10-Q

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 March 31, 2016

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.)
20 South Street, Pier 6 East River, New York, NY	10004
(Address of principal executive offices)	(Zip Code)

(212) 776-4046

(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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x         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  ¨ Accelerated filer  ¨ Non-accelerated filer  ¨ 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 May 16, 2016, the registrant had 33,157,610 shares of its common stock, $0.001 par value, issued and outstanding.

 i

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

Form 10-Q

March 31, 2016

Index

PART I - FINANCIAL INFORMATION
	ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		Page
		Balance Sheets as of March 31, 2016 (unaudited) and December 31, 2015	1
		Statements of Operations for the Three Months Ended March 31, 2016 and 2015 (unaudited)	2
		Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015 (unaudited)	3
		Notes to Financial Statements (unaudited)	4
	ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		7
	ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		11
	ITEM 4.  CONTROLS AND PROCEDURES		11
PART II - OTHER INFORMATION
	ITEM 6. EXHIBITS		12
SIGNATURE			13

 ii

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS
	March 31, 2016			December 31, 2015
	(unaudited)
CURRENT ASSETS
Cash	$	756,398		$	414,661
Accounts receivable		2,296,752			2,520,955
Inventories		64,796			67,860
Notes receivable – current portion		300,000			300,000
Prepaid expenses and other current assets		289,180			354,485
Total current assets		3,707,126			3,657,961
PROPERTY AND EQUIPMENT, net
of accumulated depreciation and amortization of $2,210,348 and $2,116,676 respectively		1,411,159			1,496,656
OTHER ASSETS
Deposits		137,035			150,297
Note Receivable		200,000			200,000
Intangible assets		35,000			35,000
Goodwill		530,000			530,000
Deferred income taxes		173,000			173,000
Total other assets		1,075,035			1,088,297
TOTAL ASSETS	$	6,193,320		$	6,242,914
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	757,286		$	682,916
Customer deposits		126,335			126,257
Accrued expenses		339,184			589,417
Notes payable – current portion		271,199			272,374
Total current liabilities		1,494,004			1,670,964
LONG-TERM LIABILITIES
Notes payable - less current portion		585,000			652,500
Total liabilities		2,079,004			2,323,464
STOCKHOLDERS’ EQUITY
Preferred stock - $.001 par value; authorized 9,999,154; none issued and outstanding
Common stock - $.001 par value; authorized 100,000,000; 33,157,610 shares issued and outstanding as of March 31, 2016 and December 31, 2015		33,157			33,157
Additional paid-in capital		20,004,928			19,996,428
Accumulated deficit		(15,923,769	)		(16,110,135	)
TOTAL STOCKHOLDERS’ EQUITY		4,114,316			3,919,450
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,193,320		$	6,242,914

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 March 31,
	2016			2015
REVENUE	$	2,967,080		$	2,487,115
COST OF REVENUE		1,265,390			1,283,064
GROSS PROFIT		1,701,690			1,204,051
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		1,328,612			1,119,542
OPERATING INCOME FROM CONTINUING OPERATIONS		373,078			84,509
OTHER INCOME (EXPENSE):
OTHER INCOME, net		---			1,666
INTEREST EXPENSE		(7,212	)		(5,463	)
TOTAL OTHER EXPENSE, net		(7,212	)		(3,797	)
INCOME FROM CONTINUING OPERATIONS, before income taxes		365,866			80,712
INCOME TAX EXPENSE		179,500			43,000
INCOME FROM CONTINUING OPERATIONS		186,366			37,712
LOSS FROM DISCONTINUED OPERATIONS, net of income taxes		---			(174,304	)
NET INCOME (LOSS)	$	186,366		$	(136,592	)
Basic and Diluted Net (Loss) Income Per Common Share	$	0.01		$	(0.00	)
Weighted Average Number of Common Shares – Basic		33,157,610			33,107,610
Weighted Average Number of Common Shares – Diluted		33,295,579			33,858,518

See notes to condensed consolidated financial statements.

2

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended March 31,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	186,366		$	(136,592	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		93,672			151,210
Stock based compensation		8,500			8,500
Changes in operating assets and liabilities:
Accounts receivable, trade		224,203			591,864
Inventories		3,064			15,400
Prepaid expenses and other current assets		65,305			237,990
Deposits		13,340			(5,747	)
Accounts payable		74,370			(507,664	)
Accrued expenses		(250,233	)		(317,140	)
TOTAL ADJUSTMENTS		232,221			174,413
NET CASH PROVIDED BY OPERATING ACTIVITIES		418,587			37,821
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(8,175	)		(14,248	)
NET CASH USED IN INVESTING ACTIVITIES		(8,175	)		(14,248	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable		(68,675	)		(94,331	)
NET CASH USED IN FINANCING ACTIVITIES		(68,675	)		(94,331	)
NET CHANGE IN CASH		341,737			(70,758	)
CASH – Beginning		414,661			531,003
CASH – Ending		756,398		$	460,245
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the periods for:
Income Taxes	$	365,894		$	100,898
Interest	$	7,212		$	14,006

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 of Saker Aviation Services, Inc. (the “Company”) and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial statements and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all of the information and disclosures required by GAAP for annual financial statements and should be read in conjunction with the financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

The condensed consolidated balance sheet as of March 31, 2016 and the condensed consolidated statements of operations and cash flows for the three months ended March 31, 2016 and 2015 have been prepared by the Company without audit. In the opinion of the Company’s management, all necessary adjustments (consisting of normal recurring accruals) have been included to make the Company’s financial position as of March 31, 2016 and its results of operations and cash flows for the three months ended March 31, 2016 not misleading. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for any full year or any other interim period.

The Company has evaluated events which have occurred subsequent to March 31, 2016, and through the date of the filing of this Quarterly Report on Form 10-Q with the SEC, and has determined that no subsequent events have occurred after the current reporting period.

NOTE 2 – Liquidity

As of March 31, 2016, we had cash and cash equivalents of $756,398 and a working capital surplus of $2,213,122. We generated revenue from continuing operations of $2,967,080 and had net income from continuing operations before taxes of $365,866 for the three months ended March 31, 2016. For the three months ended March 31, 2016, cash flows included net cash provided by operating activities of $418,587, net cash used in investing activities of $8,175, and net cash used in financing activities of $68,675.

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

Proceeds of the PNC Acquisition Line were able to be dispersed, based on parameters defined in the PNC Loan Agreement, until May 17, 2014 (the “Conversion Date”). As of the Conversion Date, there was $1,350,000 outstanding under the PNC Acquisition Line. The payment terms provided that 30 days following the Conversion Date, and continuing on the same day of each month thereafter, we are required to make equal payments of principal over a 60 month period. Interest on the outstanding principal continues to accrue at a rate equal to one-month LIBOR plus 275 basis points (3.18% as of March 31, 2016). An unused commitment fee had been applied at a rate of 1.5% on the unused portion of the PNC Acquisition Line and was charged for each fiscal quarter through the Conversion Date. As of March 31, 2016, there was $855,000 outstanding under the PNC Acquisition Line.

The PNC Working Capital was to have been dispersed for working capital and general corporate purposes. Interest on outstanding principal accrued at a rate equal to daily LIBOR plus 250 basis points. The PNC Working Capital Line expired on December 31, 2015, with $0 outstanding.

The PNC Term Loan was utilized to retire our previously outstanding miscellaneous debt of the same amount. Interest on outstanding principal accrued at a rate equal to one-month LIBOR plus 275 basis points and principal and interest payments were to be made over a thirty-four month period. At December 31, 2015, all amounts under the PNC Term loan have been repaid.

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 program year gross receipts and 25% of gross receipts in excess of $5 million 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 Concession Agreement, which now expires on April 30, 2021, in accordance with an agreement (the “Agreement”) between the Company and the New York City Economic Development Corporation (“NYCEDC”). In addition to the extended base term, the City of New York has two one year options to further extend the Concession Agreement. The Agreement also calls for certain reductions in air tour activity at the Heliport as well as reductions to the Company’s minimum annual guaranteed payments, which are further detailed in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the “SEC”) on April 11, 2016. During the three months ended March 31, 2016 and 2015, we incurred approximately $478,000 and $403,000, respectively, in concession fees which are recorded in the cost of revenue.

4

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The air tour reductions articulated in the Agreement will negatively impact the Company’s business and financial results as well as those of the Company’s management company at the Heliport, Empire Aviation which, as previously disclosed, is owned by the children of Alvin Trenk, our CEO and a member of our Board of Directors.  The Company incurred management fees with Empire Aviation of approximately $710,000 and $394,000 during the three months ended March 31, 2016 and 2015, respectively, which is recorded in administrative expenses.  The Company and Empire have also contributed to the Helicopter Tourism and Jobs Council (“HTJC”), an association that lobbies on behalf 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.

NOTE 3 - Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries, FirstFlight Heliports, LLC (“FFH”), our FBO at Garden City (Kansas) Regional Airport (“FBOGC”) and Phoenix Rising Aviation, Inc. (“PRA”), see Note 5, Discontinued Operations. All significant inter-company accounts and transactions have been eliminated in consolidation.

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.

Net Income Per Common Share

Net income (loss) was $186,366 and $(136,592) for the three months ended March 31, 2016 and 2015, 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 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 net income per share:

	For the Three Months Ended March 31,
	2016 (1)		2015
Weighted average common shares outstanding, basic		33,157,610		33,107,610
Common shares upon exercise of options		137,969		711,187
Common shares upon exercise of warrants		0		39,721
Weighted average common shares outstanding, diluted		33,295,579		33,858,518

(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.

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 three months ended March 31, 2016 and 2015, the Company incurred stock-based compensation costs of $8,500. 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 March 31, 2016, the unamortized fair value of the options totaled $16,000.

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 because 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.

Recently Issued Accounting Pronouncements

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

5

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 4 - Inventories

Inventories consist primarily of 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 March 31, 2016 and December 31, 2015 is set forth in the table below:

	March 31, 2016		December 31, 2015
Fuel inventory	$	50,734	$	52,475
Other inventory		14,062		15,385
Total inventory	$	64,796	$	67,860

Included in inventories are amounts held for third parties of $55,278 and $55,798 as of March 31, 2016 and December 31, 2015, respectively, with an offsetting liability included as part of accrued expenses.

NOTE 5 – Discontinued Operations

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 (the “Agreement”). The details of this Agreement are included in that 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.

Components of discontinued operations are as follows:

As of March 31, 2016 and March 31, 2015, assets of $0.00 and $539,208, and liabilities of $0.00 and $1,165,804, respectively, were included in the consolidated balance sheets.

	For the Three Months Ended March 31,
	2016		2015
Revenue	$	0.00	$	223,028
Cost of revenue		0.00		210,661
Gross profit		0.00		12,367
Operating expenses		0.00		219,172
Operating loss from discontinued operations		0.00		(206,805	)
Interest expense, net		0.00		(8,543	)
Other expense, net		0.00		(1,956	)
Income tax benefit		0.00		43,000
Net loss from discontinued operations	$	0.00	$	(174,304	)
Basic net loss per common share	$	0.00	$	(0.01	)
Weighted average number of common shares outstanding, basic		33,157,610		33,107,610

NOTE 6 – Related Parties

The law firm of Wachtel & Missry, LLP provides certain legal services to the Company and its subsidiaries from time to time. William B. Wachtel, Chairman of the Company’s Board of Directors, is a managing partner of such firm. During the three months ended March 31, 2016 and 2015, no services were provided to the Company by Wachtel & Missry, LLP.

As described in more detail in Note 2, Liquidity, the Company is party to a management agreement with Empire Aviation, an entity owned by the children of Alvin S. Trenk, our CEO and a member of our Company’s Board of Directors.

NOTE 7 - Litigation

From time to time, the Company and /or its subsidiaries 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.

6

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

The following discussion should be read together with the accompanying 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, 2015.

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

OVERVIEW

Saker Aviation Services, Inc. (“we”, “us”, “our”) is a Nevada corporation. Our common stock, $0.001 par value per share (the “common stock”), is publicly traded 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”), as a provider of aircraft maintenance, repair and overhaul (“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, as an FBO at the Garden City (Kansas) Regional Airport, as a consultant to the operator of a seaplane base in New York City, and prior to our divestiture, as an MRO at the Bartlesville (Oklahoma) Municipal Airport.

The Garden City facility became part of our company as a result of our acquisition of the FBO assets of Central Plains Aviation, Inc. (“CPA”) in March 2005.

Our business activities at the Downtown Manhattan (New York) Heliport facility (the “Heliport”) commenced as a result of the Company’s award of the Concession Agreement by the City of New York to operate the Heliport, which we assigned to our subsidiary, FirstFlight Heliports, LLC d/b/a Saker Aviation Services (“FFH”). See Note 2 to the condensed consolidated financial statements included in Item 1. of this report.

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

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

7

REVENUE AND OPERATING RESULTS

Comparison of Continuing Operations from the Three Months Ended March 31, 2016 and March 31, 2015.

REVENUE

Revenue from continuing operations increased by 19.3 percent to $2,967,080 for the three months ended March 31, 2016 as compared with corresponding prior-year period revenue of $2,487,115.

For the three months ended March 31, 2016, revenue from continuing operations associated with the sale of jet fuel, aviation gasoline and related items increased by 9.9 percent to approximately $1,115,000 as compared to approximately $1,015,000 in the three months ended March 31, 2015. The increase is largely attributable to the combination of more gallons being sold, and at a higher average price, in the three months ended March 31, 2016 as compared to the same period in 2015.

For the three months ended March 31, 2016, revenue from continuing operations associated with services and supply items increased by 29.6 percent to approximately $1,838,000 as compared to approximately $1,419,000 in the three months ended March 31, 2015. The increase was attributable to higher demand for our services and supplies in 2016 as compared to the three months ended March 31, 2015.

For the three months ended March 31, 2016, all other revenue from continuing operations decreased by 73.8 percent to approximately $14,000 as compared to approximately $53,000 in the three months ended March 31, 2015. The decrease was attributable to one-time miscellaneous income events that occurred in the three months ended March 31, 2015 that did not recur in 2016.

GROSS PROFIT

Total gross profit from continuing operations increased by 41.3 percent to $1,701,690 in the three months ended March 31, 2016 as compared with the three months ended March 31, 2015. Gross margin increased to 57.4 percent in the three months ended March 31, 2016 as compared to 48.4% percent in the same period in the prior year. The increase in gross profit and gross margin is related to higher levels of gross profit in our fuel sales in 2016 as compared to the prior year.

OPERATING EXPENSE

Selling, General and Administrative

Total selling, general and administrative expenses, or SG&A, from continuing operations were $1,328,612 in the three months ended March 31, 2016, representing an increase of approximately $209,000 or 18.7 percent, as compared to the same period in 2015. The overall increase in SG&A was largely attributable to additional costs related to the higher levels of activity in our Heliport operations.

SG&A from continuing operations associated with our aviation services operations were approximately $1,221,000 in the three months ended March 31, 2016, representing an increase of approximately $192,000, or 18.6 percent, as compared to the three months ended March 31, 2015. SG&A from continuing operations associated with our FBO operations, as a percentage of revenue, was 41.2 percent for the three months ended March 31, 2016, as compared with 41.4 percent in the corresponding prior year period. The increased operating expenses were largely attributable to additional costs related to the higher levels of activity in our Heliport operations.

Corporate SG&A from continuing operations was approximately $107,000 for the three months ended March 31, 2016, representing an increase of approximately $17,000 as compared with the corresponding prior year period.

8

OPERATING INCOME

Operating income from continuing operations for the three months ended March 31, 2016 was $373,078 as compared to $84,509 in the three months ended March 31, 2015. The increase on a year-over-year basis was driven by higher levels of gross profit, which offset higher SG&A expenses.

Depreciation and Amortization

Depreciation and amortization was approximately $94,000 and $151,000 for the three months ended March 31, 2016 and 2015, respectively.

Interest Expense

Interest expense for the three months ended March 31, 2016 was approximately $7,000 as compared to $14,000 in the same period in 2015.

Income Tax

Income tax expense for the three months ended March 31, 2016 was $179,500 as compared to $0.00 during the same period in 2015.

Net Income (Loss) Per Share

Net income (loss) was $186,366 and $(136,592) for the three months ended March 31, 2016 and 2015, respectively.

Basic and diluted net income (loss) per share for each of the three month periods ended March 31, 2016 and 2015 was $0.01 and $(0.00), respectively.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2016, we had cash and cash equivalents of $756,398 and a working capital surplus of $2,213,122. We generated revenue from continuing operations of $2,967,080 and had net income from continuing operations before taxes of $365,866 for the three months ended March 31, 2016. For the three months ended March 31, 2016, cash flows included net cash provided by operating activities of $418,587, net cash used in investing activities of $8,175, and net cash used in financing activities of $68,675.

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

Proceeds of the PNC Acquisition Line were able to be dispersed, based on parameters defined in the PNC Loan Agreement, until May 17, 2014 (the “Conversion Date”). As of the Conversion Date, there was $1,350,000 outstanding under the PNC Acquisition Line. The payment terms provided that 30 days following the Conversion Date, and continuing on the same day of each month thereafter, we are required to make equal payments of principal over a 60 month period. Interest on the outstanding principal continues to accrue at a rate equal to one-month LIBOR plus 275 basis points (3.18% as of March 31, 2016). An unused commitment fee had been applied at a rate of 1.5% on the unused portion of the PNC Acquisition Line and was charged for each fiscal quarter through the Conversion Date. As of March 31, 2016, there was $855,000 outstanding under the PNC Acquisition Line.

The PNC Working Capital was to have been dispersed for working capital and general corporate purposes. Interest on outstanding principal accrued at a rate equal to daily LIBOR plus 250 basis points. The PNC Working Capital Line expired on December 31, 2015, with $0 outstanding.

The PNC Term Loan was utilized to retire our previously outstanding miscellaneous debt of the same amount. Interest on outstanding principal accrued at a rate equal to one-month LIBOR plus 275 basis points and principal and interest payments were to be made over a thirty-four month period. At December 31, 2015, all amounts under the PNC Term loan have been repaid.

We are party to a concession agreement, dated as of November 1, 2008, with the City of New York for the operation of the Downtown Manhattan Heliport (the “Concession Agreement”). Pursuant to the terms of the Concession Agreement, we must pay the greater of 18% of the first $5,000,000 in program year gross receipts and 25% of gross receipts in excess of $5 million or minimum annual guaranteed payments. We paid the City of New York $1,200,000 in the first year of the term and minimum payments were scheduled to increase to approximately $1,700,000 in the final year of Concession Agreement, which now expires on April 30, 2021, in accordance with an agreement (the “Agreement”) between us and the New York City Economic Development Corporation (“NYCEDC”). In addition to the extended base term, the City of New York has two one year options to further extend the Concession Agreement. The Agreement also calls for certain reductions in air tour activity at the Heliport as well as reductions to our minimum annual guaranteed payments, which are further detailed in the Company’s Annual Report on Form 10-K, which was filed with the SEC on April 11, 2016. During the three months ended March 31, 2016 and 2015, we incurred approximately $478,000 and $403,000, respectively, in concession fees which are recorded in the cost of revenue.

The air tour reductions articulated in the Agreement will negatively impact our business and financial results and those of our management company at the Heliport, Empire Aviation which, as previously disclosed, is owned by the children of Alvin Trenk, our CEO and a member of our Board of Directors.  The Company incurred management fees with Empire Aviation of approximately $710,000 and $394,000 during the three months ended March 31, 2016 and 2015, respectively, which is recorded in administrative expenses.  We and Empire have also contributed to the Helicopter Tourism and Jobs Council (“HTJC”), an association that lobbies on behalf 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

During the three months ended March 31, 2016, we had a net increase in cash of $341,737. Our sources and uses of funds during this period were as follows:

9

Cash from Operating Activities

For the three months ended March 31, 2016, net cash provided by operating activities was $418,587. This amount included an increase in operating cash related to net income of $186,366 and additions for the following items: (i) depreciation and amortization, $93,672 ; (ii) stock based compensation, $8,500 ; (iii) accounts receivable, trade, $224,203; (iv) inventories, $3,064; (v) deposits, $13,340; (vi) prepaid expenses and other current assets, $65,305; and (vii) accounts payable, $74,370. These increases in operating activities were offset by the following decrease in (i) accrued expenses, $250,233.

For the three months ended March 31, 2015, net cash provided by operating activities was $37,821. This amount included a decrease in operating cash related to net loss of $(136,592) and additions for the following items: (i) depreciation and amortization, $151,210 ; (ii) stock based compensation, $8,500 ; (iii) accounts receivable, trade, $591,864; (iv) inventories, $15,400; and (v) prepaid expenses and other current assets, $237,990. These increases in operating activities were offset by the following decreases: (i) accounts payable, $507,664; (ii) customer deposits, $5,747; and (iii) accrued expenses, $317,140.

Cash from Investing Activities

For the three months ended March 31, 2016, net cash of $8,175 was used in investing activities for the purchase of property and equipment. For the three months ended March 31, 2015, net cash of $14,248 was used in investing activities for the purchase of property and equipment.

Cash from Financing Activities

For the three months ended March 31, 2016, net cash used in financing activities was $68,675 for the repayment of notes payable. For the three months ended March 31, 2015, net cash used in financing activities was $94,331 for the repayment of notes payable.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Recent Accounting Pronouncements

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

10

CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

Statements contained in this report may contain information that includes or is based upon "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent management's current judgment and assumptions, and can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are frequently accompanied by the use of such words as "anticipates," "plans," "believes," "expects," "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 secure the additional debt or equity financing, if required, to execute our business plan;

§ our ability to identify, negotiate and complete the acquisition of targeted operators and/or other businesses, consistent with our business plan;

§ existing or new competitors consolidating operators ahead of us;

§ our ability to attract new personnel or retain existing personnel, which would adversely affect implementation of our overall business strategy.

Any one of these or other risks, uncertainties, other factors, or any inaccurate assumptions made by the Company may cause actual results to be materially different from those described herein or elsewhere by us. Undue reliance should not be 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, 2015 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, except as may be required by law.

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4 – Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management, including our President, Chief Executive Officer and our principal financial officer, has 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 President, Chief Executive Officer and principal financial officer 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 President, Chief Executive Officer and principal financial 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.

11

PART II – OTHER INFORMATION

Item 6.  Exhibits

Exhibit No.	Description of Exhibit
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (principal executive officer). *
31.2	Rule 13a-14(a)/15d-14(a) Certification of President (principal financial officer). *
32.1	Section 1350 Certification. *
101.INS	XBRL Instance Document. *
101.SCH	XBRL Taxonomy Extension Schema Document. *
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document. *
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document. *
101.LAB	XBRL Taxonomy Extension Label Linkbase Document. *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document. *

* Filed herewith

12

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: May 16, 2016	By:	/s/ Ronald J. Ricciardi
		Ronald J. Ricciardi
		President

13

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

(principal executive officer)

Pursuant To Rule 13a-14(a)/15d-14(a)

I, Alvin S. Trenk, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Saker Aviation Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 16, 2016

By:	/s/ Alvin S. Trenk
Alvin S. Trenk
Chief Executive Officer (principal executive officer)

EX-31.2

EXHIBIT 31.2

Certification of President

(principal financial officer)

Pursuant To Rule 13a-14(a)/15d-14(a)

I, Ronald J. Ricciardi, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Saker Aviation Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 16, 2016

By:	/s/ Ronald J. Ricciardi
Ronald J. Ricciardi
President (principal financial officer)

EX-32.1

EXHIBIT 32.1

Section 1350 Certification

Pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), each of the undersigned (the principal executive officer and principal financial officer) of Saker Aviation Services, Inc. does hereby certify that:

1. The Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016 (the “Report”) of Saker Aviation Services, Inc. fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of Saker Aviation Services, Inc.

Date:	May 16, 2016	By:	/s/ Alvin S. Trenk
			Alvin S. Trenk
			Chief Executive Officer (principal executive officer)
Date:	May 16, 2016	By:	/s/ Ronald J. Ricciardi
			Ronald J. Ricciardi
			President (principal financial officer)

A signed original of this written statement required by Section 906 has been provided to Saker Aviation Services, Inc. and will be retained by Saker Aviation Services, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 16, 2016
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Entity Registrant Name	Saker Aviation Services, Inc.
Entity Central Index Key	0001128281
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	SKAS
Entity Common Stock, Shares Outstanding		33,157,610

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2016	Dec. 31, 2015
CURRENT ASSETS
Cash	$ 756,398	$ 414,661
Accounts receivable	2,296,752	2,520,955
Inventories	64,796	67,860
Notes receivable - current portion	300,000	300,000
Prepaid expenses and other current assets	289,180	354,485
Total current assets	3,707,126	3,657,961
PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of $2,210,348 and $2,116,676 respectively	1,411,159	1,496,656
OTHER ASSETS
Deposits	137,035	150,297
Note Receivable	200,000	200,000
Intangible assets	35,000	35,000
Goodwill	530,000	530,000
Deferred income taxes	173,000	173,000
Total other assets	1,075,035	1,088,297
TOTAL ASSETS	6,193,320	6,242,914
CURRENT LIABILITIES
Accounts payable	757,286	682,916
Customer deposits	126,335	126,257
Accrued expenses	339,184	589,417
Notes payable - current portion	271,199	272,374
Total current liabilities	1,494,004	1,670,964
LONG-TERM LIABILITIES
Notes payable - less current portion	585,000	652,500
Total liabilities	2,079,004	2,323,464
STOCKHOLDERS’ EQUITY
Preferred stock - $.001 par value; authorized 9,999,154; none issued and outstanding	0	0
Common stock - $.001 par value; authorized 100,000,000; 33,157,610 shares issued and outstanding as of March 31, 2016 and December 31, 2015	33,157	33,157
Additional paid-in capital	20,004,928	19,996,428
Accumulated deficit	(15,923,769)	(16,110,135)
TOTAL STOCKHOLDERS’ EQUITY	4,114,316	3,919,450
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 6,193,320	$ 6,242,914

XML

CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] - USD ($)	Mar. 31, 2016	Dec. 31, 2015
PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization (in dollars)	$ 2,210,348	$ 2,116,676
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized	9,999,154	9,999,154
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized	100,000,000	100,000,000
Common stock, shares issued	33,157,610	33,157,610
Common stock, shares outstanding	33,157,610	33,157,610

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Mar. 31, 2016		Mar. 31, 2015
REVENUE	$ 2,967,080		$ 2,487,115
COST OF REVENUE	1,265,390		1,283,064
GROSS PROFIT	1,701,690		1,204,051
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	1,328,612		1,119,542
OPERATING INCOME FROM CONTINUING OPERATIONS	373,078		84,509
OTHER INCOME (EXPENSE):
OTHER INCOME, net	0		1,666
INTEREST EXPENSE	(7,212)		(5,463)
TOTAL OTHER EXPENSE, net	(7,212)		(3,797)
INCOME FROM CONTINUING OPERATIONS, before income taxes	365,866		80,712
INCOME TAX EXPENSE
INCOME TAX EXPENSE	179,500		43,000
INCOME FROM CONTINUING OPERATIONS	186,366		37,712
LOSS FROM DISCONTINUED OPERATIONS, net of income taxes	0		(174,304)
NET INCOME (LOSS)	$ 186,366		$ (136,592)
Basic and Diluted Net (Loss) Income Per Common Share	$ 0.01		$ (0.00)
Weighted Average Number of Common Shares - Basic (in shares)	33,157,610	[1]	33,107,610
Weighted Average Number of Common Shares - Diluted (in shares)	33,295,579	[1]	33,858,518

[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.

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ 186,366	$ (136,592)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	93,672	151,210
Stock based compensation	8,500	8,500
Changes in operating assets and liabilities:
Accounts receivable, trade	224,203	591,864
Inventories	3,064	15,400
Prepaid expenses and other current assets	65,305	237,990
Deposits	13,340	(5,747)
Accounts payable	74,370	(507,664)
Accrued expenses	(250,233)	(317,140)
TOTAL ADJUSTMENTS	232,221	174,413
NET CASH PROVIDED BY OPERATING ACTIVITIES	418,587	37,821
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(8,175)	(14,248)
NET CASH USED IN INVESTING ACTIVITIES	(8,175)	(14,248)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable	(68,675)	(94,331)
NET CASH USED IN FINANCING ACTIVITIES	(68,675)	(94,331)
NET CHANGE IN CASH	341,737	(70,758)
CASH - Beginning	414,661	531,003
CASH - Ending	756,398	460,245
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income Taxes	365,894	100,898
Interest	$ 7,212	$ 14,006

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE 1 - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Saker Aviation Services, Inc. (the “Company”) and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial statements and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all of the information and disclosures required by GAAP for annual financial statements and should be read in conjunction with the financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

The condensed consolidated balance sheet as of March 31, 2016 and the condensed consolidated statements of operations and cash flows for the three months ended March 31, 2016 and 2015 have been prepared by the Company without audit. In the opinion of the Company’s management, all necessary adjustments (consisting of normal recurring accruals) have been included to make the Company’s financial position as of March 31, 2016 and its results of operations and cash flows for the three months ended March 31, 2016 not misleading. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for any full year or any other interim period.

The Company has evaluated events which have occurred subsequent to March 31, 2016, and through the date of the filing of this Quarterly Report on Form 10-Q with the SEC, and has determined that no subsequent events have occurred after the current reporting period.

XML

Liquidity

3 Months Ended

Mar. 31, 2016

Going Concern [Abstract]

Going Concern Disclosure [Text Block]

NOTE 2 – Liquidity

As of March 31, 2016, we had cash and cash equivalents of $756,398 and a working capital surplus of $2,213,122. We generated revenue from continuing operations of $2,967,080 and had net income from continuing operations before taxes of $365,866 for the three months ended March 31, 2016. For the three months ended March 31, 2016, cash flows included net cash provided by operating activities of $418,587, net cash used in investing activities of $8,175, and net cash used in financing activities of $68,675.

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

Proceeds of the PNC Acquisition Line were able to be dispersed, based on parameters defined in the PNC Loan Agreement, until May 17, 2014 (the “Conversion Date”). As of the Conversion Date, there was $1,350,000 outstanding under the PNC Acquisition Line. The payment terms provided that 30 days following the Conversion Date, and continuing on the same day of each month thereafter, we are required to make equal payments of principal over a 60 month period. Interest on the outstanding principal continues to accrue at a rate equal to one-month LIBOR plus 275 basis points (3.18% as of March 31, 2016). An unused commitment fee had been applied at a rate of 1.5% on the unused portion of the PNC Acquisition Line and was charged for each fiscal quarter through the Conversion Date. As of March 31, 2016, there was $855,000 outstanding under the PNC Acquisition Line.

The PNC Working Capital was to have been dispersed for working capital and general corporate purposes. Interest on outstanding principal accrued at a rate equal to daily LIBOR plus 250 basis points. The PNC Working Capital Line expired on December 31, 2015, with $0 outstanding.

The PNC Term Loan was utilized to retire our previously outstanding miscellaneous debt of the same amount. Interest on outstanding principal accrued at a rate equal to one-month LIBOR plus 275 basis points and principal and interest payments were to be made over a thirty-four month period. At December 31, 2015, all amounts under the PNC Term loan have been repaid.

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 program year gross receipts and 25% of gross receipts in excess of $5 million 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 Concession Agreement, which now expires on April 30, 2021, in accordance with an agreement (the “Agreement”) between the Company and the New York City Economic Development Corporation (“NYCEDC”). In addition to the extended base term, the City of New York has two one year options to further extend the Concession Agreement. The Agreement also calls for certain reductions in air tour activity at the Heliport as well as reductions to the Company’s minimum annual guaranteed payments, which are further detailed in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the “SEC”) on April 11, 2016. During the three months ended March 31, 2016 and 2015, we incurred approximately $478,000 and $403,000, respectively, in concession fees which are recorded in the cost of revenue.

The air tour reductions articulated in the Agreement will negatively impact the Company’s business and financial results as well as those of the Company’s management company at the Heliport, Empire Aviation which, as previously disclosed, is owned by the children of Alvin Trenk, our CEO and a member of our Board of Directors.  The Company incurred management fees with Empire Aviation of approximately $710,000 and $394,000 during the three months ended March 31, 2016 and 2015, respectively, which is recorded in administrative expenses.  The Company and Empire have also contributed to the Helicopter Tourism and Jobs Council (“HTJC”), an association that lobbies on behalf 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.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

NOTE 3 - Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries, FirstFlight Heliports, LLC (“FFH”), our FBO at Garden City (Kansas) Regional Airport (“FBOGC”) and Phoenix Rising Aviation, Inc. (“PRA”), see Note 5, Discontinued Operations. All significant inter-company accounts and transactions have been eliminated in consolidation.

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.

Net Income Per Common Share

Net income (loss) was $186,366 and $(136,592) for the three months ended March 31, 2016 and 2015, 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 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 net income per share:

	For the Three Months Ended March 31,
	2016 (1)		2015
Weighted average common shares outstanding, basic		33,157,610		33,107,610
Common shares upon exercise of options		137,969		711,187
Common shares upon exercise of warrants		0		39,721
Weighted average common shares outstanding, diluted		33,295,579		33,858,518

(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.

 

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 three months ended March 31, 2016 and 2015, the Company incurred stock-based compensation costs of $8,500. 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 March 31, 2016, the unamortized fair value of the options totaled $16,000.

 

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 because 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.

Recently Issued Accounting Pronouncements

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

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Inventories

3 Months Ended

Mar. 31, 2016

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

NOTE 4 - Inventories

Inventories consist primarily of 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 March 31, 2016 and December 31, 2015 is set forth in the table below:

	March 31, 2016		December 31, 2015
Fuel inventory	$	50,734	$	52,475
Other inventory		14,062		15,385
Total inventory	$	64,796	$	67,860

Included in inventories are amounts held for third parties of $55,278 and $55,798 as of March 31, 2016 and December 31, 2015, respectively, with an offsetting liability included as part of accrued expenses.

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Discontinued Operations

3 Months Ended

Mar. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

NOTE 5 – Discontinued Operations

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 (the “Agreement”). The details of this Agreement are included in that 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.

Components of discontinued operations are as follows:

As of March 31, 2016 and March 31, 2015, assets of $0.00 and $539,208, and liabilities of $0.00 and $1,165,804, respectively, were included in the consolidated balance sheets.

 

	For the Three Months Ended March 31,
	2016		2015
Revenue	$	0.00	$	223,028
Cost of revenue		0.00		210,661
Gross profit		0.00		12,367
Operating expenses		0.00		219,172
Operating loss from discontinued operations		0.00		(206,805)
Interest expense, net		0.00		(8,543)
Other expense, net		0.00		(1,956)
Income tax benefit		0.00		43,000
Net loss from discontinued operations	$	0.00	$	(174,304)
Basic net loss per common share	$	0.00	$	(0.01)
Weighted average number of common shares outstanding, basic		33,157,610		33,107,610

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Related Parties

3 Months Ended

Mar. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 6 – Related Parties

The law firm of Wachtel & Missry, LLP provides certain legal services to the Company and its subsidiaries from time to time. William B. Wachtel, Chairman of the Company’s Board of Directors, is a managing partner of such firm. During the three months ended March 31, 2016 and 2015, no services were provided to the Company by Wachtel & Missry, LLP.

As described in more detail in Note 2, Liquidity, the Company is party to a management agreement with Empire Aviation, an entity owned by the children of Alvin S. Trenk, our CEO and a member of our Company’s Board of Directors.

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Litigation

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings [Text Block]

NOTE 7 - Litigation

From time to time, the Company and /or its subsidiaries 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.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries, FirstFlight Heliports, LLC (“FFH”), our FBO at Garden City (Kansas) Regional Airport (“FBOGC”) and Phoenix Rising Aviation, Inc. (“PRA”), see Note 5, Discontinued Operations. All significant inter-company accounts and transactions have been eliminated in consolidation.

Reclassification, Policy [Policy Text Block]

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.

Earnings Per Share, Policy [Policy Text Block]

Net Income Per Common Share

Net income (loss) was $186,366 and $(136,592) for the three months ended March 31, 2016 and 2015, 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 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 net income per share:

	For the Three Months Ended March 31,
	2016 (1)		2015
Weighted average common shares outstanding, basic		33,157,610		33,107,610
Common shares upon exercise of options		137,969		711,187
Common shares upon exercise of warrants		0		39,721
Weighted average common shares outstanding, diluted		33,295,579		33,858,518

(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.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

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 three months ended March 31, 2016 and 2015, the Company incurred stock-based compensation costs of $8,500. 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 March 31, 2016, the unamortized fair value of the options totaled $16,000.

 

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 because 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.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

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

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

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

	For the Three Months Ended March 31,
	2016 (1)		2015
Weighted average common shares outstanding, basic		33,157,610		33,107,610
Common shares upon exercise of options		137,969		711,187
Common shares upon exercise of warrants		0		39,721
Weighted average common shares outstanding, diluted		33,295,579		33,858,518

(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.

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Inventories (Tables)

3 Months Ended

Mar. 31, 2016

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

A summary of inventories as of March 31, 2016 and December 31, 2015 is set forth in the table below:

	March 31, 2016		December 31, 2015
Fuel inventory	$	50,734	$	52,475
Other inventory		14,062		15,385
Total inventory	$	64,796	$	67,860

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Discontinued Operations (Tables)

3 Months Ended

Mar. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations [Table Text Block]

Components of discontinued operations are as follows:

	For the Three Months Ended March 31,
	2016		2015
Revenue	$	0.00	$	223,028
Cost of revenue		0.00		210,661
Gross profit		0.00		12,367
Operating expenses		0.00		219,172
Operating loss from discontinued operations		0.00		(206,805)
Interest expense, net		0.00		(8,543)
Other expense, net		0.00		(1,956)
Income tax benefit		0.00		43,000
Net loss from discontinued operations	$	0.00	$	(174,304)
Basic net loss per common share	$	0.00	$	(0.01)
Weighted average number of common shares outstanding, basic		33,157,610		33,107,610

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Liquidity (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015	May. 17, 2014	May. 17, 2013
Going Concern [Line Items]
Cash	$ 756,398		$ 414,661
Working Capital	2,213,122
Revenue	2,967,080	$ 2,487,115
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest, Total	365,866	80,712
Net Cash Provided by (Used in) Operating Activities, Continuing Operations, Total	418,587	37,821
Net Cash Provided by (Used in) Investing Activities, Continuing Operations, Total	(8,175)	(14,248)
Net Cash Provided by (Used in) Financing Activities, Continuing Operations, Total	(68,675)	(94,331)
Empire Aviation [Member]
Going Concern [Line Items]
General and Administrative Expense, Total	$ 710,000	394,000
Concession Agreement [Member]
Going Concern [Line Items]
Percentage Payable Greater Than Gross Receipts During Period	18.00%
Amount Of Gross Receipts During Period	$ 5,000,000
Percentage Payable Greater Than Gross Receipts In Year One	25.00%
Amount Paid Greater Than Gross Receipts In Year One	$ 1,200,000
Minimum Annual Guarantee, Year One	5,000,000
Amount Paid Greater Than Gross Receipts In Year Ten	1,700,000
Concession Fees	$ 478,000	$ 403,000
Line Of Credit Facility Loan Agreement Expire Term	April 30, 2021
Working Capital Loan [Member]
Going Concern [Line Items]
Short-term Debt, Total					$ 1,150,000
Term loan [Member]
Going Concern [Line Items]
Short-term Debt, Total					280,920
PNC Acquisition [Member]
Going Concern [Line Items]
Line of Credit Facility, Amount Outstanding	$ 855,000
Line of Credit Facility, Maximum Borrowing Capacity					$ 2,500,000
Line of Credit Facility, Interest Rate During Period	3.18%
Line Of Credit Facility Payment Term	60 months
Line of Credit Facility, Commitment Fee Percentage	1.50%
Line of Credit Facility, Fair Value of Amount Outstanding				$ 1,350,000
PNC Acquisition [Member] | LIBOR [Member]
Going Concern [Line Items]
Line of Credit Facility, Interest Rate Description	LIBOR plus 275 basis points
PNC Term Loan [Member] | LIBOR [Member]
Going Concern [Line Items]
Line of Credit Facility, Interest Rate Description	LIBOR plus 275 basis points

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Summary of Significant Accounting Policies (Details) - shares	3 Months Ended
	Mar. 31, 2016	[1]	Mar. 31, 2015
Summary Of Significant Accounting Policies [Line Items]
Weighted average common shares outstanding, basic	33,157,610		33,107,610
Common shares upon exercise of options	137,969		711,187
Common shares upon exercise of warrants	0		39,721
Weighted average common shares outstanding, diluted	33,295,579		33,858,518

[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.

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Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Summary Of Significant Accounting Policies [Line Items]
Stock based compensation	$ 8,500	$ 8,500
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,900,000
Share Based Compensation Stock Options Unamortized Fair Value	$ 16,000
Net income (loss)	$ 186,366	$ (136,592)

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Inventories (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Inventory [Line Items]
Total inventory	$ 64,796	$ 67,860
Fuel [Member]
Inventory [Line Items]
Total inventory	50,734	52,475
Other Inventory [Member]
Inventory [Line Items]
Total inventory	$ 14,062	$ 15,385

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Inventories (Details Textual) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Fuel [Member]
Inventory [Line Items]
Inventory Third Party	$ 55,278	$ 55,798

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Discontinued Operations (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Discontinued Operations [Line Items]
Revenue	$ 0	$ 223,028
Cost of revenue	0	210,661
Gross profit	0	12,367
Operating expenses	0	219,172
Operating loss from discontinued operations	0	(206,805)
Interest expense, net	0	(8,543)
Other expense, net	0	(1,956)
Income tax benefit	0	43,000
Net loss from discontinued operations	$ 0	$ (174,304)
Basic net loss per common share (in dollars per share)	$ 0	$ (0.01)
Weighted average number of common shares outstanding, basic (in shares)	33,157,610	33,107,610

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Discontinued Operations (Details Textual) - USD ($)	Mar. 31, 2016	Mar. 31, 2015
Discontinued Operations [Line Items]
Trade Receivables Held-for-sale, Net, Not Part of Disposal Group	$ 0.00	$ 539,208
Disposal Group, Including Discontinued Operation, Accrued Liabilities, Current	$ 0.00	$ 1,165,804