Saker Aviation Services, Inc 10-Q for FY2024 Q3
Saker Aviation Services, Inc. (SKAS)
About this 10-Q
Saker Aviation Services, Inc filed this 10-Q on November 14, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.51M
- down 3.1% from $2.58M a year earlier
- Net income
- $580.89K
- down 50.5% from net income of $1.17M a year earlier
- Diluted EPS
- $0.57
- down 51.7% from $1.18 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For The Quarterly Period Ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to ________________
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
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(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.05 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Emerging growth company |
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
As of November 14, 2024, the registrant had
SAKER AVIATION SERVICES, INC. AND SUBSIDIARY
Form 10-Q
September 30, 2024
Index
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PART I - FINANCIAL INFORMATION |
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ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
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Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023 |
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Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited) |
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Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited) |
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Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (unaudited) |
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Notes to Financial Statements (unaudited) |
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
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ITEM 4. CONTROLS AND PROCEDURES |
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PART II - OTHER INFORMATION |
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ITEM 1. LEGAL PROCEEDINGS |
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ITEM 6. EXHIBITS |
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SIGNATURES |
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SAKER AVIATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
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September 30, 2024 |
December 31, 2023 |
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(unaudited) |
(audited) |
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CURRENT ASSETS |
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Cash and cash equivalents |
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Investments |
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Accounts receivable, trade |
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Inventories |
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Income tax receivable |
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Prepaid expenses |
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Total current assets |
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PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of $ |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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CURRENT LIABILITIES |
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Accounts payable |
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Customer deposits |
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Accrued expenses |
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Total current liabilities |
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TOTAL LIABILITIES |
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STOCKHOLDERS’ EQUITY |
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Preferred stock - $ |
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Common stock - $ |
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Additional paid-in capital |
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Accumulated deficit |
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TOTAL STOCKHOLDERS’ EQUITY |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
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See accompanying notes to condensed consolidated financial statements.
SAKER AVIATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
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2024 |
2023 |
2024 |
2023 |
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REVENUE |
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COST OF REVENUE |
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GROSS PROFIT |
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
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OPERATING INCOME |
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OTHER INCOME (EXPENSE) |
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LITIGATION EXPENSE |
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BAD DEBT RECOVERY |
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GAIN ON SALE OF INVESTMENTS |
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INTEREST INCOME |
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TOTAL OTHER INCOME (EXPENSE) |
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INCOME BEFORE INCOME TAX |
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INCOME TAX EXPENSE |
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NET INCOME |
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Basic Net Income Per Common Share |
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Diluted Net Income Per Common Share |
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Weighted Average Number of Common Shares – Basic |
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Weighted Average Number of Common Shares – Diluted |
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See accompanying notes to condensed consolidated financial statements.
SAKER AVIATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(UNAUDITED)
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Additional |
Total |
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Common Stock |
Paid-in |
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Stockholders’ |
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Capital |
Deficit |
Equity |
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BALANCE – January 1, 2023 |
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Amortization of stock-based compensation |
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Net loss |
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BALANCE – March 31, 2023 |
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| BALANCE – June 30, 2023 | $ | $ | $ | ( |
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Amortization of stock-based compensation |
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Net income |
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| BALANCE – September 30, 2023 | $ | $ | $ | ( |
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BALANCE – January 1, 2024 |
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Amortization of stock-based compensation |
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Net income |
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BALANCE – March 31, 2024 |
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Exercise of stock options |
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Net Loss |
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BALANCE – June 30, 2024 |
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Amortization of stock-based compensation |
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Net income |
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BALANCE – September 30, 2024 |
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See accompanying notes to condensed consolidated financial statements.
SAKER AVIATION SERVICES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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For the Nine Months Ended September 30, |
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2024 |
2023 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net income |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Gain in sale of investments |
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Stock based compensation |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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TOTAL ADJUSTMENTS |
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NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchase of investments |
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Proceeds from sale of investments |
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Purchase of property and equipment |
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NET CASH USED IN INVESTING ACTIVITIES |
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NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH |
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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – Beginning |
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CASH AND CASH EQUIVALENTS - Ending |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
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Cash paid during the periods for income taxes |
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See accompanying notes to condensed consolidated financial statements.
SAKER AVIATION SERVICES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Saker Aviation Services, Inc. (the “Company”) and its subsidiary have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial statements and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all of the information and disclosures required by GAAP for annual financial statements and should be read in conjunction with the financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
The condensed consolidated balance sheet as of September 30, 2024 and the condensed consolidated statements of operations and cash flows for the three and nine months ended September 30, 2024 and 2023 have been prepared by the Company without audit. In the opinion of the Company’s management, all necessary adjustments (consisting of normal recurring accruals) have been included to make the Company’s financial position as of September 30, 2024 and its results of operations, stockholders’ equity, and cash flows for the three and nine months ended September 30, 2024 not misleading. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for any full year or any other interim period.
NOTE 2 – Liquidity and Material Agreements
As of September 30, 2024, we had cash and cash equivalents of $
On March 15, 2018, the Company entered into a loan agreement for a $
The Company has invested its excess working capital reserves in a high yield savings account and government backed securities with UBS Financial Services Inc. (“UBS”).
The Company was party to a Concession Agreement, dated as of November 1, 2008, with the City of New York for the operation of the Downtown Manhattan Heliport (the “Concession Agreement”). Pursuant to the terms of the Concession Agreement, the Company was required to pay the greater of
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 Downtown Manhattan 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
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 Downtown Manhattan 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
The Company was party to a management agreement with Empire Aviation (“Empire”). The management agreement expired April 30, 2023. The Company’s internal management team and heliport employees have taken over all duties relating to the management of the heliport. The Company incurred management fees with Empire of approximately $
On April 28, 2023, the Company entered into a Temporary Use Authorization Agreement (the “Use Agreement”), effective as of May 1, 2023, with the City of New York acting by and through the New York City of Department of Small Business Services (“DSBS”). The Use Agreement had a term of one year. Pursuant to the terms of the Use Agreement, the Company was granted the exclusive right to operate as the fixed base operator for the Downtown Manhattan Heliport and collect all revenue derived from the Downtown Manhattan Heliport operations. In addition to terminations for an event of default, the Use Agreement could be terminated at any time by the Commissioner of the DSBS or suspended at any time by the NYCEDC. The Company was required under the Use Agreement to remit a monthly administrative fee to the NYCEDC in the amount of $
On July 13, 2023, the DSBS was granted approval by the Franchise and Concession Review Committee to enter into an Interim Concession Agreement (the “Interim Agreement”) with the Company to provide for the continued operation of the Downtown Manhattan Heliport. The Interim Agreement became effective upon registration with the Comptroller of the City of New York and commenced on December 12, 2023, the date set forth in a written notice to proceed received by the Company. The Interim Agreement provides for one (1) term (the “Initial Period”), with two (2) options to renew (the “Renewal Periods”). The Company is required to pay the greater of $
On April 30, 2024, the Company received notice from DSBS of its exercise of the first of the two six-month renewal options extending the term of the Interim Concession Agreement through December 12, 2024. On October 18, 2024, the Company received notice from DSBS of its exercise of the second of the two six-month renewal options extending the term of the Interim Concession Agreement through June 12, 2025. In addition to terminations for an event of default, the Interim Agreement can be terminated at any time by the Commissioner of the DSBS or suspended at any time by the NYCEDC. During the nine months ended September 30, 2024 and 2023, we incurred approximately $
On November 13, 2023, the DBS and NYCEDC released the new Request for Proposals (“RFP”). The initial due date for submissions was January 12, 2024, with the due date being subsequently extended to February 12, 2024. The Company submitted a timely proposal in compliance with the terms of the RFP. The Interim Agreement will govern the Company’s operation of the Downtown Manhattan Heliport until the RFP process is concluded and an operator selected unless terminated earlier pursuant to its terms.
NOTE 3 - Summary of Significant Accounting Policies
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, FirstFlight Heliports, LLC. All significant inter-company accounts and transactions have been eliminated in consolidation.
Cash and cash equivalents
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. The Company considers all highly liquid investments with an original maturity at time of acquisition of three months or less to be cash equivalents.
Net Income Per Common Share
Net income was $
The following table sets forth the components used in the computation of basic net income per share:
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For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
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Weighted average common shares outstanding, basic |
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Common shares upon exercise of options and warrants |
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Weighted average common shares outstanding, diluted |
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Stock-Based Compensation
Stock-based compensation expense for all stock-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 the nine months ended September 30, 2024 and 2023, the Company incurred stock-based compensation of $
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.
NOTE 4 – Litigation
Empire Aviation, LLC (“Empire”) and the Company were parties to a certain Management Agreement (the “Management Agreement”) effective November 1, 2008. The Management Agreement terminated on April 30, 2023. As previously disclosed in the Company’s 2023 Annual Report on Form 10-K, Note 10. Contingent Liabilities. Empire Aviation notified the Company that it believes additional fees (“Management Fees”) are due under the Management Agreement.
On March 14, 2024, the Company and Empire participated in an arbitration of this dispute. In their filing, Empire claimed that Saker failed to pay Empire certain Management Fees in various months throughout the term of the Management Agreement. Of this amount, approximately $
On July 8, 2024, the Company was notified of the arbitrator's decision. The arbitrator found in favor of Empire in the amount of $
NOTE 5 – Investments
Accounting principles generally accepted in the United States of America establish a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level 2 – Inputs to the valuation methodology include:
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quoted prices for similar assets or liabilities in active markets; |
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quoted prices for identical or similar assets or liabilities in inactive markets; |
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inputs other than quoted prices that are observable for the asset or liability; |
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inputs that are derived principally from or corroborated by observable market data by correlation or by other means. |
Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
The fair value measurements and levels within the fair value hierarchy of these measurements for the assets reported at fair value on a recurring basis are U.S. Treasury Notes and Bills in the amount of $
The Company’s policy is to recognize transfers of investments into or out of Level 3 as of the date of the event or change in circumstances that caused the transfer. For the nine months ended September 30, 2024 , there were no transfers of investments into or out of Level 3. There are no assets requiring the use of Level 3 inputs for the nine months ended September 30, 2024.
NOTE 6 – Related Parties
The law firm of Wachtel & Missry, LLP provides certain legal services to the Company and its subsidiary from time to time. William B. Wachtel, Chairman of the Company’s Board of Directors, is a managing partner of this firm. During the nine months ended September 30, 2024 and 2023, the Company was billed approximately $
The Company was party to a management agreement with Empire Aviation, an entity owned by the children and grandchild of the Company’s former Chief Executive Officer and former member of our Company’s Board of Directors.
NOTE 7 – Subsequent Events
The Company has made an assessment of its operations and determined that there were no material subsequent events, requiring adjustment to, or disclosure in, our condensed consolidated financial statements for the nine months ended September 30, 2024.
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read together with the accompanying unaudited condensed consolidated financial statements and related notes in this report. This Item 2 contains forward-looking statements that involve risks and uncertainties. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date of this report. Actual results may differ materially from those expressed or implied in such forward-looking statements. Factors which could cause actual results to differ materially are discussed throughout this report and include, but are not limited to, those set forth at the end of this Item 2 under the heading "Cautionary Statement Regarding Forward Looking Statements." Additional factors are under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
The terms “we”, “us”, and “our” are used below to refer collectively to the Company and its subsidiary through which our various businesses are actually conducted.
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 subsidiary, 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 Downtown Manhattan (New York) Heliport and until October 31, 2022 as a fixed base operator (“FBO”) and provider of aircraft maintenance and repair services (“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 Downtown Manhattan Heliport commenced in November 2008 when we were awarded the Concession Agreement by the City of New York to operate the Heliport, which we assigned to our subsidiary, FirstFlight Heliports, LLC d/b/a Saker Aviation Services (“FFH”).
On April 28, 2023, the Company entered into a Temporary Use Authorization Agreement (the “Use Agreement”), effective as of May 1, 2023, with the City of New York acting by and through the New York City of Department of Small Business Services (“DSBS”). The Use Agreement had a term of one year. Pursuant to the terms of the Use Agreement, the Company was granted the exclusive right to operate as the fixed base operator for the Downtown Manhattan Heliport and collect all revenue derived from the Downtown Manhattan Heliport operations. In addition to terminations for an event of default, the Use Agreement could be terminated at any time by the Commissioner of the DSBS or suspended at any time by the NYCEDC. The Company was required under the Use Agreement to remit a monthly administrative fee to the NYCEDC in the amount of $5,000.
On July 13, 2023, the DSBS was granted approval by the Franchise and Concession Review Committee to enter into an Interim Concession Agreement (the “Interim Agreement”) with the Company to provide for the continued operation of the Downtown Manhattan Heliport. The Interim Agreement became effective upon registration with the Comptroller of the City of New York and commenced on December 12, 2023, the date set forth in a written notice to proceed received by the Company. The Interim Agreement provides for one (1) six-month term (the “Initial Period”), with two (2) six-month options to renew (the “Renewal Periods”). The Company is required to pay the greater of $1,036,811 or 30% of Gross Receipts during the Initial Term and the greater of $518,406 or 30% of Gross Receipts during both Renewal Periods.
On April 30, 2024, the Company received notice from DSBS of its exercise of the first of the two six-month renewal options extending the term of the Interim Concession Agreement through December 12, 2024. On October 18, 2024, the Company received notice from DSBS of its exercise of the second of the two six-month renewal options extending the term of the Interim Concession Agreement through June 12, 2025. In addition to terminations for an event of default, the Interim Agreement can be terminated at any time by the Commissioner of the DSBS or suspended at any time by the NYCEDC. During the nine months ended September 30, 2024 and 2023, we incurred approximately $1,969,000 and $0 in fees under the Interim Agreement, respectively, and $0 and $532,000 in fees under the Concession Agreement, respectively, which are recorded in the cost of revenue.
REVENUE AND OPERATING RESULTS
Comparison of Operations for the Three and Nine Months Ended September 30, 2024 and September 30, 2023.
REVENUE
Revenue from operations decreased by 3.1 percent to $2,505,488 for the three months ended September 30, 2024 as compared with corresponding prior-year period revenue of $2,584,755.
For the three months ended September 30, 2024, revenue from operations associated with the sale of jet fuel and related items decreased by 0.8 percent to approximately $687,000 as compared to approximately $693,000 in the three months ended September 30, 2023.
For the three months ended September 30, 2024, revenue from operations associated with services and supply items decreased by 1.2 percent to approximately $1,802,000 as compared to approximately $1,824,000 in the three months ended September 30, 2023.
For the three months ended September 30, 2024, all other revenue decreased by 75.8 percent to approximately $16,000 as compared to approximately $68,000 in the three months ended September 30, 2023. This decrease was attributable to a decrease in non-aeronautical revenue, including revenue from advertising and photo shoots, compared to the same period last year.
Revenue from operations increased by 2.4 percent to $6,466,973 for the nine months ended September 30, 2024 as compared with corresponding prior-year period revenue of $6,318,488.
For the nine months ended September 30, 2024, revenue associated with the sale of jet fuel and related items decreased by 2.0 percent to approximately $1,604,000 as compared to approximately $1,636,000 in the nine months ended September 30, 2023.
For the nine months ended September 30, 2024, revenue associated with services and supply items decreased by 0.2 percent to approximately $4,568,000 as compared to approximately $4,578,000 in the nine months ended September 30, 2023.
For the nine months ended September 30, 2024, all other revenue increased by 183.0 percent to approximately $295,000 as compared to approximately $104,000 in the nine months ended September 30, 2023. This increase was attributable to an increase in non-aeronautical revenue, including revenue from advertising and photo shoots, compared to the same period last year.
COST OF REVENUE
Total cost of revenue increased by 123.6 percent to $1,245,862 in the three months ended September 30, 2024 as compared to $557,256 in the three months ended September 30, 2023. This increase was largely attributable to higher fees due under the Interim Agreement which became effective December 12, 2023. Total cost of revenue increased by 69.7 percent to $3,183,418 in the nine months ended September 30, 2024 as compared to $1,876,428 in the nine months ended September 30, 2023. The increase was largely attributable to higher fees due under the Interim Agreement which became effective December 12, 2023.
GROSS PROFIT
Total gross profit decreased by 37.9 percent to $1,259,626 in the three months ended September 30, 2024 as compared with $2,027,499 in the three months ended September 30, 2023. Gross margin was 50.3 percent in the three months ended September 30, 2024 as compared to 78.4 percent in the same period in the prior year. Gross profit and gross margin were negatively impacted by the item discussed above.
Total gross profit decreased by 26.1 percent to $3,283,555 in the nine months ended September 30, 2024 as compared to $4,442,060 in the nine months ended September 30, 2023. Gross margin decreased to 50.8 percent in the nine months ended September 30, 2024 as compared to 70.3 percent in the same period in the prior year. Gross profit and gross margin were negatively impacted by the item discussed above.
OPERATING EXPENSE
Selling, General and Administrative
Total selling, general and administrative expenses, (“SG&A”), from operations were $456,132 in the three months ended September 30, 2024, representing a decrease of $22,668 or 4.7 percent, as compared to the same period in 2023.
SG&A from operations associated with our aviation services operation were approximately $328,000 in the three months ended September 30, 2024, representing a decrease of approximately $8,000, or 2.4 percent, as compared to the three months ended September 30, 2023. SG&A from operations associated with our aviation services operation, as a percentage of revenue, was 13.1 percent for the three months ended September 30, 2024, as compared with 13.0 percent in the corresponding prior year period.
SG&A from operations in the nine months ended September 30, 2024 were approximately $996,000, representing a decrease of approximately $534,000 or 34.9 percent, as compared to the same period in 2023. The decrease in SG&A operating expenses for the nine months ended September 30, 2024 was primarily attributable to the termination of the management agreement with Empire Aviation, effective April 30, 2023.
Corporate SG&A from operations was approximately $128,000 for the three months ended September 30, 2024, representing a decrease of approximately $15,000 as compared with the corresponding prior year period.
Corporate SG&A was approximately $388,000 for the nine months ended September 30, 2024, representing a decrease of approximately $113,000 as compared with the corresponding prior year period. The decrease in Corporate SG&A was largely attributable to a decrease in services provided by various service providers.
OPERATING INCOME
Operating income from operations for the three months ended September 30, 2024 was $803,494 as compared to operating income of $1,548,699 in the three months ended September 30, 2023. The change on a year-over-year basis was largely attributable to an increase in fees paid to EDC in 2024 compared to 2023.
Operating income from operations for the nine months ended September 30, 2024 was $1,900,270 as compared to operating income of $2,412,043 in the nine months ended September 30, 2023. The change on a year-over-year basis was largely attributable to a decrease in management fees from the termination of the Empire Agreement effective April 30, 2023 offset by an increase in fees paid to EDC in 2024 compared to 2023.
Depreciation
Depreciation for the nine months ended September 30, 2024 and 2023 was $11,636 and $12,535, respectively.
Interest Income
Interest income for the nine months ended September 30, 2024 and 2023 was $281,481 and $143,246, respectively. The increase in interest income was attributable to the Company’s increase in cash invested with UBS.
Income Tax
Income tax expense for the nine months ended September 30, 2024 and 2023 was $429,000 and $1,003,000, respectively. The decrease in income tax was attributable to decreased net income in 2024 compared to 2023.
Net Income Per Share
Net income was $736,868 and $1,764,289 for the nine months ended September 30, 2024 and 2023, respectively. The change on a year-over-year basis was largely attributed to the items discussed above.
Basic net income per share from operations for the nine months ended September 30, 2024 and 2023 was $0.75 and $1.81, respectively. Diluted net income per share from operations for the nine months ended September 30, 2024 and 2023 was $0.73 and $1.78, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2024, we had cash and cash equivalents of $5,078,426 and a working capital surplus of $9,091,941. We generated revenue from operations of $6,466,973 and had net income of $736,868 for the nine months ended September 30, 2024. For the nine months ended September 30, 2024, cash flows included net income of $736,868, cash used in operating activities of $912,541, and cash used in investing activities of $940,742.
On March 15, 2018, the Company entered into a loan agreement for a $1,000,000 revolving line of credit (the “Key Bank Revolver Note”) which, at the discretion of the Bank, provides for the Company to borrow up to $1,000,000 for working capital and general corporate purposes. On November 22, 2023, the Bank reduced the amount available under the Key Bank Revolver Note to $500,000. 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 September 30, 2024 or 2023.
The Company has invested its excess working capital reserves in a high yield savings account and government backed securities with UBS Financial Services Inc. (“UBS”).
Cash from Operating Activities
For the nine months ended September 30, 2024, net cash used in operating activities was $912,541. This amount included an increase in operating cash related to net profit of $736,838 and additions for the following items: (i) depreciation and amortization, $11,636; (ii) stock-based compensation, $76,081; (iii) accounts receivable, trade, $58,924; and (iv) customer deposits, $6,740. These increases in operating activities were offset by (i) gain on sale of investments, $38,317; (ii) inventories, $3,459; (iii) prepaid expenses, $264,564; (iv) accounts payable, $565,785; and accrued expenses, $930,665.
For the nine months ended September 30, 2023, net cash provided by operating activities was $2,629,098. This amount included an increase in operating cash related to net income of $1,764,289 and additions for the following items: (i) depreciation and amortization, $12,535; (ii) stock based compensation, $76,500; (iii) accounts receivable, trade, $3,928; (iv) inventory, $7,438; (v) prepaid expenses, $7,874; and (vi) customer deposits, $50,246; (vii) accounts payable, $312,688; and (viii) accrued expenses, $393,600.
Cash from Investing Activities
For the nine months ended September 30, 2024, cash used in investing activities was $940,742. This amount included purchases of investments of $2,761,571, proceeds from sale of investments of $1,823,000, and the purchase of property and equipment of $2,171. For the nine months ended September 30, 2023, net cash of $2,448,846 was used in investing activities for the purchase of investments of $2,425,854 and the purchase of property and equipment of $22,992.
CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS
Statements contained in this report may contain information that includes or is based upon "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent management's current judgment and assumptions, and can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are frequently accompanied by the use of such words as "anticipates," "plans," "believes," "expects," and similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, including, but not limited to, those relating to:
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our continued operation of the Downtown Manhattan Heliport pursuant to the Interim Concession Agreement; |
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the RFP process conducted by the NYCEDC for operation of the Downtown Manhattan Heliport; and |
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our ability to attract new personnel or retain existing personnel, which would adversely affect implementation of our overall business strategy. |
Any one of these or other risks, uncertainties, other factors, or any inaccurate assumptions made by the Company may cause actual results to be materially different from those described herein or elsewhere by us. Undue reliance should not be placed on any such forward-looking statements, which speak only as of the date they were made. Certain of these risks, uncertainties, and other factors are described in greater detail in our Annual Report on Form 10-K for the year ended December 31, 2023 and in other filings we make with the SEC. Subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above and elsewhere in our reports filed with the SEC. We expressly disclaim any intent or obligation to update any forward-looking statements, except as may be required by law.
Item 3 – Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to report the information required by this item.
Item 4 – Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management, including our President (principal financial officer) and Chief Executive Officer (principal executive officer), have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon, and as of the date of that evaluation, our President and our Chief Executive Officer concluded that the disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the reports filed and submitted by us under the Exchange Act, is (i) recorded, processed, summarized and reported as and when required, and (ii) is accumulated and communicated to our management, including our President and our Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – INFORMATION
Item-1 – Legal Proceedings
Empire Aviation, LLC (“Empire”) and the Company were parties to a certain Management Agreement (the “Management Agreement”) effective November 1, 2008. The Management Agreement terminated on April 30, 2023. As previously disclosed in the Company’s 2023 Annual Report on Form 10-K, Note 10. Contingent Liabilities. Empire Aviation notified the Company that it believes additional fees (“Management Fees”) are due under the Management Agreement.
On March 14, 2024, the Company and Empire participated in an arbitration of this dispute. In their filing, Empire claimed that Saker failed to pay Empire certain Management Fees in various months throughout the term of the Management Agreement. Of this amount, approximately $350,000 had been accrued by the Company in 2023 and included in the Company’s Condensed Consolidated Statement of Operations in selling, general and administrative expenses and the Condensed Consolidated Balance Sheet in accounts payable. Saker asserted numerous defenses including, but not limited to, Empire waiving its rights to such fees by the parties’ course of conduct. Further, Saker asserted counterclaims against Empire.
On July 8, 2024, the Company was notified of the arbitrator's decision. The arbitrator found in favor of Empire in the amount of $1.4 million (the “Judgement Amount”), such amount representing approximately $1,036,000 in unpaid Management Fees due under the Management Agreement plus accrued interest of approximately $363,000. The Judgement Amount was immediately payable and accrued per diem interest of $511.08 for each day until it was paid in full. On July 10, 2024, the Company paid Empire the Judgement Amount including per diem interest through the date of payment. The Company recorded Litigation Expense of $1,054,200 at June 30, 2024, representing the difference between the Judgement Amount and the expense accrued by the company in 2023. The Company does not plan to appeal the arbitrator’s decision.
Item 6 - Exhibits
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Exhibit No. |
Description of Exhibit |
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31.1* |
Rule 13a-14(a)/15d-14(a) Certification of acting principal executive officer * |
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31.2* |
Rule 13a-14(a)/15d-14(a) Certification of acting principal financial officer * |
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32.1* |
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101.INS* |
Inline XBRL Instance Document |
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101.SCH* |
Inline XBRL Taxonomy Extension Schema Document |
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101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF* |
Inline XBRL Taxonomy Extension Linkbase Document |
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101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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| 104 | Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101) |
* Filed herewith
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Saker Aviation Services, Inc. |
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Date: November 14, 2024 |
By: |
/s/ Samuel Goldstein |
| Samuel Goldstein | ||
| President, Chief Executive Officer, Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer | ||
EXHIBIT 31.1
Certification of Chief Executive Officer
(principal executive officer)
Pursuant To Rule 13a-14(a)/15d-14(a)
I, Samuel Goldstein, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Saker Aviation Services, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: |
November 14, 2024 |
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By: /s/ Samuel Goldstein |
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Samuel Goldstein |
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Chief Executive Officer (principal executive officer) |
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EXHIBIT 31.2
Certification of President
(principal financial officer)
Pursuant To Rule 13a-14(a)/15d-14(a)
I, Samuel Goldstein, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Saker Aviation Services, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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Date: |
November 14, 2024 |
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By: /s/ Samuel Goldstein |
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Samuel Goldstein |
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President (principal financial officer) |
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EXHIBIT 32.1
Section 1350 Certification
Pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), Samuel Goldstein, the Chief Executive Officer (principal executive officer) and President (principal financial officer) of Saker Aviation Services, Inc., does hereby certify that:
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1. |
The Quarterly Report on Form 10-Q for the period ended September 30, 2024 (the “Report”) of Saker Aviation Services, Inc. fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of Saker Aviation Services, Inc. |
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Date: November 14, 2024
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By: |
/s/ Samuel Goldstein |
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Samuel Goldstein |
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Chief Executive Officer (principal executive officer) |
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Date: November 14, 2024
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By: |
/s/ Samuel Goldstein |
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Samuel Goldstein |
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President (principal financial officer) |