10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended September 30, 2018

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 ☒         No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes ☒         No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐          No ☒

As of November 14, 2018, the registrant had 30,195,034 shares of its common stock, $0.001 par value, issued and outstanding.

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

Form 10-Q

September 30, 2018

Index

PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	Page
Balance Sheets as of September 30, 2018 (unaudited) and December 31, 2017	1
Statements of Operations for the Three and Nine Months Ended September 30, 2018 and 2017 (unaudited)	2
Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017 (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	15
ITEM 4. CONTROLS AND PROCEDURES	15
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS	17
SIGNATURES	18

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2018			December 31, 2017
	(unaudited)
ASSETS
CURRENT ASSETS
Cash	$	2,783,773		$	1,724,504
Accounts receivable		852,331			1,838,664
Inventories		221,751			163,129
Notes receivable – current portion		320,264			370,000
Prepaid expenses and other current assets		515,453			531,691
Total current assets		4,693,572			4,627,988
PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of $3,566,318 and $3,158,664 as of September 30,2018 and December 31, 2017, respectively		441,983			669,957
OTHER ASSETS
Deposits		6,933			46,717
Goodwill		750,000			750,000
Deferred income taxes		454,000			454,000
Total other assets		1,210,933			1,250,717
TOTAL ASSETS	$	6,346,488		$	6,548,662
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	383,823		$	495,194
Customer deposits		126,843			126,843
Accrued expenses		290,745			292,341
Notes payable – current portion		110,278			345,000
Total current liabilities		911,689			1,259,378
LONG-TERM LIABILITIES
Notes payable - less current portion		208,133			112,500
Total liabilities		1,119,822			1,371,878
STOCKHOLDERS’ EQUITY
Preferred stock - $.001 par value; authorized 9,999,154; none issued and outstanding
Common stock - $.001 par value; authorized 100,000,000; 30,195,034 and 32,117,554 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively		30,195			32,117
Additional paid-in capital		19,748,349			19,896,744
Accumulated deficit		(14,551,878	)		(14,752,077	)
TOTAL STOCKHOLDERS’ EQUITY		5,226,666			5,176,784
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,346,488		$	6,548,662

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,
	2018			2017		2018			2017
REVENUE	$	3,280,445		$	3,518,712	$	8,236,353		$	8,743,913
COST OF REVENUE		1,698,504			1,520,900		4,590,808			4,074,958
GROSS PROFIT		1,581,941			1,997,812		3,645,545			4,668,955
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		1,265,730			1,533,689		3,362,209			3,919,392
OPERATING INCOME		316,211			464,123		283,336			749,563
OTHER (INCOME) EXPENSE:
OTHER EXPENSE		---			---		---			10,000
INTEREST INCOME		(6,574	)		---		(32,703	)		---
INTEREST EXPENSE		6,220			4,959		13,386			17,091
TOTAL OTHER (INCOME) EXPENSE, net		(354	)		4,959		(19,317	)		27,091
INCOME BEFORE INCOME TAX		316,565			459,164		302,653			722,472
INCOME TAX EXPENSE		102,454			227,100		102,454			414,241
NET INCOME	$	214,111		$	232,064	$	200,199		$	308,231
Basic and Diluted Net Income Per Common Share	$	0.01		$	0.01	$	0.01		$	0.01
Weighted Average Number of Common Shares – Basic		30,195,034			33,396,892		31,096,602			33,318,008
Weighted Average Number of Common Shares - Diluted		30,522,620			34,493,889		31,424,188			34,415,005

See notes to condensed consolidated financial statements.

2

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	200,199		$	308,231
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		407,654			395,017
Loss on sale of charter certificate		---			10,000
Stock based compensation		25,496			25,496
Changes in operating assets and liabilities:
Accounts receivable, trade		236,069			(210,821	)
Inventories		(58,622	)		(49,378	)
Prepaid expenses and other current assets		16,238			(175,118	)
Deposits		39,784			37,543
Accounts payable		(111,371	)		(261,395	)
Accrued expenses		(1,596	)		(67,600	)
TOTAL ADJUSTMENTS		553,652			(296,256	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		753,851			11,975
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of charter certificate		---			25,000
Payment of notes receivable		800,000			100,000
Purchase of property and equipment		(179,680	)		(82,376	)
NET CASH PROVIDED BY INVESTING ACTIVITIES		620,320			42,624
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase and cancellation of common stock		(175,813	)		---
Notes Payable:
Borrowings		135,000			---
Repayments		(274,089	)		(277,500	)
NET CASH USED IN FINANCING ACTIVITIES		(314,902	)		(277,500	)
NET CHANGE IN CASH		1,059,269			(222,901	)
CASH – Beginning		1,724,504			2,318,629
CASH – Ending	$	2,783,773		$	2,095,728
NON-CASH OPERATING AND INVESTING ACTIVITIES:
Change in Accounts Receivable through issuance of a Note Receivable:	$	750,264		$	---
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the periods for:
Income Taxes	$	311,324		$	648,826
Interest	$	13,386		$	17,091

$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, 2017.

The condensed consolidated balance sheet and statements of cash flows as of September 30, 2018 and the condensed consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017 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 September 30, 2018 and its results of operations and cash flows for the three and nine months ended September 30, 2018 not misleading. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for any full year or any other interim period.

The Company has evaluated events that have occurred subsequent to September 30, 2018, and through the date of the filing of this Quarterly Report on Form 10-Q with the Securities and Exchange Commission (the “SEC”), and has determined that no subsequent events have occurred after the current reporting period.

NOTE 2 – Liquidity

As of September 30, 2018, the Company had cash and cash equivalents of $2,783,773 and a working capital surplus of $3,781,883. For the nine months ended September 30, 2018, the Company generated revenue from operations of $8,236,353 and had a net income of $200,199. For the nine months ended September 30, 2018, cash flows included net cash provided by operating activities of $753,851, net cash provided by investing activities of $620,320, and net cash used in financing activities of $314,902.

On May 17, 2013, the Company 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”). As of September 30, 2018, all amounts due under the PNC Loan Agreement, the PNC Acquisition Line, and the PNC Term Loan have been repaid.

As disclosed in a Current Report on Form 8-K filed on March 21, 2018 with the SEC, on March 15, 2018 the Company entered into a loan agreement (the “Loan Agreement”) with Key Bank National Association (the “Bank”). The Loan Agreement contains three components: (i) a $2,500,000 acquisition line of credit (the “Key Bank Acquisition Note”); (ii) a $1,000,000 revolving line of credit (the “Key Bank Revolver Note”); and (iii) a $338,481 term loan (the “Key Bank Term Loan”).

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

At any time through and including the Conversion Date, at the Bank’s discretion, the Company had the opportunity to request that any loan made under the Key Bank Acquisition Note be converted into a term loan to be repaid in full, including accrued interest, by consecutive monthly payments over a 48 month amortization period beginning after the Conversion Date. For any loan that was not converted into a term loan on or before the Conversion Date, the Company would have been required to begin making monthly payments of principal and interest after the Conversion Date, over a 48 month amortization period, after which the remaining unpaid principal and accrued interest shall become due and payable. All loans under the Key Bank Acquisition Note shall, after the Conversion Date, accrue interest at a rate per annum equal to the Bank’s four year cost of funds rate plus 2.5%. As of September 30, 2018, there were no amounts due under the Key Bank Acquisition Note and no amounts had been converted to a term loan.

4

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Proceeds from the Key Bank Revolver Note, at the discretion of the Bank, provide for the Company to borrow up to $1,000,000 for working capital and general corporate purposes. This revolving line of credit is a demand note with no stated maturity date. Borrowings under the Key Bank Revolver Note will bear interest at a rate per annum equal to one-day LIBOR (adjusted daily) plus 2.75%. The Company is required to make monthly payments of interest on any outstanding principal under the Key Bank Revolver Note and are required to pay the entire balance, including principal and all accrued and unpaid interest and fees, upon demand by the Bank. As of September 30, 2018, there were no amounts due under the Key Bank Revolver Note.

Proceeds from the Key Bank Term Note were utilized to retire amounts previously outstanding under the PNC Term Loan. Interest on outstanding principal accrues at a fixed rate of 4.85% per annum and is to be paid in equal consecutive monthly installments of $7,772 over a 48 month period. The Company has the right to prepay principal amounts due under the Key Bank Term Note early without penalty. As of September 30, 2018, $193,342 was outstanding under the Key Bank Term Note.

The Company is party to a Concession Agreement, dated as of November 1, 2008, with the City of New York for the operation of the Downtown Manhattan Heliport (the “Concession Agreement”). Pursuant to the terms of the Concession Agreement, the Company must pay the greater of 18% of the first $5,000,000 in any program year based on cash collected (“Gross Receipts”) and 25% of Gross Receipts in excess of $5,000,000, or minimum annual guaranteed payments. During the nine months ended September 30, 2018 and 2017, the Company incurred approximately $1,350,000 and $1,285,000, respectively, in concession fees which are recorded in the cost of revenue.

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

Under the Air Tour Agreement, filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2015, the Company may not allow its tenant operators to conduct tourist flights from the Downtown Manhattan Heliport on Sundays beginning April 1, 2016. The Company was also required to ensure that its tenant operators reduce the total allowable number of tourist flights from 2015 levels by 20 percent beginning June 1, 2016, by 40 percent beginning October 1, 2016 and by 50 percent beginning January 1, 2017. Additionally, beginning on June 1, 2016, the Company was required to provide monthly written reports to the NYCEDC and the New York City Council detailing the number of tourist flights conducted out of the Downtown Manhattan Heliport compared to 2015 levels, as well as information on any tour flight that flies over land and/or strays from agreed upon routes.

The Air Tour Agreement also extended the Concession Agreement for 30 months, resulting in a new expiration date of April 30, 2021. The City of New York has two one year options to further extend the Concession Agreement. The Agreement also provides that the minimum annual guarantee payments the Company is required to pay to the City of New York under the Concession Agreement be reduced by 50%, effective January 1, 2017.

These reductions have negatively impacted the Company’s business and financial results as well as those of its management company at the Heliport, Empire Aviation which, as previously disclosed, is owned by the children of Alvin Trenk, the Company’s former Chief Executive Officer and a former member of its Board of Directors.  The Company incurred management fees with Empire Aviation of approximately $1,230,000 and $1,780,000 during the nine months ended September 30, 2018 and 2017, respectively, which is recorded in administrative expenses.  The Company and Empire Aviation have also contributed to the Helicopter Tourism and Jobs Council (“HTJC”), an association that lobbies on 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, and Same Goldstein, one our directors, serves as deputy director of HJTC.  

On February 6, 2018, the Company was issued a note by one of its customers at the Heliport. The note scheduled approximately $750,000 in receivables payable by such customer, had a maturity date of October 31, 2018, and carried a 7.5 % rate of interest. As of September 30, 2018, approximately $50,000 in principal plus accrued interest was due under the note. On October 31, 2018, the customer paid the remainder of all amounts due under the note. During the second quarter of 2018, Alvin Trenk, the Company’s former Chief Executive Officer and a former member of its Board of Directors, acquired controlling interest in this customer.

On April 20, 2018, the Company’s Kansas subsidiary entered into a purchase lease with Commerce Bank for a refueling truck (the “Truck Lease”). The Truck Lease commenced on May 1, 2018 and continues for 60 months at an interest rate of LIBOR plus 416 basis points. At the end of the Truck Lease, the Company’s subsidiary may purchase the vehicle for $1.00.

5

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

As disclosed in a Current Report on Form 8-K filed with the SEC on July 6, 2015, the Company entered into a stock purchase agreement, dated June 30, 2015, by and between the Company and Warren A. Peck, pursuant to which Mr. Peck purchased all of the capital stock of the Company’s wholly-owned subsidiary. The details of the agreement are described in such Current Report as well as in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on April 11, 2016. The Company received $100,000 due under this agreement in September 2017 and an additional payment of $100,000 in September 2018.

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”) and our fixed base operation (“FBO”) and aircraft repair, maintenance and overhaul (“MRO”) services at Garden City (Kansas) Regional Airport (“FBOGC”). All significant inter-company accounts and transactions have been eliminated in consolidation.

Net Income Per Common Share

Net income was $200,199 and $308,231 for the nine months ended September 30, 2018 and 2017, 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 are 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 loss per share:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2018		2017		2018		2017
Weighted average common shares outstanding, basic		30,195,034		33,396,892		31,096,602		33,318,008
Common shares upon exercise of options and warrants		327,586		1,096,997		327,586		1,096,997
Weighted average common shares outstanding, diluted		30,522,620		34,493,889		31,424,188		34,415,005

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 each of the nine months ended September 30, 2018 and 2017, the Company incurred stock-based compensation costs of approximately $25,500. 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 September 30, 2018, the unamortized fair value of the options totaled $8,500.

6

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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 May 2014, the Financial Accounting Standards Board (the” FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. ASU 2014-09 also supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the current guidance. These judgments and estimates include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14 “Revenue from Contracts with Customers” (“ASU 2015-14”), which delays the effective date of ASU 2014-09, as amended by ASU 2015-14, ASU 2016-08 Revenue from Contracts with Customers (Topic 606): Principal Versus Agent Consideration (Reporting Revenue Gross versus Net); ASU 2016-10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU 2016-12 Revenue from Contracts with Customers (Topic 606): Narrow Scope Improvements and Practical Expedients and ASU 2016-20 Technical Corrections and Improvements to Topic 606.

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”), which requires an entity to recognize assets and liabilities on the balance sheet for the rights and obligations created by leased assets and provide additional disclosures. ASU 2016-02 is effective for us beginning January 1, 2019, and, at that time, we will adopt the new standard using a modified retrospective approach. We are currently evaluating the impact that the adoption of ASU 2016-02 may have on our consolidated financial statements and disclosures.

NOTE 4 – Inventories

Inventory consists primarily of aviation fuel, which the Company dispenses to its customers, and parts inventory as a result of the acquisition of Aircraft Services. The Company also maintains fuel inventories for commercial airlines, to which it charges into-plane fees when servicing commercial aircraft.

Inventories consist of the following:

	September 30, 2018		December 31, 2017
Parts inventory	$	80,259	$	82,505
Fuel inventory		132,400		69,822
Other inventory		9,092		10,802
Total inventory	$	221,751	$	163,129

Included in fuel inventory are amounts held for third parties of $59,933 and $31,147 as of September 30, 2018 and December 31, 2017, respectively, with an offsetting liability included as part of accrued expenses.

NOTE 5 – Related Parties

From time to time, the law firm of Wachtel Missry, LLP provides certain legal services to the Company and its subsidiaries. William B. Wachtel, Chairman of the Company’s Board of Directors, is a managing partner of such firm. During the quarters ended September 30, 2018 and 2017, 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, the Company’s former Chief Executive Officer and a former member of the Company’s Board of Directors. In the second quarter of 2018, Mr. Trenk acquired controlling interest in one of the Company’s customers.

7

SAKER AVIATION SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 6 – 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, expect that any such matters will have a material adverse effect on the Company’s business, financial condition or results of operations.

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, 2017.

The terms “we,” “us,” and “our” are used below to refer collectively to the Company and the subsidiaries through which our various businesses are 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 and MRO at the Garden City (Kansas) Regional Airport, and as a consultant to the operator of a seaplane base in New York City.

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 Garden City facility began offering maintenance services in October 2016 as a result of our acquisition of Aircraft Services, Inc. (“Aircraft Services”).

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.

8

REVENUE AND OPERATING RESULTS

Comparison of Continuing Operations from the Three and Nine Months Ended September 30, 2018 and September 30, 2017.

REVENUE

Operating results for the three and nine months ended September 30, 2018 were negatively impacted by a fatal helicopter accident that occurred on March 11, 2018. While the accident was independent of our operation, one of our Heliport customers was the operator of the flight. That customer’s need to focus on the follow-up investigation, and the general market impact of the accident itself, has depressed year-over-year activity at our Heliport and, consequently, contributed to the results reported below.

Revenue from operations decreased by 6.8 percent to $3,280,445 for the three months ended September 30, 2018 as compared with corresponding prior-year period revenue of $3,518,712.

For the three months ended September 30, 2018, revenue from operations associated with the sale of jet fuel, aviation gasoline and related items increased by 9.4 percent to approximately $1,408,000 as compared to approximately $1,286,000 in the three months ended September 30, 2017.

For the three months ended September 30, 2018, revenue from operations associated with services and supply items decreased by 14.7 percent to approximately $1,852,000 as compared to approximately $2,170,000 in the three months ended September 30, 2017.

For the three months ended September 30, 2018, all other revenue from operations decreased by 67.3 percent to approximately $20,000 as compared to approximately $62,000 in the three months ended September 30, 2017. The decrease was largely attributable to a decrease in non-aeronautical revenue generated by our Heliport compared to the same period last year.

Revenue from operations decreased by 5.8 percent to $8,236,353 for the nine months ended September 30, 2018 as compared with corresponding prior-year period revenue of $8,743,913.

For the nine months ended September 30, 2018, revenue from operations associated with the sale of jet fuel, aviation gasoline and related items decreased by 1.1 percent to approximately $3,305,000 as compared to approximately $3,341,000 in the nine months ended September 30, 2017.

For the nine months ended September 30, 2018, revenue from operations associated with services and supply items decreased by 8.5 percent to approximately $4,832,000 as compared to approximately $5,283,000 in the nine months ended September 30, 2017.

For the nine months ended September 30, 2018, all other revenue from operations decreased by 17.7 percent to approximately $98,000 as compared to approximately $119,000 in the nine months ended September 30, 2017. The decrease was largely attributable to a decrease in non-aeronautical revenue generated by our Heliport compared to the same period last year.

GROSS PROFIT

Total gross profit from operations decreased 20.8 percent to $1,581,941 in the three months ended September 30, 2018 as compared with the three months ended September 30, 2017. Gross margin decreased to 48.2 percent in the three months ended September 30, 2018 as compared to 56.8 percent in the same period in the prior year. The decrease in gross profit is related to lower levels of activity at our Heliport operation in the three months ended September 30, 2018 as compared to the prior year. The decrease in gross margin is related to lower levels of revenue from services and supplies, which generally carry a higher overall gross margin, in the three months ended September 30, 2018 as compared to the same period in the prior year.

9

Total gross profit from operations decreased 21.9 percent to $3,645,545 in the nine months ended September 30, 2018 as compared with the nine months ended September 30, 2017. Gross margin decreased to 44.3 percent in the nine months ended September 30, 2018 as compared to 53.4 percent in the same period in the prior year. The decreases in gross profit and gross margin are due to the same reasons that are described above.

OPERATING EXPENSE

Selling, General and Administrative

Total selling, general and administrative expenses, or SG&A, were approximately $1,265,000 in the three months ended September 30, 2018, representing a decrease of approximately $267,000 or 17.5 percent, as compared to the same period in the prior year. Total SG&A expenses were approximately $3,362,000 in the nine months ended September 30, 2018, representing a decrease of approximately $557,000 or 14.2 percent, as compared to the same period in the prior year.

Operational SG&A expenses associated with our aviation services operations were approximately $1,164,000 in the three months ended September 30, 2018, representing a decrease of approximately $251,000 or 17.8 percent, as compared to the three months ended September 30, 2017. Operational SG&A, as a percentage of revenue, was 35.5 percent for the three months ended September 30, 2018, as compared with 40.2 percent in the corresponding prior year period. The decreased operating expenses were largely attributable to reduced costs related to the lower levels of activity in our Heliport operations.

Operational SG&A expenses were approximately $2,993,000 in the nine months ended September 30, 2018, representing a decrease of approximately $539,000 or 15.3 percent, as compared to the nine months ended September 30, 2017. Operational SG&A, as a percentage of revenue, was 36.3 percent for the nine months ended September 30, 2018, as compared with 40.4 percent in the corresponding prior year period. The decreased operating expenses were largely attributable to reduced costs related to the lower levels of activity in our Heliport operations.

Corporate SG&A expense were approximately $101,000 for the three months ended September 30, 2018, representing a decrease of approximately $16,000 as compared with the corresponding prior year period. Corporate SG&A was approximately $368,000 for the nine months ended September 30, 2018, representing a decrease of approximately $17,000 as compared with the corresponding prior year period.

OPERATING INCOME

Operating income from operations for the three and nine months ended September 30, 2018 was $316,211 and $283,336, respectively, as compared to operating income of $464,123 and $749,563, in the three and nine months ended September 30, 2017, respectively. The decrease on a year-over-year basis was driven by lower levels of gross profit, which was partially offset by lower SG&A expenses.

Depreciation and Amortization

Depreciation and amortization was approximately $407,000 and $395,000 for the nine months ended September 30, 2018 and 2017, respectively.

Interest Expense (Income)

Interest expense for the nine months ended September 30, 2018 was approximately $13,000 as compared to $17,000 in the same period in the prior year.

Interest income for the nine months ended September 30, 2018 was approximately $33,000 as compared to $0 in the same period in the prior year.

10

Income Tax

               Income tax expense for both the three and nine months ended September 30, 2018 was $102,454 as compared to $227,100 and $414,241 for the three and nine months ended September 30, 2017, respectively. The decrease is attributable to a decrease in net income in the three and nine months ended September 30, 2018 as compared to net income in the same period in 2017.  

Net Income Per Share

Net income was $200,199 and $308,231for the nine months ended September 30, 2018 and 2017, respectively.

Basic and diluted net income per share for both the nine month periods ended September 30, 2018 and 2017 was $0.01.

LIQUIDITY AND CAPITAL RESOURCES

             As of September 30, 2018, we had cash and cash equivalents of $2,783,773 and a working capital surplus of $3,781,883. For the nine months ended September 30, 2018, we generated revenue from operations of $8,236,353 and had net income of $200,199. For the nine months ended September 30, 2018, cash flows included net cash provided by operating activities of $753,851, net cash provided by investing activities of $620,320, and net cash used in financing activities of $314,902.

             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”). As of September 30, 2018, all amounts due under the PNC Loan Agreement, the PNC Acquisition Line, and the PNC Term Loan have been repaid.

            As disclosed in a Current Report on Form 8-K filed on March 21, 2018 with the Securities and Exchange Commission (the “SEC”), on March 15, 2018 we entered into a loan agreement (the “Loan Agreement”) with Key Bank National Association (the “Bank”). The Loan Agreement contains three components: (i) a $2,500,000 acquisition line of credit (the “Key Bank Acquisition Note”); (ii) a $1,000,000 revolving line of credit (the “Key Bank Revolver Note”); and (iii) a $338,481 term loan (the “Key Bank Term Loan”).

             Proceeds of the Key Bank Acquisition Note are to be dispersed pursuant to a multiple draw demand note dated as of the agreement date, where we may, at the discretion of the Bank, borrow up to an aggregate amount of $2,500,000, to be used for our acquisition of one or more business entities. We are required to make consecutive monthly payments of interest, calculated at a rate per annum equal to one-day LIBOR (adjusted daily) plus 2.75%, on any outstanding principal under the Key Bank Acquisition Note from the date of its issuance through September 15, 2018 (the “Conversion Date”).

             At any time through and including the Conversion Date, at the Bank’s discretion, the Company had the opportunity to request that any loan made under the Key Bank Acquisition Note be converted into a term loan to be repaid in full, including accrued interest, by consecutive monthly payments over a 48 month amortization period beginning after the Conversion Date. For any loan that was not converted into a term loan on or before the Conversion Date, the Company would have been required to begin making monthly payments of principal and interest after the Conversion Date, over a 48 month amortization period, after which the remaining unpaid principal and accrued interest shall become due and payable. All loans under the Key Bank Acquisition Note shall, after the Conversion Date, accrue interest at a rate per annum equal to the Bank’s four year cost of funds rate plus 2.5%. As of September 30, 2018, there were no amounts due under the Key Bank Acquisition Note and no amounts had been converted to a term loan.

11

             Proceeds from the Key Bank Revolver Note, at the discretion of the Bank, provide for us to borrow up to $1,000,000 for working capital and general corporate purposes. This revolving line of credit is a demand note with no stated maturity date. Borrowings under the Key Bank Revolver Note will bear interest at a rate per annum equal to one-day LIBOR (adjusted daily) plus 2.75%. We are required to make monthly payments of interest on any outstanding principal under the Key Bank Revolver Note and are required to pay the entire balance, including principal and all accrued and unpaid interest and fees, upon demand by the Bank. As of September 30, 2018, there were no amounts due under the Key Bank Revolver Note.

            Proceeds from the Key Bank Term Note were utilized to retire amounts previously outstanding under the PNC Term Loan. Interest on outstanding principal accrues at a fixed rate of 4.85% per annum and is to be paid in equal consecutive monthly installments of $7,772 over a 48 month period. The Company has the right to prepay principal amounts due under the Key Bank Term Note early without penalty. As of September 30, 2018, $193,342 was outstanding under the Key Bank Term Note.

             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 any program year based on cash collected (“Gross Receipts”) and 25% of Gross Receipts in excess of $5,000,000, or minimum annual guaranteed payments. During the nine months ended September 30, 2018 and 2017, we incurred approximately $1,350,000 and $1,285,000, respectively, in concession fees which are recorded in the cost of revenue.

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

            Under the Air Tour Agreement, filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2015, we may not allow our tenant operators to conduct tourist flights from the Downtown Manhattan Heliport on Sundays beginning April 1, 2016. We were also required to ensure that its tenant operators reduce the total allowable number of tourist flights from 2015 levels by 20 percent beginning June 1, 2016, by 40 percent beginning October 1, 2016 and by 50 percent beginning January 1, 2017. Additionally, beginning on June 1, 2016, we are required to provide monthly written reports to the NYCEDC and the New York City Council detailing the number of tourist flights conducted out of the Downtown Manhattan Heliport compared to 2015 levels, as well as information on any tour flight that flies over land and/or strays from agreed upon routes.

            The Air Tour Agreement also extended the Concession Agreement for 30 months, resulting in a new expiration date of April 30, 2021. The City of New York has two one year options to further extend the Concession Agreement. The Agreement also provides that the minimum annual guarantee payments we are required to pay to the City of New York under the Concession Agreement be reduced by 50%, effective January 1, 2017.

            These reductions have negatively impacted our business and financial results as well as those of its management company at the Heliport, Empire Aviation which, as previously disclosed, is owned by the children of Alvin Trenk, our former Chief Executive Officer and a former member of our Board of Directors.  We incurred management fees with Empire Aviation of approximately $1,230,000 and $1,780,000 during the nine months ended September 30, 2018 and 2017, respectively, which is recorded in administrative expenses.  We and Empire Aviation 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. 

             On February 6, 2018, we were issued a note by one of its customers at the Heliport. The note scheduled approximately $750,000 in receivables payable by such customer, had a maturity date of October 31, 2018, and carried a 7.5 % rate of interest. As of September 30, 2018, approximately $50,000 in principal plus accrued interest was due under the note. On October 31, 2018, the customer paid the remainder of all amounts due under the note. During the second quarter of 2018, Alvin Trenk, our former Chief Executive Officer and a former member of our Board of Directors, acquired controlling interest in this customer.

12

            On April 20, 2018, our Kansas subsidiary entered into a purchase lease with Commerce Bank for a refueling truck (the “Truck Lease”). The Truck Lease commenced on May 1, 2018 and continues for 60 months at an interest rate of LIBOR plus 416 basis points. At the end of the Truck Lease, our subsidiary may purchase the vehicle for $1.00.

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

             As disclosed in a Current Report on Form 8-K filed with the SEC on July 6, 2015, we entered into a stock purchase agreement, dated June 30, 2015, by and between us and Warren A. Peck, pursuant to which Mr. Peck purchased all of the capital stock of our wholly-owned subsidiary. The details of the agreement are described in such Current Report as well as in our Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on April 11, 2016. We received $100,000 due under this agreement in September 2017 and an additional payment of $100,000 in September 2018.

             During the nine months ended September 30, 2018, we had a net increase in cash of $1,059,269. Our sources and uses of funds during this period were as follows:

Cash from Operating Activities

      For the nine months ended September 30, 2018, net cash provided by operating activities was $753,851. This amount included an increase in operating cash related to net income of $200,199 and additions for the following items: (i) depreciation and amortization, $407,654; (ii) stock based compensation, $25,496; (iii) accounts receivable, trade, $236,069; (iv) prepaid expenses and other current assets, $16,238; and (v) deposits, $39,784. These increases in operating activities were offset by decreases in (i) inventories, $58,622; (ii) accounts payable, $111,371; and (iii) accrued expenses, $1,596.

          For the nine months ended September 30, 2017, net cash provided by operating activities was $11,975. This amount included an increase in operating cash related to net income of $308,231 and additions for the following items: (i) depreciation and amortization, $395,017; (ii) loss on sale of charter certificate, $10,000; (iii) stock based compensation, $25,496 ; and (iv) deposits, $37,543. These increases in operating activities were offset by decreases in the following (i) accounts receivable, trade, $210,821; (ii) inventories, $49,378; (iii) prepaid expenses and other current assets, $175,118; (iv) accounts payable, $261,395; and (v) accrued expenses, $67,600.

Cash from Investing Activities

       For the nine months ended September 30, 2018, net cash provided by investing activities was $620,320. This amount included the repayment of notes receivable of $800,000 offset by the purchase of property and equipment of $179,680. For the nine months ended September 30, 2017, net cash provided by investing activities was $42,624. This amount included $100,000 provided by the payment of notes receivable and $25,000 of proceeds from the sale of the Company’s charter certificate, offset by a decrease in operating cash used for the purchase of property and equipment of $82,376.

Cash from Financing Activities

       For the nine months ended September 30, 2018, net cash used in financing activities was $314,904. This amount included $175,813 for the repurchase and cancellation of common stock and $274,089 for the repayment of notes payable, offset by the issuance of notes payable of $135,000. For the nine months ended September 30, 2017, net cash used in financing activities was $277,500 for the payment of notes payable.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Recent Accounting Pronouncements

       In May 2014, the Financial Accounting Standards Board (the” FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. ASU 2014-09 also supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the current guidance. These judgments and estimates include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14 “Revenue from Contracts with Customers” (“ASU 2015-14”), which delays the effective date of ASU 2014-09 by one year. ASU 2014-09, as amended by ASU 2015-14, ASU 2016-08 Revenue from Contracts with Customers (Topic 606): Principal Versus Agent Consideration (Reporting Revenue Gross versus Net); ASU 2016-10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU 2016-12 Revenue from Contracts with Customers (Topic 606): Narrow Scope Improvements and Practical Expedients and ASU 2016-20 Technical Corrections and Improvements to Topic 606.

       In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”), which requires an entity to recognize assets and liabilities on the balance sheet for the rights and obligations created by leased assets and provide additional disclosures. ASU 2016-02 is effective for us beginning January 1, 2019, and, at that time, we will adopt the new standard using a modified retrospective approach. We are currently evaluating the impact that the adoption of ASU 2016-02 may have on our consolidated financial statements and disclosures.

14

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 placed 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, 2017 and in other filings we make with the SEC. Subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above and elsewhere in our reports filed with the SEC. We expressly disclaim any intent or obligation to update any forward-looking statements, except as may be required by law.

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4 – Controls and Procedures

Evaluation of Disclosure Controls and Procedures

              Management, including our President (principal financial officer) and our Chief Executive Officer (principal executive 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 and Chief Executive 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 and Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure.

15

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.

16

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

17

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 14, 2018	By:	/s/ Ronald J. Ricciardi
		Ronald J. Ricciardi
		President & Chief Executive Officer

18

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

(principal executive 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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) 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;

(d) 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: November 14, 2018

By:  /s/ Ronald J. Ricciardi

Ronald J. Ricciardi

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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) 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;

(d) 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: November 14, 2018

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”), Ronald J. Ricciardi, the Chief Executive Officer (principal executive officer) and President (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 September 30, 2018 (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:           November 14, 2018	By:	/s/ Ronald J. Ricciardi
		Ronald J. Ricciardi
		Chief Executive Officer (principal executive officer)
Date:           November 14, 2018	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	9 Months Ended
	Sep. 30, 2018	Nov. 14, 2018
Document Information [Line Items]
Entity Registrant Name	Saker Aviation Services, Inc.
Entity Central Index Key	0001128281
Trading Symbol	skas
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		30,195,034
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
CURRENT ASSETS
Cash	$ 2,783,773	$ 1,724,504
Accounts receivable	852,331	1,838,664
Inventories	221,751	163,129
Notes receivable – current portion	320,264	370,000
Prepaid expenses and other current assets	515,453	531,691
Total current assets	4,693,572	4,627,988
PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of $3,566,318 and $3,158,664 as of September 30,2018 and December 31, 2017, respectively	441,983	669,957
OTHER ASSETS
Deposits	6,933	46,717
Goodwill	750,000	750,000
Deferred income taxes	454,000	454,000
Total other assets	1,210,933	1,250,717
TOTAL ASSETS	6,346,488	6,548,662
CURRENT LIABILITIES
Accounts payable	383,823	495,194
Customer deposits	126,843	126,843
Accrued expenses	290,745	292,341
Notes payable – current portion	110,278	345,000
Total current liabilities	911,689	1,259,378
LONG-TERM LIABILITIES
Notes payable - less current portion	208,133	112,500
Total liabilities	1,119,822	1,371,878
STOCKHOLDERS’ EQUITY
Preferred stock - $.001 par value; authorized 9,999,154; none issued and outstanding
Common stock - $.001 par value; authorized 100,000,000; 30,195,034 and 32,117,554 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively	30,195	32,117
Additional paid-in capital	19,748,349	19,896,744
Accumulated deficit	(14,551,878)	(14,752,077)
TOTAL STOCKHOLDERS’ EQUITY	5,226,666	5,176,784
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 6,346,488	$ 6,548,662

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
PROPERTY AND EQUIPMENT, accumulated depreciation and amortization	$ 3,566,318	$ 3,158,664
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	9,999,154	9,999,154
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	30,195,034	32,117,554
Common stock, shares outstanding (in shares)	30,195,034	32,117,554

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
REVENUE	$ 3,280,445	$ 3,518,712	$ 8,236,353	$ 8,743,913
COST OF REVENUE	1,698,504	1,520,900	4,590,808	4,074,958
GROSS PROFIT	1,581,941	1,997,812	3,645,545	4,668,955
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	1,265,730	1,533,689	3,362,209	3,919,392
OPERATING INCOME	316,211	464,123	283,336	749,563
OTHER (INCOME) EXPENSE:
OTHER EXPENSE				10,000
INTEREST INCOME	(6,574)		(32,703)
INTEREST EXPENSE	6,220	4,959	13,386	17,091
TOTAL OTHER (INCOME) EXPENSE, net	(354)	4,959	(19,317)	27,091
INCOME BEFORE INCOME TAX	316,565	459,164	302,653	722,472
INCOME TAX EXPENSE	102,454	227,100	102,454	414,241
NET INCOME	$ 214,111	$ 232,064	$ 200,199	$ 308,231
Basic and Diluted Net Income Per Common Share (in dollars per share)	$ 0.01	$ 0.01	$ 0.01	$ 0.01
Weighted Average Number of Common Shares – Basic (in shares)	30,195,034	33,396,892	31,096,602	33,318,008
Weighted Average Number of Common Shares - Diluted (in shares)	30,522,620	34,493,889	31,424,188	34,415,005

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 200,199	$ 308,231
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	407,654	395,017
Loss on sale of charter certificate		10,000
Stock based compensation	25,496	25,496
Changes in operating assets and liabilities:
Accounts receivable, trade	236,069	(210,821)
Inventories	(58,622)	(49,378)
Prepaid expenses and other current assets	16,238	(175,118)
Deposits	39,784	37,543
Accounts payable	(111,371)	(261,395)
Accrued expenses	(1,596)	(67,600)
TOTAL ADJUSTMENTS	553,652	(296,256)
NET CASH PROVIDED BY OPERATING ACTIVITIES	753,851	11,975
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of charter certificate		25,000
Payment of notes receivable	800,000	100,000
Purchase of property and equipment	(179,680)	(82,376)
NET CASH PROVIDED BY INVESTING ACTIVITIES	620,320	42,624
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase and cancellation of common stock	(175,813)
Borrowings	135,000
Repayments	(274,089)	(277,500)
NET CASH USED IN FINANCING ACTIVITIES	(314,902)	(277,500)
NET CHANGE IN CASH	1,059,269	(222,901)
CASH – Beginning	1,724,504	2,318,629
CASH – Ending	2,783,773	2,095,728
NON-CASH OPERATING AND INVESTING ACTIVITIES:
Change in Accounts Receivable through issuance of a Note Receivable:	750,264
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income Taxes	311,324	648,826
Interest	$ 13,386	$ 17,091

XML

Note 1 - Basis of Presentation

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

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, 2017.

The condensed consolidated balance sheet and statements of cash flows as of

September 30, 2018

and the condensed consolidated statements of operations for the

three

and

nine

months ended

September 30, 2018

and

2017

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

September 30, 2018

and its results of operations and cash flows for the

three

and

nine

months ended

September 30, 2018

not

misleading. The results of operations for the

three

and

nine

months ended

September 30, 2018

are

not

necessarily indicative of the results to be expected for any full year or any other interim period.

The Company has evaluated events that have occurred subsequent to

September 30, 2018,

and through the date of the filing of this Quarterly Report on Form

10

-Q with the Securities and Exchange Commission (the “SEC”), and has determined that

no

subsequent events have occurred after the current reporting period.

XML

Note 2 - Liquidity

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Going Concern Disclosure [Text Block]

NOTE

2

–

Liquidity

As of

September 30, 2018,

the Company had cash and cash equivalents of

$2,783,773

and a working capital surplus of

$3,781,883.

For the

nine

months ended

September 30, 2018,

the Company generated revenue from operations of

$8,236,353

and had a net income of

$200,199.

For the

nine

months ended

September 30, 2018,

cash flows included net cash provided by operating activities of

$753,851,

net cash provided by investing activities of

$620,320,

and net cash used in financing activities of

$314,902.

On

May 17, 2013,

the Company 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”). As of

September 30, 2018,

all amounts due under the PNC Loan Agreement, the PNC Acquisition Line, and the PNC Term Loan have been repaid.

As disclosed in a Current Report on Form

8

-K filed on

March 21, 2018

with the SEC, on

March 15, 2018

the Company entered into a loan agreement (the “Loan Agreement”) with Key Bank National Association (the “Bank”). The Loan Agreement contains

three

components: (i) a

$2,500,000

acquisition line of credit (the “Key Bank Acquisition Note”); (ii) a

$1,000,000

revolving line of credit (the “Key Bank Revolver Note”); and (iii) a

$338,481

term loan (the “Key Bank Term Loan”).

Proceeds of the Key Bank Acquisition Note are to be dispersed pursuant to a multiple draw demand note dated as of the agreement date, where the Company

may,

at the discretion of the Bank, borrow up to an aggregate amount of

$2,500,000,

to be used for the Company’s acquisition of

one

or more business entities. The Company is required to make consecutive monthly payments of interest, calculated at a rate per annum equal to

one

-day LIBOR (adjusted daily) plus

2.75%,

on any outstanding principal under the Key Bank Acquisition Note from the date of its issuance through

September 15, 2018 (

the “Conversion Date”).

At any time through and including the Conversion Date, at the Bank’s discretion, the Company had the opportunity to request that any loan made under the Key Bank Acquisition Note be converted into a term loan to be repaid in full, including accrued interest, by consecutive monthly payments over a

48

month amortization period beginning after the Conversion Date. For any loan that was

not

converted into a term loan on or before the Conversion Date, the Company would have been required to begin making monthly payments of principal and interest after the Conversion Date, over a

48

month amortization period, after which the remaining unpaid principal and accrued interest shall become due and payable. All loans under the Key Bank Acquisition Note shall, after the Conversion Date, accrue interest at a rate per annum equal to the Bank’s

four

year cost of funds rate plus

2.5%.

As of

September 30, 2018,

there were

no

amounts due under the Key Bank Acquisition Note and

no

amounts had been converted to a term loan.

Proceeds from the Key Bank Revolver Note, at the discretion of the Bank, provide for the Company to borrow up to

$1,000,000

for working capital and general corporate purposes. This revolving line of credit is a demand note with

no

stated maturity date. Borrowings under the Key Bank Revolver Note will bear interest at a rate per annum equal to

one

-day LIBOR (adjusted daily) plus

2.75%.

The Company is required to make monthly payments of interest on any outstanding principal under the Key Bank Revolver Note and are required to pay the entire balance, including principal and all accrued and unpaid interest and fees, upon demand by the Bank. As of

September 30, 2018,

there were

no

amounts due under the Key Bank Revolver Note.

Proceeds from the Key Bank Term Note were utilized to retire amounts previously outstanding under the PNC Term Loan. Interest on outstanding principal accrues at a fixed rate of

4.85%

per annum and is to be paid in equal consecutive monthly installments of

$7,772

over a

48

month period. The Company has the right to prepay principal amounts due under the Key Bank Term Note early without penalty. As of

September 30, 2018,

$193,342

was outstanding under the Key Bank Term Note.

The Company is party to a Concession Agreement, dated as of

November 1, 2008,

with the City of New York for the operation of the Downtown Manhattan Heliport (the “Concession Agreement”). Pursuant to the terms of the Concession Agreement, the Company must pay the greater of

18%

of the

first

$5,000,000

in any program year based on cash collected (“Gross Receipts”) and

25%

of Gross Receipts in excess of

$5,000,000,

or minimum annual guaranteed payments. During the

nine

months ended

September 30, 2018

and

2017,

the Company incurred approximately

$1,350,000

and

$1,285,000,

respectively, in concession fees which are recorded in the cost of revenue.

As disclosed in a Current Report on Form

8

-K filed with the SEC on

February 5, 2016,

the Company and the New York City Economic Development Corporation (the “NYCEDC”) announced new measures to reduce helicopter noise and impacts across New York City (the “Air Tour Agreement”).

Under the Air Tour Agreement, filed as an exhibit to our Annual Report on Form

10

-K for the year ended

December 31, 2015,

the Company

may

not

allow its tenant operators to conduct tourist flights from the Downtown Manhattan Heliport on Sundays beginning

April 1, 2016.

The Company was also required to ensure that its tenant operators reduce the total allowable number of tourist flights from

2015

levels by

20

percent beginning

June 1, 2016,

by

40

percent beginning

October 1, 2016

and by

50

percent beginning

January 1, 2017.

Additionally, beginning on

June 1, 2016,

the Company was required to provide monthly written reports to the NYCEDC and the New York City Council detailing the number of tourist flights conducted out of the Downtown Manhattan Heliport compared to

2015

levels, as well as information on any tour flight that flies over land and/or strays from agreed upon routes.

The Air Tour Agreement also extended the Concession Agreement for

30

months, resulting in a new expiration date of

April 30, 2021.

The City of New York has

two one

year options to further extend the Concession Agreement. The Agreement also provides that the minimum annual guarantee payments the Company is required to pay to the City of New York under the Concession Agreement be reduced by

50%,

effective

January 1, 2017.

These reductions have negatively impacted the Company’s business and financial results as well as those of its management company at the Heliport, Empire Aviation which, as previously disclosed, is owned by the children of Alvin Trenk, the Company’s former Chief Executive Officer and a former member of its Board of Directors.  The Company incurred management fees with Empire Aviation of approximately

$1,230,000

and

$1,780,000

during the

nine

months ended

September 30, 2018

and

2017,

respectively, which is recorded in administrative expenses.  The Company and Empire Aviation have also contributed to the Helicopter Tourism and Jobs Council (“HTJC”), an association that lobbies on 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, and Same Goldstein,

one

our directors, serves as deputy director of HJTC.  

On

February 6, 2018,

the Company was issued a note by

one

of its customers at the Heliport. The note scheduled approximately

$750,000

in receivables payable by such customer, had a maturity date of

October 31, 2018,

and carried a

7.5

% rate of interest. As of

September 30, 2018,

approximately

$50,000

in principal plus accrued interest was due under the note. On

October 31, 2018,

the customer paid the remainder of all amounts due under the note. During the

second

quarter of

2018,

Alvin Trenk, the Company’s former Chief Executive Officer and a former member of its Board of Directors, acquired controlling interest in this customer.

On

April 20, 2018,

the Company’s Kansas subsidiary entered into a purchase lease with Commerce Bank for a refueling truck (the “Truck Lease”). The Truck Lease commenced on

May 1, 2018

and continues for

60

months at an interest rate of LIBOR plus

416

basis points. At the end of the Truck Lease, the Company’s subsidiary

may

purchase the vehicle for

$1.00.

On

October 3, 2016,

the Company purchased all of the capital stock of Aircraft Services, Inc. (“Aircraft Services”), an aircraft maintenance services firm located in Garden City, Kansas. Under the terms of the transaction, the Company made a

$150,000

cash payment at closing, a

$75,000

installment payment in

2017,

and an installment payment of

$75,000

in

2018.

The closing cash payment and both the

2017

and

2018

installment payments were funded with internal resources. The Company’s purchase of Aircraft Services’ capital stock is discussed in greater detail in a Current Report on Form

8

-K filed with the SEC on

October 7, 2016

and filed as an Exhibit to our Quarterly Report on Form

10

-Q for the period ended

September 30, 2016.

As disclosed in a Current Report on Form

8

-K filed with the SEC on

July 6, 2015,

the Company entered into a stock purchase agreement, dated

June 30, 2015,

by and between the Company and Warren A. Peck, pursuant to which Mr. Peck purchased all of the capital stock of the Company’s wholly-owned subsidiary. The details of the agreement are described in such Current Report as well as in the Company’s Annual Report on Form

10

-K for the year ended

December 31, 2015,

which was filed with the SEC on

April 11, 2016.

The Company received

$100,000

due under this agreement in

September 2017

and an additional payment of

$100,000

in

September 2018.

XML

Note 3 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

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”) and our fixed base operation (“FBO”) and aircraft repair, maintenance and overhaul (“MRO”) services at Garden City (Kansas) Regional Airport (“FBOGC”). All significant inter-company accounts and transactions have been eliminated in consolidation.

Net Income Per Common Share

Net income was

$200,199

and

$308,231

for the

nine

months ended

September 30, 2018

and

2017,

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 are 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 loss per share:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2018		2017		2018		2017
Weighted average common shares outstanding, basic		30,195,034		33,396,892		31,096,602		33,318,008
Common shares upon exercise of options and warrants		327,586		1,096,997		327,586		1,096,997
Weighted average common shares outstanding, diluted		30,522,620		34,493,889		31,424,188		34,415,005

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 each of the

nine

months ended

September 30, 2018

and

2017,

the Company incurred stock-based compensation costs of approximately

$25,500

.

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

September 30, 2018,

the unamortized fair value of the options totaled

$8,500.

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

May 2014,

the Financial Accounting Standards Board (the” FASB”) issued Accounting Standards Update (“ASU”)

No.

2014

-

09,

“Revenue from Contracts with Customers” (“ASU

2014

-

09”

), which provides guidance for revenue recognition. ASU

2014

-

09

affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic

605,

“Revenue Recognition,” and most industry-specific guidance. ASU

2014

-

09

also supersedes some cost guidance included in Subtopic

605

-

35,

“Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the current guidance. These judgments and estimates include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. In

August 2015,

the FASB issued ASU

2015

-

14

“Revenue from Contracts with Customers” (“ASU

2015

-

14”

), which delays the effective date of ASU

2014

-

09,

as amended by ASU

2015

-

14,

ASU

2016

-

08

Revenue from Contracts with Customers (Topic

606

): Principal Versus Agent Consideration (Reporting Revenue Gross versus Net); ASU

2016

-

10

Revenue from Contracts with Customers (Topic

606

): Identifying Performance Obligations and Licensing; ASU

2016

-

12

Revenue from Contracts with Customers (Topic

606

): Narrow Scope Improvements and Practical Expedients and ASU

2016

-

20

Technical Corrections and Improvements to Topic

606.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

“Leases” (“ASU

2016

-

02”

), which requires an entity to recognize assets and liabilities on the balance sheet for the rights and obligations created by leased assets and provide additional disclosures. ASU

2016

-

02

is effective for us beginning

January 1, 2019,

and, at that time, we will adopt the new standard using a modified retrospective approach. We are currently evaluating the impact that the adoption of ASU

2016

-

02

may

have on our consolidated financial statements and disclosures.

XML

Note 4 - Inventories

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE

4

–

Inventories

Inventory consists primarily of aviation fuel, which the Company dispenses to its customers, and parts inventory as a result of the acquisition of Aircraft Services. The Company also maintains fuel inventories for commercial airlines, to which it charges into-plane fees when servicing commercial aircraft.

Inventories consist of the following:

	September 30, 2018		December 31, 2017
Parts inventory	$	80,259	$	82,505
Fuel inventory		132,400		69,822
Other inventory		9,092		10,802
Total inventory	$	221,751	$	163,129

Included in fuel inventory are amounts held for

third

parties of

$59,933

and

$31,147

as of

September 30, 2018

and

December 31, 2017,

respectively, with an offsetting liability included as part of accrued expenses.

XML

Note 5 - Related Parties

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

NOTE

5

–

Related Parties

From time to time, the law firm of Wachtel Missry, LLP provides certain legal services to the Company and its subsidiaries. William B. Wachtel, Chairman of the Company’s Board of Directors, is a managing partner of such firm. During the quarters ended

September 30, 2018

and

2017,

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, the Company’s former Chief Executive Officer and a former member of the Company’s Board of Directors. In the

second

quarter of

2018,

Mr. Trenk acquired controlling interest in

one

of the Company’s customers.

XML

Note 6 - Litigation

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Legal Matters and Contingencies [Text Block]

NOTE

6

–

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, expect that any such matters will have a material adverse effect on the Company’s business, financial condition or results of operations.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

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”) and our fixed base operation (“FBO”) and aircraft repair, maintenance and overhaul (“MRO”) services at Garden City (Kansas) Regional Airport (“FBOGC”). All significant inter-company accounts and transactions have been eliminated in consolidation.

Earnings Per Share, Policy [Policy Text Block]

Net Income Per Common Share

Net income was

$200,199

and

$308,231

for the

nine

months ended

September 30, 2018

and

2017,

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 are 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 loss per share:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2018		2017		2018		2017
Weighted average common shares outstanding, basic		30,195,034		33,396,892		31,096,602		33,318,008
Common shares upon exercise of options and warrants		327,586		1,096,997		327,586		1,096,997
Weighted average common shares outstanding, diluted		30,522,620		34,493,889		31,424,188		34,415,005

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 each of the

nine

months ended

September 30, 2018

and

2017,

the Company incurred stock-based compensation costs of approximately

$25,500

.

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

September 30, 2018,

the unamortized fair value of the options totaled

$8,500.

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

May 2014,

the Financial Accounting Standards Board (the” FASB”) issued Accounting Standards Update (“ASU”)

No.

2014

-

09,

“Revenue from Contracts with Customers” (“ASU

2014

-

09”

), which provides guidance for revenue recognition. ASU

2014

-

09

affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic

605,

“Revenue Recognition,” and most industry-specific guidance. ASU

2014

-

09

also supersedes some cost guidance included in Subtopic

605

-

35,

“Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the current guidance. These judgments and estimates include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. In

August 2015,

the FASB issued ASU

2015

-

14

“Revenue from Contracts with Customers” (“ASU

2015

-

14”

), which delays the effective date of ASU

2014

-

09,

as amended by ASU

2015

-

14,

ASU

2016

-

08

Revenue from Contracts with Customers (Topic

606

): Principal Versus Agent Consideration (Reporting Revenue Gross versus Net); ASU

2016

-

10

Revenue from Contracts with Customers (Topic

606

): Identifying Performance Obligations and Licensing; ASU

2016

-

12

Revenue from Contracts with Customers (Topic

606

): Narrow Scope Improvements and Practical Expedients and ASU

2016

-

20

Technical Corrections and Improvements to Topic

606.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

“Leases” (“ASU

2016

-

02”

), which requires an entity to recognize assets and liabilities on the balance sheet for the rights and obligations created by leased assets and provide additional disclosures. ASU

2016

-

02

is effective for us beginning

January 1, 2019,

and, at that time, we will adopt the new standard using a modified retrospective approach. We are currently evaluating the impact that the adoption of ASU

2016

-

02

may

have on our consolidated financial statements and disclosures.

XML

Note 3 - Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2018		2017		2018		2017
Weighted average common shares outstanding, basic		30,195,034		33,396,892		31,096,602		33,318,008
Common shares upon exercise of options and warrants		327,586		1,096,997		327,586		1,096,997
Weighted average common shares outstanding, diluted		30,522,620		34,493,889		31,424,188		34,415,005

XML

Note 4 - Inventories (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	September 30, 2018		December 31, 2017
Parts inventory	$	80,259	$	82,505
Fuel inventory		132,400		69,822
Other inventory		9,092		10,802
Total inventory	$	221,751	$	163,129

XML

Note 2 - Liquidity (Details Textual)			1 Months Ended		3 Months Ended		6 Months Ended	9 Months Ended			12 Months Ended
	Oct. 03, 2016 USD ($)	Nov. 01, 2008 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2018	Sep. 30, 2018 USD ($)	Sep. 15, 2018	Sep. 30, 2017 USD ($)	Dec. 31, 2015	Apr. 20, 2018 USD ($)	Mar. 15, 2018 USD ($)	Feb. 06, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	May 17, 2013 USD ($)
Cash and Cash Equivalents, at Carrying Value, Ending Balance			$ 2,783,773	$ 2,095,728	$ 2,783,773	$ 2,095,728		$ 2,783,773		$ 2,095,728					$ 1,724,504	$ 2,318,629
Working Capital			3,781,883		3,781,883			3,781,883
Revenue from Contract with Customer, Including Assessed Tax					3,280,445	3,518,712		8,236,353		8,743,913
Net Income (Loss) Attributable to Parent, Total					214,111	$ 232,064		200,199		308,231
Net Cash Provided by (Used in) Operating Activities, Total								753,851		11,975
Net Cash Provided by (Used in) Investing Activities, Total								620,320		42,624
Net Cash Provided by (Used in) Financing Activities, Total								(314,902)		(277,500)
Environmental Remediation, Agreed Percentage of Reduction in Tenant Operated Tourist Flights											20.00%
Environmental Remediation, Agreed Percentage of Reduction in Tenant Operated Tourist Flights by Year One											40.00%
Environmental Remediation, Agreed Percentage of Reduction in Tenant Operated Tourist Flights by Year Two											50.00%
General and Administrative Expense, Total								1,230,000		1,780,000
Aircraft Services, Inc [Member]
Stock Purchase Agreement, Cash Consideration Paid	$ 150,000
Stock Purchase Agreement, Cash Consideration Payable	75,000
Stock Purchase Agreement, Payments, Due Next Twelve Months	$ 75,000
Truck Lease [Member]
Lessee, Finance Lease, Term of Contract												5 years
Capital Lease, Lessee, Purchase Price of Capital Leased Asset												$ 1
Heliport [Member]
Financing Receivable, Net, Total														$ 750,000
Financing Receivable, Interest Rate														7.50%
Note Principle And Accrued Interest			50,000		$ 50,000			50,000
Warren A. Peck [Member]
Proceeds from Collection of Notes Receivable			$ 100,000	$ 100,000
Concession Agreement [Member]
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%
Concession Fees								$ 1,350,000		$ 1,285,000
Line of Credit Facility, Payment Term							2 years 180 days
Line of Credit Facility, Number of Options to Extend Agreement							2
Minimum Annual Guarantee Percent								50.00%
London Interbank Offered Rate (LIBOR) [Member] | Truck Lease [Member]
Capital Leases of Lessee, Contingent Rentals, Basis Spread on Variable Rate												4.16%
Key Bank National Association [Member] | Term Loan [Member]
Debt Instrument, Face Amount													$ 338,481
Debt Instrument, Term								4 years
Debt Instrument, Periodic Payment, Total								$ 7,772
Debt Instrument, Interest Rate, Stated Percentage			4.85%		4.85%			4.85%
Line of Credit Facility, Fair Value of Amount Outstanding			$ 193,342		$ 193,342			$ 193,342
PNC Acquisition Line [Member]
Line of Credit Facility, Maximum Borrowing Capacity																	$ 2,500,000
Working Capital Loan [Member]
Short-term Debt, Total																	1,150,000
Term Loan [Member]
Short-term Debt, Total																	$ 280,920
Acquisition Line of Credit [Member] | Key Bank National Association [Member]
Line of Credit Facility, Maximum Borrowing Capacity													2,500,000
Debt Instrument, Term									4 years
Debt Instrument, Periodic Payment, Total								$ 0
Acquisition Line of Credit [Member] | Key Bank National Association [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate									2.75%
Acquisition Line of Credit [Member] | Key Bank National Association [Member] | Cost of Funds Rate [Member]
Debt Instrument, Basis Spread on Variable Rate								2.50%
Working Capital Line of Credit [Member] | Key Bank National Association [Member]
Line of Credit Facility, Maximum Borrowing Capacity													$ 1,000,000
Debt Instrument, Periodic Payment, Total								$ 0
Working Capital Line of Credit [Member] | Key Bank National Association [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate								2.75%

XML

Note 3 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net Income (Loss) Attributable to Parent, Total	$ 214,111	$ 232,064	$ 200,199	$ 308,231
Share-based Compensation, Total			25,496	$ 25,496
Share-based Compensation, Stock Options, Unamortized Fair Value			$ 8,500

XML

Note 3 - Summary of Significant Accounting Policies - Computation of Basic Net Income Per Share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Weighted average common shares outstanding, basic (in shares)	30,195,034	33,396,892	31,096,602	33,318,008
Common shares upon exercise of options and warrants (in shares)	327,586	1,096,997	327,586	1,096,997
Weighted average common shares outstanding, diluted (in shares)	30,522,620	34,493,889	31,424,188	34,415,005

XML

Note 4 - Inventories (Details Textual) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Fuel [Member]
Inventory Third Party	$ 59,933	$ 31,147

XML

Note 4 - Inventories - Summary of Inventory (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Inventories	$ 221,751	$ 163,129
Parts [Member]
Inventories	80,259	82,505
Fuel [Member]
Inventories	132,400	69,822
Other Inventory [Member]
Inventories	$ 9,092	$ 10,802