The following discussion should be read together with the accompanying unaudited
condensed consolidated 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, 2020.
The terms "we", "us", and "our" are used below to refer collectively to the
Company and the subsidiaries through which our various businesses are actually
conducted.
OVERVIEW
Saker Aviation Services, Inc. is a Nevada corporation. Our common stock, $0.03
par value per share (the "common stock"), is quoted 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"), and as a provider of
aircraft maintenance and repair services ("MRO"). 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 and as an FBO and MRO at the Garden City (Kansas)
Regional Airport.
The Garden City facility became part of our Company as a result of our
acquisition of the FBO assets of Central Plains Aviation, Inc. in March 2005 and
of Aircraft Services, Inc. in October 2016.
Our business activities at the Downtown Manhattan (New York) Heliport facility
(the "Heliport") commenced in November 2008 when we were awarded 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").
The COVID-19 pandemic has impacted the global and United States economies.
Federal, state, and local governments implemented certain travel restrictions,
"stay-at-home" orders, and social distancing initiatives which negatively
impacted our operations and those of our customers. As a result of the COVID-19
pandemic, on March 17, 2020, all sightseeing tour operations at the Downtown
Manhattan Heliport ceased due to a drop in demand. On July 20, 2020, New York
City started Phase 4 of the city's reopening. Sightseeing tour operators at the
heliport restarted operations under this phase. Sightseeing tour operators have
experienced low demand and minimal activity since July 20, 2020, but have seen a
slight uptick in demand beginning in the second quarter of 2021 through the date
of this report. The COVID-19 pandemic has had a less substantial impact on our
operations at our Kansas FBO and MRO.
While we expect the COVID-19 pandemic to continue to adversely impact our
business and operations, the full extent of the impact of the COVID-19 pandemic
on our operational and financial performance will depend on future developments,
including the duration and spread of the COVID-19 pandemic and related travel
advisories and restrictions and the impact of the COVID-19 pandemic on overall
demand for air travel.
Our long-term strategy is to increase our sales through growth within our
aviation services operations. To do so, we may expand our geographic reach and
product offering through strategic acquisitions and improved market penetration
within the markets we serve. We expect that any future acquisitions or product
offerings would be to complement and/or augment our current aviation services
operations.
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If we are able to grow our business as planned, we anticipate that our larger
size would provide us with greater buying power from suppliers, resulting in
lower costs. We expect that lower costs would allow for a more aggressive
pricing policy against some competition. More importantly, we believe that the
higher level of customer service offered in our facilities will allow us to draw
additional aircraft to our facilities and thus allow us to compete against other
FBOs of varying sizes.
REVENUE AND OPERATING RESULTS
Comparison of Continuing Operations for the Three and Nine Months Ended
September 30, 2021 and September 30, 2020.
REVENUE
Total revenue from operations increased by 101.4 percent to $1,451,817 for the
three months ended September 30, 2021 as compared with corresponding prior-year
period revenue of $720,287.
For the three months ended September 30, 2021, revenue from operations
associated with the sale of jet fuel, aviation gasoline and related items
increased by 63.0 percent to approximately $762,000 as compared to approximately
$467,000 in the three months ended September 30, 2020. This increase was
attributable to the higher volume of gallons of aviation gasoline sold at both
our New York and Kansas locations compared to the third quarter of 2020.
For the three months ended September 30, 2021, revenue from operations
associated with services and supply items increased by 149.1 percent to
approximately $605,000 as compared to approximately $243,000 in the three months
ended September 30, 2020. This increase was attributable to increased demand for
services at our New York and Kansas locations compared to the third quarter of
2020.
For the three months ended September 30, 2021 all other revenue from operations
increased by 688.4 percent to approximately $85,000 as compared to approximately
$11,000 in the three months ended September 30, 2020. This increase was
attributable to an increase in non-aeronautical revenue generated at our New
York location compared to the same period last year.
Total revenue increased by 21.4 percent to $3,439,977 for the nine months ended
September 30, 2021 as compared with corresponding prior- period revenue of
$2,833,174.
For the nine months ended September 30, 2021, revenue from operations associated
with the sale of jet fuel, aviation gasoline and related items increased by 24.3
percent to approximately $1,935,000 as compared to approximately $1,557,000 in
the nine months ended September 30, 2020. This increase was attributable to the
higher volume of gallons of aviation gasoline sold at both our New York and
Kansas locations compared to the same period in 2020.
For the nine months ended September 30, 2021, revenue from operations associated
with services and supply items decreased by 0.3 percent to approximately
$1,239,000 as compared to approximately $1,243,000 in the nine months ended
September 30, 2020.
For the nine months ended September 30, 2021, all other revenue from operations
increased by 689.3 percent to approximately $266,000 as compared to
approximately $34,000 in the nine months ended September 30, 2020. This increase
was attributable to an increase in non-aeronautical revenue generated by our
Heliport compared to the same period last year.
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GROSS PROFIT
Total gross profit (loss) from operations increased by 124.1 percent in the
three months ended September 30, 2021 compared to the three months ended
September 30, 2020. The Company experienced a profit from operations of $670,440
as compared to net income of $299,125 in the three months ended September 30,
2020. Gross profit for the three months ended September 30, 2021 was positively
impacted by Employee Retention Tax Credits ("ERTC") due the Company under the
CARES Act. These credits were recorded in the second and third quarters of 2021
and offset operating payroll costs in the third quarter by approximately
$69,000. Gross margin increased to 46.2 percent in the three months ended
September 30, 2021 as compared to 41.5 percent in the same period in the prior
year. Gross margin was also positively impacted by the ERTC amounts due the
Company under the CARES Act recorded in the second and third quarters of 2021.
Gross profit in the three months ended September 30, 2020 was positively
impacted by a credit in the amount of approximately $475,000 in connection with
the abatement of fees at our New York facility that were formerly deferred.
Total gross profit from operations increased by 103.2 percent to $1,597,790 in
the nine months ended September 30, 2021 as compared to $786,247 in the nine
months ended September 30, 2020. Gross margin increased to 46.4 percent in the
nine months ended September 30, 2021 as compared to 27.8 percent in the same
period in the prior year. The increases in gross profit and gross margin in a
year over year basis were driven by the items discussed above.
OPERATING EXPENSE
Selling, General and Administrative
Total selling, general and administrative expenses, ("SG&A"), from operations
were approximately $358,000 in the three months ended September 30, 2021,
representing a decrease of approximately $336,000 or 48.4 percent, as compared
to the same period in 2020. The decrease in SG&A for the three months ended
September 30, 2021 was primarily attributable to a reduction in expenses in 2020
due to the COVID-19 pandemic as compared to the same period in 2021. SG&A from
operations for the nine months ended September 30, 2021 were approximately
$1,019,000, representing a decrease of approximately $418,000 or 29.1 percent,
as compared to the same period in 2020. The decrease in SG&A operating expenses
for the nine months ended September 30, 2021, were largely attributable to ERTC
due the Company under the CARES Act. These credits of approximately $154,000
offset SG&A payroll expenses in 2021.
Corporate SG&A from operations was approximately $105,000 for the three months
ended September 30, 2021, representing a decrease of approximately $8,000 as
compared with the corresponding prior year period. Corporate SG&A was
approximately $348,000 for the nine months ended September 30, 2021,
representing a decrease of approximately $91,000 as compared with the
corresponding prior year period. The decrease in both the three and nine month
periods on a year-over-year basis were largely attributable to a non-recurring
write-off of miscellaneous receivables in the second quarter of 2020.
OPERATING INCOME (LOSS)
Operating income from operations for the three and nine months ended September
30, 2021 was $207,537 and $230,585, respectively, compared to operating loss of
($508,380) and ($1,089,960) in the three and nine months ended September 30,
2021, respectively. The increase in operating income on a year-over-year basis
was driven by the factors described above.
Depreciation and Amortization
Depreciation and amortization was approximately $82,000 and $99,000 for the nine
months ended September 30, 2021 and 2020, respectively.
Interest Expense
Interest expense was approximately $18,000 for both the nine month periods ended
September 30, 2021 and 2020.
Income Tax (Benefit) Expense
Income tax expense for the nine months ended September 30, 2021 was $8,364 as
compared to ($517,000) in income tax benefit during the same period in 2020. The
income tax benefit is attributable to a net loss in the nine months ended
September 30, 2020.
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Net Income (Loss) Per Share
Net income was $508,576 and $(844,711) for the nine months ended September 30,
2021 and 2020, respectively.
Basic net income (loss) per share for the nine months ended September 30, 2021
and 2020 was $0.49 and $(0.83), respectively. Diluted net income per share for
the nine months ended September 30, 2021 was $0.49. For the nine months ended
September 30, 2020, underlying stock options were excluded from the computation
of diluted earnings per share as their inclusion would be anti-dilutive.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2021, we had cash of $2,010,293 and a working capital
surplus of $3,413,169. We generated revenue of $3,439,977 and had net income of
$508,576 for the nine months ended September 30, 2021. For the nine months ended
September 30, 2021, cash flows included net cash provided by operating
activities of $444,389, net cash used in investing activities of $78,044, and
net cash used in financing activities of $255,134.
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 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"). There are currently no amounts
outstanding under the Key Bank Term Note.
Proceeds of the Key Bank Acquisition Note were to be disbursed 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 (as so amended, the "Change of Terms Agreement")
which modified the original terms of the Key Bank Acquisition Note. Under the
Change of Terms Agreement, the Company could have continued to, at the
discretion of the Bank, borrow up to an aggregate amount of $2,500,000 through
September 1, 2021 (the "Maturity Date"), to be used for the Company's
acquisition of one or more business entities. The Change of Terms Agreement
required the Company to make consecutive monthly payments of interest on any
outstanding principal calculated at a rate per annum equal to 4.25% and was
secured by substantially all of the Company's assets. The entire principal
balance, plus all accrued interest, was due in full on the Maturity Date. The
Bank notified the Company of its decision to discontinue the Key Bank
Acquisition Note, effective June 30, 2021. There are no amounts due under the
Changes of Terms Agreement.
The Key Bank Revolver Note, at the discretion of the Bank, provides 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.
Any proceeds from the Key Bank Revolver Note would be secured by substantially
all of the Company's assets. As of September 30, 2021, there were no amounts due
under the Key Bank Revolver Note.
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On August 14, 2020, the Company was granted a loan from the Bank (the "Loan") in
the amount of $304,833, pursuant to the Paycheck Protection Program under
Division, Title I of the CARES Act, which was enacted March 27, 2020. The Loan,
which was in the form of a note dated August 14, 2020, matures in August 2025
and bore interest at a rate of 1% per annum and was payable in monthly
installments commencing on, or before, October 31, 2021. At December 31, 2020,
in accordance with FASB ASC 470, Debt, and ASC 405-20, Liabilities -
Extinguishment of Liabilities, the Company recorded the cash inflow from the
Loan as a liability, and cash flows from financing, pending legal release from
the obligation by the U.S. Small Business Administration ("S.B.A."). The Company
used the Loan proceeds for eligible expenses during the covered period and the
Loan was forgiven by the S.B.A. in full in the second quarter of 2021. The
Company recorded the forgiveness of the Loan as a gain on extinguishment of
debt.
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.
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, the
Company has not been allowed to permit its tenant operators to conduct tourist
flights from the Downtown Manhattan Heliport on Sundays since 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. The Air Tour Agreement also provided for 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.
Additionally, since June 1, 2016, the Company has been 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 and gave the City of New York two one-year options to
extend the term of the Concession Agreement. The term of the Concession
Agreement was subsequently extended by the City through April 30, 2022 by the
City's exercise of the first of their two one-year option renewals.
The reductions under the Air Tour Agreement 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 a former officer and director of the Company. The
Company incurred management fees with Empire Aviation of approximately $0 and
$144,000 during the nine months ended September 30, 2021 and 2020, respectively,
which is recorded in administrative expenses. The Company and Empire Aviation
had historically 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. The
Company has suspended its contributions to HTJC in light of the pandemic. The
Company's former officer and director was also an active participant with HTJC,
which is managed by the former officer and director's grandson. One of our
Directors and our current acting principal executive officer, Sam Goldstein,
serves as deputy director of HTJC.
During the program year that began on May 1, 2020, the City agreed, in
recognition of the pandemic's impact, that the Company could defer payment of
minimum guaranteed payments. In April 2021, the City waived the deferred fees
through December 31, 2020. In May 2021, the City waived the deferred fees
through April 30, 2021 which coincided with the expiration of the Concession
Agreement as amended by the Air Tour Agreement. The City is currently working
toward obtaining approval of an amendment to the Air Tour Agreement relative to
fees to be paid by the Company to the City during the one year extension period,
among other things. Concession fees in this Form 10-Q have been accounted for
based on the months abated and the Company's commitment to pay the City 18% of
monthly Gross Receipts in excess of $100,000 during the amendment approval
process. During the nine months ended September 30, 2021 and 2020, we incurred
approximately $103,810 and $254,000 in concession fees, respectively, which are
recorded in the cost of revenue.
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 with a monthly payment of
$2,568 and 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, had 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
in October 2019. In February 2021, the bankruptcy court allowed the customer to
convert from a Chapter 11 Bankruptcy to a Chapter 7 Liquidation. Under the
Chapter 7 Liquidation, the note will now be treated as a general unsecured claim
as opposed to a prioritized payment under the Chapter 11 Bankruptcy to cure the
permit default. This change has substantially diminished the Company's
expectation to collect amounts due under the note. Therefore, the Company deemed
unpaid principal and accrued interest of approximately $205,000 at December 31,
2020 as uncollectable. The $205,000 was written off to bad debt expense in the
fourth quarter of 2020.
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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 intended to sell the
aircraft and classified it as "Held For Sale" on the Company's consolidated
balance sheet at December 31. 2019. The Company has been unable to find a buyer
due to a depressed market as well as a drop in demand for this type of aircraft.
Without a market in which to sell the aircraft, the Company recorded an
impairment charge in the quarter ended June 30, 2020 for the full carrying
amount of the aircraft. The Company does not believe the aircraft has any value
and, in December 2020, filed an application with the FAA Aircraft Registry to
cancel the aircraft's registry.
On May 1, 2021, the Company's Kansas subsidiary executed a promissory note for
$76,000 with Avfuel Corporation ("Avfuel") for the purchase of a Jet-A refueling
truck (the "Truck Note"). The Truck Note requires six annual payments of
$13,432.56 commencing April 30, 2022 with the entire balance of unpaid principal
and interest due on, or before, April 30, 2028. Interest accrues at prime plus
3% on the outstanding principal amount. The Company is required to make
prepayments against the Truck Note at the rate of $0.018 per gallon of fuel
purchased under a fuel supply agreement between the Company and Avfuel.
As described throughout this Quarterly Report on Form 10-Q, on March 17, 2020,
all sightseeing tour operations at the Downtown Manhattan Heliport ceased as a
result of the COVID-19 pandemic. On July 20, 2020, New York City began Phase 4
of the city's reopening. Sightseeing tours resumed under this phase. Sightseeing
tour operators have experienced low demand and minimal activity since July 20,
2020, but sightseeing tour operators have seen a slight uptick in demand in the
second quarter of 2021 through the date of this report. To mitigate this loss of
revenue, we may need additional financing to continue operations through the
issuance of equity or debt and any such financing will be dependent on general
market conditions, which itself is subject to the effects of the COVID-19
pandemic. Although we have access to the Key Bank Revolver Note described above,
we can make no assurance that that the Key Bank Revolver Note will be sufficient
to fund our operations. Additionally, certain restrictions in the Key Bank
Revolver Note may prohibit us from obtaining more attractive financing.
During the nine months ended September 30, 2021, we had a net increase in cash
of $111,211. Our sources and uses of funds during this period were as follows:
Cash from Operating Activities
For the nine months ended September 30, 2021, net cash provided by operating
activities was $444,389. This amount included an increase in operating cash
related to net income of $508,576 and additions for the following items: (i)
depreciation and amortization, $82,244; (ii) stock based compensation, $25,794;
(iii) accounts receivable, trade, $5,679; (iv) deposits, $2,512; and (v)
accounts payable, $90,787. These increases in operating activities were offset
by a decrease in the following items: (i) inventories, $69,365, (ii) prepaid
expenses and other current assets, $179,151; and (iii) accrued expenses,
$22,687.
For the nine months ended September 30, 2020, net cash used in operating
activities was $1,111,606. This amount included a decrease in operating cash
related to net loss of $844,711 and additions for the following items: (i)
depreciation and amortization, $98,538; (ii) impairment charge, $270,000; (iii)
stock based compensation, $55,989; (iv) accounts receivable, trade, $176,436;
(v) inventories, $895; and (vi) customer deposits, $592. These increases in
operating activities were offset by decreases for the following items: (i)
prepaid expenses and other current assets, $396,351; (ii) accounts payable;
$296,691 and (ii) accrued expenses, $176,303.
Cash from Investing Activities
For the nine months ended September 30, 2021, net cash of $78,044 was used in
investing activities for the purchase of property and equipment. For the nine
months ended September 30, 2020, net cash of $4,912 was used in investing
activities for the purchase of property and equipment.
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Cash from Financing Activities
For the nine months ended September 30, 2021, net cash of $255,134 was used in
financing activities for the following items: (i) extinguishment of debt,
$304,833; (ii) payment of right of use leases, $20,781; and (iii) repayment of
notes payable, $5,520. These decreases in financing activities were offset by
issuance of notes payable of $76,000. For the nine months ended September 30,
2020, net cash of $112,500 was used in financing activities for the payment of
accrued dividends of $383,909 and repayment of right of use leases payable of
$33,424, offset by the issuance of a notes payable of $304,833.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Recently Adopted Accounting Pronouncements
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 became effective for us on January 1, 2019
and we have adopted the new standard using a modified retrospective approach.
The adoption of ASU No. 2016-02 did not have a material impact on the Company's
financial statements.
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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:
? the impact of the COVID-19 pandemic on our business and results of operations;
? 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; and
? 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, 2020 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.
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