PART I

General

Saker Aviation Services, Inc. (“we”, “us”, “our”) is a Nevada corporation. Our common stock, $0.03 par value per share (the “common stock”), is quoted on the OTCQB Marketplace (“OTCQB”) under the symbol “SKAS”. Through our subsidiaries,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.

The Garden City facility became part of our company FBOs provide ground-based services, such as a result of our acquisition of the FBO assets of Central Plains Aviation, Inc. in March 2005fueling and of Aircraft Services, Inc. (“Aircraft Services”) in October 2016.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”).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. TheBeginning in April 2022, following declined tourism due to the COVID-19 pandemic, has contributedsightseeing 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.

Concession Agreement for Downtown Manhattan Heliport

The Company was party to a declineConcession Agreement, dated as of November 1, 2008, with the City of New York for the operation of the Downtown Manhattan Heliport (the “Concession Agreement”). Pursuant to the terms of the Concession Agreement, the Company was required to pay the greater of 18% of the first $5,000,000 in travelany program year based on cash collected (“Gross Receipts”) and tourism related businesses25% of Gross Receipts in excess of $5,000,000, or minimum annual guaranteed payments.

On February 5, 2016, the Company and general economic conditionsthe New York City Economic Development Corporation (the “NYCEDC”) announced new measures to reduce helicopter noise and impacts across New York City (the “Air Tour Agreement”). Under the Air Tour Agreement, the Company has not been allowed to permit its tenant operators to conduct tourist flights from the Downtown Manhattan Heliport on Sundays since April 1, 2016. The Company was also required to ensure that its tenant operators reduce the total allowable number of tourist flights from 2015 levels by 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 United Statespandemic’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 significantly disrupted our business and operations into continue paying fees due under the yearConcession Agreement through the remainder of the Air Tour Agreement. During the twelve months ended December 31, 2020, as well as disrupted business operations2023 and 2022, we incurred approximately $682,000 and $1,509,000 in concession fees, respectively, which are recorded in the United Statescost 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 globally. ToConcession Review Committee meeting on March 3, 2023. The item was subsequently removed from the extent local, regionalagenda, 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 Temporary Use Authorization Agreement (the “Use Agreement”), effective as of May 1, 2023, with the City of New York acting by and through the New York City of Department of Small Business Services (“DSBS”). The Use Agreement has a term of one year. Pursuant to the terms of the Use Agreement, the Company has been granted the exclusive right to operate as the fixed base operator for the Downtown Manhattan Heliport and collect all revenue derived from the Downtown Manhattan Heliport operations. In addition to terminations for an event of default, the Use Agreement could be terminated at any time by the Commissioner of the DSBS or suspended at any time by the NYCEDC. The Company was required under the Use Agreement to remit a monthly administrative fee to the NYCEDC in the amount of $5,000. 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 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 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 federal government impose restrictions on air travel and/greater of $518,406 or air tourism30% 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 consumers cease traveling,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.

Lease for Garden City (Kansas) Regional Airport

On October 3, 2022, FBO Air-Garden City, Inc., (“GCK”), one of our resultswholly 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, including our subsidiaries and affiliates, will not engage in any business involving the operation of a fixed based operation supplying aviation fuels and lubricants or the supply of other goods or provision of services typically supplied or performed at fixed base operations will continueat airports at any facility located within one hundred (100) miles of the Garden City Regional Airport in Garden City, Kansas for $1.6 million.

On October 31, 2022 (the “Closing Date”), the transaction contemplated by the Transfer Agreement Company closed and we became subject to be negatively impacted. We cannot predict with certainty the full impact thatNon-Compete, for an aggregate purchase price of, after certain closing adjustments, approximately $1.5 million. The Buyer paid the COVID-19 pandemic will have on our business operations, financial condition and results of operations, which will largely dependpurchase price on the length and severityClosing Date less $160,000, which was subsequently paid on the first anniversary of the ongoing pandemic and any recovery will depend on consumer willingnessClosing Date. Both GCK leases, which allowed us to traveloperate at the Garden City Regional Airport, were terminated by air. Please see Item 1A. “Risk Factors” below.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, including, for example, regulations that restricted air travel such as reduced seating capacity or possible temporary orders to cease operations as a result of the COVID-19 pandemic.public health crises.

Customers

In 2019,Beginning in April 2022, the Company’s accounts receivable was comprisedcustomers began operating at pre-pandemic levels which continued through the end of four key customers2022. In June 2022, a new tenant began operating at our New YorkDowntown Manhattan Heliport. Due to the COVID-19 pandemic, two of these key customers were unable to sustain their business and ceased operating in 2020. Their receivable balances at December 31, 2020, totaling approximately $208,000, have been deemed uncollectable by the Company. The loss of these two key customers has adversely affected our business and results of operations. The Company’s other two key customers continue to operate, but at substantially reduced levels of operation. For the fiscal year ended December 31, 2020, these remaining two key2022, three customers represented approximately $137,000,$184,000, or 52.4%75%, of the balance of accounts receivable.In addition, these three customers represented approximately 83 % of our revenue in 2022. The Company has a security deposit in place in connection with bothfor each of these receivables.customers.

In September 2023, one of the Company’s former customers resumed operations.For the fiscal year ended December 31, 2023, 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 our facility in Garden City, KS. 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, 2020,2023, we employed 22eleven persons, 18nine 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. 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 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.

Risks related to our business and 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 conditions 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.

The COVID-19 pandemic has had, and is expected to continue to have, a material adverse impact on the Company's business, operatingresults and financial condition, and has resulted in lower demand and reduced activity at the Downtown Manhattan Heliport.

The COVID-19 pandemic and its impact on travel demand, travel behavior, or travel restrictions has had, and is expected to continue to have, a material adverse impact on our business, financial condition and operating results. The pandemic has resulted in, at times, increased government restrictions and regulation, including certain interstate and other travel restrictions and quarantines of our personnel, and future regulations may make accessing our facilities overly burdensome or impossible, which would adversely affect our operations.

Throughout 2020, the COVID-19 pandemic impacted the global and United States economies. Federal, state, and local governments implemented certain travel restrictions, “stay-at-home” orders, and social distancing initiatives which negatively impacted our operations and those of our customers. As a result of the COVID-19 pandemic, on March 17, 2020 all sightseeing tour operations the Downtown Manhattan Heliport ceased. On July 20, 2020, New York City started Phase 4 of the city’s reopening. Sightseeing tour operators at the heliport restarted operations under this phase. For the period July 20, 2020 through the date of this report, sightseeing tour operators have experienced low demand and minimal activity. To date, the COVID-19 pandemic has had a less substantial impact on our operations at our Kansas FBO and MRO. Although the Downtown Manhattan Heliport has been able to reopen and our Kansas FBO and MRO is operating, there can be no assurance that these facilities will be able to remain open for the foreseeable future, depending on future developments related to the COVID-19 pandemic.

Additionally, the general economic conditions resulting from the COVID-19 pandemic have significantly depressed the market value of certain types of aircraft, which led us to record a $270,000 impairment charge relating to a Falcon 10 aircraft we previously recorded as an asset held for sale.

To-date, we have experienced a significant decrease in revenue during all four fiscal quarters of 2020 compared to prior year periods and expect this trend to continue throughout the duration of the COVID-19 pandemic. The full extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration and spread of the COVID-19 pandemic and related travel advisories and restrictions and the impact of the COVID-19 pandemic on overall demand for air travel, which we expect to remain low for the duration of the pandemic.

We expect our business, results of operations and financial condition to continue to be adversely affected by the COVID-19 pandemic.

The COVID-19 pandemic has created significant volatility, uncertainty and economic disruption. The COVID-19 pandemic has significantly and adversely affected our business, operations and financial results, and we expect these adverse effects to continue for the duration of the pandemic, and the full extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict. We expect our results for the fiscal year ending December 31, 2021 to be adversely affected. Factors that will determine the full extent to which the COVID-19 pandemic continues to impact our business include, but are not limited to:

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.

WeIf we are susceptiblenot awarded the contract to counterparty risk inoperate the Downtown Manhattan Heliport through the new RFP, our agreements with our customers and have beenoperations will be materially adversely affected by the loss of certain key customers and the inability of such key customers to pay amounts due to us.affected.

DueWe currently operate the Downtown Manhattan Heliport pursuant to the COVID-19 pandemic, twoInterim Concession Agreement. The NYCEDC initiated a new RFP to govern the use of the Company’s key customers atDowntown 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 Ney York Heliport were unableproposal to sustain theirthe new RFP is not chosen, our business and ceased operating in 2020. Their receivable balances at December 31, 2020, totaling approximately $208,000, have been deemed uncollectable by the Company. The loss of these two key customers haswill 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 and results of operation. The Company’s other two key customers at our New York Heliport continueoperations to operate, but at substantially reduced levels of operation. For the fiscal year ended December 31, 2020, these two accounts represented approximately $137,000, or 52.4%, of the balance of accounts receivable at December 31, 2020. The Company has a security deposit in place for both of these receivables. If our remaining key customers experience further reduced operations, they may also cease operating which would materially and adversely impact our business and results of operations.generate revenue.

We could be adversely affected by the loss of or failure to extend our material agreements including ourInterim Concession Agreement with the City of New York and our lease of the Garden City, Kansas facilities.York.

A substantial portion of our business depends on our existing material agreements including ourOn July 13, 2023, the DSBS was granted approval by the Franchise and Concession Review Committee to enter into an Interim Concession Agreement (the “Interim Agreement”) with the Company to provide for the continued operation of the Downtown Manhattan Heliport. The Interim Agreement became effective upon registration with the Comptroller of the City of New York and our leasecommenced on December 12, 2023, the date set forth in a written 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 facilities in Garden City, Kansas. If we were$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 lose these agreements,terminations for an event of default, the Interim Agreement can be terminated at any time by the Commissioner of the DSBS or if these agreements expired without renewal or extension, we may be unable to operate our business in our current geographic markets. Should we lose or fail to extend these agreements, there is no guarantee that we could enter into new agreements with similar terms or into new agreementssuspended at all. If we were to enter into material agreements with less favorable terms or if we were unable to enter into new agreements, our business and results of operations would be materially and adversely affected.any time by the NYCEDC.

Our agreement (the “Air Tour Agreement”)On November 13, 2023, the DBS and NYCEDC released the new RFP. The initial due date for submissions was January 12, 2024, with the New York City Economic Development Corporation (the “NYCEDC”) may continuedue date being subsequently extended to negatively impact our business and financial results as well as thoseFebruary 12. 2024. The Company submitted a timely proposal in compliance with the terms of our management company.

Under the Air TourRFP. The Interim Agreement we cannot allow our tenant operators to conduct tourist flights fromwill govern the Downtown Manhattan Heliport on Sundays. We were also required to ensure that our tenant operators reduced 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. 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 outCompany’s operation of the Downtown Manhattan Heliport compareduntil the RFP process is concluded and an operator selected unless terminated earlier pursuant to 2015 levels, as well as informationits terms.

All of our business is conducted and reliant on any tour flight that flies over landthe Downtown Manhattan Heliport. Any disruption in business at the Downtown Manhattan Heliport or strays from agreed upon routes. These provisionsadditional restrictions imposed on the operations of the Air Tour Agreement have, and may continue to, have an adverse effect onDowntown Manhattan Heliport by the NYCEDC could adversely impact our business and results of operations.

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 weAdditionally, 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 ableadversely affected as we would be required to successfully compete incease our industry.operations at the Downtown Manhattan Heliport.

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, including the potential of emergency regulations, such as those related to the COVID-19 pandemic.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. If any emergency regulations related to the COVID-19 pandemic caused us to temporarily cease operations, our results of operations and financial condition would be adversely impacted.

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. Our success depends to a significant extent upon the continued service of Ron Ricciardi, our President and Chief Executive Officer. On September 1, 2019, we entered into an employment agreement with Mr. Ricciardi. The initial term runs from September 1, 2019 through September 1, 2023 and does not provide for automatic renewal. Loss of the services of Mr. Ricciardi could significantly harm our business, results of operations and financial condition. The Company maintains key-person insurance on the life of Mr. Ricciardi. Beginning on December 24, 2020 and continuing through the date of this report, Mr. Ricciardi remains on a temporary leave of absence to address health issues unrelated to the COVID-19 pandemic. As previously disclosed, effective March 26, 2021, Samuel Goldstein, one of our directors, has been appointed to serve as our acting principal executive officer.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 Management 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 markets impacting financial institutions at which we maintain balances, or concerns or rumors about such events, may lead to disruptions in access to our 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 MarchDecember 31, 2021,2023, our executive officers, directors and their family members and associates, collectively, are entitled to vote approximately 402,793294,433 shares, or 30.2%29.9% of the 1,028,863985,888 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 a director who is a managing partner of a law firm which provides legal services to us, and one executive officer/director.

General risk factors:

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

As of MarchDecember 31, 2021,2023, there were 1,028,863985,888 shares of our common stock outstanding. If all of our outstanding and currently exercisable options were exercised, there would be 1,082,1911,053,382 shares outstanding, an increase of approximately 5.2%6.8%. Any further issuances due to additional equity financings, or the granting of additional options could further dilute our existing stockholders, which could cause the value of our common stock to decline.

Our Board of 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 333,306 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.

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 31, 2021, we lease officeApril 1, 2024, the Company operates the Downtown Manhattan Heliport pursuant to the Interim Concession Agreement and had no leased offices or hangar space at the following locations: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 Information

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, 2021,April 1, 2024, there were approximately 162475 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

On September 30, 2019,In the past, the Company announced that its Board of Directors had declared a specialhas paid cash dividend of $0.50 per share (the “Dividend”). The Dividend was paid in equal quarterly installments of $0.125 per share beginningdividends on November 1, 2019, with the final dividend paidour common stock. Any future determination to pay dividends on August 13, 2020. The declaration and payment of any future dividendour common stock will be at the sole discretion of theour Board of Directors.

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.

Not applicable.

Forward-looking Statements

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

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncer‐tainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by such forward-looking statements. We therefore caution you against relying on any of these forward-looking statements because they are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include our services and pricing, the impact of the COVID-19 pandemic, general economic conditions, our ability to raise additional capital, 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 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”), and as a provider of aircraft maintenance and repair services (“MRO”). 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 FBO and MRO at the Garden City (Kansas) Regional Airport.

TheOn October 31, 2022, the Garden City facility became part of our company as a result of our acquisition offacilities were sold and we no longer maintain an FBO or MRO at the FBO assets of Central Plains Aviation, Inc. in March 2005 and of Aircraft Services, Inc. in October 2016.Garden City (Kansas) Regional Airport.

Our business activities at the Downtown Manhattan (New York) Heliport facility (the “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”).

Throughout 2020, the COVID-19 pandemic impacted the global and United States economies. Federal, state, and local governments implemented certain travel restrictions, “stay-at-home” orders, and social distancing initiatives which negatively impacted our operations and those of our customers. As a result of the COVID-19 pandemic, on March 17, 2020, all sightseeing tour operations at the Downtown Manhattan Heliport ceased due to a drop in demand. On July 20, 2020, New York City started Phase 4 of the city’s reopening. Sightseeing tour operators at the heliport restarted operations under this phase. For the period July 20, 2020 through the date of this report, sightseeing tour operators have experienced low demand and minimal activity. To date, the COVID-19 pandemic has had a less substantial impact on our operations at our Kansas FBO and MRO.

We experienced a decrease in revenue during the twelve months ended December 31, 2020 compared to prior year periods. While we expect the COVID-19 pandemic to continue to adversely impact our business and operations, the full extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration and spread of the COVID-19 pandemic and related travel advisories and restrictions and the impact of the COVID-19 pandemic on overall demand for air travel.

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

Comparison of Results for the Years Ended December 31, 20202023 and December 31, 2019.2022.

REVENUE

Operating results for the twelve months ended December 31, 2020 were negatively impacted by the COVID-19 pandemic. The COVID-19 pandemic has depressed year-over-year activity at our Heliport and, consequently, the results reported below.

Revenue decreased by 69.7 percent to $3,506,628 for the twelve months ended December 31, 2020 as compared with corresponding prior-year period revenue of $11,567,725.

For the twelve months ended December 31, 2020, revenue associated with services and supply items decreased by 77.4 percent to approximately $1,500,000 as compared to approximately $6,600,000 in the twelve months ended December 31, 2019.

For the twelve months ended December 31, 2020, revenue associated with the sale of jet fuel, aviation gasoline and related items decreased by 59.1 percent to approximately $1,950,000 as compared to approximately $4,800,000 in the twelve months ended December 31, 2019.

For the twelve months ended December 31, 2020, all other revenue decreased by 68.3 percent to approximately $58,000 as compared to approximately $184,000 in the twelve months ended December 31, 2019. AND RESULTS OF CONTINUING OPERATIONS

GROSS PROFITDISCONTINUED OPERATIONS

Total gross profit decreased 82.8 percent to $980,928 in the twelve months ended December 31, 2020 as compared to $5,716,659 in the twelve months ended December 31, 2019. Gross margin was 28.0 percent for the twelve months ended December 31, 2020 as compared to 49.4 percent for the same period in 2019.

OPERATING EXPENSE

Selling, General and Administrative

Total selling, general and administrative expenses (“SG&A”) were $2,472,203 in the twelve months ended December 31, 2020, a decrease of $2,196,894, or 47.1 percent, as compared to the same period in 2019.

SG&A associated with our FBO operations were approximately $1,865,000 in the twelve months ended December 31, 2020, a decrease of approximately $2,290,000, or 55.1 percent, as compared to the twelve months ended December 31, 2019. SG&A associated with our FBO operations, as a percentage of revenue, was 53.2 percent for the twelve months ended December 31, 2020, as compared with 35.9 percent in the corresponding prior year period.

Corporate SG&A was approximately $608,000 for the twelve months ended December 31, 2020, representing an increase of approximately $93,000 as compared with the corresponding prior year period.

OPERATING (LOSS) INCOME

Operating loss for the year ended December 31, 2020 was $(1,491,276) as compared to operating income of $1,047,562 in the year ended December 31, 2019.

Depreciation and Amortization

Depreciation and amortization was approximately $119,000 and $124,000 for the twelve months ended December 31, 2020 and 2019, respectively.

Interest Income and Expense

Interest income was $18,109 and $27,069 for the twelve months ended December 31, 2020 and 2019, respectively. Interest expense for the year ended December 31, 2020 was $24,025, as compared to $7,987 in the same period in 2019. The increase in interest expense is due primarily to interest expense associated with our right of use leases.

Impairment of Goodwill and Other Intangibles

We had $750,000 of goodwill at December 31, 2020 and 2019.

Income Tax (Benefit) Expense

Income tax benefit for the twelve months ended December 31, 2020 was approximately $(431,000), as compared to income tax expense of $399,000 in the same period in 2019. The income tax benefit is attributable to a net loss in the twelve months ended December 31, 2020 as compared to net income in the same period in 2019.

Net (Loss) Income Per Share

Net loss for the twelve months ended December 31, 2020 was $(1,748,928) as compared to net income of $667,644 in the twelve months ended December 31, 2019.

Basic net loss per share for the twelve months ended December 31, 2020 was ($1.71), as compared to basic and diluted net income per share of $0.66 and $0.65, respectively, in 2019.

Liquidity and Capital Resources

As of December 31, 2020, we had cash of $1,899,082 and a working capital surplus of $2,827,586. We generated revenue of $3,506,268 and had a net loss of $(1,748,928) for the year ended December 31, 2020. For the year ended December 31, 2020, cash flows included net cash used in operating activities of $1,590,447, net cash used in investing activities of $4,913, and net cash used in financing activities of $103,049.

As disclosed in a Current Report on Form 8-K filed on March 21, 2018 with the SecuritiesSEC on November 2, 2022, on October 31, 2022 (the “Closing Date”), the Company sold its subsidiary FBO and Exchange CommissionMRO operations of FBO Air-Garden City, Inc. (“GCK”) to Crosby Flying Services, LLC (the “SEC”“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 from the Twelve Months Ended December 31, 2023 and December 31, 2022.

REVENUE

Revenue from continuing operations increased by 16.3 percent to $8,837,614 for the twelve months ended December 31, 2023, as compared with corresponding prior-year period revenue of $7,598,597.

For the twelve months ended December 31, 2023, revenue from continuing operations associated with services and supply items increased by 11.9 percent to approximately $6,429,414 as compared to approximately $5,747,000 in the twelve months ended December 31, 2022. This increase was attributable to increased demand for services in 2023 compared to the prior year.

For the twelve months ended December 31, 2023, revenue from continuing operations associated with the sale of jet fuel and related items increased by 45.3 percent to approximately $2,299,000 as compared to approximately $1,582,000 in the twelve months ended December 31, 2022. This increase was attributable to the higher volume of gallons and price of jet fuel sold at our New York location in 2023 compared to the prior year.

For the twelve months ended December 31, 2023, all other revenue from continuing operations decreased by 59.6 percent to approximately $109,000 as compared to approximately $269,000 in the twelve months ended December 31, 2022.

GROSS PROFIT

Total gross profit increased 36.2 percent to $6,281,220 in the twelve months ended December 31, 2023 as compared to $4,613,316 in the twelve months ended December 31, 2022. Gross margin was 71.1 percent for the twelve months ended December 31, 2023 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 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 expenses (“SG&A”) were $2,768,310 in the twelve months ended December 31, 2023, a decrease of $1,112,592, or 28.7 percent, as compared to the same period in 2022.

SG&A associated with operations were approximately $2,132,000 in the twelve months ended December 31, 2023, a decrease of approximately $1,197,000, or 35.9 percent, as compared to the twelve months ended December 31, 2022. SG&A as a percentage of revenue, was 24.1 percent for the twelve months ended December 31, 2023, as compared with 43.8 percent in the corresponding prior year period. The decrease in SG&A was primarily attributable to decreased fees due under the Company’s management agreement and fees due the NYCEDC in 2023 compared to the prior year.

Corporate SG&A was approximately $636,000 for the twelve months ended December 31, 2023, representing an increase of approximately $84,000, or 15.2 percent, as compared with the corresponding prior year period. The increase in Corporate SG&A on a year-over-year basis was largely attributable to an increase in services provided by various service providers.

OPERATING INCOME

Operating income for the year ended December 31, 2023 was $3,512,910 as compared to operating income of $732,414 in the year ended December 31, 2022. The increase in operating income on a year-over-year basis was driven by the factors described above.

Depreciation and Amortization

Depreciation and amortization was approximately $16,000 and $100,000 for the twelve months ended December 31, 2023 and 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, 2023 was $0 as compared to $17,979 in the same period in 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.

Income Tax

Income tax expense for the twelve months ended December 31, 2023 was approximately $1,507,000, on as compared to $300,000 in the same period in 2022. The increase in income tax expense is attributable to higher net income in the twelve months ended December 31, 2023 as compared to 2022.

Net Income Per Share

Net income for the twelve months ended December 31, 2023 was $2,446,444 as compared to net income of $1,246,621 in the twelve months ended December 31, 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 net income per share for the twelve months ended December 31, 2023 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, 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, 2023, we had cash, cash equivalents, and restricted cash of $6,931,709 and a working capital surplus of $8,269,527. We generated revenue from continuing operations of $8,837,614 and had net income of $2,446,444 for the year ended December 31, 2023. For the year ended December 31, 2023, cash flows included net income of $2,446,644, cash provided by operating activities of $3,344,387, and cash used in investing activities of $2,389,835.

On March 15, 2018, the Company entered into a loan agreement (the “Loan Agreement”) with Key Bank National Association (the “Bank”). The Loan Agreement contains three components: (i) a $2,500,000 acquisition line of credit (the “Key Bank Acquisition Note”); (ii)for a $1,000,000 revolving line of credit (the “Key Bank Revolver Note”); and (iii) a $338,481 term loan (the “Key Bank Term Note”). There are currently no amounts outstanding under the Key Bank Term Note.

Proceeds of the Key Bank Acquisition Note were to be disbursed pursuant to a multiple draw demand note dated as of the agreement date, where the Company could, which, at the discretion of the Bank, borrow up to an aggregate amount of $2,500,000, to be used for the Company’s acquisition of one or more business entities. Until the Change of Terms Agreement, as defined below, the Company was required to make consecutive monthly payments of interest, calculated at a rate per annum equal to one-day LIBOR (adjusted daily) plus 2.75%, on any outstanding principal under the Key Bank Acquisition Note from the date of its issuance through September 15, 2018 (the “Conversion Date”).

At any time through and including the Conversion Date, at the Bank’s discretion, the Company had the opportunity to request that any loan made under the Key Bank Acquisition Note be converted into a term loan to be repaid in full, including accrued interest, by consecutive monthly payments over a 48 month amortization period beginning after the Conversion Date. For any loan that was not converted into a term loan on or before the Conversion Date, the Company would have been required to begin making monthly payments of principal and interest after the Conversion Date, over a 48 month amortization period, after which the remaining unpaid principal and accrued interest would have become due and payable. All loans under the Key Bank Acquisition Note would have, after the Conversion Date, accrued interest at a rate per annum equal to the Bank’s four year cost of funds rate plus 2.5%. As of the Conversion Date, there were no amounts due under the Key Bank Acquisition Note and no amounts had been converted to a term loan.

On October 11, 2018, and as subsequently amended, the Company entered into a new loan agreement with the Bank (as so amended, the “Change of Terms Agreement”) which modified the original terms of the Key Bank Acquisition Note. Under the Change of Terms Agreement, the Company may continue to, at the discretion of the Bank, borrow up to an aggregate amount of $2,500,000 through September 1, 2021 (the “Maturity Date”), to be used for the Company’s acquisition of one or more business entities. The Change of Terms Agreement requires the Company to make consecutive monthly payments of interest on any outstanding principal calculated at a rate per annum equal to 4.25% and would be secured by substantially all of the Company’s assets. The entire principal balance, plus all accrued interest, is due in full on the Maturity Date. As of December 31, 2020, there were no amounts due under the Change of Terms Agreement.

Proceeds from the Key Bank Revolver Note, at the discretion of the Bank, provideprovides for the Company to borrow up to $1,000,000 for working capital and general corporate purposes. On November 22, 2023, the Bank reduced the amount available under the Key Bank Revolver Note to $500,000. This revolving line of credit is a demand note with no stated maturity date. Borrowings under the Key Bank Revolver Note will bear interest at a rate per annum equal to one-day LIBOR (adjusted daily)Daily Simple SOFR plus 2.75%. The Company is required to make monthly payments of interest on any outstanding principal under the Key Bank Revolver Note and is required to pay the entire balance, including principal and all accrued and unpaid interest and fees, upon demand by the Bank. Any proceeds from the Key Bank Revolver Note would be secured by substantially all of the Company’s assets. As of December 31, 2020, thereThere were no amounts due under the Key Bank Revolver Note.

On August 14, 2020, the Company was granted a loan from the Bank (“the Loan”) in the amount of $304,833, pursuant to the Paycheck Protection Program (the “PPP”) under Division, Title I of the CARES Act, which was enacted March 27, 2020. The Loan, which was in the form of a Note dated August 14, 2020 (“the “Note”), matures in August 2025 and bears interest at a rate of 1% per annum and is payable in monthly installments commencing on, or before, October 31, 2021. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. The Company did not provide any collateral or guarantees in connection with the PPP loan. Funds from the loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred during the covered 24 week period. The loan qualifies for forgiveness provided the proceeds are used for eligible expenses on the covered period and certain employee retention criteria are met. In accordance with FASB ASC 470, Debt, and ASC 405-20, Liabilities – Extinguishment of Liabilities, the Company recorded the cash inflow from the PPP loan as a liability, and cash flows from financing, pending legal release from the obligation by the U.S. Small Business Administration at December 31, 2020. Upon forgiveness and legal release, the liability will be reduced by the amount forgiven and a gain on debt extinguishment will be recorded. The Company has used the proceeds for purposes consistent with the PPP and expects this loan to be forgiven in 2021.2023 or 2022.

The Company ishas invested its excess working capital reserves in a high yield savings account and government backed securities with UBS Financial Services Inc. (“UBS”).

The Company was party to a Concession Agreement, dated as of November 1, 2008, with the City of New York for the operation of the Downtown Manhattan Heliport (the “Concession Agreement”). Pursuant to the terms of the Concession Agreement, the Company mustwas required to pay the greater of 18% of the first $5,000,000 in any program year based on cash collected (“Gross Receipts”) and 25% of Gross Receipts in excess of $5,000,000, or minimum annual guaranteed payments. During the program year that began on May 1, 2020, the City agreed, in recognition of the pandemic’s impact, that the Company could defer payment of minimum guaranteed payments. In October 2020 City waived the deferred fees through September 30, 2020. Concession fees in this Form 10-K have been accounted for based on the abatement. During the twelve months ended December 31, 2020 and 2019, we incurred approximately $315,000 and $1,640,000 in concession fees, respectively, which are recorded in the cost of revenue.

As disclosed in a Current Report on Form 8-K filed with the SEC onOn February 5, 2016, the Company and the New York City Economic Development Corporation (the “NYCEDC”) announced new measures to reduce helicopter noise and impacts across New York City (the “Air Tour Agreement”).

Under the Air Tour Agreement, the Company has not been allowed to permit its tenant operators to conduct tourist flights from the Downtown Manhattan Heliport on Sundays since April 1, 2016. The Company was also required to ensure that its tenant operators reduce the total allowable number of tourist flights from 2015 levels by 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, the Company washas 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, 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 Air Tour Agreement also provided for the minimum annual guarantee payments the Company is 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 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 under the Air Tour Agreement have negatively impacted the Company’s business and financial results as well as those of its management company at the Downtown Manhattan Heliport, Empire Aviation which, as previously disclosed, is owned by the children of a former officer and director of the Company.Aviation. The Company incurred management fees with Empire Aviation of approximately $144,000$448,000 and $2,200,000$2,138,000 during the twelve monthsyears ended December 31, 20202023 and 2019, respectively, which is recorded in administrative expenses. The Company andDecember 31, 2022, respectively. Empire Aviation had historically contributednotified 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 Helicopter Tourism and Jobs Council (“HTJC”), an association that lobbies on behalfmanagement of the helicopter air tour industry, and which had engaged in discussions with the Mayor’s office.  The Company has suspended its contributions to HTJC in light of the pandemic. The Company’s former officer and director is also an active participant with HTJC, which is managed by the former officer and director’s grandson. One of our Directors and our current acting principal executive officer, Sam Goldstein, serves as deputy director of HTJC.  heliport.

On April 20, 2018,During the Company’s Kansas subsidiary entered into a purchase lease with Commerce Bank for a refueling truck (the “Truck Lease”). The Truck Lease commencedprogram year that began on May 1, 2018 and continues for 60 months at an interest rate2020, the City of LIBOR plus 416 basis points. At the endNew York agreed, in recognition of the Truck Lease, the Company’s subsidiary may purchase the vehicle for $1.00.

On January 15, 2019,pandemic’s impact, that the Company was issued an unsecured note by onecould defer payment of its customers atminimum guaranteed payments. In April 2021, the Heliport. The note schedules paymentsCity of approximately $276,000 in receivables payable by such customer, had a maturity dateNew York waived the deferred fees through December 31, 2020. In May 2021, the City of October 31, 2019,New York waived the deferred fees through April 30, 2021 which coincided with the original expiration of the Concession Agreement as amended and carries a 7.5% rateby the Air Tour Agreement. The Company worked with the City of interest. The note payments wereNew York to address fees to be made in six monthly installments beginning May 31, 2019. The customer’s payments on the note have not met the installment plan andpaid by the Company was working on changesfor 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 note whenCompany agreed to resume paying the customer filed for Chapter 11 Bankruptcy in October 2019. In February 2021,City of New York the bankruptcy court allowed the customer to convert from a Chapter 11 Bankruptcy to a Chapter 7 Liquidation. Under the Chapter 7 Liquidation, the note will now be treated as a general unsecured claim as opposed to a prioritized payment under the Chapter 11 Bankruptcy to cure the permit default. This change has substantially diminished the Company’s expectation to collecttotal monthly amounts due under the note. Therefore, the Company has deemed unpaid principalConcession Agreement retro-active to January 2022 and accrued interest of approximately $205,000 at December 31, 2020 as uncollectable. The $205,000 was written off to bad debt expense in the fourth quarter of 2020.

As disclosed in a Current Report on Form 8-K filed with the SEC on July 6, 2015, the Company entered into a stock purchase agreement, dated June 30, 2015, by and between the Company and Warren A. Peck, pursuant to which Mr. Peck purchased all of the capital stock of the Company’s wholly-owned subsidiary, Phoenix Rising Aviation, Inc. The details of the agreement are described in such Current Report as well as in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on April 11, 2016. The Company received $100,000continue paying fees due under this agreement in September 2017 and an additional payment of $100,000 in September 2018. In 2019, the Company accepted the title to a Falcon 10 aircraft owned by Mr. Peck as satisfaction in full ofConcession Agreement through the remainder of the $270,000 stock purchase price. The Company intended to sell the aircraft and classified it as “Held For Sale” on the Company’s consolidated balance sheet at December 31. 2019. The Company has been unable to find a buyer due to a depressed market as well as a drop in demand for this type of aircraft. Without a market in which to sell the aircraft, the Company recorded an impairment charge in the quarter ended June 30, 2020 for the full carrying amount of the aircraft. The Company does not believe the aircraft has any value and, in December 2020, filed an application with the FAA Aircraft Registry to cancel the aircraft’s registry.

As described throughout this Quarterly Report on Form 10-Q, on March 17, 2020, all sightseeing tour operations at the Downtown Manhattan Heliport ceased as a result of the COVID-19 pandemic. On July 20, 2020, New York City began Phase 4 of the city’s reopening. Sightseeing tours resumed under this phase. For the period July 20, 2020, through the date of this report, sightseeing tour operators have experienced low demand and minimal activity. To mitigate this loss of revenue, we may need additional financing to continue operations through the issuance of equity or debt and any such financing will be dependent on general market conditions, which itself is subject to the effects of the COVID-19 pandemic. Although we have access to the Key Bank Revolver Note described above, we can make no assurance that that the Key Bank Revolver Note will be sufficient to fund our operations. Additionally, certain restrictions in the Key Bank Revolver Note may prohibit us from obtaining more attractive financing.Air Tour Agreement.

Our anticipated capital expendituresOn 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 20212023. 

On April 28, 2023, the Company entered into a Temporary Use Authorization Agreement (the “Use Agreement”), effective as of May 1, 2023, with the City of New York acting by and through the New York City of Department of Small Business Services (“DSBS”). The Use Agreement has a term of one year. Pursuant to the terms of the Use Agreement, the Company has been granted the exclusive right to operate as the fixed base operator for the Downtown Manhattan Heliport and collect all revenue derived from the Downtown Manhattan Heliport operations. In addition to terminations for an event of default, the Use Agreement could be terminated at any time by the Commissioner of the DSBS or suspended at any time by the NYCEDC. The Company was required under the Use Agreement to remit a monthly administrative fee to the NYCEDC in the amount of $5,000. For the year 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 enter into an Interim Concession Agreement (the “Interim Agreement”) with the Company to provide for the continued operation of the Downtown Manhattan Heliport. The Interim Agreement became effective upon registration with the Comptroller of the City of New York and commenced on December 12, 2023, the date set forth in a written notice to proceed received by the Company. The Interim Agreement provides for one (1) six-month term (the “Initial Period”), with two (2) six-month options to renew (the “Renewal Periods”). The Company is required to pay the greater of $1,036,811 or 30% of Gross Receipts during the Initial Term and the greater of $518,406 or 30% of Gross Receipts during both Renewal Periods. In addition to terminations for an event of default, the Interim Agreement can be terminated at any time by the Commissioner of the DSBS or suspended at any time by the NYCEDC. During the years ended December 31, 2023 and 2022, we incurred approximately $50,000 - $100,000.$682,000 and $1,509,000 in concession 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 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.

During the twelve months ended December 31, 2020,2023, we had a net decreaseincrease in cash of $1,698,409.$954,552. Our sources and uses of funds during this period were as follows:

Cash from Operating Activities

For the year ended December 31, 2020, net cash used in operating activities was $1,590,447. This amount included a decrease in operating cash related to net loss of $1,748,928 and additions for the following items: (i) depreciation, $119,039; (ii) bad debt, $396,000; (iii) impairment charge, $270,000; (iv) impairment of notes receivable, $205,730; (v) stock-based compensation expense, $74,659; (vi) deferred income taxes, $476,000; (vii) accounts receivable, trade, $19,944; and (viii) inventories, $17,585. The decrease in cash used in operating activities in 2020 was offset by the following items: (i) prepaid expenses and income tax receivable, $935,387; (ii) customer deposits, $49,517; (iii) accounts payable, $335,322; and (iv) accrued expenses, $100,250. For the year ended December 31, 2019,2023, net cash provided by operating activities was $1,123,862.$3,344,387. This amount included an increase in operating cash related to net incomeprofit of $667,644$2,446,444 and additions for the following items: (i) depreciation, $124,264;$16,414; (ii) stock-based compensation, expense, $33,997;$81,999; (iii) prepaid expenses and other current assets, $271,830;inventories, $12,409; (iv) income tax receivable, $75,000; (v) customer deposits, $3,552; (v) deferred income taxes, $31,000;$48,813; (vi) accounts payable, $49,052;$376,628; and (vii) accrued expenses, $59,129.$735,830. The increase in cash provided by operating activities in 20192023 was offset by the following items: (i) realized gain on investments, $8,479; (ii) accounts receivable, trade, $106,267;$49,978 and (iii) prepaid expenses $390,693. For the year ended December 31, 2022, net cash provided by operating activities was $1,712,556. This amount included an increase in operating cash related to net profit of $1,246,621 and additions for the following items: (i) depreciation, $100,089; (ii) stock based compensation, $71,995; (iii) accounts receivable, $60,866; (iv)inventories, $7,091; (v) income tax receivable, $573,679; (vi) prepaid expenses, $150,805; (vii) customer deposits, $123,755; (viii) accounts payable, $116,284; and (vii) accrued expenses, $192,689. The increase in cash provided by operating activities in 2022 was offset by the following items: (i) gain on sale of assets, $431,318 and (ii) inventories, $10,339.life insurance proceeds $500,000.

Cash from Investing Activities

For the year ended December 31, 2020,2023, net cash of $2,389,835 was used in investing activities was $4,913. This amount represents purchasesfor the purchase of investments of $3,386,842 and the purchase of property and equipment.equipment 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 note receivable from sale of assets of $160,000. For the year ended December 31, 2019,2022, net cash used inprovided by investing activities was $87,382.$1,424,315. This amount included paymentsnet proceeds from sale of note receivable of $87,208assets, $1,440,000, offset by purchasesthe purchase of property and equipment, of $174,590.$15,685.

Cash from Financing Activities

For the year ended December 31, 2020, net2023, there was no cash used in, or provided by, financing activities was $103,049. This amount included additions for the issuance of common stock of $16,196 and the issuance of notes payable of $304,833 offset by $383,909 to the payment of accrued dividends and $40,169 to the repayment of right of use leases.activities. For the year ended December 31, 2019,2022, net cash used inprovided by financing activities was $277,638 of which $112,217 was attributable to the$393,380. This amount included proceeds from life insurance $500,000 offset by (i) repayment of notes payable, $126,630 to the payment of accrued dividends,$67,045; and $38,891 to the(ii) repayment of right of use leases.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

In 2020,Beginning in April 2022, the Company’s accounts receivable was comprisedcustomers began operating at pre-pandemic levels which continued through the end of four key customers2022. In June 2022, a new tenant began operating at our New YorkDowntown Manhattan Heliport. Due to the COVID-19 pandemic, two of these key customers were unable to sustain their business and ceased operating in 2020. Their receivable balances at December 31, 2020, totaling approximately $208,000, have been deemed uncollectable by the Company and have been written off to bad debt expense in the fourth quarter of 2020. The Company’s remaining two key customers at our New York Heliport continue to operate, but at substantially reduced levels of operation. For the fiscal year ended December 31, 2020, these remaining two key2022, three customers represented approximately $137,000,$184,000, or 52.4%75%, of the balance of accounts receivable. No customerIn addition, these three customers represented more than 10%approximately 83% of our revenue in 2020.2022. The Company has a security deposit in place in connection with bothfor each of these receivables.customers.

AtIn September 2023, one of the Company’s former customers resumed operations.For the fiscal year ended December 31, 2019, the Company had concentrations of credit risk in that 73.0%2023, four customers represented approximately $248,000, or 84.1%, of the balance of its accounts receivable at December 31, 2019 was made up of its four key customers. At December 31, 2019, accounts receivable from the Company’s four key customers amounted to approximately $241,298 (35.6%), $115,864 (17.1%), $111,149 (16.4%), and $26,523 (3.9%), respectively. receivable.In addition, these four key customers represented approximately 54.7%84.8% of our revenue in 2019. Accounts receivable are carried at their estimated collectible amounts. Accounts receivable are periodically evaluated2023. The Company has a security deposit in place for collectability and the allowance for doubtful accounts is adjusted accordingly. We determine collectability based on our management experience and knowledgeeach 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 impairment of goodwill using qualitative factors by considering various factors including macroeconomic conditions, industry and market conditions, cost factors, a sustained share price or market capitalization decrease and any reporting unit specific events. We performed an analysis of our goodwill and intangible assets at December 31, 2020 and 2019.

Income Taxes

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

Deferred tax assets are subject to a valuation allowance because it is more likely than not that certain of the deferred tax assets will not be realized in future periods. During 2020 we experienced a decrease in demand and minimal activity in our business. The extent of the impact of COVID-19 on our operational and financial performance cannot be predicted and will depend on future developments, including the duration and spread of the outbreak, related travel advisories and restrictions. Accordingly, we have established a valuation allowance on net deferred assets. We file income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, we are no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2017.2020.

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.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”), which requires an entity to recognize assets and liabilities on the balance sheet for the rights and obligations created by leased assets and provide additional disclosures. ASU 2016-02 became effective for us on January 1, 2019 and we have adopted the new standard using a modified retrospective approach. The adoption of ASU No. 2016-02 did not have a material impact on the Company’s financial statements.

Not applicable.

See accompanying notes to consolidated financial statements.

See accompanying notes to consolidated financial statements.

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR YEARS ENDED DECEMBER 31, 2020 AND 2019OPERATIONS

See accompanying notes to consolidated financial statements.

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

Notes To Consolidated Financial StatementsCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR YEARS ENDED DECEMBER 31, 2023 AND 2022

See accompanying notes to consolidated financial statements.

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes to consolidated financial statements.

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS