Filing summary
Registrant and period: This is Yellowstone Acquisition Company’s unaudited Form 10-Q for the three months ended March 31, 2021, filed May 24, 2021. This does not appear to be a filing by Sky Harbour Group Corp.; investors should verify the company and filing identity.
Business context and financial results
Yellowstone was a blank-check company searching for a business combination, with stated target-sector interests including homebuilding, related manufacturing, financial services and commercial real estate. It had not begun operations or generated revenue. The filing reports no operating revenue for the quarter; margins are therefore not meaningful.
- Net income: $4.43 million, including a $4.65 million noncash gain from the decrease in the fair value of warrant liabilities. Interest and dividend income was $11,813; unrealized loss on trust investments was $2,948. Basic and diluted earnings were $0.26 per share for both Class A and Class B.
- Cash flow: $229,810 used in operating activities; $17,335 used in investing activities; cash declined $247,145 to $875,049.
- Liquidity and assets: Total assets were $140.00 million, including $138.73 million of trust-account investments. Operating cash was $875,049. Management said it expected working capital to be sufficient through the earlier of a business combination or one year from the filing.
- Liabilities and equity: Total liabilities were $18.24 million, including a $13.36 million warrant liability and $4.76 million deferred underwriting fee payable. The balance sheet reports negative stockholders’ equity of $16.95 million and $138.71 million of Class A shares subject to possible redemption, classified outside permanent equity. No borrowings are reported.
Changes, outlook and risks
Compared with December 31, 2020, trust investments were broadly unchanged, operating cash decreased from $1.12 million, and warrant liabilities fell from $18.00 million to $13.36 million. The reported quarterly profit is substantially attributable to the warrant remeasurement gain, rather than operating activity. The filing provides no prior-year comparable-quarter results.
The company had until 15 months after its October 2020 IPO to complete a business combination, with the filing giving January 25, 2022 in one section and January 26, 2022 in another. If it failed to complete a transaction, it was required to cease operations and redeem public shares, subject to stated terms. Management disclosed that COVID-19 could adversely affect its financial position, operations or target search, but the impact was not determinable.
Control issue: Management concluded disclosure controls were ineffective because of a material weakness in accounting for complex Class A share and warrant features. The weakness had led to restatement of 2020 financial statements and could cause further material misstatements. No change in internal control during the quarter was reported.
Key facts for investors to verify
- Confirm whether this Yellowstone filing is the intended filing; it does not identify Sky Harbour Group Corp. as the registrant.
- Review the 2020 restatements and the remediation status of the material weakness in internal controls.
- Assess the quality of quarterly earnings, particularly the noncash warrant fair-value gain.
- Verify available operating cash and any related-party expense reimbursements or working-capital loans; reimbursement terms have no stated cap, and potential loans were not documented in written agreements.
- Confirm the applicable business-combination deadline, which is stated inconsistently as January 25 and January 26, 2022.