NOTE

Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, FFH and FBOGC. All significant inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates include depreciation, amortization, impairment of goodwill and intangibles, stock-based compensation, allowance for doubtful accounts and deferred tax assets.

Cash

The Company maintains its cash with various financial institutions which often exceeds federally insured limits. The Company has

not

experienced any losses from maintaining cash accounts in excess of federally insured limits. As part of its cash management process, the Company periodically reviews the relative credit standing of these financial institutions.

Accounts Receivable

rade

and Revenue Concentration

The Company extends credit to large and mid-size companies for products and services. The Company has concentrations of credit risk in that

73.0%

of the balance of its accounts receivable at

December 31, 2019

is made up of only

four

customers. At

December 31, 2019,

accounts receivable from the Company’s

four

largest accounts amounted to approximately

$241,298

(

35.6%

$115,864

(

17.1%

$111,149

(

16.4%

), and

$26,523

(

3.9%

), respectively. In addition, these

four

customers represented approximately

54.7%

of our revenue in

2019.

December 31, 2018,

accounts receivable from the Company’s

four

largest accounts amounted to approximately

$285,350

(

33.7%

202,080

(

23.8%

$101,678

(

12.0%

), and

$12,671

(

1.5%

), respectively. In addition, these

four

customers represented approximately

59.7%

of our revenue in

2018.

Accounts receivable are carried at their estimated collectible amounts. Accounts receivable are periodically evaluated for collectability and the allowance for doubtful accounts is adjusted accordingly. We determine collectability based on our management experience and knowledge of the customers.

Inventories

Inventories consist primarily of maintenance parts and aviation fuel and are stated at the lower of cost or net realizable value determined by the

first

-in,

first

out method.

Property and Equipment

Property and equipment is stated at cost. Depreciation is provided primarily using the straight-line method over the estimated useful lives as set forth in footnote

Amortization of leasehold improvements is provided using the straight-line method over the shorter of their estimated useful life or lease term, including renewal option periods expected to be exercised. Maintenance and repairs are charged to expense as incurred; costs of major additions and betterments are capitalized. When property and equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in income.

Goodwill and Intangible Assets

Goodwill and intangibles that are deemed to have indefinite lives are

not

amortized but, instead, are to be reviewed at each reporting period for impairment. The Company assessed potential impairment of goodwill using qualitative factors by considering various factors including macroeconomic conditions, industry and market conditions, cost factors, a sustained share price or market capitalization decrease and any reporting unit specific events. The Company performed an analysis of its goodwill and intangible assets at

December 31, 2019

and

2018.

Leases

December 31, 2019,

our consolidated balance sheets include a right of use asset of approximately

$495,000,

a long-term lease liability of approximately

$400,000,

and a short-term liability of approximately

$61,000.

Revenue Recognition

The Company recognizes revenue from ground-based services, such as fueling and aircraft storage, and aircraft maintenance and repair services. Revenue for the sale of ground-based services is recognized as a sale of services at the time the service is performed and provided to customers. Revenue for the sale of aircraft fuel is recognized at the time products are delivered to customers. Customers are invoiced at the time the services are performed and the associated revenue is recognized in the period it is earned. Revenue from aircraft storage services is recognized monthly based upon agreement. Aircraft maintenance and repair service revenue is recognized over time as all of the performance obligations are met. Performance obligations are satisfied when control of the aircraft has been transferred back to the customer.

2014,

the Financial Accounting Standard Board (the “FASB”) issued ASC

606,

Revenue from Contracts with Customers (“ASC

606”

), replacing the existing accounting standard and industry specific guidance for revenue recognition with a

five

-step model for recognizing and measuring revenue from contracts with customers. The underlying principle of the new standard is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC

606

became effective on

January 1, 2018

and we adopted it using the modified retrospective method applied to open contracts and only to the version of the contracts in effect as of

January 1, 2018.

Prior period amounts have

not

been adjusted and continue to be reflected in accordance with our historical accounting. There was

impact on the consolidated financial statements and

cumulative effect adjustment was recognized.

Customer Deposits

Customer deposits consist of amounts that customers are required to remit in advance to the Company in order to secure payment for future purchases and services.

Advertising

The Company expenses all advertising costs as incurred. Advertising expense for the years ended

December 31, 2019

and

2018

was approximately

$29,840

and

$33,118,

respectively.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between their financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income or loss in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than

not”

to be sustained assuming examination by tax authorities. Management has analyzed the Company’s tax positions, and has concluded that

liability should be recorded related to uncertain tax positions taken.

Deferred tax assets are subject to a valuation allowance because it is more likely than

not

that certain of the deferred tax assets will

not

be realized in future periods. The Company files income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, the Company is

longer subject to federal, state and local income tax examinations by tax authorities for years prior to

2016.

Fair Value of Financial Instruments

The reported amounts of the Company’s financial instruments, including accounts receivable, accounts payable and accrued liabilities, approximate their fair value due to their short maturities. The carrying amounts of debt approximate fair value because the debt agreements provide for interest rates that approximate market. The carrying value of the note receivable approximated fair value because it was discounted at a current market rate.

Net Income Per Common Share

Basic net income per share applicable to common stockholders is computed based on the weighted average number of shares of the Company’s common stock outstanding during the periods presented. Diluted net income per share reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted into common stock. Potentially dilutive securities, consisting of options and warrants, are excluded from the calculation of the diluted income per share when their exercise prices are greater than the average market price of the common stock during the period or when their inclusion would be antidilutive.

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

	For the Year Ended December 31,
		2019(1)	2018(1)
Weighted average common shares outstanding, basic		1,008,979	1,029,001

Common shares upon exercise of options		12,886	10,598

Weighted average common shares outstanding, diluted		1,021,865	1,039,599

(

)

Common shares of

40,402

and

39,402

underlying outstanding stock options for the years ended

December 31, 2019

and

2018,

respectively, were excluded from the computation of diluted earnings per share as their inclusion would be antidilutive.

Stock

Based Compensation

Stock-based compensation expense for all share-based payment awards are based on the estimated grant-date fair value. The Company recognizes these compensation costs over the requisite service period of the award, which is generally the option vesting term. For each of the years ended

December 31, 2019

and

2018,

the Company incurred stock based compensation of

33,997

Such amounts have been recorded as part of the Company’s selling, general and administrative expenses in the accompanying consolidated statements of operations. As of

December 31, 2019,

the unamortized fair value of the options totaled

$74,660

and the weighted average remaining amortization period of the options approximated

five

years.

Option valuation models require the input of highly subjective assumptions, including the expected life of the option. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do

not

necessarily provide a reliable single measure of the fair value of its employee stock options.

The fair value of each share-based payment award granted during the years ended

December 31, 2019

and

2018

were estimated using the Black-Scholes option pricing model with the following weighted average fair values:

	For the Year Ended December 31,
	2019	2018
Dividend yield	0%	0%
Expected volatility	910%	740%
Risk-free interest rate	1.6%	2.5%
Expected lives (years)	5.0	5.0

The weighted average fair value of the options on the date of grant, using the fair value based methodology during the years ended

December 31, 2019

and

2018,

was

$5.16

and

$3.03,

respectively.

Recently Adopted Accounting Pronouncements

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

became effective for us on

January 1, 2019

and we have adopted the new standard using a modified retrospective approach. The adoption of ASU

2016

did

not

have a material effect on the Company’s consolidated financial statements.