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: None
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 August 8, 2023 was 57,459,361 shares, consisting of
GLOBAL CROSSING AIRLINES GROUP INC.
Form 10-Q
Period Ended June 30, 2023
Index
PART I - FINANCIAL INFORMATION |
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ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
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Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022 |
1 |
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Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited) |
2 |
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3 |
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Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (unaudited) |
4 |
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5 |
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
15 |
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
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23 |
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25 |
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i
GLOBAL CROSSING AIRLINES GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
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June 30, |
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December 31, 2022 |
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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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$ |
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Restricted cash |
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$ |
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$ |
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Accounts receivable, net of allowance |
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$ |
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$ |
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Prepaid expenses and other current assets |
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$ |
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$ |
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Current assets held for sale |
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$ |
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$ |
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Total Current Assets |
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$ |
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$ |
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Property and equipment, net |
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$ |
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$ |
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Finance leases, net |
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$ |
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$ |
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Operating lease right-of-use assets |
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$ |
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$ |
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Deposits and other assets |
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$ |
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$ |
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Total Assets |
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$ |
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$ |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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$ |
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$ |
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Deferred revenue |
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$ |
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$ |
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Customer deposits |
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$ |
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$ |
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Current portion of notes payable |
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$ |
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$ |
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Current portion of long-term operating leases |
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$ |
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$ |
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Current portion of finance leases |
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$ |
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$ |
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Total current liabilities |
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$ |
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$ |
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Other liabilities |
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Note payable |
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$ |
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$ |
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Long-term operating leases |
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$ |
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$ |
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Other liabilities |
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$ |
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$ |
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Total other liabilities |
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$ |
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$ |
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$ |
— |
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$ |
— |
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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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$ |
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$ |
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Retained deficit |
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$ |
( |
) |
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$ |
( |
) |
Total stockholders’ equity (Deficit) |
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$ |
( |
) |
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$ |
( |
) |
Total Liabilities and Equity (Deficit) |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
1
GLOBAL CROSSING AIRLINES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended |
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Three Months Ended |
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Six Months Ended |
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Six Months Ended |
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June 30, 2023 |
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June 30, 2022 |
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June 30, 2023 |
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June 30, 2022 |
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Operating Revenue |
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$ |
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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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Operating Loss |
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( |
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( |
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( |
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( |
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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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( |
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( |
) |
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Income tax expense |
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— |
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— |
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— |
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— |
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Net Loss |
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( |
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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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$ |
( |
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Diluted |
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$ |
( |
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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.
2
GLOBAL CROSSING AIRLINES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
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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 |
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Beginning – January 1, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
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Issuance of shares – warrants and options exercised |
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— |
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Warrants issued |
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Share based compensation on stock options or RSUs |
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— |
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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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— |
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( |
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( |
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Ending – March 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
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Issuance of shares – warrants and options exercised |
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— |
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Warrants issued |
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— |
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— |
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— |
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— |
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— |
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Share based compensation on stock options or RSUs |
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— |
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— |
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— |
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Subscription receivable |
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— |
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— |
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— |
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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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— |
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( |
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( |
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Ending – June 30, 2022 |
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$ |
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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 |
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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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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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Loss for the period |
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— |
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— |
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— |
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( |
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( |
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Ending – March 31, 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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— |
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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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Issuance of shares - ESPP |
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— |
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Loss for the period |
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— |
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— |
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— |
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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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$ |
( |
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See accompanying notes to condensed consolidated financial statements.
3
GLOBAL CROSSING AIRLINES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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For The Six Months Ended June 30, |
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2023 |
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2022 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash (used in) operating activities: |
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Depreciation |
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Bad debt expense (recovery) |
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( |
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Gain on sale of spare parts |
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( |
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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 asset |
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Share-based payments |
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Foreign exchange loss |
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Loss on sale of property |
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— |
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Interest on finance leases |
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— |
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Changes in assets and liabilities |
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Accounts receivable |
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( |
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( |
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Assets held for sale |
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— |
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Prepaid expenses and other current assets |
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( |
) |
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( |
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Accounts payable |
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Accrued liabilities and other liabilities |
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Operating lease obligations |
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( |
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( |
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Other liabilities |
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— |
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Net cash provided (used) in operating activities |
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( |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchases of property and equipment |
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( |
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( |
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Deposits, deferred costs and other assets |
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( |
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( |
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Net cash used in investing activities |
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( |
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( |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Payments to related party |
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— |
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( |
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Principal payments on finance leases |
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( |
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— |
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Proceeds on issuance of shares |
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Proceeds from note payable |
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Net cash provided by financing activities |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
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( |
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Cash, cash equivalents and restricted cash - beginning of the period |
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Cash, cash equivalents and restricted cash - end of the period |
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$ |
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$ |
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Non-cash transactions |
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Right-of-use (ROU) assets acquired through operating leases |
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$ |
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Equipment acquired through finance leases |
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— |
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Note Payable reductions through accounts receivable from sale of Assets held for sale |
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— |
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Cash paid for |
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Interest |
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$ |
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Taxes |
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- |
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- |
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See accompanying notes to condensed consolidated financial statements.
4
GLOBAL CROSSING AIRLINES GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Global Crossing Airlines Group Inc. (the “Company” or “Global”) 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 “Global USA”), GlobalX A320 Aircraft Acquisitions Corp. (“Acquisition A320”), GlobalX A321 Aircraft Acquisition Corp. (“Acquisition A321”), GlobalX Travel Technologies, Inc. (“Technologies”), GlobalX Air Tours, LLC (“GlobalX Tours”), LatinX Air S.A.S. and GlobalX Colombia S.A.S.. 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). 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 years ended December 31, 2022 and 2021, which includes additional disclosures and a summary of our significant accounting policies. The December 31, 2022, balance sheet data was derived from that Annual Report and may not include disclosures required for presentation in conformity with U.S. GAAP. In our opinion, these Financial Statements include all adjustments, consisting of normal recurring items, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows
Our quarterly results are subject to seasonal and other fluctuations, including fluctuations resulting from the global COVID-19 pandemic 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 foreseeable future. As of June 30, 2023, the Company had a working capital deficit of $
Recently Adopted Accounting Standards
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The update requires the use of an “expected loss” model on certain types of financial instruments and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. For trade receivables, loans and held-to-maturity debt securities, entities will be required to estimate lifetime expected credit losses. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction to the carrying value of the asset. ASU 2016-13 was initially effective for non- public companies for fiscal years and interim periods beginning after December 15, 2021, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which delayed the effective date for certain entities, such as the Company, to apply ASU 2016-13 until fiscal years and interim periods beginning after December 15, 2022. The adoption of ASU 2016-13 had no impact on our consolidated financial statements.
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The Company’s investments in affiliates accounted for using the equity method include an approximately
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