Saker Aviation Services Inc. (SKAS)

[hasagos]

Overall I thought the last report was quite good. Cash flow from operating activities increased significantly, from $591,928 in 2013 to $1,156,041 in 2014.

Cash on the balance sheet seems to have grown to a healthier level, and the company has made a good dent in paying down its debt.

As for earnings, I copy and pasted below what appears to have caused the dip. In and of itself I don’t think is a huge issue, however – the company should be careful when making acquisitions that they turn out to be profitable for shareholders.

Setting aside the above, I think they will continue chugging along, though not sure how much long term growth can be squeezed out of the heliport.

The biggest risk I see is if a group such as http://www.stopthechopnynj.org/ manages to convince the NYC mayor to either limit or shut down the tourist choppers. I don’t think the current mayor would do that, but it’s always a possibility in the future. Currently I think this poses an existential risk for the company, which would explain why up until recently the price was so cheap.

That is why I hope the company continues to pay down its debts, build up cash, and hopefully diversify itself later into profitable operations elsewhere - which will ensure its ongoing future regardless of which way the political winds blow.

I think this may explain the lower earnings in Q4:

Impairment of Goodwill and Other Intangibles

The Company had $530,000 and $1,080,380 of goodwill at December 31, 2014 and 2013, respectively. The Company assessed its goodwill using the qualitative approach and determined it was more likely than not that the fair value of its goodwill resulting from the purchase of PRA was less than its carrying value and recorded a $550,380 impairment charge at December 31, 2014. Due to macroeconomic, industry and market conditions, the PRA facility has not been able to establish positive cash flow and that future cash flows were insufficient to support any value of goodwill or indefinite live intangibles and has taken an impairment charge in the audited financial statements for their remaining value.