Assets and Liabilities Held for Sale

6 Months Ended

Jun. 30, 2021

Assets and Liabilities Held for Sale

NOTE 3 - Assets and Liabilities Held for Sale

3. Assets and Liabilities Held for Sale

The Company’s assets and liabilities classified as held for sale are required to be recorded at the lower of the carrying value or fair value less cost to sell. During the second quarter of 2021, with the exception of one aircraft that is collateral for a sales-type lease receivable, the Company reclassified all of its aircraft to held for sale as a result of the Sale Order approved by the Bankruptcy Court.

In May 2021, the Company agreed to sell most of the remaining inventory of two aircraft that were being sold in parts (“Part-out Assets”) for $290,000, and recorded an impairment loss of $1,940,400 in the first quarter of 2021. During the second quarter of 2021, the Company received $345,400 in cash related to the Part-out Assets. This amount was accounted for as follows: $44,300 reduced accounts receivable for parts sales accrued in the first quarter of 2021; $294,300 reduced the carrying value of the parts; and $6,800 was recorded as gains in excess of the carrying value of the parts. During the second quarter of 2020, the Company received $112,000 in cash and accrued $30,100 in receivables for parts sales. These amounts were accounted for as follows: $77,300 reduced accounts receivable for parts sales accrued in the first quarter of 2020; $43,700 reduced the carrying value of the parts; and $21,100 was recorded as gains in excess of the carrying value of the parts.

The table below sets for the assets and liabilities that were classified as held for sale at June 30, 2021 and December 31, 2020:

	June 30, 2021			December 31, 2020
Cash and cash equivalents	$	-		$	345,900
Restricted cash		-			2,346,300
Aircraft and Part-out Assets		53,409,400			38,146,700
Notes payable and accrued interest, net of unamortized debt issuance costs of $313,400		-			(13,836,900	)
Derivative liability		-			(767,900	)
Maintenance reserves		(2,028,000	)		-
Security deposits		(466,000	)		-
Unearned revenue		(966,400	)		-

As of June 30, 2021, minimum future lease revenue payments receivable under non-cancelable operating leases were as follows:

Years ending December 31
2021 (six months)	$	3,858,100
2022		7,368,300
2023		7,368,300
2024		5,892,000
2025		2,992,200
Thereafter		2,886,000
	$	30,364,900

The remaining weighted average lease term of the Company’s assets under operating leases was 40 months and 29 months at June 30, 2021 and December 31, 2020, respectively.