On July 27, 2023, the Company completed the acquisition of all issued and outstanding shares of Southern. The acquisition of Southern expands the Company’s regional airline network servicing U.S. cities across the Mid-Atlantic, Gulf South, Midwest, Rocky Mountains, West Coast, New England and Hawaii. Total consideration is comprised of $81.25 million of equity consideration, through the issuance of 16,250,000 shares of the Company’s common stock on close of the Southern Acquisition and $699 thousand of payments made by the Company to settle debt obligations of Southern, which were not assumed as part of the acquisition. As the transaction closed prior to the Company’s listing on the New York Stock Exchange on July 27, 2023, the fair value of the common stock issued to Southern stockholders was based on the opening trading price of the Company’s common stock on July 27, 2023 of $5.00 per share.

Subsequent to the issuance of shares of the Company’s common stock as purchase consideration, the Company repurchased 403,667 shares from employees for $1.3 million in satisfaction of employee tax withholdings related to such issuance.

The results of operations of Southern are included in the Company’s condensed consolidated financial statements from the date of acquisition, July 27, 2023, through September 30, 2023.

The purchase consideration was preliminarily allocated as follows (in thousands) :


Cash	$	1,377
Accounts receivable, net		4,155
Prepaid expenses and other current assets		4,326
Property and equipment, net		37,372
Operating lease right-of-use assets		13,214
Finance lease right-of-use assets		303
Acquisition-related intangibles		28,150
Other assets		3,604
Total assets	$	92,501
Accounts payable		5,649
Accrued expenses and other current liabilities		10,405
Deferred revenue		7,329
Current maturities of long-term debt		2,923
Operating lease liabilities, current		3,624
Finance lease liabilities, current		147
Due to related parties, current		1,853
Long-term debt, net of current maturities		24,123
Operating lease liabilities, long term		6,836
Finance lease liabilities, long term		175
Due to related parties, long term		1,864
Deferred tax liability		3,750
Other noncurrent liabilities		37
Total liabilities	$	68,715
Fair value of net assets acquired		23,786
Goodwill		58,163
Total Purchase Consideration	$	81,949

The Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the preliminary estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management. The fair values are subject to adjustment for up to one year after the close of the transaction as additional information is obtained. The primary items pending are related to income tax matters. Any adjustments to the preliminary purchase price allocation identified during the measurement period will be recognized in the period in which the adjustments are determined.

Goodwill represents purchase consideration in excess of the fair value of net assets acquired. Factors that contribute to the recognition of goodwill include increased synergies expected to be achieved from the integration of Southern, as well as the acquisition of a talented workforce. None of the goodwill is expected to be deductible for income tax purposes. Goodwill is not amortized to earnings, but instead will be reviewed for impairment at least annually, absent any interim indicators of impairment.

Following are details of the purchase consideration allocated to acquired intangible assets:


Asset	Fair Value		Weighted- Average Estimated Useful Life
EAS Route Contracts (1)	$	26,830	10 years
Corporate Tradename and Trademarks (2)		1,320	4 years
Total	$	28,150
(1) The fair value of EAS route contracts were determined using the income approach, specifically, the multi-period excess earnings method.
(2) Corporate trade name and trademarks primarily relate to the Southern brand and related trademarks, respectively, and the fair values were determined by applying the income approach, specifically, the relief from royalty method.

The fair value of the identified intangible assets will be amortized over the assets’ estimated useful lives based on the pattern in which the economic benefits are expected to be received to cost of sales and operating expenses.

Following are the supplemental condensed consolidated financial results of the Company and Southern on an unaudited pro forma basis, as if the Southern Acquisition had been consummated as of the beginning of the fiscal year 2022 (i.e., January 1, 2022):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenue	$	28,882		$	27,197		$	85,446		$	72,849
Net loss	$	(50,751	)	$	(13,314	)	$	(77,542	)	$	(72,133	)

The unaudited pro forma financial information presented above has been calculated after adjusting the results of operations of the Company to reflect certain business combination effects, including the amortization of the acquired intangible assets, associated income tax impacts, incremental financing costs, and one-time acquisition-related costs incurred by the Company as though this business combination occurred as of January 1, 2022, the beginning of the Company’s 2022 fiscal year. The pro forma financial information is for informational purposes only and not indicative of the results of operations that would have been achieved if this business combination had taken place as of January 1, 2022, nor is it indicative of future results of operations.