SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

FORM 10-K

INDEX

THIS FORM 10-K CONTAINS 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. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN SUCH FORWARD-LOOKING STATEMENTS. CERTAIN FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE ARE DISCUSSED IN ITEM 1A, “RISK FACTORS” AND ITEM 7, “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION”OPERATIONS” OF THIS ANNUAL REPORT ON FORM 10-K. SEE ALSO “FORWARD-LOOKING STATEMENTS” WITHIN SUCH ITEM 7 OF THIS ANNUAL REPORT ON FORM 10-K.

PART I

General

Saker Aviation Services, Inc. (“we”, “us”, “our”) is a Nevada corporation. Our common stock, $0.001$0.03 par value per share (the “common stock”), is quoted on the OTCQB Marketplace (“OTCQB”) under the symbol “SKAS”. Through our subsidiaries,subsidiary, we operate in the aviation services segment of the general aviation industry, in which we serve as the operator of a heliport, a fixed base operation (“FBO”), a provider of aircraft maintenance and repair services (“MRO”), and as a consultant for a seaplane base that we do not own. FBOs provide ground-based services, such as fueling and aircraft storage for general aviation, commercial and military aircraft, and other miscellaneous services.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 FBOa fixed base operator (“FBO’) and MROa provider of aircraft maintenance and repair services (“MRO”) at the Garden City (Kansas) Regional Airport,Airport. FBOs provide ground-based services, such as a consultant to the operator of a seaplane base in New York City,fueling and prior to our divestiture, as an MRO at the Bartlesville (Oklahoma) Municipal Airport.

The Garden City facility became part of our company as a result of our acquisition of the FBO assets of Central Plains Aviation, Inc. in March 2005. Our Garden City facility began offering maintenance services in October 2016 as a result of our acquisition of Aircraft Services, Inc. (“Aircraft Services”).aircraft storage for general aviation, commercial and military aircraft, and other miscellaneous services.

Our business activities at the Downtown Manhattan (New York) Heliport facility (the “Heliport”“Downtown Manhattan Heliport”) commenced in November 2008 when we were awarded the Concession Agreement by the City of New York to operate the Downtown Manhattan Heliport, which we assigned to our subsidiary, FirstFlight Heliports, LLC d/b/a Saker Aviation Services (“FFH”).

The Bartlesville facility became part of our company as a result of our acquisition of all of the outstanding stock of Phoenix Rising Aviation, Inc. (“PRA”) on August 15, 2013.

The FBO segment of the general aviation industry is highly fragmented. According to the National Air Transportation Association (“NATA”), there are over 3,000 FBOs that serve customers at one or more of over 3,000 airport facilities across the country that have at least one paved 3,000-foot runway. The vast majority of these companies are single location operators. NATA characterizes companies with operations at three or more airports as “chains.” An operation with FBOs in at least two distinctive regions of the country is considered a “national” chain while an operation with FBOs in multiple locations within a single region is considered a “regional” chain.Services.

We believe the general aviation market has been historically cyclical, with revenue correlated to general U.S. economic conditions. Although not truly seasonal in nature, the spring and summer months tend to generate higher levels of revenue and our operations generally follow that trend. Beginning in April 2022, following declined tourism due to the COVID-19 pandemic, sightseeing tour operators saw an increase in activity and a much higher demand for tours. There can be no assurance that this increased activity will continue as demand for sightseeing tours will depend on future developments in the tourist industry.

Discontinued OperationsConcession Agreement for Downtown Manhattan Heliport

As disclosed inThe Company was party to a Current Report on Form 8-K filedConcession Agreement, dated as of November 1, 2008, with the SecuritiesCity 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 18% of the first $5,000,000 in any program year based on cash collected (“Gross Receipts”) and Exchange Commission25% of Gross Receipts in excess of $5,000,000, or minimum annual guaranteed payments.

On February 5, 2016, the Company and the New York City Economic Development Corporation (the “SEC”“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 July 6,Sundays since April 1, 2016. The Company was also required to ensure that its tenant operators reduce the total allowable number of tourist flights from 2015 levels by 20 percent beginning June 1, 2016, by 40 percent beginning October 1, 2016 and by 50 percent beginning January 1, 2017. The Air Tour Agreement also provided for the minimum annual guarantee payments the Company is required to pay to the City of New York under the Concession Agreement.

Additionally, since June 1, 2016, we have 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 30 months and gave the City of New York two one-year options to extend the term of the Concession Agreement. The term of the Concession Agreement was subsequently extended by the City of New York through April 30, 2023 by the city’s exercise of both its two one-year option renewals.

During the program year that began on May 1, 2020, the City of New York agreed, in recognition of the pandemic’s impact, that the Company could defer payment of minimum guaranteed payments. In April 2021, the City of New York waived the deferred fees through December 31, 2020. In May 2021, the City of New York waived the deferred fees through April 30, 2021 which coincided with the original expiration of the Concession Agreement as amended by the Air Tour Agreement. The Company worked with the City of New York to address fees to be paid by the Company for the period May 1, 2021 through December 31, 2021. In March 2022, the City of New York agreed to accept 18% of monthly Gross Receipts in excess of $100,000 as Concession fees for this period. In April 2022, the Company agreed to resume paying the City of New York the total monthly amounts due under the Concession Agreement retro-active to January 2022 and to continue paying fees due under the Concession Agreement through the remainder of the Air Tour Agreement. During the twelve months ended December 31, 2023 and 2022, we incurred approximately $682,000 and $1,509,000 in concession fees, respectively, which are recorded in the cost of revenue.

On February 15, 2023, NYCEDC reported that it would be bringing a new concession agreement with the Company as the operator of the Downtown Manhattan Heliport to the New York City Franchise and Concession Review Committee meeting on March 3, 2023. The item was subsequently removed from the agenda, with NYCEDC announcing on April 7, 2023 that the previous Request for Proposals ("RFP") had been cancelled and that it is their intention to put out a new RFP in 2023. 

On April 28, 2023, the Company entered into a Stock PurchaseTemporary Use Authorization Agreement dated June 30, 2015,(the “Use Agreement”), effective as of May 1, 2023, with the City of New York acting by and betweenthrough the Company and Warren A. Peck (the “Agreement”). Pursuant to the Agreement, Mr. Peck was to purchase allNew York City of the outstanding capital stockDepartment of the Company’s wholly-owned subsidiary Phoenix Rising Aviation, Inc.Small Business Services (“PRA”DSBS”). The closingUse Agreement has a term of the transactions contemplated by the Agreement occurred on September 30, 2015. At that time, in exchange for all of the outstanding capital stock of PRA, Mr. Peck agreedone year. Pursuant to pay (i) the Company $250,000 in cash; (ii) execute a $250,000 Secured Promissory Note in favor of the Company; and (iii) execute an Installment Payment Agreement giving the Company rights to earn-out payments based on EBITDA thresholds achieved by PRA post-closing. As a result of the sale, PRA results of operations have been reported as discontinued operations in the Consolidated Balance Sheet and Statement of Operations for 2015.

The Agreement, Secured Promissory Note and Installment Payment Agreement were included as exhibits with the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2015. On September 30, 2015 the Company and Mr. Peck executed the Closing Cash Agreement “the “Closing Agreement”, which was filed with the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2015. The Closing Agreement provided for Mr. Peck to assign to the Company title to an aircraft in order to defer the $250,000 cash consideration due at closing. As further described in the Closing Agreement, the Company shall receive the $250,000 closing cash payment, plus other identified costs, when the aircraft is subsequently sold. The $250,000 closing cash consideration plus receivables associated with the Note are therefore reflected as a Note Receivable in the Consolidated Balance Sheet as of December 31, 2015. On June 13, 2016, the Company entered into a sale agreement (the “Sale Agreement”) with an unrelated third party to acquire the aircraft subject to the Closing Agreement. Under the terms of the SaleUse Agreement, the Company received a down-payment of $30,000, which was credited againsthas been granted the $250,000 cash consideration owed by Mr. Peck.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 beginningto 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 October 2016,the amount of $5,000. During the twelve months ended December 31, 2023, the Company incurred $40,000 in administrative fees which are recorded in the cost of revenue.

On July 13, 2023, the DSBS was granted approval by the Franchise and Concession Review Committee to receive monthly payments of at least $28,000enter into an Interim Concession Agreement (the “Interim Agreement”) with the Company to satisfyprovide for the remaindercontinued operation of the $250,000 cash consideration and $50,000Downtown Manhattan Heliport. The Interim Agreement became effective upon registration with the Comptroller of the Note owed by Mr. Peck.City of New York and commenced on December 12, 2023. 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 has not receivedis 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. In addition to terminations for an event of default, the Interim Agreement can be terminated at any time by the Commissioner of the monthly paymentsDSBS or suspended at any time by the NYCEDC.

On November 13, 2023, the DBS and NYCEDC released the new RFP. The initial due under the Sale Agreement, have issued a demand letter, and are pursuing all other legal remedies at our disposal. The $220,000 remaining balance of closing cash consideration plus receivables associateddate for submissions was January 12, 2024, with the Note, are reflected asdue date being subsequently extended to February 12. 2024. The Company submitted a Note Receivabletimely proposal in the Consolidated Balance Sheet as of December 31, 2016.

Acquisition

Our wholly-owned subsidiary, FBO Air Garden City, Inc. (“GCK”), entered into a Stock Purchase Agreement, dated October 3, 2016, by and between the Company, GCK and Gary and Kim Keller (the “Stock Purchase Agreement”), to purchase all of the capital stock of Aircraft Services, an aircraft maintenance services firm located in Garden City, Kansas. Undercompliance with the terms of the transaction,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.

Lease for Garden City (Kansas) Regional Airport

On October 3, 2022, FBO Air-Garden City, Inc., (“GCK”), one of our wholly owned subsidiaries, entered into a FBO Transfer Agreement (the “Transfer Agreement”) with Crosby Flying Services, LLC (the “Buyer”) pursuant to which GCK agreed (i) to sell to the Buyer substantially all of its assets (the “Assets”) and none of its liabilities, and (ii) to a seven year non-competition covenant (the “Non-Compete”) whereby the Company, madeincluding our subsidiaries and affiliates, will not engage in any business involving the operation of a $150,000 cash paymentfixed based operation supplying aviation fuels and lubricants or the supply of other goods or provision of services typically supplied or performed at closing and will make installment payments totaling an additional $150,000 overfixed base operations at airports at any facility located within one hundred (100) miles of the next two years. The closing cash paymentGarden City Regional Airport in Garden City, Kansas for $1.6 million.

On October 31, 2022 (the “Closing Date”), the transaction was funded with internal resources. The Stock Purchasecontemplated by the Transfer Agreement is discussed in greater detail in a Current Report on Form 8-K filed on October 7, 2016Company closed and was filed as an Exhibitwe became subject to the Company’s Quarterly ReportNon-Compete, for an aggregate purchase price of, after certain closing adjustments, approximately $1.5 million. The Buyer paid the purchase price on Form 10-Q for the period ended September 30,2016.Closing Date less $160,000, which was subsequently paid on the first anniversary of the Closing Date. Both GCK leases, which allowed us to operate at the Garden City Regional Airport, were terminated by Garden City as of the October 31, 2022 closing date.

Suppliers and Raw Materials

Our principal materials are aviation fuel and aircraft parts. We obtain aviation fuel, component parts and other supplies from a variety of sources, generally from more than one supplier. Our suppliers and sources are both domestic and foreign, and we believe that our sources of supplies and materials are adequate to meet our needs for the foreseeable future. We do not believe the loss of any one supplier would have a material adverse effect on our business or results of operations. We generally purchase our supplies on the open market, where certain commodities have fluctuated in price significantly in recent years. We have not experienced any significant shortage of our key supplies.

Marketing and Sales

The main goal of our marketing and sales efforts is to increase traffic at our facilities,the Downtown Manhattan Heliport, which we believe would then drive revenue through the incremental sale of our products and services. Our primary marketing tactic in this regard is to focus advertising efforts in the environments (web, periodical and industry publications) where the pilot and aviation-user community might be introduced to our brand name and locations.location. We intend to continue to invest in improvements to our sales and marketing strategies to drive revenue growth.

Government Approvals

The aviation services that we provide are generally performed on municipal or other government owned real estate properties. Accordingly, at times we will need to obtain certain consents or approvals from governmental entities in conjunction with our operations. These consents and approvals are typically in the form of a lease agreement, as is the case at our Kansas facility, or a concession agreement, as is the case with our New York facility. There can be no assurance that we will obtain further consents or approvals on favorable terms or be able to renew existing consents or approvals on favorable terms, if at all.

Government Regulation

We are subject to a variety of governmental laws and regulations that apply to companies in the aviation industry. These include, among other matters, compliance with the Federal Aviation Administration (“FAA”) rules and regulations, and local, regional and national rules and regulations as they relate to environmental matters. The FAA, from time to time, issues directives and other regulations relating to the management, maintenance and operation of facilities. Additionally, we may be subject to government procurement regulations as they relate to obtaining new agreements or renewing or extending existing agreements with governmental entities. Compliance with those requirements may cause us to incur significant expenditures. The proposal and enactment of additional laws and regulations, as well as any charges that we have not complied with any such laws and regulations, could significantly increase the cost of our operations and reduce overall revenue. We believe we are in compliance with, and intend to continue to comply with, all applicable government regulations.regulations but cannot provide assurance that compliance with existing laws and regulations or that laws or regulations enacted in the future will not adversely affect our business and results of operations. The adoption of new regulations could result in increased costs and have an adverse impact on our results of operations. In the event we are unableoperations, including, for example, regulations that restricted air travel such as reduced seating capacity or possible temporary orders to remain compliant with applicable rules and regulations, our business may be adversely affected.cease operations as a result of public health crises.

Customers

Beginning in April 2022, the Company’s customers began operating at pre-pandemic levels which continued through the end of 2022. In June 2022, a new tenant began operating at our Downtown Manhattan Heliport. For the fiscal year ended December 31, 2016, four2022, three customers represented approximately 75.1% of our revenue. The loss of any of these four customers could represent a significant decrease in revenue that may adversely affect our business and results of operations. Additionally, four accounts represented approximately 89.3%$184,000, or 75%, of the balance of accounts receivable atreceivable.In addition, these three customers represented approximately 83 % of our revenue in 2022. The Company has a security deposit in place for each of these customers.

In September 2023, one of the Company’s former customers resumed operations.For the fiscal year ended December 31, 2016. Accounts receivable are carried at their estimated collectible amounts and are periodically evaluated for collectability. We depend significantly on our business with2023, the Company’s four customers represented approximately $248,000, or 84.1%, of the balance of accounts receivable.In addition, these four customers represented approximately 84.8% of our revenue in 2023. The Company has a security deposit in place for each of these customers.

Competition

The FBO segment ofOur New York location is the aviation services industry is competitive in both pricing and service because aircraft in transit are ableonly heliport authorized by New York to choose from a number of FBO options within a 300-mile radius. The vast majority of FBO operators are independent, single location operators. We are the sole FBO at each of our current facilities. As such,perform sightseeing tours. Therefore, we face no direct on-airport competition. However,competition in servicing this line of business. There are two other New York heliports who offer fuel and corporate charter services that we face competitive pressure on pricing and servicesdirect competition from FBO facilities at other airports, depending on aircraft travel flexibility.

We plan to grow our business through both internal development of existing resources and facilities and through the potential acquisition of other related business. We anticipate that growing our business will provide us with greater buying power from suppliers and, therefore, result in lower costs. Lower costs would allow us to implement a more aggressive pricing policy against some competitors. We believe that the higher level of customer service offered in our facilities will allow us to draw additional aircraft traffic and thus compete successfully against other FBOs of all sizes. However, there can be no assurance that we will be able to compete successfully in the highly competitive aviation industry.providing these services.

Costs and Effects of Complying With Environmental Laws

We are subject to a variety of federal, state and local environmental laws and regulations, including those that govern health and safety requirements, the discharge of pollutants into the air or water, the management and disposal of hazardous substances and wastes and the responsibility to investigate and clean up contaminated sites that are or were owned, leased, operated or used by us or our predecessors. Some of these laws and regulations require us to obtain permits, which contain terms and conditions that impose limitations on our ability to emit and discharge hazardous materials into the environment and may be periodically subject to modification, renewal and revocation by issuing authorities. Fines and penalties may be imposed for non-compliance with applicable environmental laws and regulations and the failure to have or to comply with the terms and conditions of required permits. We intend to comply with these laws and regulations. However, from time to time, our operations may not be in full compliance with the terms and conditions of our permits or licenses. We periodically review our procedures and policies for compliance with environmental laws and requirements. We believe that our operations are in material compliance with applicable environmental laws and requirements and that any potential non-compliance would not be expected to result in us incurring material liability or cost to achieve compliance. Although the cost of achieving and maintaining compliance with environmental laws and requirements has not been material, we can provide no assurance that such cost will not become material in the future.

Employees

As of December 31, 2016,2023, we employed 31eleven persons, 29nine of which were employed on a full-time basis, and onebasis. None of which wasthese employees were an executive officer. All of our personnel are employed in connection with our operations in New York and Kansas.York.

Available Information

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Therefore, we file periodic reports, proxy statements and other information with the SEC. Such reports may be read and copied at the SEC’s Public Reference Room at 100 F Street NE, Washington, D.C. 20549. Information regarding the operation of the Public Reference Room may be obtained by calling the SEC at (800) SEC-0330. The SEC also maintains a website (www.sec.gov) that includes our reports, proxy statements and other information. We maintain a website at www.sakeraviation.com where we make available, free of charge, documents that we file with, or furnish to, the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, registration statements and any amendments to those reports. Our SEC reports can be found under “Financial Reporting”the “SEC Filings” heading in the “Investor Relations” tab on our website. The information found on our website is not part of this or any other report we file with, or furnish to, the SEC.

The following risk factors relateRisks related to our operations:

We will need additional financing to expand our business.

Certain potential aviation services firms which we may seek to acquire in the future may accept shares of our common stock or other securities as payment by us for the acquisition. However, we believe that most will likely prefer cash payments, whether paid at the closing or in post-closing installment payments. There can be no assurance that our operations will generate sufficient cash flow to meet these acquisition obligations. Accordingly, we anticipate the need to seek additional equity or debt financing to meet any cash requirements for acquisitions. Any such financing will be dependent on general market conditionsbusiness and the stock market’s evaluation of our performance and potential. Accordingly, we can give no assurance that we will obtain such equity or debt financing and, even if we do, that the terms would be satisfactory to us.operations:

We could be adversely affected by increases in the price, or decreases in the availability, of jet fuel.

Our operations could be significantly affected by the availability and price of jet fuel. The price and supply of jet fuel is unpredictable and fluctuates based on events we cannot control, such as geopolitical developments, including but not limited to heightened uncertainties and impacts resulting from Russian military actions in Ukraine and associated response, supply and demand for crude oil, actions by oil and jet fuel producers, actions by jet fuel refiners, conflict, unrest or economic instability in oil producing countries and regions, regional production patterns and weather conditions. A significant increase in the price of jet fuel would most likely have a material impact on our ability to achieve and maintain profitability unless we are able to pass on such costs to our customers. Due to the competitive nature of the industry, our ability to pass on increased fuel prices by increasing our rates is uncertain. Likewise, any potential benefit of lower fuel prices may be offset by increased competition and lower revenue, in general. While we do not currently anticipate a significant reduction in fuel availability, dependency on foreign imports of crude oil and the possibility of changes in government policy on jet fuel production, transportation and marketing make it impossible to predict the future availability of jet fuel. If there are new outbreaks of hostility or other conflicts in oil producing areas or elsewhere, there could be a reduction in the availability of jet fuel or significant increases in costs to our business, as well as to the entire aviation industry, which in turn would adversely affect our business and results of operations. While we do not currently anticipate a significant reduction in fuel availability, dependency on foreign imports of crude oil and the impacts resulting from Russian military actions in Ukraine and possibility of changes in government policy on jet fuel production, transportation and marketing make it impossible to predict the future availability of jet fuel. As a result, any increases in these prices or decrease in the availability of fuel may adversely affect our profitability and competitiveness.

If we are not awarded the contract to operate the Downtown Manhattan Heliport through the new RFP, our operations will be materially adversely affected.

We currently operate the Downtown Manhattan Heliport pursuant to the Interim Concession Agreement. The NYCEDC initiated a new RFP to govern the use of the Downtown Manhattan Heliport. There is no guarantee that the proposal we submitted for the new RFP will be selected and that we will be awarded the contract to operate the Downtown Manhattan Heliport. If our proposal to the new RFP is not chosen, our business will be materially adversely affected as we would be required to cease all our operations at the Downtown Manhattan Heliport and we would have no business operations to generate revenue.

We could be adversely affected by the loss of certain key customers orour Interim Concession Agreement with the inabilityCity of such key customers to pay amounts due to us.

For the fiscal year ended December 31, 2016, four customers represented approximately 75.1% of our revenue. Additionally, these four accounts represented approximately 89.3% of the balance of accounts receivable at December 31, 2016. Accounts receivable are carried at their estimated collectible amounts and are periodically evaluated for collectability. The loss of any of our key customers, or the inability of such customers to pay amounts due to us, could result in a significant decrease in revenue that may adversely affect our business and result of operations.

The continued threat of terrorist actions may result in less demand for private aviation and, as a result, our revenue may be adversely affected and we may not be able to continue successful operations.New York.

Terrorist actions involving publicOn July 13, 2023, the DSBS was granted approval by the Franchise and private aircraft may haveConcession 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 significant adversewritten notice received by the Company to proceed. 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. 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.

On November 13, 2023, the DBS and NYCEDC released the new 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.

All of our business is conducted and reliant on the Downtown Manhattan Heliport. Any disruption in business at the Downtown Manhattan Heliport or additional restrictions imposed on the operations of the Downtown Manhattan Heliport by the NYCEDC could adversely impact on us. As a result of these actions, individuals and corporate customers may cease using private aircraft as a means of transportation or reduce their use of such aircraft, or we could become subject to burdensome regulations that would have an adverse effect on our results of operations. In either event,Additionally, our business depends on us remaining as the operator of the Downtown Manhattan Heliport. If the Interim Agreement expires, or is terminated early pursuant to its terms, without us having a further agreement in place for our continued operation of the Downtown Manhattan Heliport, our business will be adversely affected as we would be unablerequired to maintain sales and may be unable to continuecease our operations on a successful basis.at the Downtown Manhattan Heliport.

The FBO segment of the aviation services industry in which we operate is fiercely competitive.

We compete with national, regional, and local FBO operators. Many of our competitors have been in business longer than we have and have greater financial resources available to them. Having greater financial resources will make it easier for these competitors to absorb an increase in fuel prices and other expenses. In addition, these competitors might seek acquisitions in regions and markets competitive to us, which could have an adverse effect on our business and results of operations. Accordingly, we can give no assurance that we will be able to successfully compete in our industry.

Our business as an FBO is subject to extensive governmental regulation.

FBOsWe are subject to extensive regulatory requirements that could result in significant costs. For example, the FAA, from time to time, issues directives and other regulations relating to the management, maintenance and operation of facilities.facilities, including the potential of emergency regulations, such as those related to public health crises including pandemics and epidemics. Additionally, we may be subject to government procurement regulations as they relate to obtaining new agreements or renewing or extending existing agreements with governmental entities. Compliance with those requirements may cause us to incur significant expenditures. The proposal and enactment of additional laws and regulations, as well as any charges that we have not complied with any such laws and regulations, could significantly increase the cost of our operations and reduce overall revenue. We cannot provide assurance that compliance with existing laws and regulations or that laws or regulations enacted in the future will not adversely affect our business and results of operations.

We must maintain and add key management and other personnel.

Our future success is heavily dependent on the performance of our managers. Our growth and future success depends, in large part, on the continued contributions of management and our ability to retain management. management.

Our growth and future success also depends on other key individuals, as well as our ability to motivate and retain these personnel or hire other persons. Although we believe we will be able to retain and hire qualified personnel, we can give no assurance that we will be successful in retaining and recruiting such personnel in sufficient numbers to increase revenue, maintain profitability or successfully implement our growth strategy. If we lose the services of management or any of our key personnel, or are not able to retain or hire qualified personnel, our business could be adversely affected.

If our employees were to unionize, our operating costs would increase and our business could be adversely affected.

None of our employees are currently represented under a collective bargaining agreement. From time to time, there may be efforts to organize our employees. There is no assurance that our employees will not unionize in the future, particularly if legislation is passed that facilitates unionization. The unionization of our employees could have a material adverse effect on our business, financial condition and results of operations due to the possibility of work stoppage, wage increases, or other developments that may result from the unionization of our employees.

Changes in minimum wage laws outside of our control could affect our profitability.

We have employees who are paid wage rates based on the applicable federal or state minimum wage and increases in the minimum wage may increase our labor costs and reduce profitability. Federal, state, or local minimum wages may be raised in the future and we may be unable or unwilling to increase our prices in order to pass these increased labor costs on to our customers, in which case, our business and results of operations could be materially and adversely affected.

We are subject to environmental laws that could impose significant costs on us and the failure to comply with such laws could subject us to sanctions and material fines and expenses.

We are subject to a variety of federal, state and local environmental laws and regulations, including those governing the discharge of pollutants into the air or water, the management and disposal of hazardous substances and wastes and the responsibility to investigate and clean-up contaminated sites that are or were owned, leased, operated or used by us or our predecessors. Some of these laws and regulations require us to obtain permits, which contain terms and conditions that impose limitations on our ability to emit and discharge hazardous materials into the environment and may be periodically subject to modification, renewal and revocation by issuing authorities. Fines and penalties may be imposed for non-compliance with applicable environmental laws and regulations, the failure to have required permits or the failure to comply with the terms and conditions of such permits. We intend to comply with all laws and regulations, however, from time to time, our operations may not be in full compliance with the terms and conditions of our permits. We periodically review our procedures and policies for compliance with environmental laws and requirements. We believe that our operations are in material compliance with applicable environmental laws, requirements and permits and any lapses in compliance are not expected to result in us incurring material liability or cost to achieve compliance. However, there can be no assurance that our operations will remain in material compliance with applicable environmental laws and requirements. Historically, the costs of achieving and maintaining compliance with environmental laws, requirements and permits have not been material; however, the operation of our business entails risks in these areas and a failure by us to comply with applicable environmental laws, regulations or permits could result in civil or criminal fines, penalties, enforcement actions, third party claims for property damage and personal injury, requirements to clean up property or to pay for the costs of cleanup and/or regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures. Moreover, if applicable environmental laws and regulations, or the interpretation or enforcement thereof, become more stringent in the future, we could incur capital or operating costs beyond those currently anticipated and our business and results of operations could be harmed.

We are currently involved in arbitration with Empire Aviation, LLC regarding claims of unpaid fees to Empire under our prior Management Agreement, the arbitration could be time-consuming and expensive and may not have a favorable outcome.

Empire Aviation, LLC and the Company were parties to a certain Management Agreement effective November 1, 2008. The followingManagement Agreement terminated on April 30, 2023. 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 of accrued interest. Saker has asserted numerous defenses and counterclaims against Empire.

The arbitration will require additional time and effort from management and additional expenses and may not result in a favorable outcome. Such expenses and results could adversely affect our business.

Bank failures or other events affecting financial institutions could adversely affect our liquidity and financial performance.

We currently maintain a portion of our excess working capital reserves in a high yield savings account at UBS Financial Services Inc. (“UBS”), which we believe is a high-quality institution. The cash balance we have on account with UBS currently, and may from time to time, exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. If UBS were to fail, we could lose all or a portion of the amounts held more than such insurance limitations. In addition, events involving limited liquidity, defaults, non-performance or other adverse conditions in the financial or credit risk factors relatemarkets impacting financial institutions at which we maintain balances, or concerns or rumors about such events, may lead to disruptions in access to our common stock:bank deposits or otherwise adversely impact our liquidity or financial performance. There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or that UBS or any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions, or by acquisition in the event of a failure or liquidity crisis.

Risks related to our securities:

There is no active market for our common stock, which makes our common stock less liquid.

To date, trading of our common stock has been sporadic and nominal in volume. In addition, there are only a limited number of broker-dealers trading our common stock. As a result, there is little, if any, liquidity in our common stock. We can provide no assurance that an active trading market will ever develop.

Our common stock is subject to the penny stock rules, which makes our common stock less liquid.

The SEC has adopted a set of rules called the “penny stock rules” that regulate broker-dealers with respect to trading in securities with a bid price of less than $5.00. These rules do not apply to securities registered on certain national securities exchanges (including the Nasdaq Stock Market), provided that current price and volume information regarding transactions in such securities is provided by the exchange. Our stock is not listed on such an exchange and we have no expectation that our common stock will be listed on such an exchange in the future. The penny stock rules require a broker-dealer to deliver to the customer a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. Additionally, the broker-dealer must provide the customer with other information. The penny stock rules also require that, prior to a transaction in a penny stock, the broker-dealer must determine in writing that the penny stock is a suitable investment for the purchaser. The broker-dealer must also receive the purchaser’s written agreement to the transaction. These disclosure requirements have the effect of reducing the level of trading activity in the secondary market for a stock such as ours that is subject to the penny stock rules.

Our common stock may not continue to be traded on the OTCQB.

We cannot provide any assurance that our common stock will continue to be eligible to be quoted on the OTCQB Marketplace (“OTCQB”). Should our common stock cease to be quoted on the OTCQB and fail to qualify for listing on a stock exchange (including the Nasdaq Stock Market), our common stock would only trade in the “pink sheets” which generally provides an even less liquid market than the OTCQB. In such event, stockholders may find it more difficult to trade their shares of our common stock or to obtain accurate and current information concerning market prices for our common stock.

Our management team currently has the ability to influence stockholder votes.

As of December 31, 2023, our executive officers, directors and their family members and associates, collectively, are entitled to vote 294,433 shares, or 29.9% of the 985,888 shares of our outstanding shares of common stock. Accordingly, and because there is no cumulative voting for directors, our executive officers and directors are currently in a position to influence the election of all of our Board of Directors. The management of our company is controlled by our Board of Directors, which is currently comprised of three independent directors and one executive officer/director.

General risk factors:

Potential additional financings, the granting of additional stock options and any anti-dilution provisions in our warrantspotential future derivative securities could further dilute our existing stockholders.

As of March 30, 2017,December 31, 2023, there were 33,157,610985,888 shares of our common stock outstanding. If all of our outstanding common stock purchase warrants and currently exercisable options were exercised, there would be 35,357,6101,053,382 shares outstanding, an increase of approximately 6.6%6.8%. Any further issuances due to additional equity financings, or the granting of additional options or the anti-dilution provisions in our warrants could further dilute our existing stockholders, which could cause the value of our common stock to decline.

We do not anticipate paying dividends on our common stock in the foreseeable future.

We intend to retain future earnings, if any, to fund our operations and to expand our business. Accordingly, we do not anticipate paying cash dividends on shares of our common stock in the foreseeable future and an investment in our common stock might not generate any return.

Our Board of Directors’Directors’ right to issue shares of preferred stock could adversely impact the rights of holders of our common stock.

Our Board of Directors currently has the right to authorize the issuance of up to 9,999,154333,306 shares of one or more series of our preferred stock with such voting, dividend and other rights as our directors determine. Such action can be taken by our Board of Directors without the approval of our shareholders. Accordingly, the holders of any new series of preferred stock could be granted voting rights that reduce the voting power of the holders of our common stock. For example, the preferred holders could be granted the right to vote on a merger as a separate class even if the merger would not have an adverse effect on their rights. This right, if granted, would give such preferred holders a veto with respect to any merger proposal. Alternatively, such preferred holders could be granted a large number of votes per share while voting as a single class with the holders of our common stock, thereby diluting the voting power of the holders of our common stock. In addition, the holders of any new series of preferred stock could be given the option to redeem their shares for cash in the event of a merger. This would make acquiring us less attractive to a potential buyer. Thus, our Board of Directors could authorize the issuance of shares of the new series of preferred stock in order to defeat a proposal for the acquisition of our company that a majority of the holders of our common stock otherwise favor.

Our common stock may not continue to be traded on the OTCQB.

We cannot provide any assurance that our common stock will continue to be eligible to be quoted on the OTCQB Marketplace (“OTCQB”). Should our common stock cease to be quoted on the OTCQB and fail to qualify for listing on a stock exchange (including the Nasdaq Stock Market), our common stock would only trade in the “pink sheets” which generally provides an even less liquid market than the OTCQB. In such event, stockholders may find it more difficult to trade their shares of our common stock or to obtain accurate and current information concerning market prices for our common stock.

Our management team currently has influential voting power.

As of March 31, 2017, our executive officers, directors and their family members and associates, collectively, are entitled to vote 10,183,426 shares, or 30.7%, of the 33,157,610 shares of our outstanding shares of common stock. Accordingly, and, because there is no cumulative voting for directors, our executive officers and directors are currently in a position to influence the election of all of our Board of Directors. The management of our company is controlled by our Board of Directors, which is currently comprised of two independent directors, a director who is a managing partner of a law firm which provides legal services to us, and two executive officer/directors.

Not applicable.

Risk Management and Strategy

Cyber Security Governance

Oversight of cybersecurity infrastructure is managed by members of our management team, including our President & Chief Executive Officer. Management works in tandem with a third-party service provider (the “Service Provider”). The Service Provider periodically reviews and updates our antivirus and antimalware software, manages our Business Continuity and Disaster Recovery system, reviews our vulnerability management and ensures our system is Payment Card Industry (PCI) compliant. Given our overall risk profile, the Board has had limited involvement with our cybersecurity risk management. The management team, with support from the Service Provider, would raise any significant cybersecurity risks with the Board.

Risk Management and Strategy

We believe we have implemented processes that are designed to effectively identify and manage risks from cybersecurity threats. Through our Service Provider, we receive Endpoint Detection and Response services (“EDR”). The EDR helps to ensure faster identification of a cybersecurity breach. Once a cyber incident is identified, our Service Provider will notify management and work to secure our systems and fix the vulnerability. An investigation will be conducted, with the assistance of the Service Provider if needed, to determine the root cause of the cyber incident, the materiality of the cyber incident, and any disclosure or legal obligations that will stem from the cyber incident.

We have not been the victim of a cyber incident in the past but may be the subject of cyber incidents in the future.

As of March 30, 2017, we lease office space atApril 1, 2024, the following locations:Company operates the Downtown Manhattan Heliport pursuant to the Interim Concession Agreement and had no leased offices or hangar space.

We believe that our space is adequate and suitable for our immediate needs. Additional hangar space may be required for our operations in the future. No definitive plans to lease any additional space have been developed at the time of this report. Should additional hangar space be required, there can be no assurance that such space will be available or available on commercially reasonable terms or at all.

From timeEmpire Aviation, LLC (“Empire”) and the Company were parties to time, we may be a party to one or more claims or disputes which may resultcertain Management Agreement (the “Management Agreement”) effective November 1, 2008. The Management Agreement terminated on April 30, 2023. As previously disclosed in litigation. However, wethe Company’s 2022 Annual Report on Form 10-K, Note 15. Contingent Liabilities, Empire Aviation notified the Company that it believes additional fees (“Management Fees”) are currently not a party to, nor is our property subject to, any material pending legal proceedings.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 administrative expenses and the Condensed 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. The Company and Empire will each submit proposed findings to the arbitrator in the next 30 days. We anticipate that the arbitrator will issue his rulings within 30 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.

Not applicable.

PART II

Market for Common EquityInformation

Our common stock is quoted on the OTCQB under the symbol “SKAS”. The OTCQB is a regulated quotation service that displays real-time quotes, last-sale prices and volume information in over-the-counter (“OTC”) equity securities. Our common stock is only traded on a limited or sporadic basis and should not be deemed to constitute an established public trading market. OTC quotations reflect intra-dealer prices, without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.

The following table sets forth the high and low closing sale prices for the common stock as reported on the OTCQB each full quarterly period within for the past two most recent fiscal years.

Holders

As of March 31, 2017,April 1, 2024, there were approximately 285475 holders of record of our common stock. This number does not include beneficial owners of the common stock whose shares are held in the names of various broker-dealers, clearing agencies, banks and other fiduciaries.

Dividends

Since our inception we have never declared orIn the past, the Company has paid any cash dividends on our common stock. We intendAny future determination to retain future earnings to finance the growth and development of our business and future operations. Therefore, we do not anticipate paying any cashpay dividends on shares of our common stock inwill be at the foreseeable future.discretion of our Board of Directors and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our Board of Directors deems relevant.

Forward-looking Statements

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. These statements may include projections of revenue, provisions for doubtful accounts, income or loss, capital expenditures, repayment of debt, other financial items, statements regarding our plans and objectives for future operations, acquisitions, divestitures and other transactions, statements of future economic performance, statements of the assumptions underlying or relating to any of the foregoing statements and statements other than statements of historical fact.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties,uncer‐tainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by such forward-looking statements. We therefore caution you against relying on any of these forward-looking statements because they are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include our services and pricing, general economic conditions, our ability to raise additional capital, our ability to obtain the various approvals and permits for the acquisition and operation of FBOs and the other risk factors contained in Item 1A of this report.

Any forward-looking statement made by us in this report speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Overview

Saker Aviation Services, Inc. is a Nevada corporation. Our common stock, $0.03 par value per share (the “common stock”), is quoted on the OTCQB Marketplace (“OTCQB”) under the symbol “SKAS”. Through our 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 FBO and MRO at the Garden City (Kansas) Regional Airport.

On October 31, 2022, the Garden City facilities were sold and we no longer maintain an FBO or MRO at the Garden City (Kansas) Regional Airport.

Our business activities at the 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”).

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.

If we are able to grow our business as planned, we anticipate that our larger size would provide us with greater buying power from suppliers, resulting in lower costs. We expect that lower costs would allow for a more aggressive pricing policy against some competition. More importantly, we believe that the higher level of customer service offered in our facilities will allow us to draw additional aircraft to our facilities and thus allow us to compete against other FBOs of varying sizes.

Summary Financial Information

The summary financial data set forth below is derived from and should be read in conjunction with the consolidated financial statements, including the notes thereto, filed as part of this report.Annual Report on Form 10-K.

Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations

Comparison of Results for the Years Ended December 31, 2023 and December 31, 2022.

REVENUE AND RESULTS OF CONTINUING OPERATIONS

DISCONTINUED OPERATIONS

As disclosed in a Current Report on Form 8-K filed with the SEC on November 2, 2022, on October 31, 2022 (the “Closing Date”), the Company sold its subsidiary FBO and MRO operations of FBO Air-Garden City, Inc. (“GCK”) to Crosby Flying Services, LLC (the “Buyer”) for an aggregate purchase price of $1.6 million. The Buyer paid the purchase price on the Closing Date less $160,000 (the “Installment Payment”) which was paid in cash upon the first anniversary of the Closing Date. GCK results of operations have been reported as discontinued operations in the Condensed Consolidated Statements of Operations for the year ended December 31, 2022.

Comparison of Continuing Operations forfrom the YearsTwelve Months Ended December 31, 20162023 and December 31, 2015.2022.

REVENUE

Revenue from continuing operations decreasedincreased by 8.016.3 percent to $14,690,654$8,837,614 for the twelve months ended December 31, 20162023, as compared with corresponding prior-year period revenue of $15,974,307.$7,598,597.

For the twelve months ended December 31, 2016,2023, revenue from continuing operations associated with services and supply items decreasedincreased by 7.711.9 percent to approximately $8,800,000$6,429,414 as compared to approximately $9,600,000$5,747,000 in the twelve months ended December 31, 2015.2022. This decreaseincrease was relatedattributable to increased demand for services in 2023 compared to the initiation of the air tour reductions which took effect on June 1, 2016, as further described below in Liquidity and Capital Resources.prior year.

For the twelve months ended December 31, 2016,2023, revenue from continuing operations associated with the sale of jet fuel aviation gasoline and related items decreasedincreased by 8.545.3 percent to approximately $5,700,000$2,299,000 as compared to approximately $6,300,000$1,582,000 in the twelve months ended December 31, 2015. The decrease2022. This increase was attributable to lowerthe higher volume of gallons and price of jet fuel costs, leading to lower average fuel prices. The cost of fuelsold at our New York location in 2016 was less on average as2023 compared to the cost of fuel in 2015. As our fuel pricing generally follows the cost of fuel, lower fuel costs translate to lesser revenue on comparable volume.prior year.

For the twelve months ended December 31, 2016,2023, all other revenue from continuing operations decreased by 7.559.6 percent to approximately $121,000$109,000 as compared to approximately $131,000$269,000 in the twelve months ended December 31, 2015.2022.

GROSS PROFIT

Total gross profit from continuing operations decreased 7.0increased 36.2 percent to $8,098,737$6,281,220 in the twelve months ended December 31, 20162023 as compared to $8,711,637$4,613,316 in the twelve months ended December 31, 2015.2022. Gross profit as amargin was 71.1 percent of revenue was 55 percent in each offor the twelve months ended December 31, 20162023 as compared to 60.7 percent for the same period in 2022. The increase in gross profit related to higher levels of activity at our New York location in 2023 as compared to the prior year. The increase in gross margin is related to the lower cost of jet fuel and 2015.lower costs associated with services and supplies in 2023 as compared to the prior year.

OPERATING EXPENSE

Selling, General and Administrative

Total selling, general and administrative or SG&A, expenses (“SG&A”) were $6,304,011$2,768,310 in the twelve months ended December 31, 2016,2023, a decrease of approximately $365,000$1,112,592, or 5.528.7 percent, as compared to the same period in 2015.2022.

SG&A associated with our FBO operations were approximately $5,800,000$2,132,000 in the twelve months ended December 31, 2016,2023, a decrease of approximately $459,000,$1,197,000, or 7.335.9 percent, as compared to the twelve months ended December 31, 2015.2022. SG&A associated with our FBO operations, as a percentage of revenue, was 39.724.1 percent for the twelve months ended December 31, 2016,2023, as compared with 39.443.8 percent in the corresponding prior year period. The decreased operating expenses were largelydecrease in SG&A was primarily attributable to decreased costs relatedfees due under the Company’s management agreement and fees due the NYCEDC in 2023 compared to the lower levels of activity in our Heliport operations.prior year.

Corporate SG&A was approximately $469,000$636,000 for the twelve months ended December 31, 2016,2023, representing an increase of approximately $95,000$84,000, or 15.2 percent, as compared with the corresponding prior year period. The majority of this increase in Corporate SG&A on a year-over-year basis was largely attributable to one-time expenses that are not expected to recuran increase in future periods.services provided by various service providers.

OPERATING INCOME

Operating income from continuing operations for the year ended December 31, 20162023 was $1,794,726$3,512,910 as compared to $2,043,104operating income of $732,414 in the year ended December 31, 2015.2022. The decreaseincrease in operating income on a year-over-year basis was driven by lower levels of gross profit, which did not offset lower SG&A expenses.the factors described above.

Depreciation and Amortization

Depreciation and amortization was approximately $505,000$16,000 and $569,000$100,000 for the twelve months ended December 31, 20162023 and 2015,2022, respectively. The decrease in depreciation expense was attributable to the sale of our Kansas location on October 31, 2022.

Interest Income and Expense

Interest income was $220,098 and $3,302 for the twelve months ended December 31, 2023 and 2022, respectively. The increase in interest income is attributable to the Company investing its excess working capital reserves in a high yield savings account and U.S government backed securities with UBS Financial Services Inc. (“UBS”).

Interest expense for the year ended December 31, 20162023 was $27,296,$0 as compared to $25,024$17,979 in the same period in 2015.2022. Interest expense in 2022 is included in loss from discontinued operations. The decrease in interest expense on a year-over-year basis was due primarily to the repayment of notes payable in connection with the sale of our Kansas operation effective October 31, 2022.

Impairment of Goodwill and Other IntangiblesIncome Tax

We had $750,000 and $530,000 of goodwill at December 31, 2016 and 2015, respectively. The $220,000 increase in goodwill relates to the Company’s acquisition of Aircraft Services, Inc. in October 2016.

As of December 31, 2016 and December 31, 2015, intangible assets consisted of a charter certificate ($35,000). In connection with our divestiture of PRA at September 30, 2015, we recorded a $107,500 charge in 2015 for the full value of the PRA non-compete agreement.

Income Tax

Income tax expense from continuing operations for the twelve months ended December 31, 20162023 was $887,000,approximately $1,507,000, as compared to $1,032,000$300,000 in the same period in 2015. Included2022. The increase in these amounts are paid actual or estimated federal, state and local income taxes along with a charge for deferred income tax at our estimated blended effective tax rate of 50 and 54 percent for 2016 and 2015, respectively. Paid actual or estimated tax expenses were $1,255,685 and deferred income tax expense was $0 foris attributable to higher net income in the twelve months ended December 31, 2016. Paid actual or estimated tax expenses were $388,000 and deferred income tax expense was $190,000 for the twelve months ended December 31, 2015.2023 as compared to 2022.

Net Income Per Share

Net income for the twelve months ended December 31, 20162023 was $880,430$2,446,444 as compared to net income of $695,208$1,246,621 in the twelve months ended December 31, 2015.2022. The increase in net income was attributable to higher revenue combined with decreased fees due under the Company’s management agreement and fees due the NYCEDC in 2023 compared to the prior year.

Basic and diluted net income per share was $0.03 and $0.02 for the twelve months ended December 31, 2016 and2023 was $2.50 as compared to basic net income per share of $1.28 in 2022. Diluted net income per share for the twelve months ended December 31, 2015, respectively.2023 was $2.47 as compared to diluted net income per share of $1.26 in 2022.

Liquidity and Capital Resources

As of December 31, 2016,2023, we had cash, and cash equivalents, and restricted cash of $2,192,507$6,931,709 and a working capital surplus of $2,811,729.$8,269,527. We generated revenue from continuing operations of $14,690,654$8,837,614 and had net income from continuing operations before taxes of $1,767,430$2,446,444 for the twelve monthsyear ended December 31, 2016. 2023. For the twelve monthsyear ended December 31, 2016,2023, cash flows included net income of $2,446,644, cash provided by operating activities of $2,244,551, net$3,344,387, and cash used in investing activities of $194,781, and net cash used in financing activities of $272,374.$2,389,835.

On May 17, 2013, weMarch 15, 2018, the Company entered into a loan agreement with PNC Bank (the “PNC Loan Agreement”). The PNC Loan Agreement contained three components: (i)for a $2,500,000 non-revolving acquisition$1,000,000 revolving line of credit (the “PNC Acquisition Line”“Key Bank Revolver Note”); (ii) a $1,150,000 working capital line (the “PNC Working Capital Line”); and (iii) a $280,920 term loan (the “PNC Term Loan”).

Proceeds which, at the discretion of the PNC Acquisition Line were ableBank, provides for the Company to be dispersed, based on parameters defined in the PNC Loan Agreement, until May 17, 2014 (the “Conversion Date”). As of the Conversion Date, there was $1,350,000 outstanding under the PNC Acquisition Line. The payment terms provided that 30 days following the Conversion Date, and continuing on the same day of each month thereafter, we are requiredborrow up to make equal payments of principal over a 60 month period. Interest on the outstanding principal continues to accrue at a rate equal to one-month LIBOR plus 275 basis points (3.486% as of December 31, 2016). An unused commitment fee had been applied at a rate of 1.5% on the unused portion of the PNC Acquisition Line and was charged for each fiscal quarter through the Conversion Date. As of December 31, 2016, there was $652,500 outstanding under the PNC Acquisition Line.

The PNC Working Capital was to have been dispersed$1,000,000 for working capital and general corporate purposes. Interest on outstanding principal accruedOn 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 LIBORDaily Simple SOFR plus 250 basis points.2.75%. The PNC Working Capital Line expiredCompany is required to make monthly payments of interest on any outstanding principal under the Key Bank Revolver Note and is required to pay the entire balance, including principal and all accrued and unpaid interest and fees, upon demand by the Bank. Any proceeds from the Key Bank Revolver Note would be secured by substantially all of the Company’s assets. There were no amounts due under the Key Bank Revolver Note at December 31, 2015, with $0 outstanding.2023 or 2022.

The PNC Term Loan was utilized to retire our previously outstanding miscellaneous debt of the same amount. Interest on outstanding principal accrued atCompany has invested its excess working capital reserves in a rate equal to one-month LIBOR plus 275 basis pointshigh yield savings account and principal and interest payments were to be made over a thirty-four month period. At December 31, 2015, all amounts under the PNC Term loan had been repaid.government backed securities with UBS Financial Services Inc. (“UBS”).

We areThe 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, we mustthe Company was required to pay the greater of 18% of the first $5,000,000 in any program year gross receiptsbased on cash collected (“Gross Receipts”) and 25% of gross receiptsGross Receipts in excess of $5 million,$5,000,000, or minimum annual guaranteed payments. We paid the City of New York $1,200,000 in the first year of the term and minimum payments are scheduled to increase to approximately $1,700,000 in the final year of Concession Agreement, which was set to expire on October 31, 2018. During the twelve months ended December 31, 2016 and 2015, we incurred approximately $2,700,000 and $2,900,000, respectively, in concession fees which are recorded in the cost of revenue.

As disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) onOn February 5, 2016, on February 2, 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 “Agreement”“Air Tour Agreement”).

Under the Air Tour Agreement, filed as an exhibitthe Company has not been allowed to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, we may not allowpermit its tenant operators to conduct tourist flights from the Downtown Manhattan Heliport on Sundays beginningsince April 1, 2016. WeThe Company was also were required to ensure that its tenant operators reduce the total allowable number of tourist flights from 2015 levels by 20 percent beginning June 1, 2016, by 40 percent beginning October 1, 2016 and by 50 percent beginning January 1, 2017. The Air Tour Agreement also provided for the minimum annual guarantee payments the Company is required to pay to the City of New York under the Concession Agreement.

Additionally, beginning onsince June 1, 2016, we werethe 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 extends ourextended the Concession Agreement with the City of New York for 30 months, resulting in a new expiration date of April 30, 2021. The City of New York has two one year options to further extend the Concession Agreement. The Agreement also provides that the minimum annual guarantee payments we are required to pay to2021 and gave the City of New York undertwo one-year options to extend the term of the Concession Agreement. The term of the Concession Agreement will be reducedwas subsequently extended by 50%, effective January 1, 2017.the City through April 30, 2023 by the City’s exercise of both one-year option renewals and expired on that date.

TheseThe reductions willunder the Air Tour Agreement have negatively impact ourimpacted the Company’s business and financial results as well as those of ourits management company at the Downtown Manhattan Heliport, Empire Aviation which, as previously disclosed, is owned by the children of Alvin Trenk, our Chief Executive Officer and a member of our Board of Directors.Aviation. The Company incurred management fees with Empire Aviation of approximately $3,500,000$448,000 and $3,700,000$2,138,000 during the twelve monthsyears ended December 31, 20162023 and 2015, respectively,December 31, 2022, respectively. Empire Aviation notified the Company that it believes additional fees are due under the management agreement. Please see Note 10. Litigation. The Empire 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.

During the program year that began on May 1, 2020, the City of New York agreed, in recognition of the pandemic’s impact, that the Company could defer payment of minimum guaranteed payments. In April 2021, the City of New York waived the deferred fees through December 31, 2020. In May 2021, the City of New York waived the deferred fees through April 30, 2021 which is recorded in administrative expenses.coincided with the original expiration of the Concession Agreement as amended by the Air Tour Agreement. The Company worked with the City of New York to address fees to be paid by the Company for the period May 1, 2021 through December 31, 2021. In March 2022, the City of New York agreed to accept 18% of monthly Gross Receipts in excess of $100,000 as Concession fees for this period. In April 2022, the Company agreed to resume paying the City of New York the total monthly amounts due under the Concession Agreement retro-active to January 2022 and Empire Aviation have also contributedto continue paying fees due under the Concession Agreement through the remainder of the Air Tour Agreement.

On February 15, 2023, NYCEDC reported that it would be bringing a new concession agreement with the Company as the operator of the Downtown Manhattan Heliport to the Helicopter TourismNew York City Franchise and Jobs Council (“HTJC”), an associationConcession Review Committee meeting on March 3, 2023. The item was subsequently removed from the agenda, with NYCEDC announcing on April 7, 2023 that lobbies on behalf of the helicopter air tour industry,previous Request for Proposals ("RFP") had been cancelled and which had engagedthat it is their intention to put out a new RFP in discussions with the Mayor’s office.  Mr. Trenk is also an active participant with HJTC, which is managed by his grandson.2023. 

As disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on July 6, 2015,On April 28, 2023, the Company entered into a Stock PurchaseTemporary Use Authorization Agreement dated June 30, 2015,(the “Use Agreement”), effective as of May 1, 2023, with the City of New York acting by and betweenthrough the Company and Warren A. Peck (the “Agreement”). Pursuant to the Agreement, Mr. Peck was to purchase allNew York City of the outstanding capital stockDepartment of the Company’s wholly-owned subsidiary Phoenix Rising Aviation, Inc.Small Business Services (“PRA”DSBS”). The closingUse Agreement has a term of the transactions contemplated by the Agreement occurred on September 30, 2015. At that time, in exchange for all of the outstanding capital stock of PRA, Mr. Peck was requiredone year. Pursuant to (i) pay the Company $250,000 in cash; (ii) execute a $250,000 Secured Promissory Note in favor of the Company; and (iii) execute an Installment Payment Agreement giving the Company rights to earn-out payments based on EBITDA thresholds achieved by PRA post-closing. As a result of the sale, PRA results of operations have been reported as discontinued operations in the Consolidated Balance Sheet and Statement of Operations for 2015. The Agreement, Secured Promissory Note and Installment Payment Agreement were included as exhibits with the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2015.

On September 30, 2015 the Company and Mr. Peck executed the Closing Cash Agreement “the “Closing Agreement”, which was filed with the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2015. The Closing Agreement provided for Mr. Peck to sign over to the Company title to an aircraft to defer the $250,000 cash consideration due at closing. As further described in the Closing Agreement, the Company shall receive the $250,000 closing cash payment, plus other identified costs, when the aircraft is subsequently sold. The $250,000 closing cash consideration plus receivables associated with the Note are therefore reflected as a Note Receivable in the Consolidated Balance Sheets as of December 31, 2015. On June 13, 2016, the Company entered into a sale agreement (the “Sale Agreement”) with an unrelated third party to acquire the aircraft subject to the Closing Agreement. Under the terms of the SaleUse Agreement, the Company received a down-payment of $30,000, which was credited againsthas been granted the $250,000 cash consideration owed by Mr. Peck.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 beginningto 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 October 2016,the amount of $5,000. For the year ended December 31, 2023, the Company was to receive monthly paymentsincurred $40,000 in administrative fees which are recorded in the cost of at least $28,000 to satisfy the remainder of the $250,000 cash consideration and $50,000 of the Note owed by Mr. Peck. The Company has not received any of the monthly payments due under the Sale Agreement, has issued a demand letter, and is pursuing all other legal remedies at its disposal. The $220,000 remaining balance of closing cash consideration, plus receivables associated with the Note, are reflected as a Note Receivable as of December 31, 2016.revenue.

On October 3,2016,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 purchased allto provide for the continued operation of the capital stockDowntown Manhattan Heliport. The Interim Agreement became effective upon registration with the Comptroller of Aircraft Services, Inc. (“Aircraft Services”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. In addition to terminations for an aircraft maintenance services firm locatedevent 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 years ended December 31, 2023 and 2022, we incurred approximately $682,000 and $1,509,000 in Garden City, Kansas. Underconcession fees, respectively, which are recorded in the cost of revenue.

On November 13, 2023, the DBS and NYCEDC released the new 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 transaction, the Company made a $150,000 cash payment at closing andRFP. The Interim Agreement will make installment payments totaling an additional $150,000 over the next two years. The closing cash payment for the transaction was funded with internal resources. The Stock Purchase Agreement is discussed in greater detail in a Current Report on Form 8-K filed on October 7, 2016 and filed as an Exhibit togovern the Company’s Quarterly Report on Form 10-Q foroperation of the period ended September 30,2016.

Our anticipated capital expenditures in 2017 are approximately $50,000 - $100,000.Downtown Manhattan Heliport until the RFP process is concluded and an operator selected unless terminated earlier pursuant to its terms.

During the twelve months ended December 31, 2016,2023, we had a net increase in cash of $1,777,396.$954,552. Our sources and uses of funds during this period were as follows:

Cash from Operating Activities

For the year ended December 31, 2016,2023, net cash provided by operating activities was $2,244,551.$3,344,387. This amount included an increase in operating cash related to net incomeprofit of $880,430$2,446,444 and additions for the following items: (i) depreciation, $505,390;$16,414; (ii) stock-based compensation, expense, $33,997;$81,999; (iii) accountsinventories, $12,409; (iv) income tax receivable, trade, $1,046,548; (iv) inventories, $26,405;$75,000; (v) customer deposits, $53,046;$48,813; (vi) accounts payable, $159,495;$376,628; and (vii) customer deposits, $315.accrued expenses, $735,830. The increase in cash provided by operating activities in 20162023 was offset by the following items: (i) realized gain on investments, $8,479; (ii) accounts receivable, $49,978 and (iii) prepaid expenses and other current assets, $83,101; (ii) deferred income taxes, $150,000; and (iii) accrued expenses, $227,974.$390,693. For the year ended December 31, 2015,2022, net cash provided by operating activities was $990,545.$1,712,556. This amount included an increase in operating cash related to net incomeprofit of $695,208$1,246,621 and additions for the following items: (i) depreciation, $568,821;$100,089; (ii) stock-basedstock based compensation, expense, $33,946;$71,995; (iii) impaired goodwill and other intangibles, $107,500;accounts receivable, $60,866; (iv)inventories, $7,091; (v) income tax receivable, $573,679; (vi) prepaid expenses, and other current assets, $170,457; (v)$150,805; (vii) customer deposits, $28,227; (vi) deferred income taxes, $190,000;$123,755; (viii) accounts payable, $116,284; and (vii) accrued expenses, $84,347.$192,689. The increase in cash provided by operating activities in 20152022 was offset by the following items: (i) gain on salessale of assets, $73,305;$431,318 and (ii) accounts receivable, trade, $471,113; (iii) inventories, $21,524; (iv) accounts payable, $313,515; and (v) customer deposits, $8,504.life insurance proceeds $500,000.

Cash from Investing Activities

For the year ended December 31, 2016,2023, net cash of $2,389,835 was used in investing activities was $194,781. This amount included (i)for the purchase of ASI assets, $150,000;investments of $3,386,842 and (ii)the purchase of property and equipment $74,781;of $22,992. These amounts were offset by proceeds from the sale of investments of $852,000, the exercise of options of $7,999, and payment of notesnote receivable from sale of $30,000.assets of $160,000. For the year ended December 31, 2015,2022, net cash used inprovided by investing activities was $152,375 attributable to$1,424,315. This amount included net proceeds from sale of assets, $1,440,000, offset by the purchase of property and equipment.equipment, $15,685.

Cash from Financing Activities

For the year ended December 31, 2016, net2023, there was no cash used in, or provided by, financing activities was $272,374 attributable to the repayment of notes payable.activities. For the year ended December 31, 2015,2022, net cash used inprovided by financing activities was $954,512, consisting of$393,380. This amount included proceeds from life insurance $500,000 offset by (i) repayment of notes payable, $404,562;$67,045; and (ii) repayment of borrowings on the lineright of credit, $550,000; offset by (iii) issuance of common stock, $50.use lease payables, $39,575.

Off-Balance Sheet Arrangements

We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.

Critical Accounting Estimates

Discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the amounts reported in the consolidated financial statements and the accompanying notes. We evaluate our estimates on an ongoing basis, including those estimates related to product returns, product and content development expenses, bad debts, inventories, intangible assets, income taxes, contingencies and litigation. We base our estimates on experience and on various assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The critical accounting policies which we believe affect our more significant judgments and estimates used in the preparation of our consolidated financial statements are provided as follows:

Accounts Receivable Trade

We extend credit to large and mid-size companies for products and services. We have concentrationsBeginning in April 2022, the Company’s customers began operating at pre-pandemic levels which continued through the end of credit risk in that 89.3%2022. In June 2022, a new tenant began operating at our Downtown Manhattan Heliport. For the fiscal year ended December 31, 2022, three customers represented approximately $184,000, or 75%, of the balance of accounts receivable.In addition, these three customers represented approximately 83% of our accounts receivable at December 31, 2016 is made up of only four customers. At December 31, 2016, accounts receivable from our four largest accounts amounted to approximately $554,436 (37.6%), $426,898 (29.0%), $196,993 (13.4%), and $136,470 (9.3%), respectively.revenue in 2022. The Company has in place a security deposit in connection with threeplace for each of the four receivables, with a letter of credit in the process of being reissued for the fourth, but its receivables are otherwise not collateralized. Accounts receivable are carried at their estimated collectible amounts. Accounts receivable are periodically evaluated for collectability and the allowance for doubtful accounts is adjusted accordingly. We determine collectability based on our management experience and knowledge of thethese customers.

Goodwill and Intangible Assets

Goodwill and intangibles that are deemed to have indefinite lives are not amortized but, instead, are to be reviewed at each reporting period for impairment. We assessed potential impairmentIn September 2023, one of goodwill using qualitative factors by considering various factors including macroeconomic conditions, industry and market conditions, cost factors, a sustained share pricethe Company’s former customers resumed operations.For the fiscal year ended December 31, 2023, four customers represented approximately $248,000, or market capitalization decrease and any reporting unit specific events. We performed an analysis84.1%, of the balance of accounts receivable.In addition, these four customers represented approximately 84.8% of our goodwill and intangible assets at December 31, 2016 and 2015. In 2015 we recorded an impairment charge related to intangibles recordedrevenue in connection with the purchase2023. The Company has a security deposit in place for each of PRA. In 2016 we recorded additional goodwill relating to our Garden City operation’s acquisition of Aircraft Services.these customers.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between their financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets are subject to a valuation allowance because it is more likely than not that certain of the deferred tax assets will not be realized in future periods. We file income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, we are no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2013.2020.

Stock Based Compensation

Stock-based compensation expense for all share-based payment awards are based on the estimated grant-date fair value. We recognize these compensation costs over the requisite service period of the award, which is generally the option vesting term.

Option valuation models require the input of highly subjective assumptions, including the expected life of the option. Because our employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

Recent Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update No. 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) – Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (ASU 2014-08) which requires entities to change the criteria for reporting discontinued operations and enhance convergence of the FASB’s and International Accounting Standard Board’s (IASB) reporting requirements for discontinued operations so as not to be overly complex or difficult to apply to stakeholders. Only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on the entity’s operations and financial results will be reported as discontinued operations in the financial statements. ASU 2014-08 is effective for fiscal years beginning on or after December 15, 2014 and interim periods thereafter. ASU 2014-08 became effective for our financial statements for fiscal years beginning January 1, 2015. Based on our evaluation of ASU 2014-08, the adoption of this statement on January 1, 2015 did not have a material impact on our financial statements.

Not applicable.