JETMF 10-Q
Global Crossing Airlines Group Inc. (JETMF)
ESPP
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification Number) |
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(Address of principal executive office) |
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(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
[ ] |
Accelerated filer |
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[X] |
Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No
The number of shares outstanding of the registrant’s Common Stock as of November 1, 2024 was 61,163,437 shares, consisting of
GLOBAL CROSSING AIRLINES GROUP, INC.
Form 10-Q
Period Ended September 30, 2024
Index
2
GLOBAL CROSSING AIRLINES GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and share quantities)
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September 30, 2024 |
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December 31, 2023 |
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(Unaudited) |
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Current Assets |
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Cash and cash equivalents |
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$ |
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$ |
Restricted cash |
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Accounts receivable, net of allowance |
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Prepaid expenses and other current assets |
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Current assets held for sale |
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Total Current Assets |
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Property and equipment, net |
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Finance leases, net |
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Operating lease right-of-use assets |
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Deposits |
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Other assets |
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Total Assets |
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$ |
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$ |
Current liabilities |
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Accounts payable |
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$ |
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$ |
Accrued liabilities |
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Deferred revenue |
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Customer deposits |
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Current portion of long-term operating leases |
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Current portion of finance leases |
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Total current liabilities |
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Other liabilities |
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Note payable |
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Long-term operating leases |
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Long-term finance leases |
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Other liabilities |
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Total other liabilities |
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Total Liabilities |
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$ |
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$ |
(Note 7) |
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Stockholders' Equity (Deficit) |
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Common Stock |
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$ |
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$ |
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$ |
Additional paid-in capital |
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Retained deficit |
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( |
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( |
Total Company's stockholders’ deficit |
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( |
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( |
Noncontrolling interest |
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Total stockholders’ deficit |
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( |
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( |
Total Liabilities and Deficit |
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$ |
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$ |
See accompanying notes to condensed consolidated financial statements.
3
GLOBAL CROSSING AIRLINES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except share and per share amounts)
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Three Months Ended September 30, 2024 |
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Three Months Ended September 30, 2023 |
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Nine Months Ended September 30, 2024 |
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Nine Months Ended September 30, 2023 |
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Revenue |
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$ |
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$ |
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$ |
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$ |
Operating Expenses |
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Salaries, Wages, & Benefits |
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Aircraft Fuel |
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Maintenance, materials and repairs |
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Depreciation and amortization |
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Contracted ground and aviation services |
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Travel |
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Insurance |
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Aircraft Rent |
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Other |
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||||
Total Operating Expenses |
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$ |
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$ |
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$ |
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$ |
Operating Loss |
|
( |
|
( |
|
( |
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( |
Non-Operating Expenses |
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Interest Expense |
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Total Non-Operating Expenses |
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Loss before income taxes |
|
( |
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( |
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( |
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( |
Income tax expense |
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- |
|
- |
|
- |
|
- |
Net Loss |
|
( |
|
( |
|
( |
|
( |
Net Loss attributable to Noncontrolling Interest |
|
( |
|
( |
|
( |
|
( |
Net Loss attributable to the Company |
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( |
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( |
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( |
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( |
Loss per share: |
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Basic |
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$( |
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$( |
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$( |
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$( |
Diluted |
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$( |
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$( |
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$( |
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$( |
Weighted average number of shares outstanding |
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Fully diluted shares outstanding |
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See accompanying notes to condensed consolidated financial statements.
4
GLOBAL CROSSING AIRLINES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
(In thousands, except shares quantities)
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Common Stock Number of Shares |
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Amount |
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Additional Paid in Capital |
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Retained Deficit |
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Total |
Noncontrolling Interest |
Total |
Beginning – January 1, 2023 |
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$ |
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$ |
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$( |
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$( |
$- |
$( |
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Issuance of shares – options exercised |
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- |
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- |
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- |
||||
Issuance of shares – warrants exercised |
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- |
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- |
|||||
Issuance of shares - share based compensation on RSUs |
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- |
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- |
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- |
||||
Loss for the period |
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- |
|
- |
|
- |
|
( |
|
( |
- |
( |
Ending – March 31, 2023 |
|
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$ |
|
$ |
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$( |
|
$( |
$- |
$( |
|
Issuance of shares – warrants exercised |
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- |
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- |
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- |
||||
Issuance of shares - share based compensation on RSUs |
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|
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- |
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- |
|||||
Issuance of shares - ESPP |
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- |
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- |
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- |
||||
Loss for the period |
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- |
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- |
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- |
|
( |
|
( |
- |
( |
Ending – June 30, 2023 |
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$ |
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$ |
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$( |
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$( |
$- |
$( |
|
Issuance of shares - share based compensation on RSUs |
|
|
|
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- |
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- |
|||||
Loss for the period |
|
- |
|
- |
|
- |
|
( |
|
( |
( |
( |
Warrants issued |
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- |
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- |
|
|
- |
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- |
|||
Ending – September 30, 2023 |
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$ |
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$ |
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$( |
|
$( |
$( |
$( |
|
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Common Stock Number of Shares |
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Amount |
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Additional Paid in Capital |
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Retained Deficit |
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Total |
Noncontrolling Interest |
Total |
Beginning – January 1, 2024 |
|
|
$ |
|
$ |
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$( |
|
$( |
$ |
$( |
|
Issuance of shares - share based compensation on RSUs |
|
|
|
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- |
|
- |
|||||
Loss for the period |
|
- |
|
- |
|
- |
|
( |
|
( |
- |
( |
Ending – March 31, 2024 |
|
|
$ |
|
$ |
|
$( |
|
$( |
$ |
$( |
|
Issuance of shares - share based compensation on RSUs |
|
|
- |
|
|
- |
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- |
||||
Issuance of shares - ESPP |
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- |
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- |
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- |
||||
Dividends |
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- |
|
- |
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- |
|
- |
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- |
( |
( |
Income for the period |
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- |
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- |
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- |
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||||
Ending – June 30, 2024 |
|
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$ |
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$ |
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$( |
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$( |
$ |
$( |
|
Issuance of shares - share based compensation on RSUs |
|
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- |
|
|
- |
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- |
||||
Loss for the period |
|
- |
|
- |
|
- |
|
( |
|
( |
( |
( |
Ending – September 30, 2024 |
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$ |
|
$ |
|
$( |
|
$( |
$ |
$( |
See accompanying notes to condensed consolidated financial statements.
5
GLOBAL CROSSING AIRLINES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
|
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For The Nine Months |
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2024 |
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2023 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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|
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Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation expense |
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Credit losses |
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Loss on sale of property |
|
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— |
|
|
|
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Loss (gain) on sale of spare parts |
|
|
|
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( |
) |
|
Foreign exchange loss |
|
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— |
|
|
|
|
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Amortization of debt issue costs |
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|
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Amortization of operating lease right of use assets |
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Share-based payments |
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Interest on finance leases |
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Changes in assets and liabilities: |
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|
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|
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|
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Accounts receivable |
|
|
|
|
|
( |
) |
|
Assets held for sale |
|
|
( |
) |
|
|
|
|
Prepaid expenses and other current assets |
|
|
|
|
|
( |
) |
|
Accounts payable |
|
|
|
|
|
|
||
Accrued liabilities and other liabilities |
|
|
( |
) |
|
|
|
|
Operating lease obligations |
|
|
( |
) |
|
|
( |
) |
Other liabilities |
|
|
( |
) |
|
|
|
|
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
||
Deposits, deferred costs and other assets |
|
|
( |
) |
|
|
( |
) |
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
||
Principal payments on finance leases |
|
|
( |
) |
|
|
( |
) |
Dividends |
|
|
( |
) |
|
|
— |
|
Proceeds on issuance of shares |
|
|
|
|
|
|
||
Repayment of notes payables |
|
|
— |
|
|
|
( |
) |
Proceeds from note payable |
|
|
— |
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
( |
) |
|
|
|
|
Net (decrease) increase in cash, cash equivalents, and restricted cash |
|
|
( |
) |
|
|
|
|
Cash, cash equivalents and restricted cash - beginning of the period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash - end of the period |
|
$ |
|
|
$ |
|
||
Non-cash investing and financing activities |
|
|
|
|
|
|
||
Right-of-use (ROU) assets acquired through operating leases |
|
$ |
|
|
$ |
|
||
Equipment acquired through finance leases |
|
$ |
|
|
$ |
|
||
Note Payable reductions through accounts receivable from sale of Assets held for sale |
|
$ |
- |
|
|
$ |
|
|
Reclass of capitalized professional fees from proceeds from senior secured note |
|
$ |
|
|
$ |
- |
|
|
Cash paid for |
|
|
|
|
|
|
||
Interest |
|
$ |
|
|
$ |
|
||
See accompanying notes to condensed consolidated financial statements.
6
GLOBAL CROSSING AIRLINES GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(In thousands, except share and per share data)
Item 1 - Financial Statements
Global Crossing Airlines Group, Inc. (the “Company” or “GlobalX”) principal business activity is providing passenger and cargo aircraft to customers through aircraft operating service agreements including, crew, maintenance, insurance (“ACMI”) and charter services “Charter” serving the United States, Caribbean, Latin American and European markets.
The condensed consolidated financial statements include the accounts of the Company, and its subsidiaries, Global Crossing Airlines, Inc. and Global Crossing Airlines Operations, LLC (collectively “GlobalX USA”), Global Crossing Airlines Holdings, Inc, GlobalX Travel Technologies, Inc. (“Technologies”), GlobalX Air Tours, LLC (“GlobalX Tours”), LatinX Air S.A.S., GlobalX Colombia S.A.S., UrbanX Air Mobility, Inc. ("UrbanX") and Charter Air Solutions, LLC ("Top Flight"). All intercompany transactions and balances have been eliminated on consolidation.
The accompanying unaudited condensed consolidated financial statements and related notes (the “Financial Statements”) have been prepared in accordance with the U.S. Securities and Exchange Commission (the “SEC”) requirements for quarterly reports on Form 10-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). Management’s opinion is that all adjustments necessary for a fair statement of the results for the interim periods have been made. In the opinion of the Company, the accompanying unaudited condensed financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of September 30, 2024, and its results of operations for the three months and nine months ended September 30, 2024, and 2023, and cash flows for the nine months ended September 30, 2024, and 2023. The condensed balance sheet at December 31, 2023, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The Financial Statements should be read in conjunction with the audited consolidated financial statements and the notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which includes additional disclosures and a summary of our significant accounting policies.
Our quarterly results are subject to seasonal and other fluctuations and the operating results for any quarter are therefore not necessarily indicative of results that may be otherwise expected for the entire year.
The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the 12 months from the date of the filing of this 10Q. As of September 30, 2024, the Company had a working capital deficit of $
2. NEW ACCOUNTING STANDARDS
Recently Issued Accounting Standards
In November 2023, the FASB issued ASU 2023-07 – Improvements to Reportable Segment Disclosures – Amendments in this update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Management expects
7
In December 2023, the FASB issued ASU 2023-09 – Improvements to Income Tax Disclosures – Amendments in this update require: that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5
percent of the amount computed by multiplying pretax income [or loss] by the applicable statutory income tax rate). All entities disclose on an annual basis the following information about income taxes paid: 1. The amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes 2. The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). All entities disclose the following information: 1. Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign 2. Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. The amendments in this Update eliminate the requirement for all entities to (1) disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or (2) make a statement that an estimate of the range cannot be made. The amendments in this Update remove the requirement to disclose the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures. The amendments in this Update replace the term public entity as currently used in Topic 740 with the term public business entity as defined in the Master Glossary of the Codification. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2024. Management expects
In March 2024, the FASB issued ASU 2024-02 - Codification Improvements - Amendments to Remove References to the Concepts Statements. This update contains amendments to the Codification that remove reference to various FASB Concepts Statement. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2024. Management expects
In March 2024, the FASB issued ASU 2024-01 - Compensation-Stock Compensation - Amendments to improve generally accepted accounting principles (GAAP) by adding an illustrative example to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether profits interest and similar awards ("profits interest awards") should be accounted for in accordance with Topic 718, Compensation-Stock Compensation. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2024. Management expects
Investment in Canada Jetlines Operations Ltd.:
On June 28, 2021, the Company completed the spin-out pursuant to the Arrangement under which the Company transferred
On September 11, 2024, Canada Jetlines Operations Ltd. filed an Assignment in Bankruptcy after finding that it would be unable to secure financing to continue with its Proposal under the Bankruptcy and Insolvency Act. BDO Canada Limited was assigned as Trustee of the bankrupt estate. The Company had provided a guarantee for one of their aircraft and are in discussions with the lessor of that aircraft to determine what obligations the Company may have.
As of September 30, 2024, the Company holds approximately
Investment in Top Flight:
On September 18, 2023, the Company acquired
On January 27, 2023, the Company announced an up to $
8
business objectives of the Company and to secure additional aircraft for charter operations. As of September 30, 2024, the Company had been advanced $
The terms of the promissory note (the "Note") issued in connection with Loan include:
This loan was paid off in connection with the new $
On August 2, 2023, the Company closed the placement of $
The terms of the senior secure notes include:
The Company determined that the terms of the warrants issued in the financing require the warrants to be classified as equity. Accordingly, upon issuance, the Company recorded debt issuance costs of $
Since the warrants may purchase a fixed number of shares for a fixed price, the Company chose to use the Monte Carlo option pricing model to value the warrants at issuance. The inputs selected are: underlying stock price at date of issuance of $
The debt issuance costs resulting from the warrants along with other direct costs of the financing will be amortized to interest expense using the effective interest method.
On December 21, 2023, the Company and the senior secured notes due 2029 purchasers amended the original placement of $
9
of accrued interest due of $
Notes Payable is comprised of the following:
|
|
For the Period Ended |
|
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For the Year Ended |
|
||
|
|
|
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|
||
Subscription Agreement |
|
$ |
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$ |
|
||
Less unamortized debt issuance costs, noncurrent |
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Total carrying amount |
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Less current maturities |
|
— |
|
|
— |
|
||
Total long-term Note Payable |
|
$ |
|
|
$ |
|
||
GEM Global Yield LLC SCS
The Company entered into an agreement with GEM Global Yield LLC SCS ("GEM"), the private alternative investment group to provide the Company with up to CND $
On March 4, 2024, Global Crossing Airlines and GEM agreed to extend the length of the GEM Facility by 12 months with a new expiration date of March 4, 2025.
As of September 30, 2024 and December 31, 2023, the Company had
Following is a summary of the warrant activity during the three and nine months ended September 30, 2024 and 2023:
10
|
|
Number of Share Purchase Warrants |
|
|
Weighted Average Exercise Price |
|
||
Outstanding January 1, 2023 |
|
|
|
|
$ |
|
||
Issued |
|
|
- |
|
|
|
- |
|
Exercised |
|
|
( |
) |
|
|
|
|
Expired |
|
|
- |
|
|
|
- |
|
Outstanding March 31, 2023 |
|
|
|
|
$ |
|
||
Issued |
|
|
- |
|
|
|
- |
|
Exercised |
|
|
( |
) |
|
|
|
|
Expired |
|
|
( |
) |
|
|
|
|
Outstanding June 30, 2023 |
|
|
|
|
$ |
|
||
Issued |
|
|
|
|
|
|
||
Exercised |
|
|
- |
|
|
|
- |
|
Expired |
|
|
- |
|
|
|
- |
|
Outstanding September 30, 2023 |
|
|
|
|
$ |
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||
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|
|
|
||
Outstanding January 1, 2024 |
|
|
|
|
$ |
|
||
Issued |
|
|
- |
|
|
|
- |
|
Exercised |
|
|
- |
|
|
|
- |
|
Expired |
|
|
( |
) |
|
|
|
|
Outstanding March 31, 2024 |
|
|
|
|
$ |
|
||
Issued |
|
|
- |
|
|
|
- |
|
Exercised |
|
|
- |
|
|
|
- |
|
Expired |
|
|
- |
|
|
|
- |
|
Outstanding June 30, 2024 |
|
|
|
|
$ |
|
||
Issued |
|
|
- |
|
|
|
- |
|
Exercised |
|
|
- |
|
|
|
- |
|
Expired |
|
|
- |
|
|
|
- |
|
Outstanding September 30, 2024 |
|
|
|
|
$ |
|
||
As of September 30, 2024, the following share purchase warrants were outstanding and exercisable:
Outstanding |
|
|
Exercise Price |
|
Remaining life |
|
|
Expiry Date |
||
|
|
|
USD$ |
|
|
|
|
|||
|
|
|
USD$ |
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||
As of September 30, 2023, the following share purchase warrants were outstanding and exercisable:
Outstanding |
|
|
Exercise Price |
|
Remaining life |
|
|
Expiry Date |
||
|
|
|
USD$ |
|
|
|
|
|||
|
|
|
USD$ |
|
|
|
|
|||
|
|
|
USD$ |
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||
The maximum number of shares of Common Stock issuable pursuant to share-based payment arrangements, including stock options, restricted share units and performance share units, is
Stock options
The Company grants stock options to directors, officers, employees and consultants as compensation for services, pursuant to its Amended Stock Option Plan (the “Stock Option Plan”). The maximum price shall not be less than the closing price of the Company’s shares on the last trading day preceding the date on which the grant of options is approved by the Board of Directors. Options have a
11
maximum expiry period of
The following is a summary of stock option activities for the three and nine months ended September 30, 2024 and 2023:
|
|
Number of stock |
|
|
Weighted average |
|
|
Weighted average |
|
|||
Outstanding January 1, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|||
Granted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Exercised |
|
|
( |
) |
|
|
|
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
||
Outstanding March 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|||
Granted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Forfeited |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Outstanding June 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|||
Granted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Forfeited |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Outstanding September 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Outstanding January 1, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|||
Granted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
||
Outstanding March 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|||
Granted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
||
Outstanding June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|||
Granted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Forfeited |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Outstanding September 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|||
As of September 30, 2024, the following stock options were outstanding and exercisable:
Outstanding |
|
|
Exercisable |
|
|
Exercise Price |
|
|
Remaining life (years) |
|
|
Expiry Date |
||||
|
|
|
|
|
|
$ |
|
|
|
— |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of September 30, 2023, the following stock options were outstanding and exercisable:
Outstanding |
|
|
Exercisable |
|
|
Exercise Price |
|
|
Remaining life (years) |
|
|
Expiry Date |
||||
|
|
|
|
|
|
$ |
|
|
|
|
|
|||||
|
|
|
|
|
|
$ |
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
The Company recognizes share-based payments expense for all stock options granted using the fair value based method of accounting. The fair value of stock options is determined by the Black-Scholes Option Pricing Model with assumptions for risk-free interest rates, dividend yields, volatility factors of the expected market price of the Common Stock, forfeiture rate, and expected life of the options.
There were
Restricted share units
12
The Company grants restricted share units (“RSUs”) to directors, officers, employees and consultants as compensation for services, pursuant to its Amended RSU Plan (the “RSU Plan”). One restricted share unit has the same value as a share of Common Stock. The number of RSUs awarded and underlying vesting conditions are determined by the Board of Directors in its discretion.
At the election of the Board of Directors, upon each vesting date, participants receive (a) the issuance of Common Stock equal to the number of RSUs vesting, or (b) a cash payment equal to the number of vested RSUs multiplied by the fair market value of a Voting Share, calculated as the closing price of the Common Stock on the NEO for the trading day immediately preceding such payment date; or (c) a combination of (a) and (b).
On the grant date of RSUs, the Company determines whether it has a present obligation to settle in cash. If the Company has a present obligation to settle in cash, the RSUs are accounted for as liabilities, with the fair value remeasured at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss for the period. The Company has a present obligation to settle in cash if the choice of settlement in shares has no commercial substance, or the Company has a past practice or a stated policy of settling in cash, or generally settles in cash whenever the counterpart asks for cash settlement.
If no such obligation exists, RSUs are accounted for as equity settled share-based payments and are valued using the share price on grant date. Upon settlement:
The following is a summary of RSU activities for the three and nine months ended September 30, 2024 and 2023:
|
|
Number of RSUs |
|
|
Weighted average grant date fair value per RSU |
|
||
Outstanding January 1, 2023 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding March 31, 2023 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding June 30, 2023 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding September 30, 2023 |
|
|
|
|
$ |
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Outstanding January 1, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding March 31, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding June 30, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding September 30, 2024 |
|
|
|
|
$ |
|
||
13
During the three and nine months ended September 30, 2024, the Company recognized total share-based payments expense with respect to stock options, RSUs and employees' stock purchase plan of $
The remaining compensation that has not been recognized as of September 30, 2024 and 2023 with regards to RSUs and the weighted average period they will be recognized are $
Employee Stock Purchase Plan
In September 2021, the Board adopted the GlobalX 2021 Employee Stock Purchase Plan (“ESPP”). There are
During the three and nine months ended September 30, 2024, the Company issued
As of September 30, 2024 and 2023, total recognized equity-based compensation costs related to ESPP was
ESPP payroll contributions accrued at September 30, 2024 and 2023, totaled $
8. INCOME TAXES
The Company’s expected effective tax rate for the three and six months ended September 30, 2024, and 2023 was
9. COMMITMENTS AND CONTINGENCIES
The Company has contractual obligations and commitments primarily with regard to management and development services, lease arrangements and financing arrangements.
On October 14, 2021, the Company entered into a lease agreement for
On June 21, 2022, the Company entered into a lease agreement for
On December 14, 2022, the Company entered into a lease agreement for
On January 27, 2023, the Company entered into a lease agreement for
On May 22, 2023, the Company entered into a lease agreement for a commercial property warehouse. The
14
On June 16, 2023, the Company entered into a lease agreement for
On August 8, 2023, the Company entered into a lease agreement for
On September 8, 2023, the Company entered into a lease agreement for
On November 17, 2023, the Company signed a lease agreement for
On November 20, 2023, the Company entered into a lease agreement for
On December 22, 2023, the Company entered into a lease agreement for
On January 19, 2024, the Company entered into a lease agreement for
On April 16, 2024, the Company entered into a lease agreement for
On April 29, 2024, the Company signed a lease agreement for
The Company reviewed the operating leases for extension options that may be reasonably certain to be exercised and then would become part of the right-of-use assets and lease liabilities. On December 21, 2022, and October 10, 2023, the Company signed extensions for
15
The following table provides details of the Company's future minimum lease payments under finance lease liabilities and operating lease liabilities recorded in thousands on the Company's condensed consolidated balance sheets as of September 30, 2024. The table does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.
|
Finance Leases |
|
|
Operating Leases |
|
||
Remainder of 2024 |
$ |
|
|
$ |
|
||
2025 |
|
|
|
|
|
||
2026 |
|
|
|
|
|
||
2027 |
|
|
|
|
|
||
2028 |
|
|
|
|
|
||
2029 and thereafter |
|
|
|
|
|
||
Total minimum lease payments |
|
|
|
|
|
||
Less amount representing interest |
|
|
|
|
|
||
Present value of minimum lease payments |
|
|
|
|
|
||
Less current portion |
|
|
|
|
|
||
Long-term portion |
$ |
|
|
$ |
|
||
The table below presents information for lease costs related to the Company's finance and operating leases in thousands:
|
For The Three Months Ended September 30, |
|
|
For The Nine Months Ended September 30, |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Finance lease cost |
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of leased assets |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest of lease liabilities |
|
|
|
|
|
|
|
|
|
|
|
||||
Operating lease cost |
|
|
|
|
|
|
|
|
|
|
|
||||
Operating lease cost (1) |
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease cost |
|
|
|
|
|
|
|
|
|
|
|
||||
(1)
The Company utilizes the rate implicit in the lease whenever it is easily determined. For leases where the implicit rate is not readily available, we utilize our incremental borrowing rate as the discount rate.
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
||
Weighted-average remaining lease term |
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
||||
Finance leases |
|
|
|
|
||||
Weighted-average discount rate |
|
|
|
|
|
|
||
Operating leases |
|
|
% |
|
|
% |
||
Finance leases |
|
|
% |
|
|
% |
||
The table below presents cash and non-cash activities associated with our leases:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
||
Financing cash flows from finance leases |
|
|
|
|
|
|
||
The Company is subject to various legal proceedings in the normal course of business and records legal costs as incurred. Management believes these proceedings will not have a materially adverse effect on the Company.
10. INCOME (LOSS) PER SHARE
Basic earnings per share, which excludes dilution, is computed by dividing Net Income (Loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that
16
could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The number of incremental shares from the assumed issuance of shares relating to share based awards is calculated by applying the treasury stock method.
The following table shows the computation of basic and diluted earnings per share for the three months ended September 30, 2024 and 2023 in thousands, except share and per share amounts:
|
|
Three Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Numerator: |
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator: |
|
|
|
|
|
|
||
Weighted average common shares outstanding - Basic |
|
|
|
|
|
|
||
Dilutive effect of stock options, RSUs and warrants |
|
|
|
|
|
|
||
Weighted average common shares outstanding - Diluted |
|
|
|
|
|
|
||
Basic loss per share |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted loss per share (1) |
|
$ |
( |
) |
|
$ |
( |
) |
The following table shows the computation of basic and diluted earnings per share for the nine months ended September 30, 2024 and 2023 in thousands, except share and per share amounts:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Numerator: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator: |
|
|
|
|
|
|
||
Weighted average common shares outstanding - Basic |
|
|
|
|
|
|
||
Dilutive effect of stock options, RSUs and warrants |
|
|
|
|
|
|
||
Weighted average common shares outstanding - Diluted |
|
|
|
|
|
|
||
Basic loss per share |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted loss per share (1) |
|
$ |
( |
) |
|
$ |
( |
) |
(1)
11. RELATED PARTY TRANSACTIONS
Related parties and related party transactions impacting the consolidated financial statements not disclosed elsewhere in these consolidated financial statements are summarized below and include transactions with the following individuals or entities.
As mentioned in footnote 3, on June 28, 2021, the Company completed the spin-out of Jetlines to GlobalX. GlobalX continues to provide back-office support including sharing the costs of the Company’s aircraft fleet management software (TRAX).
As of September 30, 2024 and 2023, amounts due to related parties include the following:
As described in footnote 4 above, on August 2 and December 21, 2023, the Company issued Secured Notes of $
17
12. ACCRUED LIABILITIES
Accrued liabilities consisted of the following as of September 30, 2024 and December 31, 2023, in thousands.
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Salaries, wages and benefits |
|
$ |
|
|
$ |
|
||
Passenger Taxes |
|
|
|
|
|
|
||
Aircraft fuel |
|
|
|
|
|
|
||
Contracted ground and aviation services |
|
|
|
|
|
|
||
Maintenance |
|
|
|
|
|
|
||
Aircraft Rent |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Accrued liabilities |
|
$ |
|
|
$ |
|
||
13. REVENUE CONTRACT LIABILITY
Deferred revenue for customer contracts represents amounts collected from, or invoiced to, customers in advance of revenue recognition. The balance of deferred revenue will increase or decrease based on the timing of invoices and recognition of revenue.
Significant changes in our deferred revenue liability balances during the nine months and year ended, September 30, 2024 and December 31, 2023, respectively, were as follows in thousands:
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
|
|
|
|
|
|
|
||
Beginning Balance |
|
$ |
|
|
$ |
|
||
Revenue Recognized |
|
|
( |
) |
|
|
( |
) |
Amounts Collected or Invoiced |
|
|
|
|
|
|
||
Ending Balance |
|
$ |
|
|
$ |
|
||
The Company has 2 customers that accounted for approximately
18
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the Financial Statements included in Item 1 of this report. This Item 2 contains forward-looking statements that involve risks and uncertainties. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date of this report. Actual results may differ materially from those expressed or implied in such forward-looking statements.
Background
Certain Terms - Glossary
The following represents terms and statistics specific to our business and industry. They are used by management to evaluate and measure operations, results, productivity, and efficiency.
ACMI |
Service offering, whereby we provide outsourced cargo and passenger aircraft operating solutions, including the provision of an aircraft, crew, maintenance, and insurance, while customers assume fuel, demand and price risk. In addition, customers are generally responsible for landing, navigation and most other operational fees and costs |
Block Hour |
The time interval between when an aircraft departs the terminal until it arrives at the destination terminal |
Charter |
Service offering, whereby we provide cargo and passenger aircraft charter services to customers. The customer generally pays a fixed charter fee that includes fuel, insurance, landing fees, navigation fees and most other operational fees and costs
|
Net Available Aircraft |
The number of aircraft available each month reduced by (netted) days the aircraft is unavailable due to various maintenance events or deliveries during a month |
2Y Check |
“Heavy” airframe maintenance checks, which are the most extensive in scope and are generally performed every two years and can take from 20 – 40 days to complete. |
6Y Check |
“Heavy” airframe maintenance checks, which are the most extensive in scope and are generally performed every six years and can take from 45-75 days to complete |
12Y Check |
“Heavy” airframe maintenance checks, which are the most extensive in scope and are generally performed every twelve years and can take from 60 – 100 days to complete |
Heavy Maintenance |
Scheduled maintenance activities that are extensive in scope and are primarily based on time or usage intervals, which include, but are not limited to 2Y Checks, 6Y Checks, 12Y Checks and engine overhauls. In addition, unscheduled engine repairs involving the removal of the engine from the aircraft are considered to be Heavy Maintenance. |
Line Maintenance |
Maintenance events occurring during normal day-to-day operations.
|
Non-heavy Maintenance |
Discrete maintenance activities for the overhaul and repair of specific aircraft components, including landing gear, auxiliary power units and engine thrust reversers. |
Utilization |
The average number of Block Hours operated per day per aircraft. |
Business Overview
GlobalX operates a US Part 121 domestic flag and supplemental airline using the Airbus A320 family of aircraft, operating both passenger and cargo aircraft. GlobalX’s business model is to (1) provide services on an ACMI using wet lease contracts to airlines and non-airlines, and (2) on a Charter basis whereby we provide passenger aircraft charter services to customers by charging an “all-in” fee that includes fuel, insurance, landing fees, navigation fees and most other operational fees and costs. GlobalX operates in the United States, Europe, Canada, Central and South America.
Business Strategy
GlobalX intends to become the best-in-class U.S. narrow-body, ACMI charter airline, operating both passenger and cargo charter aircraft while recruiting and maintaining a dynamic team of customer-centric flight crews, ground and maintenance teams and management staff.
GlobalX operates its A320 family aircraft for airlines, tour operators, college and professional sports teams, incentive groups, resorts and casino groups and government agencies. It is our goal to deliver best in class on time performance and dispatch reliability, expand existing relationships and develop additional relationships with leading charter/tour operators to provide aircraft during their peak seasons; and provide ad-hoc and track charter programs for non-airline customers.
19
Business Developments
During the nine months period ended September 30, 2024, the Company refocused the business back to GlobalX’s core competency – operating narrow body charter flights for both passengers and cargo. This led to the cancellation of several initiatives and the prioritization of adding aircraft to our operating certificate. Projects cancelled, include UrbanX, GlobalX Colombia, GlobalX Ecuador, adding ETOP’s capability, the acquisition of a wide body A330 aircraft and the development of a hangar facility at Fort Lauderdale Airport. Not only does the cancellation of these projects represent significant cash savings in 2024, but it also allows the team to devote efforts towards our stated goal: creating the largest narrow body charter operation in North America generating sustainable, long-term profits. To achieve this goal, GlobalX continues to invest in its three key assets–certifications, aircraft, and crew.
GlobalX achieved the following during the nine months period ended September 30, 2024:
The Passenger Charter Market
The passenger market continues to experience surging demand resulting in improved aircraft utilization and improved operating income. There are several factors, including the supply of aircraft, reduced direct competition, increased reliance on air charter by colleges and increased customer demand driving increased demand for our services. GlobalX anticipates the high level of demand will continue well into 2025. To address this demand, the Company has prioritized passenger aircraft deliveries over cargo, devoted sales and operational resources to develop long term relationships with key customers and to expand the markets served as opportunities arise. Passenger charter services will be the economic engine for GlobalX in 2024.
The Cargo Charter Market
GlobalX believes in the longer term viability of the A321F (passenger to freighter) cargo aircraft. During Q1 2024, we had two aircraft offline, one for maintenance and, one for conformity. This left two operational aircraft, both of which generated lower than anticipated revenue. GlobalX attributed the softness of the market to several external factors including the rebid of the USPS contract, general economic conditions, and excess capacity in the North American freight market. In response to this slowdown during the quarter, the Company cancelled two aircraft deliveries, elected to take two A321’s as passenger rather than freighter and deferred two other cargo deliveries to 2025. GlobalX is working diligently to place the aircraft we have into long term ACMI contracts and continues to make progress establishing our reputation for on-time performance as the market better understands the capabilities of the A321F aircraft. While the Company cannot predict when the cargo market will recover, GlobalX has taken concrete steps to reduce our financial exposure in 2024 while expanding our customer base for the aircraft the Company does have.
GlobalX Aircraft Fleet
Critical to GlobalX’s business model is, a fleet of modern and cost-effective aircraft. To achieve this objective, GlobalX has selected what it believes is the best overall single-aisle aircraft family to operate. This approach differs from traditional airlines, which purchase a variety of aircraft, often from different manufacturers, to achieve their operational flight sectors, resulting in increased training, operating and spare part costs. GlobalX conducted research to determine the best aircraft to fly in competition with other narrow-body charter airlines in the single-aisle seat market and GlobalX selected the A320 aircraft family.
The following factors support GlobalX’s choice to operate the Airbus A320 and A321 aircraft versus the Boeing family of aircraft:
Cost and Operating factors: lower fuel burn, and better aircraft and cockpit crew pool availability.
Operational Capability: the A320 has a range advantage over the 737-800 and can fly non-stop from Miami to selected airports in North America, South America, the Caribbean, and between most major destinations in Europe. The A320 has excellent maintenance dispatch
20
reliability and strong availability of spare parts and components, making the A320, in management’s estimation, the most popular aircraft among low-cost airlines.
Passenger comfort: better seat width, cargo bin volume for carry-on baggage and cargo hold volume.
Aircraft Maintenance
Heavy maintenance checks are expected to continue to be outsourced to FAA-approved service providers. The 6Y and 12Y checks will be primarily paid for using funds from the accrued maintenance reserves paid to lessors under operating leases.
Strategy to Address Competitive Response
There have been significant changes to the competitive environment for US Charter operators in recent months. The liquidation of iAero (our largest competitor), the acquisition of Hillwood Airways by Eastern Airlines, the acquisition of iAero Assets by Eastern Airlines and Breeze Airways renewed focus on charter operations have all had a large impact on the charter market. It is our management's expectation that Eastern Airlines, with the assets acquired from iAero, will look to expand their business domestically. In response we are focusing on our core business, emphasizing on time performance, reinforcing our differentiation of our Airbus product and actively soliciting longer-term contracts with key customers.
Experienced management team
Our management team has extensive operating and leadership experience in the airfreight, airline, and aircraft leasing, maintenance, and management industries at companies such as JetBlue Airways, Virgin America, American Airlines, US Airways, Atlas Air, Breeze Airways, Miami Air, Spirit Airlines, Continental Airlines, Pan Am, and Flair Airlines, as well as the United States Army, and Air Force.
Results of Operations
The following discussion should be read in conjunction with our Financial Statements and other financial information appearing and referred to elsewhere in this report.
Revenue & Statistics
The analysis of GlobalX results for the three and nine-month periods ended on September 30, 2024 and 2023 requires an understanding of how the Company fundamentally evolved during that time period. 2023 was only our second year of full operations and was a period where the company was focused on securing new customers, entering new markets, and flying to new locations; primarily in the domestic and Caribbean markets.
By contrast in 2024, GlobalX is expanding on our existing relationships both domestically and internationally and grew operations in the ACMI market through increased focus on operating for government agencies. As the company grows, operational efficiency and margins are continuing to improve. Our key metric is block hours flown and block hours flown per available aircraft, which is the measure by which the Company tracks commercial activity. While other airlines discuss available seat miles and revenue per available seat mile (“rasm”), cost per available seat mile (“casm”), these metrics are not germane to our business model as an ACMI and Charter operator. GlobalX charters the entire aircraft, does not take fuel risk, and does not take third party risk therefore all results are evaluated on a block hour basis.
Three months ended September 30, 2024 and 2023
21
The following table compares our Operating Fleet (average aircraft equivalents during the period) and total Block Hours operated:
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
Operating Fleet |
|
2024 |
|
|
2023 |
|
|
Inc/(Dec) |
|
|
% Change |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
A319 |
|
|
1.0 |
|
|
|
0.3 |
|
|
|
0.7 |
|
|
|
233.3 |
% |
A320 |
|
|
9.7 |
|
|
|
7.0 |
|
|
|
2.7 |
|
|
|
38.6 |
% |
A321 |
|
|
5.7 |
|
|
|
4.0 |
|
|
|
1.7 |
|
|
|
42.5 |
% |
Total Operating Average Aircraft Equivalents |
|
|
16.4 |
|
|
|
11.3 |
|
|
|
5.1 |
|
|
|
45.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Aircraft Available |
|
|
15.2 |
|
|
|
10.8 |
|
|
|
4.4 |
|
|
|
40.7 |
% |
Total Block Hours |
|
|
7,460 |
|
|
|
6,506 |
|
|
|
954 |
|
|
|
14.7 |
% |
Average Utilization per available aircraft |
|
|
490.8 |
|
|
|
602.4 |
|
|
|
(111.6 |
) |
|
|
-18.5 |
% |
The following table describes the degree to which variations in revenues in thousands can be attributed to fluctuations in prices and nature of GlobalX services.
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
||||||
Revenue |
|
2024 |
|
|
2023 |
|
|
Inc/(Dec) |
|
|
% Change |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Charter |
|
$ |
14,987 |
|
|
$ |
21,820 |
|
|
$ |
(6,833 |
) |
|
-31.3% |
ACMI |
|
|
36,841 |
|
|
|
19,103 |
|
|
|
17,738 |
|
|
92.9% |
Other |
|
|
608 |
|
|
|
1,654 |
|
|
|
(1,046 |
) |
|
-63.2% |
Total |
|
$ |
52,436 |
|
|
$ |
42,577 |
|
|
$ |
9,859 |
|
|
23.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Block Hours |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Charter |
|
|
813 |
|
|
|
1,873 |
|
|
|
(1,060 |
) |
|
-56.6% |
Sub-service Charter |
|
|
441 |
|
|
|
383 |
|
|
|
58 |
|
|
15.1% |
Total Charter |
|
|
1,254 |
|
|
|
2,256 |
|
|
|
(1,002 |
) |
|
-44.4% |
ACMI |
|
|
6,408 |
|
|
|
4,614 |
|
|
|
1,794 |
|
|
38.9% |
Subservice ACMI |
|
|
163 |
|
|
|
1 |
|
|
|
162 |
|
|
16200.0% |
Total ACMI |
|
|
6,571 |
|
|
|
4,615 |
|
|
|
1,956 |
|
|
42.4% |
Non Revenue |
|
|
239 |
|
|
|
19 |
|
|
|
220 |
|
|
1157.9% |
Total |
|
|
8,064 |
|
|
|
6,890 |
|
|
|
1,174 |
|
|
17.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Revenue per Block Hour |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Charter |
|
|
12.0 |
|
|
|
9.7 |
|
|
|
2.3 |
|
|
23.7% |
ACMI |
|
|
5.6 |
|
|
|
4.1 |
|
|
|
1.5 |
|
|
36.6% |
Q3 saw a significant shift in the mix of our business from Charter to ACMI. Charter revenue for the period decreased $6.8 million or 31.3%, from $21.8 million in 2023 to $15.0 million in 2024. Charter block hours decreased 44.4% from 2,256 to 1,254 resulting in a $9.7 million reduction which was primarily offset by the rate for Charter flying which increased 23.6% from $9,672 per block hour to $11,951 per block hour resulting in a $2.9 million impact. The increase in the rate per block hour is primarily driven by high market demand and a shortage of supply as competitors reduced capacity to increase demand, higher fuel and handling fees and the mix of flying. The decrease in charter block hours was due to the increase in the number of aircraft in the ACMI segment.
ACMI revenue for the period increased by $17.7 million or 92.9% from $19.1 million in 2023 to $36.8 million in 2024. This variance is primarily driven by a 40.7% increase in the number of available aircraft and the movement of aircraft from the Charter segment which resulted in an increase from 4,615 block hours in 2023 to 6,571 block hours in 2024, an increase of 42.4% or 1,956 block hours. This volume accounted for 45.8% or $8.1 million of the revenue increase. The average revenue per block hour increased $1,468 per block hour from $4,139 per block hour in 2023 to $5,607 per block hour in 2024 and accounted for $9.6 million or 54.2% of the revenue increase. The primary driver for the increase was related to both high market demand and a shortage of supply as competitors reduce capacity.
Other revenue for the period decreased by $1.0 million from $1.7 million in 2023 to $0.6 million in 2024. The decrease is primarily driven by less ancillary services provided to our customers.
22
Operating Expenses
The following table compares our Operating Expenses (in thousands):
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
Operating Expenses |
|
2024 |
|
|
2023 |
|
|
Inc/(Dec) |
|
|
% Change |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries, Wages, & Benefits |
|
$ |
17,404 |
|
|
$ |
15,040 |
|
|
$ |
2,364 |
|
|
|
15.7 |
% |
Aircraft Fuel |
|
|
4,104 |
|
|
|
5,743 |
|
|
|
(1,639 |
) |
|
|
-28.5 |
% |
Maintenance, materials and repairs |
|
|
3,448 |
|
|
|
2,983 |
|
|
|
465 |
|
|
|
15.6 |
% |
Depreciation and amortization |
|
|
1,866 |
|
|
|
566 |
|
|
|
1,300 |
|
|
|
229.7 |
% |
Contracted ground and aviation services |
|
|
3,281 |
|
|
|
4,695 |
|
|
|
(1,414 |
) |
|
|
-30.1 |
% |
Travel |
|
|
2,216 |
|
|
|
1,554 |
|
|
|
662 |
|
|
|
42.6 |
% |
Insurance |
|
|
1,627 |
|
|
|
1,219 |
|
|
|
408 |
|
|
|
33.5 |
% |
Aircraft Rent |
|
|
16,031 |
|
|
|
9,400 |
|
|
|
6,631 |
|
|
|
70.5 |
% |
Other |
|
|
4,963 |
|
|
|
3,707 |
|
|
|
1,256 |
|
|
|
33.9 |
% |
Total Operating Expenses |
|
$ |
54,940 |
|
|
$ |
44,907 |
|
|
$ |
10,033 |
|
|
|
22.3 |
% |
Salaries, wages, and benefits increased $2.4 million from $15.0 million to $17.4 million, or 15.7%, primarily due to the hiring and training of pilots and other airline personnel necessitated by the growing fleet and operations. The total employees grew 15.0% from 585 to 688 and pilots increased from 121 to 143, or 18.2%.
Aircraft fuel decreased by $1.6 million, from $5.7 million to $4.1 million, or 28.5%, primarily due to the volume of non-ACMI block hours which decreased 34.0% or $2.0 million. This was partially offset by an increase in fuel prices by 5.4%.
Maintenance, materials, and repairs increased by $0.5 million, from $3.0 million to $3.4 million, or 15.6%. An increase of $0.6 million was due to severe weather event that damaged two parked aircraft, multiple bird strikes and damage caused by a third-party vendor, which was offset by $0.2 million decrease primarily due to decreased ad hoc work in spite of the increase in both the number of aircraft and the number of block hours flown which increased 954 or 15% from 6,506 to 7,460 block hours. The rate per block hour remained relatively unchanged at $462 per block hour.
Depreciation and amortization increased $1.3 million, from $0.6 million to $1.9 million or 229.7%, driven by assets acquired to support our airport operations. These assets include, but are not limited to, aircraft deliveries secured on capital leases, computers, software, and rotable inventory.
Contracted ground and aviation services decreased by $1.4 million from $4.7 million to $3.3 million, or 30.1%. These costs are directly correlated to the number of Charter hours operated. A $2.7 million reduction was primarily driven by the decrease in charter block hours by 56.6%. This was offset by $1.2 million primarily due to an increase in rate by 61.0%.
Travel increased by $0.6 million, from $1.6 million to $2.2 million or 42.6%. This increase was driven by increased activity at newly created bases to support new customers resulting in additional hotel, flight and meal costs.
Insurance increased $0.4 million, from $1.2 million to $1.6 million or 33.5%, primarily related to the increase in the number of aircraft.
Aircraft rent increased $6.6 million, from $9.4 million to $16.0 million or 70.5%, primarily due to the increase in the number of aircraft from 12 to 18 aircraft in the fleet. $4.2 million or 63.6% of the increase is driven by the increase in the number of aircraft being leased, with the remaining $2.4 million or 36.4% due to rate increase per aircraft and short-term ACMI leases from other airlines due to flights sold exceeded capacity available during the period.
Operating loss was greatly impacted by a series of unplanned maintenance events in September that effectively took almost 35% of the passenger fleet offline for almost two weeks. This included a severe weather event damaging two parked aircraft, multiple bird strikes across three different aircraft and a third-party vendor who severely damaged an aircraft during a routine check. A number of these are insurable events, but the impact to revenue was significant and the estimated impact to operating loss is over $5M. In addition, our Cargo segment continued to underperform which also served as a multimillion dollar drag to earnings in Q3. Specifically, operating loss increased $0.2 million, from an operating loss of $2.3 million to an operating loss in 2023 of $2.5 million. We were able to minimize the impacts of the events in September by our ability to secure higher rates for both ACMI and Charter contracts. The Company’s ACMI rate grew 35.4%, from $4,139 per block hour to $5,607 per block hour, while Charter rate per block hour is up 23.6% from 9,672 per block hour to $11,951 per block hour. The second factor is scale. As an example, when measured on
23
a per block hour basis, Salaries, wages, and benefits dropped from $2,183 to $2,158 per block hour, a 1.1% reduction. There were also savings on a per block hour basis on fuel, and contracted ground and aviation services.
Non-operating Expenses
The following table compares our Non-operating Expenses (in thousands):
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
Non-Operating Expenses (Income) |
|
2024 |
|
|
2023 |
|
|
Inc/(Dec) |
|
|
% Change |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest Expense |
|
$ |
2,385 |
|
|
$ |
2,565 |
|
|
$ |
(180 |
) |
|
|
(7.0 |
)% |
Total Non-Operating Expenses (Income) |
|
$ |
2,385 |
|
|
$ |
2,565 |
|
|
$ |
(180 |
) |
|
|
(7.0 |
)% |
Interest expense, net decreased $0.2 million from $2.6 million to $2.4 million driven mainly by the restructuring of debt in Q3 of 2023.
Net Income/Loss
Net Loss remained unchanged at $4.9 million comparing the three months ended September 30, 2024 and 2023, despite the additional events noted above during the current period.
Nine months ended September 30, 2024 and 2023
The following table compares our Operating Fleet (average aircraft equivalents during the period) and total Block Hours operated:
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
Operating Fleet |
|
2024 |
|
|
2023 |
|
|
Inc/(Dec) |
|
|
% Change |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
A319 |
|
|
1.0 |
|
|
|
0.1 |
|
|
|
0.9 |
|
|
|
900.0 |
% |
A320 |
|
|
9.0 |
|
|
|
6.7 |
|
|
|
2.3 |
|
|
|
34.3 |
% |
A321 |
|
|
5.3 |
|
|
|
3.3 |
|
|
|
2.0 |
|
|
|
60.6 |
% |
Total Operating Average Aircraft Equivalents |
|
|
15.3 |
|
|
|
10.1 |
|
|
|
5.2 |
|
|
|
51.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Aircraft Available |
|
|
13.8 |
|
|
|
8.0 |
|
|
|
5.8 |
|
|
|
72.5 |
% |
Total Block Hours |
|
|
19,252 |
|
|
|
13,235 |
|
|
|
6,017 |
|
|
|
45.5 |
% |
Average Utilization per available aircraft |
|
|
1,395.1 |
|
|
|
1,654.4 |
|
|
|
(259.3 |
) |
|
|
-15.7 |
% |
The following table describes the degree to which variations in revenues in thousands can be attributed to fluctuations in prices and nature of GlobalX services.
24
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
||||||
Revenue |
|
2024 |
|
|
2023 |
|
|
Inc/(Dec) |
|
|
% Change |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Charter |
|
$ |
73,618 |
|
|
$ |
73,737 |
|
|
$ |
(119 |
) |
|
-0.2% |
ACMI |
|
|
87,374 |
|
|
|
28,565 |
|
|
|
58,809 |
|
|
205.9% |
Other |
|
|
2,825 |
|
|
|
3,901 |
|
|
|
(1,076 |
) |
|
-27.6% |
Total |
|
$ |
163,817 |
|
|
$ |
106,203 |
|
|
$ |
57,614 |
|
|
54.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Block Hours |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Charter |
|
|
4,553 |
|
|
|
6,045 |
|
|
|
(1,492 |
) |
|
-24.7% |
Sub-service Charter |
|
|
1,189 |
|
|
|
607 |
|
|
|
582 |
|
|
95.9% |
Total Charter |
|
|
5,742 |
|
|
|
6,652 |
|
|
|
(910 |
) |
|
-13.7% |
ACMI |
|
|
14,141 |
|
|
|
7,139 |
|
|
|
7,002 |
|
|
98.1% |
Subservice ACMI |
|
|
634 |
|
|
|
7 |
|
|
|
627 |
|
|
8957.1% |
Total ACMI |
|
|
14,775 |
|
|
|
7,146 |
|
|
|
7,629 |
|
|
106.8% |
Non Revenue |
|
|
558 |
|
|
|
51 |
|
|
|
507 |
|
|
994.1% |
Total |
|
|
21,075 |
|
|
|
13,849 |
|
|
|
7,226 |
|
|
52.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Revenue per Block Hour |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Charter |
|
|
12.8 |
|
|
|
11.1 |
|
|
|
1.7 |
|
|
15.3% |
ACMI |
|
|
5.9 |
|
|
|
4.0 |
|
|
|
1.9 |
|
|
47.5% |
Charter revenue for the period decreased $0.1 million or 0.2%, from $73.7 million in 2023 to $73.6 million in 2024. The rate for Charter flying increased 15.7% from $11,084 per block hour to $12,821 per block hour resulting in a $10.0 million increase. This was offset by a $10.1 million reduction due to charter block hours decreasing 13.7% from 6,652 to 5,742 block hours. The increase in the rate per block hour is primarily driven by high market demand and a shortage of supply as competitors reduced capacity to increase demand, higher fuel and handling fees and the mix of flying. The decrease in charter block hours was due to the increase in the number of aircraft in the ACMI segment.
ACMI revenue for the period increased by $58.8 million or 205.9% from $28.6 million in 2023 to $87.4 million in 2024. This variance is driven by an increase from 7,146 block hours in 2023 to 14,775 block hours in 2024, an increase of 106.8% or 7,629 block hours. This volume accounted for 51.9% or $30.5 million of the increase. The average revenue per block hour increased $1,916 per block hours from $3,997 per block hour in 2023 to $5,914 per block hour in 2024 and accounted for $28.3 million or 48.1% of the revenue increase. The primary driver for the increase was related to both high market demand and a shortage of supply as competitors reduce capacity.
Other revenue for the period decreased by $1.1 million from $3.9 million in 2023 to $2.8 million in 2024. The decrease is primarily driven by less ancillary services provided to our customers.
Operating Expenses
The following table compares our Operating Expenses (in thousands):
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
Operating Expenses |
|
2024 |
|
|
2023 |
|
|
Inc/(Dec) |
|
|
% Change |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries, Wages, & Benefits |
|
$ |
50,923 |
|
|
$ |
38,264 |
|
|
$ |
12,659 |
|
|
|
33.1 |
% |
Aircraft Fuel |
|
|
17,904 |
|
|
|
19,779 |
|
|
|
(1,875 |
) |
|
|
-9.5 |
% |
Maintenance, materials and repairs |
|
|
9,026 |
|
|
|
6,308 |
|
|
|
2,718 |
|
|
|
43.1 |
% |
Depreciation and amortization |
|
|
4,476 |
|
|
|
1,452 |
|
|
|
3,024 |
|
|
|
208.3 |
% |
Contracted ground and aviation services |
|
|
14,941 |
|
|
|
14,749 |
|
|
|
192 |
|
|
|
1.3 |
% |
Travel |
|
|
9,185 |
|
|
|
5,155 |
|
|
|
4,030 |
|
|
|
78.2 |
% |
Insurance |
|
|
4,815 |
|
|
|
3,589 |
|
|
|
1,226 |
|
|
|
34.2 |
% |
Aircraft Rent |
|
|
43,554 |
|
|
|
21,874 |
|
|
|
21,680 |
|
|
|
99.1 |
% |
Other |
|
|
13,573 |
|
|
|
9,669 |
|
|
|
3,904 |
|
|
|
40.4 |
% |
Total Operating Expenses |
|
$ |
168,397 |
|
|
$ |
120,839 |
|
|
$ |
47,558 |
|
|
|
39.4 |
% |
25
Salaries, wages, and benefits increased $12.7 million from $38.3 million to $50.9 million, or 33.1%, primarily due to the hiring and training of pilots and other airline personnel necessitated by the growing fleet and operations. The total employees grew 15.0% from 585 to 688 and pilots increased from 121 to 143, or 18.2%. A block hour increase of 52.2% drove a $19.3 million increase, offset by $6.6 million due to a reduction in rate per block hour of 11.5%.
Aircraft fuel decreased by 9.5% by $1.9 million, the volume of non-ACMI block hours decreased by 16.2% or $3.2 million. This was offset by an increase in base jet fuel of approximately 8.0% or $1.3 million.
Maintenance, materials, and repairs increased by $2.7 million, from $6.3 million to $9.0 million, or 43.1%. An increase of $0.6 million was due to a severe weather event that damaged two parked aircraft, multiple bird strikes across several aircraft and damage caused by a third-party vendor, which was offset by a $0.2 million decrease primarily due to decreased ad hoc work in spite of the increase in both the number of aircraft and the number of block hours flown which increased 954 or 15% from 6,506 to 7,460 block hours. Another $2.3 million cost increase was primarily due to volume from the increase in both the number of aircraft to 18 and the number of block hours flown which increased 45.5% from 13,235 to 19,252 block hours. This was offset by $0.2 million due to the rate per block hour improvement of 1.6% from $477 per block hour to $469 per block hour.
Depreciation and amortization increased $3.0 million, from $1.5 million to $4.5 million or 208.3%, driven by assets acquired to support our airport operations. These assets include, but are not limited to, aircraft deliveries secured on capital leases, computers, software, and rotable inventory.
Contracted ground and aviation services increased by $0.2 million from $14.7 million to $14.9 million, or 1.3%. A rate increase or 34.5% per block hour drove an increase of $3.8 million. This was mostly offset by lower charter block hours by 24.7%, which drove a reduction of $3.6 million.
Travel increased $4.0 million, from $5.2 million to $9.2 million or 78.2%, $2.3 million was driven by the 45.5% increase in block hours. The remaining $1.7 million variance is driven rate increase by 22.5%, caused by higher flying at outstations, thus raising hotel and meal cost for crews on missions.
Insurance increased $1.2 million, from $3.6 million to $4.8 million or 34.2%, primarily related to the increase in the number of aircraft.
Aircraft rent increased $21.7 million, from $21.9 million to $43.6 million or 99.1%, primarily due to the increase in the number of aircraft from 10 to 18 aircraft in the fleet. $11.2 million or 51.9% of the increase is driven by the increase in the number of aircraft being leased, with the remaining $10.4 million or 48.1% due to rate increase per aircraft and short-term ACMI leases from other airlines due to flights sold exceeded capacity available during the period.
Operating loss decreased $10.0 million, from an operating loss of $14.6 million to $4.6 million, or 68.7% improvement. In addition, operating loss as a percentage of revenue improved from (13.8%) to (2.8%), an 11.0% improvement. This was a direct result of GlobalX’s ability to grow its revenue faster than its cost structure as the airline works towards achieving scale and profitability. There are a few factors driving the improved margins. The first factor is rates as the Company was able to secure higher rates for both ACMI and Charter contracts. The Company’s ACMI rate grew 47.8%, from $4,001 per block hour to $5,914 per block hour, while Charter rate per block hour is up 30.5% from $9,822 per block hour to $12,821 per block hour. The second factor is scale. As an example, when measured on a per block hour basis, Salaries, wages, and benefits dropped from $1,384 to $1,224 per block hour, an 11.5% reduction. There were also savings on a per block hour basis in fuel, Maintenance, insurance, and general overhead expenses (other) which combined with the other factors drove the improvement. This improvement was, in spite of the impact of the events in September, that effectively took almost 35% of the passenger fleet offline for almost two weeks. This included a severe weather event damaging two parked aircraft, multiple bird strikes across three different aircraft and a third-party vendor who severely damaged an aircraft during a routine check. A number of these are insurable events, but the impact to revenue was significant and the estimated impact to operating loss is over $5M. In addition, our Cargo segment continued to underperform which also served as a multimillion dollar drag to earnings in Q3.
Non-operating Expenses
The following table compares our Non-operating Expenses (in thousands):
26
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
Non-Operating Expenses (Income) |
|
2024 |
|
|
2023 |
|
|
Inc/(Dec) |
|
|
% Change |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest Expense |
|
$ |
6,403 |
|
|
$ |
3,801 |
|
|
$ |
2,602 |
|
|
|
68.5 |
% |
Total Non-Operating Expenses (Income) |
|
$ |
6,403 |
|
|
$ |
3,801 |
|
|
$ |
2,602 |
|
|
|
68.5 |
% |
Interest expense, net increased $2.6 million from $3.8 million to $6.4 million driven mainly by the interest payable on the debentures issued in 2023.
Net Loss
Net Loss due to events noted above, decreased by $7.4 million or 40.4%, from a net loss of $18.4 million in 2023 to $11.0 million in 2024.
Liquidity and Capital Resources
As of September 30, 2024, the Company had approximately $7.1 million in unrestricted cash and cash equivalents and approximately $0.8 million in restricted cash, a decrease of approximately $4.5 million and $5.3 million from December 31, 2023, respectively primarily due to new aircraft deliveries, deposits, and net loss in operations. Management is confident that the augmented cash and cash equivalents, coupled with the anticipated rise in sales linked to the Company’s strategies to attract more funds, will adequately address the Company’s liquidity requirements. Management is actively assessing various options to procure additional funds, including exploring opportunities for additional equity or debt financing.
Net Cash used in operating activities during the nine months ended September 30, 2024 decreased $4.5 million to $2.3 million, consisting primarily of $5.3 million of increase in accounts payable, $3.4 million of decrease in accounts receivable, $0.1 million of decrease in prepaid expenses and other current assets, $15.5 million in noncash adjustments for depreciation and amortization of fixed assets, operating lease right of use assets and debt issue costs, $2.0 million of interest on finance leases, $1.3 million of share-based payments, $0.4 million of bad debt expense and $0.2 million of loss on sale of spare parts. These were partially offset by $10.5 million of decrease in operating leases obligations, $8.6 million of decrease in accrued liabilities and other liabilities, $11.0 million of net loss and $0.4 million of increase in assets held for sale. Net Cash used in operating activities during the nine months ended September 30, 2023 was $6.8 million, consisting primarily of $18.4 million of net loss, $6.2 million of increase of operating lease obligations, $4.9 million of increase of accounts receivable, $1.2 million of increase in prepaid expenses and other current assets and $0.2 million of gain on sale of spare parts. These were partially offset by $8.9 million of increase of accrued liabilities and other liabilities, $3.6 million of increase in accounts payable and $8.9 million in noncash adjustments for depreciation and amortization of fixed assets, operating lease right of use assets and debt issue costs, $1.7 million of share-based payments, $0.3 million of interest on finance leases, and $0.1 million of loss on sale of property.
The Company has significant fixed and non-cancelable lease commitments of aircraft, equipment and related maintenance checks. As of September 30, 2024, the Company had total of $19.5 million due in the next 12 months of future minimum lease payments under finance and operating leases. As of September 30, 2024, the Company had total of $105.3 million due after 12 months from the balance sheet date of future minimum lease payments under finance and operating leases, and $29.5 million in notes payable included in the non-current liabilities presented in the Company’s consolidated balance sheet. The Company ended September 30, 2024 with fourteen passenger aircraft and four cargo aircraft and expects the fleet to increase to 15 and 17 passenger aircraft and maintain four cargo aircraft by the end of 2024 and 2025, respectively. To achieve the number of aircraft deliveries in 2024 and 2025, the Company currently has seven aircrafts under lease with partial or total deposit paid.
During the nine months ended September 30, 2024, net cash used for investing activities decreased $1.5 million to $6.3 million, consisting of $5.0 million of Purchases of property and equipment and $1.3 million of increase of deposit, deferred costs and other assets. During the nine months ended September 30, 2023, net cash used for investing activities was $7.8 million, consisting of $5.7 million increase of deposit, deferred costs and other assets and $2.1 million of Purchases of property and equipment.
During the nine months ended September 30, 2024, net cash used in financing activities increased $27.7 million to $1.3 million, consisting of $1.4 million of Principal payments on finance leases and $0.1 million of Dividends, partially offset by Proceeds on issuance of shares of $0.2 million. During the nine months ended September 30, 2023, net cash provided by financing activities was $26.4 million, consisting of $32.1 million of Proceeds from note payable, $1.6 million of Proceeds on issuance of shares, partially offset by $7.0 million of Repayment of note payable and $0.3 million of Principal payments on finance leases.
The Company continuously seeks to identify external sources of capital from time to time depending on our cash requirements, assessment of current and anticipated market conditions, and the after-tax cost of capital. Our access to capital markets can be adversely impacted by prevailing economic conditions and by financial, business and other factors, some of which are beyond our control.
27
Additionally, the Company’s borrowing costs are affected by market conditions and may be adversely impacted by a tightening in credit markets.
The Company regularly assesses our anticipated working capital needs, debt and leverage levels, debt maturities, capital expenditure requirements and future investments or acquisitions to maximize shareholder return, efficiently finance our ongoing operations and maintain flexibility for future strategic transactions. The Company also regularly evaluates its liquidity and capital structure to ensure financial risks, adequate liquidity access and lower cost of capital are efficiently managed.
Item 3 – Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4 – Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Executive Chairman and President & Chief Financial Officer, referred to collectively herein as the Certifying Officers, are responsible for establishing and maintaining our disclosure controls and procedures that are designed to ensure that information relating to the Company required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such information is accumulated and communicated to the Company’s management, including the Executive Chairman and the President & Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
The Certifying Officers have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 240.13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934) as of September 30, 2024. Our Executive Chairman and President & Chief Financial Officer concluded that, as of September 30, 2024, the Company’s disclosure controls and procedures were not effective, due to the material weaknesses in internal control over financial reporting described below.
Material Weakness in Internal Control over Financial Reporting
Remediation Plans
In order to mitigate the foregoing material weakness, the Company plans to take steps to develop and enhance its internal controls over financial reporting in the remainder of 2024, including:
As we continue to evaluate and work to improve our internal control over financial reporting, Certifying officers and management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary. Therefore, we cannot assure you when the Company will remediate the material weakness identified above, nor can we be certain that additional actions will not be required and what the costs of any such additional actions may be. Moreover, we cannot assure you that additional material weaknesses will not arise in the future.
Notwithstanding the material weakness identified in our internal control over financial reporting, we believe that the consolidated financial statements in this quarterly report fairly present, in all material respects, the Company’s consolidated financial condition as of September 30, 2024 and consolidated results of its operations and cash flows for the period then ended, in conformity GAAP.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
28
PART II - OTHER INFORMATION
ITEM 1 Legal Proceedings
On August 11, 2023 Global Crossing Airlines in combination with Top Flight Charters and its minority interest member filed a lawsuit in the United States District Court Southern District of Florida against Shorts Travel Management, Inc (Shorts) and STM Charters, Inc. seeking (1) to have an old non-solicit agreement signed by Top Flight' minority interest member to be declared invalid, (2) a declaration that Shorts alleged trade secrets do not exist and (2) damages arising from the Shorts defamation per se based on numerous false statements made by Shorts in the marketplace. On October 4, 2023, Shorts responded in court by denying the claims made and countersued all parties for breach of contract and theft of trade secrets. This case was settled with no financial impact to GlobalX.
ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds
None.
ITEM 3 Defaults Upon Senior Securities
None.
ITEM 4 Mine Safety Disclosures
Not Applicable
ITEM 5 Other Information
29
Item 6 - Exhibits
Exhibit Number |
|
Description |
31.1* |
|
Rule 13a-14(a)/15d-14(a) Certification of acting principal executive officer. * |
31.2* |
|
Rule 13a-14(a)/15d-14(a) Certification of acting principal financial officer. * |
32.1* |
|
|
32.2* |
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
* Filed herewith.
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURE |
|
TITLE |
|
DATE |
|
|
|
|
|
/s/ Ryan Goepel |
|
President - CFO |
|
November 7, 2024 |
|
|
|
|
|
/s/ Chris Jamroz |
|
Executive Chairman |
|
November 7, 2024 |
|
|
|
|
|
/s/ Ed Wegel |
|
Director |
|
November 7, 2024 |
|
|
|
|
|
/s/ Alan Bird |
|
Director |
|
November 7, 2024 |
|
|
|
|
|
/s/ T. Allan McArtor |
|
Director |
|
November 7, 2024 |
|
|
|
|
|
/s/ Deborah Robinson |
|
Director |
|
November 7, 2024 |
|
|
|
|
|
/s/ Cordia Harrington |
|
Director |
|
November 7, 2024 |
31