0000950170-23-040331.txt : 20230809 0000950170-23-040331.hdr.sgml : 20230809 20230809125238 ACCESSION NUMBER: 0000950170-23-040331 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 61 CONFORMED PERIOD OF REPORT: 20230630 FILED AS OF DATE: 20230809 DATE AS OF CHANGE: 20230809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Global Crossing Airlines Group Inc. CENTRAL INDEX KEY: 0001846084 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 981350261 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-56409 FILM NUMBER: 231154316 BUSINESS ADDRESS: STREET 1: 4200 NW 36TH STREET, BUILDING 5A STREET 2: MIAMI INT'L AIRPORT, 4TH FLOOR CITY: MIAMI STATE: FL ZIP: 33166 BUSINESS PHONE: 7867518503 MAIL ADDRESS: STREET 1: 4200 NW 36TH STREET, BUILDING 5A STREET 2: MIAMI INT'L AIRPORT, 4TH FLOOR CITY: MIAMI STATE: FL ZIP: 33166 10-Q 1 jetmf-20230630.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2023

 

OR

 

[ ] 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 August 8, 2023 was 57,459,361 shares, consisting of 38,875,739 shares of common stock, 5,537,313 shares of Class A Non-Voting Common Stock and 13,046,309 shares of Class B Non-Voting Common Stock.

 

 

 

 


 

GLOBAL CROSSING AIRLINES GROUP INC.

Form 10-Q

Period Ended June 30, 2023

Index

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Page

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

1

Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)

2

Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)

3

Statements of Cash Flows for the Six Months Ended June 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

15

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

22

ITEM 4. CONTROLS AND PROCEDURES

22

 

 

 

PART II - OTHER INFORMATION

23

 

 

 

 

ITEM 6. EXHIBITS

24

 

 

 

SIGNATURES

25

 

i


 

GLOBAL CROSSING AIRLINES GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

June 30,
2023

 

 

December 31, 2022

 

 

 

(Unaudited)

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,157,386

 

 

$

1,875,673

 

Restricted cash

 

$

4,268,749

 

 

$

3,585,261

 

Accounts receivable, net of allowance

 

$

5,496,021

 

 

$

2,664,174

 

Prepaid expenses and other current assets

 

$

2,913,836

 

 

$

2,193,449

 

Current assets held for sale

 

$

704,777

 

 

$

1,405,741

 

Total Current Assets

 

$

17,540,769

 

 

$

11,724,298

 

Property and equipment, net

 

$

3,105,637

 

 

$

2,441,288

 

Finance leases, net

 

$

3,826,247

 

 

$

2,710,899

 

Operating lease right-of-use assets

 

$

61,602,362

 

 

$

27,952,609

 

Deposits and other assets

 

$

9,033,168

 

 

$

6,334,878

 

Total Assets

 

$

95,108,183

 

 

$

51,163,973

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

9,913,030

 

 

$

4,997,080

 

Accrued liabilities

 

$

13,122,583

 

 

$

9,458,629

 

Deferred revenue

 

$

7,778,549

 

 

$

3,200,664

 

Customer deposits

 

$

5,875,991

 

 

$

1,617,337

 

Current portion of notes payable

 

$

8,507,869

 

 

$

1,810,468

 

Current portion of long-term operating leases

 

$

9,148,095

 

 

$

6,445,915

 

Current portion of finance leases

 

$

488,342

 

 

$

335,527

 

Total current liabilities

 

$

54,834,459

 

 

$

27,865,621

 

Other liabilities

 

 

 

 

 

 

Note payable

 

$

596,572

 

 

$

5,081,294

 

Long-term operating leases

 

$

54,465,291

 

 

$

23,189,835

 

Other liabilities

 

$

3,307,364

 

 

$

2,282,892

 

Total other liabilities

 

$

58,369,227

 

 

$

30,554,020

 

Commitments and Contingencies

 

$

 

 

$

 

Equity (Deficit)

 

 

 

 

 

 

Common stock - $.001 par value; 200,000,000 authorized; 57,307,695 and 53,440,482 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

 

$

57,308

 

 

$

53,440

 

Additional paid-in capital

 

$

33,473,220

 

 

$

30,774,197

 

Retained deficit

 

$

(51,626,030

)

 

$

(38,083,304

)

Total stockholders’ equity (Deficit)

 

$

(18,095,502

)

 

$

(7,255,667

)

Total Liabilities and Equity (Deficit)

 

$

95,108,183

 

 

$

51,163,973

 

 

See accompanying notes to condensed consolidated financial statements.

1


 

GLOBAL CROSSING AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

 

June 30, 2023

 

 

June 30, 2022

 

 

June 30, 2023

 

 

June 30, 2022

 

 

Operating Revenue

 

$

31,475,076

 

 

$

17,441,980

 

 

$

63,625,630

 

 

$

33,821,992

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, Wages, & Benefits

 

 

12,139,960

 

 

 

7,251,870

 

 

 

23,307,554

 

 

 

13,116,732

 

 

Aircraft Fuel

 

 

6,087,480

 

 

 

4,387,135

 

 

 

14,036,442

 

 

 

7,637,689

 

 

Maintenance, materials and repairs

 

 

1,766,857

 

 

 

964,352

 

 

 

3,325,581

 

 

 

2,155,175

 

 

Depreciation and amortization

 

 

443,016

 

 

 

79,898

 

 

 

886,155

 

 

 

103,212

 

 

Contracted ground and aviation services

 

 

5,201,126

 

 

 

3,087,023

 

 

 

10,053,937

 

 

 

6,037,266

 

 

Travel

 

 

1,346,980

 

 

 

830,208

 

 

 

3,600,813

 

 

 

2,125,530

 

 

Insurance

 

 

1,245,258

 

 

 

909,181

 

 

 

2,370,117

 

 

 

1,766,450

 

 

Aircraft Rent

 

 

6,830,359

 

 

 

3,834,230

 

 

 

12,474,387

 

 

 

7,193,904

 

 

Other

 

 

3,190,502

 

 

 

2,629,323

 

 

 

5,994,566

 

 

 

4,980,561

 

 

Total Operating Expenses

 

 

38,251,539

 

 

 

23,973,220

 

 

 

76,049,552

 

 

 

45,116,519

 

 

Operating Loss

 

 

(6,776,462

)

 

 

(6,531,240

)

 

 

(12,423,922

)

 

 

(11,294,527

)

 

Non-Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

694,560

 

 

 

234,417

 

 

 

1,118,806

 

 

 

250,631

 

 

Total Non-Operating Expenses

 

 

694,560

 

 

 

234,417

 

 

 

1,118,806

 

 

 

250,631

 

 

Loss before income taxes

 

 

(7,471,022

)

 

 

(6,765,657

)

 

 

(13,542,728

)

 

 

(11,545,158

)

 

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

(7,471,022

)

 

 

(6,765,657

)

 

 

(13,542,728

)

 

 

(11,545,158

)

 

Loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.13

)

 

$

(0.13

)

 

$

(0.24

)

 

$

(0.22

)

 

Diluted

 

$

(0.13

)

 

$

(0.13

)

 

$

(0.24

)

 

$

(0.22

)

 

Weighted average number of shares outstanding

 

 

56,857,629

 

 

 

51,505,095

 

 

 

55,680,815

 

 

 

51,373,939

 

 

Fully diluted shares outstanding

 

 

56,857,629

 

 

 

51,505,095

 

 

 

55,680,815

 

 

 

51,373,939

 

 

 

See accompanying notes to condensed consolidated financial statements.

2


 

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

 

Warrants issued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share based compensation on stock options or RSUs

 

 

 

 

 

 

 

 

343,007

 

 

 

 

 

 

343,007

 

Subscription receivable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock Number of Shares

 

 

Amount

 

 

Additional Paid in Capital

 

 

Retained Deficit

 

 

Total

 

Beginning – January 1, 2023

 

 

53,440,482

 

 

$

53,440

 

 

$

30,774,197

 

 

$

(38,083,304

)

 

$

(7,255,667

)

Issuance of shares – options exercised

 

 

150,000

 

 

 

150

 

 

 

67,106

 

 

 

 

 

 

67,256

 

Issuance of shares - warrants exercised

 

 

2,499,453

 

 

 

2,499

 

 

 

1,133,802

 

 

 

 

 

 

1,136,301

 

Issuance of shares - share based compensation on RSUs

 

 

208,416

 

 

 

208

 

 

 

500,421

 

 

 

 

 

 

500,629

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

(6,071,704

)

 

 

(6,071,704

)

Ending – March 31, 2023

 

 

56,298,351

 

 

$

56,297

 

 

$

32,475,526

 

 

$

(44,155,008

)

 

$

(11,623,185

)

Issuance of shares – options exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of shares - warrants exercised

 

 

227,630

 

 

 

228

 

 

 

221,434

 

 

 

 

 

 

221,662

 

Issuance of shares - share based compensation on RSUs

 

 

481,593

 

 

 

482

 

 

 

577,580

 

 

 

 

 

 

578,062

 

Issuance of shares - ESPP

 

 

300,121

 

 

 

301

 

 

 

198,680

 

 

 

 

 

 

198,981

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

(7,471,022

)

 

 

(7,471,022

)

Ending – June 30, 2023

 

 

57,307,695

 

 

$

57,308

 

 

$

33,473,220

 

 

$

(51,626,030

)

 

$

(18,095,502

)

 

See accompanying notes to condensed consolidated financial statements.

3


 

GLOBAL CROSSING AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

For The Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$

(13,542,728

)

 

$

(11,545,158

)

Adjustments to reconcile net loss to net cash (used in) operating activities:

 

 

 

 

 

 

Depreciation

 

 

893,988

 

 

 

103,210

 

Bad debt expense (recovery)

 

 

(17,540

)

 

 

51,356

 

Gain on sale of spare parts

 

 

(107,117

)

 

 

 

Amortization of debt issue costs

 

 

530,729

 

 

 

 

Amortization of operating lease right of use asset

 

 

3,646,948

 

 

 

1,913,191

 

Share-based payments

 

 

1,108,538

 

 

 

725,619

 

Foreign exchange loss

 

 

1,200

 

 

 

4,652

 

Loss on sale of property

 

 

135,772

 

 

 

 

Interest on finance leases

 

 

202,064

 

 

 

 

Changes in assets and liabilities

 

 

 

 

 

 

Accounts receivable

 

 

(2,931,205

)

 

 

(488,316

)

Assets held for sale

 

 

700,964

 

 

 

 

Prepaid expenses and other current assets

 

 

(684,068

)

 

 

(563,886

)

Accounts payable

 

 

4,767,261

 

 

 

1,362,684

 

Accrued liabilities and other liabilities

 

 

12,344,141

 

 

 

3,614,574

 

Operating lease obligations

 

 

(3,668,823

)

 

 

(1,387,700

)

Other liabilities

 

 

232,457

 

 

 

 

Net cash provided (used) in operating activities

 

 

3,612,581

 

 

 

(6,209,774

)

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,068,839

)

 

 

(863,775

)

Deposits, deferred costs and other assets

 

 

(2,969,133

)

 

 

(1,889,235

)

Net cash used in investing activities

 

 

(4,037,972

)

 

 

(2,753,010

)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Payments to related party

 

 

 

 

 

(197,558

)

Principal payments on finance leases

 

 

(220,895

)

 

 

 

Proceeds on issuance of shares

 

 

1,594,353

 

 

 

644,242

 

Proceeds from note payable

 

 

2,017,134

 

 

 

5,925,529

 

Net cash provided by financing activities

 

 

3,390,592

 

 

 

6,372,213

 

 

 

 

 

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

2,965,201

 

 

 

(2,590,571

)

 

 

 

 

 

 

 

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

 

$

8,426,135

 

 

$

5,403,430

 

 

 

 

 

 

 

 

Non-cash transactions

 

 

 

 

 

 

Right-of-use (ROU) assets acquired through operating leases

 

$

37,296,700

 

 

 

5,390,848

 

Equipment acquired through finance leases

 

 

1,334,004

 

 

 

 

Note Payable reductions through accounts receivable from sale of Assets held for sale

 

 

336,385

 

 

 

 

 

 

 

 

 

 

 

Cash paid for

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

$

472,572

 

 

 

15,665

 

Taxes

 

-

 

 

-

 

 

See accompanying notes to condensed consolidated financial statements.

4


 

GLOBAL CROSSING AIRLINES GROUP INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.
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”), GlobalX A320 Aircraft Acquisitions Corp. (“Acquisition A320”), GlobalX A321 Aircraft Acquisition Corp. (“Acquisition A321”), GlobalX Travel Technologies, Inc. (“Technologies”), GlobalX Air Tours, LLC (“GlobalX Tours”), LatinX Air S.A.S. and GlobalX Colombia S.A.S.. 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, 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, including fluctuations resulting from the global COVID-19 pandemic and the operating results for any quarter are therefore not necessarily indicative of results that may be otherwise expected for the entire year.

The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As of June 30, 2023, the Company had a working capital deficit of $37,293,689 and a retained deficit of $51,626,030. 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.

2.
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.

5


 

3.
EQUITY METHOD INVESTMENTS

The Company’s investments in affiliates accounted for using the equity method include an approximately 13% ownership interest in Canada Jetlines Operations Ltd. (“Jetlines”) as of June 30, 2023.

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 June 30, 2023, the Company holds approximately 13% ownership in Jetlines. Jetlines did not generate net income during the year ended on December 31, 2022 and the six months period ended on June 30, 2023.

4.
DEBT

 

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 June 30, 2023, the Company received $2.5 million from the loan.

 

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