9%, and 1.9%, for 2025 and 2026, respectively. FBO services at APA are provided by four companies.
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The FBOs offer standard amenities such as pilot’s lounge, waiting area/lounge, weather station, restroom, showers, kitchenette, and conference rooms, flight instruction, rental car, aircraft maintenance and parts supply, hangar rental, aircraft tie-down parking, and aircraft fueling. APA has several private hangars that provide storage for business aircraft, office space, maintenance space, and lounges.
Removed
Some of the private hangars are owned and built by individuals or corporations based locally. Centennial Site Facilities. We obtained lease rights to approximately 20 acres of land in the Centennial lnterPort master-planned business hangar development on the south side of APA. Our development at APA is located in a secluded, low-traffic area on the airfield.
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The campus will be constructed in two phases, and in total will consist of 14 NFPA Group III hangars comprising 239,739 total rentable square feet. Our Centennial home basing hangar campus will include two hangar layouts, each including a ramp area for aircraft startup and shutdown in front of the hangar doors.
Removed
Car parking is to be included in the hangar space and in an attached two car garage. The adjoining office space will include high-end finishes with a kitchen, storage and a bathroom with a shower. Each unit is also to be assigned adjacent outdoor parking. 11 Table of Contents Chicago Executive Airport (PWK) The Airport.
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PWK is the leading general aviation airport in the Chicago area, and a top reliever airport for Chicago O’Hare International (ORD), accepting some 100,000 corporate, charter and light recreational aircraft operations annually. Located just 10 miles north of ORD, PWK is jointly owned by the Village of Wheeling and City of Prospect Heights, Illinois.
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Over 240 aircraft are presently based at PWK, including nearly 100 jet aircraft. According to FAA OPSNET, between 2021 and 2022 PWK experienced a 2.3% decrease in total operations, which partially reversed from 2022 to 2023, when PWK saw an increase of 0.7% in year-over-year operations.
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FAA TAF forward-looking data projects increases of 1.2%, 0.2%, and 0.2% for 2024, 2025, and 2026, respectively. General airport facilities at PWK consist of three runways, including a 5,001-foot primary runway, as well as fuel services, several maintenance providers, and a flight school. FBO services at PWK are provided by three companies. Chicago Executive Site Facilities.
Removed
We obtained lease rights to approximately fifteen acres of land at PWK. The home basing hangar campus will consist of 5 NFPA Group III modular hangars comprising 149,400 total rentable square feet. Ground-breaking at PWK is provisionally expected to occur in the first calendar quarter of 2025 with occupancy projected in the first calendar quarter of 2026.
Removed
Hudson Valley Regional Airport (POU) The Airport. POU is a Part 139 Certified Airport with an FAA staffed and operated control tower and nearly 60,000 annual operations. POU is owned by the County of Dutchess, NY, and is located approximately 34 miles from White Plains and 47 miles from Teterboro.
Removed
Based on data from FAA OPSNET, between 2021 and 2022 POU recorded a 3.6% increase in overall operations. From 2022 to 2023, POU experienced a partial reversal of its previous growth, as total operations decreased 2.4%.
Removed
FAA TAF forward-looking data projects a decrease of 5.1% in 2024 followed by increases of 0.1% and 0.1% in the years 2025 and 2026, respectively. FBO services at POU are provided by one company.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

81 edited+29 added−13 removed196 unchanged
Biggest changeWith oversight from the audit committee of the Board (the “Audit Committee”) and input from management, in order to remediate the material weakness in internal control over financial reporting related to the ineffective operation of controls related to manual adjustments to the statement of cash flows, the Company designed and implemented changes in processes and controls to remediate the material weakness described above and to enhance our internal control over financial reporting, including a control to review non-standard manual adjustments to the statement of cash flows in accordance with applicable accounting guidance, and the contemporaneous preparation and review of the statement of cash flows at greater levels of disaggregation, including lower-level reporting units.
Biggest changeWith oversight from the audit committee of the Board (the “Audit Committee”) and input from management, the Company designed and implemented changes in processes and controls to remediate the material weakness described above and to enhance our internal control over financial reporting.
We have a substantial amount of indebtedness outstanding, which may expose us to the risk of default under our debt obligations, restrict our operations and our ability to grow our business and revenues. The majority of our outstanding indebtedness is secured under the terms of the Series 2021 Bonds.
We have a substantial amount of indebtedness outstanding, which may expose us to the risk of default under our debt obligations and restrict our operations and our ability to grow our business and revenues. The majority of our outstanding indebtedness is secured under the terms of the Series 2021 Bonds.
We cannot assure you that we will be able to source external financing for our capital needs, and if we are unable to source financing on acceptable terms or at all, our business could be materially adversely affected.
We cannot assure you that we will be able to source external financing for our capital needs, and if we are unable to source financing on acceptable terms or at all, our business could be materially and adversely affected.
Factors affecting the trading price of Class A Common Stock and Public Warrants may include: ● actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; ● changes in the market’s expectations about our operating results; ● the public’s reaction to our press releases, our other public announcements and our filings with the SEC; ● speculation in the press or investment community; ● actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; ● our operating results failing to meet the expectation of securities analysts or investors in a particular period; ● changes in financial estimates and recommendations by securities analysts concerning us or the market in general; ● operating and stock price performance of other companies that investors deem comparable to us; ● publications of research reports by securities analysts about us, our competitors, or the industry we operate in; ● changes in laws and regulations affecting our business; ● commencement of, or involvement in, litigation involving us; ● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; ● the volume of Class A Common Stock available for public sale; ● any major change in the Board of Directors or management; ● sales of substantial amounts of Class A Common Stock by directors, officers or significant stockholders or the perception that such sales could occur; ● general economic and political conditions such as recessions, interest rates, fuel prices, trade wars, pandemics (such as COVID-19), epidemics, currency fluctuations and acts of war (such as the conflict between Russia and Ukraine and the military conflict in Israel and Gaza) or terrorism; and ● other risk factors listed under this “Risk Factors” section.
Factors affecting the trading price of Class A Common Stock and Public Warrants may include: ● actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; ● changes in the market’s expectations about our operating results; ● the public’s reaction to our press releases, our other public announcements and our filings with the SEC; ● speculation in the press or investment community; ● actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; ● our operating results failing to meet the expectation of securities analysts or investors in a particular period; ● changes in financial estimates and recommendations by securities analysts concerning us or the market in general; ● operating and stock price performance of other companies that investors deem comparable to us; ● publications of research reports by securities analysts about us, our competitors, or the industry we operate in; ● changes in laws and regulations affecting our business; ● commencement of, or involvement in, litigation involving us; ● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; ● the volume of Class A Common Stock available for public sale; ● any major change in the Board or management; ● sales of substantial amounts of Class A Common Stock by directors, officers or significant stockholders or the perception that such sales could occur; ● general economic and political conditions such as recessions, interest rates, fuel prices, trade wars, pandemics (such as COVID-19), epidemics, currency fluctuations and acts of war (such as the conflict between Russia and Ukraine and the military conflict in Israel and Gaza) or terrorism; and ● other risk factors listed under this “Risk Factors” section.
The market volatility and trading patterns we have experienced create several risks for investors, including the following: ● the market price of our Class A Common Stock has experienced and may continue to experience rapid and substantial increases or decreases unrelated to our operating performance or prospects, or macro or industry fundamentals, and substantial increases may be significantly inconsistent with the risks and uncertainties that we continue to face; ● factors in the public trading market for our Class A Common Stock may include the sentiment of retail investors, the direct access by retail investors to broadly available trading platforms, the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our Class A Common Stock and any related hedging and other trading factors; ● to the extent volatility in our Class A Common Stock is caused by a “short squeeze” in which coordinated trading activity causes a spike in the market price of our Class A Common Stock as traders with a short position make market purchases to avoid or to mitigate potential losses, investors purchase at inflated prices unrelated to our financial performance or prospects, and may thereafter suffer substantial losses as prices decline once the level of short-covering purchases has abated; and ● if the market price of our Class A Common Stock declines, you may be unable to resell your shares at or above the price at which you acquired them, and the Public Warrants you own may become out of the money. 28 Table of Contents The trading price of Class A Common Stock and Public Warrants depends on many factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance.
The market volatility and trading patterns we have experienced create several risks for investors, including the following: ● the market price of our Class A Common Stock has experienced and may continue to experience rapid and substantial increases or decreases unrelated to our operating performance or prospects, or macro or industry fundamentals, and substantial increases may be significantly inconsistent with the risks and uncertainties that we continue to face; ● factors in the public trading market for our Class A Common Stock may include the sentiment of retail investors, the direct access by retail investors to broadly available trading platforms, the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our Class A Common Stock and any related hedging and other trading factors; ● to the extent volatility in our Class A Common Stock is caused by a “short squeeze” in which coordinated trading activity causes a spike in the market price of our Class A Common Stock as traders with a short position make market purchases to avoid or to mitigate potential losses, investors purchase at inflated prices unrelated to our financial performance or prospects, and may thereafter suffer substantial losses as prices decline once the level of short-covering purchases has abated; and ● if the market price of our Class A Common Stock declines, you may be unable to resell your shares at or above the price at which you acquired them, and the Public Warrants you own may become out of the money. 27 Table of Contents The trading price of Class A Common Stock and Public Warrants depends on many factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance.
Although we believe these provisions benefit us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. 25 Table of Contents We qualify as an “ emerging growth company ” within the meaning of the Securities Act, and we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, and as such, it could make our securities less attractive to investors and may make it more difficult to compare our performance to the performance of other public companies.
Although we believe these provisions benefit us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. 24 Table of Contents We qualify as an “ emerging growth company ” within the meaning of the Securities Act, and we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, and as such, it could make our securities less attractive to investors and may make it more difficult to compare our performance to the performance of other public companies.
If some investors find our securities less attractive as a result of its reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by any investor, and investors purchasing shares or other securities in the future could have rights superior to you.
In addition, we may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by any investor, and investors purchasing shares or other securities in the future could have rights superior to you.
Our ability to enter into new ground leases on favorable terms, or at all, may be adversely affected by the following significant factors: ● we may not be able to negotiate new ground leases with airport authorities on attractive terms or at all; ● we may encounter competition from other potential ground lessors, which could significantly increase the lease rate for properties we seek to lease; ● we may incur significant costs and divert management attention in connection with evaluating and negotiating potential new ground leases, including ones that we are subsequently unable to complete; ● 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; and ● we may be unable to obtain financing for the development of additional sites on favorable terms, or at all, as a result of our existing indebtedness, market conditions or other factors.
Our ability to enter into new ground leases on favorable terms, or at all, may be adversely affected by the following significant factors: ● we may not be able to negotiate new ground leases with airport authorities on attractive terms or at all; ● we may encounter competition from other potential ground lessors, which could significantly increase the lease rate for properties we seek to lease; ● we may incur significant costs and divert management attention in connection with evaluating and negotiating potential new ground leases, including ground leases that we are subsequently unable to execute; ● even if we enter into letters of intent or conditional agreements for new ground leases of airport properties, these agreements are subject to customary closing conditions, including, but not limited to, the satisfactory results of our due diligence investigations and local government and municipal authority approvals; and ● we may be unable to obtain financing for the development of additional sites on favorable terms, or at all, as a result of our existing indebtedness, market conditions or other factors.
Our ability to make payments under the ground leases or under our debt service obligations through their final maturity will depend upon our success in renewing current tenants or in re-leasing these facilities.
Our ability to make payments under the ground leases or under our debt service obligations through their final maturity will depend upon our success in renewing current tenants or in re-leasing these facilities to new tenants.
To the extent such warrants are exercised, additional shares of Class A Common Stock will be issued, which will result in dilution to the holders of Class A Common Stock and increase the number of shares eligible for resale in the public market.
To the extent the Warrants are exercised, additional shares of Class A Common Stock will be issued, which will result in dilution to the holders of Class A Common Stock and increase the number of shares eligible for resale in the public market.
Furthermore, our future obligation to make payments under the Tax Receivable Agreement could make us a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the Tax Attributes that may be deemed realized under the Tax Receivable Agreement. 27 Table of Contents We could be adversely affected by changes in applicable tax laws, regulations, or administrative interpretations thereof in the United States or other jurisdictions .
Furthermore, our future obligation to make payments under the Tax Receivable Agreement could make us a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the Tax Attributes that may be deemed realized under the Tax Receivable Agreement. 26 Table of Contents We could be adversely affected by changes in applicable tax laws, regulations, or administrative interpretations thereof in the United States or other jurisdictions .
In addition, our acquisition of a controlling interest in a pre-engineered metal building manufacturer may in the future subject us to a variety of legal proceedings and legal compliance risks in respect to various issues, including product liability, regulatory, safety, environmental, employment, and intellectual property matters that arise in the ordinary course of its business and in its industry, including matters that may have existed prior to our acquisition and claims that have not been asserted.
In addition, our ownership of a controlling interest in a pre-engineered metal building manufacturer may in the future subject us to a variety of legal proceedings and legal compliance risks with respect to various issues, including product liability, regulatory, safety, environmental, employment, and intellectual property matters that arise in the ordinary course of its business and in its industry, including matters that may have existed prior to our acquisition and claims that have not been asserted.
If any one of these events were to occur, our business and results of operations could be materially and adversely affected. 16 Table of Contents Secured debt obligations, including those under the Series 2021 Bonds, expose us to the possibility of defaults and cross-defaults, as well as foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt.
If any one of these events were to occur, our business and results of operations could be materially and adversely affected. 14 Table of Contents Secured debt obligations, including those under the Series 2021 Bonds, expose us to the possibility of defaults and cross-defaults, as well as foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt.
The resulting decline in tenants or negative impact on our reputation could adversely impact revenue, including from more than one facility, which would have a material adverse effect on our business and results of operation. Aircraft owners and operators rely on home basing hangar campuses and FBO operators to control the quality of the fuel they provide.
The resulting decline in tenants or negative impact on our reputation could adversely impact revenue, including from more than one facility, which would have a material adverse effect on our business and results of operations. Aircraft owners and operators rely on home basing hangar campuses and FBO operators to control the quality of the fuel they provide.
Additionally, nonpayment for a specified period and/or under certain circumstances may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments under the Tax Receivable Agreement, which could be substantial. 26 Table of Contents We anticipate that the distributions received from Sky may, in certain periods, exceed our actual tax liabilities and obligations to make payments under the Tax Receivable Agreement.
Additionally, nonpayment for a specified period and/or under certain circumstances may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments under the Tax Receivable Agreement, which could be substantial. 25 Table of Contents We anticipate that the distributions received from Sky may, in certain periods, exceed our actual tax liabilities and obligations to make payments under the Tax Receivable Agreement.
In addition, as of December 31, 2023, there were 42,046,356 outstanding Sky Common Units held by the members of Sky (excluding the Company as Managing Member of Sky), which may be redeemed for shares of our Class A Common Stock on a one-for-one basis, and in connection with the redemption of such Sky Common Units, the corresponding shares of Class B Common Stock will be cancelled.
In addition, as of December 31, 2024, there were 42,046,356 outstanding Sky Common Units held by the members of Sky (excluding the Company as Managing Member of Sky), which may be redeemed for shares of our Class A Common Stock on a one-for-one basis, and in connection with the redemption of such Sky Common Units, the corresponding shares of Class B Common Stock will be cancelled.
When effective, it is possible that the minimum tax could result in an additional tax liability over the regular federal corporate tax liability in a given year based on differences between book and taxable income (including as a result of temporary differences). The resulting tax liability could adversely impact the Company’s business, financial condition, results of operation and liquidity.
When effective, it is possible that the minimum tax could result in an additional tax liability over the regular federal corporate tax liability in a given year based on differences between book and taxable income (including as a result of temporary differences). The resulting tax liability could adversely impact the Company’s business, financial condition, results of operations and liquidity.
Secured debt obligations increase the risk of property losses because defaults on indebtedness secured by properties may result in foreclosure actions initiated by holders of the Series 2021 Bonds, its trustee, or other lenders and ultimately our loss of the property securing any loans for which it is in default.
Secured debt obligations increase the risk of property losses because defaults on indebtedness secured by properties may result in foreclosure actions initiated by holders of the Series 2021 Bonds, the bond trustee, or other lenders and ultimately our loss of the property securing any loans for which it is in default.
Risks Relating to Our Business Our growth depends in part upon our ability to enter into new ground leases at airports, and we may be unsuccessful in identifying and consummating attractive new ground leases or taking advantage of other investment opportunities, which would impede our growth and materially and adversely affect our business and results of operation.
Risks Relating to Our Business Our growth depends in part upon our ability to enter into new ground leases at airports, and we may be unsuccessful in identifying and consummating attractive new ground leases or taking advantage of other investment opportunities, which would impede our growth and materially and adversely affect our business and results of operations.
There can be no assurances that the airports or their competitors will not undertake future improvements that may adversely impact the ability of tenant leases to generate revenues. Moreover, the terms of our tenant leases currently in place do not extend past the final maturity date of our bond debt.
There can be no assurances that the airports or their competitors will not undertake future improvements that may adversely affect the ability of tenant leases to generate revenues. Moreover, the terms of our tenant leases currently in place do not extend past the final maturity date of our bond debt.
Further, reconstruction or improvement of such a property may require significant upgrades to meet zoning and building code requirements. Environmental and legal restrictions could also restrict the rebuilding of properties. 23 Table of Contents Our properties are subject to environmental risks that may impact our future profitability.
Further, reconstruction or improvement of such a property may require significant upgrades to meet zoning and building code requirements. Environmental and legal restrictions could also restrict the rebuilding of properties. 22 Table of Contents Our properties are subject to environmental risks that may impact our future profitability.
As a result, management has determined that our completed remediation activities are sufficient to allow them to conclude that the previously-reported material weakness related to the identification and classification of certain manual cash flow adjustments has been remediated as of December 31, 2023.
As a result, management determined that our completed remediation activities were sufficient to allow them to conclude that the previously-reported material weakness related to the identification and classification of certain manual cash flow adjustments has been remediated as of December 31, 2023.
The growth and success of our business is subject to our ability to market, attract, and retain tenants. Our future success depends upon our ability to attract and retain tenants for hangars at our home basing hangar campuses. The extent to which we achieve growth in our customer base materially influences our business and results of operation.
The growth and success of our business is subject to our ability to market, attract, and retain tenants. Our future success depends upon our ability to attract and retain tenants for hangars at our home basing hangar campuses. The extent to which we achieve growth in our customer base materially influences our business and results of operations.
Thus, the airport landlord or our stream of payments from a debtor subsidiary would be interrupted to the extent of pre-petition goods and services, including accrued loan and lease payments, which would have a material adverse effect on our business and results of operation.
Thus, the airport landlord or our stream of payments from a debtor subsidiary would be interrupted to the extent of pre-petition goods and services, including accrued loan and lease payments, which would have a material adverse effect on our business and results of operations.
As a result, we will not be able to sell underlying real estate assets in order to meet liquidity requirements, including our debt service obligations, which could have a material and adverse impact on our liquidity position and ability to meet our obligations.
As a result, we will not be able to sell underlying real estate assets in order to meet liquidity requirements, including our debt service obligations, which could have a material and adverse effect on our liquidity position and ability to meet our obligations.
We cannot predict whether investors will find our securities less attractive because it will rely on these exemptions.
We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.
Since the closing of the Yellowstone Transaction, our Class A Common Stock has traded as low as $2.50 and as high as $43.41 through December 31, 2023. In addition, the volume of trading of our Class A Common Stock has been inconsistent.
Since the closing of the Yellowstone Transaction, our Class A Common Stock has traded as low as $2.50 and as high as $43.41 through December 31, 2024. In addition, the volume of trading of our Class A Common Stock has been inconsistent.
As previously disclosed, we identified a material weakness in our internal control over financial reporting in our internal control over financial reporting as of June 30, 2023 related to the classification of certain cash transactions made during the six months ended June 30, 2023 associated with the payment of construction retainage liabilities incurred and appropriately recognized during the years ended December 31, 2021 and December 31, 2022.
In the past, we identified a material weakness in our internal control over financial reporting as of June 30, 2023 related to the classification of certain cash transactions made during the six months ended June 30, 2023 associated with the payment of construction retainage liabilities incurred and appropriately recognized during the years ended December 31, 2021 and December 31, 2022.
Our ability to complete these projects within budgets and on expected schedules may be adversely affected by various factors including: ● estimating errors; ● design and engineering errors; ● cost increases because of demand for labor and materials; ● contractors’ difficulty in predicting costs over a lengthy construction period; ● the need to estimate costs of unbid project elements; ● changes to the scope of the projects; ● delays in contract awards; ● material and/or labor shortages; ● unforeseen site conditions; ● adverse weather conditions; ● contractor defaults and bankruptcy; ● labor disputes; ● unanticipated levels of inflation; ● litigation; and ● environmental issues.
Our ability to complete these projects within budgets and on expected schedules may be adversely affected by various factors including: ● estimating errors; ● design and engineering errors; ● cost increases because of demand for labor and materials; ● cost increases due to instituted or proposed changes in trade policies; ● contractors’ difficulty in predicting costs over a lengthy construction period; ● the need to estimate costs of unbid project elements; ● changes to the scope of the projects; ● delays in contract awards; ● material and/or labor shortages; ● unforeseen site conditions; ● adverse weather conditions; ● contractor defaults and bankruptcy; ● labor disputes; ● unanticipated levels of inflation; ● litigation; and ● environmental issues.
If any of our most significant tenants, currently or in the future, were to discontinue or otherwise reduce their use of our home basing hangar campuses or other services, our business and results of operation would be materially and adversely affected. 18 Table of Contents Our capital projects are subject to uncertainties, including the possibility of delays, cost overruns, and inflation, which could have a material adverse effect on our business, results of operation and market reputation.
If any of our most significant tenants, currently or in the future, were to discontinue or otherwise reduce their use of our home basing hangar campuses or other services, our business and results of operations would be materially and adversely affected. 16 Table of Contents Our capital projects are subject to uncertainties, including the possibility of delays, cost overruns, and inflation, which could have a material adverse effect on our business, results of operations and market reputation.
As a result, the market price of shares of Class A Common Stock could be adversely affected. 29 Table of Contents The outstanding Warrants are exercisable for shares of Class A Common Stock and common units in Sky may be redeemed for Class A Common Stock.
As a result, the market price of shares of Class A Common Stock could be adversely affected. 28 Table of Contents The outstanding Warrants are exercisable for shares of Class A Common Stock and common units in Sky may be redeemed for Class A Common Stock.
Regulators, such as the TSA, have and may again consider regulations that could impair the relative convenience of general aviation and adversely affect demand for our services. We are subject to extensive regulatory requirements and compliance with those requirements could result in significant costs.
We are subject to extensive governmental regulations that could require significant expenditures. Regulators, such as the TSA, have and may again consider regulations that could impair the relative convenience of general aviation and adversely affect demand for our services. We are subject to extensive regulatory requirements and compliance with those requirements could result in significant costs.
Compliance with these rules and regulations increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
Compliance with these rules and regulations increases our legal and financial compliance costs, makes some activities more difficult, time-consuming or costly and increases demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
Moreover, certain new regulations, if implemented, could decrease the convenience and attractiveness of general aviation travel relative to commercial air travel and may adversely impact demand for our services. 22 Table of Contents Compliance or failure to comply with the ADA and other regulations could result in substantial costs.
Moreover, certain new regulations, if implemented, could decrease the convenience and attractiveness of general aviation travel relative to commercial air travel and may adversely impact demand for our services. Compliance or failure to comply with the ADA and other regulations could result in substantial costs.
As of December 31, 2023, management has completed the implementation of our remediation efforts of the material weakness described above and has performed testing to evaluate the design and operating effectiveness of the controls.
As of December 31, 2023, management completed its implementation of our remediation efforts of the material weakness described above and performed testing to evaluate the design and operating effectiveness of the controls.
Inadequate maintenance of any of the hangars or other assets comprising our home basing hangar campuses could result in customers’ electing not to utilize us where another provider operates, or to elect not to use a particular airport where an alternative operator in the same market exists.
Inadequate maintenance of any of the hangars or other assets comprising our home basing hangar campuses could result in customers electing not to utilize us where another provider operates, or electing not to use a particular airport where an alternative operator in the same market exists.
Lack of access to private activity bonds due to change in law or market access would have an increase in the cost of our debt and our future financial results. Uninsured losses or a loss in excess of insured limits could adversely affect our business and results of operations.
Lack of access to private activity bonds due to change in law or market access would have an increase in the cost of our debt and our future financial results. 21 Table of Contents Uninsured losses or a loss in excess of insured limits could adversely affect our business and results of operations.
Securities litigation against us could result in substantial costs and divert management’s attention from other business concerns, which could seriously harm our business. 30 Table of Contents
Securities litigation against us could result in substantial costs and divert management’s attention from other business concerns, which could seriously harm our business. 29 Table of Contents
We may be unable to renew ground leases, lease vacant space or re-lease space as leases expire, or renewing existing leases may require significant concession, inducements and/or capital expenditures.
We may be unable to renew ground leases, lease vacant space or re-lease space as leases expire, or renewing existing leases may require significant concessions, inducements and/or capital expenditures.
If the rental rates for our hangar campuses decrease, or if our existing tenants do not renew their leases or we do not re-lease a significant portion of our available space and space for which leases will expire, our business and results of operations could be adversely affected.
If the rental rates for our hangar campuses decrease, or if our existing tenants do not renew their leases or we do not re-lease a significant portion of our available space, our business and results of operations could be adversely affected.
Any such event could have a material adverse effect on our business and results of operations. The lack of accurate and reliable industry data can result in unfavorable strategic planning, mergers and acquisitions, and macro pricing decisions.
Any such event could have a material adverse effect on our business and results of operations. 20 Table of Contents The lack of accurate and reliable industry data can result in unfavorable strategic planning, mergers and acquisitions, and macro pricing decisions.
Our home basing hangars are generally leased to single or multi hangar tenants, and certain of our tenants constitute a significant percentage of our revenues.
Our home basing hangars are generally leased to single or multi hangar tenants, and certain of our tenants constitute a material percentage of our revenues.
Although the material weakness has been remediated as of December 31, 2023, if we identify additional control deficiencies that individually or in the aggregate constitute one or more material weaknesses or we otherwise fail to maintain effective disclosure controls and procedures or internal control over financial reporting in the future, our ability to accurately record, process, and report financial information and consequently, our ability to prepare financial statements within required time periods, could be adversely affected, which may negatively impact the confidence level of our stockholders and other market participants as well as our ability to remain listed on the NYSE American.
Although the material weakness had been remediated as of December 31, 2023, if we identify additional control deficiencies that individually or in the aggregate constitute one or more material weaknesses or we otherwise fail to maintain effective disclosure controls and procedures or internal control over financial reporting in the future, our ability to accurately record, process, and report financial information and consequently, our ability to prepare financial statements within required time periods, could be adversely affected, which may negatively impact the confidence level of our stockholders and other market participants as well as our ability to remain listed on the New York Stock Exchange.
Our rental revenue is concentrated within a small number of tenants and the loss of or default by one or more significant tenants could have a material adverse effect on our business and results of operations. For the year ended December 31, 2023, our two largest tenants contributed 30% of our revenues.
Our rental revenue in the past has been concentrated within a small number of tenants and the loss of or default by one or more significant tenants could have a material adverse effect on our business and results of operations. For the year ended December 31, 2023, our two largest tenants contributed 30% of our revenues.
If we were unable to do so, our operations might suffer, which may adversely impact our results of operations and financial condition. 24 Table of Contents Risks Relating to Our Organization and Structure We are a “ controlled company ” within the meaning of the NYSE American listing standards and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements.
If we were unable to do so, our operations might suffer, which may adversely impact our results of operations and financial condition. 23 Table of Contents Risks Relating to Our Organization and Structure We are a “ controlled company ” within the meaning of the New York Stock Exchange listing standards and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements.
To the extent we rely on any of these exemptions, holders of Class A Common Stock will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE American.
To the extent we rely on any of these exemptions, holders of Class A Common Stock will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the New York Stock Exchange.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE American and other applicable securities rules and regulations.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the New York Stock Exchange and other applicable securities rules and regulations.
The exercise of these outstanding warrants will increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders. As of December 31, 2023, there were 6,798,964 outstanding Public Warrants to purchase 6,798,694 shares of Class A Common Stock at an exercise price of $11.50 per share.
The exercise of these outstanding Warrants will increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders. As of December 31, 2024, there were 15,798,155 outstanding Warrants to purchase 15,798,155 shares of Class A Common Stock at an exercise price of $11.50 per share.
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 particularly if interest rates remain at elevated levels as compared to when we issued our debt that is currently outstanding.
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 particularly if interest rates remain at elevated levels as compared to when we issued our debt that is currently outstanding.
You do not have the same protections afforded to stockholders of companies that are subject to such requirements. We qualify as a “controlled company” within the meaning of the corporate governance standards of the NYSE American.
You do not have the same protections afforded to stockholders of companies that are subject to such requirements. We qualify as a “controlled company” within the meaning of the corporate governance standards of the New York Stock Exchange.
Our Public Warrants have not traded in tandem with our Class A Common Stock, and since the closing of the Yellowstone Transaction have traded within a range of $0.17 to $2.75 through December 31, 2023.
Our Public Warrants have not traded in tandem with our Class A Common Stock, and since the closing of the Yellowstone Transaction have traded within a range of $0.17 to $3.98 through December 31, 2024.
Given the variety of factors that impact competitiveness within the home basing hangar campus industry, we can give no assurance that we will be able to successfully compete, which could, in turn, result in a decline in the trading price of our securities.
Given the variety of factors that impact competitiveness within the home basing hangar campus industry, we can give no assurance that we will be able to successfully compete, which could have a material adverse effect on our business and results of operations and, in turn, result in a decline in the trading price of our securities.
Increases in market interest rates or unavailability of additional indebtedness may make it difficult for us to finance or refinance our debt, which could have a material adverse effect on our financial condition, results of operations and growth prospects. We expect to issue additional debt to finance future site developments and higher interest rates would impact our overall economic performance.
Increases in market interest rates or unavailability of additional indebtedness may make it difficult for us to finance or refinance our debt, which could have a material adverse effect on our financial condition, results of operations and growth prospects.
As a result, the use of such data may result in decisions in strategic planning or pricing that are incorrect or inefficient, which could have a material adverse effect on our business and results of operation. We are subject to extensive governmental regulations that could require significant expenditures.
As a result, the use of such data may result in decisions in strategic planning or pricing that are incorrect or inefficient, which could have a material adverse effect on our business and results of operations.
Depending on the results of our review, we could be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our long-lived assets were determined, negatively impacting our results of operations. For example, in June 2022, the Company evaluated the development progress related to its smart hangar app.
Depending on the results of our review, we could be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our long-lived assets were determined, negatively impacting our results of operations.
In the event of a tenant’s default under its lease or its rejection of the lease in bankruptcy proceedings, we may be unable to locate a replacement tenant in a timely manner or on comparable or better terms.
In the event of a tenant’s default under its lease or its rejection of the lease in bankruptcy proceedings, we may be unable to locate a replacement tenant in a timely manner or on comparable or better terms. As a result, our financial condition and results of operations could be adversely affected.
Unlike other real estate companies that lease space to tenants, we do not directly own the sites we lease. Instead, the sites are subject to long-term ground leases with airport authorities.
Because we do not directly own the sites we lease, we will not be able to liquidate real estate investments in order to meet liquidity needs. Unlike other real estate companies that lease space to tenants, we do not directly own the sites we lease. Instead, the sites are subject to long-term ground leases with airport authorities.
Airport authorities may choose not to renew a lease at all or to only renew the lease on terms that are unfavorable to us. In addition, airport authorities may require us to participate in a bidding process to renew a lease, which could require unanticipated capital spending and could divert management’s attention during the pendency of the process.
At the conclusion of a lease, airport authorities may require us to participate in a bidding process to renew a lease, which could require unanticipated capital spending and could divert management’s attention during the pendency of the process.
For instance, there are certain types of losses, such as losses resulting from wars, terrorism or certain acts of God, that generally are not insured because they are either uninsurable or not economically insurable.
For instance, there are certain types of losses, such as losses resulting from wars, terrorism or certain acts of God, that generally are not insured because they are either uninsurable or not economically insurable. Further, as of December 31, 2024, two of our existing hangar campuses are located in California.
We are a holding company with no independent operations and, as such, will be dependent upon the operations of our subsidiaries. Our subsidiaries’ operations rely upon the authority granted under certain ground leases to operate project sites. Each operating subsidiary with bond debt is structured as a special purpose entity.
Our subsidiaries’ operations rely upon the authority granted under certain ground leases to operate project sites. Each operating subsidiary with bond debt is structured as a special purpose entity.
The production of our hangar buildings is subject to design and construction defects, product liability, and other claims that could be significant and costly, which may delay our construction projects and could have a material adverse effect on our business and results of operations.
Any such cost overruns or delays could have a material adverse effect on our business, results of operations or market reputation, which could, in turn, result in a decline in the market price of our Class A Common Stock. 17 Table of Contents The production of our hangar buildings is subject to design and construction defects, product liability, and other claims that could be significant and costly, which may delay our construction projects and could have a material adverse effect on our business and results of operations.
For example, we recently signed new ground leases at BDL, POU, and PWK, which represent our initial entries into the states of Connecticut, New York, and Illinois, respectively, and our first home basing hanger campuses in the broader Chicago and New York markets. Furthermore, the negotiation of a potential expansion into new markets may divert management time and other resources.
These new leases represent our initial entries into the states of Connecticut, New York, Illinois, and California, respectively, and our first home basing hangar campuses in the broader Chicago, New York, San Jose, and Los Angeles markets. Furthermore, the negotiation of a potential expansion into new markets may divert management time and other resources.
For example, some of our properties are located in Florida and Texas and are situated in geographic areas that are periodically impacted by severe weather conditions such as hurricanes, flooding, and tornadoes.
For example, some of our properties are located in Florida and Texas and are situated in geographic areas that are periodically impacted by severe weather conditions such as hurricanes, flooding, and tornadoes, and one of our properties is located in the Los Angeles area, which has recently experienced the significant and damaging effects of the January 2025 wildfires.
Although we implemented additional controls and procedures to remediate the material weakness described above, in the future those controls and procedures may not be adequate to prevent or detect material misstatements in our interim or annual consolidated financial statements due to fraud or errors. 20 Table of Contents We conduct substantially all of our operations under ground leases, which grant significant rights to airport authorities as our direct or ultimate landlord.
Although we implemented additional controls and procedures to remediate the material weakness described above, in the future those controls and procedures may not be adequate to prevent or detect material misstatements in our interim or annual consolidated financial statements due to fraud or errors.
In addition, we assess our long-lived assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Accounting principles generally accepted in the United States of America (“GAAP”) require us to assess our long-lived assets for impairment at least annually. In addition, we assess our long-lived assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
For example, reductions in passenger volumes and flights, as well as by the broader economic shutdown resulting from an epidemic, pandemic or contagious disease could materially and negatively impact our business and results of operations.
For example, reductions in passenger volumes and flights, as well as a broader economic shutdown resulting from an epidemic, pandemic or contagious disease could materially and negatively impact our business and results of operations. We have in the past and may again in the future be required to record impairment charges to future earnings if our long-lived assets become impaired.
In the event we are unable to attract and retain talent sufficient to support our development plans, our business and results of operations may be adversely affected. We previously identified material a weakness in our internal control over financial reporting, which was recently remediated.
In the event we are unable to attract and retain talent sufficient to support our development plans, our business and results of operations may be adversely affected. 18 Table of Contents We have identified material weaknesses in the past.
Inflationary and supply chain pressures have previously led to increased construction materials costs, specifically associated with steel, concrete, and other materials. We believe we may continue to experience such pressures in future quarters, as well as delays in our subsidiaries’ and contractors’ ability to requisition such materials.
We believe we may continue to experience such pressures in future quarters, as well as delays in our subsidiaries’ and contractors’ ability to requisition such materials.
There can be no assurance that insurance coverage will be available for such defects and claims, or that such coverage will not be further restricted or become more costly. 19 Table of Contents Failure to adequately maintain our home basing hangar campuses or the integrity of our fuel supplies may have a material adverse impact on the revenue or market share of one or more of our home basing hangar campuses resulting in a decline in operations of the business.
Failure to adequately maintain our home basing hangar campuses or the integrity of our fuel supplies may have a material adverse impact on the revenue or market share of one or more of our home basing hangar campuses, resulting in a decline in operations of the business.
We face risks related to an epidemic, pandemic or contagious disease, such as COVID-19, which have impacted, and in the future could impact, the markets in which we operate and could materially and negatively impact our business and results of operations.
We face risks related to an epidemic, pandemic, or similar public threat, and the measures that federal, state, and local governments and other authorities implement to address it, which have impacted, and in the future could impact, the markets in which we operate and could materially and negatively impact our business and results of operations.
The Existing Sky Equityholders control the direction of our business, and the concentrated ownership of Common Stock prevent you and other stockholders from influencing significant decisions.
The Existing Sky Equityholders control the direction of our business, and the concentrated ownership of Common Stock prevent you and other stockholders from influencing significant decisions. In connection with the Yellowstone Transaction, the Company, the Existing Sky Equityholders, and the Sponsor (collectively the “Stockholder Parties”) entered into a stockholders’ agreement (the “Stockholders’ Agreement”).
Furthermore, our ability to grow and lease new sites will be inhibited. 17 Table of Contents An epidemic, pandemic or contagious disease, such as COVID-19, could have a material adverse effect on our business and results of operations.
Furthermore, our ability to grow and lease new sites will be inhibited. 15 Table of Contents An epidemic, pandemic, or similar public threat, and the measures that federal, state, and local governments and other authorities implement to address it could have a material adverse effect on our business and results of operations.
If we are unable to do so or if capital is otherwise unavailable, we may be unable to make the required expenditures. This could result in non-renewals by tenants upon expiration of their leases and/or an inability to attract new tenants, which would have a material adverse effect on our business and results of operation.
This could result in non-renewals by tenants upon expiration of their leases and/or an inability to attract new tenants, which would have a material adverse effect on our business and results of operations. 19 Table of Contents Failure to succeed in new markets may have adverse consequences. We intend to continue to develop properties across the United States.
As a result, our financial condition and results of operations could be adversely affected. 21 Table of Contents Our business and results of operations may be materially adversely affected by a default under a ground lease or the bankruptcy of a subsidiary.
Our business and results of operations may be materially adversely affected by a default under a ground lease or the bankruptcy of a subsidiary. We are a holding company with no independent operations and, as such, will be dependent upon the operations of our subsidiaries.
For example, on February 24, 2023 our Class A Common Stock had trading volume of 3,300 shares and on February 28, 2023 our Class A Common Stock had trading volume of 1,546,800 shares.
For example, on April 11, 2024 our Class A Common Stock had trading volume of 4,200 shares and on June 28, 2024 our Class A Common Stock had trading volume of 1,524,200 shares.
In May 2023, we acquired a controlling interest in a pre-engineered metal building manufacturer with the intention to design and manufacture our own hangar prototypes for our home basing hangar campuses. As a manufacturer of hangar buildings, we are subject to design and construction defects, product liability and other claims in the ordinary course of business.
As a manufacturer of hangar buildings, we are subject to design and construction defects, product liability and other claims in the ordinary course of business. These defect claims are common in the pre-engineered metal building industry and can be significant and costly to remediate.
The termination for cause of one or more of the ground leases would affect our business and results of operations significantly. We do not directly own the sites we develop and lease to tenants. Instead, we enter into ground leases at each site directly or indirectly (thru a sub-lessor) from airport authorities and other governmental agencies that regulate local airports.
Instead, we enter into ground leases at each site directly or indirectly (through a sub-lessor) from airport authorities and other governmental agencies that regulate local airports. Airport authorities may choose not to renew a lease at all or to only renew the lease on terms that are unfavorable to us.
The independent peer reviews determined that a significant design defect existed within our prototype hangar building designs that will require retrofitting to both meet and exceed our standards.
The 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.
For example, in November 2023, we sold and issued the PIPE Shares and PIPE Warrants pursuant to the Private Placement Purchase Agreement (as defined herein) at a purchase price equivalent to approximately $6.50 per PIPE Share and associated PIPE Warrant coverage.
For example, in September and December 2024, we sold and issued an aggregate of 7,911,580 2024 PIPE Shares (as defined herein) pursuant to the 2024 Purchase Agreement (as defined herein) at a net purchase price of $9.50 per share, which may be sold by the holders thereof upon the expiration of the lock-up period on April 25, 2025.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed5 unchanged
Biggest changeRisk Management and Strategy Consistent with overall ERM policies and practices, the Company’s cybersecurity program focuses on the following areas: ● we maintain cybersecurity threat operations with the specific goal of identifying, preventing and mitigating cybersecurity threats and responding to cybersecurity incidents in accordance with our established incident response plans; ● we deploy systems safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through ongoing vulnerability assessments and cybersecurity threat intelligence; ● we utilize collaboration mechanisms established with other entities, industry groups and third-party service providers, to identify, assess and respond to cybersecurity risks; ● we maintain a comprehensive, risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including vendors, service providers and other external users of our systems, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems; ● we provide periodic training and education for personnel regarding cybersecurity threats, which reinforces our information security policies, standards and practices, and such training is scaled to reflect the roles, responsibilities and information systems access of such personnel; ● we have established and maintain comprehensive incident response plans that fully address our response to a cybersecurity incident and the recovery from a cybersecurity incident, and such plans are evaluated on an regular basis; ● we utilize a cross-functional approach to address the risk from cybersecurity threats, involving management personnel from our technology, operations, legal, finance and other key business functions, as well as the members of the Board and the Audit Committee in an ongoing dialogue regarding cybersecurity threats and incidents, while also implementing controls and procedures for the escalation of cybersecurity incidents pursuant to established thresholds so that decisions regarding the disclosure and reporting of such incidents can be made by management in a timely manner; and ● the Board’s oversight of cybersecurity risk management is supported by the Audit Committee, which regularly interacts with the Company’s Chief Financial Officer, Chief Accounting Officer, other members of management. 31 Table of Contents Governance The Board, in coordination with the Audit Committee, oversees the management of risks from cybersecurity threats, including the policies, standards, processes and practices that our management implements to address risks from cybersecurity threats.
Biggest changeRisk Management and Strategy Consistent with overall ERM policies and practices, our cybersecurity program focuses on the following areas: ● we maintain cybersecurity threat operations with the specific goal of identifying, preventing and mitigating cybersecurity threats and responding to cybersecurity incidents in accordance with our established incident response plans; ● we deploy systems safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through ongoing vulnerability assessments and cybersecurity threat intelligence; ● we utilize collaboration mechanisms established with other entities, industry groups and third-party service providers, to identify, assess and respond to cybersecurity risks; ● we maintain a comprehensive, risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including vendors, service providers and other external users of our systems, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third -party systems; ● we provide periodic training and education for personnel regarding cybersecurity threats, which reinforces our information security policies, standards and practices, and such training is scaled to reflect the roles, responsibilities and information systems access of such personnel; ● we have established and maintain comprehensive incident response plans that fully outlines our response to, and recovery from a cybersecurity incident and the recovery from a cybersecurity incident, and such plans are evaluated on an regular basis; ● we utilize a cross-functional approach to address the risk from cybersecurity threats, involving management personnel from our technology, operations, legal, finance and other key business functions, as well as the members of the Board and the Audit Committee in an ongoing dialogue regarding cybersecurity threats and incidents, while also implementing controls and procedures for the escalation of cybersecurity incidents pursuant to established thresholds so that decisions regarding the disclosure and reporting of such incidents can be made by management in a timely manner; and ● the Board’s oversight of cybersecurity risk management is supported by the Audit Committee, which regularly interacts with the Company’s Chief Financial Officer, Chief Accounting Officer, other members of management. 30 Table of Contents Governance The Board, in coordination with the Audit Committee, oversees the management of risks from cybersecurity threats, including the policies, standards, processes and practices that our management implements to address risks from cybersecurity threats.
We generally approaches cybersecurity threats through a cross-functional, multilayered approach, with specific the goals of: (i) identifying, preventing and mitigating cybersecurity threats to us; (ii) preserving the confidentiality, security and availability of the information that we collect and store to use in our business; (iii) protecting our intellectual property; (iv) maintaining the confidence of our tenants, vendors and airport partners; and (v) providing appropriate public disclosure of cybersecurity risks and incidents when required.
We generally approach cybersecurity threats through a cross-functional, multilayered methodology, with specific the goals of: (i) identifying, preventing and mitigating cybersecurity threats to us; (ii) preserving the confidentiality, security and availability of the information that we collect and store to use in our business; (iii) protecting our intellectual property; (iv) maintaining the confidence of our tenants, vendors and airport partners; and (v) providing appropriate public disclosure of cybersecurity risks and incidents when required.
Our Director of Information Technology has served in various roles in information technology and information security for over 26 years. Our Director of Information Technology, in coordination with our cybersecurity committee, works collaboratively across the Company to implement a program designed to protect our information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents.
Our Director of Information Technology has served in various roles in information technology and information security for over 27 years. Our Director of Information Technology, in coordination with our cybersecurity committee, works collaboratively across the Company to implement a program designed to protect our information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents.
The Board and the Audit Committee would also receive prompt and timely information regarding any cybersecurity incident that meets established reporting thresholds, as well as ongoing updates regarding such incident until it has been addressed, to the extent applicable.
The Board and the Audit Committee will also receive prompt and timely information regarding any cybersecurity incident that meets established reporting thresholds, as well as ongoing updates regarding such incident until it has been addressed, to the extent applicable.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed3 unchanged
Biggest change(c) Securities Authorized for Issuance Under Equity Compensation Plans The following table summarizes the securities authorized for issuance under our equity compensation plans at December 31, 2023: Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders 930,705 - 4,155,538 Total 930,705 - 4,155,538 (d) Recent Sales of Unregistered Securities , Use of Proceeds from Registered Public Offering During the year ended December 31, 2023, there were no unregistered sales of our securities that were not reported in a Current Report on Form 8-K or Quarterly Report on Form 10-Q.
Biggest change(d) Recent Sales of Unregistered Securities , Use of Proceeds from Registered Public Offering During the year ended December 31, 2024, there were no unregistered sales of our securities that were not reported in a Current Report on Form 8-K or Quarterly Report on Form 10-Q.
However, because many of the shares of Class A Common Stock and the Warrants are held by brokers and other institutions on behalf of stockholders, the Company believes there are substantially more beneficial holders of Class A Common Stock and Warrants than record holders.
However, because many of the shares of Class A Common Stock and the Warrants are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial holders of Class A Common Stock and Warrants than record holders.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information (a) Market Information The Company’s Class A Common Stock and Public Warrants are listed on the NYSE American under the symbols “SKYH” and “SKYH WS,” respectively.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information (a) Market Information Our Class A Common Stock and Public Warrants are listed on the New York Stock Exchange under the symbols “SKYH” and “SKYH WS,” respectively.
(e) Purchases of Equity Securities by the Issuer and Affiliated Purchasers There were no repurchases of our equity securities during the three months ended December 31, 2023.
(e) Purchases of Equity Securities by the Issuer and Affiliated Purchasers There were no repurchases of our equity securities during the year ended December 31, 2024.
As of March 18, 2024, there were seven holders of record of Class A Common Stock and two holders of record of Warrants.
As of March 20, 2025, there were 45 holders of record of Class A Common Stock and 2 holders of record of Warrants.
Added
(c) Securities Authorized for Issuance Under Equity Compensation Plans The required information is incorporated by reference from our Proxy Statement to be filed with respect to our 2025 Annual Meeting of Stockholders within 120 days of December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

69 edited+73 added−32 removed36 unchanged
Biggest changeThe following table summarizes our cash and cash equivalents, restricted cash, investments, and restricted investments as of December 31, 2023 and 2022 (in thousands): December 31, 2023 December 31, 2022 Cash and cash equivalents $ 60,257 $ 2,174 Restricted cash 12,009 39,222 Investments 11,866 24,895 Restricted investments 88,213 114,648 Total cash, restricted cash, investments, and restricted investments $ 172,345 $ 180,939 Private Placement and Securities Purchase Agreement On November 1, 2023, we entered into the Private Placement Purchase Agreement with certain Investors, pursuant to which we (i) sold and issued to the Investors on November 2, 2023 an aggregate of 6,586,154 PIPE Shares and accompanying PIPE Warrants to purchase up to 1,141,600 shares of Class A Common Stock, for an aggregate purchase price of $42.8 million, and (ii) sold and issued to the Investors on November 29, 2023 an aggregate of 2,307,692 PIPE Shares and accompanying PIPE Warrants to purchase up to an aggregate of 400,000 shares of Class A Common Stock for an aggregate purchase price of $15.0 million.
Biggest changeThe following table summarizes our cash and cash equivalents, restricted cash, investments, and restricted investments as of December 31, 2024 and 2023 (in thousands): December 31, 2024 December 31, 2023 Cash and cash equivalents $ 42,442 $ 60,257 Restricted cash 51,917 12,009 Investments 18,987 11,866 Restricted investments 13,816 88,213 Total cash, restricted cash, investments, and restricted investments $ 127,162 $ 172,345 2024 Private Placement and Securities Purchase Agreement On September 16, 2024, we entered into the 2024 Purchase Agreement with 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 Initial 2024 PIPE Shares of our Class A Common Stock for an aggregate purchase price of $31.8 million.
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 home basing hangar campus development projects. We expect to raise additional equity capital and issue additional indebtedness as our business grows.
Financing Activities Our primary financing activities have consisted of equity capital raised to fund the growth of our business and proceeds from debt obligations incurred to finance our home basing hangar campus development projects. We expect to raise additional equity capital and issue additional indebtedness as our business grows.
Investing Activities Our primary investing activities have consisted of payments related to the cost of construction at our various home basing 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 home basing hangar campus development projects.
Investing Activities Our primary investing activities have consisted of payments related to the cost of construction at our various home basing hangar campus development projects, investment in U.S. Treasury Securities, and acquisition activities. As our business expands, we expect to continue to invest in our current and anticipated future portfolio of home basing hangar campus development projects.
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. 37 Table of Contents Results of Operations Year ended December 31, 2023 Compared to the Year ended December 31, 2022 The following table sets forth a summary of our consolidated results of operations for the periods indicated below and the changes between the periods (in thousands).
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. 37 Table of Contents Results of Operations Year ended December 31, 2024 Compared to the Year ended December 31, 2023 The following table sets forth a summary of our consolidated results of operations for the periods indicated below and the changes between the periods (in thousands).
Aircraft hangars are in high demand and short supply, with some airports compiling waiting lists that can exceed several years. We believe our scalable, real estate-centric business model is uniquely optimized to capture this market opportunity and address the increased imbalance between the supply and demand for private jet storage.
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.
Our ability to expand through new ground leases and tenant leases at airports is integral to our long-term business strategy and requires that we identify and consummate suitable new ground leases or investment opportunities in real estate properties for our portfolio that meet our investment criteria and are compatible with our growth strategy.
Our ability to 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.
We expect to realize economies of scale in construction through a prototype hangar design replicated at our hangar campuses across the United States. This allows for centralized procurement, straightforward permitting processes, efficient development processes, and the best hangar in business aviation.
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.
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 December 31, 2023.
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 December 31, 2024.
We expect to issue additional debt to finance future site developments and higher interest rates would impact our overall economic performance. In addition, we are subject to credit spreads demanded by fixed income investors.
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.
The cumulative 20 airport site business plan is estimated to cost approximately $1.2 billion, with approximately 65% to 75% anticipated from long-term private activity bonds and the balance with equity or equity linked financing.
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.
As the fleet of private jets in the United States continues to grow, with recent new aircraft deliveries exceeding retirements, demand for hangar space is at a premium in part because new jets require more square footage of hangar space and the pace of new hangar construction has lagged behind the demand.
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.
During the year ended December 31, 2023, the Company received $57.8 million of proceeds during the fourth quarter due to the issuance of Class A Common Stock and Warrants in connection with the Private Placement Purchase Agreement.
During the year ended December 31, 2023, the Company received $57.8 million of proceeds during the respective fourth quarter due to the issuance of Class A Common Stock and Warrants in connection with the 2023 Purchase Agreement.
General and Administrative Expenses The general and administrative expenses reflected in our statement of operations are reflective of the professional, legal and consulting fees, payroll costs, and other general and administrative expenses, including those necessary to support our business as a public company such as expenses associated with corporate governance, SEC reporting, and other compliance matters.
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.
However, there can be no assurance that we will be able to increase the lease rates for the hangars within our hangar campuses to absorb these increased costs and/or delays, if at all.
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.
These larger footprint aircraft do not fit in much of the existing hangar infrastructure and impose stacking challenges and constraints in the traditional shared or community hangars operated by FBOs. The addition of winglets (the vertical extensions on aircraft wingtips) on most modern business jets inhibits wing-over-wing storage.
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.
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 home basing hangar campus development projects.
In May 2023, we acquired a controlling interest in Rapidbuilt, a metal building and hangar door manufacturer, that we expect will ultimately result in an increase in quality and a reduction in the overall cost of the metal building and hangar door components at future development projects.
The approximately $2.0 million increase in net cash provided by financing activities was primarily driven by the equity financing completed during the year ended December 31, 2023, as compared to the year ended December 31, 2022.
The approximately $20.2 million increase in net cash provided by financing activities was primarily driven by the equity financing completed during the year ended December 31, 2024, as compared to the year ended December 31, 2023.
On November 29, 2023 (the “Second Closing Date”), pursuant to the terms of the Private Placement Purchase Agreement, we sold and issued to the Investors an aggregate of 2,307,692 shares of our Class A Common Stock (the “Additional PIPE Shares” and, together with the Initial PIPE Shares, the “PIPE Shares”) and accompanying warrants to purchase an aggregate of 400,000 shares of Class A Common Stock (the “Additional PIPE Warrants” and, together with the Initial PIPE Warrants, the “PIPE Warrants”) for an aggregate purchase price of $15.0 million.
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 cumulative square footage of the business aircraft fleet in the United States increased 50% between 2010 and 2021. Moreover, over that same period, there was an 81% increase in the square footage of larger private jets – those with greater than a 24-foot tail height.
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.
As of December 31, 2023, we were in compliance with all debt covenants.
As of December 31, 2024, we were in compliance with all debt covenants.
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 debt used to fund the capital projects are also capitalized until the capital project is completed.
We allocate a portion of our internal salaries to both capitalized cost of construction and to compensation and benefits 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.
Our home basing hangar campuses feature exclusive private hangars and a full suite of dedicated services specifically optimized for home-based, versus transient, aircraft. The physical footprint of the U.S. business aviation fleet grew by almost 28 million square feet in the ten years preceding the beginning of the COVID-19 pandemic, with hangar supply lagging dramatically, especially in key growth markets.
Our home basing hangar campuses feature exclusive private hangars and a full suite of dedicated services specifically optimized for home-based, versus transient, aircraft. The physical footprint of the U.S. business aviation fleet grew by almost 36 million square feet in the past fourteen years, with hangar supply lagging dramatically, especially in key growth markets.
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 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.
On average, each future campus is anticipated to be composed of at least 100,000 rentable square feet and is expected to cost approximately $55 million per campus, with 60% or more to be funded with additional private activity bonds or other indebtedness.
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.
Given the planned design enhancements at our APA Phase I, DVT Phase I, and ADS Phase I development projects, we anticipate that our total construction costs for these projects to each be greater than our original estimates, and outside of the scope of the guaranteed maximum price construction contracts.
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.
Net cash used in investing activities was approximately $16.3 million for the year ended December 31, 2023, compared to net cash used in investing activities of approximately $187.8 million for the same period in 2022.
Net cash used in investing activities was approximately $43.9 million for the year ended December 31, 2024, compared to net cash used in investing activities of approximately $16.3 million for the same period in 2023.
Other (Income) Expenses Other (income) expenses for the year ended December 31, 2023 was approximately $8.4 million of expense as compared to approximately $5.2 million of income for the year ended December 31, 2022.
Other (Income) Expenses Other (income) expenses for the year ended December 31, 2024 was approximately $33.3 million of expense as compared to approximately $8.5 million of expense for the year ended December 31, 2023.
Net cash used in operating activities was $7.7 million for the year ended December 31, 2023, as compared to $27.5 million of net cash used in operating activities for the same period in 2022.
Net cash used in operating activities was approximately $9.1 million for the year ended December 31, 2024, as compared to approximately $7.7 million of net cash used in operating activities for the same period in 2023.
Net cash provided by financing activities was $54.8 million for the year ended December 31, 2023, compared to $52.8 million for the same period in 2022.
Net cash provided by financing activities was $75.1 million for the year ended December 31, 2024, compared to $54.9 million for the same period in 2023.
On November 1, 2023, we entered into a Securities Purchase Agreement (the “Private Placement Purchase Agreement”) with certain investors (collectively, the “Investors”), pursuant to which we sold and issued to the Investors at an initial closing an aggregate of 6,586,154 shares (the “Initial PIPE Shares”) of our Class A Common Stock and accompanying warrants to purchase up to 1,141,600 shares of Class A Common Stock (the “Initial PIPE Warrants”), for an aggregate purchase price of $42.8 million (the "Initial Financing").
See “Note 11 — Equity ” in the Notes to Consolidated Financial Statements for additional information regarding the 2024 Purchase Agreement. 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").
We previously raised equity capital, along with potential future debt and further equity issuances, including the Private Placement Purchase Agreement entered into on November 1, 2023, see Note 12 — Equity and Redeemable Equity in the Notes to Consolidated Financial Statements, to begin to fund additional airport campuses and reach up to 20 airport campuses over the next several years.
We previously raised equity capital, along with potential future debt and further equity issuances, including the 2024 Purchase Agreement and 2023 Purchase Agreement entered into on September 16, 2024 and November 1, 2023, respectively, see Liquidity and Capital Resources — Private Placement and Securities Purchase Agreement below, to begin to fund additional airport campuses and reach up to 20 airport campuses over the next several years.
We intend to fund the increase in estimated costs by contributing additional corporate cash holdings to SHC, thereby restricting the use of the cash to the project scope of the Series 2021 Bonds.
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.
We believe that we will be able to utilize such a registration statement to efficiently access capital. However, 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.
However, as we have recently become a publicly-traded company, we cannot assure you that we will have access to these sources of capital or that, even if such sources of capital are available, that these sources of capital will be available on favorable terms.
We 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 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.
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.
While we expect that our general and administrative expenses will rise in some measure as our portfolio of campuses grows, we expect that such expenses as a percentage of our portfolio will decrease over time due to efficiencies, economies of scale, insourcing of job functions, and cost control measures. 35 Table of Contents Construction Material Costs and Labor When constructing our home basing hangar campuses, we use various materials and components.
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.
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 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 or otherwise utilize our shelf registration statement on Form S-3 to access the capital markets.
The timing of collection of our tenant receivables, and the timing of spending commitments and payments of our accounts payable, accrued expenses, accrued payroll and related benefits, all affect these account balances.
Our working capital consists primarily of cash, receivables from tenants, prepaid expenses, accounts payable, accrued compensation, accrued other expenses, and lease liabilities. The timing of collection of our tenant receivables, and the timing of spending commitments and payments of our accounts payable, accrued expenses, accrued payroll and related benefits, all affect these account balances.
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.
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.
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 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.
Operating Expenses Operating expenses increased approximately $2.1 million, or 42%, from approximately $5.0 million for the year ended December 31, 2022, to approximately $7.2 million for the year ended December 31, 2023.
Operating Expenses Campus operating expenses increased approximately $0.9 million, or 29%, from approximately $3.1 million for the year ended December 31, 2023, to approximately $4.0 million for the year ended December 31, 2024.
Salaries, wages, and benefits associated with our hangar campus personnel increased by approximately $0.6 million, primarily driven by headcount increases at our BNA and OPF hangar campuses. Other operating expenses increased approximately $1.3 million, primarily driven by increased insurance, property taxes, and utilities associated with operations at our OPF, BNA, and SGR hangar campuses.
Salaries, wages, and benefits associated with our hangar campus personnel increased approximately $0.6 million, primarily driven by the commencement of operations at our SJC hangar campus in April 2024, and headcount increases at our BNA and OPF hangar campuses.
The shift from income to expense was primarily due to an approximately $13.7 million variance related to the mark-to-market of the outstanding warrants at December 31, 2023 as compared to December 31, 2022.
The approximately $24.8 million, or 294%, increase in expense was primarily due to an approximately $25.9 million variance related to the mark-to-market of the outstanding Warrants at December 31, 2024 as compared to December 31, 2023.
We believe that recent inflationary pressures and market conditions will lead to continued increases in construction costs as well as market rental rates for hangars within our hangar campus development projects.
We 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.
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.
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. 34 Table of Contents 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.
We contract for certain of our materials and labor with general contractors under guaranteed maximum price contracts upon receipt of building permits. This allows us to mitigate certain of the risks associated with increases in certain building materials and labor costs between the time construction begins on a hangar campus and the time it is completed.
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.
A recent study conducted by a business aircraft manufacturer forecasted that business aircraft will only continue to grow in the next ten years, with up to 8,500 new business jet deliveries worth over $275 billion expected to be delivered between 2024 and 2033, further supported by data from the major business aviation manufacturers that suggest the current order backlog for new business aviation aircraft is over $49 billion.
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.
Lease Commitments The table below sets forth certain information with respect to our future minimum lease payments required under operating and finance leases as of December 31, 2023 (in thousands): Year Ending December 31, Operating Leases Finance Leases 2024 $ 2,080 $ 29 2025 2,323 24 2026 3,296 17 2027 3,727 2 2028 3,634 - Thereafter 249,683 - Total lease payments 264,743 72 Less imputed interest (195,306 ) (5 ) Total $ 69,437 $ 67 Contractual Obligations The following table sets forth our contractual obligations as of December 31, 2023 (in thousands): 2024 2025-2026 2027-2028 Thereafter Total Principal Payments of bonds payable $ - $ - $ - $ 166,340 $ 166,340 Interest Payments on bonds payable 6,941 13,881 13,881 114,968 149,671 Contractual payments on other long-term indebtedness 2,484 7,981 95 - 10,560 Lease commitments 2,109 5,660 7,363 249,683 264,815 Total $ 11,534 $ 27,522 $ 21,339 $ 530,991 $ 591,386 Off-Balance Sheet Arrangements We do not maintain any off-balance sheet arrangements. 40 Table of Contents Cash Flows Historical Cash Flows The following table summarizes our sources and uses of cash for the years ended December 31, 2023 and 2022 (in thousands): Year ended December 31, 2023 December 31, 2022 Cash and restricted cash at beginning of period $ 41,396 $ 203,935 Net cash used in operating activities (7,735 ) (27,491 ) Net cash used in investing activities (16,268 ) (187,838 ) Net cash provided by financing activities 54,873 52,790 Cash and restricted cash at end of period $ 72,266 $ 41,396 Operating Activities Cash provided by operating activities is significantly influenced by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business.
Lease Commitments The table below sets forth certain information with respect to our future minimum lease payments required under operating and finance leases as of December 31, 2024 (in thousands): Year Ending December 31, Operating Leases Finance Leases 2025 $ 6,353 $ 24 2026 7,460 17 2027 8,305 2 2028 8,678 - 2029 9,051 - Thereafter 477,868 - Total lease payments 517,715 43 Less imputed interest (364,918 ) (2 ) Total $ 152,797 $ 41 Contractual Obligations The following table sets forth our contractual obligations as of December 31, 2024 (in thousands): 2025 2026-2027 2028-2029 Thereafter Total Principal Payments of bonds payable $ - $ - $ - $ 166,340 $ 166,340 Interest Payments on bonds payable 6,941 13,881 13,881 108,027 142,730 Contractual payments on other long-term indebtedness 7,909 131 34 - 8,074 Lease commitments 6,377 15,784 17,729 477,868 517,758 Total $ 21,227 $ 29,796 $ 31,644 $ 752,235 $ 834,902 Off-Balance Sheet Arrangements We do not maintain any off-balance sheet arrangements. 41 Table of Contents Cash Flows Historical Cash Flows The following table summarizes our sources and uses of cash for the years ended December 31, 2024 and 2023 (in thousands): Year ended December 31, 2024 December 31, 2023 Cash and restricted cash at beginning of period $ 72,266 $ 41,396 Net cash used in operating activities (9,095 ) (7,735 ) Net cash used in investing activities (43,907 ) (16,268 ) Net cash provided by financing activities 75,095 54,873 Cash and restricted cash at end of period $ 94,359 $ 72,266 Operating Activities Cash provided by operating activities is significantly influenced by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business.
We structure our guaranteed maximum price construction contracts with shared savings clauses to incentivize the general contractors to reduce construction costs.
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.
Typically, the materials and most of the components used to construct our hangar campuses are readily available in the United States. We continue to monitor the supply markets to achieve the best prices available. Typically, the price changes that most significantly influence our operations are price increases in steel, concrete, and labor.
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.
The independent peer reviews determined a significant design defect existed within our prototype hangar building designs that will require retrofitting to both meet and exceed our standards and the respective local building codes.
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.
For a more complete description of our operations, including our home basing hangar campus development projects, refer to Item 1 — Business . 34 Table of Contents Recent Developments On October 11, 2023, we entered into a ground lease agreement (the “PWK Lease”) with PWK.
For a more complete description of our operations, including our home basing hangar campus development projects, refer to Item 1 — Business .
General and Administrative Expenses For the years ended December 31, 2023 and 2022, general and administrative expenses were approximately $15.1 million and approximately $14.7 million, respectively.
Headcount and compensation expenses increased approximately $1.8 million, and non-cash equity compensation expense increased approximately $1.6 million. For the years ended December 31, 2024 and 2023, other general and administrative expenses were approximately $3.5 million and approximately $3.3 million, respectively.
The aggregate PIPE financing through the Private Placement Purchase Agreement totaled approximately $57.8 million. See “Note 12 — Equity and Redeemable Equity ” in the Notes to Consolidated Financial Statements for additional information regarding the Private Placement Purchase Agreement.
The aggregate PIPE financing through the 2023 Purchase Agreement totaled approximately $57.8 million. See “Note 11 — Equity ” in the Notes to Consolidated Financial Statements for additional information regarding the 2023 Purchase Agreement. 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.
Our ability to enter into new ground leases and tenant leases on favorable terms, or at all, may be adversely affected by a number of factors. We believe that the business environment of the industry segments in which our tenants operate is generally positive for tenants.
Our ability to enter into new ground leases on favorable terms, or at all, may be adversely affected by certain significant factors.
Rental revenue and the corresponding rent and other receivables are recorded net of any concessions and uncollectible tenant receivables for all periods presented. The Company evaluates the collectability of tenant receivables for payments required under the lease agreements.
The Company evaluates the collectability of tenant receivables for payments required under the lease agreements.
We expect that over time this vertical integration will enable us to deliver metal buildings to each development site in shorter timeframes, which we believe will reduce the overall construction duration of each development project in the future.
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.
The increase is primarily reflective of the cumulative impact of the commencement of operations at our BNA and OPF hangar campuses, which opened during the three months ended December 31, 2022 and March 31, 2023, respectively.
The approximately $5.6 million, or 78%, increase was primarily the result of the commencement of operations at SJC during the three months ended June 30, 2024 and the impact of increased occupancy at our BNA and OPF hangar campuses during the year ended December 31, 2024.
If airport landlords increase the per acre cost of the ground lease of our target campuses, the operating margins at potential target developments may be impacted negatively. Interest Expense Economic conditions and actions by policymaking bodies are contributing to rising interest rates, which, along with increases in our borrowing levels, could increase our future borrowing costs.
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.
Treasury investment purchases and a decrease of approximately $10.9 million of proceeds received from such investments during the year ended December 31, 2023 as compared to the same period in 2022.
Treasury securities, which was comprised of an approximately $172.0 million decrease in purchases of held-to-maturity investments, an approximately $169.4 million increase in proceeds received from available-for-sale investments, an approximately $190.2 million increase in purchases of available-for-sale investments, and an approximately $124.0 million decrease in proceeds received from held-to-maturity investments for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
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. 36 Table of Contents 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.
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. 36 Table of Contents Critical Accounting Policies and Estimates The preparation of financial statements and related disclosures in conformity with GAAP 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.
The decrease of $171.5 million of net cash used in investing activities was driven primarily by an increase of approximately $193.4 of proceeds received from the Company's held-to-maturity investments during the year ended December 31, 2023 as compared to the year ended December 31, 2022. The decrease was also attributable to a decrease of approximately $21.8 million of held-to-maturity U.S.
The increase of approximately $27.6 million of net cash used in investing activities was driven primarily by the CMA asset acquisition during the three months ended December 31, 2024, which drove a increase of approximately $31.7 million, and a $20.9 million increase in capital expenditures during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
The SJC Lease covers approximately 7 acres of property. The initial term of the SJC Lease will be 20 years from May 1, 2024, and contains a mutual option to extend the SJC Lease an additional 5 years following the expiration of the initial term.
The TTN Lease contains an option exercisable by the Company to extend the TTN Lease for an additional 20 years following the expiration of such initial term.
Ground lease expense increased approximately $0.2 million, primarily due to new ground leases signed at PWK, BDL, and POU during the three months ended December 31, 2023. Depreciation Expense Depreciation increased approximately $1.6 million, or 228%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Depreciation increased approximately $0.4 million, or 19%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
For the years ended December 31, 2023 and 2022, our operating expense related to ground leases was $4.0 million and $3.7 million, respectively. As we enter into new ground leases at new airport sites, our payments to airport landlords will continue to increase into the future.
For the years ended December 31, 2024 and 2023, we recognized expense related to ground leases of approximately $8.6 million and $3.9 million, respectively.
Year ended December 31, 2023 December 31, 2022 Change Revenue: Rental revenue $ 7,575 $ 1,845 $ 5,730 Total revenue 7,575 1,845 5,730 Expenses: Operating 7,168 5,046 2,122 Depreciation 2,278 695 1,583 Loss on impairment of long-lived assets - 248 (248 ) General and administrative 15,122 14,714 408 Total expenses 24,568 20,703 3,865 Operating loss (16,993 ) (18,858 ) 1,865 Other (income) expense: Interest expense, net of capitalized interest 541 - 541 Other (income) expense (737 ) (98 ) (639 ) Unrealized (gain) loss on warrants 8,644 (5,082 ) 13,726 Total other (income) expense 8,448 (5,180 ) 13,628 Net loss $ (25,441 ) $ (13,678 ) $ (11,763 ) Revenues Revenues for the year ended December 31, 2023 were approximately $7.6 million, compared to approximately $1.8 million for the year ended December 31, 2022.
Year ended December 31, 2024 December 31, 2023 Change Revenue: Rental revenue $ 12,700 $ 7,137 $ 5,563 Fuel revenue 2,061 438 1,623 Total revenue 14,761 7,575 7,186 Expenses: Campus operating expenses 3,953 3,065 888 Fuel expenses 555 214 341 Ground lease expenses 8,564 3,889 4,675 Depreciation and amortization 2,706 2,278 428 Pursuit and marketing expenses 2,027 1,519 508 Employee compensation and benefits 13,882 10,310 3,572 General and administrative expenses 3,488 3,293 195 Total expenses 35,175 24,568 10,607 Operating loss (20,414 ) (16,993 ) (3,421 ) Other (income) expense: Interest expense, net of capitalized interest 715 541 174 Other (income) expense (1,961 ) (737 ) (1,224 ) Unrealized (gain) loss on warrants 34,515 8,644 25,871 Total other (income) expense 33,269 8,448 24,821 Net loss $ (53,683 ) $ (25,441 ) $ (28,242 ) Revenues Rental revenues for the year ended December 31, 2024 were approximately $12.7 million, compared to approximately $7.1 million for the year ended December 31, 2023.
The anticipated retrofitting efforts are also expected to be applied to ADS Phase I, and we project that the aggregate additional cost of such retrofits could total $26 to $28 million and require an additional three to five months of construction time for each project impacted.
Such retrofitting efforts required an additional three to five months of construction duration for each project impacted.
The approximately $19.8 million decrease in net cash used in operating activities was primarily attributable to a $15.5 million favorable change in the Company's working capital position, which was primarily driven by $9.6 million of initial direct costs associated with the purchase of our former landlord's leasehold interest at OPF during the year ended December 31, 2022.
The approximately $1.4 million increase in net cash used in operating activities was primarily attributable to a $3.4 million unfavorable change in the Company's working capital position, which was primarily driven by the timing of spending commitments and payments of our accounts payable and other accrued expenses.
The increase was partially offset by an approximately $1.4 million decrease in professional fees, which was primarily driven by decreased in legal and accounting related costs due non-recurring transaction costs incurred during the year ended December 31, 2023, and our efforts to internalize job functions, and an approximately $0.8 million decrease in other administrative expenses, primarily due to decreased corporate insurance premiums.
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.
The decrease was also partially attributable to a $4.3 million decrease in net loss, net of non-cash adjustments. The decrease in net loss was primarily driven by an increase in revenue and a decrease in non-recurring general and administrative expenses incurred in the expansion of our business, including transaction-related expenses incurred during the year ended December 31, 2023.
This increase was offset by an approximately $2.0 million decrease in net loss, net of non-cash adjustments. The decrease in net loss, net of non-cash adjustments, was primarily driven by an increase in revenue which outpaced the growth in cash operating expenses.
Removed
The term of the PWK Lease will be 50 years and is divided into two parcels, together allowing for the development of a hangar campus on up to 25 acres of land at PWK.
Added
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.
Removed
Together with the Initial Financing, the aggregate PIPE financing through the Private Placement Purchase Agreement totaled approximately $57.8 million. On December 13, 2023, we entered into a ground lease agreement (the “BDL Lease”) at BDL with the Connecticut Airport Authority (“CAA”). The BDL Lease covers a parcel containing approximately 8 acres of land at BDL.
Added
Recent Developments In September 2024, we entered into a Securities Purchase Agreement (the “2024 Purchase Agreement”) with certain investors (collectively, the “Initial 2024 Investors”), pursuant to which, among other things, we agreed to sell and issue 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 net purchase price of approximately $31.8 million (the “Initial 2024 Closing”), and agreed to sell and issue to the Initial 2024 Investors at a second closing, at the option of the Initial 2024 Investors, up to an aggregate of number of shares equal to the number of each such Initial 2024 Investor's Initial 2024 PIPE Shares purchased in the Initial 2024 Closing at the same purchase price of $9.50 per share (the “Second 2024 Closing” and, together with the Initial Closing, the “2024 Financing”).
Removed
The initial term of the BDL Lease will be 30 years with options exercisable by the Company to extend the BDL Lease an additional 20 years. On December 13, 2023, we entered into a ground lease agreement at POU with the County of Dutchess, New York (the “POU Lease”).
Added
The 2024 Purchase Agreement provided that, at any time prior to the Initial 2024 Closing, and at our sole discretion, additional investors (“Additional 2024 Investors” and, together with the Initial 2024 Investors, the “2024 Investors” ) could execute a joinder to the 2024 Purchase Agreement pursuant to which they would agree to purchase additional shares of Class A Common Stock (the “Additional 2024 PIPE Shares”) in the Initial 2024 Closing, along with the option to purchase Second Closing 2024 PIPE Shares (as defined below).
Removed
The POU Lease covers two parcels containing approximately 7 acres of land at POU. In December 2023 and March 2024, the Company updated its forecasted construction expenditures and timelines as a result of an independent peer review of the hangar buildings designed for our DVT Phase I and APA Phase I development projects.
Added
In October 2024, 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 Additional 2024 PIPE Shares (together with the Initial 2024 PIPE Shares, the “First Closing 2024 PIPE Shares”) for an aggregate purchase price of $5.7 million.
Removed
See “ Factor s That May Influence Future Results of Operations — Construction Material Costs and Labor ” for more information. On March 23, 2024, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “SJC Lease”) at San Jose Mineta International Airport (“SJC”) with the City of San Jose.
Added
The Initial 2024 Closing of the 2024 Financing occurred on October 25, 2024, and 3,955,790 First Closing 2024 PIPE Shares were issued to the 2024 Investors for an aggregate purchase price of $37.6 million.
Removed
On March 27, 2024, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “ORL Lease”) at Orlando Executive Airport (“ORL”) with the Greater Orlando Aviation Authority (“GOAA”). The ORL Lease covers a parcel containing approximately 20 acres of land at ORL.

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