Sky Harbour Group Corp

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’** EQUITY**

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

Sky Harbour Group Corporation (“SHG”) is a holding company organized under the laws of the State of Delaware and, through its main operating subsidiary, Sky Harbour LLC and its subsidiaries (collectively, “Sky”), is an aviation infrastructure development company that develops, leases and manages general aviation hangars for business aircraft across the United States. Sky Harbour Group Corporation and its consolidated subsidiaries are collectively referred to as the “Company.”

The Company is organized as an umbrella partnership-C corporation, or “Up-C”, structure in which substantially all of the operating assets of the Company are held by Sky and SHG’s only substantive assets are its equity interests in Sky (the “Sky Common Units”). As of* June 30, 2024*, SHG owned approximately 37.2% of the Sky Common Units and the prior holders of Sky Common Units (the “LLC Interests”) owned approximately 62.8% of the Sky Common Units and control the Company through their ownership of the Company's Class B Common Stock, $0.0001 par value (“Class B Common Stock”).

Basis of Presentation

The accompanying unaudited consolidated financial statements and the related notes (the “Financial Statements”) have been prepared in conformity with the U.S. Securities and Exchange Commission (the “SEC”) requirements for quarterly reports on Form10-Q, and consequently exclude certain disclosures normally included in audited consolidated financial statements prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).These Financial Statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Financial Statements should be read in conjunction with the audited consolidated financial statements and the notes contained in the Company’s Annual Report on Form10-K for the year ended* December 31, 2023,*which includes additional disclosures and a summary of the Company's significant accounting policies. In the Company’s opinion, these Financial Statements include all adjustments, consisting of normal recurring items, considered necessary by management to fairly state the Company’s results of operation, financial position, and cash flows.

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

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include assumptions used within impairment analyses, estimated useful lives of depreciable assets and amortizable costs, estimates of inputs utilized in determining the fair value of financial instruments such as warrants, estimates and assumptions related to right-of-use assets and operating lease liabilities, and estimates and assumptions used in the determination of the fair value of assets acquired and liabilities assumed in the business combination. Actual results could differ materially from those estimates.

Risks and Uncertainties

The Company’s operations have been limited to-date. For most of its history, the Company has been engaged in securing access to land through ground leases and developing and constructing aviation hangars. The major risks faced by the Company is its future ability to obtain additional tenants for the facilities that it constructs, and to contract with such tenants for rental income in an amount that is sufficient to meet the Company’s financial obligations, including increasing construction costs due to inflation and increased borrowing costs to the extent that the Company incurs additional indebtedness.

Liquidity and Capital Resources

As a result of ongoing construction projects and business development activities, including the development of aircraft hangars and the leasing of available hangar space, the Company has incurred recurring losses and negative cash flows from operating activities since its inception. The Company expects to continue to invest in such activities and generate operating losses in the near future.

The Company obtained long-term financing through bond and equity offerings to fund its construction, lease, and operational commitments, and believes its liquidity is sufficient to allow continued operations for more thanone year after the date these financial statements are issued.

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Significant Accounting Policies

Basis of Consolidation

SHG is deemed to have a controlling interest of Sky through its appointment as the Managing Member of Sky, in which SHG has control over the affairs and decision-making of Sky. The interests in Skynot owned by the Company are presented as non-controlling interests. Sky’s ownership percentage in each of its consolidated subsidiaries is 100%, unless otherwise disclosed.

Cost of Construction

Cost of construction on the consolidated balance sheets is carried at cost. The cost of acquiring an asset includes the costs necessary to bring a capital project to the condition necessary for its intended use. Costs are capitalized once the construction of a specific capital project is probable. Construction labor and other direct costs of construction are capitalized. Professional fees for engineering, procurement, consulting, and other soft costs that are directly identifiable with the project and are considered an incremental direct cost are capitalized. Activities associated with internally manufactured hangar buildings, including materials, direct manufacturing labor, and manufacturing overhead directly identifiable with such activities are allocated to our construction projects and capitalized. The Company allocates a portion of its internal salaries to both capitalized cost of construction and to general and administrative expense based on the percentage of time certain employees worked in the related areas. Interest, net of the amortization of debt issuance costs and premiums, and net of interest income earned on bond proceeds, is also capitalized until the capital project is completed.

Once a capital project is complete, the Company begins to depreciate the constructed asset on a straight-line basis over the lesser of the life of the asset or the remaining term of the related ground lease, including expected renewal terms.

Leases

The Company accounts for leases under Accounting Standards Codification (“ASC”) Topic842, Leases. The Company determines whether a contract contains a lease at the inception of the contract. ASC Topic842 requires lessees to recognize lease liabilities and right-of-use (“ROU”) assets for all operating leases with terms of more than12 months on the consolidated balance sheets. The Company has made an accounting policy election tonot recognize leases with an initial term of12 months or less on the Company’s consolidated balance sheets and will result in recognizing those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. When management determines that it is reasonably certain that the Company will exercise its options to renew the leases, the renewal terms are included in the lease term and the resulting ROU asset and lease liability balances.

The Company has lease agreements with lease and non-lease components; the Company has elected the accounting policy tonot separate lease and non-lease components for all underlying asset classes. The Company hasnot elected to capitalize any interest cost that is implicit within its operating leases into cost of construction on the consolidated balance sheet, but instead, expenses its ground lease cost as a component of operating expenses in the consolidated statements of operations.

Warrants liability

The Company accounts for its Warrants (as defined in Note10 —Warrants) in accordance with the guidance contained in ASC Topic815, “Derivatives and Hedging” (“ASC815”), under which warrants that donot meet the criteria for equity classification and must be recorded as derivative liabilities. Accordingly, the Company classifies the Warrants as liabilities carried at their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the warrants are exercised or expire, and any change in fair value is recognized in the consolidated statement of operations.

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Revenue recognition

The Company leases the hangar facilities that it constructs tothird parties. The lease agreements are either on a month-to-month basis or have a defined term and* mayhave options to extend the term. Some of the leases contain options to terminate the lease by either party with given notice. There areno* options given to the lessee to purchase the underlying assets. Rental revenue is recognized in accordance with ASC Topic842, Leases (see Note8 —Leases) and includes fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and is recognized on a straight-line basis over the term of the lease. Rental revenue 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. If the Company determines that collectability isnot probable, the Company recognizes any difference between revenue amounts recognized to date under ASC842 and payments that have been collected from the lessee, including any additional rent or lease termination fees, as a current period adjustment to rental revenue.

Variable lease payments consist of tenant reimbursements for common area maintenance, utilities, and operating expenses of the property, and various other fees, including fees associated with the delivery of aircraft fuel, late fees, and lease termination fees. Variable lease payments are charged based on the terms and conditions included in the respective tenant leases and are recognized in the same period as the expenses are incurred. For thethree andsix months ended* June 30, 2024*, rental revenue includes $673 and $1,053 of variable lease payments, respectively. For thethree andsix months ended* June 30, 2023*, rental revenue includes $187 and $304 of variable lease payments, respectively.

As of* June 30, 2024* and* December 31, 2023*, the deferred rent receivable included in prepaid expenses and other assets was $404 and $367, respectively. Rent received in advance represents tenant payments received prior to the contractual due date, and is included in accounts payable, accrued expenses, and other liabilities. Rent received in advance consisted of $262 and $241 as of* June 30, 2024* and* December 31, 2023*, respectively.

For thethree andsix months ended* June 30, 2024* the Company didnot derive 10% of its revenue from anysingle tenant. For thethree andsix months ended* June 30, 2023* the Company derived approximately 29% and 30% of its revenue fromtwo tenants, respectively.

Income Taxes

SHG is classified as a corporation for Federal income tax purposes and is subject to U.S. Federal and state income taxes. SHG includes in income, for U.S. Federal income tax purposes, its allocable portion of income from the “pass-through” entities in which it holds an interest, including Sky. The “pass-through” entities, arenot subject to U.S. Federal and certain state income taxes at the entity level, and instead, the tax liabilities with respect to taxable income are passed through to the members, including SHG. As a result, prior to the Yellowstone Transaction, Sky wasnot subject to U.S. Federal and certain state income taxes at the entity level.

The Company follows the asset and liability method of accounting for income taxes. This method gives consideration to the future tax consequences associated with the differences between the financial accounting and tax basis of the assets and liabilities as well as the ultimate realization of any deferred tax asset resulting from such differences, as well as from net operating losses and other tax-basis carryforwards. Valuation allowances are recorded to reduce deferred tax assets when it is more likely thannot that a tax benefit willnot be realized. When a valuation allowance is increased or decreased, a corresponding tax expense or benefit is recorded.

The Company recorded income tax expense of $0 and the effective tax rate was 0.0% for thethree andsix months ended* June 30, 2024* and2023. The effective income tax rate for thethree andsix months ended* June 30, 2024* and2023 differs from the federal statutory rate of 21% primarily due to a full valuation allowance against net deferred tax assets as it is more likely thannot that the deferred tax assets willnot be realized due to the cumulative losses sustained by the Company to date.

Recently Issued Accounting Pronouncements

Segment Reporting (Topic 280)

In* November**2023,* the FASB issued ASUNo. 2023-07, Segment Reporting (Topic280*): Improvements to Reportable Segment Disclosures*, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The disclosure requirements included in ASUNo. 2023-07 are required for all public entities, including entities with a single reportable segment. ASUNo. 2023-07 is effective for fiscal years beginning after* December 15,2023, and interim periods within fiscal years beginning after December 15, 2024,*and early adoption is permitted. The guidance is required to be applied on a retrospective basis. The Company is currently evaluating the impact of the standard on our consolidated financial statement disclosures.

Income Taxes (Topic 740)

In* December 2023,the FASB issued ASUNo.* 2023-09, Income Taxes (Topic740*): Improvements to Income Tax Disclosures*. The amendments in this update apply to all entities that are subject to Topic740, Income Taxes. The standard requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The amendments in this update are effective for annual periods beginning after* December 15, 2024.*The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of this updated standard on its disclosures to the consolidated financial statements.

On* May 12, 2023 (*the “Option Exercise Date”), Sky exercised its option to acquire a 51% equity interest in Overflow Ltd., a Texas limited partnership (“Overflow”), and its wholly-owned operating subsidiary, Rapidbuilt, Inc., a Texas corporation (“Rapidbuilt”), for nominal consideration (the “Rapidbuilt Acquisition”). As a result of the Rapidbuilt Acquisition, Weatherford Steel Buildings Holdings LLC, a Delaware limited liability company and wholly-owned subsidiary of Sky (“WSBH”), owns a 50% limited partnership interest in Overflow, and Weatherford Steel Buildings GP LLC, a Delaware limited liability company and wholly-owned subsidiary of Sky (“WSB GP”), owns a 1% general partnership interest in Overflow.

Rapidbuilt is a manufacturer of pre-engineered steel buildings that previously entered into a supplier arrangement with Sky. Rapidbuilt and Sky’s strategic partnership has resulted in a standard set of proprietary prototype hangar designs, which are intended to deliver high-quality business aviation facilities, lower construction costs, minimize development risk, expedite permit issuance, and facilitate the implementation of refinements across Sky’s portfolio. The Company had pre-existing relationships with Rapidbuilt through a vendor agreement entered into in* July 2022*to acquire construction materials related to the Company's development projects (the “Rapidbuilt Vendor Agreement”) and a revolving line of credit loan and security agreement (the “Rapidbuilt Loan Agreement”) to fund the working capital requirement of Rapidbuilt. These pre-existing relationships were effectively settled in the acquisition and the net receivable balance of $44 is included within the consideration transferred.No gain or loss was recognized in the effective settlement of the Rapidbuilt Vendor Agreement and the Rapidbuilt Loan Agreement.

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

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

Following the Rapidbuilt Acquisition, substantially all of Overflow and Rapidbuilt's activities relate to the manufacturing of pre-engineering hangar structures for Sky's hangar development projects. As such, the pro-forma effect of this acquisition on revenues and earnings wasnot material.

Investments of the Company's cash in various U.S. Treasury securities have been classified as available-for-sale and are carried at estimated fair value utilizing Level1 inputs as determined based upon quoted market prices.

Pursuant to provisions within the Master Indenture of the Series2021 Bonds, as defined in Note9 —Bonds payable, loans payable, and interest, the Company invests the funds held in the restricted trust bank accounts in various U.S. Treasury securities. Therefore, such investments are reported as “Restricted investments” in the accompanying consolidated balance sheets. Unrealized losses on certain of the Company's investments and restricted investments are primarily attributable to changes in interest rates. The Company doesnot believe the unrealized losses represent impairments because the unrealized losses are due to general market factors. The Company hasnot recognized an allowance for expected credit losses related to its investments or restricted investments as the Company hasnot identified any unrealized losses attributable to credit factors during thethree andsix months ended* June 30, 2024*. The held-to-maturity restricted investments are carried on the consolidated balance sheet at amortized cost. As of* June 30, 2024*, the Company has the ability and intent to hold these restricted investments until maturity, and as a result, the Company wouldnot expect the value of these investments to decline significantly due to a sudden change in market interest rates. The fair value of the Company’s restricted investments is estimated utilizing Level1 inputs including prices for U.S. Treasury securities with comparable maturities on active markets.

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

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

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

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

Depreciation expense for thethree months ended* June 30, 2024* and2023 totaled $450 and $448, respectively. Depreciation for thesix months ended* June 30, 2024* and2023 totaled $898 and $839, respectively.

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

Depreciation expense for thethree months ended* June 30, 2024* and2023 totaled $191 and $83, respectively. Depreciation for thesix months ended* June 30, 2024* and2023 $373 and $141, respectively. Capitalized depreciation of long-lived assets included in cost of construction totaled $130 and $119 for thethree months ended* June 30, 2024* and2023, respectively. Capitalized depreciation of long-lived assets included in cost of construction totaled $266 and $119 for thesix months ended* June 30, 2024* and2023, respectively.

As of* June 30, 2024* and* December 31, 2023,long-lived assets included approximately $653 and $362, respectively, of purchase deposits towards long-lived assets which arenot* being depreciated as the assets havenot been placed into service.

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Accounts payable, accrued expenses and other liabilities

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

Supplemental Cash Flow Information

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

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

The following table summarizes interest paid:

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

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Lessee

The table below sets forth a summary of operating lease expense for thethree andsix months ended* June 30, 2024and2023* recorded in the captions within our consolidated statement of operations:

The Company’s ground leases at airports are classified as operating leases under ASC Topic842. Management has determined that it is reasonably certain that the Company will exercise its options to renew the leases, and therefore the renewal options are included in the lease term and the resulting ROU asset and operating lease liability balances. As the Company’s lease agreements donot provide a readily determinable implicit rate, nor is the rate available to the Company from its lessors, the Company uses its incremental borrowing rate to determine the present value of the lease payments. In addition to the Company’s ground leases, the company has operating leases for office space and ground support vehicles, and finance leases for vehicles supporting operations at Rapidbuilt.

The Company’s lease population doesnot include any residual value guarantees. The Company has operating leases that contain variable payments, most commonly in the form of common area maintenance and operating expense charges, which are based on actual costs incurred. These variable payments were excluded from the calculation of the ROU asset and operating lease liability balances since they arenot fixed or in-substance fixed payments. These variable payments werenot material in amount for thethree andsix months ended* June 30, 2024and2023*. Some of the leases contain covenants that require the Company to construct the hangar facilities on the leased grounds within a certain period and spend a set minimum dollar amount. Forone of the leases, the shortfall (if any) must be paid to the lessor. See Note15 —Commitments and Contingencies.

The Company’s ground leases have remaining terms ranging between 16 to 73 years, including options for the Company to extend the terms. These leases expire between2040 and2097, which include all lease extension options available to the Company. Certain of the Company's ground leases contain options to lease additional parcels of land at the Company's option within a specified period of time.

In* March 2024,the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “SJC Lease”) at SJC with the City of San Jose. The SJC Lease covers approximately7* acres of property that contains an approximately 38,000 square foot hangar, approximately 19,000 square feet of office space, and approximately 108,000 square feet of apron and ramp space. The property at SJC includes additional land on which the Company intends to develop approximately 28,000 square feet of additional hangar space. The initial term of the SJC Lease will be 20 years from* May 1, 2024,*and contains a mutual option to extend the SJC Lease an additional 5 years following the expiration of the initial term.

In* March 2024,*the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “ORL Lease”) at ORL with the Greater Orlando Aviation Authority (“GOAA”). The ORL Lease covers a parcel containing approximately 20 acres of land at ORL. The initial term of the ORL Lease will be 30 years from expiration of construction period, with lease payments commencing contemporaneously with the term. The ORL Lease contains options exercisable by the Company to extend the ORL Lease an additional 20 years based on the Company's total expenditures in subsequent phases at ORL.

In* May 2024,the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “IAD Lease”) at IAD with the Metropolitan Washington Airports Authority (“MWAA”). The IAD Lease covers approximately 18 acres of property at IAD. The initial term of the IAD Lease will be approximately 50 years and expire on March 31, 2074,and contains an option exercisable by the Company to extend the IAD Lease an additional 10 years following the expiration of the initial term. The property covered by the IAD Lease is split betweentwo* parcels, with rent payments associated with thefirst parcel (“IAD Phase I”) commencing the earlier of certificate of occupancy or36 months from the issuance of permits for IAD Phase I, and rent payments associated with thesecond parcel (“IAD Phase II”) commencing the earlier of issuance of permits for IAD Phase II orfive years from certificate of occupancy associated with IAD Phase I. The IAD Lease requires the Company to commence construction related to IAD Phase II withinfive years of the receipt of the certificate of occupancy for IAD Phase I.

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

Supplemental consolidated balance sheet information related to the Company’s leases was as follows:

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

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Lessor

The Company leases the hangar facilities that it constructs tothird-party tenants. These leases have been classified as operating leases. The Company doesnot have any leases classified as sales-type or direct financing leases. Lease agreements with tenants are either on a month-to-month basis or have a defined term with an option to extend the term. The defined term leases vary in length fromone toten years with options to renew for additional term(s) given to the lessee. There areno options given to the lessee to purchase the underlying assets.

The leases* maycontain variable fees, most commonly in the form of tenant reimbursements, which are recoveries of the common area maintenance and operating expenses of the property and are recognized as income in the same period as the expenses are incurred. The leases didnot* have any initial direct costs. The leases donot contain any restrictions or covenants to incur additional financial obligations by the lessee.

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

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Bonds payable

On* May 20, 2021,Sky formed a new wholly-owned subsidiary, Sky Harbour Capital LLC (“SHC”), as a parent corporation to its wholly-owned subsidiaries that operate each of the aircraft hangar development sites under its ground leases. SHC and these subsidiaries form an Obligated Group (the “Obligated Group” or the “Borrowers”) under a series of bonds that were issued in September 2021with a principal amount of $166.3 million (the “Series2021* Bonds”). The members of the Obligated Group are jointly and severally liable under the Series2021 Bonds. SHG and its other subsidiaries arenot members of the Obligated Group and haveno obligation to repay the bonds.

The Series2021 Bonds are payable pursuant to a loan agreement dated* September 1, 2021between the Public Finance Authority (of Wisconsin) and the Borrowers. The payments by the Borrowers under the loan agreement are secured by a Senior Master Indenture Promissory Note, Series2021*-1 issued by the Obligated Group under an indenture (the “Master Indenture”). The obligations of the Borrowers are collateralized by certain leasehold and subleasehold deeds of trust or mortgages on the Borrowers’ interests in the development sites and facilities being constructed at each airport where the Borrowers hold ground leases. In addition, the Borrowers have assigned, pledged and granted afirst priority security interest in all funds held under the Master Indenture and all right, title and interest in the gross revenues of the Borrowers. Furthermore, Sky, Sky Harbour Holdings LLC and SHC have each pledged as collateral its respective ownership interest in any of the Borrowers.

The Series2021 Bonds have principal amounts, interest rates, and maturity dates as follow: $21.1 million bearing interest at 4.00%, due* July 1, 2036;$30.4 million bearing interest at 4.00%, due July 1, 2041;and $114.8 million bearing interest at 4.25%, due July 1, 2054.The Series2021* Bond that has a maturity date of* July 1, 2036was issued at a premium, and the Company received bond proceeds that were $0.2 million above its face value. The bond premium is being amortized as a reduction of interest expense over the life of the bond. Interest is payable on each January 1and July 1,commencing January 1, 2022.Principal repayments due under the Series2021* Bonds are paid annually, commencing* July 1, 2032.*

On* March 22, 2023**,* SHC elected to modify the scope of the Series2021 Bonds pursuant to the terms of the Master Indenture, in order to reallocate a portion of the proceeds of the Series2021 Bonds to its project site located at ADS (the “ADS Project”) . In connection with the election to modify the scope of the Series2021 PABs to include the ADS Project, (i) Addison Hangars LLC (“Sky Harbour Addison”) and OPF Hangars Landlord LLC (“OPF Hangars”) joined as members of the Obligated Group, (ii) Sky Harbour Holdings LLC contributed its membership interest in OPF Hangars to SHC, (iii) SHC pledged its equity interest in each of Sky Harbour Addison and OPF Hangars to the Master Trustee as security for the obligations under the Series2021 Bonds, (iv) Sky Harbour Addison granted to the Master Trustee a mortgage on its leasehold interest in the real property comprising the ADS Project, (v) OPF Hangars granted the Master Trustee a mortgage on its leasehold interest in the real estate comprising the project located in Opa Locka, Florida, and (vi) Sky Harbour Services LLC, a wholly-owned subsidiary of the Company, has agreed to waive all management fees and development fees during the construction period of the projects associated with the Series2021 Bonds.

As of* June 30, 2024* and* December 31, 2023*, the fair value of the Company’s Series2021-1 Bonds was approximately $134.2 million and $116.5 million, respectively. As of* June 30, 2024* and* December 31, 2023*, the fair value of the Company’s bonds is estimated utilizing Level2 inputs including prices for the bonds on inactive markets.

The following table summarizes the Company’s Bonds payable as of* June 30, 2024* and* December 31, 2023*:

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Loans Payable and Finance Leases

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

Interest

The following table sets forth the details of interest expense:

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SHG's legal predecessor, Yellowstone Acquisition Company (“YAC”), issued tothird-party investors 6,799,439 warrants which entitled the holder to purchaseone share of Class A Common Stock at an exercise price of $11.50 per share (the “Public Warrants”). In addition,7,719,779 private placement warrants were sold to BOC Yellowstone LLC (the “Sponsor”). Each Private Warrant allows the Sponsor to purchaseone share of Class A Common Stock at an exercise price of $11.50 per share. The Public Warrants and Private Warrants remain outstanding under the same terms and conditions to purchase shares of the Company’s Class A Common Stock. The terms of the Private Warrants are identical to those of the Public Warrants, except for that so long as the Private Warrants are held by the Sponsor or its permitted transferees, they* may*be exercised on a cashless basis.

In connection with the Securities Purchase Agreement (the “Private Placement Purchase Agreement”) entered into on* November 1, 2023with certain investors, the Company issued tothird*-party investors 1,541,600 warrants (the “PIPE Warrants”, and together with the Public Warrants and the Private Warrants, the “Warrants”). The PIPE Warrants are equivalent in form and substance to the Company’s Public Warrants.

The Warrants contain an exercise price of $11.50 per share and expire on* January 25, 2027.The Company determined the fair value of its Public Warrants and PIPE Warrants based on the publicly listed trading price as of the valuation date. Accordingly, these warrants are classified as Level1* financial instruments. As the terms of the Private Warrants are identical to those of the Public Warrants, the Company determined the fair value of its Private Warrants based on the publicly listed trading price of the Public Warrants as of the valuation date and have classified the Private Warrants as Level2 financial instruments.

During thethree andsix months ended* June 30, 2024*,3,639 and 257,342 Warrants were exercised, respectively, resulting in approximately $3.0 million of proceeds. As of* June 30, 2024*,15,803,001 Warrants remain outstanding.

The closing price of the Warrants was $1.24 and $0.75 per warrant on* June 30, 2024* and* December 31, 2023*, respectively. The aggregate fair value of the outstanding Warrants was approximately $19.6 million and $12.0 million as of* June 30, 2024* and* December 31, 2023*, respectively. During thethree months ended* June 30, 2024* and2023, the Company recorded unrealized gains associated with the change in fair value of the Warrants of approximately $8.2 million and $2.6 million, respectively. During thesix months ended* June 30, 2024* and2023, the Company recorded unrealized losses associated with the change in fair value of the Warrants of approximately $8.0 million and $1.6 million, respectively.

Common Equity

As of* June 30, 2024*, there were 24,878,700 and 42,046,356 shares of Class A Common Stock and Class B Common Stock outstanding, respectively. Holders of Class A Common Stock and Class B Common Stock vote together as a single class on all matters submitted to the stockholders for their vote or approval, except as required by applicable law. Holders of Class A Common Stock and Class B Common Stock are entitled toone vote per share on all matters submitted to the stockholders for their vote or approval.

The holders of Class A Common Stock are entitled to receive dividends, as and if declared by the Company’s Board of Directors out of legally available funds. With respect to stock dividends, holders of Class A Common Stock must receive Class A Common Stock. The holders of Class B Common Stock donot have any right to receive dividends other than stock dividends consisting of shares of Class B Common Stock, as applicable, in each case paid proportionally with respect to each outstanding share of Class B Common Stock.

At-the-Market Facility

On* March 27, 2024,the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with B. Riley Securities, Inc. (“B. Riley”) with respect to an “at the market” offering program (the “ATM Facility”), under which the Company may,from time to time, at its sole discretion, issue and sell through B. Riley, acting as sales agent, up to $100 million of shares of Class A Common Stock. Pursuant to the ATM Agreement, the Company maysell the shares through B. Riley by any method permitted that is deemed an “at the market” offering as defined in Rule415* under the Securities Act of1933, as amended. B. Riley will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon instructions from the Company, including any price or size limits or other customary parameters or conditions the Company* mayimpose. The Company will pay B. Riley a commission of 3.0% of the gross sales price per share sold under the ATM Agreement, subject to certain reductions. During thethree* andsix months ended* June 30, 2024,*the Company sold 7,407 shares of Class A Common Stock under the ATM Facility at a weighted-average sales price of $12.42.

The Company isnot obligated to sell any shares under the ATM Agreement. The offering of shares pursuant to the ATM Agreement will terminate upon the earlier to occur of (i) the issuance and sale, through B. Riley, of all of the shares subject to the ATM Agreement and (ii) termination of the ATM Agreement in accordance with its terms.

In connection with entering into the ATM Agreement, on* March 27, 2024,the Company and B. Riley terminated (the “B. Riley Termination”) the Common Stock Purchase Agreement (the “B. Riley Stock Purchase Agreement”) dated August 18, 2022.As a result of the B. Riley Termination, the Company recognized approximately $0.1 million of expense associated with the write-off of deferred equity issuance costs. From August 18, 2022through March 27, 2024,the Company hadnot* directed B. Riley to purchase any Class A Common Stock pursuant to the B. Riley Stock Purchase Agreement.

Non-controlling interests

The LLC Interests’ ownership in Sky is presented as non-controlling interests within the Equity section of the consolidated balance sheet as of* June 30, 2024* and represents the Sky Common Units held by holders other than SHG. The holders of LLC Interests* mayexchange Sky Common Units along with an equal number of Class B Common Shares, for Class A Common Shares on the Company. The LLC Interests donot* have the option to redeem their Sky Common Units for cash or a variable number of Class A Common Shares, nor does SHG have the option to settle a redemption in such a manner. As of* June 30, 2024*, the LLC interests owned approximately 62.8% of the Sky Common Units outstanding.

The former majority shareholder's ownership in Overflow is presented as a non-controlling interest within the Equity section of the consolidated balance sheet. As of* June 30, 2024*, the former majority shareholder owned approximately 49% of the partnership interests in Overflow.

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Restricted Stock Units (“RSUs”)

In* February 2024,the Company granted time-based RSUs to certain employees under the Company’s2022* Incentive Award Plan.430,002 of time-based awards were granted at a grant date fair value of $12.33, which will vest ratably over afour-year period beginning on thefirst anniversary of the grant date and ending on* February 15, 2028.*

During thethree andsix months ended* June 30, 2024*, the Company recognized stock compensation expense of approximately $0.9 million and $1.9 million, respectively, associated with all RSU awards, which is recorded within General and Administrative Expenses within the statement of operations. During thethree andsix months ended* June 30, 2023,the Company recognized stock compensation expense of $0.5 million and $0.9 million, respectively. As of June 30 2024,there are approximately 1,029,697 unvested RSUs outstanding with a weighted average grant date fair value of $9.82. The unrecognized compensation costs associated with all unvested RSUs at June 30, 2024*was approximately $8.4 million that is expected to be recognized over a weighted-average future period of 2.9 years.

Non-qualified Stock Options (“NSOs”)

In* February 2024,the Company granted to certain employees options to purchase 438,781 shares of Class A Common Stock at an exercise price of $11.63 under the Company's2022* Incentive Award Plan. The NSOs vest ratably over afour-year period beginning on thesixth anniversary of the grant date and have a term of 10 years. The options were valued at $7.32 using a Black -Scholes pricing model. During thethree andsix months ended* June 30, 2024,the Company recognized stock compensation expense of $0.1 million associated with all NSO awards. The unrecognized compensation costs associated with all unvested NSOs at June 30, 2024*was approximately $3.1 million that is expected to be recognized over a weighted-average future period of 8.6 years.

Sky Incentive Units

The Company recognized equity-based compensation expense relating to awarded equity units of Sky (the “Sky Incentive Units”) of $45 and $91 for thethree andsix months ended* June 30, 2024,respectively, and $81 and $166 for thethree* andsix months ended* June 30, 2023,respectively. Expense associated with the Sky Incentive Units is recorded within General and Administrative Expenses within the statement of operations, and as a component of the non-controlling interest in the consolidated statement of changes in stockholders’ equity. As of June 30, 2024*, there was $0.2 million of total unrecognized compensation expense that is expected to be recognized over a weighted-average future period of 0.9 years.

Basic earnings (loss) per share of Class A Common Stock is computed by dividing net income (loss) attributable to SHG by the weighted-average number of shares of Class A Common Stock outstanding during the period. Diluted net income (loss) per share of Class A Common Stock is computed by dividing net income (loss) attributable to SHG, adjusted for the assumed exchange of all potentially dilutive securities, by the weighted-average number of shares of Class A Common Stock outstanding adjusted to give effect to potentially dilutive shares using the treasury stock or if-converted method as appropriate. Shares of the Company’s Class B Common Stock donot participate in the earnings or losses of the Company and are thereforenot participating securities. As such, separate presentation of basic and diluted earnings per share of Class B Common Stock under thetwo-class method hasnot been presented.

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

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The following table summarizes the components of Accumulated other comprehensive income:

In addition to the lease payment commitments discussed in Note 8 —Leases, the ground leases to which the Company is a party contain covenants that require the Company to conduct construction of hangar facilities on the leased grounds within a certain period and in some cases, to spend a minimum dollar amount.

The APA Lease requires the Company to improve the property in accordance with a development plan included in the lease and to complete such improvements within 24-months of the issuance of permitting documents. Construction began on the APA Phase I project in* October 2022.*

The DVT Lease requires approximately $15.3 million and $14.6 million of improvements to be made for Phase I and for Phase II, if such option is exercised, respectively, within12-months after receiving permitting documents for each Phase, but inno event later than* May 2026.Construction began on the DVT Phase I project in December 2022.*

The Company has committed to spend $10.0 million in capital improvements on the ADS construction project. If this amount isnot expended, the Company is subject to a reduction of the term of the lease.

The PWK Lease contains a requirement that the Company must commence construction withinsix months of the issuance of permits and must complete construction within18 months of construction commencement. If the Company is unable to adhere to the prescribed timeline and unable to receive an extension from PWK, the PWK Lease is subject to termination.

The SJC Lease contains customary milestones by which the Company must complete additional construction.

The ORL Lease requires that the Company construct $30 million of improvements in its initial phase of construction within24 months of the effective date of the lease. The ORL Lease contains other customary milestones by which the Company must commence and complete subsequent phases of construction.

The Company has contracts for construction of the APA Phase I, DVT Phase I, and ADS Phase I projects. The Company* may*terminate any of the contracts or suspend construction without cause. There areno termination penalties under the construction contracts.

In addition to the matters described in this note, the Company is involved is various legal proceedings and claims in the ordinary course of its business. Although the Company cannot predict with certainty the ultimate resolution of these matters, which involve judgements that are inherently subjective, the Company doesnot expect that the ultimate disposition of such other contingencies or matters will materially affect its financial condition, results of operations or cash flows.

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On* September 20, 2021,the Company entered into a non-exclusive agreement with Echo Echo, LLC, a related party to the Founder and CEO, for the use of a Beechcraft BaronG58* aircraft. The effective date of the agreement was* September 8, 2021and the agreement automatically renews annually. The agreement can be terminated without penalty if either party provides35* days written notice, or if the aircraft is sold or otherwise disposed of. The Company is charged per flight hour of use along with all direct operating costs. Additionally, the Company will also incur the pro rata share of maintenance, overhead and insurance costs of the aircraft. For thethree andsix months ended* June 30, 2024*, the Company recognized $18 and $87 of expense, respectively, within General and administrative expense under the terms of this agreement. For thethree andsix months ended* June 30, 2023,the Company recognized $54 and $116 of expense, respectively, associated with this agreement. The related liability is included in Accounts payable, accrued expenses and other liabilities on the consolidated balance sheet as of June 30, 2024*.

For thethree andsix months ended* June 30, 2024*, the Company recognized $0 of expense for consulting services, to a company that employed the chief financial officer until prior to* July 1, 2021.The Company recognized $8 and $95 of expense during thethree* andsix months ended* June 30, 2023,*respectively, to the same company.

On* August 8, 2024,the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “SLC Lease”) at Salt Lake City International Airport (“SLC”) with the Salt Lake City Corporation. The SLC Lease covers approximately 8.4 acres of property at SLC. The initial term of the SLC Lease will be 30 years from the earlier of certificate of occupancy or24* months from the expiration of the diligence period, as defined in the SLC Lease, with lease payments commencing contemporaneously with the term. The SLC Lease containstwo options exercisable by the Company to extend the SLC Lease for an additional 20 years following the expiration of the initial term. Under the terms of the SLC Lease, the Company is required to make minimum capital improvements of $40 million.

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