Business Context and Reporting Period
Sky Harbour Group Corporation filed this Form 8-K to report the completion of its business combination with Sky Harbour LLC on January 25, 2022. Yellowstone Acquisition Company changed its name to Sky Harbour Group Corporation and ceased to be a shell company. The transaction created an “Up-C” structure in which substantially all operating assets are held by Sky Harbour LLC, while the public company controls and consolidates Sky’s results.
Class A common stock and warrants began trading on NYSE American on January 26, 2022 under the symbols SKYH and SKYH WS. The filing was signed on January 31, 2022.
Key Financial and Capitalization Metrics
- Public stockholders redeemed 12,061,041 Class A shares for approximately $123 million, or approximately $10.20 per share.
- The company contributed $39.8 million to Sky, representing the remaining trust-account proceeds after redemptions, the Boston Omaha PIPE, transaction costs, deferred underwriting commissions, debt repayment and other payments.
- Boston Omaha purchased 4.5 million Class A shares for $45.0 million.
- BOC YAC Funding LLC received 5.5 million Class A shares upon conversion of Sky Series B preferred units, representing aggregate consideration of $55.0 million.
- Immediately after closing, the company had 14,937,581 Class A shares, 42,192,250 Class B shares and warrants exercisable for 14,519,218 Class A shares, including 7,719,779 private placement warrants.
- Sky had 42,192,250 common units outstanding, excluding units held by the company, and 2,807,750 incentive units. Sky common units may be redeemed for Class A shares.
- The company reserved 5,211,975 Class A shares for issuance under its 2022 Incentive Award Plan.
- Former Sky equityholders held approximately 73.9% of voting power; Boston Omaha held approximately 23.5%; and former YAC public stockholders held approximately 2.7% immediately after closing.
- The filing text does not provide clear current-period revenue, net income, cash-flow, margin, total debt, or liquidity balances. Historical and pro forma financial information is incorporated by reference from the proxy statement and Exhibit 99.1.
Material Changes Versus the Prior Comparable Period
- The transaction transformed YAC from a SPAC into the public parent of Sky Harbour LLC and resulted in a change of control.
- YAC’s units ceased trading and separated into Class A shares and warrants; the securities began trading under the new SKYH and SKYH WS symbols.
- The company entered into a new stockholders’ agreement, registration rights agreement, tax receivable agreement and amended Sky operating agreement.
- The board and executive leadership were substantially reconstituted. Tal Keinan became chairman and chief executive officer; Alex Saltzman became chief operating officer; Francisco Gonzalez became chief financial officer; Michael Schmitt became chief accounting officer; and Gerald Adler became general counsel and corporate secretary.
- EisnerAmper LLP was appointed as the company’s independent registered public accounting firm for 2022, replacing KPMG LLP after completion of KPMG’s audit of YAC’s 2021 financial statements.
- The 2022 Incentive Award Plan became effective, with 5,211,975 shares available for potential issuance.
Guidance, Outlook, Risks and Unusual Items
No specific revenue, earnings, cash-flow or operating guidance is provided in this Form 8-K. The filing incorporates Sky’s management discussion, projections, risk factors and pro forma information from the proxy statement and related exhibits.
- Sky has a limited operating history, making future revenue and operating results difficult to predict.
- Financial projections may not reflect actual results, and the company may not realize the anticipated benefits of the business combination.
- Key risks include competition, growth execution, liquidity and cash-flow needs, capital expenditures, transaction costs, regulatory changes, economic conditions and potential legal proceedings.
- The company stated that it expects to retain earnings, if any, and does not anticipate paying dividends in the foreseeable future.
- KPMG’s prior audit report was not qualified, but YAC restated its 2020 financial statements to correct warrant classification and identified a material weakness related solely to warrant accounting.
- The exhibits include bond and loan agreements related to airport properties, but the filing text does not provide clear principal balances, interest rates or maturity amounts.
- Chief Executive Officer Tal Keinan’s 2022 base salary is $500,000, with a target bonus equal to 100% of base salary and a potential restricted stock unit grant of up to $750,000. Other executive compensation and incentive arrangements are described in the filing.
Important Facts for Investors to Verify
- Review Exhibit 99.1 and the incorporated financial statements for actual revenue, losses, cash flow, debt, liquidity and pro forma capitalization.
- Assess the dilution potential from 14.5 million warrants, redeemable Sky common units, incentive units and the 5.2 million-share equity plan reserve.
- Review the tax receivable agreement for potential future payment obligations to existing Sky equityholders.
- Review the bond, loan, ground lease and airport lease agreements for collateral, covenants, maturities and refinancing requirements.
- Evaluate the effect of the substantial voting control held by existing Sky equityholders and Boston Omaha.
- Confirm remediation of YAC’s material weakness related to warrant accounting and review EisnerAmper’s subsequent audit conclusions.
- Reconcile the ownership percentages and share counts across the closing capitalization disclosures, beneficial ownership table and transaction exhibits.