10-Q 1 jetmf-20240331.htm 10-Q 10-Q
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ESPP

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2024

 

OR

 

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

 

Commission File Number: 000-56409

 

Global Crossing Airlines Group, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

86-2226137

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

 

4200 NW 36th Street, Building 5A

Miami International Airport

Miami, Florida

33166

(Address of principal executive office)

(Zip Code)

 

Registrant’s telephone number, including area code: (786) 751-8503

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act: common stock and Class B non-voting common stock

 

 

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. Yes [X] No [ ]

 

 

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). Yes [X] No [ ]

 

 

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

[ ]

Non-accelerated filer

[X]

Smaller reporting company

[X]

Emerging growth company

[X]

 

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 [X]

 

 

The number of shares outstanding of the registrant’s Common Stock as of May 02, 2024 was 59,863,778 shares, consisting of 41,419,188 shares of common stock, 5,537,313 shares of Class A Non-Voting Common Stock and 12,907,277 shares of Class B Non-Voting Common Stock.

 


 

GLOBAL CROSSING AIRLINES GROUP, INC.

Form 10-Q

Period Ended March 31, 2024

Index

 

Global Crossing Airlines Group, Inc.

 

Page

 

 

 

ITEM 1. GLOBAL CROSSING AIRLINES GROUP, INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

Condensed Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023

 

3

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023 (Unaudited)

 

4

Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2024 and 2023 (Unaudited)

 

5

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (Unaudited)

 

6

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

7

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

 

17

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

23

ITEM 4. CONTROLS AND PROCEDURES

 

23

PART II - OTHER INFORMATION

 

25

ITEM 6. EXHIBITS

 

26

SIGNATURES

 

27

 

 

 

 

2


 

GLOBAL CROSSING AIRLINES GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share quantities)

 

 

 

March 31, 2024 (Unaudited)

 

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,300

 

 

 

$

11,596

 

Restricted cash

 

 

3,764

 

 

 

 

6,080

 

Accounts receivable, net of allowance of $454 and $95 as March 31, 2024 and December 31, 2023, respectively.

 

 

5,574

 

 

 

 

10,180

 

Prepaid expenses and other current assets

 

 

3,177

 

 

 

 

2,552

 

Current assets held for sale

 

 

181

 

 

 

 

184

 

Total Current Assets

 

 

20,996

 

 

 

 

30,592

 

Property and equipment, net

 

 

6,776

 

 

 

 

5,525

 

Finance leases, net

 

 

20,878

 

 

 

 

4,108

 

Operating lease right-of-use assets

 

 

86,429

 

 

 

 

76,880

 

Deposits

 

 

12,959

 

 

 

 

12,506

 

Other assets

 

 

2,425

 

 

 

 

1,717

 

Total Assets

 

$

150,463

 

 

 

$

131,328

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

 

$

11,999

 

 

 

$

7,481

 

Accrued liabilities

 

 

17,648

 

 

 

 

17,465

 

Deferred revenue

 

 

3,814

 

 

 

 

9,896

 

Customer deposits

 

 

4,266

 

 

 

 

3,935

 

Current portion of long-term operating leases

 

 

12,311

 

 

 

 

13,650

 

Current portion of finance leases

 

 

2,160

 

 

 

 

599

 

Total current liabilities

 

 

52,198

 

 

-

 

 

53,026

 

Other liabilities

 

 

 

 

 

 

 

Note payable

 

 

29,331

 

 

 

 

29,175

 

Long-term operating leases

 

 

75,677

 

 

 

 

65,158

 

Long-term finance leases

 

 

18,592

 

 

 

 

3,292

 

Other liabilities

 

 

568

 

 

 

 

544

 

Total other liabilities

 

 

124,168

 

 

 

 

98,169

 

Total Liabilities

 

$

176,366

 

 

 

$

151,195

 

Commitments and Contingencies (Note 7)

 

 

 

 

 

 

 

Equity (Deficit)

 

 

 

 

 

 

 

$.001 par value; 200,000,000 authorized; 59,667,950 and 58,925,871 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

$

60

 

 

 

$

59

 

Additional paid-in capital

 

 

39,285

 

 

 

 

38,943

 

Retained deficit

 

 

(65,473

)

 

 

 

(59,094

)

Total Company's stockholders’ deficit

 

 

(26,128

)

 

 

 

(20,092

)

Noncontrolling interest

 

 

225

 

 

 

 

225

 

Total stockholders’ deficit

 

 

(25,903

)

 

 

 

(19,867

)

Total Liabilities and Deficit

 

$

150,463

 

 

 

$

131,328

 

 

 

See accompanying notes to consolidated financial statements.

3


 

GLOBAL CROSSING AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(In thousands, except share and per share amounts)

 

 

Three Months Ended March 31, 2024

 

 

Three Months Ended March 31, 2023

 

 

 

 

 

 

 

 

Revenue

 

$

53,835

 

 

$

32,151

 

Operating Expenses

 

 

 

 

 

 

Salaries, Wages & Benefits

 

 

16,775

 

 

 

11,168

 

Aircraft Fuel

 

 

8,199

 

 

 

7,949

 

Maintenance, materials and repairs

 

 

2,933

 

 

 

1,559

 

Depreciation and amortization

 

 

1,166

 

 

 

443

 

Contracted ground and aviation services

 

 

6,903

 

 

 

4,853

 

Travel

 

 

4,282

 

 

 

2,254

 

Insurance

 

 

1,633

 

 

 

949

 

Aircraft Rent

 

 

12,761

 

 

 

5,644

 

Other

 

 

3,802

 

 

 

2,862

 

Total Operating Expenses

 

$

58,454

 

 

$

37,681

 

Operating Loss

 

 

(4,619

)

 

 

(5,530

)

Non-Operating Expenses

 

 

 

 

 

 

Interest Expense

 

 

1,760

 

 

 

542

 

Total Non-Operating Expenses

 

 

1,760

 

 

 

542

 

Loss before income taxes

 

 

(6,379

)

 

 

(6,072

)

Income tax expense

 

 

-

 

 

 

-

 

Net Loss

 

 

(6,379

)

 

 

(6,072

)

Net Income attributable to Noncontrolling Interest

 

 

-

 

 

 

-

 

Net Loss attributable to the Company

 

 

(6,379

)

 

 

(6,072

)

Loss per share:

 

 

 

 

 

 

Basic

 

 

(0.11

)

 

$

(0.11

)

Diluted

 

 

(0.11

)

 

$

(0.11

)

Weighted average number of shares outstanding

 

 

59,234,601

 

 

 

54,490,925

 

 

 

 

 

 

 

 

Fully diluted shares outstanding

 

 

59,234,601

 

 

 

54,490,925

 

 

See accompanying notes to consolidated financial statements.

 

 

4


 

GLOBAL CROSSING AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(UNAUDITED)

(In thousands, except shares quantities)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock Number of Shares

 

 

Amount

 

 

Additional Paid in Capital

 

 

Retained Deficit

 

 

Total

 

 

 

 

 

Beginning – January 1, 2023

 

 

53,440,482

 

 

$

53

 

 

$

30,774

 

 

$

(38,083

)

 

$

(7,256

)

 

 

 

 

Issuance of shares – options exercised

 

 

150,000

 

 

 

0

 

 

 

67

 

 

 

-

 

 

 

67

 

 

 

 

 

Issuance of shares – warrants exercised

 

 

2,499,453

 

 

 

2

 

 

 

1,134

 

 

 

-

 

 

 

1,136

 

 

 

 

 

Issuance of shares - share based compensation on RSUs

 

 

208,416

 

 

 

0

 

 

 

500

 

 

 

-

 

 

 

500

 

 

 

 

 

Loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,072

)

 

 

(6,072

)

 

 

 

 

Ending – March 31, 2023

 

 

56,298,351

 

 

$

55

 

 

$

32,475

 

 

$

(44,155

)

 

$

(11,625

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock Number of Shares

 

 

Amount

 

 

Additional Paid in Capital

 

 

Retained Deficit

 

 

Total

 

Noncontrolling Interest

 

Total

 

Beginning – January 1, 2024

 

 

58,925,871

 

 

$

59

 

 

$

38,943

 

 

$

(59,094

)

 

$

(20,092

)

$

225

 

$

(19,867

)

Issuance of shares - share based compensation on RSUs

 

 

742,079

 

 

 

1

 

 

 

342

 

 

 

-

 

 

 

343

 

 

-

 

 

343

 

Loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,379

)

 

 

(6,379

)

 

-

 

 

(6,379

)

Ending – March 31, 2024

 

 

59,667,950

 

 

$

60

 

 

$

39,285

 

 

$

(65,473

)

 

$

(26,128

)

$

225

 

$

(25,903

)

 

 

See accompanying notes to consolidated financial statements.

5


 

GLOBAL CROSSING AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

 

 

 

For The Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$

(6,379

)

 

$

(6,072

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation expense

 

 

1,166

 

 

 

443

 

Bad debt expense (recovery)

 

 

359

 

 

 

(18

)

Loss on sale of property

 

 

 

 

 

136

 

Gain on sale of spare parts

 

 

 

 

 

(56

)

Foreign exchange loss

 

 

 

 

 

1

 

Amortization of debt issue costs

 

 

157

 

 

 

250

 

Amortization of operating lease right of use assets

 

 

2,704

 

 

 

1,847

 

Share-based payments

 

 

343

 

 

 

501

 

Interest on finance leases

 

 

309

 

 

 

93

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

4,248

 

 

 

(1,255

)

Assets held for sale

 

 

3

 

 

 

256

 

Prepaid expenses and other current assets

 

 

(626

)

 

 

(121

)

Accounts payable

 

 

4,518

 

 

 

359

 

Accrued liabilities and other liabilities

 

 

(5,569

)

 

 

4,803

 

Operating lease obligations

 

 

(3,073

)

 

 

(2,018

)

Other liabilities

 

 

(294

)

 

 

155

 

Net cash used in operating activities

 

 

(2,134

)

 

 

(696

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Deposits, deferred costs and other assets

 

 

(1,529

)

 

 

(824

)

Purchases of property and equipment

 

 

(1,717

)

 

 

(307

)

Net cash used in investing activities

 

 

(3,246

)

 

 

(1,131

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Principal payments on finance leases

 

 

(231

)

 

 

(111

)

Proceeds on issuance of shares

 

 

 

 

 

1,204

 

Proceeds from note payable

 

 

 

 

 

2,500

 

Net cash (used in) provided by financing activities

 

 

(231

)

 

 

3,592

 

Net (decrease) increase in cash, cash equivalents, and restricted cash

 

 

(5,611

)

 

 

1,766

 

Cash, cash equivalents and restricted cash - beginning of the period

 

 

17,675

 

 

 

5,461

 

Cash, cash equivalents and restricted cash - end of the period

 

$

12,064

 

 

$

7,227

 

Non-cash transactions

 

 

 

 

 

 

Right-of-use (ROU) assets acquired through operating leases

 

$

12,252

 

 

$

16,209

 

Equipment acquired through finance leases

 

$

17,100

 

 

$

1,215

 

Cash paid for

 

 

 

 

 

 

Interest

 

$

2,588

 

 

$

291

 

 

 

See accompanying notes to 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

1.
BASIS OF PRESENTATION AND GOING CONCERN

 

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). 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 foreseeable future. As of March 31, 2024, the Company had a working capital deficit of $30.7 million and a retained deficit of $65.5 million. The Company began flight operations in August 2021. Without ongoing income generation or additional financing, the Company will be unable to fund general and administrative expenses and working capital requirements for the next 12 months. These material uncertainties raise substantial doubt as to the Company’s ability to continue as a going concern. The Company is evaluating financing its future requirements through a combination of debt, equity and/or other facilities. There is no assurance that the Company will be able to obtain such financing or obtain them on favorable terms. The condensed consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary were the going concern assumption deemed to be inappropriate. These adjustments could be material.

 

2. NEW ACCOUNTING STANDARDS

 

Recently Issued Accounting Standards

 

In March 2024, the FASB issued ASU 2024-04 - 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 no significant impact after adoption of the new standard.

 

 

 

 

3. INVESTMENTS

7


 

 

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 75% of shares of Jetlines to GlobalX shareholders. At that time, GlobalX retained 25% of the shares issued and outstanding of Jetlines and accounts for the investment in accordance with the equity method. As of March 31, 2024 and 2023, the Company holds approximately 7% and 13% ownership in Jetlines, respectively.

 

Investment in Top Flight:

 

On September 18, 2023, the Company acquired 80% of Charter Air Solutions, LLC ("Top Flight"). Top Flight was established on February 8, 2023 and had no significant transactions from the date of formation to the acquisition date. The balance sheet and operating activity of Top Flight are included in the Company's consolidated financial statements and net income is adjusted in the consolidated statement of operations to exclude the noncontrolling interests' proportionate share of results. The proportionate share of equity attributable to noncontrolling interests is presented as equity within our consolidated balance sheet. Top Flight figures did not materially impact the consolidated financial statements of the Company.

 

4.
NOTE PAYABLE

 

On January 27, 2023, the Company announced an up to $5.0 million loan (the "Loan") with a key investor to provide working capital and additional liquidity to support GlobalX’s rapidly growing operations. The net proceeds of the Loan will be used to further the business objectives of the Company and to secure additional aircraft for charter operations. As of March 31, 2024, the Company received $2.5 million from the loan.

 

The terms of the promissory note (the "Note") issued in connection with Loan include:

a maturity date of 6 months from the date of issuance (the “Maturity Date”) and the principal amount of the Note, together with any
accrued and unpaid interest, will be payable on the Maturity Date;
the Note bears interest at the rate of 20% per annum, accruing monthly and payable on the Maturity Date;
the principal amount of the Note will be advanced in two tranches of $2.5 million each. The first tranche was advanced within one business day and the second tranche will be advanced after the Company delivers a draw down notice, but subject to the lender receiving internal approval for the second tranche; and
the Note is unsecured, is not convertible and provides for no warrants.

 

This loan was paid off in connection with the new $35.0 million secured notes closed on August 2, 2023 and the outstanding balance related to debt costs and discounts of approximately $945 thousand was written off.

 

On August 2, 2023, the Company closed the placement of $35 million senior secure notes due 2029. The proceeds from these notes were used to pay-off the pre-existing Loan and Subscription Agreement.

The terms of the senior secure notes include:

a term of 6 years and maturity date of June 30, 2029 with no principal payments due until maturity date;
the notes bear interest at a fixed rate of 15% per annum and include an upfront fee of 2% of the principal payment;
the Company is permitted to prepay all (but not less than all) of the notes beginning on July 1, 2025 subject to a redemption premium of (i) 7.5% of the principal to be redeemed on or prior to August 2, 2026, (ii) 5.0% of the principal to be redeemed after August 2, 2026 or on or prior to August 2, 2027, (iii) 2.5% of the principal to be redeemed after August 2, 2027 or on or prior to August 2, 2028, (iv) 0% of the principal to be redeemed after August 2, 2028;
the investors will be issued 10 million warrants, each exercisable into one share of Class A common stock at an exercise price of $1.00 per share, with such warrants expiring on June 30, 2030;
each of the Company's material subsidiaries will guarantee the notes;
the notes and the related guarantees will be secured by a lien on substantially all of the property and assets of the Company and the guarantors of the notes.

8


 

financial covenants requirements as follows:
o
minimum adjusted EBITDA of (i) $5 million for the fiscal year ended December 31, 2023, (ii) $15 million for the fiscal year ended December 31, 2024 and (iii) $25 million for the fiscal year ended December 31, 2025;
o
minimum liquidity of $5 million measured at each quarter end;
collateral substantially of all the Company's assets.

 

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 $3.8 million related to the warrants along with a corresponding credit to additional paid in capital. As the warrants are classified as equity warrants the Company will not remeasure the warrants each accounting period.

 

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 $0.85 per share, exercise price of $1.0 per share, expected term of 6.91 years, dividends of $0, a risk free rate of 4.21%, and volatility of 50%.

 

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 $35 million senior secured notes due 2029 for the sale of an additional $5 million senior secured notes due 2029 to original purchasers and the total warrants increased by 142,874 warrants with an exercise price of US$1.00 per warrant. The net proceeds from the sale of the additional notes will be used to repurchase $4.3 million principal amount of senior secure notes due 2029 from an original purchaser plus payment of accrued interest due of $251 thousand, with the balance expected to be used for general corporate purposes, including the transaction expenses and deposits to expand its current fleet of aircraft. No other substantial modification to the terms of the original $35 million senior secure notes due 2029 was made in the issuance of the additional notes.

 

Notes Payable is comprised of the following:

 

 

For the Period Ended
March 31, 2024

 

 

For the Year Ended
December 31, 2023

 

 

 

 

 

 

 

 

Subscription Agreement

 

$

35,684

 

 

$

35,684

 

Less unamortized debt issuance costs, noncurrent

 

 

6,353

 

 

 

6,509

 

Total carrying amount

 

 

29,331

 

 

 

29,175

 

Less current maturities

 

 

 

 

Total long-term Note Payable

 

$

29,331

 

 

$

29,175

 

 

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 $100 million over a 36-month term following the closing of the Transaction (the “Facility”). The initial CAD $100 million is in the form of a capital commitment that allows the Company to draw down funds during the 36-month term by issuing shares to GEM (or such persons as it may direct) and subject to share lending arrangement(s) being in place. The purchase price of the shares to be sold is set at (i) 90% of the recent average daily closing price of the Company’s common stock on the TSX Venture Exchange or (ii) the floor price set by the company for each drawn down. The Company is not permitted to make a draw-down request in an amount that exceeds (i)1000% of the average daily trading volume of the Company’s stock for the 15 trading days preceding the draw-down date or (ii) 90% of the closing price on the trading day immediately prior to the issue or the relevant draw down notice and then added to the aggregate purchase price of all the common shares subscribed for pursuant to all prior closings would not exceed the total facility. GEM may accept or reject such drawn down notice based on various conditions described in the agreement. On July 8, 2020 the TSX Venture Exchange provided approval for the Facility.

 

On March 4, 2024, Global Crossing Airlines and GEM decided to extend the length of the GEM Facility by 12 months with a new expiration date of March 4, 2025.

 

5.
SHARE CAPITAL AND ADDITIONAL PAID IN CAPITAL AUTHORIZED

9


 

As of March 31, 2024 and December 31, 2023, the Company had 41,162,429 and 40,420,350 common shares, 5,537,313 and 5,537,313 Class A Non-Voting Common Shares, and 12,968,208 and 12,968,208 Class B Non-Voting Shares outstanding, respectively.

 

 

6.
WARRANTS

 

Following is a summary of the warrant activity during the three months ended March 31, 2024 and 2023:

 

 

Number of Share Purchase Warrants

 

 

Weighted Average Exercise Price

 

Outstanding January 1, 2023

 

 

19,633,911

 

 

$

1.18

 

Issued

 

 

-

 

 

 

-

 

Exercised

 

 

(2,499,453

)

 

 

0.43

 

Expired

 

 

-

 

 

 

-

 

Outstanding March 31, 2023

 

 

17,134,458

 

 

$

1.29

 

 

 

 

 

 

 

 

Outstanding January 1, 2024

 

 

22,518,894

 

 

$

1.35

 

Issued

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

Expired

 

 

(4,838,707

)

 

 

1.24

 

Outstanding March 31, 2024

 

 

17,680,187

 

 

$

1.21

 

 

As of March 31, 2024, the following share purchase warrants were outstanding and exercisable:

 

Outstanding

 

 

Exercise Price

 

Remaining life
(years)

 

 

Expiry Date

 

7,537,313

 

 

USD$1.50

 

 

2.33

 

 

April 29, 2026

 

10,142,874

 

 

USD$1.00

 

 

6.50

 

 

Jun 30, 2030

 

17,680,187

 

 

 

 

 

 

 

 

 

As of March 31, 2023, the following share purchase warrants were outstanding and exercisable:

 

Outstanding

 

 

Exercise Price

 

Remaining life
(years)

 

 

Expiry Date

 

4,649,238

 

 

USD$1.00

 

 

0.07

 

 

April 26, 2023

 

109,200

 

 

USD$0.62

 

 

0.07

 

 

April 26, 2023

 

4,838,707

 

 

USD$1.24

 

 

0.99

 

 

Mar 28, 2024

 

7,537,313

 

 

USD$1.50

 

 

3.08

 

 

April 29, 2026

 

17,134,458

 

 

 

 

 

 

 

 

 

 

 

7.
SHARE-BASED PAYMENTS

The maximum number of voting shares is the number of common stock of the Company issuable pursuant to share-based payment arrangements, including stock options, restricted share units and performance share units, is 9,400,000.

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 maximum expiry period of ten years from the grant date. Vesting conditions are determined by the Board of Directors in its discretion with certain restrictions in accordance with the Stock Option Plan.

The following is a summary of stock option activities for the three months ended March 31, 2024 and 2023:

 

10


 

 

Number of stock
options

 

 

Weighted average
exercise price

 

 

Weighted average
grant date
fair value

 

Outstanding January 1, 2023

 

 

820,668

 

 

$

0.25

 

 

$

0.34

 

Granted

 

 

 

 

 

 

 

 

 

Exercised

 

 

(150,000

)

 

 

0.48

 

 

 

0.16

 

Forfeited

 

 

(200,000

)

 

 

0.25

 

 

 

0.57

 

Outstanding March 31, 2023

 

 

470,668

 

 

$

0.25

 

 

$

0.54

 

 

 

 

 

 

 

 

 

 

 

Outstanding January 1, 2024

 

 

470,668

 

 

$

0.25

 

 

$

0.54

 

Granted

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(157,334

)

 

 

0.37

 

 

 

0.24

 

Outstanding March 31, 2024

 

 

313,334

 

 

$

0.25

 

 

$

0.01

 

 

As of March 31, 2024, the following stock options were outstanding and exercisable:

 

Outstanding

 

 

Exercisable

 

 

Exercise Price

 

 

Remaining life (years)

 

 

Expiry Date

 

313,334

 

 

 

313,334

 

 

$

0.25

 

 

 

1.23

 

 

June 23, 2025

 

313,334

 

 

 

313,334

 

 

 

 

 

 

 

 

 

 

As of March 31, 2023, the following stock options were outstanding and exercisable:

 

Outstanding

 

 

Exercisable

 

 

Exercise Price

 

 

Remaining life (years)

 

 

Expiry Date

 

420,668

 

 

 

420,668

 

 

$

0.25

 

 

 

2.23

 

 

June 23, 2025

 

50,000

 

 

 

50,000

 

 

$

0.62

 

 

 

2.48

 

 

September 23, 2025

 

470,668

 

 

 

470,668

 

 

 

 

 

 

 

 

 

 

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 Company’s shares, forfeiture rate, and expected life of the options.

There were no stock options granted during the three months ended March 31, 2024 and 2023.

Restricted share units

 

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 Voting Share. 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 Voting Shares from treasury 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 Voting Shares 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:

a.
If the Company elects to settle in cash, the cash payment is accounted for as the repurchase of an equity interest (i.e. as a deduction from equity), except as noted in (c) below.
b.
If the Company elects to settle by issuing shares, the value of RSUs initially recognized in reserves is reclassified to capital, except as noted in (c) below.
c.
If the Company elects the settlement alternative with the higher fair value, As of the date of settlement, the Company recognizes an additional expense for the excess value given (i.e. the difference between the cash paid and the fair value of shares that

11


 

would otherwise have been issued, or the difference between the fair value of the shares and the amount of cash that would otherwise have been paid, whichever is applicable).

The following is a summary of RSU activities for the three months ended March 31, 2024 and 2023:

 

 

Number of RSUs

 

 

Weighted average grant date fair value per RSU

 

Outstanding January 1, 2023

 

 

3,305,837

 

 

$

1.14

 

Granted

 

 

1,687,777

 

 

 

0.97

 

Vested

 

 

(400,542

)

 

 

1.04

 

Forfeited

 

 

(129,315

)

 

 

0.96

 

Outstanding March 31, 2023

 

 

4,463,757

 

 

$

1.10

 

 

 

 

 

 

 

 

Outstanding January 1, 2024

 

 

5,056,268

 

 

$

0.98

 

Granted

 

 

2,573,333

 

 

 

0.52

 

Vested

 

 

(814,142

)

 

 

1.01

 

Forfeited

 

 

(850,437

)

 

 

1.11

 

Outstanding March 31, 2024

 

 

5,965,022

 

 

$

0.76

 

 

During the three months ended March 31, 2024 and 2023, the Company recognized total share-based payments expense with respect to stock options, RSUs and employees' stock purchase plan of $343 and $501, respectively.

The remaining compensation that has not been recognized as of March 31, 2024 and 2023 with regards to RSUs and the weighted average period they will be recognized are $3.5 million and 2.25 years and $3.3 million and 2.12 years, respectively. As of March 31, 2024, all compensation expense with respect to stock options has been recognized.

 

Employee Stock Purchase Plan

 

In September 2021, the Board adopted the GlobalX 2021 Employee Stock Purchase Plan (“ESPP”). There are 2 offering periods that the employees make contributions to the plan. The first offering period starts from June 16th to November 15th and the second offering period starts from November 16 th to May 15th of each year. Eligible employees may purchase maximum of $10 of the Company's common stock per offering through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of six-month offering periods. An employee's payroll deductions under the ESPP are limited to 15% of the employee's compensation and an employee may not purchase more than $25 of stock during any calendar year in which the employee’s option to purchase stock under the ESPP is outstanding at any time.

During the three months ended March 31, 2024 and 2023, the Company did not issue common shares under the ESPP.

As of March 31, 2024 and 2023, total recognized equity-based compensation costs related to ESPP were $0.

ESPP payroll contributions accrued at March 31, 2024 and March 31, 2023 totaled $235 and $162, respectively, and are included within accrued expenses in the consolidated balance sheets. Employee payroll contributions used to purchase shares under the ESPP will be reclassified to stockholders' equity at the end of the offering period.

 

8. INCOME TAXES

The Company’s expected effective tax rate for the three months periods ended March 31, 2024, and 2023 was 0%. The effective tax rate varies from the statutory rate due to the change in the valuation allowance.

 

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 one Airbus A321 converted freighter. The ten-year lease term commenced on January 23, 2023. Under the agreement, the Company will pay the lessor a fixed monthly rent for 120 months, plus supplemental rent for maintenance of the aircraft.

 

12


 

On June 21, 2022, the Company entered into a lease agreement for one A321F cargo aircraft. The eight-year lease term commenced on August 1, 2023. Under the agreement, the Company will pay the lessor a fixed monthly rent for 94 months, plus supplemental rent for maintenance of the aircraft.

 

On July 29, 2022, the Company signed a lease agreement for one A321F cargo aircraft and paid commitment fees to the lessor. The lease will commence upon aircraft delivery which is expected to be in 2024 and will run through 72 months from delivery date. In addition to basic rent due, the Company will pay the lessor supplemental rent for maintenance of the aircraft.

 

On December 14, 2022, the Company entered into a lease agreement for one A319 passenger aircraft. The two-year lease term commenced on August 18, 2023. Under the agreement, the Company will pay the lessor a fixed monthly rent for 24 months, plus supplemental rent for maintenance of the aircraft.

 

On January 27, 2023, the Company entered into a lease agreement for one A320 passenger aircraft. The six-year lease term commenced on April 21, 2023. Under the agreement, the Company will pay the lessor a fixed monthly rent for 72 months, plus supplemental rent for maintenance of the aircraft.

 

On May 22, 2023, the Company entered into a lease agreement for a commercial property warehouse. The five-year lease term commenced on June 1, 2023. Under the agreement, the Company will pay the lessor variable monthly rents increasing once every year for 62 months, plus estimated expenses for insurance, utilities, taxes, management fees and other operating expenses.

 

On June 16, 2023, the Company entered into a lease agreement for one A320 passenger aircraft. The four-year lease term commenced on November 13, 2023. Under the agreement, the Company will pay the lessor a fixed monthly rent for 48 months, plus supplemental rent for maintenance of the aircraft.

 

On August 8, 2023, the Company signed a lease agreement for an A320 passenger aircraft and paid commitment fees to the lessor. The lease will commence upon aircraft delivery which is expected to be between in 2024 and will run through the next heavy maintenance visit reached (estimated to be in February 2028) from delivery date. In addition to basic rent due, the Company will pay the lessor supplemental rent for maintenance of aircraft equipment.

 

On September 8, 2023, the Company entered into a lease agreement for one A321F cargo aircraft. The eight-year lease term commenced on October 6, 2023. Under the agreement, the Company will pay the lessor a fixed monthly rent for 96 months, plus supplemental rent for maintenance of the aircraft.

 

On November 17, 2023, the Company signed a lease agreement for one A321 passenger aircraft and paid commitment fees to the lessor. The lease will commence upon aircraft delivery which is expected to be in 2025 and will run through 24 months from delivery date. In addition to basic rent due, the Company will pay the lessor supplemental rent for maintenance of the aircraft.

 

On November 20, 2023, the Company entered into a lease agreement for one A320 passenger aircraft. The seven-year lease term commenced on February 9, 2024. Under the agreement, the Company will pay the lessor a fixed monthly rent for 86 months, plus supplemental rent for maintenance of the aircraft.

On December 22, 2023, the Company entered into a lease agreement for one A321F cargo aircraft. The ten-year lease commenced on March 8, 2024. Under the agreement, the Company will pay the lessor a fixed monthly rent for 120 months, plus supplemental rent for maintenance of the aircraft.

 

On January 19, 2024, the Company signed a lease agreement for one A320 passenger aircraft and paid commitment fees to the lessor. The lease will commence upon aircraft delivery which is expected to be in 2024 and will run through 96 months from delivery date. In addition to basic rent due, the Company will pay the lessor supplemental rent for maintenance of the aircraft.

 

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 two aircraft extending their lease terms for an additional 60 and 15 months from original ending date of June 1, 2023, and October 1, 2023, to May 31, 2028, and December 31, 2024, respectively. In addition, on March 27, 2024 an additional extension was signed to extend aircraft lease term for an additional 74 months from previous extended ending date of December 31, 2024 to February 28, 2031. Terms of extensions were agreed solely to grant the Company the right to use the asset for the related additional time including no changes in payment rent. As such, extension was accounted as a modification of lease in accordance with ASC 842 rather than as a new contract and the Company remeasured at modification date the following: Right-of-use asset, lease liability, discount rate, lease term and classification. In addition, as of March 31, 2024, the Company signed a lease agreement to convert one of its lease passenger aircraft with lease term ending on November 1, 2024, into an Aircraft Freighter at lessor's expense. The new lease is contingent on a successful conversion from induction date of November 1, 2024, and can take up to a year. Among terms agreed includes commitment fees paid

13


 

to lessor and also no basic and supplemental rent shall be payable while the Aircraft undergoes conversion during the period commencing on the conversion induction date and ending on the conversion redelivery date. The Company expects to record a new lease on the acceptance of redelivery date, which is the date the lessee will have access to the leased asset.

 

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 March 31, 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

$

3,707

 

 

$

17,247

 

2025

 

5,122

 

 

 

22,365

 

2026

 

5,122

 

 

 

20,694

 

2027

 

5,013

 

 

 

18,776

 

2028

 

4,384

 

 

 

14,072

 

2029 and thereafter

 

8,486

 

 

 

41,053

 

Total minimum lease payments

 

31,834

 

 

 

134,207

 

Less amount representing interest

 

11,082

 

 

 

46,219

 

Present value of minimum lease payments

 

20,752

 

 

 

87,988

 

Less current portion

 

2,160

 

 

 

12,311

 

Long-term portion

$

18,592

 

 

$

75,677

 

 

 

The table below presents information for lease costs related to the Company's finance and operating leases in thousands:

 

 

For The Three Months Ended March 31,

 

 

2024

 

 

2023

 

Finance lease cost

 

 

 

 

 

Amortization of leased assets

$

330

 

 

$

114

 

Interest of lease liabilities

 

309

 

 

 

93

 

Operating lease cost

 

 

 

 

 

Operating lease cost (1)

 

2,704

 

 

 

3,217

 

Total lease cost

 

3,343

 

 

 

3,424

 

 

(1) Expenses are classified within Aircraft Rent on the Company's condensed consolidated statements of operations.

 

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. The table below presents lease terms and discount rates related to the Company's finance and operating leases:

 

 

 

March 31, 2024

 

 

March 31, 2023

 

Weighted-average remaining lease term

 

 

 

 

 

 

Operating leases

 

6.69 years

 

 

6.30 years

 

Finance leases

 

6.60 years

 

 

5.95 years

 

Weighted-average discount rate

 

 

 

 

 

 

Operating leases

 

 

13.41

%

 

 

11.63

%

Finance leases

 

 

14.61

%

 

 

12.14

%

 

The table below presents cash and non-cash activities associated with our leases:

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

Operating cash flows from operating leases

 

$

3,073

 

 

$

2,018

 

Financing cash flows from finance leases

 

 

231

 

 

 

111

 

 

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 to have an old non-solicit agreement signed by Top Flight's minority interest member to be declared invalid, that Shorts alleged

14


 

trade secrets do not exist and sought 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 is currently in the discovery phase.

 

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. LOSS PER SHARE

 

Basic earnings per share, which excludes dilution, is computed by dividing Net Income 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 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 March 31, 2024 and 2023 in thousands, except share and per share amounts:

 

 

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

Numerator:

 

 

 

 

 

 

Net loss

 

$

(6,379

)

 

$

(6,072

)

Denominator:

 

 

 

 

 

 

Weighted average common shares outstanding - Basic

 

 

59,234,601

 

 

 

54,490,925

 

Dilutive effect of stock options, RSUs and warrants

 

 

 

 

 

 

Weighted average common shares outstanding - Diluted

 

 

59,234,601

 

 

 

54,490,925

 

Basic loss per share

 

$

(0.11

)

 

$

(0.11

)

Diluted loss per share (1)

 

$

(0.11

)

 

$

(0.11

)

 

 

(1) There were 17,680,187 warrants, 313,334 options, and 5,965,022 RSUs outstanding at March 31, 2024 and there were 17,134,458 warrants, 470,668 options, and 4,463,757 RSUs outstanding at March 31, 2023. The Company excluded the warrants, options and RSUs from the calculation of diluted EPS for the years ended March 31, 2024 and 2023 as inclusion would have an anti-dilutive effect.

 

 

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 March 31, 2024 and 2023, amounts due to related parties include the following:

1.
GlobalX earned $0 and $0 during the 3 months ended on March 31, 2024 and it was owed $0 and $0, respectively, in relation to flights flown and shared TRAX services with Jetlines, respectively. GlobalX earned $0 and $ 0.1 million during the 3 months ended on March 31, 2023 and it was owed $0 and $0.1 million, respectively, in relation to flights flown and shared TRAX services with Jetlines, respectively;
2.
Jetlines earned approximately $1.2 million and $0 during 3 months ended on March 31, 2024 and 2023, respectively, and it was owed $0.4 million and $0, respectively, in relation to flights flown by Jetlines for GlobalX;

 

As described in footnote 4 above, on August 2, 2023, the Company issued Secured Notes of $35.5 million with entity of which its executive was elected Board of Directors' member of the Company during the last annual shareholders meeting in December 2023.

15


 

12. ACCRUED LIABILITIES

Accrued liabilities consisted of the following as of March 31, 2024 and December 31, 2023, in thousands.

 

 

 

 

 

 

March 31, 2024

 

 

December 31, 2023

 

  Salaries, wages and benefits

$

3,111

 

$

2,899