Notes Payable |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Payable | 5. NOTES PAYABLE
On August 2, 2023, and December 21, 2023, the Company consummated the placement of $35 million and $0.7 million, respectively, of senior secured notes due 2029 (the “Secured Notes”).
The terms of the Secured Notes include: • a maturity date of June 30, 2029, with no principal payments due until the maturity date; • the Secured Notes bear interest at a fixed rate of 15% per annum and include an upfront fee of 2% of the principal amount of such Secured Notes; • 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 were granted 10 million warrants, each exercisable into one share of Class A Non-Voting 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 guaranteed the Secured Notes; • the Secured Notes and the related guarantees are secured by a lien on substantially all of the property and assets of the Company and the guarantors of the Secured Notes; • financial covenants requiring minimum adjusted EBITDA of (i) $5 million for the fiscal year ended December 31, 2023, (ii) $15 million for the fiscal year ended December 31, 2024, and (iii) $25 million for the fiscal year ended December 31, 2025, and each following fiscal year; • minimum liquidity of $5 million measured at each quarter end; and • collateral consisting of substantially of all the Company's assets.
The Company determined that the terms of the warrants issued in the financing require such 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.
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 July 11, 2025, MSN 3101 Acquisition LLC, a wholly owned subsidiary of the Company, consummated the Company’s first aircraft acquisition, an Airbus A320 (MSN 3101), currently operating in its fleet as N630VA and powered by two CFM56-5B engines. The aircraft was purchased from former lessor Falcon 2019-1 Aerospace Limited, and the lease agreement with Falcon 2019-1 Aerospace Limited was terminated simultaneously with the consummation of the purchase of the aircraft.
The purchase price of approximately $17.0 million (including transaction costs, less deposits and cash maintenance reserves of approximately $2.4 million) paid to seller was financed by Volofin Capital Management Ltd. of London pursuant to, among other documents, a loan agreement and a promissory note (the “Loan Documents”).
The terms of the Loan Documents include monthly payments equal to (i) $375,000, for the first twelve monthly payments, (ii) $300,000, for the subsequent twelve monthly payments, and (iii) $225,000, for each monthly payment thereafter, and all remaining outstanding indebtedness shall be due and payable on the earlier of (a) March 1, 2031, and (b) the day immediately prior to the next scheduled 12Y Check for the aircraft. Interest on the debt will accrue at the annual rate of 8.84%.
The Loan Documents include customary covenants including, maintenance of a “loan to value” ratio of at least 85% on the first anniversary of the first utilization of the loan which shall be reduced by 5% on each anniversary thereafter.
Notes Payable is comprised of the following (in thousands):
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