ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Forward-looking Statements
This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. These statements may include projections of revenue, provisions for doubtful accounts, income or loss, capital expenditures, repayment of debt, other financial items, statements regarding our plans and objectives for future operations, acquisitions, divestitures and other transactions, statements of future economic performance, statements of the assumptions underlying or relating to any of the foregoing statements and statements other than statements of historical fact.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncer‐tainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by such forward-looking statements. We therefore caution you against relying on any of these forward-looking statements because they are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include our services and pricing, the impact of the COVID-19 pandemic, general economic conditions, our ability to raise additional capital and the other risk factors contained in Item 1A of this report.
Any forward-looking statement made by us in this report speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Overview
Saker Aviation Services, Inc. is a Nevada corporation. Our common stock, $0.03 par value per share (the “common stock”), is quoted on the OTCQB Marketplace (“OTCQB”) under the symbol “SKAS”. Through our subsidiaries, we operate in the aviation services segment of the general aviation industry, in which we serve as the operator of a heliport.
We were formed on January 17, 2003 as a proprietorship and were incorporated in Arizona on January 2, 2004. We became a public company as a result of a reverse merger transaction on August 20, 2004 with Shadows Bend Development, Inc., an inactive public Nevada corporation, and subsequently changed our name to FBO Air, Inc. On December 12, 2006, we changed our name to FirstFlight, Inc. On September 2, 2009, we changed our name to Saker Aviation Services, Inc.
Our business activities are carried out as the operator of the New York Heliport and until October 31, 2022 as an FBO and MRO at the Garden City (Kansas) Regional Airport. On October 31, 2022, the Garden City facilities were sold and we no longer maintain an FBO or MRO at the Garden City (Kansas) Regional Airport.
Our business activities at the New York Heliport commenced in November 2008 when we were awarded the Concession Agreement by the City of New York to operate the New York Heliport, which we assigned to our subsidiary, FirstFlight Heliports, LLC d/b/a Saker Aviation Services. On February 15, 2023, it was reported in the public record that NYCEDC would be bringing a new Concession Agreement with the Company as the operator of the Downtown Manhattan Heliport to the Franchise and Concession Review Committee meeting on March 3, 2023. The item was subsequently pulled off the agenda, with NYCEDC announcing on April 7, 2023 that the previous Request for Proposals ("RFP") had been cancelled and that it is their intention to put out a new RFP in 2023. Saker's current Concession Agreement terminates on April 30, 2023. The Company has been notified by NYCEDC that the Company will receive a new permit to operate the heliport from May 1, 2023 until a new RFP process is concluded. The Company is currently working with NYCEDC on the new agreement and expects to file a Form 8-K once the new agreement is finalized.
The COVID-19 pandemic has impacted the global and United States economies. Federal, state, and local governments implemented certain travel restrictions, “stay-at-home” orders, and social distancing initiatives which negatively impacted our operations and those of our customers. As a result of the COVID-19 pandemic, on March 17, 2020 all sightseeing tour operations at the New York Heliport ceased. On July 20, 2020, New York City started Phase 4 of the city’s reopening. Sightseeing tour operators at the New York Heliport restarted operations under this phase.
For the period July 20, 2020 through March 31, 2022, sightseeing tour operators experienced much lower demand for tours as compared to pre-pandemic levels of activity. Beginning in April 2022, sightseeing tour operators had an increase in activity and a much higher demand for tours.
Our long-term strategy is to increase our sales through growth within our aviation services operations. To do so, we may expand our geographic reach and product offering through strategic acquisitions and improved market penetration within the markets we serve. We expect that any future acquisitions or product offerings would be to complement and/or augment our current aviation services operations.
Summary Financial Information
The summary financial data set forth below is derived from and should be read in conjunction with the consolidated financial statements, including the notes thereto, filed as part of this Annual Report on Form 10-K.
Consolidated Statement of Operations Data:
|
|
Year Ended
December 31,
2022
|
|
|
Year Ended
December 31,
2021
|
|
(in thousands, except for share and per share data)
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
7,599 |
|
|
$ |
2,400 |
|
Operating income, before income tax expense
|
|
$ |
732 |
|
|
$ |
441 |
|
Other income, before income tax expense
|
|
$ |
628 |
|
|
$ |
308 |
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, before income taxes
|
|
$ |
1,361 |
|
|
$ |
749 |
|
Income tax expense |
|
$ |
(300 |
) |
|
$ |
(150 |
) |
Discontinued operations (loss) income, net of income taxes
|
|
$ |
186 |
|
|
$ |
127 |
|
Net Income
|
|
$ |
1,247 |
|
|
$ |
726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share – basic
|
|
$ |
1.28 |
|
|
$ |
0.71 |
|
Net income per share – diluted
|
|
$ |
1.26 |
|
|
$ |
0.71 |
|
Weighted average number of shares – basic
|
|
|
976,048 |
|
|
|
1,023,709 |
|
Weighted average number of shares – diluted
|
|
|
987,149 |
|
|
|
1,026,729 |
|
Balance Sheet Data: (in thousands)
|
|
December 31,
2022
|
|
|
December 31,
2021
|
|
Working capital surplus
|
|
$ |
5,740 |
|
|
$ |
3,442 |
|
Total assets
|
|
$ |
6,913 |
|
|
$ |
5,602 |
|
Total liabilities
|
|
$ |
1,130 |
|
|
$ |
1,138 |
|
Stockholders’ equity
|
|
$ |
5,783 |
|
|
$ |
4,464 |
|
Total liabilities and Stockholders’ equity
|
|
$ |
6,913 |
|
|
$ |
5,602 |
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Comparison of Results for the Years Ended December 31, 2022 and December 31, 2021.
REVENUE AND RESULTS OF CONTINUING OPERATIONS
DISCONTINUED OPERATIONS
As disclosed in a Current Report on Form 8-K filed with the SEC on November 2, 2022, on October 31, 2022, the Company sold its subsidiary FBO and MRO operations of FBO Air-Garden City, Inc. (“GCK”) to Crosby Flying Services, LLC (”Crosby”) for an aggregate purchase price of $1.6 million. Crosby paid the purchase price on October 31, 2022 less $160,000 (the “Installment Payment”) which is to be paid in cash upon the first anniversary of the Closing Date. The Installment Payment is subject to GCK’s and the Company’s compliance with a Non-Compete agreement. GCK results of operations have been reported as discontinued operations in the Condensed Consolidated Statements of Operations for the year ended December 31, 2022 and 2021.
Comparison of Continuing Operations from the Twelve Months Ended December 31, 2022 and December 31, 2021.
REVENUE
Revenue from continuing operations increased by 216.6 percent to $7,598,597 for the twelve months ended December 31, 2022 as compared with corresponding prior-year period revenue of $2,400,316.
For the twelve months ended December 31, 2022, revenue from continuing operations associated with services and supply items increased by 240.7 percent to approximately $5,747,000 as compared to approximately $1,687,000 in the twelve months ended December 31, 2021. This increase was attributable to increased demand for services at our New York location in 2022 compared to the prior year, which was negatively impacted by the COVID-19 pandemic.
For the twelve months ended December 31, 2022, revenue from continuing operations associated with the sale of jet fuel and related items increased by 261.6 percent to approximately $1,582,000 as compared to approximately $438,000 in the twelve months ended December 31, 2021. This increase was attributable to the higher volume of gallons and price of jet fuel sold at our New York location in 2022 compared to the prior year, which was negatively impacted by the COVID-19 pandemic.
For the twelve months ended December 31, 2022, all other revenue from continuing operations decreased by 2.4 percent to approximately $269,000 as compared to approximately $276,000 in the twelve months ended December 31, 2021.
GROSS PROFIT
Total gross profit increased 152.8 percent to $4,613,317 in the twelve months ended December 31, 2022 as compared to $1,824,954 in the twelve months ended December 31, 2021. Gross margin was 60.7 percent for the twelve months ended December 31, 2022 as compared to 76.0 percent for the same period in 2021. Gross profit for the year ended December 31, 2021 was positively impacted by Employee Retention Tax Credits due the Company under the CARES Act. These credits were recorded in the second and third quarters of 2021. The increase in gross profit is also related to higher levels of activity at our New York location in 2022 as compared to the prior year. The decrease in gross margin is related to the higher cost of jet fuel and higher costs associated with services and supplies in 2022 as compared to the prior year.
OPERATING EXPENSE
Selling, General and Administrative
Total selling, general and administrative expenses (“SG&A”) were $3,880,902 in the twelve months ended December 31, 2022, an increase of $2,496,494, or 180.3 percent, as compared to the same period in 2021.
SG&A associated with our New York operations were approximately $3,329,000 in the twelve months ended December 31, 2022, an increase of approximately $2,416,000, or 264.6 percent, as compared to the twelve months ended December 31, 2021. SG&A associated with our New York operations, as a percentage of revenue, was 43.8 percent for the twelve months ended December 31, 2022, as compared with 38.0 percent in the corresponding prior year period. The increase in SG&A was primarily attributable to increased fees due under the Company’s management agreement and fees due the NYCEDC in 2022 compared to the prior year due to pre-pandemic levels of activity beginning in April, 2022.
Corporate SG&A was approximately $552,000 for the twelve months ended December 31, 2022, representing an increase of approximately $81,000, or 17.2 percent, as compared with the corresponding prior year period. The increase in Corporate SG&A on a year-over-year basis was largely attributable to non-recurring expenses in 2022.
OPERATING INCOME
Operating income for the year ended December 31, 2022 was $732,414 as compared to operating income of $440,546 in the year ended December 31, 2021. The increase in operating income on a year-over-year basis was driven by the factors described above.
Depreciation and Amortization
Depreciation and amortization was approximately $100,089 and $128,990 for the twelve months ended December 31, 2022 and 2021, respectively. The decrease in depreciation expense was attributable to assets becoming fully depreciated in 2022.
Interest Income and Expense
Interest income was $3,302 and $3,780 for the twelve months ended December 31, 2022 and 2021, respectively. Interest expense for the year ended December 31, 2022 was $17,979, as compared to $24,823 in the same period in 2021. Interest expense in both years is included in gain (loss) from discontinued operations. The decrease in interest expense on a year-over-year basis was due primarily to the repayment of notes payable in connection with the sale of our Kansas operation on October 31, 2022.
Impairment of Goodwill and Other Intangibles
We had $0 and $750,000 of goodwill at December 31, 2022 and 2021, respectively. The Company’s goodwill was included in the sale of the Company’s Kansas location on October 31, 2022.
Income Tax Expense
Income tax expense for the twelve months ended December 31, 2022 was approximately $300,000, as compared to $150,000 in the same period in 2021. The increase in income tax expense is attributable to higher net income in the twelve months ended December 31, 2022 as compared to 2021.
Net Income Per Share
Net income for the twelve months ended December 31, 2022 was $1,246,621 as compared to net income of $726,184 in the twelve months ended December 31, 2021. The increase in net income was attributable to higher revenue at our New York location as well as an increase in other income in 2022 as compared to 2021.
Basic net income per share for the twelve months ended December 31, 2022 was $1.28 as compared to basic net income per share of $0.71 in 2021. Diluted net income per share for the twelve months ended December 31, 2022 was $1.26 as compared to diluted net income per share of $0.71 in 2021.
Liquidity and Capital Resources
As of December 31, 2022, we had cash and restricted cash of $5,977,157 and a working capital surplus of $5,739,663. We generated revenue from continuing operations of $7,598,597 and had net income of $1,246,621 for the year ended December 31, 2022. For the year ended December 31, 2022, cash flows included net cash provided by operating activities of $2,435,018, net cash provided by investing activities of $1,201,853, and net cash used in financing activities of $106,620.
As disclosed in a Current Report on Form 8-K filed on March 21, 2018 with the SEC, on March 15, 2018 the Company entered into a loan agreement (the “Loan Agreement”) with Key Bank National Association (the “Bank”). The Loan Agreement contains three components: (i) a $2,500,000 acquisition line of credit (the “Key Bank Acquisition Note”); (ii) a $1,000,000 revolving line of credit (the “Key Bank Revolver Note”); and (iii) a $338,481 term loan (the “Key Bank Term Note”). On October 11, 2018, and as subsequently amended, the Company entered into a new loan agreement with the Bank (as so amended, the “Change of Terms Agreement”) which modified the original terms of the Key Bank Acquisition Note. The Bank notified the Company of its decision to discontinue the Key Bank Acquisition Note, effective June 30, 2021. There were no amounts due under the Key Bank Acquisition Note as of the date it was discontinued. All amounts due under the Key Bank Term Note have been repaid.
The Key Bank Revolver Note, at the discretion of the Bank, provides for the Company to borrow up to $1,000,000 for working capital and general corporate purposes. This revolving line of credit is a demand note with no stated maturity date. Borrowings under the Key Bank Revolver Note will bear interest at a rate per annum equal to Daily Simple SOFR plus 2.75%. The Company is required to make monthly payments of interest on any outstanding principal under the Key Bank Revolver Note and is required to pay the entire balance, including principal and all accrued and unpaid interest and fees, upon demand by the Bank. Any proceeds from the Key Bank Revolver Note would be secured by substantially all of the Company’s assets. There were no amounts due under the Key Bank Revolver Note at December 31, 2022 or 2021.
On August 14, 2020, the Company was granted a loan from the Bank (the “Loan”) in the amount of $304,833, pursuant to the Paycheck Protection Program (PPP) under Division, Title I of the CARES Act, which was enacted March 27, 2020. The Loan, which was in the form of a note dated August 14, 2020, was to mature in August 2025 and bore interest at a rate of 1% per annum and was payable in monthly installments commencing on, or before, October 31, 2021 if not forgiven and legally released. At December 31, 2020, in accordance with FASB ASC 470, Debt, and ASC 405-20, Liabilities – Extinguishment of Liabilities, the Company recorded the cash inflow from the Loan as a liability, and cash flows from financing, pending legal release from the obligation by the U.S. Small Business Administration (“S.B.A.”). The Company used the Loan proceeds for eligible expenses during the covered period and the Loan was forgiven and legally released by the S.B.A. in full in the second quarter of 2021. The Company recorded the forgiveness of the Loan as a gain on extinguishment of debt – PPP Loan in 2021.
The Company is party to a Concession Agreement, dated as of November 1, 2008, with the City of New York for the operation of the New York Heliport (the “Concession Agreement”). Pursuant to the terms of the Concession Agreement, the Company must pay the greater of 18% of the first $5,000,000 in any program year based on cash collected (“Gross Receipts”) and 25% of Gross Receipts in excess of $5,000,000, or minimum annual guaranteed payments.
As disclosed in a Current Report on Form 8-K filed with the SEC on February 5, 2016, the Company and the New York City Economic Development Corporation (the “NYCEDC”) announced new measures to reduce helicopter noise and impacts across New York City (the “Air Tour Agreement”). Under the Air Tour Agreement, the Company has not been allowed to permit its tenant operators to conduct tourist flights from the New York Heliport on Sundays since April 1, 2016. The Company was also required to ensure that its tenant operators reduce the total allowable number of tourist flights from 2015 levels by 20 percent beginning June 1, 2016, by 40 percent beginning October 1, 2016 and by 50 percent beginning January 1, 2017. The Air Tour Agreement also provided for the minimum annual guarantee payments the Company is required to pay to the City of New York under the Concession Agreement be reduced by 50%, effective January 1, 2017. Additionally, since June 1, 2016, the Company has been required to provide monthly written reports to the NYCEDC and the New York City Council detailing the number of tourist flights conducted out of the New York Heliport compared to 2015 levels, as well as information on any tour flight that flies over land and/or strays from agreed upon routes. The Air Tour Agreement also extended the Concession Agreement for 30 months, resulting in a new expiration date of April 30, 2021 and gave the City of New York two one-year options to extend the term of the Concession Agreement. The term of the Concession Agreement was subsequently extended by the City through April 30, 2023 by the City’s exercise of both one-year option renewals.
The reductions under the Air Tour Agreement have negatively impacted the Company’s business and financial results as well as those of its management company at the New York Heliport, Empire Aviation. The Company incurred management fees with Empire Aviation of approximately $2,138,000 and $0 during the twelve months ended December 31, 2022 and 2021, respectively. Empire Aviation notified the Company that it believes additional fees are due under the management agreement with the New York Heliport for both 2021 and 2020. If the Company is unable to come to an agreement with Empire Aviation regarding amounts due under the agreement, the Company could incur additional expense as disclosed in the Company’s 2021 Annual Report on Form 10-K (Note 10. Contingent Liabilities).
During the program year that began on May 1, 2020, the City of New York agreed, in recognition of the pandemic’s impact, that the Company could defer payment of minimum guaranteed payments. In April 2021, the City of New York waived the deferred fees through December 31, 2020. In May 2021, the City of New York waived the deferred fees through April 30, 2021 which coincided with the original expiration of the Concession Agreement as amended by the Air Tour Agreement. The Company worked with the City of New York to address fees to be paid by the Company for the period May 1, 2021 through December 31, 2021. In March 2022, the City of New York agreed to accept 18% of monthly Gross Receipts in excess of $100,000 as Concession fees for this period. In April 2022, the Company agreed to resume paying the City of New York the total monthly amounts due under the Concession Agreement retro-active to January 2022 and to continue paying fees due under the Concession Agreement through the remainder of the Air Tour Agreement. During the twelve months ended December 31, 2022 and 2021, we incurred approximately $1,509,000 and $192,000 in concession fees, respectively, which are recorded in the cost of revenue.
On February 15, 2023, it was reported in the public record that NYCEDC would be bringing a new Concession Agreement with the Company as the operator of the Downtown Manhattan Heliport to the Franchise and Concession Review Committee meeting on March 3, 2023. The item was subsequently pulled off the agenda, with NYCEDC announcing on April 7, 2023 that the previous Request for Proposals ("RFP") had been cancelled and that it is their intention to put out a new RFP in 2023. Saker's current Concession Agreement terminates on April 30, 2023. The Company has been notified by NYCEDC that the Company will receive a new permit to operate the heliport from May 1, 2023 until a new RFP process is concluded. The Company is currently working with NYCEDC on the new agreement and expects to file a Form 8-K once the new agreement is finalized.
On April 20, 2018, the Company’s Kansas subsidiary entered into a purchase lease with Commerce Bank for a refueling truck (the “Truck Lease”). The Truck Lease commenced on May 1, 2018 and continues for 60 months with a monthly payment of $2,568 and an interest rate of 5.5%. At the end of the Truck Lease, the Company’s subsidiary may purchase the vehicle for $1.00. The refueling truck was included in the sale of the Company’s Kansas subsidiary and the Truck Lease was paid in full at closing.
On May 1, 2021, the Company’s Kansas subsidiary executed a promissory note for $76,000 with Avfuel Corporation (“Avfuel”) for the purchase of a Jet-A refueling truck (the “Truck Note”). The Truck Note requires six annual payments of $13,432.56 commencing April 30, 2022 with the entire balance of unpaid principal and interest due on, or before, April 30, 2028. Interest accrues at prime plus 3% on the outstanding principal amount. The Company is required to make prepayments against the Truck Note at the rate of $0.018 per gallon of fuel purchased under a fuel supply agreement between the Company and Avfuel. The Jet-A refueling truck was included in the sale of the Company’s Kansas subsidiary and the Truck Note was paid in full at closing.
During the twelve months ended December 31, 2022, we had a net increase in cash of $3,530,251. Our sources and uses of funds during this period were as follows:
Cash from Operating Activities
For the year ended December 31, 2022, net cash provided by operating activities was $1,712,556. This amount included an increase in operating cash related to net profit of $1,246,621 and additions for the following items: (i) depreciation, $100,089; (ii) stock based compensation, $71,995; (iii) accounts receivable, $60,866; (iv)inventories, $227,091; (v) income tax receivable, $573,679; (vi) prepaid expenses, $150,805; (vii) customer deposits, $123,755; (viii) accounts payable, $116,284; and (vii) accrued expenses, $192,689. The increase in cash provided by operating activities in 2022 was offset by the following item: (i) gain on sale of assets, $431,318 and life insurance proceeds (500,000). For the year ended December 31, 2021, net cash provided by operating activities was $813,751. This amount included an increase in operating cash related to net profit of $726,184 and additions for the following items: (i) depreciation, $128,990; (ii) stock based compensation, $34,392; (iii) extinguishment of debt, $304,833; (iv)income tax receivable, $261,922; (v) customer deposits, $2,512; (vi) accounts payable, $150,200; and (vii) accrued expenses, $185,266. The increase in cash provided by operating activities in 2021 was offset by the following items: (i) accounts receivable, trade, $43,308; (ii) inventories, $79,485; and (iii) prepaid expenses, $248,089.
Cash from Investing Activities
For the year ended December 31, 2022, net cash provided by investing activities was $1,424,315. This amount included (i) net proceeds from sale of assets, $1,440,000; and (ii) the purchase of property and equipment, $15,685. For the year ended December 31, 2021, net cash used in investing activities was $81,544 for purchases of property and equipment.
Cash from Financing Activities
For the year ended December 31, 2022, net cash provided by financing activities was $393,380. This amount included proceeds from life insurance $500,000 offset by (i) repayment of notes payable, $67,045; and (ii) repayment of right of use lease payables, $39,575. For the year ended December 31, 2021, net cash used in financing activities was $184,383. This amount included an addition for the issuance of notes payable of $76,000 offset by the following items: (i) purchase and cancellation of common stock, $204,399; (ii) repayment of notes payable, $8,955; and (iii) repayment of right of use leases, $47,029.
Off-Balance Sheet Arrangements
We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.
Critical Accounting Estimates
Discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the amounts reported in the consolidated financial statements and the accompanying notes. We evaluate our estimates on an ongoing basis, including those estimates related to product returns, product and content development expenses, bad debts, inventories, intangible assets, income taxes, contingencies and litigation. We base our estimates on experience and on various assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The critical accounting policies which we believe affect our more significant judgments and estimates used in the preparation of our consolidated financial statements are provided as follows:
Accounts Receivable
In 2021, the Company’s accounts receivable was primarily comprised of two customers at our New York Heliport. These customers continued to operate throughout 2021, but at substantially reduced levels of operation when compared to pre-pandemic levels. For the fiscal year ended December 31, 2021, these two customers represented approximately $180,000, or 59.8%, of the balance of accounts receivable. In addition, these two customers represented approximately 27.6% of our revenue in 2021. The Company has a security deposit in place in connection with both of these receivables.
In March 2022, one of the Company’s former customers resumed operations. In June 2022, this customer ceased operating. In June 2022, a new tenant began operating at our New York Heliport. Beginning in April 2022, the Company’s customers began operating at pre-pandemic levels which continued through the end of 2022. For the fiscal year ended December 31, 2022, the Company’s three customers represented approximately $184,000, or 75%, of the balance of accounts receivable. In addition, these three customers represented approximately 83 % of our revenue in 2022. The Company has a security deposit in place for each of these customers.
Goodwill and Intangible Assets
Goodwill and intangibles that are deemed to have indefinite lives are not amortized but, instead, are to be reviewed at each reporting period for impairment. We assessed potential impairment of goodwill using qualitative factors by considering various factors including macroeconomic conditions, industry and market conditions, cost factors, a sustained share price or market capitalization decrease and any reporting unit specific events. We performed an analysis of our goodwill and intangible assets at December 31, 2021. The Company had no goodwill recorded as of December 31, 2022 due to the sale of the Company’s Kansas location on October 31, 2022.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between their financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Deferred tax assets are subject to a valuation allowance because it is more likely than not that certain of the deferred tax assets will not be realized in future periods. During 2020 we experienced a decrease in demand and minimal activity in our business. The extent of the impact of COVID-19 on our operational and financial performance cannot be predicted and will depend on future developments, including the duration and spread of the outbreak, related travel advisories and restrictions. Accordingly, we have established a valuation allowance on net deferred assets. We file income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, we are no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2019.
Stock Based Compensation
Stock-based compensation expense for all share-based payment awards are based on the estimated grant-date fair value. We recognize these compensation costs over the requisite service period of the award, which is generally the option vesting term.
Option valuation models require the input of highly subjective assumptions, including the expected life of the option. Because our employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
|
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
|
|
Table of Contents to Consolidated Financial Statements
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
19
|
|
|
Consolidated Financial Statements
|
|
|
|
Consolidated Balance Sheets as of December 31, 2022 and 2021
|
21
|
|
|
Consolidated Statements of Operations For the Years Ended December 31, 2022 and 2021
|
22
|
|
|
Consolidated Statements of Stockholders’ Equity For the Years Ended December 31, 2022 and 2021
|
23
|
|
|
Consolidated Statements of Cash Flows For the Years Ended December 31, 2022 and 2021
|
24
|
|
|
Notes to Consolidated Financial Statements
|
25
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Audit Committee of the Board of Directors and Stockholders of
Saker Aviation Services, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Saker Aviation Services, Inc. and Subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, stockholders’ equity and cash flows, for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Contingent Liabilities
As described in Note 14 to the consolidated financial statements, Management assesses matters to determine whether it can reasonably estimate the amount of a loss contingency and whether the loss is probable. Where the reasonable estimate of the probable loss is a range, Management records as an accrual in its financial statements the most likely estimate of the loss or the low end of the range, if there is no best estimate. Management either discloses the amount of a possible loss or range of a loss in excess of the recorded accrual or states that such an estimate cannot be made. Management discloses significant contingencies even where the liability is not probable or the amount of the loss is not estimable, or both, if management believes there is at least a reasonable possibility that a loss may be incurred.
The principal considerations for our determination that performing procedures relating to loss contingencies is a critical audit matter are the significant judgment by Management when assessing the likelihood of a loss being incurred and when estimating the loss or range of loss for each contingency, which in turn led to significant auditor judgment, subjectivity and effort in performing procedures and evaluating Management’s assessment of the liabilities and disclosure associated with loss contingencies.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included auditing the estimated range of loss provided by Management to determine if the amount of loss can be reasonably estimated, as well as financial statement disclosures. These procedures also included, among others, evaluating the reasonableness of Management’s assessment regarding whether the loss is probable and evaluating the sufficiency of the Company’s disclosures related to this contingency.
/s/ Kronick Kalada Berdy & Co. P.C.
We have served as the Company's auditor since 2009.
Kingston, Pennsylvania
April 17, 2023
PCAOB ID No. 448
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
December 31,
2022
|
|
|
December 31,
2021
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
Cash and restricted cash
|
|
$ |
5,977,157 |
|
|
$ |
1,647,097 |
|
Accounts receivable
|
|
|
244,543 |
|
|
|
209,835 |
|
Non-Compete receivable
|
|
|
160,000 |
|
|
|
- |
|
Inventories
|
|
|
13,551 |
|
|
|
740 |
|
Income tax receivable
|
|
|
119,899 |
|
|
|
693,578 |
|
Prepaid expenses
|
|
|
354,913 |
|
|
|
413,792 |
|
Assets of discontinued operations |
|
|
- |
|
|
|
1,229,673 |
|
Total current assets
|
|
|
6,870,063 |
|
|
|
4,194,715 |
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of $3,111,462 and $3,093,877 respectively
|
|
|
42,862 |
|
|
|
46,407 |
|
|
|
|
|
|
|
|
|
|
Assets of discontinued operations
|
|
|
- |
|
|
|
1,360,714 |
|
TOTAL ASSETS
|
|
$ |
6,912,925 |
|
|
$ |
5,601,836 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable
|
|
$ |
328,505 |
|
|
$ |
115,303 |
|
Customer deposits
|
|
|
204,633 |
|
|
|
80,878 |
|
Accrued expenses
|
|
|
597,262 |
|
|
|
378,468 |
|
Liabilities of discontinued operations |
|
|
- |
|
|
|
178,035 |
|
Total liabilities
|
|
|
1,130,400 |
|
|
|
752,684 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES |
|
|
|
|
|
|
|
|
Liabilities of discontinued operations |
|
|
- |
|
|
|
385,243 |
|
TOTAL LIABILITIES |
|
|
1,130,400 |
|
|
|
1,137,927 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Preferred stock - $ 0.03 par value; authorized 333,306; none issued and outstanding
|
|
|
|
|
|
|
|
|
Common stock - $0.03 par value; authorized 3,333,334; 976,330 and 975,074 shares issued and outstanding as of December 31, 2022 and 2021, respectively
|
|
|
29,290 |
|
|
|
29,252 |
|
Additional paid-in capital
|
|
|
19,812,794 |
|
|
|
19,740,837 |
|
Accumulated deficit
|
|
|
(14,059,559 |
) |
|
|
(15,306,180 |
) |
TOTAL STOCKHOLDERS’ EQUITY
|
|
|
5,782,525 |
|
|
|
4,463,909 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$ |
6,912,925 |
|
|
$ |
5,601,836 |
|
See accompanying notes to consolidated financial statements.
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
For the Years Ended
December 31,
|
|
|
|
2022
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
$ |
7,598,597 |
|
|
$ |
2,400,316 |
|
COST OF REVENUE
|
|
|
2,985,281 |
|
|
|
575,362 |
|
GROSS PROFIT
|
|
|
4,613,316 |
|
|
|
1,824,954 |
|
|
|
|
|
|
|
|
|
|
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
|
|
|
3,880,902 |
|
|
|
1,384,408 |
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
|
|
|
732,414 |
|
|
|
440,546 |
|
|
|
|
|
|
|
|
|
|
OTHER INCOME: |
|
|
|
|
|
|
|
|
BAD DEBT RECOVERY
|
|
|
125,000 |
|
|
|
- |
|
LIFE INSURANCE PROCEEDS, FORMER PRESIDENT
|
|
|
500,000 |
|
|
|
- |
|
GAIN ON EXTINGUISHMENT OF DEBT – PPP LOAN
|
|
|
- |
|
|
|
304,833 |
|
INTEREST INCOME
|
|
|
3,302 |
|
|
|
3,780 |
|
TOTAL OTHER INCOME
|
|
|
628,302 |
|
|
|
308,613 |
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS, before income taxes
|
|
|
1,360,716 |
|
|
|
749,159 |
|
INCOME TAX EXPENSE
|
|
|
(300,000 |
) |
|
|
(150,000 |
) |
INCOME FROM CONTINUING OPERATIONS, net
|
|
|
1,060,716 |
|
|
|
599,159 |
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS: |
|
|
|
|
|
|
|
|
(Loss) Income from
|
|
|
(65,413 |
) |
|
|
179,125 |
|
Gain on Sale of Assets
|
|
|
431,318 |
|
|
|
- |
|
Income tax expense |
|
|
(180,000 |
) |
|
|
(52,100 |
) |
INCOME FROM DISCONTINUED OPERATIONS, net of income taxes
|
|
|
185,905 |
|
|
|
127,025 |
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$ |
1,246,621 |
|
|
$ |
726,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Net Income Per Common Share
|
|
$ |
1.28 |
|
|
$ |
0.71 |
|
|
|
|
|
|
|
|
|
|
Diluted Net Income Per Common Share
|
|
$ |
1.26 |
|
|
$ |
0.71 |
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares – Basic
|
|
|
976,048 |
|
|
|
1,023,709 |
|
Weighted Average Number of Common Shares – Diluted
|
|
|
987,149 |
|
|
|
1,026,729 |
|
See accompanying notes to consolidated financial statements.
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR YEARS ENDED DECEMBER 31, 2022 AND 2021
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
Total
|
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
BALANCE – January 1, 2021
|
|
|
1,028,863 |
|
|
$ |
30,866 |
|
|
$ |
19,909,230 |
|
|
$ |
(16,032,364 |
) |
|
$ |
3,907,732 |
|
Amortization of stock based compensation |
|
|
|
|
|
|
|
|
|
|
34,392 |
|
|
|
|
|
|
|
34,392 |
|
Purchase and cancellation of Common Stock |
|
|
(53,789 |
) |
|
|
(1,614 |
) |
|
|
(202,785 |
) |
|
|
|
|
|
|
(204,399 |
) |
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
726,184 |
|
|
|
726,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE – December 31, 2021 |
|
|
975,074 |
|
|
$ |
29,252 |
|
|
$ |
19,740,837 |
|
|
$ |
(15,306,180 |
) |
|
$ |
4,463,909 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of stock based compensation |
|
|
|
|
|
|
|
|
|
|
71,995 |
|
|
|
|
|
|
|
71,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Common Stock in connection with a cashless exercise of stock options |
|
|
1,256 |
|
|
|
38 |
|
|
|
(38 |
) |
|
|
|
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,246,621 |
|
|
|
1,246,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE – December 31, 2022
|
|
|
976,330 |
|
|
$ |
29,290 |
|
|
$ |
19,812,794 |
|
|
$ |
(14,059,559 |
) |
|
$ |
5,782,525 |
|
See accompanying notes to consolidated financial statements.
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
For the Years Ended
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net income
|
|
$ |
1,246,621 |
|
|
$ |
726,184 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
100,089 |
|
|
|
128,990 |
|
Life insurance proceeds |
|
|
(500,000 |
) |
|
|
- |
|
Stock based compensation
|
|
|
71,995 |
|
|
|
34,392 |
|
Gain on sale of assets
|
|
|
(431,318 |
) |
|
|
- |
|
Gain on extinguishment of debt - PPP loan
|
|
|
- |
|
|
|
(304,833 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
60,866 |
|
|
|
(43,308 |
) |
Inventories
|
|
|
7,091 |
|
|
|
(79,485 |
) |
Income tax receivable
|
|
|
573,679 |
|
|
|
261,922 |
|
Prepaid expenses
|
|
|
150,805 |
|
|
|
(248,089 |
) |
Customer deposits
|
|
|
123,755 |
|
|
|
2,512 |
|
Accounts payable
|
|
|
116,284 |
|
|
|
150,200 |
|
Accrued expenses
|
|
|
192,689 |
|
|
|
185,266 |
|
TOTAL ADJUSTMENTS
|
|
|
465,935 |
|
|
|
87,567 |
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
|
1,712,556 |
|
|
|
813,751 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Net proceeds from sale of assets
|
|
|
1,440,000 |
|
|
|
- |
|
Purchase of property and equipment
|
|
|
(15,685 |
) |
|
|
(81,544 |
) |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
|
1,424,315 |
|
|
|
(81,544 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Purchase and cancellation of common stock
|
|
|
- |
|
|
|
(204,399 |
) |
Proceeds from notes payable
|
|
|
- |
|
|
|
76,000 |
|
Proceeds from life insurance |
|
|
500,000 |
|
|
|
- |
|
Repayment of notes payable
|
|
|
(67,045 |
) |
|
|
(8,955 |
) |
Repayment of right of use leases payable
|
|
|
(39,575 |
) |
|
|
(47,029 |
) |
NET CASH, PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
|
393,380 |
|
|
|
(184,383 |
) |
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND RESTRICTED CASH
|
|
|
3,530,251 |
|
|
|
547,824 |
|
|
|
|
|
|
|
|
|
|
CASH AND RESTRICTED CASH – Beginning
|
|
|
2,446,906 |
|
|
|
1,899,082 |
|
CASH AND RESTRICTED CASH – Ending
|
|
$ |
5,977,157 |
|
|
$ |
2,446,906 |
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Net proceeds from sale of assets was reduced by issuance of a note receivable
|
|
$ |
160,000 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid during the periods for: |
|
|
|
|
|
|
|
|
Interest
|
|
$ |
17,979 |
|
|
$ |
24,823 |
|
Income taxes
|
|
$ |
216,546 |
|
|
$ |
8,364 |
|
See accompanying notes to consolidated financial statements.
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements
NOTE 1 - Nature of Operations
Our business activities are carried out by FirstFlight Heliports, LLC d/b/a Saker Aviation Services (“FFH”), a wholly-owned subsidiary, as the operator of the New York Heliport via a concession agreement with the City of New York. FBO Air Garden City, Inc. d/b/a Saker Aviation Services (“GCK”), a wholly-owned subsidiary and, until October 31, 2022, provided services as a fixed base operator (“FBO”) and as a provider of aircraft maintenance, repair and overhaul (“MRO”). FBOs provide ground-based services, such as fueling and aircraft storage for general aviation, commercial and military aircraft, and other miscellaneous services.
NOTE 2 – Liquidity and Material Agreements
As of December 31, 2022, we had cash and restricted cash of $5,977,157 and a working capital surplus of $5,739,663. We generated revenue from continuing operations of $7,598,597 and had net income of $1,246,621 for the year ended December 31, 2022. For the year ended December 31, 2022, cash flows included net cash provided by operating activities of $1,712,556, net cash provided by investing activities of $1,424,315, and net cash provided by financing activities of $393,380.
As disclosed in a Current Report on Form 8-K filed on March 21, 2018 with the SEC, on March 15, 2018 the Company entered into a loan agreement (the “Loan Agreement”) with Key Bank National Association (the “Bank”). The Loan Agreement contains three components: (i) a $2,500,000 acquisition line of credit (the “Key Bank Acquisition Note”); (ii) a $1,000,000 revolving line of credit (the “Key Bank Revolver Note”); and (iii) a $338,481 term loan (the “Key Bank Term Note”). On October 11, 2018, and as subsequently amended, the Company entered into a new loan agreement with the Bank (as so amended, the “Change of Terms Agreement”) which modified the original terms of the Key Bank Acquisition Note. The Bank notified the Company of its decision to discontinue the Key Bank Acquisition Note, effective June 30, 2021. There were no amounts due under the Key Bank Acquisition Note as of the date it was discontinued. All amounts due under the Key Bank Term Note have been repaid.
The Key Bank Revolver Note, at the discretion of the Bank, provides for the Company to borrow up to $1,000,000 for working capital and general corporate purposes. This revolving line of credit is a demand note with no stated maturity date. Borrowings under the Key Bank Revolver Note will bear interest at a rate per annum equal to Daily Simple SOFR plus 2.75%. The Company is required to make monthly payments of interest on any outstanding principal under the Key Bank Revolver Note and is required to pay the entire balance, including principal and all accrued and unpaid interest and fees, upon demand by the Bank. Any proceeds from the Key Bank Revolver Note would be secured by substantially all of the Company’s assets. There were no amounts due under the Key Bank Revolver Note at December 31, 2022 or 2021.
On August 14, 2020, the Company was granted a loan from the Bank (the “Loan”) in the amount of $304,833, pursuant to the Paycheck Protection Program (PPP) under Division, Title I of the CARES Act, which was enacted March 27, 2020. The Loan, which was in the form of a note dated August 14, 2020, was to mature in August 2025 and bore interest at a rate of 1% per annum and was payable in monthly installments commencing on, or before, October 31, 2021 if not forgiven and legally released. At December 31, 2020, in accordance with FASB ASC 470, Debt, and ASC 405-20, Liabilities – Extinguishment of Liabilities, the Company recorded the cash inflow from the Loan as a liability, and cash flows from financing, pending legal release from the obligation by the U.S. Small Business Administration (“S.B.A.”). The Company used the Loan proceeds for eligible expenses during the covered period and the Loan was forgiven and legally released by the S.B.A. in full in the second quarter of 2021. The Company recorded the forgiveness of the Loan as a gain on extinguishment of debt – PPP Loan in 2021.
The Company is party to a Concession Agreement, dated as of November 1, 2008, with the City of New York for the operation of the New York Heliport (the “Concession Agreement”). Pursuant to the terms of the Concession Agreement, the Company must pay the greater of 18% of the first $5,000,000 in any program year based on cash collected (“Gross Receipts”) and 25% of Gross Receipts in excess of $5,000,000, or minimum annual guaranteed payments.
As disclosed in a Current Report on Form 8-K filed with the SEC on February 5, 2016, the Company and the New York City Economic Development Corporation (the “NYCEDC”) announced new measures to reduce helicopter noise and impacts across New York City (the “Air Tour Agreement”). Under the Air Tour Agreement, the Company has not been allowed to permit its tenant operators to conduct tourist flights from the New York Heliport on Sundays since April 1, 2016. The Company was also required to ensure that its tenant operators reduce the total allowable number of tourist flights from 2015 levels by 20 percent beginning June 1, 2016, by 40 percent beginning October 1, 2016 and by 50 percent beginning January 1, 2017. The Air Tour Agreement also provided for the minimum annual guarantee payments the Company is required to pay to the City of New York under the Concession
Agreement be reduced by 50%, effective January 1, 2017. Additionally, since June 1, 2016, the Company has been required to provide monthly written reports to the NYCEDC and the New York City Council detailing the number of tourist flights conducted out of the New York Heliport compared to 2015 levels, as well as information on any tour flight that flies over land and/or strays from agreed upon routes. The Air Tour Agreement also extended the Concession Agreement for 30 months, resulting in a new expiration date of April 30, 2021 and gave the City of New York two one-year options to extend the term of the Concession Agreement. The term of the Concession Agreement was subsequently extended by the City through April 30, 2023 by the City’s exercise of both one-year option renewals.
The reductions under the Air Tour Agreement have negatively impacted the Company’s business and financial results as well as those of its management company at the New York Heliport, Empire Aviation. The Company incurred management fees with Empire Aviation of approximately $2,138,000 and $0 during the twelve months ended December 31, 2022 and 2021, respectively. Empire Aviation notified the Company that it believes additional fees are due under the management agreement with the New York Heliport for both 2021 and 2020. If the Company is unable to come to an agreement with Empire Aviation regarding amounts due under the agreement, the Company could incur additional expense (See Note 10. Contingent Liabilities).
During the program year that began on May 1, 2020, the City of New York agreed, in recognition of the pandemic’s impact, that the Company could defer payment of minimum guaranteed payments. In April 2021, the City of New York waived the deferred fees through December 31, 2020. In May 2021, the City of New York waived the deferred fees through April 30, 2021 which coincided with the original expiration of the Concession Agreement as amended by the Air Tour Agreement. The Company worked with the City of New York to address fees to be paid by the Company for the period May 1, 2021 through December 31, 2021. In March 2022, the City of New York agreed to accept 18% of monthly Gross Receipts in excess of $100,000 as Concession fees for this period. In April 2022, the Company agreed to resume paying the City of New York the total monthly amounts due under the Concession Agreement retro-active to January 2022 and to continue paying fees due under the Concession Agreement through the remainder of the Air Tour Agreement. During the twelve months ended December 31, 2022 and 2021, we incurred approximately $1,509,000 and $192,000 in concession fees, respectively, which are recorded in the cost of revenue.
On February 15, 2023, it was reported in the public record that NYCEDC would be bringing a new Concession Agreement with the Company as the operator of the Downtown Manhattan Heliport to the Franchise and Concession Review Committee meeting on March 3, 2023. The item was subsequently pulled off the agenda, with NYCEDC announcing on April 7, 2023 that the previous Request for Proposals ("RFP") had been cancelled and that it is their intention to put out a new RFP in 2023. Saker's current Concession Agreement terminates on April 30, 2023. The Company has been notified by NYCEDC that the Company will receive a new permit to operate the heliport from May 1, 2023 until a new RFP process is concluded. The Company is currently working with NYCEDC on the new agreement and expects to file a Form 8-K once the new agreement is finalized.
On April 20, 2018, the Company’s Kansas subsidiary entered into a purchase lease with Commerce Bank for a refueling truck (the “Truck Lease”). The Truck Lease commenced on May 1, 2018 and continues for 60 months with a monthly payment of $2,568 and an interest rate of 5.5%. At the end of the Truck Lease, the Company’s subsidiary may purchase the vehicle for $1.00. The refueling truck was included in the sale of the Company’s Kansas subsidiary and the Truck Lease was paid in full at closing.
On May 1, 2021, the Company’s Kansas subsidiary executed a promissory note for $76,000 with Avfuel Corporation (“Avfuel”) for the purchase of a Jet-A refueling truck (the “Truck Note”). The Truck Note requires six annual payments of $13,432.56 commencing April 30, 2022 with the entire balance of unpaid principal and interest due on, or before, April 30, 2028. Interest accrues at prime plus 3% on the outstanding principal amount. The Company is required to make prepayments against the Truck Note at the rate of $0.018 per gallon of fuel purchased under a fuel supply agreement between the Company and Avfuel. The Jet-A refueling truck was included in the sale of the Company’s Kansas subsidiary and the Truck Note was paid in full at closing.
NOTE 3 - Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, FFH and GCK. All significant inter-company accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates include depreciation, amortization, impairment of goodwill and intangibles, stock-based compensation, allowance for doubtful accounts, deferred tax assets, and contingent liabilities.
Cash and restricted cash
The Company maintains its cash with various financial institutions which often exceeds federally insured limits. The Company has not experienced any losses from maintaining cash accounts in excess of federally insured limits. As part of its cash management process, the Company periodically reviews the relative credit standing of these financial institutions. Amounts included in restricted cash are a deposit required by the Concession Agreement with NYEDC and aggregated $425,000 at December 31, 2022 and 2021.
Accounts Receivable and Revenue Concentration
In 2021, the Company’s accounts receivable was primarily comprised of two customers at our New York Heliport. These customers continued to operate throughout 2021, but at substantially reduced levels of operation when compared to pre-pandemic levels. For the fiscal year ended December 31, 2021, these two customers represented approximately $180,000, or 59.8%, of the balance of accounts receivable. In addition, these two customers represented approximately 27.6% of our revenue in 2021.
One of the Company’s former customers resumed operations at our New York Heliport from March 2022 through June 2022, when it ceased operations again. A new tenant began operating at our New York Heliport in June 2022. Beginning in April 2022, the Company’s customers began operating at pre-pandemic levels which continued through the end of 2022. For the fiscal year ended December 31, 2022, three customers represented approximately $184,000, or 75%, of the balance of accounts receivable. In addition, these three customers represented approximately 80 % of our revenue in 2022. The Company has a security deposit in place for each of these customers.
Inventories
Inventory consists primarily of aviation fuel which is stated at lower of cost or net realizable valve determined by the first in first out method.
Property and Equipment
Property and equipment is stated at cost. Depreciation is provided primarily using the straight-line method over the estimated useful lives as set forth in Note 5. Amortization of leasehold improvements is provided using the straight-line method over the shorter of their estimated useful life or lease term, including renewal option periods expected to be exercised. Maintenance and repairs are charged to expense as incurred; costs of major additions and betterments are capitalized. When property and equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in income.
Goodwill
Goodwill that is deemed to have an indefinite life is not amortized but, instead, are to be reviewed at each reporting period for impairment. The Company assessed potential impairment of goodwill using qualitative factors by considering various factors including macroeconomic conditions, industry and market conditions, cost factors, a sustained share price or market capitalization decrease and any reporting unit specific events. The Company performed an analysis of its goodwill at December 31, 2021 and deemed no impairment necessary. The Company’s goodwill was part of the Company’s sale if its Kansas subsidiary assets at a closing that occurred on October 31, 2022.
Leases
At December 31, 2021, our consolidated balance sheets include a right of use asset of approximately $387,000, a long-term lease liability of approximately $328,000, and a short-term liability of approximately $46,000. The Company’s right of use assets and right of use lease liabilities were included in the sale of our Kansas location on October 31, 2022.
Revenue Recognition
The Company recognizes revenue from ground-based services, such as fueling. Revenue for the sale of ground-based services is recognized as a sale of services at the time the service is performed and provided to customers. Revenue for the sale of aircraft fuel is recognized at the time products are delivered to customers. Customers are invoiced at the time the services are performed and the associated revenue is recognized in the period it is earned.
Customer Deposits
Customer deposits consist of amounts that customers are required to remit in advance to the Company in order to secure payment for future purchases and services. Customer deposits amounted to approximately $204,000 and $81,000 at December 31, 2022 and December 31, 2021, respectively.
Advertising
The Company expenses all advertising costs as incurred. Advertising expense for the years ended December 31, 2022 and 2021 was approximately $0 and $3,000, respectively. The company had previously expended funds to advertise services at its Kansas location.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between their financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income or loss in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Company’s tax positions, and has concluded that no liability should be recorded related to uncertain tax positions taken.
Deferred tax assets are subject to a valuation allowance because it is more likely than not that certain of the deferred tax assets will not be realized in future periods due to the uncertainty of future taxable income. The Company files income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2019.
Discontinue Operations
A component of the Company is classified as a discontinued operation when (i) the operations and cash flows of the component of the Company can be clearly distinguished and have been or will be eliminated from our ongoing operations; (ii) the component has either been disposed of or is classified as held for sale; and (iii) we will not have any significant continuing involvement in the operations of the component of the Company after the disposal transactions. Significant judgments are involved in determining whether a component meets the criteria for discontinued operations reporting and the period in which these criteria are met.
If a component of the Company is reported as a discontinued operation, the results of operations through the date of sale, including any gain or loss recognized on the disposition, are presented on a separate line of the Statements of Operations.
Fair Value of Financial Instruments
The reported amounts of the Company’s financial instruments, including accounts receivable, accounts payable and accrued liabilities, approximate their fair value due to their short maturities. The carrying amounts of debt approximate fair value because the debt agreements provide for interest rates that approximate market. The carrying value of the note receivable approximated fair value because it was discounted at a current market rate.
Net Income Per Common Share
Basic net income per share applicable to common stockholders is computed based on the weighted average number of shares of the Company’s common stock outstanding during the periods presented. Diluted net income per share reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted into common stock. Potentially dilutive securities, consisting of options, are excluded from the calculation of the diluted income per share when their exercise prices are greater than the average market price of the common stock during the period or when their inclusion would be anti-dilutive.
The following table sets forth the components used in the computation of basic and diluted income per share:
|
|
For the Year Ended
December 31,
|
|
|
|
2022(1) |
|
|
2021(1) |
|
Weighted average common shares outstanding, basic
|
|
|
976,048 |
|
|
|
1,023,709 |
|
Common shares upon exercise of options
|
|
|
11,101 |
|
|
|
3,020 |
|
Weighted average common shares outstanding, diluted
|
|
|
987,149 |
|
|
|
1,026,729 |
|
|
(1)
|
Common shares of 26,664 and 36,663 underlying outstanding stock options for the years ended December 31, 2022 and 2021, respectively, were excluded from the computation of diluted earnings per share as their inclusion would be anti-dilutive.
|
Stock-Based Compensation
Stock-based compensation expense for all share-based payment awards are based on the estimated grant-date fair value. The Company recognizes these compensation costs over the requisite service period of the award, which is generally the option vesting term. For each of the years ended December 31, 2022 and 2021, the Company incurred stock based compensation of $71,995 and $34,392, respectively. Such amounts have been recorded as part of the Company’s selling, general and administrative expenses in the accompanying consolidated statements of operations. As of December 31, 2022, the unamortized fair value of the options totaled $76,000 and the weighted average remaining amortization period of the options approximated five years.
Option valuation models require the input of highly subjective assumptions, including the expected life of the option. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.
The fair value of each share-based payment award granted during the years ended December 31, 2022 and 2021 were estimated using the Black-Scholes option pricing model with the following weighted average fair values:
|
|
For the Year Ended
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
Dividend yield
|
|
|
0 |
% |
|
|
0 |
% |
Expected volatility
|
|
|
4,918 |
% |
|
|
732 |
% |
Risk-free interest rate
|
|
|
3.99 |
% |
|
|
1.26 |
% |
Expected lives (in years)
|
|
|
5.0 |
|
|
|
5.0 |
|
The weighted average fair value of the options on the date of grants, using the fair value based methodology during the years ended December 31, 2022 and 2021, was $1.84 and $0.74, respectively.
NOTE 4 – Property and Equipment, net
Property and equipment consist of the following:
|
|
December 31,
|
|
|
Estimated
|
|
|
|
2022
|
|
|
2021
|
|
|
Useful Life
|
|
Office furniture and equipment (in years)
|
|
|
413,574 |
|
|
|
407,570 |
|
|
3 |
– |
7 |
|
Leasehold improvements (in years)
|
|
|
2,740,750 |
|
|
|
2,732,714 |
|
|
10 |
– |
20 |
|
Total
|
|
|
3,154,324 |
|
|
|
3,140,284 |
|
|
|
|
|
|
Less: accumulated depreciation and amortization
|
|
|
(3,111,462 |
) |
|
|
(3,093,877 |
) |
|
|
|
|
|
Property and equipment, net
|
|
$ |
42,862 |
|
|
$ |
46,407 |
|
|
|
|
|
|
Depreciation and amortization expense for the years ended December 31, 2022 and 2021 was approximately $100,089 and $128,990, respectively.
NOTE 5 – Income Taxes
The Company’s deferred tax assets consisted of the following:
|
|
December 31,
|
|
Deferred tax assets:
|
|
2022
|
|
|
2021
|
|
Stock based compensation
|
|
$ |
86,000 |
|
|
$ |
72,000 |
|
Property and equipment
|
|
|
385,000 |
|
|
|
399,000 |
|
Total deferred tax assets
|
|
|
471,000 |
|
|
|
471,000 |
|
Valuation Allowance
|
|
|
(471,000 |
) |
|
|
(471,000 |
) |
|
|
|
|
|
|
|
|
|
Deferred tax asset – net of valuation allowance
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Decrease in valuation allowance
|
|
$ |
- |
|
|
$ |
(55,000 |
) |
The valuation allowance fluctuated due to the uncertainty of future taxable income.
The provision for income taxes from continuing operations using the statutory federal tax rate as compared to the Company's effective tax rate is summarized as follows:
|
|
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
Tax at statutory rate
|
|
|
21.0 |
% |
|
|
21.0 |
% |
Extinguishment of debt (PPP loan)
|
|
|
- |
|
|
|
(6.9 |
) |
Life insurance proceeds
|
|
|
(11.7 |
) |
|
|
- |
|
State and local income taxes, net of federal
|
|
|
12.7 |
|
|
|
5.9 |
% |
Effective income tax expense rate
|
|
|
22.0 |
% |
|
|
20.0 |
% |
Income tax receivable principally consists of funds due from the taxing authorities resulting from the carryback of net operating loss to prior tax years.
NOTE 6 – Stockholders’ Equity
Common Stock
A summary of the Company’s shares of Common Stock outstanding at December 31, 2022 is presented in the table below:
|
|
Number of shares
outstanding
|
|
December 31, 2021
|
|
|
975,074 |
|
Issuance of common stock in connection with a cashless exercise of a stock option
|
|
|
1,256 |
|
December 31, 2022
|
|
|
976,330 |
|
Stock Options
On August 27, 2019, at the Company’s Annual Meeting, the stockholders of the Company approved the Stock Incentive Plan of 2019 (the “2019 Plan”) at which time the Company’s 2005 Stock Incentive Plan (the “2005 Plan”) was terminated and no future awards could be issued under the 2005 plan. As of December 31, 2022, 9,999 options were outstanding under the 2005 Plan.
The 2019 Plan is administered by the Company’s Compensation Committee and provides for 185,000 shares of common stock to be reserved for issuance under the Plan. Directors, officers, employees, and consultants of the Company are eligible to participate in the Plan. The Plan provides for the awards of incentive and non-statutory stock options. The Compensation Committee determined the vesting schedule to be up to five years at the time of grant of any options under the Plan, and unexercised options will expire in up to ten years. The exercise price is to be equal to at least 100% of the fair market value of a share of the common stock, as determined by the Compensation Committee, on the grant date. The fair value of stock options are calculated in accordance with FASB ASC Topic 718. As of December 31, 2022 and 2021, there were 127,505 and 148,337 shares, respectively, available for grant as options under the 2019 Plan.
Details of all options outstanding under the Plan are presented in the table below:
|
|
Number of
Options
|
|
|
Weighted Average
Exercise Price
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2021
|
|
|
53,328 |
|
|
$ |
3.384 |
|
Granted
|
|
|
13,332 |
|
|
|
3.450 |
|
Expired
|
|
|
(6,666 |
) |
|
|
2.250 |
|
Balance, December 31, 2021
|
|
|
59,994 |
|
|
$ |
2.184 |
|
Granted
|
|
|
20,832 |
|
|
|
4.90 |
|
Exercised
|
|
|
(3,333 |
) |
|
|
2.580 |
|
Expired
|
|
|
(9,999 |
) |
|
|
3.240 |
|
Balance, December 31, 2022
|
|
|
67,494 |
|
|
$ |
4.04 |
|
A summary of the Company’s stock options outstanding at December 31, 2022 is presented in the table below:
|
Exercise Price
|
|
|
Outstanding
|
|
|
Weighted average
remaining contractual life
of
options (in years)
|
|
|
Exercisable
|
|
|
Intrinsic
Value
|
|
|
$ |
4.00 |
|
|
|
7,500 |
|
|
|
4.66 |
|
|
|
- |
|
|
$ |
- |
|
|
$ |
5.40 |
|
|
|
13,332 |
|
|
|
4.92 |
|
|
|
- |
|
|
$ |
- |
|
|
$ |
3.45 |
|
|
|
13,332 |
|
|
|
3.92 |
|
|
|
13,332 |
|
|
$ |
10,416 |
|
|
$ |
2.58 |
|
|
|
9,999 |
|
|
|
2.92 |
|
|
|
9,999 |
|
|
$ |
16,511 |
|
|
$ |
5.60 |
|
|
|
13,332 |
|
|
|
1.92 |
|
|
|
13,332 |
|
|
$ |
- |
|
|
$ |
2.40 |
|
|
|
9,999 |
|
|
|
.92 |
|
|
|
9,999 |
|
|
$ |
18,311 |
|
|
TOTALS
|
|
|
|
67,494 |
|
|
|
|
|
|
|
46,662 |
|
|
$ |
45,238 |
|
Preferred Stock
As of December 31, 2022 and 2021, the Company has 333,306 shares of preferred stock authorized and none of which is issued and outstanding. On February 27, 2019, the Company filed with the Secretary of State of the state of Nevada a certificate of amendment to our articles of incorporation. The amendment provided for, among other things, a reduction in the number of authorized shares of preferred stock to 333,306. The Company’s Board of Directors currently has the right, with respect to the authorized shares of our preferred stock, to authorize the issuance of one or more series of preferred stock with such voting, dividend and other rights as the directors determine. As of December 31, 2022 and 2021, there were no shares of preferred stock outstanding.
NOTE 7 – Employee Benefit Plan
The Company maintains a 401K Plan which covers all employees of the Company (the “401K Plan”). Effective January 1, 2020, the Company switched to a Safe Harbor 401K plan. The Safe Harbor 401K Plan stipulates that, going forward, all employees become vested 100% on day one. Employer contributions prior to the change vest over a five-year period on a 20% per year basis. The Company’s Safe Harbor 401K Plan provides that the Company match each participant's contribution at 100% up to 4% of the employee’s deferral. Company contributions to the 401K Plan totaled approximately $40,000 and $36,000 for the years ended December 31, 2022 and 2021, respectively.
NOTE 8 – Discontinued Operations
As disclosed in a Current Report on Form 8-K filed with the SEC on October 3, 2022, FBO Air-Garden City, Inc., (“GCK”), one of our wholly owned subsidiaries entered into a FBO Transfer Agreement (the “Transfer Agreement”) with Crosby Flying Services, LLC (“Crosby”) pursuant to which GCK agreed (i) to sell to Crosby substantially all of its assets and none of its liabilities, and (ii) to a seven year non-competition covenant (the “Non-Compete”) whereby we, including our subsidiaries and affiliates, agreed not to engage in any business involving the operation of a fixed based operation supplying aviation fuels and lubricants or the supply of other goods or provision of services typically supplied or performed at fixed base operations at airports at any facility located within one hundred (100) miles of the Garden City Regional Airport in Garden City, Kansas (the “Airport”), for $1.6 million.
As disclosed in a Current Report on Form 8-K filed with the SEC on November 2, 2022, on October 31, 2022 (the “Closing Date”), the transaction contemplated by the Transfer Agreement closed and we became subject to the Non-Compete, for an aggregate purchase price of approximately $1.5 million, after certain closing adjustments. Crosby paid the purchase price on the Closing Date less $160,000 which is to be paid in cash upon the first anniversary of the Closing Date subject to GCK’s and our compliance with the Non-Compete, pursuant to the Transfer Agreement.
GCK results of operations have been reported as discontinued operations in the Condensed Consolidated Statements of Operations for the twelve months ended December 31, 2022 and 2021.
|
|
|
12/31/21 |
|
Current assets |
|
|
|
|
Cash
|
|
$ |
799,809 |
|
Accounts receivable
|
|
|
95,574 |
|
Inventories
|
|
|
242,364 |
|
Prepaid expenses
|
|
|
91,926 |
|
Total current assets
|
|
|
1,229,673 |
|
|
|
|
|
|
Property and equipment
|
|
|
222,854 |
|
Right of use assets
|
|
|
387,860 |
|
Goodwill
|
|
|
750,000 |
|
Total long-term assets |
|
|
1,360,714 |
|
|
|
|
|
|
Total assets
|
|
|
2,590,387 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable
|
|
|
96,918 |
|
Accrued expenses
|
|
|
26,105 |
|
Note Payable
|
|
|
9,315 |
|
Right of use lease payable
|
|
|
45,697 |
|
Total current liabilities |
|
|
178,035 |
|
|
|
|
|
|
Long-term liabilities |
|
|
|
|
Note payable – Long Term
|
|
|
57,730 |
|
Right of use lease payable
|
|
|
327,513 |
|
Total long-term liabilities |
|
|
385,243 |
|
|
|
|
|
|
Total liabilities
|
|
$ |
563,278 |
|
Components of discontinued operations are as follows:
|
|
For the Twelve Months Ended
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
3,704,048 |
|
|
$ |
2,982,249 |
|
Cost of revenue
|
|
|
3,183,561 |
|
|
|
2,253,578 |
|
Gross profit
|
|
|
520,487 |
|
|
|
728,671 |
|
Operating expenses
|
|
|
567,920 |
|
|
|
524,723 |
|
Operating (loss) income from discontinued operations
|
|
|
(47,433 |
) |
|
|
203,948 |
|
Gain on Sale
|
|
|
431,318 |
|
|
|
- |
|
Income tax expense
|
|
|
(180,000 |
) |
|
|
(52,100 |
) |
Interest expense
|
|
|
(17,980 |
) |
|
|
(24,823 |
) |
Net income from discontinued operations
|
|
$ |
185,905 |
|
|
$ |
127,025 |
|
Basic and diluted net income per common share
|
|
|
0.19 |
|
|
|
1.24 |
|
Weighted average number of shares outstanding, basic
|
|
|
976,048 |
|
|
|
1,023,709 |
|
Weighted average number of shares outstanding, diluted
|
|
|
987,149 |
|
|
|
1,026,729 |
|
For the year ended December 31, 2022, total operating, investing and financing cash flows from discontinued operations were $(213,475), $458,064, including the proceeds from the sale of $1,440,000, and $(106,620) respectively.
NOTE 9 – Litigation
From time to time, the Company may be a party to one or more claims or disputes which may result in litigation. The Company’s management does not, however, presently expect that any such matters will have a material adverse effect on the Company’s business, financial condition or results of operations.
NOTE 10 – Contingent Liabilities
Beginning in 2020, through the date of this report, the COVID-19 pandemic has negatively impacted the Company’s business and financial results at our New York Heliport. The negative impact on the Company’s business has also negatively affected our management company at the New York Heliport, Empire Aviation.
On March 17, 2020, all sightseeing tour operations at the New York Heliport ceased as a result of the COVID-19 pandemic. Payments to Empire Aviation also ceased around this time and did not resume due to the substantial losses the Company incurred throughout 2020. In May 2021, the Company began to see a slight uptick in activity at our New York Heliport, but activity levels continue to be at substantially lower levels than pre-pandemic years. Because of the continued lower levels of activity, payments to Empire Aviation did not resume in 2021. Empire Aviation had previously made a claim for $153,000 in unpaid fees in 2020 which the Company disputes. There can be no assurance that Empire Aviation will not make subsequent claims of amounts due under its management agreement. The Company estimates the range of the contingent liability at December 31, 2021 will not exceed $750,000, which has not been accrued at either December 31, 2021 or December 31, 2022. Management intends to vigorously defend against any claim.
NOTE 11 – Subsequent Events
On February 15, 2023, it was reported in the public record that NYCEDC would be bringing a new Concession Agreement with the Company as the operator of the Downtown Manhattan Heliport to the Franchise and Concession Review Committee meeting on March 3, 2023. The item was subsequently pulled off the agenda, with NYCEDC announcing on April 7, 2023 that the previous Request for Proposals ("RFP") had been cancelled and that it is their intention to put out a new RFP in 2023. Saker's current Concession Agreement terminates on April 30, 2023. The Company has been notified by NYCEDC that the Company will receive a new permit to operate the heliport from May 1, 2023 until a new RFP process is concluded. The Company is currently working with NYCEDC on the new agreement and expects to file a Form 8-K once the new agreement is finalized.