Global Crossing Airlines Group Inc. - Quarter Report: 2023 September (Form 10-Q)

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 September 30, 2023

[ ] 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: 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 November 3, 2023 was 57,837,685 shares, consisting of 39,332,164 shares of common stock, 5,537,313 shares of Class A Non-Voting Common Stock and 12,968,208 shares of Class B Non-Voting Common Stock.

GLOBAL CROSSING AIRLINES GROUP INC.

Form 10-Q

Period Ended September 30, 2023

Index


PART I - FINANCIAL INFORMATION

	ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		Page

		Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022	1

		Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	2

		Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	3

		Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited)	4

		Notes to Financial Statements (unaudited)	5

	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		18

	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		28

	ITEM 4. CONTROLS AND PROCEDURES		28

PART II - OTHER INFORMATION			30

	ITEM 6. EXHIBITS		31

SIGNATURES			32

GLOBAL CROSSING AIRLINES GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30, 2023			December 31, 2022
	(Unaudited)
Current Assets
Cash and cash equivalents	$	13,038,883		$	1,875,673
Restricted cash		4,260,512			3,585,261
Accounts receivable, net of allowance		7,448,582			2,664,174
Prepaid expenses and other current assets		3,410,379			2,193,449
Current assets held for sale		453,225			1,405,741
Total Current Assets	$	28,611,581		$	11,724,298
Property and equipment, net		4,019,775			2,441,288
Finance leases, net		4,023,475			2,710,899
Operating lease right-of-use assets		59,573,956			27,952,609
Deposits and other assets		11,508,169			6,334,878
Total Assets	$	107,736,956		$	51,163,973

Current liabilities
Accounts payable	$	8,690,966		$	4,997,080
Accrued liabilities		13,624,205			9,458,629
Deferred revenue		4,372,808			3,200,664
Customer deposits		4,896,921			1,617,337
Current portion of notes payable		397,168			1,810,468
Current portion of long-term operating leases		10,072,203			6,445,915
Current portion of finance leases		556,850			335,527
Total current liabilities	$	42,611,121		$	27,865,621
Other liabilities
Note payable	$	28,809,229		$	5,081,294
Long-term operating leases		51,425,511			23,189,835
Other liabilities		3,482,699			2,282,892
Total other liabilities	$	83,717,439		$	30,554,020
Commitments and Contingencies
Equity (Deficit)
Common stock - $.001 par value; 200,000,000 authorized; 57,837,685 and 53,440,482 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	$	57,838		$	53,440
Additional paid-in capital		37,871,262			30,774,197
Retained deficit		(56,509,675	)		(38,083,304	)
Total Company's stockholders’ deficit	$	(18,580,575	)	$	(7,255,667	)
Noncontrolling interest		(11,029	)		-
Total stockholders’ deficit		(18,591,604	)		(7,255,667	)
Total Liabilities and Deficit	$	107,736,956		$	51,163,973

See accompanying notes to condensed consolidated financial statements.

GLOBAL CROSSING AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended			Three Months Ended		Nine Months Ended			Nine Months Ended
	September 30, 2023			September 30, 2022		September 30, 2023			September 30, 2022

Operating Revenue	$	42,576,899		$	30,790,240	$	106,202,529		$	64,612,231

Operating Expenses
Salaries, Wages, & Benefits		15,040,396			7,712,688		38,263,674			20,829,632
Aircraft Fuel		5,742,979			7,764,761		19,779,420			15,402,450
Maintenance, materials and repairs		2,982,627			1,218,221		6,308,208			3,373,396
Depreciation and amortization		565,571			193,620		1,451,726			296,830
Contracted ground and aviation services		4,695,291			4,631,741		14,749,228			10,674,340
Travel		1,554,446			1,078,854		5,155,258			3,204,172
Insurance		1,218,818			947,342		3,588,934			2,713,791
Aircraft Rent		9,400,014			3,957,508		21,874,401			11,151,412
Other		3,706,751			2,489,530		9,668,124			7,464,756
Total Operating Expenses	$	44,906,893		$	29,994,265	$	120,838,973		$	75,110,779
Operating Income/(Loss)		(2,329,994	)		795,975		(14,636,444	)		(10,498,548	)

Non-Operating Expenses (Income)
Interest Expense (Income)		2,564,680			632,344		3,800,956			882,975
Total Non-Operating Expenses	$	2,564,680		$	632,344	$	3,800,956		$	882,975
Income (Loss) before income taxes		(4,894,674	)		163,631		(18,437,400	)		(11,381,523	)
Income tax expense		—			—		—			—
Net Income (Loss)	$	(4,894,674	)	$	163,631	$	(18,437,400	)	$	(11,381,523	)
Net Loss attributable to Noncontrolling Interest	$	(11,029	)	$	-	$	(11,029	)	$	-
Net Income (Loss) attributable to the Company	$	(4,883,645	)	$	163,631	$	(18,426,371	)	$	(11,381,523	)
Loss per share:
Basic	$	(0.08	)	$	0.00	$	(0.33	)	$	(0.22	)
Diluted	$	(0.08	)	$	0.00	$	(0.33	)	$	(0.22	)
Weighted average number of shares outstanding		57,497,385			52,569,481		56,292,992			51,776,833
Fully diluted shares outstanding		57,497,385			76,507,900		56,292,992			51,776,833

See accompanying notes to condensed consolidated financial statements.

GLOBAL CROSSING AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(UNAUDITED)


	Common Stock Number of Shares		Amount		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	)
Issuance of shares – warrants and options exercised		10,000		10		—		—			10
Share based compensation on stock options or RSUs		—		—		69,715		—			69,715
Income (Loss) for the period		—		—		—		163,631			163,631
Ending – September 30, 2022		52,573,938	$	52,574	$	30,025,791	$	(33,643,835	)	$	(3,565,470	)

	Global Stockholders' Equity (Deficit)
	Common Stock Number of Shares		Amount		Additional Paid in Capital		Retained Deficit			Total			Noncontrolling Interest			Total
Beginning – January 1, 2023		53,440,482	$	53,440	$	30,774,197	$	(38,083,304	)	$	(7,255,667	)	$	—		$	(7,255,667	)
Issuance of shares – options exercised		150,000		150		67,106		—			67,256			—			67,256
Issuance of shares - warrants exercised		2,499,453		2,499		1,133,802		—			1,136,301			—			1,136,301
Issuance of shares - share based compensation on RSUs		208,416		208		500,421		—			500,629			—			500,629
Loss for the period		—		—		—		(6,071,704	)		(6,071,704	)		—			(6,071,704	)
Ending – March 31, 2023		56,298,351	$	56,297	$	32,475,526	$	(44,155,008	)	$	(11,623,185	)	$	—		$	(11,623,185	)
Issuance of shares - warrants exercised		227,630		228		221,434		—			221,662			—			221,662
Issuance of shares - share based compensation on RSUs		481,593		482		577,580		—			578,062			—			578,062
Issuance of shares - ESPP		300,121		301		198,680		—			198,981			—			198,981
Loss for the period		—		—		—		(7,471,022	)		(7,471,022	)		—			(7,471,022	)
Ending – June 30, 2023		57,307,695	$	57,308	$	33,473,220	$	(51,626,030	)	$	(18,095,502	)	$	—		$	(18,095,502	)
Issuance of shares - share based compensation on RSUs		529,990		530		568,527		—			569,057			—			569,057
Loss for the period		—		—		—		(4,883,645	)		(4,883,645	)		(11,029	)		(4,894,674	)
Warrants issued		—		—		3,829,515		—			3,829,515			—			3,829,515
Ending – September 30, 2023	$	57,837,685	$	57,838	$	37,871,262	$	(56,509,675	)	$	(18,580,575	)	$	(11,029	)	$	(18,591,604	)

See accompanying notes to condensed consolidated financial statements.

GLOBAL CROSSING AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	For The Nine Months Ended September 30,
	2023			2022

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(18,437,400	)	$	(11,381,523	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1,451,726			296,830
Bad debt expense		5,915			94,893
Gain on sale and disposal of spare parts		(183,938	)	—
Amortization of debt issue costs		1,164,472			389,301
Amortization of operating lease right of use assets		5,933,502			3,381,624
Share-based payments		1,677,594			795,334
Foreign exchange loss		1,200			3,753
Loss on sale of property		135,772		—
Interest on finance leases		309,337		—
Changes in assets and liabilities
Accounts receivable		(4,886,060	)		(803,231	)
Assets held for sale		952,516		—
Prepaid expenses and other current assets		(1,180,611	)		(1,321,588	)
Accounts payable		3,610,551			3,095,518
Accrued liabilities and other liabilities		8,586,891			6,248,347
Operating lease obligations		(6,181,225	)		(2,559,147	)
Other liabilities		283,622		—
Net cash used in operating activities	$	(6,756,136	)	$	(1,759,889	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(2,082,226	)		(1,124,712	)
Deposits, deferred costs and other assets		(5,697,724	)		(3,350,867	)
Net cash used in investing activities	$	(7,779,950	)	$	(4,475,579	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payments to related party	—				(197,558	)
Principal payments on finance leases		(343,374	)		(321,140	)
Proceeds on issuance of shares		1,594,353			644,251
Repayment of notes payables		(6,986,079	)	—
Proceeds from notes payables		32,109,647			5,925,529
Net cash provided by financing activities	$	26,374,547		$	6,051,082

Net increase (decrease) in cash, cash equivalents and restricted cash		11,838,461			(184,386	)

Cash, cash equivalents and restricted cash - beginning of the period		5,460,934			7,994,001
Cash, cash equivalents and restricted cash - end of the period	$	17,299,395		$	7,809,615

Non-cash transactions
Right-of-use (ROU) assets acquired through operating leases	$	37,554,848		$	5,390,848
Warrants issued with debt	$	3,829,517		$	2,130,642
Equipment acquired through finance leases	$	1,680,470		$	2,815,432
Note Payable reductions through accounts receivable from sale of Assets held for sale	$	145,089		—

Cash paid for

Interest	$	928,205		$	285,684
Taxes	-			-

See accompanying notes to condensed consolidated financial statements.

GLOBAL CROSSING AIRLINES GROUP INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

BASIS OF PRESENTATION AND GOING CONCERN

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

The condensed consolidated financial statements include the accounts of the Company, and its subsidiaries, Global Crossing Airlines, Inc. and Global Crossing Airlines Operations, LLC (collectively “Global USA”), 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. 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 years ended December 31, 2022 and 2021 and Form 10-K/A Amendment No.1 for the year ended December 31, 2022, which includes additional disclosures and a summary of our significant accounting policies. The December 31, 2022, balance sheet data was derived from that Annual Report and may not include disclosures required for presentation in conformity with U.S. GAAP. In our opinion, these Financial Statements include all adjustments, consisting of normal recurring items, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows.

Our quarterly results are subject to seasonal and other fluctuations 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 September 30, 2023, the Company had a working capital deficit of $13,999,540 and a retained deficit of $56,509,675. 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.

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 adoption of ASU 2016-13 had no impact on our consolidated financial statements.

INVESTMENTS

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. As of September 30, 2023, the Company holds approximately 12% ownership in Jetlines. Jetlines did not generate net income during the year ended on December 31, 2022 and the nine months period ended on September 30, 2023.

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 we adjust the net income in our consolidated statement of operations to exclude the noncontrolling interests' proportionate share of results. We present the proportionate share of equity attributable to noncontrolling interests as equity within our consolidated balance sheet. Top Flight had approximately $24 thousand and $78 thousand in revenue and expenses, respectively, during the period from inception to September 30, 2023.

DEBT

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;

•

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.

•

financial covenants requirements as follows:

minimum adjusted EBITDA of (i) $5,000,000 for the fiscal year ended December 31, 2023, (ii) $15,000,000 for the fiscal year ended December 31, 2024 and (iii) $25,000,000 for the fiscal year ended December 31, 2025;

minimum liquidity of $5,000,000 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 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 September 30, 2023, the Company received $2.5 million from the loan and this balance was paid off in connection with the new $35.0 million secured notes closed on August 2, 2023.

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.

On March 17, 2022, the Company entered into agreements (each a “Subscription Agreement”) pursuant to which the Company sold $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 $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. 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.

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 $2.1 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.

As of September 30, 2023, Current Portion of Notes Payable includes the outstanding balance of $397,168 ($550,000 CAD), in connection with the payment plan agreed by Global Crossing Airlines and GEM for the $2,000,000 CAD final settlement.

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 September 30, 2023 and December 31, 2022, the Company had 39,327,664 and 32,668,320 common shares, 5,537,313 and 5,537,313 Class A Non-Voting Common Shares, and 12,972,708 and 15,234,849 Class B Non-Voting Shares outstanding, respectively.

WARRANTS

Following is a summary of the warrant activity during the three and nine months periods ended September 30, 2023 and 2022:


	Number of Share Purchase Warrants			Weighted Average Exercise Price
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
Issued		-			-
Exercised		-			-
Expired		(1,685,375	)		0.48
Outstanding, September 30, 2022		19,645,251			1.27

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
Issued		-			-
Exercised		(227,630	)		0.97
Expired		(4,530,808	)		0.99
Outstanding, June 30, 2023		12,376,020			1.40
Issued		10,000,000			1.00
Exercised		-			-
Expired		-			-
Outstanding, September 30, 2023		22,376,020			1.22

As of September 30, 2022, the following common stock share purchase warrants were outstanding and exercisable:


Outstanding		Exercise Price	Remaining life (years)	Expiry Date
	203,840	USD$0.62	0.57	April 26, 2023
	4,882,838	USD$1.00	0.57	April 26, 2023
	2,182,553	USD$0.39	0.59	May 4, 2023
	4,838,707	USD$1.24	1.49	March 28, 2024
	7,537,313	USD$1.50	3.58	April 29, 2026
	19,645,251

As of September 30, 2023, the following common stock share purchase warrants were outstanding and exercisable:


Outstanding		Exercise Price	Remaining life (years)	Expiry Date
	4,838,707	USD$1.24	0.75	March 28, 2024
	7,537,313	USD$1.50	2.83	April 29, 2026
	10,000,000	USD$1.00	6.75	June 30, 2030
	22,376,020

SHARE-BASED PAYMENTS

The maximum number of shares of common stock ("Voting Shares") 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 and nine months periods ended September 30, 2023 and 2022:


	Number of stock options			Weighted average exercise price		Weighted average grant date fair value
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
Granted		—			—		—
Exercised		—			—		—
Forfeited		—			—		—
Outstanding, September 30, 2022		870,668		0.25		0.48

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
Granted		—			—		—
Exercised		—			—		—
Forfeited		—			—		—
Outstanding, June 30, 2023		470,668		0.25			0.54
Granted		—			—		—
Exercised		—			—		—
Forfeited		—			—		—
Outstanding, September 30, 2023		470,668		0.25			0.54

As of September 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 September 30, 2023, the following stock options were outstanding and exercisable:


Outstanding		Exercisable		Exercise Price		Remaining life (years)		Expiry Date
	420,668		420,668	$	0.25		1.98	June 23, 2025
	50,000		50,000	$	0.62		2.24	September 23, 2025
	470,668		470,668

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 nine months ended September 30, 2023 and 2022.

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 exchange 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:

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 nine months period ended September 30, 2023 and 2022:


	Number of RSUs			Weighted average grant date fair value per RSU
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		$	1.47
Granted		1,570,000			0.63
Issuance of common stock		(10,000	)		0.69
Forfeited		(310,000	)		0.75
Outstanding September 30, 2022		3,422,500		$	1.16

Outstanding, January 1, 2023		3,305,837		$	1.14
Granted		1,687,777			0.97
Issuance of common stock		(400,542	)		1.04
Forfeited		(129,315	)		0.96
Outstanding March 31, 2023		4,463,757			1.10
Granted		1,155,000			0.97
Issuance of common stock		(467,500	)		0.91
Forfeited		(378,334	)		1.01
Outstanding June 30, 2023		4,772,923			1.01
Granted		798,500			0.87
Issuance of common stock		(324,157	)		0.87
Forfeited		(173,334	)		0.74
Outstanding September 30, 2023		5,073,932			1.02

During the three and nine months ended September 30, 2023, the Company recognized share-based payments expense with respect of stock options and RSUs of $569,057 and $1,677,594, respectively. During the three and nine months ended September 30, 2022, the Company recognized share-based payments expense with respect to stock options and RSUs of $69,724 and $795,334, respectively.

The remaining compensation that has not been recognized as of September 30, 2023 with regards to RSUs and the weighted average period they will be recognized are $3,396,927 and 2.06 years.

INCOME TAXES

The Company’s expected effective tax rate for the three and nine months periods ended September 30, 2023, and 2022 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 October 14, 2021, the Company entered into a lease agreement for an A321F cargo aircraft. The ten year lease term commenced on January 24, 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 March 8, 2022, the Company signed a lease agreement for a fourth 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 96 months from delivery date. In addition to basic rent due, the Company will pay the lessor supplemental rent for maintenance of the aircraft.

On March 22, 2022, the Company signed a lease agreement for a fifth 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 June 21, 2022, the Company entered into a lease agreement for a second A321F cargo aircraft. The eight year lease term commenced on June 1, 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 July 29, 2022, the Company signed a lease agreement for a sixth 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 an 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 an 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 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 in November 2023 and will run through 48 months from delivery date. In addition to basic rent due, the Company will pay the lessor supplemental rent for maintenance of aircraft equipment.

On July 27, 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 a third 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 72 months, plus supplemental rent for maintenance of the aircraft.

During the nine months ended September 30, 2023, the Company entered into seven finance lease agreements for equipment to support the Company's technical operations. Payments under these finance lease agreements are fixed for terms of 5 years.

The following table provides details of the Company's future minimum lease payments under finance lease liabilities and operating lease liabilities recorded on the Company's condensed consolidated balance sheets as of September 30, 2023. 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 2023	$	245,658	$	4,433,809
2024		982,634		16,931,294
2025		982,634		16,344,557
2026		982,634		14,530,834
2027		865,635		11,727,844
2028 and thereafter		1,086,778		25,014,492
Total minimum lease payments		5,145,973		88,982,830
Less amount representing interest		1,359,298		27,485,116
Present value of minimum lease payments		3,786,675		61,497,714
Less current portion		556,850		10,072,203
Long-term portion		3,229,825		51,425,511

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Finance lease cost
Amortization of leased assets	$	149,239	$	45,931	$	367,894	$	45,931
Interest of lease liabilities		116,352		30,405		309,337		30,405
Operating lease cost
Operating lease cost (1)		2,286,554		2,181,983		5,933,502		5,396,050
Total lease cost		2,552,145		2,258,319		6,610,733		5,472,386

(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:


	September 30, 2023			September 30, 2022
Weighted-average remaining lease term
Operating leases	6.19 years			4.4 years
Finance leases	5.41 years			5.97 years
Weighted-average discount rate
Operating leases		12.24	%		10.65	%
Finance leases		12.30	%		11.67	%

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


	Nine Months Ended September 30,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,181,225	$	2,559,147
Financing cash flows from finance leases		343,374		—

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.

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' minority interest member to be declared invalid, that Shorts alleged 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 will now enter a phase of discovery as we await the courts to schedule the next steps.

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 months ended September 30, 2023 and 2022:


	Three Months Ended September 30, 2023			Three Months Ended September 30, 2022
Numerator:
Net income (loss) attributable to the Company	$	(4,883,645	)	$	163,631
Denominator:
Weighted average common shares outstanding - Basic		57,497,385			52,569,481
Dilutive effect of stock options and warrants		—			23,938,419
Weighted average common shares outstanding - Diluted		57,497,385			76,507,900
Basic loss per share	$	(0.08	)	$	0.00
Diluted loss per share	$	(0.08	)	$	0.00

The following table shows the computation of basic and diluted earnings per share for the nine months ended September 30, 2023 and 2022:


	Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
Numerator:
Net income (loss) attributable to the Company	$	(18,426,371	)	$	(11,381,523	)
Denominator:
Weighted average common shares outstanding - Basic		56,292,992			51,776,833
Dilutive effect of stock options and warrants		—			—
Weighted average common shares outstanding - Diluted		56,292,992			51,776,833
Basic loss per share	$	(0.33	)	$	(0.22	)
Diluted loss per share	$	(0.33	)	$	(0.22	)

There were 22,376,020 warrants, 470,668 options, and 5,073,932 RSUs outstanding at September 30, 2023 and 19,645,521 warrants, 870,668 options and 3,422,500 RSUs outstanding at September 30, 2022 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 nine months ended September 30, 2023 and 2022, as inclusion would have an anti-dilutive effect.

11.

RELATED PARTY TRANSACTIONS

On June 28, 2021, the Company completed the spin-out pursuant to the Arrangement under which the Company transferred 75% of shares of its wholly owned subsidiary, Canada Jetlines Operations Ltd. ("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. As of September 30, 2023, Global Crossing Airlines hold approximately 12% of the outstanding at September 30, 2023.

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 September 30, 2023 and December 31, 2022, amounts with related parties include the following:

Global earned and was owed $63,872 and $110,177, respectively, in relation to shared TRAX services with Canada Jetlines LLC.

Global earned and was owed $123,000 and $3,500, respectively, in relation to flights flown by Global for Canada Jetlines LLC.

On July 3, 2023, the Company voluntarily dissolved GlobalX Ground Team LLC. The Company had a 50% interest in GlobalX Ground Team LLC and the dissolution had no impact in the Company's financial statements.

On August 14, 2023, the Company voluntarily dissolved GlobalX 321 Aircraft Acquisition Corp., The Company had a 100% interest in GlobalX 321 Aircraft Acquisition Corp and the dissolution had no impact in the Company's financial statements.

On August 17, 2023, the Company voluntarily dissolved GlobalX 320 Aircraft Acquisition Corp., The Company had a 100% interest in GlobalX 320 Aircraft Acquisition Corp. and the dissolution had no impact in the Company's financial statements.

Smartlynx Airlines Malta Limited is an entity whose Chief Executive Officer was a Board Member of Global until his term expired in December 2022. 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 term lease of an A321F aircraft. Total deposits and prepaid expense related to Smartlynx totaled $250,000 as of September 30, 2023 and December 31, 2022 and it is included in other assets on the consolidated balance sheets.

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

12. ACCRUED LIABILITIES

Accrued liabilities consisted of the following as of September 30, 2023 and December 31, 2022


	Nine Months Ended September 30, 2023		December 31, 2022
Salaries, Wages, & Benefits		3,091,990		1,796,443
Passenger Taxes		1,629,227		1,647,319
Aircraft Fuel		937,676		1,595,324
Contracted ground and aviation services		2,050,322		1,154,409
Maintenance		1,289,111		1,115,293
Aircraft Rent		2,898,440		986,762
Other		1,727,439		1,163,079
Accrued liabilities		13,624,205		9,458,629

13. REVENUE CONTRACT LIABILITY

Deferred revenue for customer contracts represents amounts collected from, or invoiced to, customers in advance of revenue recognition. The balance of Deferred revenue will increase or decrease based on the timing of invoices and recognition of revenue.

Significant changes in our Deferred Revenue liability balances during the period ended September 30, 2023 were as follows:


	Deferred Revenue
Balance as of December 31, 2022	$	3,200,664
Revenue Recognized		(3,191,044	)
Amounts Collected or invoiced		4,363,188
Balance as of September 30, 2023	$	4,372,808

14. SUBSEQUENT EVENTS

On October 3, 2023 Global Crossing Airlines Group, Inc. and Canada Jetlines Operations, Ltd. executed an agreement, according to which Global Crossing Airlines Group, Inc. will receive from Canada Jetlines Operations, Ltd. 2,000,000 restricted shares units of Canada Jetlines Operations, Ltd. vesting on October 3, 2023 in exchange to services provided by the Company to Canada Jetlines Operations, Ltd. under an existing contract.

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, 2022 on Form 10-K and Form 10-K/A Amendment No.1. 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 and Form 10-K/A Amendment No.1 for the year ended December 31, 2022.

Background

Certain Terms - Glossary

The following represents terms and statistics specific to our business and industry. They are used by management to evaluate and measure operations, results, productivity, and efficiency.


ACMI:	Service offering, whereby we provide outsourced cargo and passenger aircraft operating solutions, including the provision of an aircraft, crew, maintenance, and insurance, while customers assume fuel, demand and price risk. In addition, customers are generally responsible for landing, navigation and most other operational fees and costs
Block Hour	The time interval between when an aircraft departs the terminal until it arrives at the destination terminal
Charter	Service offering, whereby we provide cargo and passenger aircraft charter services to customers. The customer generally pays a fixed charter fee that includes fuel, insurance, landing fees, navigation fees and most other operational fees and costs
Net Available Aircraft	The number of aircraft available each month reduced by (netted) days the aircraft is unavailable due to various maintenance events or deliveries during a month
2Y Check	“Heavy” airframe maintenance checks, which are the most extensive in scope and are generally performed every two years and can take from 20 – 40 days to complete.
6Y Check	“Heavy” airframe maintenance checks, which are the most extensive in scope and are generally performed every six years and can take from 45-75 days to complete
12Y Check	“Heavy” airframe maintenance checks, which are the most extensive in scope and are generally performed every six years and can take from 60 – 100 days to complete
Heavy Maintenance	Scheduled maintenance activities that are extensive in scope and are primarily based on time or usage intervals, which include, but are not limited to 2Y Checks, 6Y Checks, 12Y checks and engine overhauls. In addition, unscheduled engine repairs involving the removal of the engine from the aircraft are considered to be Heavy Maintenance.
Line Maintenance	Maintenance events occurring during normal day-to-day operations.
Non-heavy Maintenance	Discrete maintenance activities for the overhaul and repair of specific aircraft components, including landing gear, auxiliary power units and engine thrust reversers.
Utilization	The average number of Block Hours operated per day per aircraft.

Business Overview

Global Crossing Airlines Group Inc. (“GlobalX” or the “Company”) operates a US Part 121 domestic flag and supplemental 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 began operating the Airbus A321 freighter (“A321F”) during the first quarter of 2023 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/tour 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.

Business Developments

The nine months period ended September 30, 2023 for GlobalX was characterized by the achievement of significant regulatory milestones in addition to considerable investment in crew, staff, maintenance, and systems to build out our platform, bolster our infrastructure to prepare GlobalX to continue its rapid expansion through the delivery of up to six additional aircraft in Q4, a 50% increase. GlobalX is comprised of three key assets which allows us to generate income – our certifications, our aircraft, and our crew.

From a regulatory perspective GlobalX in the nine months period ended September 30, 2023 has achieved the following:

•

Received our EASA TCO allowing us to operate in Europe

•

Received our UK TCO allowing us to operate in the UK

•

Received our Cargo Certification from the FAA allowing us to launch Cargo operations

•

Successfully passed our DOD Audit – allowing us to register and start operating flights for the Department of Defense

•

Successfully passed our IOSA Audit – allowing us to operate for other airlines without an extensive audit process

From an aircraft perspective GlobalX in the nine months period ended September 30, 2023 has achieved the following:

•

Taken delivery of two A321F to launch Cargo operations

•

Taken delivery of one A320 passenger aircraft and one A319 passenger aircraft

•

Completed four heavy maintenance events and one non-heavy maintenance event

From a crew perspective GlobalX in the nine months period ended September 30, 2023 has achieved the following:

•

Hired and trained the required number of people in dispatch, crew scheduling, operation control center and maintenance to allow for 24 hours, 7 day a week operation on a global basis

•

Increased our pilot headcount from 60 to 120

In short, the nine months period ended September 30, 2023 was a time when GlobalX invested in its people, prepared for its growth, and established a robust infrastructure for its future.

Launch cargo charter flights with A321P2F (Passenger to Freighter)

GlobalX added the A321F (passenger to freighter) aircraft to its operating certificate and into the fleet commencing Q1 2023 and expects cargo to be an integral part of the GlobalX business. GlobalX operates its A321Fs under ACMI charter operations with major package operators and major freight and logistics companies. Under these types of 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 one primary geographic base:

•

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.

•

In addition, the Company has established Airlines Use Agreements with Orlando (MCO), Nashville (BNA), Dallas (DFW), Minneapolis (MSP), Austin (AUS) and Las Vegas (LAS)

GlobalX also maintains two additional crew bases at the following locations:

•

San Antonio International Airport ("SAT") in San Antonio, Texas

•

Harry Reid International Airport ("LAS") in Las Vegas, Nevada

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 our ACMI customers are 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 services 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 Domestic Flag and Supplemental charter airline in the United States, GlobalX has done 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.

Results of Operations

Operating Revenue & Statistics

The following discussion should be read in conjunction with our Financial Statements and other financial information appearing and referred to elsewhere in this report.

The analysis of GlobalX results for the nine months period ended on September 30, 2023 and 2022 requires an understanding of how the Company fundamentally evolved during that time period. 2022 was our first year of full operations and was a period where the company was focused on securing new customers, entering new markets and flying to new locations; primarily in the domestic and Caribbean markets. As a young company, we were learning how to operate safely, efficiently and everything was new.

By contrast in 2023, Global expanded existing relationships, entered the Cargo market, expanded operations in the European ACMI market and an increased focus on operating for existing airlines once we completed our IOSA certification. Our key metric is block hours flown and block hours flown per available aircraft, which is the measure by which we track commercial activity. While other airlines discuss available seat miles and revenue per available seat mile (“rasm”), cost per available seat mile (“casm”), these metrics are not germane to our business model as an ACMI and Charter operator. Global charters the entire aircraft, does not take fuel risk, and does not take third party risk therefore all results are evaluated on a block hour basis.

Three months ended September 30, 2023 and 2022

The following table compares our Operating Fleet (average aircraft equivalents during the period), Operating Revenue, and total Block Hours operated describing the degree to which variations in revenues can be attributed to fluctuations in prices and nature of GlobalX services.


	Three Months Ended September 30,

Operating Fleet	2023			2022		Inc/(Dec)
A319		0.3			—		0.3		N/A
A320		7.0			6.0		1.0			16.7	%
A321		4.0			1.0		3.0			300.0	%
Total Operating Average Aircraft Equivalents		11.3			7.0		4.3			61.4	%

Net Aircraft Available		10.8			5.9		4.9			83.1	%
Total Block Hours		6,506			2,395		4,111.0			171.6	%
Average Utilization per available aircraft		600			407		193.0			47.4	%


Operating Revenue	2023			2022		Inc/(Dec)			% Change
Charter	$	21,819,964		$	21,644,158	$	175,806			0.8	%
ACMI		19,103,277			2,159,484		16,943,793			784.6	%
Other		1,653,658			6,986,598		(5,332,940	)		-76.3	%
Total		42,576,899			30,790,240		11,786,659			38.3	%
			-
Block Hours	2023			2022		Inc/(Dec)			% Change
Charter		1,873			1,907		(34	)		-1.8	%
ACMI		4,614			473		4,141			875.5	%
Non Revenue		19			15		4			26.7	%
Total		6,506			2,395		4,111			171.6	%

Revenue per Block Hour	2023			2022		Inc/(Dec)			% Change
Charter	$	11,647		$	11,350	$	297			2.6	%
ACMI		4,140			4,562		(422	)		-9.3	%

Charter revenue for the period was up $0.2 million or 0.8%, from $21.6 million to $21.8 million. The increase was primarily driven by an increase in rate of $297 per block hour from $11,350 to $11,647 per block hour resulting in increased revenue of $0.6 million. The rate improvement is due to several factors including higher pricing for charter services driven by stronger market demand offset by a 15% reduction in the average cost of a gallon of fuel. The rate improvement was partially offset by a decrease in volume of 34 block hours, from 1,907 to 1,873 block hours resulting in a decrease in revenue of $0.4 million.

ACMI revenue for the period increased by $16.9 million from $2.2 million in 2022 to $19.1 million in 2023 and was primarily driven by an increase volume, offset by a reduction in rate. The volume of ACMI flying increased from 473 block hours in 2022 to 4,614 block hours in 2023, an increase of 875.5% or 4,141 block hours. This increase was achievable due to additional regulatory approvals expanding our total addressable market and the availability of additional aircraft which grew from 5.9 to 10.8, an 83.1% increase. Although the Company had seven leased aircraft in the three-month period of 2022, only 5.9 of the aircraft were available for service. The difference between operational readiness and net availability is due to needed maintenance, seat configuration changes, certifications, and proving runs, and can vary widely between aircraft. Conversely in 2023, the Company had 11.3 operational aircraft and of that 10.8 were available for contracted service. The deliveries that account for the increase were as follows; one A319 was delivered in August 2023, one A320 was delivered in April 2023, and three A321s arrived in December 2022, January 2023, and June 2023. In addition, another factor which contributed to the volume increase for both Charter and ACMI flying is the company’s focus on utilization. In the three-month period utilization increased 47.4% from 407 block hours per net available aircraft to 600 block hours per net available aircraft.

Other revenue for the period decreased by $5.3 million from $7.0 million in 2022 to $1.7 million in 2023, due a specific contract in 2022 GlobalX was not able to operate due to the Company's lack of regulatory approval. This contract had a guaranteed minimum amount of block hours that were paid even though we were unable to operate the flights. The associated revenue earned under the contract was booked as other revenue with no operational block hours.

Operating Expenses

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


	Three Months Ended September 30,
Operating Expenses	2023		2022		Inc/(Dec)			% Change
Salaries, Wages, & Benefits	$	15,040,396	$	7,712,688	$	7,327,708			95.0	%
Aircraft Fuel		5,742,979		7,764,761		(2,021,782	)		(26.0	)%
Maintenance, materials and repairs		2,982,627		1,218,221		1,764,406			144.8	%
Depreciation and amortization		565,571		193,620		371,951			192.1	%
Contracted ground and aviation services		4,695,291		4,631,741		63,550			1.4	%
Travel		1,554,446		1,078,854		475,592			44.1	%
Insurance		1,218,818		947,342		271,476			28.7	%
Aircraft Rent		9,400,014		3,957,508		5,442,506			137.5	%
Other		3,706,751		2,489,530		1,217,221			48.9	%
Total Operating Expenses		44,906,893	$	29,994,265		14,912,628			49.7	%

Salaries, wages, and benefits grew to $15.0 million up from $7.7 million, a $7.3 million increase, or 95.0%, primarily due to the hiring and training of pilots and other airline personnel necessitated by the growing fleet and operations. The average employees grew from 338 in 2022 to 560 employees in the same period of 2023, an increase of 65.6%. The salaries as a percentage grew faster than the actual head count due to the focus on hiring pilots who on average are some of the highest compensated employees. Specifically, the average pilots employed in the period increase from 62 in 2022 to 118 pilots in 2023.

Aircraft fuel decreased from $7.8 million to $5.7 million, a reduction of $2.0 million, or 26.0% decrease, primarily due to a reduction in the cost of fuel. This reduction is a combination of the average spot price of fuel dropping from $3.39 per gallon in 2022 versus the same period in 2023 where the average price was $2.90 which is a decrease of $0.53 per gallon or a 15.5% reduction. Another factor driving lower fuel costs is the airport where fuel is uplifted. Different airports charge different into plane rates (this is the charge by the fueler for fueling the aircraft) and in 2023 Global, as a percentage, fueled more frequently at lower cost airports. In addition, fuel expense was impacted by the number of Charter hours operated which dropped by 1.8% or 34 block hour, from 1,907 to 1,873.

Maintenance, materials, and repairs increased by $1.8 million, from $1.2 million to $3.0 million, or 144.8%, primarily due to the increase in average aircraft in operation during the periods from seven to 11.3 and the total block hours operated, which increased from 2,395 to 6,506, or 171.7%. Maintenance costs of aircraft are directly correlated to the number of aircraft operated and how many hours those aircraft fly. The growth in these costs is in line with the underlying activity level.

Depreciation and amortization increased $0.4 million, or 192.1%, from $0.2 million to $0.6 million, primarily driven by assets acquired to support our airport operations. These assets include, but are not limited to fuel trucks, tractors, computers, software, and rotable inventory.

Contracted ground and aviation services increased by 1.4% from $4.6 million to $4.7 million. These costs are directly correlated to the number of Charter hours operated in a specific period. The year-over-year variance of Charter hours was down 1.8%, which helps explain why these costs were flat over the same period.

Travel increased $0.5 million or 44.1%, from $1.1 million to $1.6 million, primarily due to the increase in Block Hours operated and the number of crews required to operate those flights incurring airfare and hotel costs in addition to a significant increase in the number of pilots in training who require hotel accommodations during their training period.

Insurance increased $0.3 million, or 28.7%, from $0.9 million to $1.2 million, primarily related to the increase in the number of aircraft. Insurance expense is driven by the number of active aircraft. With each additional delivery, the required premium is increased, albeit as we continue to add aircraft, the cost per aircraft will be reduced.

Aircraft rent increased 137.5% or $5.4 million from $4.0 million to $9.4 million, primarily due to the increase in the number of aircraft and the number of hours operated as rent is impacted by the variable maintenance costs classified as supplemental rent. It should be noted the number of aircraft increased from seven to 11.3 average aircraft equivalents.

Operating income decreased by $3.1 million, from an operating income of $0.8 million to an operating loss of ($2.3) million. This decrease was driven by the delivery of aircraft which drove up associated cost such as aircraft rent and maintenance, materials, and repairs, many of these expenses are incurred prior to the aircraft ability to generate revenue, and pilot costs which are driven by aircraft deliveries but begin prior to delivery, as crew members must be hired, onboarded, and trained prior to the delivery of aircraft. In addition, in Q3 of 2022 we benefited from a contract that was characterized as other income for which we were paid for hours but did not operate due to regulatory issues.

Non-operating Expenses (Income)

The following table compares our Non-operating Expenses:


	Three Months Ended September 30,
Non-Operating Expenses	2023		2022		Inc/(Dec)		% Change
Interest Expense		2,564,680		632,344		1,932,336		305.6	%
Total Non-Operating Expenses (Income)	$	2,564,680	$	632,344	$	1,932,336		305.6	%

Interest expense, net increased $1.9 million from $0.6 million to $2.6 million, primarily driven by $0.9 million deferred financing costs write-off due to the early termination of prior loans and $1.0 million related to increase of interest expense of new Secured Notes.

Nine months ended September 30, 2023, and 2022


	Nine Months Ended September 30,

Operating Fleet	2023		2022		Inc/(Dec)
A319		0.1		—		0.1		N/A
A320		6.7		5.4		1.3			24.1	%
A321		3.3		1.0		2.3			230.0	%
Total Operating Average Aircraft Equivalents		10.1		6.4		3.7			57.8	%

Net Aircraft Available		8.0		5.7		2.3			40.4	%
Total Block Hours		13,235		6,254		6,981			111.6	%
Average Utilization per available aircraft		1,654		1,097		557.2			50.8	%


Operating Revenue	2023		2022		Inc/(Dec)			% Change
Charter	$	73,736,659	$	45,041,540	$	28,695,119			63.7	%
ACMI	$	28,564,480		11,096,154		17,468,326			157.4	%
Other	$	3,901,388		8,474,537		(4,573,149	)		-54.0	%
Total	$	106,202,527		64,612,231		41,590,296			64.4	%

Block Hours	2023		2022		Inc/(Dec)			% Change
Charter		6,045		4,072		1,973			48.5	%
ACMI		7,139		2,119		5,020			236.9	%
Non Revenue		51		63		(12	)		-19.0	%
Total		13,235		6,254		6,981			111.6	%

Revenue per Block Hour	2023		2022		Inc/(Dec)			% Change
Charter	$	12,198	$	11,061	$	1,137			10.3	%
ACMI		4,001		5,237		(1,235	)		-23.6	%

Charter revenue for the period was up $28.7 million, from $45.0 million in 2022 to $73.7 million in 2023. The increase was largely driven by increased block hours operated in addition to increased rates. The additional 1,973 block hours operated generated $21.8 million or 76.1% of the $28.7 million in increased revenue. This additional revenue growth was driven by the average revenue per Charter block hour which grew from $11,061 to $12,198 per block hour, an increase of $1,137 per block hour. This rate increase resulted in additional revenue of $6.9 million or 23.9% of the $28.7 million variance. The volume increase was attributable to the availability of aircraft and utilization. Although the Company had 6.4 aircraft in the nine-month period of 2022, only 5.7 of the aircraft were available for service. The difference between operational readiness and net availability is due to needed maintenance, seat configuration changes, certifications, and proving runs, and can vary widely between aircraft. Conversely in 2023, the Company had 10.1 operational aircraft and of that 8.0 were available for contracted service. The deliveries that account for the increase were as follows. One A319 was delivered in August 2023, one A320 was delivered in April 2023, and three A321s arrived in December 2022, January 2023, and June 2023. The Charter rate increase itself was driven by strong demand in the first half of 2023.

ACMI revenue for the period increased $17.5 million from $11.1 million in 2022 to $28.6 million in 2023 and was driven by an increase in volume, offset by a reduction in rate. This was primarily driven by higher minimum guarantees committed to by our

customers which typically results in a lower block hour rate. The volume of ACMI flying increased from 2,119 block hours in 2022 to 7,139 block hours in 2023, an increase of 236.9%. This increase was achievable due to the increase of net available aircraft from 5.7 to 8.0, an 40.4% increase. In addition, during the nine-month period utilization increased 50.8% from 1,097 block hours per net available to 1,654 block hours per net available aircraft.

Other revenue for the period decreased by $4.6 million from $8.5 million in 2022 to $3.9 million in 2023, due a specific contract in 2022 GlobalX was not able to operate due to the Company's lack of regulatory approval. This contract had a guaranteed minimum amount of block hours that were paid even though we were unable to operate the flights. The associated revenue earned under the contract was booked as other revenue with no operational block hours.

Operating Expenses

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


	Nine Months Ended September 30,
Operating Expenses	2023		2022		Inc/(Dec)		% Change
Salaries, Wages, & Benefits		38,263,674		20,829,632		17,434,042		83.7	%
Aircraft Fuel		19,779,420		15,402,450		4,376,970		28.4	%
Maintenance, materials and repairs		6,308,208		3,373,396		2,934,812		87.0	%
Depreciation and amortization		1,451,726		296,830		1,154,896		389.1	%
Contracted ground and aviation services		14,749,228		10,674,340		4,074,888		38.2	%
Travel		5,155,258		3,204,172		1,951,086		60.9	%
Insurance		3,588,934		2,713,791		875,143		32.2	%
Aircraft Rent		21,874,401		11,151,412		10,722,989		96.2	%
Other		9,668,124		7,464,756		2,203,368		29.5	%
Total Operating Expenses	$	120,838,973	$	75,110,779	$	45,728,194		60.9	%

Salaries, wages, and benefits increased by $17.4 million from $20.8 million to $38.3 million, or 83.7% primarily due to the hiring and training of pilots and other airline personnel because of the growing fleet and operations. The average employees in the period of 2022 grew from 227 to 438 employees in the same period of 2023, an increase of 92.9%. In addition, the average pilots employed in the period increase from 55 in 2022 to 103 pilots in 2023.

Aircraft fuel increased $4.4 million or 28.4% from $15.4 million to $20.0 million primarily due two factors, the fluctuation of fuel prices and the change in number of Charter Block Hours operated. Charter Block Hours in the period rose from 4,071 to 6,045 a 48.5% increase. This significant increase was offset by a favorable improvement fuel price in the period. Fuel prices in the 2022 period averaged $3.44 per gallon and fell to $2.71 per gallon for the same period of 2023, a 21.3% improvement.

Maintenance, materials, and repairs increased by $2.9 million, from $3.4 million to $6.3 million, or 87.0%, primarily due to the increase in average aircraft in operation during the periods from 5.7 to 8.0 and the total block hours operated, which increased from 6,254 to 13,234, or 111.6%. Maintenance costs of aircraft are directly correlated to the number of aircraft operated and how many hours those aircraft fly. The growth in these costs is in line with the underlying activity level.

Depreciation and amortization increased $1.2 million or 389.1% from $0.3 million to $1.5 million, primarily driven by assets acquired to support our airport operations. These assets include, but are not limited to fuel trucks, tractors, computers, software, and rotable inventory.

Contracted ground and aviation services increased $4.1 million or 38.2% from $10.7 million to $14.8 million primarily due to the increase in Charter Block Hours, which increased 48.5%. The increase in costs was lower than the increase in Charter Block hours as the cost of ground and aviation services can vary widely by airport and in 2023, there were more flights from lower cost destinations.

Travel increased $2.0 million or 60.9% from $3.2 million to $5.2 million, primarily driven by the increase in Block Hours operated and the number of crews required to operate those flights incurring airfare and hotel costs in addition to a significant increase in the number of pilots in training who require hotel accommodations during their training period.

Aircraft rent increased $10.7 million or 96.2% from $11.2 million to $21.9 million, primarily due to the increase in the average number of aircraft and the number of hours operated as rent is impacted by the variable maintenance costs classified as supplemental rent. It should be noted the number of aircraft increased from 6.4 aircraft to 10.1 aircraft.

Operating income decreased by $4.1 million, from an operating loss of ($10.5) million to an operating loss of ($14.6) million. This decrease was driven by the delivery of aircraft which drove up associated cost such as aircraft rent and maintenance, materials, and repairs, many of these expenses are incurred prior to the aircraft ability to generate revenue, and pilot costs which are driven by aircraft deliveries but begin prior to delivery, as crew members must be hired, onboarded, and trained prior to the delivery of aircraft. In addition, in Q3 of 2022 we benefited from a contract that was characterized as other income for which we were paid for hours but did not operate due to regulatory issues.

Non-operating Expenses

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


	Nine Months Ended September 30,
Non-Operating Expenses (Income)	2023		2022		Inc/(Dec)		% Change
Interest Expense		3,800,956		882,975		2,917,981		330.5	%
Total Non-Operating Expenses (Income)	$	3,800,956	$	882,975	$	2,917,981		330.5	%

Interest expense, net increased $2.9 million from $0.9 million to $3.8 million, primarily driven by $0.9 million deferred financing costs write-off due to the early termination of prior loans and, $1.0 million related to increase of interest expense of new Secured Notes, and $1.0 million related to interest from prior loans and new equipment leases.

Liquidity and Capital Resources

As of September 30, 2023, the Company had approximately $13.0 million in unrestricted cash and cash equivalents, an increase of $11.2 million from December 31, 2022, primarily due to the new $35 million secured notes entered during the quarter ended September 30, 2023. The proceeds from the notes were used to pay off existing loans of approximately $8.8 million as well as approximately $2.9 million of debt issuance costs and discounts, resulting in approximately $23.3 million of net proceeds to the Company which have been used to support the Company's increase in operations. Management believes the current level of cash and cash equivalents together with cash generated from expected increase of sales provides enough liquidity to support the Company's growth.

Net cash used in operating activities during the nine months ended September 30, 2023 increased from $1.8 million to $6.7 million, when compared to the same period in prior year, primarily due to the increase of $4.1 million in accounts receivable and the increase of $3.6 million in operating lease obligations and partially offset by the increase of $2.3 million in accrued liability and other liability when compared to the same period in prior year.

The liquidity impact due to the net loss of $18.4 million incurred during the nine months period ended September 30, 2023 was partially offset noncash items of $10.6 million, including amortization of right of use assets of $5.9 million, share based compensation of $1.7 million, depreciation of $1.5 million and amortization of debt issuance costs of $1.2 million. In addition, the net cash used by operating activities of $6.7 million for the nine months period ended September 30, 2023 was also impacted by the increase of accounts receivable of $4.8 million and operating lease obligations of $6.1 million.

For the nine months ended September 2022, the net cash used for operating activities was $1.8 million, consisting primarily of $11.4 million of net loss, non-cash adjustments of $5.0 million related primarily to amortization of right of use asset of $3.4 million, $795 thousand share-based payments, and $6.2 million in accrued liabilities and other liabilities.

The Company has significant fixed and noncancelable lease commitments of aircraft, equipment and related maintenance checks. As of September 30, 2023, the Company had total of $557 thousand and $10.1 million due in the next 12 months of future minimum lease payments under finance and operating leases, respectively, and approximately $397 thousands in current portion of notes payable included in the current liabilities presented in the Company’s consolidated balance sheet. As of September 30, 2023, the Company had total of $3.2 million and $51.4 million due after 12 months from the balance sheet date of future minimum lease payments under finance and operating leases, respectively, and approximately $28.8 million in notes payable included in the non-current liabilities presented in the Company’s consolidated balance sheet. The Company finished Q3 2023 with 10 passenger aircraft and two cargo aircraft and expects

the aircraft fleet to increase to 13 passenger aircraft and five cargo aircraft by the end of 2023. In order to achieve the number of aircraft deliveries in 2023, the Company currently has six aircraft under lease with partial or total deposits paid and six additional aircraft under binding agreements that are subject to execution of definitive lease documentation and fulfillment of certain closing conditions.

During the nine months ended September 30, 2023, net cash used for investing activities increased from $4.5 million to $7.8 million, when compared to the same of period in prior year, primarily due to increase of deposits, deferred costs and other assets of $2.3 million and purchases of property and equipment of $1.0 million.

The Company continuously seeks to identify external sources of capital from time to time depending on our cash requirements, assessment of current and anticipated market conditions, and the after-tax cost of capital. Our access to capital markets can be adversely impacted by prevailing economic conditions and by financial, business and other factors, some of which are beyond our control.

Additionally, the Company’s borrowing costs are affected by market conditions and may be adversely impacted by a tightening in credit markets. The Company regularly assesses our anticipated working capital needs, debt and leverage levels, debt maturities, capital expenditure requirements and future investments or acquisitions to maximize shareholder return, efficiently finance our ongoing operations and maintain flexibility for future strategic transactions. The Company also regularly evaluates its liquidity and capital structure to ensure financial risks, adequate liquidity access and lower cost of capital are efficiently managed. Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

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 September 30, 2023. Our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2023, the Company’s disclosure controls and procedures were not effective, due to the material weaknesses in internal control over financial reporting described below.

Material Weakness in Internal Control over Financial Reporting

1. Insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

Remediation Plans

In order to mitigate the foregoing material weakness, the Company plans to take steps to develop and enhance its internal controls over financial reporting in 2023, including:

1. Developing formal policies and procedures over accounting and reporting disclosure requirements.

2. Provide additional training on application of US GAAP and SEC disclosure requirements.

3. Obtain checklists to ensure all application disclosures required under US GAAP and SEC requirements are included in each filing.

As we continue to evaluate and work to improve our internal control over financial reporting, Certifying officers and management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary. Therefore, we cannot assure you when the Company will remediate the material weakness identified above, nor can we be certain that additional actions will not be required and what the costs of any such additional actions may be. Moreover, we cannot assure you that additional material weaknesses will not arise in the future.

Notwithstanding the material weakness identified in our internal control over financial reporting, we believe that the consolidated financial statements in this quarterly report fairly present, in all material respects, the Company’s consolidated financial condition as of September 30, 2023 and consolidated results of its operations and cash flows for the period then ended, in conformity with U.S. generally accepted accounting principles (“GAAP”).

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period ended September 30, 2023 that has materially affected, or is 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 has filed initial pleadings in the Supreme Court of the State of New York, County of New York, claiming the Company breached the share subscription agreement between the parties by failing to pay a $500,000 fee due on May 4, 2021 GEM is requesting repayment in full of the CAD $2,000,000 promissory note issued by the Company to GEM plus accrued interest and costs and expenses related to collection. As of December 31, 2022, the note payable to GEM is recorded in current liabilities on the consolidated balance sheet and the Company expensed the full outstanding amount capitalized as deferred financing costs of $2,809,031.

On January 18, 2023 the Court granted summary judgment in favor of GEM. GEM subsequently filed a motion seeking $2,000,000 CAD, plus interest totaling $218,493.87, with an additional $506.02 accruing each day after January 30, 2023 until entry of Judgment. GEM also seeks $112,584.50 in attorney's fees and $4,884.86 in costs. In 2022, interest and attorney's fees were recorded in current liabilities on the consolidated balance sheet and other expenses non-operating on the consolidated statement of operation.

On March 29th, 2023 Global Crossing Airlines and GEM entered into a final settlement which included a payment plan for the $2,000,000 CAD over nine months plus the extension of the agreement for 12 months. Consequently, GlobalX has adjusted the current liabilities to reverse the previously accrued interest and attorney’s fees no longer due. Upon final payment GEM agrees to file a satisfaction of judgment in County of New York, effectively settling this issue. GlobalX made payments due per final settlement and the outstanding balance of $397,168 ($550,000 CAD), as of September 30, 2023 and included in Current Portion of Notes Payable.

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 and Form 10-K/A Amendment No.1 for the fiscal year ended December 31, 2022.

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3 Defaults Upon Senior Securities

None.

ITEM 4 Mine Safety Disclosures

Not Applicable

ITEM 5 Other Information

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	Nov 8, 2023
Edward Wegel

/s/ Ryan Goepel	CFO	Nov 8, 2023
Ryan Goepel

/s/ Alan Bird	Director	Nov 8, 2023
Alan Bird

/s/ T. Allan McArtor	Director	Nov 8, 2023
T. Allan McArtor

/s/ John Quelch	Director	Nov 8, 2023
John Quelch

/s/ Deborah Robinson	Director	Nov 8, 2023
Deborah Robinson

/s/ Cordia Harrington	Director	Nov 8, 2023
Cordia Harrington