Saker Aviation Services, Inc 10-Q for FY2024 Q1
Saker Aviation Services, Inc. (SKAS)
About this 10-Q
Saker Aviation Services, Inc filed this 10-Q on May 15, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).
Headline figures
Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.34M
- up 1.2% from $1.32M a year earlier
- Net income
- $187.29K
- compared with a net loss of $100.73K a year earlier
- Diluted EPS
- $0.18
- compared with -$0.10 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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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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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 May 15, 2024, the registrant had
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
Form 10-Q
March 31, 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 March 31, 2024 (unaudited) and December 31, 2023 |
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Statements of Operations for the Three Months Ended March 31, 2024 and 2023 (unaudited) |
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Statements of Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited) |
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Statements of Cash Flows for the Three Months Ended March 31, 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 1-A. RISK FACTORS |
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ITEM 6. EXHIBITS |
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SIGNATURES |
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SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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March 31, 2024 |
December 31, 2023 |
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CURRENT ASSETS |
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Cash, cash equivalents, and restricted cash |
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Investments |
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Accounts receivable |
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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 consolidated financial statements.
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SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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For the Three Months Ended March 31, |
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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 (LOSS) |
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OTHER INCOME: |
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INTEREST INCOME |
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INCOME (LOSS) FROM OPERATIONS |
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INCOME TAX EXPENSE |
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NET INCOME (LOSS) |
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Basic Net Income (Loss) Per Common Share |
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Diluted Net Income (Loss) 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 consolidated financial statements.
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SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THREE MONTHS ENDED MARCH 31, 2023 AND 2022 |
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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 – 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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See accompanying notes to consolidated financial statements.
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SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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For the Three Months Ended March 31, |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net income (loss) |
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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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Stock based compensation |
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Changes in operating assets and liabilities: |
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TOTAL ADJUSTMENTS |
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NET CASH PROVIDED BY OPERATING ACTIVITIES |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchase of investments |
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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 AND RESTRICTED CASH – Beginning |
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CASH AND RESTRICTED CASH – 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 consolidated financial statements.
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
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 subsidiaries 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 March 31, 2024 and the condensed consolidated statements of operations and cash flows for the three months ended March 31, 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 March 31, 2024 and its results of operations, stockholders’ equity, and cash flows for the three months ended March 31, 2024 not misleading. The results of operations for the three months ended March 31, 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 March 31, 2024, we had cash, cash equivalents, and restricted cash 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. 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 three months ended March 31, 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, cash equivalents, 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 at March 31, 2023 is a deposit of $
Net Income (Loss) Per Common Share
Net income (loss) 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 March 31, |
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Weighted average common shares outstanding, basic |
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Common shares upon exercise of options |
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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 three months ended March 31, 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 claims that Saker failed to pay Empire certain Management Fees in various months throughout the term of the Management Agreement, aggregating approximately $
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 three months ended March 31, 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 three months ended March 31, 2024.
NOTE 6 – Related Parties
The law firm of Wachtel & Missry, LLP provides certain legal services to the Company and its subsidiaries from time to time. William B. Wachtel, Chairman of the Company’s Board of Directors, is a managing partner of this firm. During the three months ended March 31, 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 consolidated financial statements for the three months ended March 31, 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 the subsidiaries 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 an fixed base operator (“FBO”) and provider of aircraft maintenance and repairs 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. 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 three months ended March 31, 2024 and 2023, we incurred approximately $425,000 and $343,000 in concession fees, respectively, which are recorded in the cost of revenue.
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.
REVENUE AND OPERATING RESULTS
Comparison of Operations for the Three Months Ended March 31, 2024 and March 31, 2023.
REVENUE
Revenue from operations increased by 1.2 percent to $1,338,367 for the three months ended March 31, 2024 as compared with corresponding prior-year period revenue of $1,322,058.
For the three months ended March 31, 2024, revenue from operations associated with the sale of jet fuel and related items decreased by 6.7 percent to approximately $315,000 as compared to approximately $338,000 in the three months ended March 31, 2023. This decrease was largely attributable to lower volume of gallons of aviation gasoline sold at our New York location in the three months ended March 31, 2024 compared to the same period in 2023.
For the three months ended March 31, 2024, revenue from operations associated with services and supply items increased by 4.1 percent to approximately $994,000 as compared to approximately $955,000 in the three months ended March 31, 2023. This increase was largely attributable to a higher demand for services at our New York location in the three months ended March 31, 2024 compared to the same period in 2023.
For the three month periods ended March 31, 2024 and 2023, all other revenue from operations was approximately $29,000.
COST OF REVENUE
Total cost of revenue from operations increased by 3.7 percent to $706,172 in the three months ended March 31, 2024, as compared to $681,007 in the three months ended March 31, 2023. The increase was largely attributable to slightly higher demand for services at our New York location.
GROSS PROFIT
Total gross profit from operations decreased by 1.4 percent to $632,195 in the three months ended March 31, 2024 as compared with the three months ended March 31, 2023. Gross margin was 47.2 percent in the three months ended March 31, 2024 as compared to 48.5 percent in the same period in the prior year.
OPERATING EXPENSE
Selling, General and Administrative
Total selling, general and administrative expenses, (“SG&A”), from operations were $431,133 in the three months ended March 31, 2024, representing a decrease of $310,648 or 41.9 percent, as compared to the same period in 2023.
SG&A from operations associated with our aviation services operation were approximately $311,000 in the three months ended March 31, 2024, representing a decrease of approximately $221,000, or 41.5 percent, as compared to the three months ended March 31, 2023. SG&A from operations associated with our aviation services operation, as a percentage of revenue, was 23.3 percent for the three months ended March 31, 2024, as compared with 40.2 percent in the corresponding prior year period. The decreased operating expenses, and expense as a percentage of revenue, were largely attributable to the termination of the Company’s management agreement with Empire Aviation on April 30, 2023.
Corporate SG&A from operations was approximately $120,000 for the three months ended March 31, 2024, representing a decrease of approximately $90,000 as compared with the corresponding prior year period. The decreased corporate expenses were primarily attributable to a decrease in services provided by various service providers.
OPERATING INCOME (LOSS)
Operating income from operations for the three months ended March 31, 2024 was $201,062 as compared to operating loss of $(100,730) in the three months ended March 31, 2023. The change on a year-over-year basis was largely attributable to the items discussed above.
Depreciation
Depreciation for the three months ended March 31, 2024 and 2023 was $3,879 and $4,216, respectively.
Interest Income
Interest income for the three months ended March 31, 2024 and 2023 was $91,228 and $0, respectively.
Income Tax
Income tax expense for the three months ended March 31, 2024 and 2023 was $105,000 and $0, respectively.
Net Income (Loss) Per Share
Net income (loss) from operations was $187,290 and $(100,730) for the three months ended March 31, 2024 and 2023, respectively. The change on a year-over-year basis was largely attributed to the items discussed above.
Basic net income (loss) per share from operations for the three months ended March 31, 2024 and 2023 was $0.19 and $(0.10), respectively. Diluted net income (loss) per share from operations for the three months ended March 31, 2024 and 2023 was $0.18 and $(0.10), respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2024, we had cash, cash equivalents, and restricted cash of $6,202,337 and a working capital surplus of $8,483,946. We generated revenue from operations of $1,338,367 and had net income of $187,290 for the three months ended March 31, 2024. For the three months ended March 31, 2024, cash flows included net income of $187,290, cash provided by operating activities of $193,497, and cash used in investing activities of $922,869.
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 March 31, 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 three months ended March 31, 2024, net cash provided by operating activities was $193,497. This amount included an increase in operating cash related to net profit of $187,290 and additions for the following items: (i) depreciation and amortization, $3,879; (ii) stock-based compensation, $25,420; (iii) accounts receivable, trade, $55,933; (iv) prepaid expenses, $85,598; (v) customer deposits, $3,126; and (vi) accrued expenses, $99,493. These increases in operating activities were offset by (i) inventories, $4,279; and (ii) accounts payable, $262,963.
For the three months ended March 31, 2023, net cash provided by operating activities was $171,768. This amount included a decrease in operating cash related to net loss of $(100,730) and additions for the following items: (i) depreciation and amortization, $4,216; (ii) stock based compensation, $25,500; (iii) accounts receivable, trade, $42,316; (iv) inventory, $10,779; (v) prepaid expenses, $139,844; and (vi) accounts payable, $52,667. These increases in operating activities were offset by a decrease in accrued expenses of $2,824.
Cash from Investing Activities
For the three months ended March 31, 2024, cash used in investing activities was $922,869. This amount included purchases of investments of $920,699 and the purchase of property and equipment of $2,170. For the three months ended March 31, 2023, there was no cash used in, or provided by, investing activities.
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
Not applicable.
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 2022 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 claims that Saker failed to pay Empire certain Management Fees in various months throughout the term of the Management Agreement, aggregating approximately $1,050,000 plus $250,000 in accrued interest. Of this amount, approximately $350,000 has been accrued by the Company in 2023 and is included in the Company’s Condensed Consolidated Statement of Operations in selling, general and administrative expenses and the Consolidated Balance Sheet in accounts payable. Saker has 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 May 2, 2024, the Company and Empire each submitted proposed findings to the arbitrator. We anticipate that the arbitrator will issue his rulings within 60 days of these submissions. Although we believe that Saker has valid defenses and a good chance to prevail on the merits against Empire’s claims, we can give no assurance as to the same.
Item–1A – Risk Factors
For a discussion of the Company’s potential risks or uncertainties, please see: (i) “Part I—Item 1A—Risk Factors” and “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC.
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: May 15, 2024 |
By: |
/s/ Samuel Goldstein |
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Samuel Goldstein |
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President, Chief Executive Officer, Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer |
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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 subsidiaries, 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: |
May 15, 2024 |
| By: /s/ Samuel Goldstein |
Samuel Goldstein
Chief Executive Officer (principal executive officer)
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 subsidiaries, 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: |
May 15, 2024 |
| By: /s/ Samuel Goldstein |
Samuel Goldstein
President (principal financial officer)
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 three months ended March 31, 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: May 15, 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: May 15, 2024
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By: |
/s/ Samuel Goldstein |
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Samuel Goldstein |
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President (principal financial officer) |