Global Crossing Airlines Group Inc. - Quarter Report: 2022 June (Form 10-Q)

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 June 30, 2022

[ ] 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

85-0655281

(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: 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. 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 June 30, 2022 was 52,563,938 shares, consisting of 31,559,576 shares of common stock, 5,537,313 shares of Class A Non-Voting Common Stock and 15,467,049 shares of Class B Non-Voting Common Stock.

GLOBAL CROSSING AIRLINES GROUP INC.

(FORMERLY “CANADA JETLINES LTD.”)

Form 10-Q

Period Ended June 30, 2022

Index


PART I - FINANCIAL INFORMATION

	ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		Page

		Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021	1

		Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)	2

		Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)	3

		Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (unaudited)	4

		Notes to Financial Statements (unaudited)	5

	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		13

	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		19

	ITEM 4. CONTROLS AND PROCEDURES		19

PART II - OTHER INFORMATION			20

	ITEM 6. EXHIBITS		21

SIGNATURES			22

GLOBAL CROSSING AIRLINES GROUP INC.

(FORMERLY “CANADA JETLINES LTD.”)

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2022 (Unaudited)			December 31, 2021
Current Assets
Cash and cash equivalents	$	1,520,224		$	5,241,716
Restricted cash	$	3,883,206		$	2,752,285
Accounts receivable, net of allowance	$	1,182,606		$	745,646
Prepaid expenses and other current assets	$	1,412,376		$	848,490
Total Current Assets	$	7,998,412		$	9,588,137
Property and equipment, net	$	1,379,448		$	618,883
Operating lease right-of-use assets	$	26,145,965		$	22,668,308
Deferred costs and other assets	$	8,087,573		$	6,198,338
Total Assets	$	43,611,398		$	39,073,666

Current liabilities
Accounts payable	$	4,941,522		$	3,574,186
Accrued liabilities	$	3,560,299		$	2,704,169
Deferred revenue	$	3,495,485		$	1,995,090
Customer deposits	$	2,522,552		$	1,264,502
Due from related parties	$	—		$	197,558
Current portion of notes payable	$	1,573,000		$	1,573,000
Current portion of long-term operating leases	$	5,934,802		$	3,393,497
Total current liabilities	$	22,027,660		$	14,702,002
Other liabilities
Note payable	$	3,794,887		$	—
Long-term operating leases	$	21,504,186		$	20,042,343
Other liabilities	$	83,491		$	83,491
Total other liabilities	$	25,382,564		$	20,125,834
Commitments and Contingencies
Equity (Deficit)
Common stock - $.001 par value; 200,000,000 authorized; 52,563,938 and 51,237,876 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	$	52,564		$	51,237
Additional paid-in capital	$	29,956,076		$	26,456,900
Retained deficit	$	(33,807,466	)	$	(22,262,307	)
Total stockholders’ equity (Deficit)	$	(3,798,826	)	$	4,245,830
Total Liabilities and Equity (Deficit)	$	43,611,398		$	39,073,666

See accompanying notes to condensed consolidated financial statements.

GLOBAL CROSSING AIRLINES GROUP INC.

(FORMERLY “CANADA JETLINES LTD.”)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Operating Revenue	$	17,441,980		$	—		$	33,821,992		$	—
Operating Expenses
Salaries, Wages, & Benefits		7,251,870			1,368,929			13,116,732			2,205,215
Aircraft Fuel		4,387,135			—			7,637,689			—
Maintenance, materials and repairs		964,352			526,848			2,155,175			801,346
Depreciation and amortization		79,898			4,733			103,212			8,385
Contracted ground and aviation services		3,087,023			—			6,037,266			—
Travel		830,208			24,338			2,125,530			63,322
Insurance		909,181			453,165			1,766,450			869,193
Aircraft Rent		3,834,230			894,114			7,193,904			894,114
Other		2,629,323			1,422,077			4,980,561			2,913,393
Total Operating Expenses		23,973,220			4,694,204			45,116,519			7,754,968
Operating Loss		(6,531,240	)		(4,694,204	)		(11,294,527	)		(7,754,968	)
Non-Operating Expenses (Income)
Loss (Gain) on Warrant Valuation		—			(400,196	)		—			2,650,772
Unrealized Loss (Gain) on Financial Instruments		(15	)		(18,758	)		(15	)		(155,566	)
Interest Expense		234,432			—			250,646			—
Total Non-Operating Expenses		234,417			(418,954	)		250,631			2,495,206
Loss from continuing operations		(6,765,657	)		(4,275,250	)		(11,545,158	)		(10,250,174	)
Income from Discontinued Operations		—			177,706			—			177,706
Loss before income taxes		(6,765,657	)		(4,097,544	)		(11,545,158	)		(10,072,468	)
Income tax expense		—			—			—			—
Net Loss		(6,765,657	)		(4,097,544	)		(11,545,158	)		(10,072,468	)
Loss per share:
Basic	$	(0.13	)	$	(0.09	)	$	(0.22	)	$	(0.24	)
Diluted	$	(0.13	)	$	(0.09	)	$	(0.22	)	$	(0.24	)
Weighted average number of shares outstanding		51,505,095			45,304,419			51,373,939			41,366,327
Fully diluted shares outstanding		51,505,095			45,304,419			51,373,939			41,366,327

See accompanying notes to condensed consolidated financial statements.

GLOBAL CROSSING AIRLINES GROUP INC.

(FORMERLY “CANADA JETLINES LTD.”)

STATEMENTS OF CONDENSED STOCKHOLDERS' EQUITY

(UNAUDITED)


	Common Stock Number of Shares		Amount		Common Stock Subscribed			Additional Paid in Capital			Retained Deficit			Total

Beginning – January 1, 2021		28,938,060	$	28,938	$	452,269		$	2,264,966		$	(2,443,794	)	$	302,379
Issuance of shares – private placement		8,064,517		8,064		(212,073	)		4,773,698			—			4,569,689
Issuance of shares – warrants and options exercised		1,050,740		1,051		(100,000	)		517,759			—			418,810
Issuance of shares – RSUs		40,000		40		—			(40	)		—			—
Share based compensation on stock options or RSUs		—		—		—			120,411			—			120,411
Loss for the period		—		—		—			—			(5,974,924	)		(5,974,924	)
Ending – March 31, 2021		38,093,317	$	38,093	$	140,196		$	7,676,794		$	(8,418,718	)	$	(563,635	)
Issuance of shares – private placement		7,537,313	$	7,537	$	—		$	9,992,462		$	—		$	9,999,999
Issuance of shares – warrants and options exercised		4,474,138	$	4,474	$	(140,196	)	$	3,807,067		$	—		$	3,671,345
Share based compensation on stock options or RSUs		—	$	—	$	—		$	164,574		$	—		$	164,574
GEM warrants write-off		—	$	—	$	—		$	3,475,379		$	—		$	3,475,379
Loss for the period		—	$	—	$	—		$	—		$	(4,097,544	)	$	(4,097,544	)
Ending – June 30, 2021		50,104,768	$	50,104	$	—		$	25,116,276		$	(12,516,262	)	$	12,650,118


	Common Stock Number of Shares		Amount		Common Stock Subscribed			Additional Paid in Capital			Retained Deficit			Total
Beginning – January 1, 2022		51,237,876	$	51,237	$	—		$	26,456,900		$	(22,262,307	)	$	4,245,830
Issuance of shares – warrants and options exercised		20,700		21		—			9,909			—			9,930
Warrants issued									2,130,642						2,130,642
Share based compensation on stock options or RSUs		—		—		—			382,612			—			382,612
Loss for the period		—		—		—			—			(4,779,502	)		(4,779,502	)
Ending – March 31, 2022		51,258,576	$	51,258		—		$	28,980,063		$	(27,041,809	)	$	1,989,512
Issuance of shares – warrants and options exercised		1,305,362		1,306		—			633,006			—			634,312
Share based compensation on stock options or RSUs		—		—		—			343,007			—			343,007
Loss for the period		—		—		—			—			(6,765,657	)		(6,765,657	)
Ending – June 30, 2022		52,563,938	$	52,564		—		$	29,956,076		$	(33,807,466	)	$	(3,798,826	)

See accompanying notes to condensed consolidated financial statements.

GLOBAL CROSSING AIRLINES GROUP INC.

(FORMERLY “CANADA JETLINES LTD.”)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	For the six months ended June 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations	$	(11,545,158	)	$	(10,250,174	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		103,210			8,385
Bad debt expense		51,356			—
Loss on warrant revaluation		—			2,650,772
Amortization of operating lease right of use asset		1,913,191			445,073
Share-based payments		725,619			284,985
Foreign exchange (gain) loss		4,652			(155,566	)
Changes in assets and liabilities
Accounts receivable		(488,316	)		—
Prepaid expenses and other current assets		(563,886	)		(1,200,134	)
Accounts payable		1,362,684			462,511
Accrued liabilities and other liabilities		3,614,574			(123,984	)
Operating lease obligations		(1,387,700	)		415,586
Net cash used in operating activities - continuing operations		(6,209,774	)		(7,462,546	)
Net cash provided by operating activities - discontinuing operations		—			177,706
Net cash used in operating activities		(6,209,774	)		(7,284,840	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(863,775	)		(309,513	)
Deferred costs and other assets		(1,889,235	)		(235,782	)
Net cash used in investing activities		(2,753,010	)		(545,295	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payments to related party		(197,558	)		(232,027	)
Other liabilities		—			(87,928	)
Proceeds on issuance of shares		644,242			19,224,799
Common stock subscribed		—			(452,269	)
Notes payable		5,925,529			—
Net cash provided by financing activities – continuing operations		6,372,213			18,452,575
Net cash provided by financing activities – discontinued operations		—			(31,416	)
Net cash provided by financing activities		6,372,213			18,421,159

Net increase (decrease) in cash		(2,590,571	)		10,591,024

Cash, cash equivalents and restricted cash - beginning of the period		7,994,001			548,690
Cash, cash equivalents and restricted cash - end of the period	$	5,403,430		$	11,139,714

Non-cash transactions
Right-of-use (ROU) assets acquired through operating leases	$	5,390,848			—

Cash paid for
Interest	$	15,665			19,814
Taxes	-			-

See accompanying notes to condensed consolidated financial statements.

GLOBAL CROSSING AIRLINES GROUP INC.

(FORMERLY “CANADA JETLINES LTD.”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

BASIS OF PRESENTATION AND GOING CONCERN

Global Crossing Airlines Inc. (the “Company” or “Global”) principal business activity is providing passenger aircraft to customers through aircraft operating service agreements including, crew, maintenance, insurance (“ACMI”) and charter services “Charter” serving the US, Caribbean and Latin American markets

The condensed consolidated financial statements include the accounts of the Company, and its subsidiaries, Global Crossing Airlines, Inc. and Global Crossing Airlines, 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”) and Capitol Airlines, LLC. 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, 2021, which includes additional disclosures and a summary of our significant accounting policies. The December 31, 2021, 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, 2022, the Company had a working capital deficit of $14,029,247 and a retained deficit of $33,807,466. 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 financings 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.

NEW ACCOUNTING STANDARDS

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 Company

evaluated the impact of ASU 2016-13 and determined the adoption of Topic 326 will not have a material impact on our consolidated financial statements.

In May 2021, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) 2021-04—Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2021, and interim periods with fiscal years beginning after December 15, 2021. Early adoption was permitted, including adoption in an interim period. The adoption of this pronouncement had no impact on our accompanying consolidated financial statements.

EQUITY METHOD INVESTMENTS

Investments in partnerships and less-than-majority owned subsidiaries in which the Company does not have control but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method of accounting. The equity method investments are included in the accompanying Balance Sheets with Deferred Costs and Other Assets. The Company’s share of earnings or losses from these investments is shown in the accompanying Consolidated Statements of Operations in Other Expense. Equity method investments are initially recognized at cost. The carrying amount of the equity investment is adjusted at each reporting period by the percentage of any change in its equity corresponding to the Company’s percentage interest in these equity affiliates. The carrying costs of these investments are also increased or decreased to reflect additional contributions or withdrawals of capital. Any difference in the book equity and the Company’s pro-rata share of the net assets of the investment will be reported as gain or loss at the time of the liquidation of the investment. It is the Company’s policy to record losses in excess of the investment if the Company is committed to provide financial support to the investee.

The Company’s investments in affiliates accounted for using the equity method include a 50% interest in GlobalX Ground Team, LLC (“GlobalX Ground”) and a 25% interest in Canada Jetlines Operations Ltd. (“Jetlines”).

Investment in GlobalX Ground Team, LLC:

On September 9, 2020, the Company entered into a joint venture agreement with KD Holdings, LLC (“KD Holdings”) for the purpose of providing ground handling services. Under the terms of the agreement, KD Holdings will run the day-to-day operations of the ground handling division and supply the ground equipment and Global will provide assistance and guidance to the operations. The Company accounts for the joint venture in accordance with the equity method.

As of December 31, 2021, the Company elected to write down GlobalX’s investment in the joint venture to zero. Going forward GlobalX has elected to self-perform all ground handling activities at Miami International Airport. As of June 30, 2022 and December 31, 2021, there was $28,681 and $197,558, respectively due to GlobalX Ground.

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 Global shareholders. Global retained 25% of the shares issued and outstanding of Jetlines and accounts for the investment in accordance with the equity method. During the three and six months ended June 30, 2022 Jetlines did not generate revenue.

DEBENTURES

On March 17, 2022, the Company entered into agreements (each a “Subscription Agreement”) pursuant to which the Company sold US$6.0 million of its securities (the “Financing”). The securities sold in the Financing consisted of (1) non-convertible debentures (each, a “Debenture”) and (2) one common stock purchase warrant (each, a “Warrant”) for every US$1.24 of principal of the Debentures purchased for gross proceeds of up to US $6.0 million. Each Warrant is exercisable into one share of common stock (each, a “Warrant Share”) at an exercise price of US$1.24 per Warrant Share with an exercise period of 24 months from the date of closing.

The terms of the Debentures include:

•

a maturity date of 24 months from the date of issuance (the “Maturity Date”) and the principal amount of the Debentures, together with any accrued and unpaid interest, will be payable on the Maturity Date;

•

the Debentures bear interest (the “Interest”) at the rate of 15% per annum, which Interest will be payable in cash quarterly in arrears;

•

the Company has the option to prepay the principal amount of the Debentures on 30 business days’ notice, provided that if repaid in the first year, the Company must provide a payment such that the holders of the Debentures receive at least 10% premium on the principal amount, after deducting any prior Interest payments from such premium; and

•

it is intended that repayment by the Company of amounts owing under the Debentures will be secured by a secured lien on the tangible fixed assets of the Company

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 $2.2 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 Black-Scholes option pricing model to value the warrants at issuance. The inputs selected are: underlying stock price at date of issuance of $1.04 per share, exercise price of $1.24 per share, expected term of 2 years, dividends of $0, a risk free rate of -0.6%, and volatility of 143%.

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.

SHARE CAPITAL AND ADDITIONAL PAID IN CAPITAL AUTHORIZED

On July 12, 2021, the Company completed a share capital reorganization creating a new class of shares, Class B Non-Voting Common Stock. As of June 30, 2022 and 2021, the Company had 31,559,576 and 44,567,455 common shares, 5,537,313 and 5,537,313 Class A Non-Voting Common Shares, and 15,467,049 and 0 Class B Non-Voting Shares outstanding, respectively.

WARRANTS

Following is a summary of the warrant activity during the three months ended June 30, 2022 and 2021:


	Number of Share Purchase Warrants			Weighted Average Exercise Price
Outstanding, January 1, 2021		7,507,005			0.49
Issued		8,414,517			0.99
Exercised		(1,050,740	)		0.49
Expired		-
Outstanding March 31, 2021		14,870,782			0.76
Issued		7,726,482			1.47
Exercised		(4,424,138	)		0.49
Expired		-
Outstanding June 30, 2021		18,173,126			1.03

Outstanding, January 1, 2022		17,631,350			1.05
Issued		4,838,707			1.24
Exercised		(20,700	)		0.49
Expired		-
Outstanding, March 31, 2022		22,449,357			1.09
Issued		-			-
Exercised		(1,078,470	)		0.48
Expired		(40,261	)		0.48
Outstanding, June 30, 2022		21,330,626			1.32

As of June 30, 2021, the following share purchase warrants were outstanding and exercisable:


Outstanding		Exercise Price	Remaining life (years)		Expiry Date
	3,338,806	USD$0.48		1.00	June 23, 2022
	4,910,614	USD$1.00	1.82		April 26, 2023
	203,840	USD$0.62	1.82		April 26, 2023
	2,182,553	USD$0.39	1.84		May 04, 2023
	7,537,313	USD$1.50	4.83		April 26, 2026
	18,173,126

As of June 30, 2022, the following share purchase warrants were outstanding and exercisable:


Outstanding		Exercise Price	Remaining life (years)		Expiry Date
	1,685,375	USD$0.48		0.18	September 3, 2022
	203,840	USD$0.62		0.82	April 26, 2023
	4,882,838	USD$1.00		0.82	April 26, 2023
	2,182,553	USD$0.39		0.84	May 4, 2023
	4,838,707	USD$1.24		1.75	March 28, 2024
	7,537,313	USD$1.50		3.83	April 29, 2026
	21,330,626

SHARE-BASED PAYMENTS

The maximum number of Voting Shares issuable pursuant to share-based payment arrangements, including stock options, restricted share units and performance share units, is 5,460,000.

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 June 30, 2022 and 2021:


	Number of stock options			Weighted average exercise price		Weighted average grant date fair value
Outstanding, January 1, 2021		1,387,000		$	0.25	$	0.21
Granted		—			—		—
Exercised		—			—		—
Forfeited		—			—		—
Outstanding March 31, 2021		1,387,000			0.25		0.21
Granted		—			—		—
Exercised		—			—		—
Forfeited		—			—		—
Outstanding June 30, 2021		1,387,000			0.25		0.21

Outstanding January 1, 2022		920,668			0.25		0.49
Granted		—			—		—
Exercised		—			—		—
Forfeited		(16,667	)		0.25		0.57
Outstanding, March 31, 2022		904,001		0.25		0.48
Granted		—			—		—
Exercised		(33,333	)		0.25		0.57
Forfeited		—			—		—
Outstanding, June 30, 2022		870,668		0.25		0.48

As of June 30, 2022, the following stock options were outstanding and exercisable:


Outstanding		Exercisable		Exercise Price		Remaining life (years)		Expiry Date
	150,000		150,000		0.48		1.00	June 29, 2023
	670,668		670,668		0.25		2.98	June 23, 2025
	50,000		33,333		0.62		3.24	September 23, 2025
	870,668		854,001

As of June 30, 2021, the following stock options were outstanding and exercisable:


Outstanding		Exercisable		Exercise Price		Remaining life (years)		Expiry Date
	150,000		75,000		0.48		2.25	June 29, 2023
	1,187,000		412,328		0.25		4.23	June 23, 2025
	50,000		16,666		0.62		4.48	September 23, 2025
	1,387,000		503,994

The Company recognizes share-based payments expense for all stock options granted based on the grant date fair value with the expense recognized ratably over the service period. 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 and six months ended June 30, 2022 and the year ended December 31, 2021. The following weighted average assumptions were used to estimate the weighted average grant date fair value of stock options granted upon issuance.

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 TSXV 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 counterparty 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:

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.

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.

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 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 and six months ended June 30, 2022 and 2021:


	Number of RSUs			Weighted average grant date fair value per RSU
Outstanding, January 1, 2021		685,000			0.67
Granted		352,500			1.48
Issuance of common stock		(40,000	)		0.69
Forfeited		(10,000	)		1.48
Outstanding March 31, 2021		987,500			0.67
Granted		790,000			1.99
Issuance of common stock		—			—
Forfeited		—			—
Outstanding June 30, 2021		1,777,500			1.41

Outstanding, January 1, 2022		2,067,500		$	1.16
Granted		620,000			1.37
Issuance of common stock		—			—
Forfeited		(400,000	)		1.48
Outstanding March 31, 2022		2,287,500			1.02
Granted		—			—
Issuance of common stock		—			—
Forfeited		(115,000	)		1.79
Outstanding June 30, 2022		2,172,500			1.50

During the three and six months ended June 30, 2022, the Company recognized share-based payments expense with respect to stock options and RSUs of $343,007 and $725,619, respectively. During the three and six months ended June 30,2021, the Company recognized share-based payments expense with respect to stock options and RSUs of $164,574and $284,985, respectively.

The remaining compensation that has not been recognized as of June 30, 2022 with regards to RSUs and the weighted average period they will be recognized are $1,870,008 and 1.50 years. As of June 30, 2022, all compensation expense with respect to stock options has been recognized.

INCOME TAXES

The Company’s expected effective tax rate for the three months ended June 30, 2022, and 2021 was 0%. The effective tax rate varies from the statutory rate due to the change in the valuation allowance.

COMMITMENTS AND CONTINGENCIES

The Company has contractual obligations and commitments primarily with regard to management and development services, lease arrangements and financing arrangements

On January 23, 2021, the Company entered into a premium finance agreement with a financial institution to finance a 12-month hull insurance policy for its aircrafts. The Company financed $1,345,836 of the total premium amount of $1,738,386 at a rate of 3.71% interest. The down payment of $395,000 and the first monthly installment was paid at time of signing.

On February 18, 2022, the Company entered into a lease agreement for an aircraft. The four year lease term commenced on June 15, 2022. Under the agreement, the Company will pay the lessor a fixed hourly rent for each flight hour operated during the first 12 months and a fixed monthly rent for the remaining 36 months, plus supplemental rent for maintenance of the aircraft.

The Company amended one of its existing passengers aircraft lease agreements to extend from a 24 months lease term ending on April 13, 2023 to end on November 15, 2023. In addition to this amendment, the Company entered into a definitive agreement to convert the aircraft and lease for a period of 8 years. The lease term is expected to commence after a 12 months conversion period and the Company will pay the lessor a fixed rent for month plus supplemental rent for maintenance of the aircraft.

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 or loss attributable 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 and six months ended June 30, 2022 and June 30, 2021:


	Six Months Ended June 31, 2022			Six Months Ended June 31, 2021
Numerator:
Net loss	$	(11,545,158	)	$	(10,072,468	)
Denominator:
Weighted average common shares outstanding - Basic		51,373,939			41,366,327
Dilutive effect of stock options and warrants		—			—

Weighted average common shares outstanding - Diluted		51,373,939			41,366,327

Basic loss per share	$	(0.22	)	$	(0.24	)
Diluted loss per share	$	(0.22	)	$	(0.24	)


	Three Months Ended June 31, 2022			Three Months Ended June 31, 2021
Numerator:
Net loss	$	(6,765,657	)	$	(4,097,544	)
Denominator:
Weighted average common shares outstanding - Basic		51,505,095			45,304,419
Dilutive effect of stock options and warrants		—			—

Weighted average common shares outstanding - Diluted		51,505,095			45,304,419

Basic loss per share	$	(0.13	)	$	(0.09	)
Diluted loss per share	$	(0.13	)	$	(0.09	)

There were 21,330,626 warrants, 870,668 options, and 2,172,500 RSUs outstanding at June 30, 2022 and 18,173,126 warrants, 1,387,000 options and 1,777,500 RSUs outstanding at June 30, 2021 that were excluded from the calculation of diluted EPS. The Company excluded the warrants, options and RSUs from the calculation of diluted EPS for the three and six months ended June 30, 2022 and 2021as 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 of June 30, 2022, amounts due to related parties include the following:

GlobalX Ground was owed $28,681 in relation to ground services provided at Miami-Dade Airport.

Other Related Party Transactions and Balances

The amounts due to related parties are unsecured, non-interest bearing and have no stated terms of repayment.

Smartlynx Airlines Malta Limited is an entity whose Chief Executive Officer is a Board Member of Global. During the year ending December 31, 2020, Global made advanced payments totaling $500,000 to Smartlynx. $350,000 of those payments related to two security deposits. One is a $250,000 security deposit for one passenger aircraft to deliver 200 hours of ACMI services per month and the second is a $100,000 security deposit for a long long-term lease of an A321F aircraft. Total deposits and prepaid expense related to Smartlynx totaled $500,000 as of June 30, 2022 and December 31, 2021, are included in other assets on the consolidated balance sheets.

12.

SUBSEQUENT EVENTS

On July 6, 2022, the Company announced that American Corporate Airport Partners has inked a long-term ground lease with Broward County to construct a widebody-capable, aircraft maintenance facility for GlobalX at Broward County’s Fort Lauderdale-Hollywood International Airport. The estimated $25 million, 10-acre maintenance complex at a mid-field site on SW 41st Ct. is expected to consist of a 54,000 sf hangar; an aircraft ramp for staging and maneuvering; technical shops and office space; environmentally friendly building systems; and automobile parking, all in a build-to-suit layout exclusively for GlobalX,

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read together with the accompanying unaudited condensed consolidated financial statements and related notes in this report and the audited financial statements included in the Company’s Annual Report for December 31, 2021 on Form 10-K. 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. Factors which could cause actual results to differ materially are discussed throughout this report and include, but are not limited to, those set forth at the end of this Item 2 under the heading "Cautionary Statement Regarding Forward Looking Statements." Additional factors are under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Business Overview

Global Crossing Airlines Group Inc. (“GlobalX” or the “Company”) operates a US Part 121 flag and charter airline using the Airbus A320 family of 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 within the United States, Europe, Canada, Central and South America. GlobalX also plans to operate the Airbus A321 freighter (“A321F”) commencing in the fourth quarter of 2022 after completing all FAA certification requirements with the A321F.

Focused on becoming a market leader with differentiated, value-creating solutions

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/our operators to provide aircraft during their peak seasons; and provide ad-hoc and track charter programs for non-airline customers, including hotels, casinos, cruise ship companies, tour operators.

Launch cargo charter flights with A321P2F (Passenger to Freighter)

GlobalX plans to add A321F (passenger to freighter) aircraft to its operating certificate and into the fleet commencing Q4 2022, and cargo will be an integral part of the GlobalX business. GlobalX intends to operate its A321Fs under ACMI charter operations with major package operators and major freight and logistics companies. Under these arrangements, customarily, these operators will take the commercial risk associated with the selling of the cargo and provide all ground handling and cargo-specific operations, with GlobalX assuming the operational risk of providing a functional aircraft, trained crew, in a safe and on time manner as the ACMI operator.

Location of Operations Bases

GlobalX operates from four primary geographic bases:

•

Miami International Airport (“MIA”) – GlobalX’s main base of operations is MIA, and, pursuant to its Airline Use Agreement with MIA, GlobalX (1) operates charter flights out of Concourse E, and rents office space and operates its ticket counters, and (2) maintains a maintenance office for its maintenance staff and for storage of all aircraft records, as well as spare parts and consumables storage, with loading dock capabilities. While we do have an Airline Use Agreement in place with MIA, it does not guarantee availability of boarding gates or landing slots at that airport.

•

Atlantic City Airport (“ACY”) – GlobalX has a northeastern U.S. base at Atlantic City Airport, New Jersey, and intends to eventually base two A320 aircraft there. ACY has below-market aircraft landing fees and aircraft parking fees, and because of its location further east and on the water, does not experience the full effect of northeastern winter storms, remaining relatively free of snow and ice in the winter. ACY serves as an excellent location to base aircraft, will be used both for charters into Atlantic City on behalf of its major casinos, and to efficiently move aircraft for ad hoc and last-minute charters from other northeastern airports, including New York – JFK, New York – LaGuardia, Newark, Boston and Philadelphia.

•

Las Vegas Airport (“LAS”) – GlobalX has established a flight attendant base at Las Vegas Airport and intends to eventually base two A320 aircraft there. LAS is a geographically convenient location to support western United States based clients and an excellent market for recruiting top staff.

•

San Antonio Airport (“SAT”) – GlobalX has established an operational base at SAT for maintenance, flight attendants and pilots. GlobalX intends to base up six A320 family of aircraft there to support signed government contracts.

Reducing Operational Costs

To control costs and maintain a competitive cost per Block Hour flown, GlobalX:

•

Flies only one aircraft family (A320).

•

Maintains focus on continuous financial discipline and strict departmental budgeting.

•

Has implemented and utilizes highly digital operating methods for both flight and maintenance operations, using best in class aviation software operating systems from leading suppliers including dispatch (Navblue), maintenance (Trax) and training software (Mint). By capitalizing on the latest software, GlobalX can effectively eliminate most manual processes and operate effectively with fewer people than a comparably-sized airline using older software systems.

•

Promotes organizational culture of efficiency and high productivity.

Marketing Plan

GlobalX plans to achieve its revenue goals by flying charter operations for a variety of client groups:

•

Scheduled airlines that have short-term or long-term capacity needs to supplement their existing routes or fleets.

•

Major tour operators, resorts, cruise lines and casinos that require airlift above and beyond scheduled service to meet their occupancy needs.

•

Professional and collegiate sports teams

•

Charter brokers representing a variety of interests, including the entertainment industry, dignitary travel, political campaigns, and government programs.

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 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 be sourced out 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

We expect the existing charter operators based in the U.S. to respond to GlobalX’s entry into the market by lowering their pricing to customers. The expected competitive response typically includes lowered ACMI rates for key contracts. We believe GlobalX’s existing relationships with potential customers and the underserved demand in the U.S., coupled with our newer planes allowing for a more cost-efficient operation, will allow us to address any competitive pressure and grow as anticipated.

GlobalX Charter Service

GlobalX is a charter provider that currently focuses exclusively on providing customized, non-scheduled passenger air transport services with narrow-body Airbus A320 and A321 aircraft. We expect our primary line of business and focus to be commercial charter services from MIA to destinations throughout North and South America and the Caribbean, with established scheduled airlines that need additional air lift to supplement their own, and established tour and travel operators that sell tour packages in and between these markets.

We provide our services through two contract structures: (1) ACMI and (2) Charter

We believe operating charter flights will largely insulate our expected profitability from fluctuations in jet fuel prices, which are typically the largest and most volatile expense for an air carrier. Under the vast majority of our commercial passenger charter arrangements, our customers bear 100% of the cost of jet fuel. In addition, consistent with industry practice, we plan for those customers to pay us our contract price approximately two weeks in advance of their flights.

Because we expect that our ACMI customers would be responsible for fuel costs, our expected commercial ACMI revenues would not be affected directly by fuel price changes. However, a significant increase in fuel prices would likely have an adverse effect on demand for the use of our aircraft, which could have a material adverse effect on our profitability and financial position.

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 Republic Airways, Eastern Airlines, JetBlue Airways, Virgin America, Hawaiian Airlines, American Airlines, US Airways, Atlas Air, Breeze Airways, Emirates, North American Airlines, Miami Air, AAR, Continental Airlines, Pan Am, Atlantic Coast Airlines, and Flair Airlines, as well as the United States Army, and Air Force. In addition, our management team has a diversity of experience from other industries at companies such as KBR, Teladoc, The Home Depot, Halliburton, Lehman Brothers, and the Burger King Corporation.

Business Strategy

GlobalX seeks to become the best-in-class U.S. narrow-body, ACMI and Full Contract charter airline, operating both passenger and cargo charter aircraft while recruiting and maintaining a dynamic team of customer-centric flight crews, ground teams and management staff.

In launching a US 121 Flag and Supplemental charter airline in the United States, GlobalX has done, or plans to do, the following:

Launch passenger charter flights with A320/A321 all passenger aircraft

GlobalX operates its A320 family aircraft under ACMI/Full Contract charter operations for major airlines, tour operators, college and professional sports teams, incentive groups, major resorts and casino groups.

•

Deliver best in class on time performance and dispatch reliability;

•

Expand existing relationships and develop additional relationships with leading European charter/ our operators to provide aircraft during their peak seasons; and

•

Provide ad-hoc and track charter programs for non-airline customers, including hotels, casinos, cruise ship companies, tour operators.

Launch cargo charter flights with A321P2F (Passenger to Freighter)

GlobalX plans to add A321F (passenger to freighter) aircraft to its operating certificate and into the fleet commencing Q4 2022. Cargo is an important revenue stream for airlines and will be an integral part of the GlobalX operation.

GlobalX intends to operate its A321Fs under ACMI/Wet Lease charter operations with major package operators and major freight and logistics companies. Under these arrangements, customarily, these operators will take the commercial risk associated with the selling of the cargo capacity and provide all ground handling and cargo-specific operations, with GlobalX assuming the operational risk of providing a functional aircraft, trained crew, in a safe and on time manner as the ACMI operator.

Business Developments

Our results for the six months ended June 30, 2022, were impacted by the following:

•

Increased demand driven by a growing reputation for performance and quality service

•

Availability of trained pilots. Many airlines are struggling with the hiring and training of new pilots and GlobalX is not immune to this market condition. Our rapid growth rate requires the hiring and training of many pilots. While we have been very successful in attracting excellent candidates, we have had to turn down significant amounts of potential work due to crew availability. This continues to be an area of focus for GlobalX and we are confident in our ability to hire and train the required crews to meet our growth targets.

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.

Three months and six months ended June 30, 2022 and 2021

Operating Statistics

The following table compares our Operating Fleet (average aircraft equivalents during the period) and total Block Hours operated:

Fleet & Block Hours


	Three Months Ended June 30,
Operating Fleet	2022		2021		Inc/(Dec)
A320		6		1		5
A321		1		1		—
Total Operating Average Aircraft Equivalents		7		2		5
Total Block Hours		2,132		—		2,132

	Six Months Ended June 30,
Operating Fleet	2022		2021		Inc/(Dec)
A320		6		1		5
A321		1		1		—
Total Operating Average Aircraft Equivalents		7		2		5
Total Block Hours		3,811		—		3,811

Block Hours for the three months ended June 30, 2022 increased by 2,132 compared with the same period in 2021, as a direct result of the initiation of revenue service.

Block Hours for the six months ended June 30, 2022 increased by 3,811 compared with the same period in 2021, as a direct result of the initiation of revenue service.

Operating Revenue

The following table compares our Operating Revenue (in dollars):


	Three Months Ended June 30,
	2022		2021		Inc/(Dec)		% Change
Operating Revenue	$	17,441,980	$	—	$	17,441,980	N/A

	Six Months Ended June 30,
	2022		2021		Inc/(Dec)		% Change
Operating Revenue	$	33,821,992	$	—	$	33,821,992	N/A

Operating revenue for the three months ended June 30, 2022 increased by $17.4 million compared with the same period in 2021, as a direct result of the initiation of revenue service.

Operating revenue for the six months ended June 30, 2022 increased by $33.8 million compared with the same period in 2021, as a direct result of the initiation of revenue service.

Operating Expenses

The following table compares our Operating Expenses (in dollars):


	Three Months Ended June 30,
Operating Expenses	2022		2021		Inc/(Dec)		% Change
Salaries, Wages, & Benefits		7,251,870		1,368,929	$	5,882,941		429.7	%
Aircraft Fuel		4,387,135		—		4,387,135	N/A
Maintenance, materials and repairs		964,352		526,848		437,504		83.0	%
Depreciation and amortization		79,898		4,733		75,165		1588.1	%
Contracted ground and aviation services		3,087,023		—		3,087,023	N/A
Travel		830,208		24,338		805,870		3311.2	%
Insurance		909,181		453,165		456,016		100.6	%
Aircraft Rent		3,834,230		894,114		2,940,116		328.8	%
Other		2,629,323		1,422,077		1,207,246		84.9	%
Total Operating Expenses	$	23,973,220	$	4,694,204	$	19,279,016		410.7	%

	Six Months Ended June 30,
Operating Expenses	2022		2021		Inc/(Dec)		% Change
Salaries, Wages, & Benefits		13,116,732		2,205,215	$	10,911,517		494.8	%
Aircraft Fuel		7,637,689		—		7,637,689	N/A
Maintenance, materials and repairs		2,155,175		801,346		1,353,829		168.9	%
Depreciation and amortization		103,212		8,385		94,827		1130.9	%
Contracted ground and aviation services		6,037,266		—		6,037,266	N/A
Travel		2,125,530		63,322		2,062,208		3256.7	%
Insurance		1,766,450		869,193		897,257		103.2	%
Aircraft Rent		7,193,904		894,114		6,299,790		704.6	%
Other		4,980,561		2,913,393		2,067,168		71.0	%
Total Operating Expenses	$	45,116,519	$	7,754,968	$	37,361,551		481.8	%

Total operating expenses for the three months ended June 30, 2022 increased by $19.3 million, or 410.7% compared with the same period in 2021, as a direct result of the initiation of revenue service.

Total operating expenses for the six months ended June 30, 2022 increased by $37.4 million, or 481.8% compared with the same period in 2021, as a direct result of the initiation of revenue service. The increase in salaries, wages and benefits is primarily due to the hiring and training of pilots and other airline personnel. The increase in aircraft fuel and rent was primarily driven by the addition of aircraft to our existing fleet as well as increased block hours. The increase in maintenance, materials and repairs was driven by our initiation of revenue service. Depreciation and amortization also increased significantly as a result of our initiation of revenue service and assets acquired to support our FAA certification.

Non-operating Expenses (Income)

The following table compares our Non-operating Expenses (Income) (in thousands):


	Three Months Ended June 30
Non-Operating Expenses (Income)	2022			2021			Inc/(Dec)			% Change
Loss on Warrant Valuation		—			(400,196	)	$	400,196			(100.0	)%
Unrealized Loss (Gain) on Financial Instruments		(15	)		(18,758	)		18,743			(99.9	)%
Interest Expense		234,432			—			234,432		N/A
Total Non-Operating Expenses (Income)	$	234,417		$	(418,954	)	$	653,371			(156.0	)%

	Six Months Ended June 30
Non-Operating Expenses (Income)	2022			2021			Inc/(Dec)			% Change
Loss on Warrant Valuation		—			2,650,772		$	(2,650,772	)		(100.0	)%
Unrealized Loss (Gain) on Financial Instruments		(15	)		(155,566	)		155,551			(100.0	)%
Interest Expense		250,646			—			250,646		N/A
Total Non-Operating Expenses (Income)	$	250,631		$	2,495,206		$	(2,244,575	)		(90.0	)%

Non-operating income for the three months ended June 30, 2022 decreased by $653.4 thousand, or 156% compared with the same period in 2021, primarily driven by reclassification of warrants during 2021 from a liability to equity. Our expected effective income tax rate was a benefit rate of 0%.

Non-operating expenses for the six months ended June 30, 2022 decreased by $2.2 million, or 90% compared with the same period in 2021, primarily driven by reclassification of warrants during 2021 from a liability to equity as well as an increase in net interest expense due to the notes payable. Our expected effective income tax rate was a benefit rate of 0%.

Liquidity and Capital Resources

The most significant liquidity events for the six months ended June 30, 2022 and 2021 were as follows:

Operating Activities. For the six months ended June 30, 2022, net cash used by operating activities decreased by $ 1.1 million to $ 6.2 million, which primarily reflected Net loss of $11.5 million, partially offset by an increase in accounts payable of $1.4 million, an increase in accrued liabilities and other liabilities of $3.6 million. The Net Loss was also offset by noncash adjustments of $103.2 thousand for depreciation expense, $725.6 thousand for share-based payments. For the six months ended June 30, 2021, Net cash used for operating activities was $7.3 million, which primarily reflected the lack of an airline operating certificate and revenue as well as treatment of warrants as a liability.

Investing Activities. For the six months ended June 30, 2022, net cash used for investing activities increased by $2.2 million, to $2.8 million, consisting primarily of $1.9 million related to Deferred costs and other assets, mainly due to new deposits to aircrafts and $864 thousand related to purchases of property and equipment. For the six months ended June 30, 2021, Net cash used for investing activities was $545.3 thousand, consisting primarily of $235.8 thousand related to Deferred costs and other assets and $309.5 thousand related to purchases of property and equipment.

Financing Activities. For the six months ended June 30, 2022, net cash provided by financing activities decreased by $12 million to $6.4 million, which primarily reflected decrease in proceeds on issuance of shared of $18.6 million partially offset by increase of $5.9 million related to notes payable. For 2021, Net cash provided by financing activities was $18.4 million, which primarily reflected $19.2 million in proceeds from issuances of shares units, partially offset by $232 thousand for payments to related parties, $87.9 thousand for other liabilities and $452.3 thousand for common stock subscribed.

We may access external sources of capital from time to time depending on our cash requirements, assessments 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. Additionally, our borrowing costs are affected by market conditions and may be adversely impacted by a tightening in credit markets.

We do not expect to pay any significant U.S. federal income tax in 2022.

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4 – Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and 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 Chief Executive Officer and the 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 December 31, 2021. Our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2021, the Company’s disclosure controls and procedures were effective.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during fiscal quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1 Legal Proceedings

Current Proceedings

On October 1, 2021, GEM Yield Bahamas Limited (“GEM”) commenced an action in the Supreme Court of the State of New York, County Of New York against the Company (the “GEM Litigation”). GEM claims the Company breached a May 4, 2020 promissory note (the “Note”) pursuant to which the Company agreed to make certain payments to GEM in an aggregate amount of CDN $2,000,000 (the “Fee”) in consideration for GEM and GEM Global Yield LLC SCS (collectively the “GEM Parties”) entering into a share subscription agreement (the “SSA”) providing for the GEM Parties to purchase up to CDN$100,000,000 worth of common shares in the Company upon the occurrence of certain events. GEM claims that the Company failed to pay the first installment of the Fee on May 4, 2021 as due and that the full CDN$2,000,000 of the Fee is accelerated and due now.

The Company claims that the GEM Parties breached the SSA by, among other things, selling the Company’s common shares when prohibited from doing so pursuant to the SSA, as part of a stock manipulation scheme, and that such breach excuses the Company from paying the Fee. The Company is opposing the relief GEM seeks and cross-moving to stay the GEM Litigation on several bases including that (i) the parties agreed to arbitrate any dispute, (ii) GEM’s suit is procedurally improper, and (iii) the GEM Parties’ breach of the SSA excuses the Company from paying the Fee. The Company’s opposition papers were filed on November 19, 2021, at which point GEM had an opportunity to file reply papers. Given the backlog of cases at the court due to COVID and other factors, the Company has not heard from or estimate when the court will rule on the parties’ respective filings.

ITEM 1A Risk Factors

There have been no material changes in our risk factors from those disclosed in “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

Except as previously reported on our Current Reports on Form 8-K, we had no unregistered sales of equity securities during the period from January 1 2022 to June 30, 2022

ITEM 3 Defaults Upon Senior Securities

None.

ITEM 4 Mine Safety Disclosures

Not Applicable

ITEM 5 Other Information

None.

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*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

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/ Edward Wegel	CEO	August 15, 2022
Edward Wegel

/s/ Ryan Goepel	CFO	August 15, 2022
Ryan Goepel

/s/ Alan Bird	Director	August 15, 2022
Alan Bird

/s/ T. Allan McArtor	Director	August 15, 2022
T. Allan McArtor

/s/ David G. Ross	Director	August 15, 2022
David G. Ross

/s/ Deborah Robinson	Director	August 15, 2022
Deborah Robinson

/s/ Cordia Harrington	Director	August 15, 2022
Cordia Harrington