LGM ENTERPRISES, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In
thousands)
Payables to Related Parties
In relation to the fuel purchase and lease transactions, accounts payable to related parties on the condensed consolidated balance sheets
totaled $0 and $72 as of September 30, 2023 and December 31, 2022, respectively. Accounts payable to related parties are recorded as an increase in equity and a decrease in accounts payable to related parties at closing. As of
September 30, 2023 and 2022, the Company recognized an increase in equity related to related party payables of $1,801 and $3,919, respectively.
Sales to Related Parties
The Company allows owners of subsidiaries and lessor SAEs without Equity (lessor VIEs) to charter flights at a reduced rate. During
the nine months ended September 30, 2023 and 2022, the Company recorded $18,387 and $17,750 in charter flight revenue from owners of subsidiaries and lessor VIEs, respectively. During the nine months ended September 30, 2023 and 2022,
the Company recorded $101 and $15 in revenue from related parties not considered owners of subsidiaries or lessor VIEs, respectively.
Receivables from Related Parties
Short term accounts receivable from related parties are comprised of these customer flight activity charges that exceed the prepaid balances of
the respective customers account and totaled $1,511 and $2,996 as of September 30, 2023 and December 31, 2022, respectively.
In addition, there are long-term accounts receivable from owners of subsidiaries and lessor VIEs on the condensed consolidated balance sheets
that totaled $2,683 and $2,629 as of September 30, 2023 and December 31, 2022, respectively. Long-term accounts receivable from related parties are comprised of the receivable balance from aircraft sales offset by aggregate repurchase
option prices at the end of the lease terms (the Company books this liability when the other party exercises its option and therefore LGM is obligated to repurchase the leased aircraft). See Note 11 Leases and Note 17 Commitments and Contingencies
for further details.
Accounts receivable from related parties are recorded as a decrease in equity and a decrease in accounts receivable
from related parties at closing. As of September 30, 2023 and 2022, the Company recognized a reduction of equity related to related party receivables of $977 and $3,912, respectively.
The Company occasionally makes accounts payable payments on behalf of LGMV. Related party receivables from LGMV are immaterial as of
September 30, 2023 and December 31, 2022, respectively.
Notes Receivable from
Non-controlling Interests
In the normal course of its business, LGM finances upfront
third-party buyers of their SAEs and holds notes receivable from these buyers. Notes receivable from non-controlling interests is comprised of $2,468 of a related partys purchase of 99% ownership of a
consolidated subsidiary and $2,440 of another related partys purchase of 99% ownership of a consolidated subsidiary as of September 30, 2023.
Notes receivable from non-controlling interests is comprised of $2,572 of a related partys
purchase of 99% ownership of a consolidated subsidiary and $2,545 of another related partys purchase of 99% ownership of a consolidated subsidiary as of December 31, 2022.
Other Transactions with Related Parties
The Company is a guarantor to a term note, dated January 29, 2021, between Sea Jay, LLC and a financial institution where the initial
principal balance is in the amount of $11,900. Sea Jay, LLC is wholly owned by LGM Ventures, LLC.
On September 14, 2023, the Company
exercised its repurchase option on a 50% interest of an aircraft co-owned with a proposed Director, Peter Hopper, which resulted in the termination of an aircraft lease with DH Aviation, LLC and subsequent
purchase of 50% of the underlying aircraft. This purchase option was settled with a cashless transaction, in which the Company received the aircraft interest in exchange for settling $825 of trade receivables the seller had with the Company. The
nature of this transaction was agreed upon in the early stages of the relationship.
19. |
Defined Contribution Plan |
The Company established the Fly Exclusive 401(k) Plan (the 401k Plan) under Section 401(k) of the Internal Revenue Code.
Under the 401k Plan, employees (or Participants) with greater than two months of service may contribute up to the lesser of $58 or 100% of their compensation per year subject to the elective limits as
defined by IRS guidelines. The Company may make discretionary matching contributions in amounts equal to a uniform percentage or dollar amount of employees elective deferrals each plan year. The Company is matching 50% of the first 8% of base
compensation that participants contribute to the Plan. Vesting in the Companys contribution portion of their accounts is based on years of continuous service. A participant is 100% vested after 2 years of credited service.
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