Sky Harbour Group Corporation Form 8-K Summary
Business Context and Reporting Period
Sky Harbour Group Corporation filed a Form 8-K dated October 10, 2023 under Item 4.02. Management and the Audit Committee concluded that the unaudited interim financial statements in the Form 10-Q for the six months ended June 30, 2023 should no longer be relied upon and must be restated.
Financial Statement Correction
- Certain cash payments related to construction retainage liabilities recognized in 2021 and 2022 were incorrectly classified as operating cash flows rather than investing cash flows.
- The error affected the consolidated statement of cash flows for the six months ended June 30, 2023 by $3.372 million.
| Cash flow line item | Reported effect of correction |
|---|---|
| Changes in accounts payable, accrued expenses and other liabilities | Decrease of $3.372 million |
| Net cash used in operating activities | Decrease of $3.372 million |
| Payments for cost of construction | Increase of $3.372 million |
| Net cash used in investing activities | Increase of $3.372 million |
The filing indicates a reclassification between operating and investing activities; it does not state that total net change in cash was affected. The filing does not provide revenue, profit, margin, debt, liquidity, or other operating metrics.
EPS Correction
The company will also correct an immaterial diluted earnings-per-share calculation error for the three months ended June 30, 2023 and June 30, 2022. Warrant-related adjustments should have been excluded because they were anti-dilutive, while Class B common stock should have been included as a convertible security.
| Period | Reported diluted EPS | Corrected diluted EPS | Reported diluted weighted-average shares | Corrected shares |
|---|---|---|---|---|
| Three months ended June 30, 2023 | $(0.06) | $(0.03) | 29.686 million | 57.213 million |
| Three months ended June 30, 2022 | $(0.09) | $0.17 | 29.466 million | 59.947 million |
The company determined that this EPS error was not material to the previously issued financial statements for the quarters ended June 30, 2022 or June 30, 2023.
Material Changes, Controls, and Next Steps
- The company identified a material weakness in internal control over financial reporting related to the erroneous classification of cash flows.
- Management determined that disclosure controls and procedures were not effective as of June 30, 2023.
- The company intends to describe remediation measures in an amendment to the Q2 Form 10-Q.
- A corrected Form 10-Q/A was expected to be filed as soon as practicable after October 10, 2023.
- Management and the Audit Committee discussed the matters with EisnerAmper LLP, the independent registered public accounting firm.
Outlook and Risks
The filing provides no financial guidance or operating outlook. Forward-looking statements relate primarily to the expected cash flow corrections and filing of the amended Form 10-Q. The company cautions that actual results may differ because of risks described in its Form 10-K for the year ended December 31, 2022 and other SEC filings.
Important Facts to Verify
- Confirm that the Q2 Form 10-Q/A was filed and review the restated statement of cash flows.
- Verify the company’s remediation plan and subsequent assessment of internal control effectiveness.
- Confirm the corrected diluted EPS and share-count calculations for both comparable quarters.
- Assess whether any additional errors, control deficiencies, or auditor disclosures were identified in the amended filing.