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

September 30, 2025

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* September 30, 2025*, SHG owned approximately 44.6% of the Sky Common Units and the prior holders of Sky Common Units (the “LLC Interests”) owned approximately 55.4% of the Sky Common Units and control the Company through their ownership of the Company's Class B Common Stock, $0.0001 par value (“Class B Common Stock”).

Basis of Presentation

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 SHG and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Financial Statements should be read in conjunction with the audited consolidated financial statements and the notes contained in the Company’s Annual Report on Form10-K for the year ended* December 31, 2024,*which includes additional disclosures and a summary of the Company's significant accounting policies. In the Company’s opinion, these Financial Statements include all adjustments, consisting of normal recurring items, considered necessary by management to fairly state the Company’s results of operation, financial position, and cash flows.

Certain historical amounts have been reclassified to conform to the current year’s presentation. Amounts previously presented as rental revenue are now separately disclosed as rental revenue and fuel revenue within the consolidated statement of operations. Amounts previously presented as operating expenses are now separately disclosed as campus operating expenses, fuel expenses, and ground lease expenses within the consolidated statement of operations. Amounts previously presented as general and administrative expenses are now separately disclosed as pursuit and marketing expenses, compensation and benefits, and general and administrative expenses within the consolidated statement of operations. These reclassifications hadno effect on total revenue, total expenses, net loss, net loss per common share and hadno impact on the Company’s consolidated balance sheets, statement of stockholders’ equity and statement of cash flows for the prior year period.

Use of Estimates

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

Risks and Uncertainties

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

Liquidity and Capital Resources

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

The Company obtained long-term financing through bond and equity offerings and has the ability to utilize the “at the market” offering program to fund its construction, lease, and operational commitments, and believes its liquidity is sufficient to allow continued operations for more 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 accompanying consolidated balance sheets is carried at cost. The cost of acquiring an asset includes the costs necessary to bring a capital project to the condition necessary for its intended use. Costs are capitalized once the construction of a specific capital project is probable. Construction labor and other direct costs of construction are capitalized. Professional fees for engineering, procurement, consulting, and other soft costs that are directly identifiable with the project and are considered an incremental direct cost are capitalized. Activities associated with internally manufactured hangar buildings, including materials, direct manufacturing labor, and manufacturing overhead directly identifiable with such activities are allocated to our construction projects and capitalized. The Company allocates a portion of its internal salaries to both capitalized cost of construction and to general and administrative expense based on the percentage of time certain employees worked in the related areas. Interest, net of the amortization of debt issuance costs and premiums, and net of interest income earned on bond proceeds, is also capitalized until the capital project is completed.

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

Leases

The Company accounts for leases under Accounting Standards Codification (“ASC”) 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 Note9 —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 Company determines whether a contract contains a lease at the inception of the contract. The lease agreements are either on a month-to-month basis or have a defined term and* mayhave options to extend the term. Some of the leases contain options to terminate the lease by either party with given notice. The Company expects to continue to derive benefit from the underlying assets after the end of the lease term through further leasing arrangements. The underlying assets are the leasehold interest that the Company has in connection with its ground leases. There areno* options given to the lessee to purchase the underlying assets.

Rental revenue is recognized in accordance with ASC842 and includes fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and is recognized on a straight-line basis over the term of the lease. Rental revenue and the corresponding rent and other receivables are recorded net of any concessions and uncollectible tenant receivables, if any, for all periods presented. The Company evaluates the collectability of tenant receivables for payments required under the lease agreements. If the Company determines that collectability 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 payments consist of tenant reimbursements for common area maintenance, utilities, and operating expenses of the property, and various other fees, including fees associated with the delivery of aircraft fuel, late fees, and lease termination fees. Variable payments are charged based on the terms and conditions included in the respective tenant leases and are recognized in the same period as the expenses are incurred.

The table below sets forth a summary of variable payments for thethree andnine months ended* September 30, 2025and2024* recorded in the captions within our consolidated statement of operations:

As of* September 30, 2025* and* December 31, 2024*, the deferred rent receivable included in accounts receivable, prepaid expenses, and other assets was $1,261 and $594, respectively. Rent received in advance represents tenant payments received prior to the contractual due date, and is included in accounts payable, accrued expenses, and other liabilities. Rent received in advance consisted of $807 and $390 as of* September 30, 2025* and* December 31, 2024*, respectively.

At certain of the Company’s hangar campuses, the Company recognizes revenue from ground-based services, such as the fueling and towing of aircraft under ASC Topic606, Revenue from Contracts with Customers. Revenue for the sale of aircraft fuel is recognized at the time customer obtains control of the fuel. Revenue for the sale of other ground-based services is recognized at the time the service is performed and provided to customers. Customers are invoiced at the time the services are performed and the associated revenue is recognized in the period it is earned. The Company’s fueling arrangements generally are unique at each location it operates, and* may*be accounted for on a gross or net basis. The Company determines whether to recognize fuel and services revenue on a gross or net basis based on consideration of various factors, including whether the Company has control of the products or services prior to delivery to customers, the Company’s degree of latitude in establishing the sales price, whether the Company carries the associated inventory risk, and which party is the primary obligor within such sales arrangements.

For thethree andnine months ended* September 30, 2025* and thethree andnine months ended* September 30, 2024*, the Company didnot derive10% of its revenue from any single tenant.

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Income Taxes

SHG is classified as a corporation for U.S. Federal income tax purposes and is subject to U.S. Federal and state income taxes. SHG includes in income, for U.S. Federal income tax purposes, its allocable portion of income from the “pass-through” entities in which it holds an interest, including Sky. The “pass-through” entities 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 transactions contemplated by that certain Equity Purchase Agreement, dated as of* August 1, 2021,by and among Yellowstone Acquisition Company (“YAC”) and Sky, which we refer to as the Yellowstone Transaction, Sky 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 andnine months ended* September 30, 2025* and2024. The effective income tax rate for thethree andnine months ended* September 30, 2025* and2024 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

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

In* November 2024,the FASB issued ASUNo.* 2024-03*,* Income Statement —* Reporting Comprehensive Income: Expense Disaggregation Disclosures (Subtopic* 220-40): Disaggregation of Income Statement Expenses. This ASU requires public business entities to disclose in the notes to financial statements specific categories within relevant expense captions presented on the face of the income statement. The ASU is effective for annual reporting periods beginning after* December 15, 2026,and interim reporting periods beginning after December 15, 2027.*Early adoption is permitted. The amendments should be applied on a prospective basis with retrospective application permitted. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.

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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 Note8 —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 andnine months ended* September 30, 2025*. The held-to-maturity restricted investments are carried on the consolidated balance sheet at amortized cost. As of* September 30, 2025*, 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* September 30, 2025* and* December 31, 2024*:

The following table sets forth the maturity profile of the Company’s investments and restricted investments as of* September 30, 2025*:

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

Depreciation expense for thethree andnine months ended* September 30, 2025* totaled $1,405 and $3,393, respectively. Depreciation expense for thethree andnine months ended* September 30, 2024* totaled $456 and $1,354, respectively.

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

Depreciation expense for thethree andnine months ended* September 30, 2025* totaled $321 and $816, respectively. Depreciation expense for thethree andnine months ended* September 30, 2024* totaled $189 and $562, respectively. Capitalized depreciation of long-lived assets included in cost of construction totaled $119 and $566 for thethree andnine months ended* September 30, 2025*, respectively. Capitalized depreciation of long-lived assets included in cost of construction totaled $112 and $378 for thethree andnine months ended* September 30, 2024*, respectively. As of* September 30, 2025* and* December 31, 2024,long-lived assets included approximately $3,239 and $2,380, respectively, of purchase deposits towards long-lived assets which arenot* being depreciated as the assets havenot been placed into service.

Lease intangible assets, net, consists of the following:

Amortization expense for thethree andnine months ended* September 30, 2025* totaled $74 and $221, respectively, of which $26 and $78 is included within rental revenue within the consolidated statements of operations, respectively.

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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 andnine months ended* September 30, 2025and2024* 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 our pre-engineered metal building subsidiary.

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 andnine months ended* September 30, 2025and2024*. 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* January 2025,the Company executed a lease amendment with respect to its ground lease at APA to add an approximately1* acre parcel of land to the existing lease (the “APA Lease Amendment”). The land associated with the APA Lease Amendment became immediately available for possession in* January 2025*and is co-terminus with the other parcels covered by the Company’s ground lease at APA.

In* April 2025,*the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “HIO Lease”) at Hillsboro Airport (“HIO”) with the Port of Portland. The HIO Lease covers approximately 13 acres of property at HIO. The initial term of the HIO Lease will be 35 years from the later of certificate of occupancy or 18 months from the expiration of the diligence period, as defined in the HIO Lease, with lease payments commencing contemporaneously with the term. The HIO Lease contains an option exercisable by the Company to extend the HIO Lease for an additional 10 years following the expiration of the initial term.

In* April 2025,*the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “SWF Lease”) at New York Stewart International Airport (“SWF”) with the Port Authority of New York and New Jersey. The SWF Lease covers approximately 16 acres of property at SWF. The initial term of the SWF Lease will be 30 years, with lease payments commencing on the earlier of hangar occupancy or 36 months from the receipt of certain environmental approvals. The SWF Lease contains three options exercisable by the Company to extend the SWF Lease for an additional total of 15 years following the expiration of the initial term.

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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* September 30, 2025* were as follows:

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Lessor

The Company leases the hangar facilities that it constructs or rents from municipal landlords 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* September 30, 2025*:

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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* September 30, 2025* and* December 31, 2024*, the fair value of the Company’s Series2021-1 Bonds was approximately $136.8 million and $143.8 million, respectively. As of* September 30, 2025* and* December 31, 2024*, 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* September 30, 2025* and* December 31, 2024*:

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Tax-Exempt Warehouse Facility

On* September 4, 2025,Sky Harbour Capital II LLC (“SH Capital II”), a wholly-owned subsidiary of the Company, entered into a Draw Down Note Purchase And Continuing Covenant Agreement (the “Credit Agreement”), among SH Capital II, the other borrowers party thereto, the lenders party thereto (the “Lenders”) and JPMorgan Chase Bank, N.A., as administrative agent, sole bookrunner and sole lead arranger (“JPMorgan” or “Administrative Agent”). The Credit Agreement provides for, among other things, a term loan facility in an aggregate principal amount of up to $200 million (the “Term Loan Facility”) at anyone* time outstanding. The Term Loan Facility provides for borrowings under the Credit Agreement (the “Loans”) to be made by the Lenders from time to time as requested by SH Capital II. The Lenders will make funds available to the Term Loan Borrowers (as defined below) through the purchase of notes issued by the Issuer (as defined below) pursuant to the Loan and Security Agreement (as defined below) so that the Issuer* mayfund the Loans to Borrowers. The Loans will mature on September 4, 2030,subject to any extensions by the Lenders. The Term Loan Facility may*be increased, subject to credit approval, up to an aggregate principal amount of $300 million.

The Credit Agreement provides for Loans to be made from time to time by special purpose subsidiaries of SH Capital II (SH Capital II together with the special purpose subsidiaries, the “Term Loan Borrowers”) for the construction and operation of hangar project facilities at various airports (the “Hangar Projects”), subject to customary phased eligibility criteria. Loans will be secured by the real estate underlying the Hangar Projects, pledges of equity interests in the Term Loan Borrowers and certain revenues of the Term Loan Borrowers. Sky Harbour LLC, the Company’s operating company, and Sky Harbour Holdings II LLC, the holding company of SH Capital II, and Sky Harbour Holdings III LLC (“SKYH III”) will guarantee the Term Loan Borrowers’ obligations under the Loans pursuant to a Parent Guarantee and a Holdco Guaranty, respectively. In addition, pursuant to a Non-Recourse Carveout Guaranty, the Company will be required to guarantee the Term Loan Borrowers’ obligations under the Loans in certain limited circumstances such as misconduct by the Term Loan Borrowers or the primary guarantors. In addition, SKYH III has entered into a Pledge and Security Agreement with the Administrative Agent pursuant to which it will pledge its interest in an account ( the “Facility Cash Flow Account”) into which will be deposited amounts received by Sky Harbour LLC from excess revenues released from the Master Trust Indenture (Security Agreement), dated as of* August 1, 2021,among Sky Harbour Capital LLC, the Obligated Group, and The Bank of New York Mellon, as master trustee, as amended from time to time and as joined from time to time by additional members as permitted therein (the “Term Loan Master Indenture”).No excess revenues are permitted to be released from the Term Loan Master Indenture until, among other things, substantial completion of the projects financed by the Series2021* Bonds for the benefit of Obligated Group (the*“2021* Projects”).

Certain events* may*disqualify a Hangar Project from further Loans and trigger prepayments such as the cancellation or termination of a construction contract or a ground lease or a material violation of environmental law. The Credit Agreement also has customary and other mandatory prepayment events including the obligation to prepay amounts to bring Company back into compliance with the Leverage Ratio (as defined below).

Loans under the Credit Agreement will bear interest at a rate of 80% of the sum of SOFR and 0.10%, plus 200 basis points. Interest payments* maybe capitalized, at the option of the Term Loan Borrowers, during the earlier of (i) thefirst* three years of the Term Loan Facility or (ii) the substantial completion of the hangar projects contemplated by the Series2021 Bonds. The entire principal amount of the Loans is due on* September 4, 2030,*unless extended in accordance with the Credit Agreement. Once the outstanding aggregate principal balance of the Loans reaches $25 million, the Term Loan Borrowers are obligated, to have hedges on 50% of the Term Loan Borrowers’ interest rate risk.

In accordance with the Credit Agreement, the Term Loan Borrowers have paid an upfront fee equal to 1.50% of the $200 million in Loans commitments. The Credit Agreement also requires the Term Loan Borrowers to pay quarterly commitment fees to the Administrative Agent for the benefit of the secured lenders at the applicable rate per annum set forth below under the caption “Commitment Fee Rate,” based upon the Term Loan Borrowers’ total commitment utilization in effect for each such day during each quarter:

The Credit Agreement contains customary affirmative and negative covenants for transactions of this type, including maintenance of financial ratios, debt service reserve requirements, restricted payments test and limitations on the sale, lease, or distribution of assets. The Term Loan Borrowers agreed to comply with historical and projected debt service coverage ratios. The Projected Debt Service Coverage Ratio (the “Projected DSCR”) is based principally on projected EBITDA of Hangar Projects that have reached substantial completion (“Hangar Project EBITDA”) minus certain capital expenditure and taxes divided by the debt service for the nextfour quarters. The Historical Debt Service Coverage Ratio (the “Historical DSCR”) is based on the Hangar Project EBITDA for the previousfour quarters minus the sum of certain capital expenditures plus taxes divided by the interest of debt service for the previousfour quarters. For this purpose, “EBITDA” is defined to include amounts in the Facility Surplus Account. Additionally, the Term Loan Borrowers agreed to a Leverage Ratio of 65% (the “Leverage Ratio”). The Leverage Ratio is calculated by dividing total indebtedness of the Term Loan Borrowers by a borrowing base value. The borrowing base value is principally the sum of project costs for the Hangar Projects or, in the case that an existing Hangar Project is used as collateral, net purchase price plus certain reserves established pursuant to the Credit Agreement and financed transaction costs. Commencingthree months after the earlier of* September 4, 2028or a trigger date based on substantial completion of certain Hangar Projects, the Term Loan Borrowers are required to maintain (i) the Historical DSCR, or (ii) the Projected DSCR, in each case determined on the last day of each fiscal quarter of the Term Loan Borrowers, at a ratio of less than 1.25 to1.00.*

In connection with the Credit Agreement, SH Capital II entered into a Loan and Security Agreement (the “Loan and Security Agreement”), with Public Finance Authority (of Wisconsin) (the “Issuer”), SH Capital II, the other borrowers party thereto, and the Administrative Agent. The Loan and Security Agreement provides for, among other things, the issuance of up to $200 million of Sky Harbour Obligated Group II Issue, Series2025 Notes (the “Series2025 Notes”). If the Lenders under the Credit Agreement approve an increase in the Term Loan Facility, additional Series2025 Notes will be issued. The Loan and Security Agreement and the Series2025 Notes further provide for the Issuer to assign all revenues on the Notes to the Administrative Agent for the benefit of the secured lenders and provide for the incorporation of certain covenants from the Credit Agreement and customary terms and conditions for financings of this type.

As of* September 30, 2025*, there wereno loans outstanding under the Term Loan Facility.

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Loans Payable and Finance Leases

The following table summarizes the Company’s loans payable and finance lease liabilities as of* September 30, 2025* and* December 31, 2024*:

Interest

The following table sets forth the details of interest expense:

SHG’s legal predecessor, 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*“2023* 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.

No Warrants were exercised during thethree andnine months ended* September 30, 2025*. During thenine months ended* September 30, 2024,253,703 Warrants were exercised, resulting in approximately $2.9 million of proceeds. As of September 30, 2025*,15,798,155 Warrants remain outstanding.

The closing price of the Warrants was $1.51 and $2.92 per warrant on* September 30, 2025* and* December 31, 2024*, respectively. The aggregate fair value of the outstanding Warrants was approximately $23.9 million and $46.1 million as of* September 30, 2025* and* December 31, 2024*, respectively. During thethree andnine months ended* September 30, 2025*, the Company recorded unrealized gains associated with the change in fair value of the Warrants of approximately $3.0 million and $22.3 million, respectively. During thethree andnine months ended* September 30, 2024,*the Company recorded unrealized losses of approximately $16.0 million and $23.9 million, respectively, associated with the change in fair value of the Warrants.

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Common Equity

As of* September 30, 2025*, there were 33,897,274 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. The Company soldno shares of Class A Common Stock under the ATM Facility during thethree* months ended* September 30, 2025or2024.* During thenine months ended* September 30, 2025,the Company sold 20,472 shares of Class A Common Stock under the ATM Facility at a weighted-average sales price of $13.70. During thenine* months ended* September**30,* 2024, the Company sold 7,407 shares of Class A Common Stock under the ATM Facility at a weighted-average sales price of $12.42.

The Company 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.

Non-controlling interests

The LLC Interests’ ownership in Sky is presented as non-controlling interests within the Equity section of the consolidated balance sheet as of* September 30, 2025* 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 of 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* September 30, 2025*, the LLC interests owned approximately 55.4% of the Sky Common Units outstanding.

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Restricted Stock Units (“RSUs”)

In* February 2025and June 2025,the Company granted time-based RSUs to certain employees under the Company’s2022* Incentive Award Plan.437,930 time-based awards were granted at a grant date fair value of $11.15 in* February 2025and 60,634 time-based awards were granted at a grant date fair value of $9.77 in June 2025.The Februaryand June 2025RSU grants will vest ratably over afour-year period beginning on thefirst* anniversary of the grant date and ending on* February 18, 2029and June 19, 2029,*respectively.

During thethree andnine months ended* September 30, 2025*, the Company recognized stock compensation expense of approximately $1.8 million and $3.9 million, respectively, associated with all RSU awards, inclusive of the recognition of approximately $0.7 million of expense associated with the accelerated vesting of unvested RSUs upon the departure of the Company's former Chief Operating Officer. The Company recognized stock compensation expense associated with RSU awards of approximately $0.8 million and $2.7 million for thethree andnine months ended* September 30, 2024*, respectively. The Company recognizes expense associated with RSU awards within employee compensation and benefits within the statement of operations. As of* September 30, 2025,there are 988,740 unvested RSUs outstanding with a weighted average grant date fair value of $10.02. The unrecognized compensation costs associated with all unvested RSUs at September 30, 2025*was approximately $8.4 million that is expected to be recognized over a weighted-average future period of 2.7 years.

Non-qualified Stock Options (“NSOs”)

In* February 2025,the Company granted to certain employees options to purchase 686,647 shares of Class A Common Stock at an exercise price of $11.07 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 $6.33 using a Black -Scholes pricing model.

During thethree andnine months ended* September 30, 2025*, the Company recognized stock compensation expense of approximately $0.2 million and $0.6 million, respectively, associated with all NSO awards. The Company recognized stock compensation expense associated with NSO awards of approximately $0.1 million and $0.2 million for thethree andnine months ended* September 30, 2024*, respectively. The unrecognized compensation costs associated with all unvested NSOs at* September 30, 2025*was approximately $6.7 million that is expected to be recognized over a weighted-average future period of 8.0 years.

Sky Incentive Units

The Company recognized equity-based compensation expense relating to awarded equity units of Sky (the “Sky Incentive Units”) of $0 and $75 for thethree andnine months ended* September 30, 2025*, respectively, and $45 and $136 for thethree andnine months ended* September 30, 2024*, respectively. Expense associated with the Sky Incentive Units is recorded within compensation and benefits within the statement of operations, and as a component of the non-controlling interest in the consolidated statement of changes in stockholders’ equity. As of* September 30, 2025*, there wasno unrecognized compensation expense associated with the Sky Incentive Units.

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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:

The Company hasone consolidated reportable segment. This segment derives revenues from customers through the leasing of home-basing aircraft hangars and through services and products ancillary to its leasing activities. As of* September**30,* 2025, the Company drives revenue entirely within the United States and manages the business activities on a consolidated basis.

The determination of reportable operating segments is based on the Chief Operating Decision Maker’s (“CODM’s”) use of financial information provided for the purposes of assessing performance and making operating decisions. The Company’s CODM is its founder and Chief Executive Officer. The CODM uses net income (loss) to allocate resources and assess the performance of the Company by comparing actual results to historical results and previously forecasted financial information and the allocation of budget between the expenses presented within the consolidated statement of operations. The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets. All required significant financial segment information can be found within the consolidated financial statements.

In addition to the lease payment commitments discussed in Note7 — 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 DVT Lease requires approximately $14.6 million of improvements to be made for the DVT Phase II project within12-months after receiving permitting documents, but inno event later than* May 2027.*

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 SLC Lease requires that the Company make minimum capital improvements of $40 million.

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

The SWF Lease requires that the Company make minimum capital improvements of $60 million within36 months of receiving certain environmental approvals associated with construction. In the event that the Company doesnot expend such amount within the prescribed timeline, such difference would become payable to SWF over a24-month period.

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

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

On* December 6, 2024,the Company entered into a revolving line of credit loan and security agreement (the “Loan and Security Agreement”), with a company controlled by the former owner of the Company’s acquired subsidiaries at Camarillo Airport (“CMA”), who also serves as an independent contractor of the Company. The Company provided an initial loan commitment of $1.0 million and agreed to provide an additional $2.0 million of availability under a revolving line of credit to fund the working capital requirements of such company. The Loan and Security Agreement matures on December 6, 2029,*and bears interest at thestandard overnight financing right plus 2% per annum.

As of* September 30, 2025* and* December 31, 2024*, the Company had loaned a total of $1.1 million and $1.0 million, respectively, to such company, the balance of which is presented as a component of accounts receivable, prepaid expenses, and other assets within the Company’s consolidated balance sheet.

Echo Echo Agreement

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

On* September 19, 2024,the Company entered into an additional non-exclusive agreement with Echo Echo, LLC for the use of an EpicE1000GX* aircraft. The effective date of the agreement was* August 30, 2024and the agreement automatically renews annually. The agreement can be terminated without penalty if either party provides30* days’ written notice, or if the aircraft is sold or otherwise disposed of. Additionally, the Company is responsible for reimbursing its pro rata share of the direct operating costs of the aircraft, exclusive of maintenance and insurance.

For thethree andnine months ended* September 30, 2025*, the Company recognized $89 and $414 of expense, respectively, within pursuit and marketing expenses under the terms of these agreements. For thethree andnine months ended* September 30, 2024*, the Company recognized $108 and $195 of expense associated such agreement, respectively. The related liability is included in Accounts payable, accrued expenses and other liabilities within the consolidated balance sheet as of* September 30, 2025*.

Other Relationships

For thethree andnine months ended* September 30, 2025*, the Company recognized $12 and $21 of expense, respectively, for consulting services, to a company that employed the Chief Financial Officer until prior to* July 1, 2021.The Company recognized $0 of expense during thethree* andnine months ended* September 30, 2024*, respectively, associated with the same company.

On* June 1, 2025,the Company hired an individual to serve as its head of construction and president ofone* of its wholly-owned subsidiaries, Ascend Aviation Services (“Ascend”). Such individual was previously employed by, and continues to hold a financial interest in, a company that provides construction services to the Company (the “General Contractor”). The General Contractor was previously engaged by the Company to serve as general contractor in connection with its APA Phase I development project. Duringthree andnine months ended* September 30, 2025* the Company incurred $2.1 million and $7.9 million of construction costs associated with the General Contractor at its APA Phase I project, respectively. The General Contractor was also previously engaged by the Company serve as an architectural and engineering consultant in connection with its ADS Phase II development project. Duringthree andnine months ended* September 30, 2025* the Company incurred $0 and $0.1 million of construction costs associated with such services, respectively. All such costs are capitalized and included as a component of cost of construction within the consolidated balance sheet as of* September 30, 2025*.

Ascend shares office space, equipment, and various administrative services with the General Contractor. Costs incurred by the General Contractor are allocated between Ascend and the General Contractor and are charged at cost. Duringthree andnine months ended* September 30, 2025* the allocated costs from the General Contractor to Ascend were approximately$0.1 million.

In* October 2025**,* the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “LGB Lease”) at Long Beach Airport (“LGB”) with the City of Long Beach, California. The LGB Lease covers approximately 17 acres of property at LGB. The initial term of the LGB Lease will be 50 years beginning18 months after the effective date, with lease payments commencing contemporaneously with the term.

In* October 2025,*the Company entered into an interest rate swap (the “Swap Agreement”) for notional amounts of up to $200.0 million, based on predetermined notional schedule agreement as defined in the Swap Agreement. The Swap Agreement effectively fixes the SOFR component of any loans at or below the notional schedule made under the Term Loan Facility at approximately 2.65%, or 4.73% inclusive of applicable interest rate spreads, for thefive-year term.

In* November 2025,SHC elected to modify the scope of its Series2021* Bonds, pursuant to the terms of the Master Indenture, in order to include thesecond phase of the Company's development project at ADS within the project scope of the Series2021 Bonds.

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