Related Party Transactions

3 Months Ended

Mar. 31, 2012

Related Party Transactions [Abstract]

Related Party Transactions

6.Related Party Transactions

The Company's portfolio of leased aircraft assets is managed and administered under the terms of a management agreement with JetFleet Management Corp. ("JMC"), which is an integrated aircraft management, marketing and financing business and a subsidiary of JetFleet Holding Corp. ("JHC").  Certain officers of the Company are also officers of JHC and JMC and hold significant ownership positions in both JHC and the Company. Under the Management Agreement, JMC receives a monthly management fee based on the net asset value of the assets under management. JMC also receives an acquisition fee for locating assets for the Company, provided that the aggregate purchase price, including chargeable acquisition costs and any acquisition fee, does not exceed the fair market value of the asset based on appraisal, and may receive a remarketing fee in connection with the sale or re-lease of the Company's assets. The Company recorded management fees of $986,700 and $945,300 during the quarters ended March 31, 2012 and 2011, respectively. The Company paid acquisition fees totaling $290,000 to JMC during the quarter ended March 31, 2012, which were included in the cost basis of the asset purchased.  The Company paid no remarketing fees to JMC during the quarter ended March 31, 2012.  The Company paid no acquisition or remarketing fees to JMC during the quarter ended March 31, 2011.  

In August 2009, the Company entered into an agreement with Lee G. Beaumont in which Mr. Beaumont assigned to the Company his rights to purchase certain aircraft engines from an unrelated third party seller.  In January 2012, Mr. Beaumont became a "related person" with respect to the Company due to his acquisition on the open market of shares representing over 5% of the Company's Common Stock.  During the quarters ended March 31, 2012 and 2011, the Company made no payments to Mr. Beaumont.  A balance of $66,700 is payable in the third quarter of 2012.

In connection with its Subordinated Notes financing entered into 2007 and 2008, the Company issued warrants to purchase up to 81,224 shares of the Company's common stock.  The warrants became exercisable on December 30, 2011, and the shares issuable upon exercise of the warrants constitute over 5% of the common stock of the Company.  As a result, the Subordinated Notes purchasers became "related persons" with respect to the Company.   During the three months ended March 31, 2012 and 2011, the Company made interest payments totaling $0 and $89,900 to the Subordinated Notes purchasers.