CONTENTS
| Clause · Page |
|---|
| PART I |
|---|
| ITEM 1. | BUSINESS | 5 |
|---|
| ITEM 1A. | RISK FACTORS | 13 |
|---|
| ITEM 1B. | UNRESOLVED STAFF COMMENTS | 29 |
|---|
| ITEM 1C. | CYBERSECURITY | 30 |
|---|
| ITEM 2. | PROPERTIES | 31 |
|---|
| ITEM 3. | LEGAL PROCEEDINGS | 32 |
|---|
| ITEM 4. | MINE SAFETY DISCLOSURES | 32 |
|---|
| PART II | | |
|---|
| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 32 |
|---|
| ITEM 6. | [RESERVED] | 33 |
|---|
| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 33 |
|---|
| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 40 |
|---|
| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 41 |
|---|
| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 77 |
|---|
| ITEM 9A. | CONTROLS AND PROCEDURES | 77 |
|---|
| ITEM 9B. | OTHER INFORMATION | 78 |
|---|
| ITEM 9C. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS | 78 |
|---|
| PART III | | |
|---|
| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | 78 |
|---|
| ITEM 11. | EXECUTIVE COMPENSATION | 78 |
|---|
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 78 |
|---|
| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 79 |
|---|
| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES | 79 |
|---|
| PART IV | | |
|---|
| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | 79 |
|---|
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Annual Report”) contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Annual Report may constitute forward-looking statements, and include, but are not limited to, changes in the market for our services; changes in applicable laws or regulations; the ability to launch new services and products or to profitably expand into new markets; and expectations of other economic, business and/or competitive factors. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential”, or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Annual Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Annual Report and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the factors described under the sections in this Annual Report titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.
You should read this Annual Report and the documents that we reference in this Annual Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
Unless otherwise stated or the context otherwise requires, references in this Annual Report to the “Company,” “AerSale,” “we,” “us,” “our” and similar terms refer to AerSale Corporation (f/k/a Monocle Holdings, Inc.) and its consolidated subsidiaries.
SUMMARY RISK FACTORS
Our business is subject to numerous risks and uncertainties, including those described in Part I, Item 1A. “Risk Factors” in this Annual Report. You should carefully consider these risks and uncertainties when investing in our shares of common stock. The principal risks and uncertainties affecting our business include the following:
Risks Related to AerSale’s Business and Industry
| ● | disruptions in supply chain; |
| ● | factors that adversely impact the commercial aviation industry; |
| ● | the fluctuating market value of our products; |
| ● | our ability to repossess mid-life commercial aircraft and engines (“Flight Equipment”) when a lessee defaults; |
| ● | success at our maintenance, repair and overhaul (“MRO”) facilities is dependent upon continued outsourcing by airlines; |
| ● | shortage of skilled personnel or work stoppages; |
| ● | the inability to obtain certain components and raw materials from suppliers; |
| ● | the highly competitive nature of the markets in which we operate; |
| ● | risks associated with our international operations; |
| ● | the risks from business acquisitions and integration of new businesses acquired; |
| ● | the unique risks we encounter by supplying equipment and services to the U.S. government; |
| ● | further consolidation of customers and suppliers in our markets; |
| ● | cyber or other security threats or disruptions; |
| ● | the significant capital expenditures that may be required to keep pace with technological developments in our industry; |
| ● | lack of ownership of certain intellectual property and tooling that is important to our business; |
| ● | intellectual property litigation to protect our intellectual property; |
| ● | our dependence on our facilities, which are subject to physical and other risks that could disrupt production; |
| ● | risks from any improper conduct by our employees, agents, subcontractors, suppliers, business ventures or joint ventures in which we participate; |
| ● | loss of services from key employees; |
| ● | the failure of our subcontractors to perform their contractual obligations; |
| ● | impacts from future outbreaks and infectious diseases on flight activity, demand for MRO and leasing services, our business partners or customers, and the related macro environment; |
Strategic and Financial Risks
| ● | our dependence on continued availability of financing to manage our business and to execute our business strategy, and unavailability of additional financing on terms acceptable to us; |
| ● | our failure to comply with the covenants in the documents governing our existing and future indebtedness; |
| ● | limitations of our current and future operations from restrictive covenants contained in documents governing our indebtedness; |
| ● | unanticipated changes in our tax provision; |
| ● | possible goodwill and other asset impairments; |
| ● | changes in interest rates, foreign currency exchange rates and swap counterparty risks; |
Legal and Regulatory Risks
| ● | we are subject to significant government regulation and may need to incur significant expenses to comply with new or more stringent government regulation; |
| ● | compliance with U.S. and other anti-corruption laws, export control laws, import control laws, trade and economic sanction laws and other laws governing our operations; |
| ● | current or future regulatory proceedings or litigation including product liability, intellectual property disputes and other claims not adequately covered by insurance; |
| ● | the liens of Flight Equipment could exceed the value of such Flight Equipment; |
| ● | the risk that our leased aircraft engines are deemed accessions to the aircraft and our ability to repossess an engine is impaired; |
| ● | product and other liability claims not covered by insurance; |
| ● | the extensive environmental requirements with which we must comply; |
| ● | global climate change, or by legal, regulatory or market responses to such change; |
Risk Factors Related to our Common Stock
| ● | depressed stock price as a result of substantial future sales of our common stock, or the perception in the public markets that these sales may occur; |
| ● | lack of analyst coverage for our common stock; |
| ● | actual or anticipated sales of significant amounts of our common stock; |
| ● | the fact that we do not intend to pay dividends on our common stock for the foreseeable future; |
| ● | reduced disclosure due to our filing status as an “emerging growth company”; |
General Risk Factors
| ● | ineffective internal control over financial reporting; |
| ● | insolvency of our customers; and |
| ● | the adverse effect of negative economic conditions. |
PART I
