Note 2 - Liquidity and Material Agreements	12 Months Ended
Dec. 31, 2019
Notes to Financial Statements
Going Concern Disclosure [Text Block]	NOTE 2 – Liquidity and Material Agreements As of December 31, 2019, we had cash of $3,597,491 and a working capital surplus of $3,928,872. We generated revenue of $11,567,725 and had net income of $667,644 for the twelve months ended December 31, 2019. 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 Note”). Proceeds of the Key Bank Acquisition Note were to be dispersed pursuant to a multiple draw demand note dated as of the agreement date, where the Company could, at the discretion of the Bank, borrow up to an aggregate amount of $2,500,000, to be used for the Company’s acquisition of one or more business entities. Until the Change of Terms Agreement, as defined below, the Company was required to make consecutive monthly payments of interest, calculated at a rate per annum equal to one -day LIBOR (adjusted daily) plus 2.75%, on any outstanding principal under the Key Bank Acquisition Note from the date of its issuance through September 15, 2018 ( the “Conversion Date”). At any time through and including the Conversion Date, at the Bank’s discretion, the Company had the opportunity to request that any loan made under the Key Bank Acquisition Note be converted into a term loan to be repaid in full, including accrued interest, by consecutive monthly payments over a 48 month amortization period beginning after the Conversion Date. For any loan that was not converted into a term loan on or before the Conversion Date, the Company would have been required to begin making monthly payments of principal and interest after the Conversion Date, over a 48 month amortization period, after which the remaining unpaid principal and accrued interest would have become due and payable. All loans under the Key Bank Acquisition Note would have, after the Conversion Date, accrued interest at a rate per annum equal to the Bank’s four year cost of funds rate plus 2.5%. As of the Conversion Date, there were no amounts due under the Key Bank Acquisition Note and no amounts had been converted to a term loan. On October 11, 2018, and as subsequently amended, the Company entered into a new loan agreement with the Bank (the “Change of Terms Agreement”) which modified the original terms of the Key Bank Acquisition Note. Under the Change of Terms Agreement, the Company may continue to, at the discretion of the Bank, borrow up to an aggregate amount of $2,500,000 through June 30, 2020 ( the “Maturity Date”), to be used for the Company’s acquisition of one or more business entities. The Change of Terms Agreement requires the Company to make consecutive monthly payments of interest on any outstanding principal calculated at a rate per annum equal to 4.25%. The entire principal balance, plus all accrued interest, is due in full on the Maturity Date. As of December 31, 2019, there were no amounts due under the Change of Terms Agreement. 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 is required to pay the entire balance, including principal and all accrued and unpaid interest and fees, upon demand by the Bank. As of December 31, 2019, 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 a $280,920 term loan from PNC Bank. As of December 31, 2019, all amounts outstanding under the Key Bank Term Note have been repaid. The Company is party to a Concession Agreement, dated as of November 1, 2008, with the City of New York for the operation of the Downtown Manhattan Heliport (the “Concession Agreement”). Pursuant to the terms of the Concession Agreement, the Company must pay the greater of 18% of the first $5,000,000 in 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 twelve months ended December 31, 2019 and 2018, we incurred approximately $1,640,000 and $1,800,000 in concession fees, respectively, which are recorded in the cost of revenue. As disclosed in a Current Report on Form 8 -K filed with the SEC 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 Air Tour 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 $2,200,000 and $1,777,000 during the twelve months ended December 31, 2019 and 2018, 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. One of our Directors, Sam Goldstein, serves as deputy director of HJTC. 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 January 15, 2019, the Company was issued an unsecured note by one of its customers at the Heliport. The note schedules payments of approximately $276,000 in receivables payable by such customer, has a maturity date of October 31, 2019, as amended, and carries a 7.5% rate of interest. The note payments were to be made in six monthly installments beginning May 31, 2019. The customer’s payments on the note have not met the installment plan and the Company was working on changes to the note when the customer filed for Chapter 11 Bankruptcy. The Company intends to continue to pursue remaining amounts due under the note and it is the Company’s expectation that the note will be fulfilled. As disclosed in a Current Report on Form 8 -K filed with the SEC on July 6, 2015, the Company entered into a stock purchase agreement, dated June 30, 2015, by and between the Company and Warren A. Peck, pursuant to which Mr. Peck purchased all of the capital stock of the Company’s wholly-owned subsidiary, Phoenix Rising Aviation, Inc. The details of the agreement are described in such Current Report as well as in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2015, which was filed with the SEC on April 11, 2016. The Company received $100,000 due under this agreement in September 2017 and an additional payment of $100,000 in September 2018. In 2019, the Company accepted the title to a Falcon 10 aircraft owned by Mr. Peck as satisfaction in full of the remainder of the $270,000 stock purchase price. The Company intends to sell the aircraft and has classified the it as “Held For Sale” on the Company’s Consolidated Balance Sheets as of December 31, 2019. As disclosed in a Current Report on Form 8 -K filed with the SEC on September 06, 2019, effective September 1, 2019, the Company and Ronald J. Ricciardi entered into a new Employment Agreement (the “New Agreement”). Pursuant to the New Agreement, Mr. Ricciardi will continue to serve as the Company’s President and Chief Executive Officer. Among other things, the New Agreement provides for a four -year term with a base salary of $200,000, with subsequent annual base salary increases at the discretion of the Board of Directors. In addition, Mr. Ricciardi is eligible to receive an annual incentive bonus in an amount equal to 25% of the then-applicable base salary earned in the event that the Company meets or exceeds its annual operating plan for earnings before interest, taxes, depreciation and amortization. Mr. Ricciardi also received a stock award upon the execution of the New Agreement. In addition, Mr. Ricciardi is eligible for additional stock awards upon each of the four anniversary dates of this New Agreement. Each of the five stock awards shall be the number of shares equal to the issued and outstanding shares of the Company on the date of each issuance multiplied by one half of one percent. The issuance of such stock awards are to be administered according to the Company’s Equity Compensation Plan, as approved the Company’s stockholders.

NOTE

–

Liquidity

and Material Agreements

As of

December 31, 2019,

we had cash of

$3,597,491

and a working capital surplus of

$3,928,872.

We generated revenue of

$11,567,725

and had net income of

$667,644

for the

twelve

months ended

December 31, 2019.

As disclosed in a Current Report on Form

-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 Note”).

Proceeds of the Key Bank Acquisition Note were to be dispersed pursuant to a multiple draw demand note dated as of the agreement date, where the Company could, at the discretion of the Bank, borrow up to an aggregate amount of

$2,500,000,

to be used for the Company’s acquisition of

one

or more business entities. Until the Change of Terms Agreement, as defined below, the Company was required to make consecutive monthly payments of interest, calculated at a rate per annum equal to

one

-day LIBOR (adjusted daily) plus

2.75%,

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

September 15, 2018 (

the “Conversion Date”).

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

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

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

four

year cost of funds rate plus

2.5%.

As of the Conversion Date, there were

amounts due under the Key Bank Acquisition Note and

amounts had been converted to a term loan.

October 11, 2018,

and as subsequently amended, the Company entered into a new loan agreement with the Bank (the “Change of Terms Agreement”) which modified the original terms of the Key Bank Acquisition Note. Under the Change of Terms Agreement, the Company

may

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

$2,500,000

through

June 30, 2020 (

the “Maturity Date”), to be used for the Company’s acquisition of

one

or more business entities. The Change of Terms Agreement requires the Company to make consecutive monthly payments of interest on any outstanding principal calculated at a rate per annum equal to

4.25%.

The entire principal balance, plus all accrued interest, is due in full on the Maturity Date. As of

December 31, 2019,

there were

amounts due under the Change of Terms Agreement.

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

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 is required to pay the entire balance, including principal and all accrued and unpaid interest and fees, upon demand by the Bank. As of

December 31, 2019,

there were

amounts due under the Key Bank Revolver Note.

Proceeds from the Key Bank Term Note were utilized to retire amounts previously outstanding under a

$280,920

term loan from PNC Bank. As of

December 31, 2019,

all amounts outstanding under the Key Bank Term Note have been repaid.

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

November 1, 2008,

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

18%

of the

first

$5,000,000

in 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

twelve

months ended

December 31, 2019

and

2018,

we incurred approximately

$1,640,000

and

$1,800,000

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

As disclosed in a Current Report on Form

-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

-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

percent beginning

June 1, 2016,

percent beginning

October 1, 2016

and by

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

months, resulting in a new expiration date of

April 30, 2021.

The City of New York has

two one

-year options to further extend the Concession Agreement. The Air Tour Agreement also 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

$2,200,000

and

$1,777,000

during the

twelve

months ended

December 31, 2019

and

2018,

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. One of our Directors, Sam Goldstein, serves as deputy director of HJTC.

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

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.

January 15, 2019,

the Company was issued an unsecured note by

one

of its customers at the Heliport. The note schedules payments of approximately

$276,000

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

October 31, 2019,

as amended, and carries a

7.5%

rate of interest. The note payments were to be made in

six

monthly installments beginning

May 31, 2019.

The customer’s payments on the note have

not

met the installment plan and the Company was working on changes to the note when the customer filed for Chapter

Bankruptcy. The Company intends to continue to pursue remaining amounts due under the note and it is the Company’s expectation that the note will be fulfilled.

As disclosed in a Current Report on Form

-K filed with the SEC on

July 6, 2015,

the Company entered into a stock purchase agreement, dated

June 30, 2015,

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

-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

September 2018.

2019,

the Company accepted the title to a Falcon

aircraft owned by Mr. Peck as satisfaction in full of the remainder of the

$270,000

stock purchase price. The Company intends to sell the aircraft and has classified the it as “Held For Sale” on the Company’s Consolidated Balance Sheets as of

December 31, 2019.

As disclosed in a Current Report on Form

-K filed with the SEC on

September 06, 2019,

effective

September 1, 2019,

the Company and Ronald J. Ricciardi entered into a new Employment Agreement (the “New Agreement”). Pursuant to the New Agreement, Mr. Ricciardi will continue to serve as the Company’s President and Chief Executive Officer. Among other things, the New Agreement provides for a

four

-year term with a base salary of

$200,000,

with subsequent annual base salary increases at the discretion of the Board of Directors. In addition, Mr. Ricciardi is eligible to receive an annual incentive bonus in an amount equal to

25%

of the then-applicable base salary earned in the event that the Company meets or exceeds its annual operating plan for earnings before interest, taxes, depreciation and amortization. Mr. Ricciardi also received a stock award upon the execution of the New Agreement. In addition, Mr. Ricciardi is eligible for additional stock awards upon each of the

four

anniversary dates of this New Agreement. Each of the

five

stock awards shall be the number of shares equal to the issued and outstanding shares of the Company on the date of each issuance multiplied by

one

half of

one

percent. The issuance of such stock awards are to be administered according to the Company’s Equity Compensation Plan, as approved the Company’s stockholders.