The following analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes included elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”), as well as the information contained in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities Exchange Commission (the “SEC”) on March 19, 2026 (the “Form 10-K”), which is accessible on the SEC’s website at www.sec.gov.
Cautionary Note Regarding Forward-Looking Statements
This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “might,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to:
• expectations regarding the Company’s strategies and future financial performance, including the Company’s future business plans or objectives, prospective performance and commercial opportunities and competitors, services, pricing, marketing plans, operating expenses, market trends, revenues, liquidity, cash flows and uses of cash, capital expenditures, and the Company’s ability to invest in growth initiatives;
• the effects of general macroeconomic conditions, including inflation, interest rate volatility, changes in trade policies (including with respect to imposed and proposed tariffs), and a prolonged recession in the national economy;
• our limited operating history makes it difficult to predict future revenues and operating results;
• our ability to implement our construction costs mitigation strategies;
• changes in applicable laws or regulations;
• the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; and
• our financial performance.
The forward-looking statements contained in this Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in our Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described in our Form 10-K may not be exhaustive.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in our Form 10-K or this Form 10-Q. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this prospectus, those results or developments may not be indicative of results or developments in subsequent periods.
Overview and Background
We are an aviation infrastructure development company building the first nationwide network of Home Base Operator (“HBO”) campuses designed exclusively for business aircraft. We develop, lease and manage general aviation hangars across the United States, targeting airfields in markets with significant based aircraft populations and high hangar demand. Our HBO campuses feature private and semi-private hangars and a full suite of dedicated services specifically optimized for home based, versus transient, aircraft.
The physical footprint of the U.S. business aviation fleet grew by almost 46 million square feet in the past sixteen years, with hangar supply lagging dramatically, especially in key growth markets. As the fleet of private jets in the United States continues to grow, with recent new aircraft deliveries exceeding retirements, demand for hangar space is at a premium in part because new jets require taller tail clearances and more square footage of hangar space and the pace of new hangar construction has lagged behind the demand. The cumulative square footage of the business aircraft fleet in the United States increased 73% between 2010 and 2025. Moreover, over that same period, there was an 120% increase in the square footage of larger private jets – those with greater than a 24-foot tail height. A recent study conducted by a business aircraft manufacturer forecasted that business aircraft will only continue to grow in the next ten years, with up to 8,500 new business jet deliveries worth over $283 billion expected to be delivered between 2025 and 2034, with over two-thirds of the deliveries expected to be comprised of larger private jets. This forecast is further supported by data from the major business aviation manufacturers that suggest the current order backlog for new business aviation aircraft as of December 31, 2025 is over $57 billion, an increase of approximately 10% over the prior year.
These larger footprint aircraft do not fit in much of the existing hangar infrastructure and impose stacking challenges and constraints in the traditional shared or community hangars operated by fixed-base operators (“FBO”). The addition of winglets (the vertical extensions on aircraft wingtips) on most modern business jets inhibits wing-over-wing storage. Aircraft hangars are in high demand and short supply, with some airports compiling waiting lists that can exceed several years.
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We believe our scalable, real estate-centric business model is uniquely positioned to capture this market opportunity and address the increased imbalance between the supply and demand for private jet storage. We intend to capitalize on the existing hangar supply constraints at major U.S. airports by targeting high-end tenants in markets where there is a shortage of private and FBO hangar space, or where such hangars are or are becoming obsolete.
We expect to realize economies of scale in construction through prototype hangar designs replicated at our HBO campuses across the United States through our in-house construction management and general contracting. This allows for centralized procurement, straightforward permitting processes, efficient development processes, and the best hangar in business aviation. Unlike a service company, our revenues are mostly derived from long-term rental agreements, offering stability and forward visibility of revenues and cash flows. This allows us to fund our development through the public bond market and bank debt, providing capital efficiency and mitigating refinance risk.
We seek to develop our home basing hangar campuses on long-term ground leases (or sub-leases thereof) at airports with suitable infrastructure serving metropolitan centers across the United States. We lease each of our properties under long-term ground leases.
The table below presents certain information with respect to our portfolio of ground leases as of June 30, 2026.
Airport IATA Code Location (City, State) Location (Metropolitan Center) Ground Lessor Ground Lease Acres Ground Lease Exp. Year(1)
Addison Airport ADS Addison, TX Dallas, TX Town of Addison 12.5 2065
Bradley International Airport BDL Windsor Locks, CT Hartford, CT Connecticut Airport Authority 8.0 2075
Camarillo Airport(2) CMA Camarillo, CA Los Angeles, CA County of Ventura 17.1 2073
Centennial Airport APA Englewood, CO Denver, CO Arapahoe County Public Airport Authority 19.7 2097
Chicago Executive Airport PWK Wheeling, IL Chicago, IL Village of Wheeling and City of Prospect Heights 15.0 2075
Fort Worth Meacham International Airport FTW Fort Worth, TX Fort Worth, TX City of Fort Worth 4.5 2056
Hillsboro Airport HIO Hillsboro, OR Portland, OR Port of Portland 13.2 2072
Hudson Valley Regional Airport POU Wappingers Falls, NY New York, NY County of Dutchess 7.1 2066
Long Beach Airport LGB Long Beach, CA Los Angeles, CA City of Long Beach 17.1 2075
Miami-Opa Locka Executive Airport OPF Opa Locka, FL Miami, FL Miami-Dade County 22.6 2079
Nashville International Airport BNA Nashville, TN Nashville, TN Metropolitan Nashville Airport Authority 15.2 2070
New York Stewart International Airport SWF New Windsor, NY New York, NY The Port Authority of New York and New Jersey 26.0 2070
Orlando Executive Airport ORL Orlando, FL Orlando, FL Greater Orlando Aviation Authority 20.0 2074
Phoenix Deer Valley Airport DVT Phoenix, AZ Phoenix, AZ City of Phoenix 15.4 2061
Salt Lake City International Airport SLC Salt Lake City, UT Salt Lake City, UT Salt Lake City Corporation 8.4 2077
San José Mineta International Airport SJC San José, CA San José, CA City of San José 6.5 2044
Sugar Land Regional Airport SGR Sugar Land, TX Houston, TX City of Sugar Land 4.1 2049
Trenton-Mercer Airport TTN Ewing, NJ New York, NY - Philadelphia, PA County of Mercer 11.8 2078
Washington Dulles International Airport IAD Dulles, VA Washington, DC Metropolitan Washington Airports Authority 18.0 2084
(1) Ground lease expiration years presented include estimates of term commencements based on the achievement of certain milestones and assume the exercise of all lease term extension options exercisable at our sole discretion.
(2) Our portfolio at Camarillo Airport consists of two ground leases which cover 6.2 and 10.9 acres, respectively. Such leases expire in 2071 and 2073, respectively.
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The following tables provide supplemental information regarding each of our home basing hangar campus properties in operation and in development:
PROPERTIES IN OPERATION
Facility Completion Date Hangars Rentable Square Footage % of Total Rentable Square Footage Occupancy at June 30, 2026 Economic Occupancy at June 30, 2026(1)
SGR December 2020 7 66,080 6.3 % 100.0 % 100.0 %
BNA November 2022 10 149,069 14.3 % 100.0 % 101.7 %
OPF February 2023 / May 2026 15 271,293 26.0 % 80.3 % 80.3 %
DVT Phase I April 2025 8 134,270 12.9 % 75.9 % 75.9 %
ADS Phase I June 2025 6 118,602 11.4 % 91.3 % 91.3 %
APA Phase I September 2025 9 130,664 12.5 % 43.8 % 43.8 %
SJC Renovation Existing facility 1 50,431 4.8 % 100.0 % 131.7 %
CMA Existing facility 4 121,931 11.7 % 100.0 % 102.1 %
Total/Weighted Average 60 1,042,340 100.0 % 83.7 % 85.8 %
(1) Economic Occupancy is measured as the total square footage of aircraft subject to leases divided by the total rentable square footage of the designated property. The square footage of individual aircraft is calculated by multiplying its respective length (i.e., from its nose to its tail) by its wingspan. We believe we can achieve Economic Occupancy in excess of 100% in our semi-private hangars due to stacking considerations and the manner in which we price such semi-private leases. Occupancy and Economic Occupancy are key performance indicators which may be calculated in a manner different than similar key performance indicators used by other issuers. These metrics are estimated operating metrics and not projections, nor actual financial results, and are not indicative of current or future performance.
PROPERTIES IN DEVELOPMENT
Projected Projected Estimated Total
Construction Completion Project Cost Rentable
Facility Status Start (1) Date (1) ($mm) (1) Hangars (1) Square Footage (1)
ADS Phase II In Construction Q2 2025 Q1 2027 24.6 - 27.6 4 110,990
APA Phase II In Development TBD TBD 30.4 - 33.6 3 57,570
BDL Phase I In Construction Q3 2025 Q4 2026 40.0 - 42.1 3 107,360
CMA Phase I In Development Q2 2027 Q2 2028 26.0 - 35.0 3 92,680
DVT Phase II In Development TBD TBD 34.6 - 38.6 4 132,732
FTW Phase I In Development Q4 2026 Q4 2027 17.5 - 19.5 2 74,560
HIO Phase I In Development Q4 2026 Q1 2028 32.0 - 34.0 4 107,680
HIO Phase II In Development TBD TBD 29.5 - 32.0 2 85,760
IAD Phase I In Development Q4 2026 Q1 2028 75.0 - 85.0 4 171,520
IAD Phase II In Development TBD TBD 44.7 - 49.4 4 171,520
LGB Phase I In Development Q3 2027 Q4 2028 26.0 - 32.0 2 95,554
LGB Phase II In Development TBD TBD TBD 3 107,360
ORL Phase I In Construction Q2 2026 Q3 2027 41.0 - 44.0 4 133,640
ORL Phase II In Development TBD TBD 35.2 - 39.0 3 128,640
POU Phase I In Construction Q2 2026 Q3 2027 31.0 - 32.5 2 85,760
POU Phase II In Development TBD TBD 18.3 - 20.3 1 42,880
PWK Phase I In Development Q4 2026 Q1 2028 38.0 - 44.0 3 128,640
PWK Phase II In Development TBD TBD TBD 4 171,520
SJC Phase II In Development Q2 2027 Q2 2028 17.1 - 17.9 1 28,000
SLC Phase I In Construction Q1 2026 Q1 2027 47.2 - 49.0 4 171,520
SWF Phase I In Development TBD TBD TBD 8 256,240
TTN Phase I In Development Q4 2026 Q1 2028 40.1 - 44.3 3 128,640
Total 648.2 - 719.8 71 2,590,766
(1) Our projections associated with the commencement and completion of construction, estimated total construction cost, number of hangars, and rentable square footage of our properties in development are inherently subjective and require judgement to estimate. We believe that our estimates of construction costs and timelines are subject to variability based on various factors including, but not limited to, changes in anticipated site plans, hangar mix, hangar specifications, executed guaranteed maximum price construction contracts, and general market conditions.
Recent Developments
On August 10, 2026, we entered into a securities purchase agreement with certain purchasers, pursuant to which we agreed to sell an aggregate of 4,000,000 shares of its Class A Common Stock in a registered direct offering at a purchase price of $10.00 per share. We expect the offering to close on or about August 12, 2026, subject to customary closing conditions. We expect to receive aggregate gross proceeds of approximately $40.0 million from the offering, before deducting offering-related expenses. We intend to use the net proceeds for general corporate purposes.
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Factors That May Influence Future Results of Operations
Airfield and Tenant Portfolio Growth
Our future success depends upon our ability to attract and retain tenants for hangars at our HBO campuses. The extent to which we achieve growth in our customer base materially influences our business and results of operations. Any number of factors could affect our ability to grow our customer base, including tenant preferences for hangar space and related services, including size and location of the hangar, as well as general economic conditions. The level and volatility of fuel prices may also impact the general aviation industry and our ability to attract and retain tenants. For example, during the first half of 2026, fuel prices increased significantly as a result of ongoing geopolitical events and market disruptions. At our ADS, APA, and CMA HBO campuses, we are directly exposed to fluctuations in fuel prices, which could have a material effect on our operating results at such campuses. Due to the competitive nature of our industry, we cannot predict the impact periods of high volatility in fuel prices or significant disruptions in the supply of aircraft fuel will have on our ability to attract and retain tenants. In addition, our ability to attract and retain customers may be dependent on other factors outside of our control, including the future trend of private aircraft sizes and the availability of alternative hangars, including size, location and/or services provided. Any significant decline in our customer base, or in our rate of growth, could have a material adverse effect on our business and results of operations, which could, in turn, result in a decline in the trading price of our securities.
Our ability to expand through new ground leases at airports is also integral to our long-term business strategy and requires that we identify and consummate suitable new ground leases or investment opportunities in real estate properties for our portfolio that meet our investment criteria and are compatible with our growth strategy. Our ability to enter into new ground leases on favorable terms, or at all, may be adversely affected by certain significant factors. We may not be able to negotiate new ground leases with airport authorities on attractive terms or at all, and we may encounter competition from other potential ground lessors, which could significantly increase the lease rate for properties we seek to lease. In our efforts to secure new ground leases, we may incur significant costs and divert management attention in connection with evaluating and negotiating such ground leases, including ground leases that we are subsequently unable to execute. In addition, even if we enter into letters of intent or conditional agreements for new ground leases of airport properties, these agreements are subject to customary closing conditions, including, but not limited to, the satisfactory results of our due diligence investigations and local government and municipal authority approvals.
Construction Material Costs and Labor
When constructing our HBO campuses, we use various materials, assemblies, and labor components. We contract for our materials and labor both internally through our in-house general contractor and with various external general contractors under guaranteed maximum price (GMP) contracts upon receipt of building permits. This allows us to mitigate certain inflationary pressures associated with increases in certain building materials and labor costs between the time construction begins at a hangar campus and the time it is completed. Typically, the materials and most of the components used to construct our hangar campuses are readily available in the United States, and we attempt to procure such materials from domestic sources where and when possible. We monitor the supply markets and ensure robust competition to achieve the best prices available. Typically, the price changes that most significantly influence our development operations are price increases in steel, concrete, and labor. Inflationary and supply chain pressures have previously led to increased construction materials costs, specifically associated with steel, concrete, and other materials. Further inflationary and supply chain pressures, including those associated with changes in trade policies, could adversely affect our business. The imposition of or increase in tariffs on construction materials such as steel, and other potential changes in U.S. and global trade policy, could substantially increase the cost of and limit the availability of construction materials. Tariffs and retaliatory tariffs announced by the U.S. and other countries, the implementation, size and timing of which remain uncertain and rapidly evolving, could impact the cost of certain of our construction materials. The implementation of these tariffs and future tariffs, or any changes in trade policies that have a similar effect, or the threat of any of the foregoing, could result in further interruptions in the supply chain. We believe we may continue to experience such pressures in future quarters, as well as delays in our subsidiaries’ and contractors’ ability to requisition such materials. However, there can be no assurance that we will be able to increase the lease rates for the hangars within our hangar campuses to absorb these increased costs, if at all.
Our projections associated with the commencement and completion of construction, estimated total construction cost, hangars, and rentable square footage of our properties in development are inherently subjective and require judgement to estimate. We believe that our estimates of construction costs and timelines are subject to variability based on various factors including, but not limited to, changes in anticipated site plans, hangar mix, hangar specifications, executed guaranteed maximum price construction contracts, and general market conditions. During 2025, we updated many of our preliminary estimates based on our intention to begin incorporating a larger hangar prototype into our home basing hangar campuses, which is intended to provide an increase in rentable square footage of hangar, office, and lounge space upon completion. This larger hangar prototype requires an increase in construction materials and components, and we expect its incorporation into multiple future development projects will ultimately result in cost savings through the realization of economies of scale. Our updated estimates of total construction costs do not include projections of potential cost reductions due to such efficiencies, and we continue to reevaluate our preliminary and updated estimates from time to time over the course of the development lifecycle. We intend to continue to mitigate inflationary pressures, reduce construction costs to the greatest extent possible, and pursue compressed development schedules. We currently structure our guaranteed maximum price construction contracts with shared savings clauses to incentivize the general contractors to reduce construction costs. No assurance can be given that our cost mitigation strategies will be successful, the costs of our ongoing and future projects will not exceed budgets or the guaranteed maximum price for such projects, or that the completion will not be delayed beyond the projected completion dates.
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Increases in Market Interest Rates and Future Costs of Borrowing
Economic conditions and actions by policymaking bodies contributed to rising interest rates, which, along with increases in our borrowing levels, could increase our future borrowing costs. While the Federal Reserve reduced interest rates during 2025, it has since paused its rate-cutting cycle and has indicated the potential for interest rate hikes in the future. Interest rates remain relatively high and there can be no certainty with respect to the occurrence, timing, or magnitude any future interest rate decisions by the Federal Reserve, and thus no certainty with respect to the ultimate impact on our borrowing costs. We expect to issue additional debt to finance future site developments and refinance the Term Loan Facility and the Series 2026 Bonds on or prior to its maturity date and mandatory tender date, respectively. Elevated interest rates would impact our overall economic performance. In addition, we are subject to credit spreads demanded by fixed income investors. As a non-rated issuer, increases in general of credit spreads in the market, or for us, may result in a higher cost of borrowing in the future. We intend to access the bond market on an opportunistic basis. In addition, we may hedge against rising benchmark interest rates by entering into hedging strategies with high quality counterparties.
Current Capital Requirements and Future Expenditures for Expansion
Each constructed and in-construction facility in our portfolio is funded by secured indebtedness under the Series 2021 Bonds, the Term Loan Facility, or the Series 2026 Bonds. We entered into the $200 million Term Loan Facility in September 2025 and issued $150 million of Series 2026 Bonds in February 2026. We anticipate that the proceeds of the Term Loan Facility and Series 2026 Bonds will fund an additional 1.2 million rentable square feet of construction projects at seven airport locations.
We previously raised equity capital, including the 2024 Purchase Agreement and 2023 Purchase Agreement entered into on September 16, 2024 and November 1, 2023, respectively, see Liquidity and Capital Resources — Private Placement and Securities Purchase Agreement below, to begin to fund construction at additional HBO campuses over the next several years. We also have the ability to access the capital markets through our ATM Facility and through our effective shelf registration statement on Form S-3. On average, each future campus is anticipated to be composed of 200,000 rentable square feet and is expected to cost approximately $60 million, with 70% or more to be funded with additional private activity bonds or other indebtedness. All future hangar campus projects are discretionary and require us to identify the appropriate airports with the target hangar demand economics, secure required ground leases and permits, and complete future construction at such sites.
The cumulative 50 airport site business plan is estimated to cost approximately $3.0 billion, with approximately 80% or more anticipated from private activity bonds and the balance with equity or equity-linked financing. Our ability to raise additional equity and/or debt financing will be subject to a number of risks, including our ability to obtain financing upon reasonable terms, if at all, our ability to reinvest free cash flow from operations, if at all, costs of construction, delays in constructing new facilities, operating results, and other risk factors. In the event that we are unable to obtain additional financing, we may be required to raise additional equity capital, creating additional dilution to existing stockholders. There can be no assurance that we would be successful in raising such additional equity capital on favorable terms, if at all. Even if we can obtain such additional equity financing if needed, there can be no assurance that we would be successful in raising such additional financing on favorable terms, if at all.
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Key Business Metrics
We focus on a variety of indicators and key operating and financial metrics to monitor the financial condition and performance of the continuing operations of our business. These metrics include:
Metric Description
Revenue The majority of our revenue is generated from rents and fees we earn pursuant to the lease and service agreements we enter into with our tenants. Our ability to achieve revenue growth depends upon our ability to attract and retain tenants for hangars at our home basing hangar campuses. The extent to which we achieve growth in our customer base materially influences our business and results of operations. Any number of factors could affect our ability to grow our customer base, including tenant preferences for hangar space and related services, including size and location of the hangar, as well as general economic conditions. Rental revenue is recognized in accordance with ASC Topic 842, Leases, and includes (i) fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and is recognized on a straight-line basis over the term of the lease and (ii) variable payments of tenant reimbursements, which are recoveries of all or a portion of the common area maintenance and operating expenses of the property and are recognized in the same period as the expenses are incurred. We derive all of our revenue from tenants in the United States. At certain of our HBO campuses, we recognize revenue from ground-based services, such as the fueling and towing of aircraft. 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. Our fueling arrangements generally are unique at each location we operate, and may be accounted for on a gross or net basis. We determine whether to recognize fuel and services revenue on a gross or net basis based on consideration of various factors, including whether we have control of the products or services prior to delivery to customers, our degree of latitude in establishing the sales price, whether we carry the associated inventory risk, and which party is the primary obligor within such sales arrangements.
Operating Expenses In addition to changes in our revenue, our operating results are affected by, among other things, the level of our operating expenses. One of our largest expenses is the payments payable under our ground leases. For the six months ended June 30, 2026 and 2025, we recognized expense related to ground leases of approximately $7.8 million and $6.5 million, respectively. We elect to expense rather than capitalize ground lease expense incurred at hangar campus sites under development and will incur expense under GAAP regardless of whether our ground leases defer cash rent payments until completion of construction. As we enter into new ground leases at new airport sites, our ground lease expense and associated cash payments to airport landlords will ultimately continue to increase into the future. If airport landlords increase the per acre cost of the ground lease of our target campuses, the operating margins at potential target developments may be impacted negatively. Other operating expenses reflected in our consolidated statement of operations are reflective of the professional, legal and consulting fees, compensation costs, and other general and administrative expenses, including those necessary to support our business as a public company such as expenses associated with corporate governance, SEC reporting, and other compliance matters. While we expect that such expenses will rise in some measure as our portfolio of hangar campuses grows, we expect that such expenses as a percentage of our portfolio will decrease over time due to efficiencies, economies of scale, insourcing of job functions, and cost control measures.
Operating Income (Loss) The presentation of operating income (loss) provides a measure of performance which is useful for investors, analysts and other interested parties in company-to-company operating performance comparisons. Operating income (loss) is computed by deducting operating expenses from revenue.
Net Income (Loss) The presentation of net income provides a measure of performance which is useful for investors, analysts and other interested parties in company-to-company operating performance comparisons.
Net Cash Provided By (Used In) Operating Activities We focus on measures designed to monitor cash flow, including net cash provided by (used in) operating activities. The presentation of net cash provided by (used in) operating activities provides a measure of performance which is useful for investors, analysts and other interested parties in company-to-company operating performance comparisons.
Non-GAAP Financial Measures To supplement our results presented in accordance with GAAP, we utilize several non-GAAP financial measures that exclude or adjust certain items. These non-GAAP financial measures are detailed in the section “— Non-GAAP Financial Measures” below.
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Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include assumptions used within impairment analyses, estimated useful lives of depreciable assets and amortizable costs, estimates of inputs utilized in determining the fair value of financial instruments such as warrants, and estimates and assumptions related to right-of-use assets and operating lease liabilities. Actual results could differ materially from those estimates.
Cost of Construction
Cost of construction on the consolidated balance sheets is carried at cost. The cost of acquiring an asset includes the costs necessary to bring a capital project to the condition necessary for its intended use. Costs are capitalized once the construction of a specific capital project is probable. Construction labor and other direct costs of construction are capitalized. Professional fees for engineering, procurement, consulting, and other soft costs that are directly identifiable with the project and are considered an incremental direct cost are capitalized. We allocate a portion of our internal salaries to both capitalized cost of construction and to general and administrative expense based on the percentage of time certain employees worked in the related areas. Interest costs on the loans and bonds used to fund the capital projects are also capitalized until the capital project is completed. Once a capital project is complete, the cost of the capital project is reclassified to Constructed Assets on the accompanying balance sheet and we begin to depreciate the constructed asset on a straight-line basis over the lesser of the life of the asset or the remaining term of the related ground lease, including expected renewal terms.
Leases
We account for leases under Accounting Standards Codification (“ASC”) Topic 842, Leases. We determine whether a contract contains a lease at the inception of the contract. ASC Topic 842 requires lessees to recognize operating lease liabilities and right-of-use (“ROU”) assets for all leases with terms of more than 12 months on the consolidated balance sheets. We have made an accounting policy election that will keep leases with an initial term of 12 months or less off our consolidated balance sheets and will result in recognizing those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. When management determines that it is reasonably certain that we will exercise our options to renew the leases, the renewal terms are included in the lease term and the resulting ROU asset and operating lease liability balances. We have elected to not capitalize any interest cost that is implicit within our operating leases into cost of construction on the consolidated balance sheet, but instead, we expense our ground lease cost in the consolidated statements of operations.
We have lease agreements with lease and non-lease components; we have elected the accounting policy to not separate lease and non-lease components for all underlying asset classes.
Revenue Recognition
We lease hangar facilities that we construct to third parties. The lease agreements are either on a month-to-month basis or have a defined term and may have options to extend the term. Some of the leases contain options to terminate the lease by either party with given notice. There are no options given to the lessee to purchase the underlying assets. Rental revenue is recognized in accordance with ASC Topic 842, Leases, and includes (i) fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and is recognized on a straight-line basis over the term of the lease and (ii) variable payments of tenant reimbursements, which are recoveries of all or a portion of the common area maintenance and operating expenses of the property and are recognized in the same period as the expenses are incurred.
The Company evaluates the collectability of tenant receivables for payments required under the lease agreements. If the Company determines that collectability is not probable, the Company recognizes any difference between revenue amounts recognized to date under ASC 842 and payments that have been collected from the lessee, including any additional rent or lease termination fees, as a current period adjustment to rental revenue.
At certain of our HBO campuses, we recognize revenue from ground-based services, such as the fueling and towing of aircraft. 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. Our fueling arrangements generally are unique at each location we operate, and may be accounted for on a gross or net basis. We determine whether to recognize fuel and services revenue on a gross or net basis based on consideration of various factors, including whether we have control of the products or services prior to delivery to customers, our degree of latitude in establishing the sales price, whether we carry the associated inventory risk, and which party is the primary obligor within such sales arrangements.
Recent Accounting Pronouncements
See Note 2 — Basis of Presentation and Significant Accounting Policies in the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements including the expected dates of adoption and effects on results of operations and financial condition.
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Results of Operations
Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025
The following table sets forth a summary of our consolidated results of operations for the periods indicated below and the changes between the periods (in thousands).
Three months ended
June 30, 2026 June 30, 2025 Change
Revenue:
Rental revenue $ 7,030 $ 5,225 $ 1,805
Fuel revenue 2,825 1,363 1,462
Total revenue 9,855 6,588 3,267
Expenses:
Campus operating expenses 2,379 2,226 153
Fuel expenses 1,867 923 944
Ground lease expenses 3,857 3,568 289
Depreciation and amortization 2,119 1,479 640
Pursuit and marketing expenses 665 585 80
Employee compensation and benefits 4,614 4,294 320
General and administrative expenses 1,122 1,041 81
Total expenses 16,623 14,116 2,507
Operating loss (6,768 ) (7,528 ) 760
Other (income) expense:
Interest expense 1,337 133 1,204
Unrealized loss on warrants (3,792 ) (21,801 ) 18,009
Other expense (income) 55 (216 ) 271
Total other (income) expense (2,400 ) (21,884 ) 19,484
Net loss $ (4,368 ) $ 14,356 $ (18,724 )
Revenues
Rental revenues for the three months ended June 30, 2026 were approximately $7.0 million, compared to approximately $5.2 million for the three months ended June 30, 2025. The $1.8 million, or 35%, increase was primarily the result of the completion of OPF Phase II during the three months ended June 30, 2026 and the cumulative impact of increased occupancy at our BNA, DVT, and ADS hangar campuses.
Fuel revenues for the three months ended June 30, 2026 were approximately $2.8 million, compared to approximately $1.4 million for the three months ended June 30, 2025. The approximately $1.4 million, or 100%, increase was primarily the result of a $1.2 million increase in fuel sales at our CMA, ADS, and APA hangar campuses, where our fuel revenues and related expenses are recognized on a gross basis. Other fuel revenue increased by approximately $0.2 million, which was primarily driven by an increase in fuel gallons uplifted at our BNA, OPF, and SJC hangar campuses due to increased occupancy.
Operating Expenses
Campus operating expenses increased approximately $0.2 million, or 9%, from approximately $2.2 million for the three months ended June 30, 2025, to approximately $2.4 million for the three months ended June 30, 2026. Salaries, wages, and benefits associated with our hangar campus personnel increased approximately $0.1 million, primarily driven by headcount increases associated with the commencement of operations at our DVT, APA, and ADS hangar campuses throughout the year ended December 31, 2025. Other campus operating expenses increased approximately $0.1 million, primarily driven by the expansion of operations at OPF during the three months ended June 30, 2026.
Fuel expenses for the three months ended June 30, 2026 were approximately $1.9 million, compared to approximately $0.9 million for the three months ended June 30, 2025. The approximately $1.0 million, or 111%, increase was primarily the result of an increase in the cost of fuel of approximately $1.0 million, driven by the impact recognizing fuel revenue and expenses on a gross basis at our CMA, ADS, and APA hangar campuses and increased volatility in fuel prices.
Ground lease expenses increased approximately $0.3 million, or 8%, from approximately $3.6 million for the three months ended June 30, 2025, to approximately $3.9 million for the three months ended June 30, 2026. The increase in ground lease expense was driven by the ground leases signed at LGB and FTW during the three months ended December 31, 2025.
Depreciation and amortization for the three months ended June 30, 2026 was approximately $2.1 million, as compared to approximately $1.5 million for the three months ended June 30, 2025. The approximately $0.6 million, or 40%, increase was primarily driven by the commencement of operations at our OPF Phase II campus during the three months ended June 30, 2026, the commencement of operations at our ADS campus during the three months ended June 30, 2025 and the commencement of operations at our APA campus during the three months ended September 30, 2025.
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Operating Expenses - Continued
Pursuit and marketing expenses for the three months ended June 30, 2026 were approximately $0.7 million, compared to approximately $0.6 million for the three months ended June 30, 2025. The 17% increase was primarily the result of increased marketing spend and our investment in our growth strategy in securing airport site acquisitions and potential tenants throughout the year.
Employee compensation and benefits expenses increased approximately $0.3 million, or 7%, to $4.6 million for the three months ended June 30, 2026, as compared to approximately $4.3 million for the three months ended June 30, 2025. The increase was primarily driven by increases in headcount and expense recognized associated with our equity compensation programs.
For the three months ended June 30, 2026 and 2025, other general and administrative expenses were approximately $1.1 million and approximately $1.0 million, respectively. The approximately $0.1 million, or 10%, increase was primarily driven by increases in professional fees and technology costs due to the expansion of the business and headcount, offset by a slight decrease in corporate insurance premiums.
Other (Income) Expense
Other income decreased from approximately $21.9 million for the three months ended June 30, 2025, to approximately $2.4 million for the three months ended June 30, 2026. The decrease was primarily due to an approximately $18.0 million difference in the mark-to-market adjustment of the outstanding warrants at June 30, 2026 as compared to June 30, 2025, an approximately $1.2 million increase in interest expense due to higher indebtedness, and an approximately $0.3 million decrease in interest income.
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Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025
The following table sets forth a summary of our consolidated results of operations for the periods indicated below and the changes between the periods (in thousands).
Six months ended
June 30, 2026 June 30, 2025 Change
Revenue:
Rental revenue $ 13,523 $ 9,685 $ 3,838
Fuel revenue 5,057 2,495 2,562
Total revenue 18,580 12,180 6,400
Expenses:
Campus operating expenses 4,953 4,109 844
Fuel expenses 3,022 1,657 1,365
Ground lease expenses 7,810 6,472 1,338
Depreciation and amortization 4,086 2,578 1,508
Pursuit and marketing expenses 1,287 1,165 122
Employee compensation and benefits 8,957 8,533 424
General and administrative expenses 2,205 2,018 187
Total expenses 32,320 26,532 5,788
Operating loss (13,740 ) (14,352 ) 612
Other (income) expense:
Interest expense 2,633 271 2,362
Unrealized loss on warrants (3,002 ) (19,274 ) 16,272
Other income (30 ) (579 ) 549
Total other (income) expense (399 ) (19,582 ) 19,183
Net loss $ (13,341 ) $ 5,230 $ (18,571 )
Revenues
Rental revenues for the six months ended June 30, 2026 were approximately $13.5 million, compared to approximately $9.7 million for the six months ended June 30, 2025. The $3.8 million, or 39%, increase was primarily the result of operations at our APA and ADS hangar campuses, which commenced operations throughout the year ended December 31, 2025, the completion of OPF Phase II during the three months ended June 30, 2026, and the cumulative impact of increased occupancy at our BNA, DVT, and SJC hangar campuses.
Fuel revenues for the six months ended June 30, 2026 were approximately $5.1 million, compared to approximately $2.5 million for the six months ended June 30, 2025. The approximately $2.6 million, or 104%, increase was primarily the result of a $2.0 million increase in fuel sales at our CMA, ADS, and APA hangar campuses, where our fuel revenues and related expenses are recognized on a gross basis. Other fuel revenue increased by approximately $0.6 million, which was primarily driven by an increase in fuel gallons uplifted at our BNA, OPF, and SJC hangar campuses due to increased occupancy.
Operating Expenses
Campus operating expenses increased approximately $0.9 million, or 22%, from approximately $4.1 million for the six months ended June 30, 2025, to approximately $5.0 million for the six months ended June 30, 2026. Salaries, wages, and benefits associated with our hangar campus personnel increased approximately $0.4 million, primarily driven by headcount increases associated with the commencement of operations at our DVT, APA, and ADS hangar campuses throughout the year ended December 31, 2025. Other campus operating expenses increased approximately $0.5 million, primarily driven by increased insurance, property taxes, and utilities associated with operations at DVT, APA, and ADS.
Fuel expenses for the six months ended June 30, 2026 were approximately $3.0 million, compared to approximately $1.7 million for the six months ended June 30, 2025. The approximately $1.3 million, or 77%, increase was primarily the result of an increase in the cost of fuel of approximately $1.4 million, driven by the impact of recognizing fuel revenue and expenses on a gross basis at our CMA, ADS, and APA hangar campuses and increased volatility in fuel prices, offset by an approximately $0.1 million decrease in other fuel-related expenses.
Ground lease expenses increased approximately $1.3 million, or 20%, from approximately $6.5 million for the six months ended June 30, 2025, to approximately $7.8 million for the six months ended June 30, 2026. The increase in ground lease expense was driven by the ground leases signed at the ground leases signed at SWF and HIO during the three months ended June 30, 2025 and the ground leases signed at LGB and FTW during the three months ended December 31, 2025.
Depreciation and amortization for the six months ended June 30, 2026 was approximately $4.1 million, as compared to approximately $2.6 million for the six months ended June 30, 2025. The approximately $1.5 million, or 58%, increase was primarily driven by the commencement of operations at our OPF Phase II campus during the three months ended June 30, 2026, the commencement of operations at our DVT and ADS campuses during the three months ended June 30, 2025, and the commencement of operations at our APA campus during the three months ended September 30, 2025.
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Operating Expenses - Continued
Pursuit and marketing expenses for the six months ended June 30, 2026 were approximately $1.3 million, compared to approximately $1.2 million for the six months ended June 30, 2025. The 8% increase was primarily the result of increased marketing spend and our investment in our growth strategy in securing airport site acquisitions and potential tenants throughout the year.
Employee compensation and benefits expenses increased approximately $0.5 million, or 6%, to $9.0 million for the six months ended June 30, 2026, as compared to approximately $8.5 million for the six months ended June 30, 2025. The increase was primarily driven by an increase in expense recognized associated with our equity compensation programs.
For the six months ended June 30, 2026 and 2025, other general and administrative expenses were approximately $2.2 million and approximately $2.0 million, respectively. The approximately $0.2 million, or 10%, increase was primarily driven by increases in professional fees and technology costs due to the expansion of the business and headcount, offset by a slight decrease in corporate insurance premiums.
Other (Income) Expense
Other income decreased from approximately $19.6 million for the six months ended June 30, 2025, to approximately $0.4 million for the six months ended June 30, 2026. The decrease was primarily due to an approximately $16.3 million difference in the mark-to-market adjustment of the outstanding warrants at June 30, 2026 as compared to June 30, 2025, an approximately $2.3 million increase in interest expense due to higher indebtedness and an approximately $0.6 million decrease in interest income.
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Non-GAAP Financial Measures
To supplement our results presented in accordance with GAAP, we utilize several non-GAAP financial measures that exclude or adjust certain items. Our method of calculating these measures may differ from similarly titled measures utilized by other companies and therefore their comparability may be limited. These non-GAAP financial measures include:
Metric Description
Adjusted EBITDA We utilize Adjusted EBITDA to evaluate our operating and financial performance, which is supplemental in nature and a financial measure not calculated in accordance with GAAP. We define Adjusted EBITDA as net income before (i) depreciation and amortization expense, (ii) interest expense, (iii) interest income, (iv) non-cash stock-based compensation expense, (v) non-cash gains and losses resulting from the change in fair value of our liability-classified warrants, (vi) non-cash operating lease expense, (vii) non-cash operating lease income, and (viii) other non-cash expenses, including, but not limited to, the impairment of long-lived assets, gains or losses arising from the disposition of assets, losses on extinguishment of debt, and other non-cash non-operating expenses. We believe Adjusted EBITDA is useful for investors, analysts and other interested parties as it provides a view of our operating performance, analyzes our ability to meet debt service obligations, and facilitates company-to-company operating performance comparisons by excluding potential differences caused by variations in capital structures, the age and book depreciation of assets, and equity-based incentive plans.
Adjusted Rental Revenue Adjusted Rental Revenue is a non-GAAP financial measure defined as rental revenue before the impact of non-cash operating lease income resulting from recognizing lease income on a straight-line basis over the term of the leases. We believe Adjusted Rental Revenue is useful for investors, analysts, and other interested parties as it provides information about cash rental income earned in a given period by excluding the non-cash income or loss associated with the straight-line recognition of leases under ASC Topic 842.
Adjusted Net Fuel Revenue Adjusted Net Fuel Revenue is a non-GAAP financial measure defined as fuel revenue net of fuel expenses. For GAAP purposes, our fueling arrangements may be accounted for on a gross or net basis based on the consideration of various factors, including whether we have control of the products or services prior to delivery to customers, our degree of latitude in establishing the sales price, whether we carry the associated inventory risk, and which party is the primary obligor within such sales arrangements. Management utilizes Adjusted Net Fuel Revenue to evaluate our operating performance for excluding potential differences caused by differing revenue recognition methods across our operating portfolio. At our ADS, APA, and CMA hangar campuses, fuel revenue and expense is accounted for on a gross basis under GAAP, whereas the calculation of Adjusted Net Fuel Revenue is more representative of the net margin we earn from fuel sales at such campuses. We believe Adjusted Net Fuel Revenue is useful for investors, analysts, and other interested parties as it enhances comparability of the net contribution of fuel revenue with prior periods.
Adjusted Total Revenue Adjusted Total Revenue is a non-GAAP financial measure that is defined as the sum of Adjusted Rental Revenue and Adjusted Net Fuel Revenue. Refer to “— Adjusted Rental Revenue” and “— Adjusted Net Fuel Revenue” above.
Adjusted Campus Operating Expenses Adjusted Campus Operating Expenses is a non-GAAP financial measure defined as the sum of our reported campus operating expenses and ground lease expenses before the impact of non-cash operating lease expense resulting from recognizing operating lease expense on a straight-line basis over the term of the ground lease. For GAAP purposes, we elect to expense rather than capitalize ground lease expense incurred at hangar campus sites under development and will incur expense under GAAP regardless of whether our ground leases defer cash rent payments until completion of construction. As such, our reported operating lease expense may include a significant amount of non-cash expense associated with hangar campuses not currently in operation. We believe Adjusted Campus Operating Expenses is useful for investors, analysts, and other interest parties as it provides a view of our operating performance at our hangar campuses presently in operation and facilitates period-to-period operating performance comparisons by excluding non-cash operating lease expense.
Adjusted Campus Operating Profit (Loss) Adjusted Campus Operating Profit (Loss) is a non-GAAP financial measure defined as the sum of Adjusted Rental Revenue and Adjusted Net Fuel Revenue minus Adjusted Campus Operating Expenses. Management utilizes Adjusted Operating Profit (Loss) to evaluate the operating performance of HBO hangar campuses presently in operation by excluding certain non-cash expenses and income, as well as general and administrative expenses associated with our corporate operations. We believe Adjusted Campus Operating Profit is useful for investors, analysts, and other interest parties as it provides a view of our operating performance at our hangar campuses presently in operation and facilitates period-to-period operating performance comparisons.
Adjusted Corporate Operating Expenses Adjusted Corporate Operating Expenses is a non-GAAP financial measure defined as the sum of our reported pursuit and marketing expenses, general and administrative expenses, and employee compensation and benefits before the impact of non-cash stock-based compensation expense. We believe Adjusted Corporate Operating Expenses is useful for investors, analysts, and other interest parties as it segregates expenses not associated with revenue-generating activities and facilitates period-to-period operating performance comparisons.
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A reconciliation of non-GAAP measures to the comparable financial measures calculated in accordance with GAAP is presented below:
Three months ended Six months ended
June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Net income (loss) $ (4,368 ) $ 14,356 $ (13,341 ) $ 5,230
Add (subtract):
Depreciation and amortization 2,119 1,479 4,086 2,578
Interest expense 1,337 133 2,633 271
Other expense (income) 55 (216 ) (30 ) (579 )
Changes in fair value of warrant liabilities (3,792 ) (21,801 ) (3,002 ) (19,274 )
Equity-based compensation 1,816 1,323 3,418 2,561
Non-cash operating lease expense 2,246 1,867 4,580 3,348
Non-cash operating lease income (360 ) (157 ) (782 ) (465 )
Adjusted EBITDA $ (947 ) $ (3,016 ) $ (2,438 ) $ (6,330 )
Three months ended Six months ended
June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Rental revenue $ 7,030 $ 5,225 $ 13,523 $ 9,685
Less: Non-cash operating lease income (360 ) (157 ) (782 ) (465 )
Adjusted rental revenue (non-GAAP) 6,670 5,068 12,741 9,220
Fuel revenue 2,825 1,363 5,057 2,495
Less: Fuel expenses (1,867 ) (923 ) (3,022 ) (1,657 )
Adjusted net fuel revenue (non-GAAP) 958 440 2,035 838
Adjusted total revenue (non-GAAP) 7,628 5,508 14,776 10,058
Campus operating expenses 2,379 2,226 4,953 4,109
Ground lease expenses 3,857 3,568 7,810 6,472
Less: Non-cash operating lease expense (2,246 ) (1,867 ) (4,580 ) (3,348 )
Adjusted campus operating expenses (non-GAAP) 3,990 3,927 8,183 7,233
Adjusted campus operating profit (non-GAAP) 3,638 1,581 6,593 2,825
Pursuit and marketing expenses 665 585 1,287 1,165
General and administrative expenses 1,122 1,041 2,205 2,018
Employee compensation and benefits 4,614 4,294 8,957 8,533
Less: Equity-based compensation (1,816 ) (1,323 ) (3,418 ) (2,561 )
Adjusted corporate operating expenses (non-GAAP) 4,585 4,597 9,031 9,155
Adjusted EBITDA $ (947 ) $ (3,016 ) $ (2,438 ) $ (6,330 )
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Liquidity and Capital Resources
Overview
Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund the construction of new assets, fund working capital and other general business needs. Our primary sources of cash include the potential issuance of equity and debt securities and rental payments from tenants. Our long-term liquidity requirements include lease payments under our ground leases with airport authorities, repaying principal and interest on outstanding borrowings, funding the construction costs of our hangar campus development projects (see “— Construction Material Costs and Labor”), funding for operations, and paying accrued expenses.
We believe that we have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional private activity bonds, drawdowns under the Term Loan Facility, and other debt and the issuance of additional equity securities. We also have the ability to utilize our ATM Facility or otherwise utilize our shelf registration statement on Form S-3 to access the capital markets. However, we cannot assure you that we will have access to these sources of capital or that, even if such sources of capital are available, that these sources of capital will be available on favorable terms. Our ability to incur additional debt will depend on multiple factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that are or may be imposed by future lenders. Our ability to access the equity and debt capital markets will depend on multiple factors as well, including general market conditions for real estate companies, our degree of leverage, the trading price of our common stock and debt and market perceptions about us.
Our cash deposits may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and the majority are maintained with a major financial institution with reputable credit. Our restricted cash is held in trust at major financial institutions pursuant to the respective indentures of the Series 2021 Bonds and Series 2026 Bonds. We monitor the relative credit standing of financial institutions with whom we transact and limit the amount of credit exposure with any one entity. Our portfolio of investments and restricted investments is composed entirely of U.S. Treasury securities as of June 30, 2026.
The following table summarizes our cash and cash equivalents, restricted cash, investments, and restricted investments as of June 30, 2026 and December 31, 2025 (in thousands):
June 30, 2026 December 31, 2025
Cash and cash equivalents $ 18,966 $ 20,718
Restricted cash 145,060 16,306
Restricted investments 42,863 11,453
Total cash, restricted cash, investments, and restricted investments $ 206,889 $ 48,477
Private Activity Bonds
Series 2026 Bonds
On February 12, 2026, Sky Harbour Capital III LLC (“Sky Capital III”) completed a $150 million financing through the issuance of Series 2026 Bonds. The Series 2026 Bonds were issued by the Public Finance Authority of Wisconsin and bear interest at a rate of 6.00% per year, payable semi-annually in arrears on January 1 and July 1 of each year, beginning on July 1, 2026. The Series 2026 Bonds are subject to mandatory tender for purchase on January 1, 2031 (the “Mandatory Tender Date”), and will mature on July 1, 2060, unless earlier exchanged, redeemed or repurchased. On the Mandatory Tender Date, holders will be required to tender their Bonds for purchase at a price equal to 100% of the principal amount thereof plus accrued interest. Following such mandatory tender, the Series 2026 Bonds may be remarketed at a new interest rate or otherwise refinanced. Accordingly, although the Series 2026 Bonds have a stated final maturity of July 1, 2060, Sky Capital III will be required to refinance or remarket the Series 2026 Bonds on or prior to January 1, 2031. We utilize the proceeds of the Series 2026 Bonds, together with other available funds, including draws from the Company’s Term Loan Facility, to (i) finance or refinance, directly or indirectly, all or a portion of the construction, equipping and/or improvement of all or a portion of the 2026 Projects; (ii) fund a deposit to the debt service reserve fund for the Series 2026 Bonds; (iii) pay capitalized interest on the Series 2026 Bonds through January 1, 2029; and (iv) pay the costs of issuance of the Series 2026 Bonds.
Series 2021 Bonds
On September 14, 2021, SHC completed an issuance through the Public Finance Authority (Wisconsin) of $166.3 million of Series 2021 PABs. The Series 2021 Bonds are comprised of three maturities: $21.1 million bearing interest at 4.00%, due July 1, 2036; $30.4 million bearing interest at 4.00%, due July 1, 2041; and $114.8 million bearing interest at 4.25%, due July 1, 2054. The Series 2021 Bond that has a maturity date of July 1, 2036 was issued at a premium, and Sky received bond proceeds that were $0.2 million above its face value. The net proceeds from the issuance of the Series 2021 Bonds proceeds were used to (a) finance or refinance the construction of various aviation facilities consisting of general aviation aircraft hangars and storage facilities located and to be located on the SGR site, the OPF site, the BNA site, the APA site, the DVT site, and following our March 2023 election to reallocate a portion of the net proceeds, the ADS site; (b) fund debt service and other operating expenses such as ground lease expense during the initial construction period; (c) fund deposits to the Debt Service Reserve Fund; and (d) pay certain costs of issuance related to the Series 2021 Bonds.
Term Loan Facility
On September 4, 2025, we 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, the Term Loan Facility. The Term Loan Facility provides for borrowings up to an aggregate principal amount of $200 million under the Credit Agreement (the “Loans”) to be made by the Lenders from time to time as requested by SH Capital II. 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. Such Loans will bear interest at a rate of 80% of the sum of SOFR and 0.10%, plus 200 basis points. In October 2025, we entered into an interest rate swap (the “Swap Agreement”) for notional amounts of up to $200 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 the five-year term.
The Credit Agreement provides for Loans to be made from time to time by our special purpose subsidiaries of SH Capital II 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 and certain revenues of SH Capital II and the special purpose subsidiaries (the “Term Loan Borrowers”). Sky and Sky Harbour Holdings II LLC, the holding company of SH Capital II, and Sky Harbour Holdings III LLC will guarantee the Term Loan Borrower’s obligations under the Loans pursuant to a Parent Guarantee and a Holdco Guaranty, respectively. In addition, pursuant to a Non-Recourse Carveout Guaranty, we 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.
As of June 30, 2026, there was approximately $130.2 million of availability under the Term Loan Facility, subject to borrowing base restrictions.
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Yorkville Promissory Notes
On December 8, 2025, we issued the Yorkville Promissory Note to Yorkville, in the aggregate principal amount of $15 million. The issue price for the Yorkville Promissory Note was 100% of the aggregate principal amount thereof. The Yorkville Promissory Note accrues interest at a rate of 7.75% per annum (or 18% upon the occurrence of an event of default) and matures on June 8, 2027. Beginning on July 8, 2026, and continuing on the same day of each of the twelve successive months thereafter, we will be required to repay a portion of the outstanding balance of the Yorkville Promissory Note in amounts equal to $1.25 million, with $7.5 million and $7.5 million due during the years ended December 31, 2026 and 2027, respectively.
On January 27, 2026, Sky issued the January 2026 Yorkville Promissory Note to Yorkville, in the aggregate principal amount of $10 million. The issue price for the January 2026 Yorkville Promissory Note was 100% of the aggregate principal amount thereof. The January 2026 Yorkville Promissory Note accrues interest at a rate of 7.75% per annum (or 18% upon the occurrence of an event of default) and matures on June 8, 2027. Beginning on July 8, 2026, and continuing on the same day of each of the twelve successive months thereafter, we will be required to repay a portion of the outstanding balance of the January 2026 Yorkville Promissory Note in an amounts equal to approximately $0.8 million.
Private Placement and Securities Purchase Agreements
2024 Private Placement and Securities Purchase Agreement
On September 16, 2024, we entered into a Securities Purchase Agreement (the “2024 Purchase Agreement”) with certain investors (collectively, the “Initial 2024 Investors”) relating to, among other things, the issuance and sale to the Initial 2024 Investors at an initial closing an aggregate of 3,352,106 shares (the “Initial 2024 PIPE Shares”) of our Class A Common Stock for an aggregate purchase price of $31.8 million, and agreed to sell and issue to the Initial 2024 Investors at a second closing, at the option of the Initial 2024 Investors, up to an aggregate of number of shares equal to the number of each such Initial 2024 Investor's Initial 2024 PIPE Shares purchased in the Initial 2024 Closing at the same purchase price of $9.50 per share (the “Second 2024 Closing” and, together with the Initial Closing, the “2024 Financing”). On October 25, 2024, additional investors (the “Additional 2024 Investors” and, together with the Initial 2024 Investors, the “2024 Investors”) each executed a joinder to the 2024 Purchase Agreement, pursuant to which the Additional 2024 Investors agreed to purchase, and we agreed to sell, an aggregate of 603,684 additional shares of Class A Common Stock (the “Additional 2024 PIPE Shares”, and together with the Initial 2024 PIPE Shares, the “First Closing 2024 PIPE Shares”) for an aggregate purchase price of $5.7 million. The initial closing under the 2024 Purchase Agreement occurred on October 25, 2024 (the “Initial 2024 Closing”), and 3,955,790 First Closing 2024 PIPE Shares were issued to the Investors for an aggregate purchase price of $37.6 million. In December 2024, we sold and issued to the 2024 Investors an aggregate of 3,955,790 Second Closing 2024 PIPE Shares for an aggregate purchase price of approximately $37.6 million (the “Second 2024 Closing”). Inclusive of the Initial 2024 Closing, we issued and sold an aggregate of 7,911,580 shares of Class A Common Stock for an aggregate purchase price of approximately $75.2 million. See “Note 12 — Equity” in the Notes to Consolidated Financial Statements for additional information regarding the 2024 Purchase Agreement.
2023 Private Placement and Securities Purchase Agreement
On November 1, 2023, we entered into a Securities Purchase Agreement (the “2023 Purchase Agreement”) with certain investors (collectively, the “2023 Investors”), pursuant to which we sold and issued to the 2023 Investors at an initial closing an aggregate of 6,586,154 shares of our Class A Common Stock (the “Initial 2023 PIPE Shares”) and accompanying warrants to purchase up to 1,141,600 shares of Class A Common Stock (the “Initial PIPE Warrants”), for an aggregate purchase price of $42.8 million (the "Initial 2023 Financing"). On November 29, 2023, pursuant to the terms of the 2023 Purchase Agreement, we sold and issued to the 2023 Investors an aggregate of 2,307,692 shares of our Class A Common Stock (the “2023 Additional PIPE Shares” and, together with the 2023 Initial PIPE Shares, the “2023 PIPE Shares”) and accompanying warrants to purchase an aggregate of 400,000 shares of Class A Common Stock (the “Additional PIPE Warrants” and, together with the Initial PIPE Warrants, the “PIPE Warrants”) for an aggregate purchase price of $15.0 million. The aggregate PIPE financing through the 2023 Purchase Agreement totaled approximately $57.8 million, or $6.50 per share.
At-the-Market Facility
On March 27, 2024, we entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with B. Riley Securities, Inc. (“B. Riley”) with respect to an “at the market” offering program (the “ATM Facility”), under which we may, from time to time, at our sole discretion, issue and sell through B. Riley, acting as sales agent, up to $100 million of shares of Class A Common Stock. Pursuant to the ATM Agreement, we may sell the shares through B. Riley by any method permitted that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act. B. Riley will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon instructions from us, including any price or size limits or other customary parameters or conditions we may impose. We pay B. Riley a commission of 3.0% of the gross sales price per share sold under the ATM Agreement, subject to certain reductions. On December 31, 2025, we entered into an Amended and Restated At Market Issuance Sales Agreement (the “A&R ATM Agreement”) with B. Riley and Yorkville Securities, LLC (“Yorkville Securities” and, together with B. Riley, the “Sales Agents”), pursuant to which, among other things, Yorkville Securities was added as an additional sales agent. Pursuant to the A&R ATM Agreement, we may offer and sell, from time to time through the Sales Agents, shares of its Class A Common Stock, having an aggregate offering price of up to $100.0 million (the “ATM Shares”). The material terms and conditions of the ATM Agreement otherwise remain unchanged.
During the three months ended June 30, 2026, the Company sold 195,112 shares of Class A Common Stock under the ATM Facility at a weighted-average sales price of $10.60. During the six months ended June 30, 2026, the Company sold 242,483 shares of Class A Common Stock under the ATM Facility at a weighted-average sales price of $10.49. As of June 30, 2026, ATM Shares having an aggregate gross sales price of up to approximately $95.2 million remain available for issuance under the A&R ATM Agreement.
We are not obligated to sell any shares under the A&R ATM Agreement. The offering of shares pursuant to the A&R ATM Agreement will terminate upon the earlier to occur of (i) the issuance and sale, through the Sales Agents, of all of the shares subject to the A&R ATM Agreement and (ii) termination of the A&R ATM Agreement in accordance with its terms. We have made limited sales under the ATM Facility to date and will only do so when our stock price is at prices our Board deems appropriate.
Debt Covenants
The Term Loan Facility contains financial and non-financial covenants, including a debt service coverage ratio, debt service reserve requirements, restricted payments test, and limitations on the sale, lease, or distribution of assets. Commencing three months after the earlier of September 4, 2028 or a trigger date based on substantial completion of certain projects, SH Capital II is required to maintain a historical and projected debt service coverage ratio of no less than 1.25 to 1.00.
The Series 2021 Bonds contain financial and non-financial covenants, including a debt service coverage ratio, a restricted payments test and limitations on the sale, lease, or distribution of assets. To the extent that SHC does not comply with these covenants, an event of default or cross-default may occur under one or more agreements, and we or our subsidiaries may be restricted in our ability to pay dividends, issue new debt or access our leased facilities. The Series 2021 Bonds are collateralized on a joint and several basis with the property and revenues of all SHC subsidiaries and their assets financed or to be financed from the proceeds of the Series 2021 Bonds. Covenants in the Series 2021 Bonds require SHC to maintain a debt service coverage ratio (as defined in the relevant documents) of at least 1.25 for each applicable test period, commencing with the quarter ending December 31, 2024. The Series 2021 Bonds are subject to a Continuing Disclosure Agreement whereby SHC is obligated to provide electronic copies of (i) monthly construction reports, (ii) quarterly reports containing quarterly financial information of SHC and (iii) annual reports containing audited consolidated financial statements of SHC to the Municipal Securities Rulemaking Board.
As of June 30, 2026, we were in compliance with all debt covenants.
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Lease Commitments
The Company’s future minimum lease payments required under leases as of June 30, 2026 were as follows:
Year Ending December 31, Operating Leases Finance Leases
2026 (remainder of year) $ 3,385 $ 26
2027 8,573 45
2028 10,402 32
2029 11,146 -
2030 11,250 -
Thereafter 651,217 -
Total lease payments 695,973 103
Less imputed interest (498,019 ) (7 )
Total $ 197,954 $ 96
Off-Balance Sheet Arrangements
We do not maintain any off-balance sheet arrangements.
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Cash Flows
The following table summarizes our sources and uses of cash for the six months ended June 30, 2026 and 2025 (in thousands):
Six months ended
June 30, 2026 June 30, 2025
Cash and restricted cash at beginning of period $ 37,024 $ 94,359
Net cash used in operating activities (3,433 ) (5,994 )
Net cash used in investing activities (96,008 ) (54,803 )
Net cash provided by (used in) financing activities 226,443 (1,457 )
Cash and restricted cash at end of period $ 164,026 $ 32,105
Operating Activities
Cash used in operating activities is significantly influenced by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business. Our working capital consists primarily of cash, receivables from tenants, prepaid expenses, accounts payable, accrued compensation, accrued other expenses, and lease liabilities. The timing of collection of our tenant receivables, and the timing of spending commitments and payments of our accounts payable, accrued expenses, accrued payroll and related benefits, all affect these account balances.
Net cash used in operating activities was approximately $3.4 million for the six months ended June 30, 2026, as compared to cash used in operating activities of approximately $6.0 million for the same period in 2025. The approximately $2.6 million decrease in cash used in operating activities was primarily attributable to an approximately $2.5 million decrease in net loss, net of non-cash adjustments and a favorable change in working capital of approximately $0.1 million. The decrease in net loss, net of non-cash adjustments was primarily driven by the impact of increases in revenue from our operations at DVT, APA, ADS, and OPF. The favorable change in working capital was primarily driven by the timing of collections of accounts receivable as well as spending commitments and payments of our accounts payable and other accrued expenses.
Investing Activities
Our primary investing activities have consisted of payments related to the cost of construction at our various hangar campus development projects and investment in U.S. Treasury Securities. As our business expands, we expect to continue to invest in our current and anticipated future portfolio of hangar campus development projects.
Net cash used in investing activities was approximately $96.0 million for the six months ended June 30, 2026, as compared to cash used in investing activities of approximately $54.8 million for the same period in 2025. The increase of approximately $41.2 million of cash used in investing activities was driven primarily by a decrease in proceeds received from available-for-sale investments of approximately $69.2 million and an increase of capital expenditures of approximately $19.0 million, offset by a decrease in purchases of available-for-sale and held-to-maturity investments of approximately $49.7 million.
Financing Activities
Our primary financing activities have consisted of capital raised to fund the growth of our business and proceeds from debt obligations incurred to finance our hangar campus development projects. We expect to raise additional equity capital and issue additional indebtedness as our business grows.
Net cash provided by financing activities was approximately $226.4 million for the six months ended June 30, 2026, as compared to net cash used in financing activities of approximately $1.5 million for the same period in 2025. The approximately $227.9 million increase in net cash used in financing activities was primarily driven by proceeds received from the issuance of the Series 2026 Bonds of $150.0 million and approximately $78.8 million of proceeds received from the Term Loan Facility and 2026 Yorkville Promissory Note. These were offset by an increase of $3.9 million in payments for debt issuance costs.
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