UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For The Quarterly Period Ended September 30, 2010
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to ________________
Commission File Number: 000-52593
SAKER AVIATION SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Nevada | 87-0617649 | |
(State or Other Jurisdiction of | (I.R.S. Employer | |
Incorporation or Organization) | Identification No.) | |
101 Hangar Road, Avoca, PA | 18641 | |
(Address of Principal Executive Offices) | (Zip Code) |
(570) 457-3400
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ¨ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer ¨ | |
Non-accelerated filer o | Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
As of November 12, 2010, the registrant had 33,164,453 shares of its common stock, $0.001 par value, issued and outstanding.
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
Form 10-Q
September 30, 2010
Index
Page | ||
PART I - FINANCIAL INFORMATION | ||
ITEM 1. FINANCIAL STATEMENTS. | ||
Balance Sheets as of September 30, 2010 (unaudited) and December 31, 2009 | 1 | |
Statements of Operations for the Three and Nine Months Ended September 30, 2010 and 2009 (unaudited) | 2 | |
Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009 (unaudited) | 3 | |
Notes to Financial Statements (unaudited) | 4 | |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND | ||
RESULTS OF OPERATIONS. | 8 | |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. | 13 | |
ITEM 4. CONTROLS AND PROCEDURES. | 13 | |
PART II - OTHER INFORMATION | ||
ITEM 1A. RISK FACTORS | 14 | |
ITEM 6. EXHIBITS | 15 | |
SIGNATURES | 16 |
i
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
September 30, 2010 | December 31, | |||||||
(unaudited) | 2009 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 919,204 | $ | 574,847 | ||||
Accounts receivable | 1,281,543 | 809,870 | ||||||
Inventories | 250,289 | 277,941 | ||||||
Note receivable – current portion, less discount | 110,289 | 110,289 | ||||||
Prepaid expenses and other current assets | 230,360 | 166,156 | ||||||
Total current assets | 2,791,685 | 1,939,103 | ||||||
PROPERTY AND EQUIPMENT, net | ||||||||
of accumulated depreciation of $601,945 and $518,751 respectively | 1,859,428 | 1,088,386 | ||||||
OTHER ASSETS | ||||||||
Deposits | 568,631 | 541,961 | ||||||
Note receivable, less discount | 422,786 | 509,431 | ||||||
Intangible assets – trade names | 100,000 | 100,000 | ||||||
Goodwill | 2,368,284 | 2,368,284 | ||||||
Total other assets | 3,459,701 | 3,519,676 | ||||||
TOTAL ASSETS | $ | 8,110,814 | $ | 6,547,165 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 399,083 | $ | 431,899 | ||||
Customer deposits | 77,242 | 67,312 | ||||||
Line of credit | 500,000 | 1,000,000 | ||||||
Accrued expenses | 1,137,887 | 741,485 | ||||||
Notes payable – current portion | 286,558 | 170,922 | ||||||
Total current liabilities | 2,400,770 | 2,411,618 | ||||||
LONG-TERM LIABILITIES | ||||||||
Notes payable - less current portion | 1,191,093 | 949,817 | ||||||
Security deposits | 125,250 | 100,026 | ||||||
Total liabilities | 3,717,113 | 3,461,461 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Controlling interest | ||||||||
Preferred stock - $.001 par value; authorized 9,999,154; | ||||||||
none issued and outstanding | — | — | ||||||
Common stock - $.001 par value; authorized 100,000,000; | ||||||||
33,164,453 shares issued and outstanding as of September 30, 2010 and December 31, 2009 | 33,164 | 33,164 | ||||||
Additional paid-in capital | 19,642,224 | 19,632,661 | ||||||
Accumulated deficit | (17,041,383 | ) | (17,542,930 | ) | ||||
Total controlling interest | 2,634,005 | 2,122,895 | ||||||
Non-controlling interest | 1,759,696 | 962,809 | ||||||
TOTAL STOCKHOLDERS’ EQUITY | 4,393,701 | 3,085,704 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 8,110,814 | $ | 6,547,165 | ||||
See notes to condensed consolidated financial statements.
1
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
REVENUE | $ | 2,922,363 | $ | 2,434,831 | $ | 8,453,888 | $ | 6,300,604 | ||||||||
COST OF REVENUE | 1,311,187 | 1,361,626 | 4,055,185 | 3,618,299 | ||||||||||||
GROSS PROFIT | 1,611,176 | 1,073,205 | 4,398,703 | 2,682,305 | ||||||||||||
SELLING, GENERAL AND ADMINISTRATIVE | ||||||||||||||||
EXPENSES | 1,254,429 | 991,626 | 3,673,685 | 3,226,495 | ||||||||||||
OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS | 356,747 | 81,579 | 725,018 | (544,190 | ) | |||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||
OTHER INCOME (EXPENSE), net | (2,980 | ) | (15,673 | ) | (94,715 | ) | 96,194 | |||||||||
INTEREST INCOME | 816 | 3,504 | 1,449 | 11,401 | ||||||||||||
INTEREST EXPENSE | (43,177 | ) | (34,913 | ) | (131,425 | ) | (84,970 | ) | ||||||||
TOTAL OTHER INCOME (EXPENSE) | (45,341 | ) | (47,082 | ) | (224,691 | ) | 22,625 | |||||||||
NET INCOME (LOSS) FROM CONTINUING OPERATIONS | 311,406 | 34,497 | 500,327 | (521,565 | ) | |||||||||||
DISCONTINUED OPERATIONS: | ||||||||||||||||
NET LOSS FROM DISCONTINUED | ||||||||||||||||
OPERATIONS | — | — | — | (547,468 | ) | |||||||||||
GAIN FROM DISPOSAL OF SUBSIDIARY | — | — | — | 469,262 | ||||||||||||
TOTAL DISCONTINUED OPERATIONS | — | — | — | (78,206 | ) | |||||||||||
NET INCOME (LOSS) | $ | 311,406 | $ | 34,497 | $ | 500,327 | $ | (599,771 | ) | |||||||
Net income (loss) per Common Share – Basic and Diluted | ||||||||||||||||
Continuing operations | $ | 0.01 | $ | 0.00 | $ | 0.02 | $ | (0.02 | ) | |||||||
Discontinued operations | — | — | — | (0.01 | ) | |||||||||||
Disposal of subsidiary | — | — | — | 0.01 | ||||||||||||
Sub-total discontinued operations | — | — | — | (0.00 | ) | |||||||||||
Total Basic and Diluted Net Income (Loss) Per Common Share | $ | 0.01 | $ | 0.00 | $ | 0.02 | $ | (0.02 | ) | |||||||
Weighted Average Number of Common Shares | ||||||||||||||||
Outstanding – Basic and Diluted | 33,164,453 | 33,764,453 | 33,164,453 | 34,394,235 | ||||||||||||
See notes to condensed consolidated financial statements.
2
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
(UNAUDITED)
Nine Months Ended September 30, | ||||||||
2010 | 2009 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | 500,327 | $ | (599,771 | ) | |||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 122,787 | 99,864 | ||||||
Gain on sale of subsidiary | — | (469,262 | ) | |||||
Stock based compensation | 10,783 | 257,570 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (471,673 | ) | (73,139 | ) | ||||
Inventories | 27,652 | 1,248 | ||||||
Prepaid expenses and other current assets | (64,204 | ) | 15,448 | |||||
Deposits | (26,670 | ) | — | |||||
Accounts payable | (32,816 | ) | (486,067 | ) | ||||
Customer deposits | 9,930 | 49,738 | ||||||
Accrued expenses | 396,402 | 469,400 | ||||||
Security deposits | 25,224 | — | ||||||
TOTAL ADJUSTMENTS | (2,585 | ) | (135,200 | ) | ||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 497,742 | (734,971 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Issuance of notes receivable | — | (750,000 | ) | |||||
Payment of notes receivable | 86,645 | 12,205 | ||||||
Net cash of sold subsidiary | — | (229,188 | ) | |||||
Purchase of property and equipment | (893,829 | ) | (220,231 | ) | ||||
NET CASH USED IN INVESTING ACTIVITIES | (807,184 | ) | (1,187,214 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from notes payable | — | 750,000 | ||||||
Repayment of notes payable | (143,088 | ) | (38,335 | ) | ||||
Increase in non-controlling interest in subsidiary | 796,887 | — | ||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 653,799 | 711,665 | ||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 344,357 | (1,210,520 | ) | |||||
CASH AND CASH EQUIVALENTS – Beginning | 574,847 | 1,472,535 | ||||||
CASH AND CASH EQUIVALENTS – Ending | $ | 919,204 | $ | 262,015 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash paid during the periods for: | ||||||||
Interest | $ | 131,425 | $ | 84,970 | ||||
Income taxes | $ | 93,610 | $ | 12,917 | ||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW INFORMATION: | ||||||||
Line of credit restructuring | $ | 500,000 | $ | — | ||||
See notes to condensed consolidated financial statements.
3
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 have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial statements and with the instructions to Quarterly Report on Form 10-Q as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required for annual financial statements. These condensed consolidated financial statements should be read in conjunction with the financial statements and related footnotes for Saker Aviation Services, Inc. and its subsidiaries (collectively, the “Company”), which appear in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 and filed with the Securities and Exchange Commission.
The condensed consolidated balance sheet as of September 30, 2010 and the condensed consolidated statements of operations and cash flows for the three and nine months ended September 30, 2010 and 2009 have been prepared by the Company without audit. In the opinion of the Company’s management, all adjustments (consisting of normal recurring accruals) necessary to make the Company’s financial position as of September 30, 2010 and its results of operations for the three and nine months and cash flows for the nine months ended September 30, 2010 not misleading have been included. The results of operations for the three and nine months ended September 30, 2010 are not necessarily indicative of the results to be expected for any full year or any other interim period.
NOTE 2 – Management’s Liquidity Plans
As of September 30, 2010, the Company had cash and cash equivalents of $919,204 and a working capital surplus of $390,915. The Company generated revenue of approximately $8,454,000 and had net income of approximately $500,000 for the nine months ended September 30, 2010. For the nine months ended September 30, 2010, cash flows included net cash provided by operating activities of $497,742, net cash used in investing activities of $807,184, and net cash provided by financing activities of $653,799.
The Company has a revolving line of credit agreement (the “Credit Facility”) dated March 3, 2009 and made jointly and severally by the Company and Airborne, Inc., a former subsidiary divested by the Company in March of 2009 (“Airborne”), in favor of Birch Hill Capital, LLC (“Birch Hill”). The Credit Facility requires interest payments based on outstanding balances at an interest rate of prime plus 350 basis points (6.75% as of September 30, 2010) and is payable upon demand by Birch Hill. Birch Hill retains a first lien against all of the assets of the Company and Airborne. The Company and Airborne are joint and several guarantors of borrowings under the Credit Facility. In the event of a sale of Airborne, Birch Hill is entitled to receive the first distribution of any related proceeds in the full amount of any outstanding against the Credit Facility.
On May 7, 2010, the Birch Hill Credit Facility was modified such that the maximum line of credit was reduced to $500,000, which is fully extended at September 30, 2010, and the remaining $500,000 was reclassified into a note with a 36-month term with a 24-month balloon payment of outstanding principal and interest at 7% per year.
The Company is party to a Loan Agreement with EuroAmerican Investment Corp. (“EuroAmerican”), pursuant to which EuroAmerican agreed to loan the Company an aggregate of up to $750,000. The EuroAmerican loan is evidenced by a Promissory Note delivered by the Company to EuroAmerican. The unpaid principal amount under the Promissory Note accrues interest at the annual rate of 12% and is payable in monthly interest only payments until maturity, at which time the entire principal balance and any accrued but unpaid interest is payable in full. On May 7, 2010, the maturity date of the EuroAmerican Note was extended from February 27, 2011 to March 1, 2012.
The Company is party to a concession agreement with the City of New York for the operation of the Downtown Manhattan Heliport (the “Heliport”). Under this agreement, the Company must pay the greater of 18% of the first $5 million in program year revenue and 25% of revenue in excess of $5 million or minimum annual guaranteed payments that began at $1.2 million in Year 1, which commenced November 1, 2008, and increase to approximately $1.7 million in Year 10, which expires on October 31, 2018. The Company also agreed, pursuant to this agreement, to make certain capital improvements and safety code compliance upgrades to the Heliport in the amount of $1,000,000 within two years following the receipt of building permits for the capital improvements and another $1,000,000 by the end of the fifth year of the Agreement. Company management believes that cash flow from the operation of the Heliport will be sufficient to satisfy the minimum annual guarantee and to fund the capital improvements as required under the concession agreement.
4
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Company believes that it has sufficient liquidity to sustain its existing business for at least the next twelve months.
NOTE 3 - Summary of Significant Accounting Policies
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Saker Aviation Services, Inc., its wholly-owned subsidiaries, FBO Air Wilkes-Barre, Inc. d/b/a Saker Aviation Services (“FBOWB”), FBO Air Garden City, Inc. d/b/a Saker Aviation Services (“FBOGC”), FBO Air WB Leasing (“WB Leasing”), and its majority-owned subsidiary FirstFlight Heliports, LLC d/b/a Saker Aviation Services (“FFH”). All significant inter-company accounts and transactions have been eliminated in consolidation.
Net Income (Loss) Per Common Share
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 income 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 and diluted income per share:
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2010* | 2009* | 2010* | 2009** | |||||||||||||
Weighted average common shares outstanding, basic | 33,164,453 | 33,764,453 | 33,164,453 | 34,394,235 | ||||||||||||
Common shares upon exercise of options | — | — | — | — | ||||||||||||
Weighted average common shares outstanding, diluted | 33,164,453 | 33,764,453 | 33,164,453 | 34,394,235 |
* Common shares of 8,303,587 underlying outstanding stock options for the three and nine months ended September 30, 2010 and 13,692,121 underlying outstanding stock options for the three months ended September 30, 2009, were excluded from the computation of diluted earnings per share as their exercise prices were greater than the average market price of the common stock during the period.
** Common shares of 13,692,121 underlying outstanding stock options for the nine months ended September 30, 2009, were excluded from the computation of diluted earnings per share as their inclusion would be anti-dilutive.
Stock Based Compensation
Stock-based compensation expense for all share-based payment awards are based on the grant-date fair value. The Company recognizes these compensation costs over the requisite service period of the award, which is generally the option vesting term. For the nine months ended September 30, 2010 and 2009, the Company incurred stock based compensation of $9,219 and $257,570, 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 September 30, 2010, the unamortized fair value of the options totaled $0.
Option valuation models require the input of highly subjective assumptions, including the expected life of the option. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.
5
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Recently Issued Accounting Pronouncements
During 2009, the Financial Accounting Standards Board (“FASB”) launched the FASB ASC as the single source of authoritative nongovernmental GAAP. The ASC was effective for interim and annual periods ending September 15, 2009. The ASC does not change GAAP. Instead, it takes all individual pronouncements that currently comprise GAAP and reorganizes them into approximately 90 accounting Topics, and displays all Topics using a consistent structure. Changes to the ASC subsequent to September 30, 2009, are referred to as Accounting Standards Updates (“ASU”).
On June 30, 2009, the FASB issued ASU 2009-01, “Topic 105 – Generally Accepted Accounting Principles, amendments based on Statement of Financial Accounting Standards No. 168 – The FASB Accounting Standard Codification and the Hierarchy of Generally Accepted Accounting Principles.” This ASU amends the FASB ASC for the issuance of FASB Statement of Financial Accounting Standards (“SFAS”) No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles.” This ASU includes FASB SFAS No. 168 in its entirety. ASU 2009-01 was effective for interim and annual periods ending after September 15, 2009. The adoption of ASU 2009-01 had no effect on the operating results or financial condition of the Company.
In December 2007, the FASB issued ASC 810, “Non-Controlling Interests in Consolidated Financial Statements – an amendment of ARB No. 51). ASC 810 established accounting and reporting standards for the non-controlling interest in a subsidiary (previously referred to as minority interests). ASC 810 also requires that a retained non-controlling interest upon the deconsolidation of a subsidiary be initially measured at its fair value. Upon adoption of ASC 810, the Company was required to report any non-controlling interests as a separate component of consolidated stockholders’ equity. The Company was also required to present any net income or loss allocable to non-controlling interests and net income or loss attributable to the stockholders of the Company separately in its consolidated statements of operations, if significant. ASC 810 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after January 1, 2009. ASC 810 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements of ASC 810 are applied prospectively. The Company adopted ASC 810 and reclassified the non-controlling interest in FFH as a separate component of consolidated stockholders’ equity on January 1, 2009. The adoption of ASC 810 did not have a material impact on the Company’s results of operation or financial condition.
NOTE 4 - Inventories
Inventories consist primarily of maintenance parts and aviation fuel, which the Company sells to its customers. The Company also maintains fuel inventories for commercial airlines, to which it charges into-plane fees when servicing commercial aircraft. A summary of inventories as of September 30, 2010 and December 31, 2009 is set forth in the following table:
September 30, 2010 | December 31, 2009 | |||||||
Parts inventory | $ | 98,098 | $ | 95,793 | ||||
Fuel inventory | 144,632 | 172,049 | ||||||
Other inventory | 7,559 | 10,099 | ||||||
Total inventory | $ | 250,289 | $ | 277,941 |
Included in inventories are amounts held for third parties of $70,368 and $84,685 as of September 30, 2010 and December 31, 2009, respectively, with an offsetting liability included as part of accrued expenses.
6
SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 - Stockholders’ Equity
Stock Options
Details of all options outstanding are presented in the table below:
Number of Options | Weighted Average Exercise Price | |||||||
Balance, January 1, 2010 | 1,250,000 | $ | 0.64 | |||||
Granted | — | — | ||||||
Exercised | — | — | ||||||
Forfeited | (250,000 | ) | (1.60 | ) | ||||
Balance, September 30, 2010 | 1,000,000 | $ | 0.36 | |||||
Exercisable at September 30, 2010 | 900,000 | $ | 0.35 |
On March 31, 2010, an option for 250,000 shares expired.
Warrants
Details of all warrants outstanding are presented in the table below:
Number of Warrants | Weighted Average Exercise Price | |||||||
Balance, January 1, 2010 | 13,417,121 | $ | 0.71 | |||||
Granted | — | — | ||||||
Exercised | — | — | ||||||
Forfeited | (6,113,534 | ) | (0.60 | ) | ||||
Balance, September 30, 2010 | 7,303,587 | $ | 0.80 | |||||
Exercisable at September 30, 2010 | 7,303,587 | $ | 0.80 |
On March 31, 2010, warrants collectively representing 4,913,534 shares expired.
On August 31, 2010, warrants collectively representing 1,200,000 shares expired.
NOTE 6 – Related Parties
The law firm of Wachtel & Masyr, LLP provides certain legal services to the Company. William B. Wachtel, a member of the Company’s Board of Directors, is a managing partner of this firm. During the nine months ended September 30, 2010 and 2009, the Company was billed approximately $77,300 and $159,400, respectively, for legal services. At September 30, 2010 and December 31, 2009, the Company has recorded in accounts payable an obligation for legal fees to such firm of approximately $20,000 and $42,900, respectively, related to legal services provided by such firm.
Effective November 2008, the Company executed a management agreement with a company who has a non-controlling interest in a subsidiary of the Company. The owners of this company include the children of a member of the Company’s Board of Directors. The agreement requires a management fee of 10% of gross receipts of the subsidiary and a “success fee” of 50% of pre-tax profits; as such term is defined in the management agreement. Total fees in the nine months ended September 30, 2010 aggregated approximately $1,300,000, which was included in accrued expenses at September 30, 2010. As part of the fee arrangement, certain capital expenditures for the subsidiary are to be funded by the non-controlling interest, per the operating agreement between the parties.
NOTE 7 - 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'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 8 – Subsequent Events
On October 21, 2010, the Company entered into an employment agreement which was reported in a Current Report Form 8-K on October 26, 2010 and which is incorporated herein by reference.
7
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read together with the consolidated condensed financial statements and related notes appearing elsewhere 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 included in such forward-looking statements. Factors which could cause actual results to differ materially include those set forth at the end of this Item 2 under the heading "Cautionary Statement Regarding Forward Looking Statements," as well as those discussed elsewhere in this report and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, as filed with the Securities and Exchange Commission.
OVERVIEW
Saker Aviation Services, Inc. (“we”, “us”, “our”) is a Nevada corporation, the common stock, $0.001 par value (the “common stock”), of which is publicly traded on the over the counter bulletin board system under the symbol “SKAS.OB”. Through our subsidiaries, we operate in the fixed base operation (“FBO”) segment of the general aviation industry. An FBO provides ground-based services such as fueling and hangaring for general aviation, commercial, and military aircraft, aircraft maintenance, and other miscellaneous services. We also provide consulting services for a non-owned FBO facility and serve as the operator of a heliport.
We were formed on January 17, 2003 (date of inception) 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 which changed its name to FBO Air, Inc. On December 13, 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 at the Wilkes-Barre/Scranton (Pennsylvania) International Airport, Garden City (Kansas) Regional Airport, Downtown Manhattan (New York) Heliport, and at Niagara Falls (New York) International Airport where we provide consulting services to the operator.
The FBO segment of the industry is highly fragmented - populated by, according to the National Air Transportation Association (“NATA”), over 3,000 operators who serve customers at one or more of the over 3,000 airport facilities across the country that have at least one paved 3,000-foot runway. The vast majority of these companies are single location operators. NATA characterizes companies with operations at three or more airports as “chains.” An operation with FBOs in at least two distinctive regions of the United States is considered a “national” chain while multiple locations within a single region are “regional” chains.
REVENUE AND OPERATING RESULTS
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2010 and September 30, 2009.
REVENUE
Revenue increased by 20.0 percent to $2,922,000 for the three months ended September 30, 2010 as compared with corresponding prior-year period revenue of $2,434,000. For the nine months ended September 30, 2010, revenue increased by 34.2% to $8,454,000 as compared with revenue of $6,300,000 in the same period in the prior year.
For the three months ended September 30, 2010, revenue associated with the operation of the Downtown Manhattan Heliport (“Heliport”) increased by 63.4% to approximately $1,596,000 as compared to the prior year period. Revenue associated with the sale of jet fuel, aviation gasoline and related items decreased by 6.0 percent to approximately $1,200,000 in the three months ended September 30, 2010 as compared to the same period in the prior year. Revenue associated with maintenance activities decreased by 30.9 percent to approximately $111,000 as compared to the same period in the prior year. Revenue associated with the leasing of aircraft and office space along with the management of non-owned FBO facilities decreased by 25.3 percent to approximately $15,000 in the three months ended September 30, 2010 as compared to the same period in the prior year.
For the nine months ended September 30, 2010, revenue associated with the sale of jet fuel, aviation gasoline and related items increased by 15.2 percent to approximately $3,633,000 as compared to the same period in the prior year. Revenue associated with the operation of the Heliport increased 68.6% to approximately $4,395,000 in the nine months ended September 30, 2010 as compared to the same period in the prior year. Revenue associated with maintenance activities decreased by 21.3 percent to approximately $376,000 as compared to the same period in the prior year. Revenue associated with the leasing of aircraft and office space along with the management of non-owned FBO facilities decreased by 19.8 percent to approximately $49,000 in the nine months ended September 30, 2010 as compared to the same period in the prior year.
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The increases in revenue associated with the Heliport operations were due to a higher level of helicopter landings and associated passenger traffic as a result of increased helicopter tour activity by Heliport tenants.
The decrease in revenue associated with the sale of jet fuel, aviation gasoline and related items during the three months ended September 30, 3010 were related to a shift in the mix of volume to categories whose average price per gallon were less in the current year period than in 2009. The increases in revenue associated with the sale of jet fuel, aviation gasoline and related items during the nine months ended September 30, 2010 were related to a combination of comparable volume along with higher average fuel prices as compared with the prior year. We generally price our fuel products on a fixed dollar margin basis. As the cost of fuel increases, the corresponding customer price increases as well. If volume is constant, this methodology yields higher revenue but at comparable gross margins.
The changes in maintenance revenue were due to differing levels of both charges for labor services and for parts as compared to each respective period in the prior year. The primary reason for the decreases in the nine month period ending September 30, 2010, was a generally lower level of activity associated with jet aircraft domiciled at the Pennsylvania facility.
The decreases in revenue associated with the leasing of aircraft and office space along with the management on non-owned FBO facilities was directly related to a planned reduction in fees associated with the management of non-owned FBO facilities.
GROSS PROFIT
Total gross profit increased 50.1 percent to approximately $1,611,000 in the three months ended September 30, 2010 as compared with the three months ended September 30, 2009. Gross profit as a percent of revenue increased to 55.1 percent in the three months ended September 30, 2010 as compared to 44.1 percent in the same period in the prior year. The impact of the Heliport operation was the primary factor in the increase in gross profit, contributing approximately $1,267,000 in 2010 as compared with approximately $677,000 during the same period in 2009.
Total gross profit increased 64.0 percent to approximately $4,400,000 in the nine months ended September 30, 2010 as compared with the nine months ended September 30, 2009. Gross profit as a percent of revenue increased to 52.0 percent in the nine months ended September 30, 2010 as compared to 42.6 percent in the same period in the prior year. The impact of the Heliport operation was a major factor in the increase in gross profit, contributing approximately $3,444,000 in 2010 as compared with approximately $1,706,000 during the same period in 2009.
OPERATING EXPENSE
Selling, General and Administrative – FBO Operations
Selling, general and administrative (“SG&A”) expenses associated with our FBO operations were approximately $1,218,000 in the three months ended September 30, 2010, an increase of approximately $353,000, or 29.0 percent, as compared to the three months ended September 30, 2009. SG&A increased at the Heliport as a result of significantly higher passenger traffic during the three months ended September 30, 2010 as compared to the same period during the prior year. Without the introduction of the Heliport, SG&A associated with our FBO operations would have increased by approximately $14,000 or 4.6 percent. SG&A associated with our FBO operations, as a percentage of revenue, was 41.7 percent for the three months ended September 30, 2010 as compared with 35.5 percent in the corresponding prior year period.
For the nine months ended September 30, 2010, SG&A expenses associated with our FBO operations were approximately $3,478,000, an increase of approximately $930,000 or 26.7 percent as compared to the nine months ended September 30, 2009. SG&A increased at the Heliport as a result of significantly higher passenger traffic during the nine months ended September 30, 2010 as compared with the same period in the prior year. Without the introduction of the Heliport, SG&A associated with our FBO operations would have decreased by approximately $5,300 or 0.5 percent. For the nine months ended September 30, 2010, SG&A associated with our FBO operations, as a percentage of revenue, was 41.1 percent as compared with 40.4 percent in the corresponding prior year period.
Selling, General and Administrative – Corporate Operations
Corporate expense was approximately $36,000 and $196,000 for the three and nine months ended September 30, 2010, respectively, representing a decrease of approximately $84,400 and $459,400, respectively, as compared with the corresponding prior year periods. The decreases in the three and nine months ended September 30, 2010, were driven largely by lower professional fees related to the transition to a new independent registered accounting firm and the elimination of certain legal and litigation settlement fees as compared to the prior year period.
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OPERATING INCOME (LOSS)
Operating income in the three and nine months ended September 30, 2010 was approximately $357,000 and $725,000, respectively, as compared to operating income of approximately $81,500 in the three months ended September 30, 2009 and operating losses of approximately $544,000 in the nine months ended September 30, 2009. Improvements to operating income were driven by a combination of greater levels of levels of revenue and gross profit, which counterbalanced higher non-corporate operating expenses, as described above.
Depreciation and Amortization
Depreciation and amortization from continuing operations was approximately $122,800 and $100,000 for the nine months ended September 30, 2010 and 2009, respectively.
Interest Income/Expense
Interest income for the three and nine months ended September 30, 2010 was approximately $800 and $1,400, respectively, as compared to approximately $3,500 and $11,400 in three and nine months ended September 30, 2009, respectively. Interest expense for the three and nine months ended September 30, 2010 was approximately $43,200 and $131,400, respectively, as compared to approximately $35,000 and $85,000, respectively, in the same periods in 2009. The decreases in interest income are attributable to significantly lower rates of interest earned on deposits. The increases in interest expense are largely attributed to debt service on the Birch Hill and EuroAmerican Notes, discussed under Liquidity and Capital Resources below.
Other Income/Expense
Other expense for the three and nine months ended September 30, 2010 was approximately $3,000 and $94,700, respectively and is attributed almost entirely to municipal taxes and fees. Federal and state net operating loss carryforwards have offset current federal and state income taxes. Other expense for the three months ended September 30, 2009 was approximately $15,700 and other income for the nine months ended September 30, 2009 was approximately $96,200. Other expense in the three months ended September 30, 2009 was attributable to loss on the sale of assets and other income in the nine months ended September 30, 2009 is attributable primarily to gains on the sale of assets.
Net Income/Loss Per Share
Net income for the three and nine months ended September 30, 2010 was approximately $311,400 and $500,000, respectively, as compared to net income of approximately $34,000 in the three months ended September 30, 2009 and net losses of approximately $520,000 for the nine months ended September 30, 2009. The improvements were as a result of the items discussed above.
Basic and diluted net income per share for the three and nine months ended September 30, 2010 was $0.01 and $0.02, respectively. Basic and diluted net loss per share for the three and nine months ended September 30, 2009 was $0.00 and $0.02, respectively, for continuing operations.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2010, we had cash and cash equivalents of $919,204 and a working capital surplus of $390,915. We generated revenue of approximately $8,454,000 and net income of approximately $500,000 for the nine months ended September 30, 2010. For the nine months ended September 30, 2010, cash flows included net cash provided by operating activities of $497,742, net cash used in investing activities of $807,184, and net cash provided by financing activities of $653,799.
We have a revolving line of credit agreement (the “Credit Facility”) dated March 3, 2009 and made jointly and severally by us and Airborne, Inc., a former subsidiary we divested in March of 2009 (“Airborne”), in favor of Birch Hill Capital, LLC (“Birch Hill”). The Credit Facility requires interest payments based on outstanding balances at an interest rate of prime plus 350 basis points (6.75% as of September 30, 2010) and is payable upon demand by Birch Hill. Birch Hill retains a first lien against all of our assets and the assets of Airborne. We and Airborne are joint and several guarantors of borrowings under the Credit Facility. In the event of a sale of Airborne, Birch Hill is entitled to receive the first distribution of any related proceeds in the full amount of any outstanding against the Credit Facility.
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On May 7, 2010, the Birch Hill Credit Facility was modified such that the maximum line of credit was reduced to $500,000, which is fully extended at September 30, 2010, and the remaining $500,000 was reclassified into a note with a 36-month term with a 24-month balloon payment of outstanding principal and interest at 7% per year.
We are also party to a Loan Agreement with EuroAmerican Investment Corp. (“EuroAmerican”), pursuant to which EuroAmerican agreed to loan the Company an aggregate of up to $750,000. The EuroAmerican loan is evidenced by a Promissory Note we delivered to EuroAmerican. The unpaid principal amount under the Promissory Note accrues interest at the annual rate of 12% and is payable in monthly interest only payments until maturity, at which time the entire principal balance and any accrued but unpaid interest is payable in full. On May 7, 2010, the maturity date of the EuroAmerican Note was extended from February 27, 2011 to March 1, 2012.
We are party to a concession agreement with the City of New York for the operation of the Downtown Manhattan Heliport (the “Heliport”). Under this agreement, we must pay the greater of 18% of the first $5 million in program year revenue and 25% of revenue in excess of $5 million or minimum annual guaranteed payments that began at $1.2 million in Year 1, which commenced on November 1, 2008, and increase to approximately $1.7 million in Year 10, which expires on October 31, 2018. During the three and nine months ended September 30, 2010, we paid the City of New York $311,250 and $933,750, respectively, in minimum annual guarantee payments. We also agreed, pursuant to this agreement, to make certain capital improvements and safety code compliance upgrades to the Heliport in the amount of $1,000,000 within two years following the receipt of building permits for the capital improvements and another $1,000,000 by the end of the fifth year of the Agreement. During the nine month period ended September 30, 2010, we made approximately $795,000 in capital improvements at the Heliport pursuant to the concession agreement. We expect to make an aggregate of approximately $900,000 in improvements at the Heliport during the fiscal year ending December 31, 2010 pursuant to such agreement. We believe that cash flow from the operation of the Heliport will be sufficient to satisfy the minimum annual guarantee and to fund the capital improvements as required under the agreement.
We believe that we have sufficient liquidity to sustain our existing business for at least the next twelve months.
Cash from Operating Activities
For the nine months ended September 30, 2010, net cash provided by operating activities was $497,742. This amount included an increase in operating cash related to net income of $500,327 and additions for the following items: (i) depreciation and amortization, $122,787; (ii) stock-based compensation expense, $10,783; (iii) inventories, $27,652; (iv) customer deposits, $9,930; (v) accrued expenses, $396,402; and (vi) security deposits, $25,224. The increase in cash used in operating activities in 2010 was offset by the following decreases: (i) accounts receivable, $471,673; (ii) prepaid expenses, $64,204; (iii) accounts payable, $32,816; and (iv) deposits, $26,670. For the nine months ended September 30, 2009, net cash used in operating activities was $734,971. This amount included a decrease in operating cash related to a net loss of $599,771 and additions for the following items: (i) depreciation and amortization, $99,864; (ii) stock-based compensation expense, $257,570; (iii) accrued expenses, $469,400; (iv) customer deposits, $49,738; (v) prepaid expenses, $15,448; and (vi) inventories, $1,248. The increase in cash used in operating activities in 2009 was offset by the following decreases: (i) gain on sale of subsidiary, $469,262; (ii) accounts payable, $486,067; and (iii) accounts receivable, $73,139.
Cash from Investing Activities
For the nine months ended September 30, 2010, net cash used in investing activities was $807,184 and was attributable to the purchase of property and equipment of $893,829, principally capital expenditures associated with the Heliport, offset by the payment of notes receivable of $86,645. For the nine months ended September 30, 2009, net cash used in investing activities was $1,187,214 and was attributable to the purchase of property and equipment ($220,231), issuance of notes receivable ($750,000), offset by proceeds from notes receivable ($12,205), and net cash of discontinued operations ($229,188).
Cash from Financing Activities
For the nine months ended September 30, 2010, net cash provided by financing activities was $653,799, consisting of the payment of notes payable of $143,088 and an increase in non-controlling interest in subsidiary of $796,887. For the nine months ended September 30, 2009, net cash provided by financing activities was $711,665, consisting of a note payable of $750,000 in connection with the divestiture of Airborne offset by repayment of notes payable of $38,335.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Stock Based Compensation
Stock-based compensation expense for all share-based payment awards are based on the grant-date fair value. We recognize these compensation costs over the requisite service period of the award, which is generally the option vesting term.
Option valuation models require the input of highly subjective assumptions including the expected life of the option. Because our employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.
Recent Accounting Pronouncements
During 2009, the Financial Accounting Standards Board (“FASB”) launched the FASB ASC as the single source of authoritative nongovernmental GAAP. The ASC was effective for interim and annual periods ending September 15, 2009. The ASC does not change GAAP. Instead, it takes all individual pronouncements that currently comprise GAAP and reorganizes them into approximately 90 accounting Topics, and displays all Topics using a consistent structure. Changes to the ASC subsequent to September 30, 2009, are referred to as Accounting Standards Updates (“ASUs”).
On June 30, 2009, the FASB issued ASU 2009-01, “Topic 105 – Generally Accepted Accounting Principles, amendments based on Statement of Financial Accounting Standards No. 168 – The FASB Accounting Standard Codification and the Hierarchy of Generally Accepted Accounting Principles.” This ASU amends the FASB ASC for the issuance of FASB Statement of Financial Accounting Standards (SFAS”) No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles.” This ASU includes FASB SFAS No. 168 in its entirety. ASU 2009-01 was effective for interim and annual periods ending after September 15, 2009. The adoption of ASU 2009-01 had no effect on our operating results or financial condition.
In December 2007, the FASB issued ASC 810, “Non-Controlling Interests in Consolidated Financial Statements – an amendment of ARB No. 51). ASC 810 established accounting and reporting standards for the non-controlling interest in a subsidiary (previously referred to as minority interests). ASC 810 also requires that a retained non-controlling interest upon the deconsolidation of a subsidiary be initially measured at its fair value. Upon adoption of ASC 810, we were required to report any non-controlling interests as a separate component of consolidated stockholders’ equity. We were also required to present any net income or loss allocable to non-controlling interests and net income or loss attributable to our stockholders separately in its consolidated statements of operations, if significant. ASC 810 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after January 1, 2009. ASC 810 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements of ASC 810 are applied prospectively. We adopted ASC 810 and reclassified the non-controlling interest in our Heliport subsidiary as a separate component of consolidated stockholders’ equity on January 1, 2009. The adoption of ASC 810 did not have a material impact on our results of operation or financial condition.
CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS
Statements contained in this report may contain information that includes or is based upon "forward-looking statements" relating to our business. 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:
§ | our ability to generate revenues sufficient to repay existing indebtedness; |
§ | our ability to identify, negotiate and complete the acquisition of targeted operators, consistent with our business plan; |
§ | our ability to secure the additional debt or equity financing, if required, to execute our business plan; |
§ | existing or new competitors consolidating operators ahead of us; |
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§ | our ability to attract new personnel or retain existing personnel, which would adversely affect implementation of our overall business strategy; |
§ | Our planned capital expenditures; and |
§ | Expected business trends. |
Any one of these or other risks, uncertainties, other factors, or any inaccurate assumptions may cause actual results to be materially different from those described herein or elsewhere by us. Undue reliance should not be replaced 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, 2009 under the heading “Risk Factors” and in other filings we make with the Securities and Exchange Commission. 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. We expressly disclaim any intent or obligation to update any forward-looking statements.
Item 3 – Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4 – Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, including our President and Chief Executive Officer (principal executive and financial officer) evaluated our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Form 10-Q. Based on this evaluation, our President and Chief Executive Officer concluded that our disclosure controls were effective as of such date.
Based upon its evaluation, our management, with the participation of our President and Chief Executive Officer, has concluded there is a significant deficiency with respect to our internal control over financial reporting as defined in Rule 13a-15(e). Those rules define internal control over financial reporting as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The weakness identified by management relates to the lack of sufficient accounting resources to apply certain U.S. Generally Accepted Accounting Principles (“U.S. GAAP”).
We currently lack adequately trained accounting personnel with appropriate U.S. GAAP expertise for certain complex transactions. Our management believes this weakness is considered a significant deficiency but does not rise to the level of a material weakness due to the compensating supervisory controls as discussed below.
As of the end of the period covered by this report and to address the identified weakness, we engage consultants or other resources to assist with the accounting and disclosure for complex transactions. Our President and Chief Executive Officer operates in a supervisory capacity to help compensate for the limited accounting personnel. This added level of supervision helps ensure the financial statements and disclosures are accurate and complete. This additional assistance was considered in concluding that our weakness in internal control is a significant deficiency. This added level of supervision helps ensure the financial statements and disclosures are accurate and complete.
In order to correct this deficiency, we plan to hire additional employees or consultants, as needed, to ensure that management will have adequate resources in order to attain complete reporting of financial information on a timely manner and provide a further level of segregation of financial responsibilities.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Such limitations include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures, such as simple errors or mistakes or intentional circumvention of the established process.
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Management’s Report on Internal Control Over Financial Reporting; Changes in Internal Controls Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal controls over financial reporting. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide a reasonable assurance of achieving their objectives. Under the supervision and with the participation of our management, including our President and Chief Executive Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as set forth in Internal Control - Integrated Framework. Based on our evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective at the reasonable assurance level as of September 30, 2010.
During the three months ended September 30, 2010, there were no changes to our internal controls over financial reporting that materially affected or were reasonably likely to materially affect these controls subsequent to the date of their evaluation.
PART II – OTHER INFORMATION
Item 1A. Risk Factors
Uncertainty and adverse changes in the general economic conditions of markets in which we participate may negatively affect our business.
Current and future conditions in the economy have an inherent degree of uncertainty. As a result, it is difficult for us to estimate the level of growth or contraction for the economy as a whole. It is even more difficult to estimate growth or contraction in various parts, sectors and regions of the economy, including the markets in which we participate. Adverse changes may occur as a result of soft global economic conditions, rising oil prices, wavering consumer confidence, changes in unemployment, declines in or volatility of stock markets, contraction of credit availability, declines in real estate values, or other factors affecting economic conditions in general. Our results of operations are sensitive to changes in general economic conditions that impact consumer spending, including discretionary spending for use of private aircraft.
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Item 6. Exhibits
Exhibit No. | Description of Exhibit | |
10.1 | Employment Agreement dated as of October 21, 2010 by and between Ronald J. Ricciardi and the Company, is incorporated herein by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K dated October 21, 2010. (1) | |
31.1 | Rule 13a-14(a)/15d-14(a) Certification of President and Chief Executive Officer (principal executive and principal financial officer). * | |
32.1 | Section 1350 Certification. * |
* Filed herewith
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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.
Saker Aviation Services, Inc. | ||
Date: November 12, 2010 | By: | /s/ Ronald J. Ricciardi |
Ronald J. Ricciardi, | ||
President & Chief Executive Officer |
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