See accompanying notes to condensed consolidatedfinancial statements.

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

See accompanying notes to condensed consolidated financial statements

See accompanying notes to condensed consolidated financial statements.

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

See accompanying notes to condensed consolidated financial statements.

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Saker Aviation Services, Inc. (the “Company”) and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial statements and in accordance with the instructions to Form 10-Q.10-Q. Accordingly, they do not include all of the information and disclosures required by GAAP for annual financial statements and should be read in conjunction with the financial statements and related footnotes included in the Company’s Annual Report on Form 10-K10-K for the year ended December 31, 2016.2021.

The condensed consolidated balance sheet and statements of cash flows as of SeptemberJune 30, 2017 2022 and the condensed consolidated statements of operations and cash flows for the three and ninesix months ended SeptemberJune 30, 2017 2022 and 20162021 have been prepared by the Company without audit. In the opinion of the Company’s management, all necessary adjustments (consisting of normal recurring accruals) have been included to make the Company’s financial position as of SeptemberJune 30, 2017 2022 and its results of operations, stockholders’ equity, and cash flows for the three and ninesix months ended SeptemberJune 30, 2017 2022 not misleading. The results of operations for the three and ninesix months ended SeptemberJune 30, 2017 2022 are not necessarily indicative of the results to be expected for any full year or any other interim period.

The CompanyCOVID-19 pandemic has evaluated eventsimpacted the global and United States economies. Federal, state, and local governments implemented certain travel restrictions, “stay-at-home” orders, and social distancing initiatives which have occurred subsequent to September 30, 2017,negatively impacted our operations and through the datethose of our customers. As a result of the filingCOVID-19 pandemic, on March 17, 2020 all sightseeing tour operations at 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 Quarterly Report on Form 10-Q with the Securities and Exchange Commission (“SEC”), and has determined that no subsequent events have occurred after the current reporting period.phase.

For the period July 20, 2020 through March 31, 2022, sightseeing tour operators experienced much lower demand for tours as compared to pre-pandemic levels of activity. Beginning in April 2022, sightseeing tour operators have seen 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 COVID-19 pandemic, including the duration and spread and related travel advisories and restrictions and the impact on overall demand for air travel. The COVID-19 pandemic has had a less substantial impact on our operations at our Kansas FBO and MRO.

NOTE 2 – Liquidity and Material Agreements

As of SeptemberJune 30, 2017, the Company2022, we had cash and restricted cash equivalents of $2,095,728$3,514,584 and a working capital surplus of $3,452,869. $4,194,988. We generated revenue of $5,273,498 and had net income of $690,890 for the six months ended June 30, 2022. For the ninesix months ended SeptemberJune 30, 2017, the Company generated revenue from operations of $8,743,913 and had income from operations before taxes of $722,472. For the nine months ended September 30, 2017, 2022, cash flows included net cash provided by operating activities of $11,975,$1,598,472, net cash provided byused in investing activities of $42,624,$501,644, and net cash used in financing activities of $277,500.$29,150.

On May 17, 2013, As disclosed in a Current Report on Form 8-K filed on March 21, 2018 with the Securities and Exchange Commission (the “SEC”), on March 15, 2018 the Company entered into a loan agreement (the “Loan Agreement”) with PNCKey Bank National Association (the “PNC Loan Agreement”“Bank”). The PNC Loan Agreement includedcontains three components: (i) a $2,500,000 non-revolving acquisition line of credit (the “PNC“Key Bank Acquisition Line”Note”); (ii) a $1,000,000 revolving line of credit (the “Key Bank Revolver Note”); and (iii) a $338,481 term loan (the “Key Bank Term Note”). On October 11, 2018, and as subsequently amended, the Company entered into a new loan agreement with the Bank (as so amended, the “Change of Terms Agreement”) which modified the original terms of the Key Bank Acquisition Note. The Bank notified the Company of its decision to discontinue the Key Bank Acquisition Note, effective June 30, 2021. There were 0 amounts due under the Changes of Terms Agreement at June 30, 2022 or 2021.

ProceedsThe Key Bank Revolver Note, at the discretion of the PNC Acquisition Line were ableBank, provides for the Company to be dispersed, based on parameters defined in the PNC Loan Agreement, until May 17, 2014 (the “Conversion Date”). Asborrow up to $1,000,000 for working capital and general corporate purposes. This revolving line of the Conversion Date, there was $1,350,000 outstandingcredit is a demand note with no stated maturity date. Borrowings under the PNC Acquisition Line.Key Bank Revolver Note will bear interest at a rate per annum equal to one-day LIBOR (adjusted daily) plus 2.75%. The payment terms providedBank notified the Company in 2022 that 30 days following the Conversion Date, and continuing on the same day of each month thereafter, theLIBOR had been replaced with Daily Simple SOFR. The Company is required to make equalmonthly payments of principal over a 60 month period. Interestinterest on theany outstanding principal continuesunder the Key Bank Revolver Note and is required to accruepay the entire balance, including principal and all accrued and unpaid interest and fees, upon demand by the Bank. Any proceeds from the Key Bank Revolver Note would be secured by substantially all of the Company’s assets. There were 0 amounts due under the Key Bank Revolver Note or Key Bank Term Note at June 30, 2022 or 2021.

On August 14, 2020, the Company was granted a loan from the Bank (the “Loan”) in the amount of $304,833, pursuant to the Paycheck Protection Program (PPP) under Division, Title I of the CARES Act, which was enacted March 27, 2020. The Loan, which was in the form of a note dated August 14, 2020, was to mature in August 2025 and bore interest at a rate equal to one-month LIBOR plus 275 basis points (3.978%of 1% per annum and was payable in monthly installments commencing on, or before, October 31, 2021 if not forgiven and legally released. At December 31, 2020, in accordance with FASB ASC 470, Debt, and ASC 405-20, Liabilities – Extinguishment of Liabilities, the Company recorded the cash inflow from the Loan as a liability, and cash flows from financing, pending legal release from the obligation by the U.S. Small Business Administration (“S.B.A.”). The Company used the Loan proceeds for eligible expenses during the covered period and the Loan was forgiven and legally released by the S.B.A. in full in the second quarter of September 30, 2017). As2021. The Company recorded the forgiveness of September 30, 2017, there was $450,000 outstanding under the PNC Acquisition Line.Loan as a gain on extinguishment of debt – PPP Loan.

The Company is party to a Concession Agreement, dated as of November 1, 2008, with the City of New York for the operation of the Downtown Manhattan Heliport (the “Concession Agreement”). Pursuant to the terms of the Concession Agreement, the Company must pay the greater of 18% of the first $5,000,000 in any program year gross receiptsbased on cash collected (“Gross Receipts”) and 25% of gross receiptsGross Receipts in excess of $5 million,$5,000,000, or minimum annual guaranteed payments. The Company paid the City of New York $1,200,000 in the first year of the term and minimum payments were scheduled to increase to approximately $1,700,000 in the final year of the Concession Agreement, which was set to expire on October 31, 2018. During the nine months ended September 30, 2017 and 2016, the Company incurred approximately $1,285,000 and $1,900,000, respectively, in concession fees which are recorded in the cost of revenue.

As disclosed in a Current Report on Form 8-K8-K filed with the SEC on February 5, 2016, on February 2, 2016, the Company and the New York City Economic Development Corporation (the “NYCEDC”) announced new measures to reduce helicopter noise and impacts across New York City (the “Air Tour Agreement”).

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

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Air Tour Agreement also extended the Company’s Concession Agreement with the City of New York for 30 months, resulting in a new expiration date of April 30, 2021. The City of New York has two one year options to further extend the Concession Agreement. The Agreement also provides that the minimum annual guarantee payments 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 two one-year option renewals.

TheseThe reductions under the Air Tour Agreement have negatively impacted the Company’s business and financial results as well as those of the Company’sits management company at the Heliport, Empire Aviation which, as previously disclosed, is owned by thetwo children of Alvin Trenk, the Company’s Chief Executive Officer and a membergrandchild of a former officer and director of the Company’s Board of Directors.Company. The Company incurred management fees with Empire Aviation of approximately $1,780,000$836,000 and $2,706,000$0 during the ninesix months ended SeptemberJune 30, 2017 2022 and 2016,2021, respectively. Empire Aviation has notified the Company they believe additional fees are due under their management agreement with the New York Heliport for both 2021 and 2020. If the Company is unable to come to an agreement with Empire Aviation regarding amounts due under the agreement, the Company could incur additional expense as disclosed in the Company’s 2021 Annual Report on Form 10-K (Note 15. Contingent Liabilities).

During the program year that began on May 1, 2020, the City of New York agreed, in recognition of the pandemic’s impact, that the Company could defer payment of minimum guaranteed payments. In April 2021, the City of New York waived the deferred fees through December 31, 2020. In May 2021, the City of New York waived the deferred fees through April 30, 2021 which coincided with the original expiration of the Concession Agreement as amended by the Air Tour Agreement. The Company worked with the City of New York to address fees to be paid by the Company for the period May 1, 2021 through December 31, 2021. In March 2022, the City of New York agreed to accept 18% of monthly Gross Receipts in excess of $100,000 as Concession fees for this period. In April 2022, the Company agreed to resume paying the City of New York the total monthly amounts due under the Concession Agreement retro-active to January 2022 and to continue paying fees due under the Concession Agreement through the remainder of the Air Tour Agreement. During the six months ended June 30, 2022 and 2021, we incurred approximately $601,000 and $28,000 in concession fees, respectively, which isare recorded in administrative expenses.  The Company and Empire Aviation have also contributed to the Helicopter Tourism and Jobs Council (“HTJC”), an association that lobbies on behalfcost of the helicopter air tour industry, and which had engaged in discussions with the Mayor’s office.  Mr. Trenk is also an active participant with HJTC, which is managed by his grandson. revenue.

On October 3, 2016, the Company purchased all of the capital stock of Aircraft Services, Inc. (“Aircraft Services”), an aircraft maintenance services firm located in Garden City, Kansas. Under the terms of the transaction, the Company made a $150,000 cash payment at closing, a $75,000 installment payment in 2017, and will make an additional installment payment of $75,000 in 2018. The closing cash payment and 2017 installment payment were both funded with internal resources. The Company’s purchases of Aircraft Services’ capital stock is discussed in greater detail in a Current Report on Form 8-K filed with the SEC on October 7, 2016 and filed as an Exhibit to April 20, 2018, the Company’s Quarterly Report on Form 10-Q for the period ended September 30,2016.

As disclosed in a Current Report on Form 8-K filed with the SEC on July 6, 2015, the CompanyKansas subsidiary entered into a stock purchase agreement, dated Junelease with Commerce Bank for a refueling truck (the “Truck Lease”). The Truck Lease commenced on May 1, 2018 and continues for 60 months with a monthly payment of $2,568 and an interest rate of 5.5%. At the end of the Truck Lease, the Company’s subsidiary may purchase the vehicle for $1.00.

On May 1, 2021, the Company’s Kansas subsidiary executed a promissory note for $76,000 with Avfuel Corporation (“Avfuel”) for the purchase of a Jet-A refueling truck (the “Truck Note”). The Truck Note requires 6 annual payments of $13,432.56 commencing April 30, 2015, by2022 with the entire balance of unpaid principal and interest due on, or before, April 30, 2028. Interest accrues at prime plus 3% on the outstanding principal amount. The Company is required to make prepayments against the Truck Note at the rate of $0.018 per gallon of fuel purchased under a fuel supply agreement between the Company and Warren A. Peck, pursuant to which Mr. Peck purchased all of the capital stock of a wholly-owned subsidiary of the Company. The details of the agreement are described in such Current Report as well as in the Company’s Annual Report on Form 10-K, which was filed with the SEC on April 11, 2016. In September 2017, the Company received $100,000 due under this agreement and a final payment of $100,000 is expected to be made in September 2018.Avfuel.

NOTE 3 - Summary of Significant Accounting Policies

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and ourits wholly-owned subsidiaries, FirstFlight Heliports, LLC, (“FFH”) and our FBOits fixed base operation and MROaircraft maintenance and repair services at Garden City (Kansas) Regional Airport (“FBOGC”).Airport. All significant inter-company accounts and transactions have been eliminated in consolidation.

Cash and restricted cash

The Company maintains its cash with various financial institutions which often exceeds federally insured limits. The Company has not experienced any losses from maintaining cash accounts in excess of federally insured limits. As part of its cash management process, the Company periodically reviews the relative credit standing of these financial institutions. Amounts included in restricted cash are a deposit required by the Concession Agreement with NYEDC and aggregated $425,000 at June 30, 2022 and 2021.

Net Income Per Common Share

Net income was $308,231$690,890 and $667,252$311,498 for the ninesix months ended SeptemberJune 30, 2017 2022 and 2016,2021, respectively. Net income was $722,042 and $577,164 for the three months ended June 30, 2022 and 2021, respectively. Basic net income per share applicable to common stockholders is computed based on the weighted average number of shares of the Company’s common stock outstanding during the periods presented. Diluted net incomeloss per share reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted into common stock. Potentially dilutive securities, consisting of options and warrants, are excluded from the calculation of the diluted income per share when their exercise prices were greater than the average market price of the common stock during the period. 

The following table sets forth the components used in the computation of basic net income per share:

(1) Potential common shares of 1,900,000 were excluded from the computation of diluted shares as their exercise prices were greater than the average closing price of the common stock during the period.

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Stock Based

Stock-Based Compensation

Stock-based compensation expense for all share-basedstock-based payment awards are based on the estimated grant-date fair value. The Company recognizes these compensation costs over the requisite service period of the award, which is generally the option vesting term. For each of the ninesix months ended SeptemberJune 30, 2017 2022 and 2016,2021, the Company incurred stock-based compensation costs of $25,496.$22,998 and $17,196, respectively. Such amounts have been recorded as part of the Company’s selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. As of SeptemberJune 30, 2017, 2022, the unamortized fair value of the options totaled $7,500.$22,997 and the weighted average remaining amortization period of the options approximated five years.

Option valuation models require the input of highly subjective assumptions,, including the expected life of the option. In management's opinion, the use of such option valuation models does not necessarily provide a reliable single measure of the fair value of the Company’s employee stock options. Management holds this view partly becauseBecause the Company's employee stock options have characteristics significantly different from those of traded options, and also because changes in the subjective input assumptions can materially affect the fair value estimate.estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

NOTE 4 – Inventories

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the” FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. ASU 2014-09 also supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the current guidance. These judgments and estimates include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14 “Revenue from Contracts with Customers” (“ASU 2015-14”), which delays the effective date of ASU 2014-09 by one year. ASU 2014-09, as amended by ASU 2015-14, is effective for us beginning January 1, 2018, and, at that time, we may adopt the new standard under the full retrospective approach or the modified retrospective approach. We are currently evaluating the method of adoption and the impact the adoption of ASU 2014-09 will have on our consolidated financial statements and disclosures.

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 is effective for us beginning January 1, 2019, and, at that time, we will adopt the new standard using a modified retrospective approach. We are currently evaluating the impact that the adoption of ASU 2016-02 may have on our consolidated financial statements and disclosures.

Reclassifications

Certain reclassifications were made to prior year amounts to conform to the current year presentation. None of the reclassifications affected the Company’s net (loss) income in any period.

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Inventories consist of the following:

Included in fuel inventory are amounts held for third parties of $42,909$3,803 and $36,692$28,042 as of SeptemberJune 30, 2017 2022 and December 31, 2016, 2021, respectively, with an offsetting liability included as part of accrued expenses.

NOTE 5– Acquisition

Our wholly-owned subsidiary, FBO Air Garden City, Inc. (“GCK”), entered into a stock purchase agreement, dated October 3, 2016, by and between the Company, GCK and Gary and Kim Keller, (the “Stock Purchase Agreement”), to purchase all of the capital stock of Aircraft Services, an aircraft maintenance services firm located in Garden City, Kansas. Under the terms of the transaction, the Company made a $150,000 cash payment at closing, an installment payment of $75,000 in 2017, and will make an additional installment payment of $75,000 in 2018. The closing cash payment for the transaction and the 2017 installment payment were funded with internal resources. The Stock Purchase Agreement is discussed in greater detail in a Current Report on Form 8-K filed with the SEC on October 7, 2016 and is filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2016.

The following table details the allocation of the purchase price:

The following table presents the unaudited pro-forma results of the continuing operations of the Company and Aircraft Services for the nine months ended September 30, 2016 as if Aircraft Services had been acquired at the beginning of the period:

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 6 – Related Parties

From time to time, the law firm of Wachtel Missry, LLP provides certain legal services to the Company and its subsidiaries. William B. Wachtel, Chairman of the Company’s Board of Directors, is a managing partner of such firm. During the nine months ended September 30, 2017 and 2016, no services were provided to the Company by Wachtel & Missry, LLP.

As described in more detail in Note 2, Liquidity and Material Agreements, the Company is party to a management agreement with Empire Aviation, an entity owned by the children and grandchild of Alvin S. Trenk, the Company’sCompany’s former Chief Executive Officer and a former member of theour Company’s Board of Directors.

NOTE 76 – Litigation

From time to time, the Company may be a party to one or more claims or disputes which may result in litigation. The Company’sCompany’s management does not, however, presently expect that any such matters will have a material adverse effect on the Company’s business, financial condition or results of operations.

NOTE 7 – Changes in Management

On June 29, 2022, the Company filed a Form 8-K with the SEC announcing that the Company’s President, Chief Executive Officer, and Director, Ronald J. Ricciardi, had passed away on June 23, 2022. In a subsequent Form 8-K filed with the SEC on July 11, 2022, the Company announced that the Company’s Director, Samuel Goldstein, had been appointed to serve as President and Chief Executive Officer.

Item 2 - ManagementManagement’s’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read together with the accompanying unaudited condensed consolidated condensed financial statements and related notes in this report. This Item 2 contains forward-looking statements that involve risks and uncertainties. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date of this report. Actual results may differ materially from those expressed or implied in such forward-looking statements. Factors which could cause actual results to differ materially are discussed throughout this report and include, but are not limited to, those set forth at the end of this Item 2 under the heading "Cautionary Statement Regarding Forward Looking Statements." Additional factors are under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2021.

The terms “the Company,”“we,” “us,”“we”, “us”, and “our” are used below to refer collectively to Saker Aviation Services, Inc.the Company and the subsidiaries through which our various businesses are actually conducted.

OVERVIEW

Saker Aviation Services, Inc. is a Nevada corporation.corporation. Our common stock, $0.001$0.03 par value per share (the “common stock”), is publicly tradedquoted on the OTCQB Marketplace (“OTCQB”) under the symbol “SKAS”. Through our subsidiaries, we operate in the aviation services segment of the general aviation industry, in which we serve as the operator of a heliport, a fixed base operation (“FBO”), and as a provider of aircraft maintenance and repair and overhaulservices (“MRO”) services, 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.

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 (the “Heliport”, and as an FBO and MRO at the Garden City (Kansas) Regional Airport, and as a consultant to the operator of a seaplane base in New York City.Airport.

The Garden City facility became part of our company as a result of our acquisition of the FBO assets of Central Plains Aviation, Inc. in March 2005. Our Garden City facility began offering maintenance services in October 2016 as a result of our acquisition of all of the capital stock2005 and of Aircraft Services, Inc. (“Aircraft Services”).in October 2016.

Our business activities at the Downtown Manhattan (New York) Heliport facility (the “Heliport”) commenced as a result ofin November 2008 when we were awarded the Company’s award of a 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. See Note 2 to the condensed consolidated financial statements included in Item 1 of this report.Services (“FFH”).

The FBO segmentCOVID-19 pandemic has impacted the global and United States economies. Federal, state, and local governments implemented certain travel restrictions, “stay-at-home” orders, and social distancing initiatives which negatively impacted our operations and those of our customers. As a result of the general aviation industry is highly fragmented. According to the National Air Transportation Association (“NATA”), there are over 3,000 FBOs that serve customers at one or more of over 3,000 airport facilities across the country that have at least one paved 3,000-foot runway. The vast majority of these entities are single location operators. NATA characterizes companies withCOVID-19 pandemic, on March 17, 2020 all sightseeing tour operations at three or more airports as “chains.” An operation with FBOs in at least two distinctive regionsthe Downtown Manhattan Heliport ceased. On July 20, 2020, New York City started Phase 4 of the country is consideredcity’s reopening. Sightseeing tour operators at the heliport restarted operations under this phase.

For the period July 20, 2020 through March 31, 2022, sightseeing tour operators experienced much lower demand for tours as compared to pre-pandemic levels of activity. Beginning in April 2022, sightseeing tour operators have seen an increase in activity and a “national” chain while an operation with FBOsmuch 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 multiple locations withinthe COVID-19 pandemic, including the duration and spread and related travel advisories and restrictions and the impact on overall demand for air travel. The COVID-19 pandemic has had a single region is considered a “regional” chain.less substantial impact on our operations at our Kansas FBO and MRO.

Our long-term strategy is to increase our sales through growth within our aviation services operations. To do so, we may expand our geographic reach and product offering through strategic acquisitions and improved market penetration within the markets we serve. We expect that any future acquisitions or product offerings would be to complement and/or augment our current aviation services operations.

REVENUE AND OPERATING RESULTS

Comparison of Continuing Operations from the Three and NineSix Months Ended September30, 2017June 30, 2022 and June 30, 2021.September 30, 2016.

REVENUE

           RevenueTotal revenue from operations decreasedincreased by 8.4192.8 percent to $3,518,712$3,452,759 for the three months ended SeptemberJune 30, 20172022 as compared with corresponding prior-year period revenue of $3,840,800.$1,179,064.

For the three months ended SeptemberJune 30, 2017,2022, revenue from operations associated with the sale of jet fuel, aviation gasoline and related items decreasedincreased by 17.0142.6 percent to approximately $1,287,000$1,617,000 as compared to approximately $1,551,000$667,000 in the three months ended SeptemberJune 30, 2016.2021. This decrease is related to lower year-over-year fuel volume, primarily dueincrease was attributable to the final stagehigher volume of gallons and price of aviation gasoline sold at both our New York and Kansas locations compared to the air tour reductions which took effect on January 1, 2017, as further described below in Liquidity and Capital Resources.second quarter of 2021.

For the three months ended SeptemberJune 30, 2017,2022, revenue from operations associated with services and supply items decreasedincreased by 4.5370.3 percent to approximately $2,170,000$1,782,000 as compared to approximately $2,273,000$379,000 in the three months ended SeptemberJune 30, 2016.2021. This decrease is relatedincrease was attributable to increased demand for services at our New York location compared to the final stagesecond quarter of the air tour reductions which took effect on January 1, 2017, as noted above.2021.

For the three months ended SeptemberJune 30, 2017,2022 all other revenue from operations increaseddecreased by 271.160.1 percent to approximately $62,000$53,000 as compared to approximately $17,000$133,000 in the three months ended SeptemberJune 30, 2016. The increase2021. This decrease was largely attributable to an increasea decrease in non-aeronautical revenue generated byat our HeliportNew York location compared to the same period last year.

           Revenue from operations decreasedTotal revenue increased by 19.6165.2 percent to $8,743,913$5,273,498 for the ninesix months ended SeptemberJune 30, 20172022 as compared with corresponding prior-year period revenue of $10,872,366.$1,988,160.

For the ninesix months ended SeptemberJune 30, 2017,2022, revenue from operations associated with the sale of jet fuel, aviation gasoline and related items decreasedincreased by 22.8123.6 percent to approximately $3,340,000$2,623,000 as compared to approximately $4,330,000$1,173,000 in the ninesix months ended SeptemberJune 30, 2016.2021. This decrease is related to lower year-over-year fuel volume, primarily dueincrease was attributable to the final stagehigher volume of gallons and price of aviation gasoline sold at both our New York and Kansas locations compared to the air tour reductions which took effect on January 1, 2017, as further described belowsame period in Liquidity and Capital Resources.2021.

For the ninesix months ended SeptemberJune 30, 2017,2022, revenue from operations associated with services and supply items decreasedincreased by 18.7305.1 percent to approximately $5,284,000$2,570,000 as compared to approximately $6,496,000$634,000 in the ninesix months ended SeptemberJune 30, 2016.2021. This decrease is relatedincrease was attributable to the final stageincreased demand for services at our New York location compared to the second quarter of the air tour reductions which took effect on January 1, 2017, as noted above.2021.

For the ninesix months ended SeptemberJune 30, 2017,2022, all other revenue from operations increaseddecreased by 156.455.8 percent to approximately $119,000$80,000 as compared to approximately $47,000$181,000 in the ninesix months ended SeptemberJune 30, 2016. The increase2021. This decrease was largely attributable to an increasea decrease in non-aeronautical revenue generated by our Heliport compared to the same period last year.

GROSS PROFIT

Total gross profit from operations decreased 13.9increased by 140.0 percent to $1,997,812$1,639,841 in the three months ended SeptemberJune 30, 2017 as2022 compared withto $683,389 in the three months ended SeptemberJune 30, 2016.2021. Gross profit was positively impacted by an increase in activity and much higher demand for tours at our New York location. Gross margin decreased to 56.847.5 percent in the three months ended SeptemberJune 30, 20172022 as compared to 60.458.0 percent in the same period in the prior year. This decrease in gross margin is largely attributable to Cares Act tax credits recorded by the Company in the second quarter of 2021 period which were not available in 2022.

Total gross profit from operations increased by 138.0 percent to $2,207,360 in the six months ended June 30, 2022 as compared to $927,350 in the six months ended June 30, 2021. Gross margin decreased to 41.9 percent in the six months ended June 30, 2022 as compared to 46.6 percent in the same period in the prior year. The decreaseincrease in gross profit is related to lower levels of activity at our Heliport operation in the three months ended September 30, 2017 as compared to the prior year. Theand decrease in gross margin was largely attributable to lower gross margins associated with MRO services being provided at our Kansas location in 2017, which was not part of our operations in the same period last year.

           Total gross profit from operations decreased 23.6 percent to $4,668,955 in the nine months ended September 30, 2017 as compared with the nine months ended June 30, 2016. Gross margin decreased to 53.4 percent in the nine months ended September 30, 2017 as compared to 56.2 percent in the same period in the prior year. The decrease in gross profit is related to the final stagewere a result of the air tour reductions, as noteditems discussed above. The decrease in gross margin is related to lower levels of revenue from services and supplies, which generally carry a higher overall gross margin, in the nine months ended September 30, 2017 as compared to the same period in 2016.

OPERATING EXPENSE

Selling, General and Administrative

Total selling, general and administrative expenses or (“SG&A,&A”) were approximately $1,534,000$1,166,000 in the three months ended SeptemberJune 30, 2017,2022, representing a decreasean increase of approximately $214,000$887,000 or 12.2319.0 percent, as compared to the same period in 2016. Total2021. The increase in SG&A for the three months ended June 30, 2022 was primarily attributable to increased fees due under the Company’s Concession Agreement with the City of New York and management agreement with Empire Aviation. SG&A in the six months ended June 30, 2022 were approximately $3,919,000 in the nine months ended September 30, 2017,$1,731,000, representing a decreasean increase of approximately $825,000$1,070,000 or 17.4161.9 percent, as compared to the same period in 2016.2021. The increase in SG&A operating expenses for the six months ended June 30, 2022 were primarily attributable to increases in amounts due under agreement as described above for the three month period.

            OperationalCorporate SG&A expenses associated with our aviation services operations, werewas approximately $1,416,000 in the three months ended September 30, 2017, representing a decrease of approximately $201,000 or 12.5 percent, as compared to the three months ended September 30, 2016. Operational SG&A, as a percentage of revenue, was 40.2 percent$172,000 for the three months ended SeptemberJune 30, 2017, as compared with 42.1 percent in the corresponding prior year period. The decreased operating expenses were largely attributable to reduced costs related to the lower levels of activity in our Heliport operations.

           Operational SG&A expenses were approximately $3,533,000 in the nine months ended September 30, 2017,2022, representing a decreasean increase of approximately $849,000 or 19.4 percent, as compared to the nine months ended September 30, 2016. Operational SG&A, as a percentage of revenue, was 40.4 percent for the nine months ended September 30, 2017, as compared with 40.3 percent in the corresponding prior year period. The decreased operating expenses were largely attributable to reduced costs related to the lower levels of activity in our Heliport operations.

           Corporate SG&A expenses were approximately $117,000 for the three months ended September 30, 2017, representing a decrease of approximately $12,000$46,000 as compared with the corresponding prior year period. Corporate SG&A was approximately $386,000$299,000 for the ninesix months ended SeptemberJune 30, 2017,2022, representing an increase of approximately $24,000$56,000 as compared with the corresponding prior year period. The increases are relatedincrease in both the three and six month periods on a year-over-year basis, were largely attributable to non-recurring miscellaneous expenses that were incurred in 2017, but did not occur in 2016.  These expenses are also not anticipated to recur in future periods.the second quarter of 2022.

OPERATING INCOME

Operating income from operations for the three and ninesix months ended SeptemberJune 30, 20172022 was $464,123 and $749,563, respectively,$176,666 as compared to operating income of $572,329 and $1,369,758,$23,048 in the three and ninesix months ended SeptemberJune 30, 2016.2021. The decrease on a year-over-year basisincrease in operating income was driven by lower levels of gross profit, which was partially offset by lower SG&A expenses.largely attributable to more activity and much higher demand for tours at our New York location.

Depreciation and Amortization

Depreciation and amortization waswere approximately $395,000$66,000 and $369,000$53,000 for the ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, respectively.

Interest Expense The increase in depreciation and amortization was largely attributable to depreciation related to our right of use assets.

Interest Expense

Interest expense for the ninesix months ended SeptemberJune 30, 20172022 and June 30, 2021 was approximately $17,000$12,000 in both periods.

Bad Debt Recovery

Bad Debt Recovery for the six months ended June 30, 2022 was $125,000 as compared to $21,000$0 in the same period in 2016.2021. The increase in bad debt recovery is attributable to collection of amounts previously deemed uncollectable in 2020.

Life Insurance Proceeds

As part of an employment agreement with the Company’s President, Chief Executive Officer, and Director, Ronald J. Ricciardi, the Company was required to provide Executive Life Insurance insuring the life of Mr. Ricciardi during the term of the agreement. The term policy was to be in the amount of $1 million, with one-half (1/2) of the proceeds thereof directed to such beneficiary or beneficiaries of Mr. Ricciardi may from time to time appoint, and one-half (1/2) of the proceeds directed to the Company. As discussed in Note 7 to the financial statements, Mr Ricciardi passed away on June 23, 2022. The Company has recorded the life insurance receivable of $500,000 as Other Income during the period ending June 30, 2022.

Income Tax

Income tax expense for the three and ninesix months ended SeptemberJune 30, 20172022 and 2021 was $227,100$99,000 and $414,241, respectively, as compared to $285,500 and $681,000 for the three and nine months ended September 30, 2016.$4,426, respectively. The decreaseincrease in income tax is attributable to lower pre-taxhigher net income in the ninesix months ended SeptemberJune 30, 2017 as2022 compared to the same period in 2016.2021.

Net Incomeincome Per Share

Net income was $308,231$690,890 and $667,252$311,498 for the ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, respectively.

Basic and diluted net income per share for the nine month periodssix months ended SeptemberJune 30, 20172022 and 20162021 was $0.01$0.71 and $0.02,$0.30, respectively. Diluted net income per share for the six months ended June 30, 2022 and 2021 was $0.70 and $0.30, respectively.

LIQUIDITY AND CAPITAL RESOURCES

As of SeptemberJune 30, 2017, the Company2022, we had cash and restricted cash equivalents of $2,095,728$3,514,584 and a working capital surplus of $3,452,869. $4,194,988. We generated revenue of $5,273,498 and had net income of $690,890 for the six months ended June 30, 2022. For the ninesix months ended SeptemberJune 30, 2017, the Company generated revenue from operations of $8,743,913 and had income from operations before taxes of $722,472. For the nine months ended September 30, 2017,2022, cash flows included net cash provided by operating activities of $11,975,$1,598,472, net cash provided byused in investing activities of $42,624,$501,644, and net cash used in financing activities of $277,500.$29,150.

On May 17, 2013,As disclosed in a Current Report on Form 8-K filed on March 21, 2018 with the Securities and Exchange Commission (the “SEC”), on March 15, 2018 the Company entered into a loan agreement (the “Loan Agreement”) with PNCKey Bank National Association (the “PNC Loan Agreement”“Bank”). The PNC Loan Agreement includedcontains three components: (i) a $2,500,000 non-revolving acquisition line of credit (the “PNC“Key Bank Acquisition Line”Note”); (ii) a $1,000,000 revolving line of credit (the “Key Bank Revolver Note”); and (iii) a $338,481 term loan (the “Key Bank Term Note”). On October 11, 2018, and as subsequently amended, the Company entered into a new loan agreement with the Bank (as so amended, the “Change of Terms Agreement”) which modified the original terms of the Key Bank Acquisition Note. The Bank notified the Company of its decision to discontinue the Key Bank Acquisition Note, effective June 30, 2021. There were no amounts due under the Changes of Terms Agreement at June 30, 2022 or 2021.

ProceedsThe Key Bank Revolver Note, at the discretion of the PNC Acquisition Line were ableBank, provides for the Company to be dispersed, based on parameters defined in the PNC Loan Agreement, until May 17, 2014 (the “Conversion Date”). Asborrow up to $1,000,000 for working capital and general corporate purposes. This revolving line of the Conversion Date, there was $1,350,000 outstandingcredit is a demand note with no stated maturity date. Borrowings under the PNC Acquisition Line.Key Bank Revolver Note will bear interest at a rate per annum equal to one-day LIBOR (adjusted daily) plus 2.75%. The payment terms providedBank notified the Company in 2022 that 30 days following the Conversion Date, and continuing on the same day of each month thereafter, theLIBOR had been replaced with Daily Simple SOFR. The Company is required to make equalmonthly payments of principal over a 60 month period. Interestinterest on theany outstanding principal continuesunder the Key Bank Revolver Note and is required to accruepay the entire balance, including principal and all accrued and unpaid interest and fees, upon demand by the Bank. Any proceeds from the Key Bank Revolver Note would be secured by substantially all of the Company’s assets. There were no amounts due under the Key Bank Revolver Note or Key Bank Term Note at June 30, 2022 or 2021.

On August 14, 2020, the Company was granted a loan from the Bank (the “Loan”) in the amount of $304,833, pursuant to the Paycheck Protection Program (PPP) under Division, Title I of the CARES Act, which was enacted March 27, 2020. The Loan, which was in the form of a note dated August 14, 2020, was to mature in August 2025 and bore interest at a rate equal to one-month LIBOR plus 275 basis points (3.978%of 1% per annum and was payable in monthly installments commencing on, or before, October 31, 2021 if not forgiven and legally released. At December 31, 2020, in accordance with FASB ASC 470, Debt, and ASC 405-20, Liabilities – Extinguishment of Liabilities, the Company recorded the cash inflow from the Loan as a liability, and cash flows from financing, pending legal release from the obligation by the U.S. Small Business Administration (“S.B.A.”). The Company used the Loan proceeds for eligible expenses during the covered period and the Loan was forgiven and legally released by the S.B.A. in full in the second quarter of September 30, 2017). As2021. The Company recorded the forgiveness of September 30, 2017, there was $450,000 outstanding under the PNC Acquisition Line.Loan as a gain on extinguishment of debt – PPP Loan.

The Company is party to a Concession Agreement, dated as of November 1, 2008, with the City of New York for the operation of the Downtown Manhattan Heliport (the “Concession Agreement”). Pursuant to the terms of the Concession Agreement, the Company must pay the greater of 18% of the first $5,000,000 in any program year gross receiptsbased on cash collected (“Gross Receipts”) and 25% of gross receiptsGross Receipts in excess of $5 million,$5,000,000, or minimum annual guaranteed payments. The Company paid the City of New York $1,200,000 in the first year of the term and minimum payments were scheduled to increase to approximately $1,700,000 in the final year of the Concession Agreement, which was set to expire on October 31, 2018. During the nine months ended September 30, 2017 and 2016, the Company incurred approximately $1,285,000 and $1,900,000, respectively, in concession fees which are recorded in the cost of revenue.

As disclosed in a Current Report on Form 8-K filed with the SEC on February 5, 2016, on February 2, 2016, the Company and the New York City Economic Development Corporation (the “NYCEDC”) announced new measures to reduce helicopter noise and impacts across New York City (the “Air Tour Agreement”).

Under the Air Tour Agreement, filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, the Company mayhas not allowbeen allowed to permit its tenant operators to conduct tourist flights from the Downtown Manhattan Heliport on Sundays beginningsince April 1, 2016. The Company was also required to ensure the Company’sthat its tenant operators reduce the total allowable number of tourist flights from 2015 levels by 20 percent beginning June 1, 2016, by 40 percent beginning October 1, 2016 and by 50 percent beginning January 1, 2017. The Air Tour Agreement also provided for the minimum annual guarantee payments the Company is required to pay to the City of New York under the Concession Agreement be reduced by 50%, effective January 1, 2017. Additionally, beginning onsince June 1, 2016, the Company ishas 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 Company’s Concession Agreement with the City of New York for 30 months, resulting in a new expiration date of April 30, 2021. The City of New York has two one year options to further extend the Concession Agreement. The Agreement also provides that the minimum annual guarantee payments 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 their two one-year option renewals.

          TheseThe reductions under the Air Tour Agreement have negatively impacted the Company’s business and financial results as well as those of the Company’sits management company at the Heliport, Empire Aviation which, as previously disclosed, is owned by thetwo children of Alvin Trenk, the Company’s Chief Executive Officer and a membergrandchild of a former officer and director of the Company’s Board of Directors.Company. The Company incurred management fees with Empire Aviation of approximately $1,780,000$836,000 and $2,706,000$0 during the ninesix months ended SeptemberJune 30, 20172022 and 2016, respectively, which is recorded in administrative expenses.  The Company and2021, respectively. Empire Aviation have also contributed tohas notified the Helicopter Tourism and Jobs Council (“HTJC”), an association that lobbies on behalf of the helicopter air tour industry, and which had engaged in discussionsCompany they believe additional fees are due under their management agreement with the Mayor’s office.  Mr. Trenk is also an active participant with HJTC, which is managed by his grandson. 

          On October 3, 2016,New York Heliport for both 2021 and 2020. If the Company purchased all ofis unable to come to an agreement with Empire Aviation regarding amounts due under the capital stock of Aircraft Services, Inc. (“Aircraft Services”), an aircraft maintenance services firm located in Garden City, Kansas. Under the terms of the transaction,agreement, the Company made a $150,000 cash payment at closing, a $75,000 installment paymentcould incur additional expense as disclosed in 2017, and will make an additional installment payment of $75,000 in 2018. The closing cash payment and 2017 installment payment were both funded with internal resources. The Company’s purchases of Aircraft Services’ capital stock is discussed in greater detail in a Current Report on Form 8-K filed with the SEC on October 7, 2016 and filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended September 30,2016.

          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 a wholly-owned subsidiary of the Company. The details of the agreement are described in such Current Report as well as in the Company’s2021 Annual Report on Form 10-K (Note 15. Contingent Liabilities). The Company incurred management fees with Empire Aviation of approximately $836,000 and $0 during the six months ended June 30, 2022 and 2021, respectively.

During the program year that began on May 1, 2020, the City of New York agreed, in recognition of the pandemic’s impact, that the Company could defer payment of minimum guaranteed payments. In April 2021, the City of New York waived the deferred fees through December 31, 2020. In May 2021, the City of New York waived the deferred fees through April 30, 2021 which was filedcoincided with the SEC on April 11, 2016. In September 2017,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 receivedfor 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 this agreementthe Concession Agreement retro-active to January 2022 and to continue paying fees due under the Concession Agreement through the remainder of the Air Tour Agreement. During the six months ended June 30, 2022 and 2021, we incurred approximately $601,000 and $28,000 in concession fees, respectively, which are recorded in the cost of revenue.

On April 20, 2018, the Company’s Kansas subsidiary entered into a finalpurchase lease with Commerce Bank for a refueling truck (the “Truck Lease”). The Truck Lease commenced on May 1, 2018 and continues for 60 months with a monthly payment of $100,000 is expected to be made in September 2018.$2,568 and an interest rate of 5.5%. At the end of the Truck Lease, the Company’s subsidiary may purchase the vehicle for $1.00.

On May 1, 2021, the Company’s Kansas subsidiary executed a promissory note for $76,000 with Avfuel Corporation (“Avfuel”) for the purchase of a Jet-A refueling truck (the “Truck Note”). The Truck Note requires six annual payments of $13,432.56 commencing April 30, 2022 with the entire balance of unpaid principal and interest due on, or before, April 30, 2028. Interest accrues at prime plus 3% on the outstanding principal amount. The Company is required to make prepayments against the Truck Note at the rate of $0.018 per gallon of fuel purchased under a fuel supply agreement between the Company and Avfuel.

During the ninesix months ended SeptemberJune 30, 2017,2022, we had a net decreaseincrease in cash of $222,901.$1,067,678. Our sources and uses of funds during this period were as follows:

Cash from Operating Activities

For the ninesix months ended SeptemberJune 30, 2017,2022, net cash provided by operating activities was $11,975.$1,598,472. This amount included an increase in operating cash related to net income of $308,231$690,890 and additions for the following items: (i) depreciation and amortization, $395,017;$66,256; (ii) loss on sale of charter certificate, $10,000; (iii) stock based compensation, $25,496 ;$22,998; (iii) income tax receivable, $573,678; (iv) deposits, $37,272; andprepaid expenses, $222,420; (v) customer deposits, $271.$74,079; and (vi) accounts payable, $268,780. These increases in operating activities were offset by the following decreases initems: (i) accounts receivable, trade, $210,821;$166,999; (ii) inventories, $49,378;$80,477; and (iii) prepaid expenses and other current assets, $175,118; (iv) accounts payable, $261,395; and (v) accrued expenses, $67,600.$73,153.

For the ninesix months ended SeptemberJune 30, 2016,2021, net cash provided by operating activities was $2,042,063.$212,275. This amount included an increase in operating cash related to net income of $667,252$311,498 and additions for the following items: (i) depreciation and amortization, $369,211;$53,140; (ii) stock based compensation, $25,496;$17,196; (iii) accounts receivable, trade, $932,788;deposits, $2,512; and (iv) deposits $39,785; (v) accounts payable, $406,905; and (vi) customer deposits, $238.$43,016. These increases in operating activities were offset by a decrease in the following items: (i) accounts receivable, trade, $14,041; (ii) inventories, $8,147; (ii)$19,615, (iii) prepaid expenses $127,887; and (iii)other current assets, $174,929; and (iv) accrued expenses, $263,578.$6,502.

Cash from Investing Activities

For the ninesix months ended SeptemberJune 30, 2017,2022, net cash provided byof $501,644 used in investing activities included a life insurance receivable of $500,000 and purchase of property and equipment of $1,644. For the six months ended June 30, 2021, net cash of $78,044 was $42,624. This amount included $100,000 provided by the payment of notes receivable and $25,000 of proceeds from the sale of the Company’s charter certificate, offset by a decreaseused in operating cash usedinvesting activities for the purchase of property and equipment of $82,376. For the nine months ended September 30, 2016, net cash used in investing activities was $40,781. This amount included $30,000 provided by the payment of notes receivable offset by amounts used in the purchase of property and equipment of $70,781.equipment.

Cash from Financing Activities

For the ninesix months ended SeptemberJune 30, 2017,2022, net cash of $29,150 was used in financing activities was $277,500 for the following items: (i) payment of right of use leases, $22,541; and (ii) repayment of notes payable. payable, $6,609.For the ninesix months ended SeptemberJune 30, 2016,2021, net cash of $244,438 was used in financing activities was $204,874 for the following items: (i) extinguishment of debt, $304,833; (ii) payment of right of use leases, $13,762; and (iii) repayment of notes payable.payable, $1,843. These decreases in financing activities were offset by issuance of notes payable of $76,000.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. ASU 2014-09 also supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the current guidance. These judgments and estimates include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14 “Revenue from Contracts with Customers” (“ASU 2015-14”), which delays the effective date of ASU 2014-09 by one year. ASU 2014-09, as amended by ASU 2015-14, is effective for us beginning January 1, 2018, and, at that time, we may adopt the new standard under the full retrospective approach or the modified retrospective approach. We are currently evaluating the method of adoption and the impact the adoption of ASU 2014-09 will have on our consolidated financial statements and disclosures.

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 is effective for us beginning January 1, 2019, and, at that time, we will adopt the new standard using a modified retrospective approach. We are currently evaluating the impact that the adoption of ASU 2016-02 may have on our consolidated financial statements and disclosures.

CAUTIONARYCAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

Statements contained in this report may contain information that includes or is based upon "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent management's current judgment and assumptions, and can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are frequently accompanied by the use of such words as "anticipates," "plans," "believes," "expects," "projects," "intends," and similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, including, but not limited to, those relating to:

Any one of these or other risks, uncertainties, other factors, or any inaccurate assumptions made by the Company may cause actual results to be materially different from those described herein or elsewhere by us. Undue reliance should not be replacedplaced on any such forward-looking statements, which speak only as of the date they were made. Certain of these risks, uncertainties, and other factors are described in greater detail in our Annual Report on Form 10-K for the year ended December 31, 20162021 and in other filings we make with the SEC. Subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above and elsewhere in our reports filed with the Securities and Exchange Commission.SEC. We expressly disclaim any intent or obligation to update any forward-looking statements, except as may be required by law.

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4 – Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management, including our principal executive officerPresident and principal financial officer, hasChief Executive Officer, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon, and as of the date of that evaluation, our principal executive officermanagement and principal financial officerour President and Chief Executive Officer, have concluded that our disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the reports filed and submitted by us under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported as and when required, and (ii) is accumulated and communicated to our management, including our principal executive officerPresident and principal financial officer,Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II –– OTHER INFORMATION

Item 6.6 - Exhibits

* Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.