UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
BALTIA AIR LINES, INC. (Baltia)
(Exact name of registrant as specified in its charter)
STATE of NEW YORK 11-2989648
(State of Incorporation) (IRS Employer Identification No.)
63-25 SAUNDERS STREET, SUITE 7 I, REGO PARK, NY 11374
(Address of principal executive offices)
Registrant's telephone number, including area code: (718) 275 5205
Check whether the issuer (1) filed all reports required to be filed by
Section 13, or 15(d) of the Exchange Act during the past 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. No [x] Yes [x] Required report filed herewith.
Class Number of Shares
Common Stock - Par Value $.0001 Per Share 6,937,584
Preferred Stock - Par Value $.01 Per Share 275,250
Transitional Small Business Disclosure Format (Check one): No [X]
PART ONE - FINANCIAL INFORMATION
Item 1. Financial Statement.
BALTIA AIR LINES, INC.
BALANCE SHEETS
As At SEPTEMBER 30, 2001
ASSETS
Current Assets
Cash $ 1327
Total Current Assets 1,327
Fixed Assets
Property, Plant and Equipment
Property, Plant and Equipment 89,656
Less Accumulated Depreciation 41,626
Net Property, Plant and Equipment 48,030
Other Assets
Premedia Costs 79,218
Total Other Assets 79,218
TOTAL ASSETS $ 128,575
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts Payable $ 36568
Total Current Liabilities 36,568
Other Liabilities
Officers Loan 117,000
Total Other Liabilities 117,000
Stockholders Equity
Common Stock 694
Preferred Stock 2,753
Paid-in-Capital 7,991,201
Retained Earnings (8,019,541)
Treasury Stock (100)
Total Stockholders Equity (24,993)
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 128,575
BALTIA AIR LINES INC.
STATEMENTS OF CHANGES OF SHAREHOLDERS EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2001
Preferred Stock Common Stock Additional
Shares Par Value Shares Par Value Paid In Capital
Balance - Dec 31, 2000 275,250 $2,753 3,987,083 399 $ 7,986,755
2001 Issue-Preferred Stock 0 0 - -
2001 Issue-Common Stock - - 2,950,501 295 4,446
Balance - Sept 30, 2001 275,250 2,753 6,937,584 694 7,991,201
STATEMENT OF OPERATIONS
Nine months Ended August 24, 1989
Sept 30, (Inception) to
2001 2000 Sept 30, 2001
(Unaudited) (Unaudited)
Revenues 0 0 0
Expenses
Depreciation 9,606 9,606 41,626
Interest Expense 0 0 1,242,363
General and
Administrative 7,042 12,557 2,415,627
Professional fees 0 5,662 2,005,608
Service contributions 0 0 1,352,516
Training Expense 0 0 225,637
FAA Certification 0 0 206,633
Media Costs 79,218 79,218 283,865
Abandoned fixed assets 0 0 205,162
Total expenses 95,866 107,043 7,979,037
Net loss (95,866) (107,043) (7,979,037)
STATEMENT OF CASH FLOWS
Cash flows from Operations Nine months Ended Aug 24, 1989
Sept 30, (inception) to
2001 2000 Sept 30, 2001
(Unaudited) (Unaudited)
Net Income (95,866) (107,003) (8,019,540)
Adjustments to reconcile net
loss to net cash provided by
operations:
Depreciation 9,606 9,606 261,036
Change in Property, Plant and
Equipment 0 0 (309,066)
Interest paid by stock 0 0 63,500
Change in Premedia costs 79,218 79,218 316,872
Change in Accounts Payable 0 (17,250) 1,841,012
Change in Officers Loan 0 (3,750) (251,890)
Service Contributions 0 0 1,352,516
Total Adjustments 88,824 67,824 3,273,980
Net Cash Provided by Operations (7,042) (39,179) (4,745,560)
Cash flows from Financing Activities:
Shareholder Loans 0 0 1,351,573
Paid In Capital 4,471 39,696 2,758,956
Issuance of Common Stock 271 0 1,133,705
Issuance of Preferred Stock 0 0 2,753
Issuance of Treasury Stock 0 0 (500,100)
Net Increase(Decrease) in Cash (2,300) 517 1,327
Equivs
Cash and Cash Equivalents - 3,627 2,935 0
Beginning
CASH AND CASH EQUIVALENTS - 1,327 3,452 1,327
ENDING
NOTES TO FINANCIAL STATEMENTS
I. ORGANIZATION, NATURE OF OPERATIONS, GOING CONCERN
CONSIDERATIONS
(A) Organization
The Company was incorporated under the laws of the state of
New York on August 24, 1989.
(B) Nature of Operations
The Company was formed to provide commercial, passenger,
cargo and mail air transportation between New York and Russia.
Since inception, the Company's primary activities have been
raising of capital, obtaining financing and obtaining Route Authority
and approval from the U.S. Department of Transportation. The Company
has not yet commenced revenue producing activities. Accordingly, the
Company is deemed to be a Development Stage Company.
2. ACCOUNTING POLICIES
(A) Cash and Cash Equivalents
The Company considers cash and cash equivalents to be all
short term investments which have an initial maturity of three months
or less.
(B) Property and Equipment
The cost of property and equipment is depreciated over the
estimated useful lives of the related assets. Leasehold improvements
are depreciated over the lesser of the term of the related lease or
the estimated lives of the assets. Depreciation is computed on the
straight-line method for financial reporting purposes and tax
purposes.
(E) Income Taxes
Deferred income taxes arise from temporary differences
between the recording of assets and or liabilities reported for
financial accounting and tax purposes in different periods. Deferred
taxes are classified as current or non-current, depending on the
classification of the assets and liabilities to which they relate.
Deferred taxes arising from temporary differences that are not related
to an asset or liability are classified as current or non-current
depending on the periods in which the temporary differences are
expected to reverse. To the extent that the total of deferred tax
assets are not realized, a reserve is established.
3. PROPERTY and EQUIPMENT
Property and equipment at September 30, 2001 (Unaudited)
consisted of the following;
Office Equipment $53,406
Furniture & Fixtures 6,782
Automobiles 29,465
Total 89,656
Less, Accumulated Depreciation (41,626)
Total Property and Equipment $51,232
The useful lives of property and equipment for purposes of
computing depreciation are;
Office equipment 5-7 years
Automobiles 5 Years
5. RELATED PARTY TRANSACTIONS
The Company's legal counsel, Steffanie Lewis, of the
International Business Law Firm, P.C. owns 803,750 restricted shares
of common stock at March 31, 2001 or approximately 12.8% of the
Company's issued and outstanding common stock. Ms. Lewis was issued
125,000 restricted common shares in June 1997 in exchange for legal
work performed in connection with various certifications, authorities
and financial matters. She was previously issued 33,333 of restricted
common shares in exchange for the first six months preparation of the
1990 application to the Department of Transportation for Air Line
Fitness Certification.
On June 30, 1997 Steffanie Lewis was issued 125,000
restricted common shares, as negotiated with the management of the
Company, in exchange for the total due to her, in the amount of
$1,624,432.
On June 23, 1997 Igor Dmitrowsky, President of the Company
and a shareholder, relinquished the amount due to him totaling
$22,142. Accordingly, the Company has recorded Contributed Capital in
the amount of $22,142.
On March 30, 1998, Various shareholders including Igor
Dmitrowsky, President of the Company relinquished the amounts due them
totaling $160,983. Accordingly, the Company recorded Contributed
Capital in the amount of $160,983.
On September 1998, Igor Dmitrowsky, President of the Company
and a shareholder, relinquished the amount due to him totaling
$45,711. Accordingly, the Company has recorded Contributed Capital in
the amount of $45,711.
On September 1998, Leonard Becker, a shareholder,
relinquished the amount due to him totaling $57,000. Accordingly, the
Company has recorded Contributed Capital in the amount of $57,000.
6. INCOME TAXES
At September 30, 2001 the Company has a net operating loss
carry forward of $7,923,675 which is available to offset future
taxable income. The carry forwards start to expire between the year
2006 and 2013. The Company is still liable for certain minimum state
and city taxes.
As of September 30, 2001, a net deferred tax benefit has not
been reflected to record temporary differences between the amount of
assets and liabilities recorded for financial reporting and income tax
purposes due to the establishment of a 100% valuation allowance
relating to the uncertainty of recoverability.
7. STOCKHOLDERS' DEFICIT
(A) Stock Options
In 1992, the Company granted options to purchase 43,583
restricted shares of common stock, at $80.00 per share, to certain
private investors. These options expire upon the passing of thirty
full calendar months after the Company has made a public sale of
securities in compliance with the Securities Act of 1933, as amended,
or the passing of twenty years from date of said agreements, whichever
is earlier. As of September 30, 2001, no options have been exercised.
(B) Retirement or Stock
On November 4, 1992, the Company issued 10,416 restricted
shares of stock for $500,000 to a private investor. On November 24,
1992, these shares were repurchased for the same amount from the
investor and subsequently retired.
(C) Acquisition of Common Treasury Stock
On September 28, 1998 the Company purchased from Igor
Dmitrowsky, president of the Company, 833,333 common shares for $100
and has granted him an option to repurchase 1,000,000 common shares
from the Company at $100 upon the completion or the Company's
inaugural flight or upon the exercise of any warrants, whichever
occurs first.
(D) Reverse Stock Split
On August 24, 1995, the Board of Directors authorized and
the majority of the current shareholders ratified a ten for one
reverse stock split of the Company's $.0001 par value common stock.
On December 31, 1997, the Board of Directors authorized and
the majority of the current shareholders ratified a two for one
reverse stock split of the Company's $.000l par value common stock.
On September 29, 1998, the Board of Directors authorized and
the majority of the current shareholders ratified a one and two
tenths (1.2) for one reverse stock split of the Company's $.0001 par
value common stock.
All references in the accompanying financial statements to
the number of common shares, warrants and per share amounts have been
restated to reflect the reverse stock splits.
(E) Preferred Shares
On December 7, 1998, the Company amended its Articles of
Incorporation thereby, increasing the authorized aggregate number of
preferred stock shares from 15,000 preferred stock shares at no par
value to 500,000 preferred stock shares at $.01 par value.
(F) Contributed Capital
The Company has recorded service contributions from certain
key officers who have worked for and on behalf of the Company. The
service contribution amounts have been calculated based on an a
normal rate of compensation, on either a full or part time basis, as
based on the number of hours worked by each individual.
The Company maintains no obligation, present or future, to
pay or repay for any and all service contributions received.
Accordingly, the Company has not recorded a liability for, accrued
for, and/or accounted for any monetary reserves in connection with the
service contributions.
On June 23, 1997, certain of the Company's management
relinquished the amount due them for back-pay totaling $270,928
Accordingly, the Company has recorded Contributed Capital in the
amount of $270,928.
Item 2. Management's Discussion and Plan of Operation.
The Company has been working with consultants to refine tools and
procedures for implementing its revenue operations plan for use when
management, with the advice of consultants, determines the appropriate
time. Administrative activities have been conducted to further that
end and to pursue the suit identified above.
The Company expects to maintain over the next twelve months. In
the absence of outside investors, management is foregoing compensation
and expects to contribute administrative costs necessarily incurred.
The Company plans no product research and development at this
time or any purchase or sale of equipment. There is no significant
change in the personnel disclosed in Registration Statement 333-37409.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On February 1, 2000,in the US District Court for the
Southern District of New York, the Company sued Canadian Imperial Bank
of Commerce and its wholly-owned subsidiary, CIBC Oppenheimer Corp.,
for action under its clearing agency license that violated securities
laws and RICO and requested ancillary jurisdiction over certain state
causes of action. The court found that CIBC's refusing to clear any
purchase of the Company's registered securities in violation of
Section 17A(b)(6) and its concealing the material risk that it might do
so, arbitrarily and at will, gave the Company no cause of action. The
US Court of Appeals for the Second Circuit affirmed and remanded for a
hearing on sanctions. Details were reported on Form 10_QSB for the
second quarter of 2001.
Item 2. Changes in Securities.
The following shares were issued to the following persons at par
value under exemption 4(2)for services rendered.
Yorktown Consulting Srvs.380,000
Airline Software 50,000
Thomas McDermott 30,000
Paul Roth 30,000
Steven Orlikoff 15,000
Mark Drimer 10,000
Daina Jerumanis 15,000
The following shares were issued under exemption 4(3) to the
following persons on 7/09/01 for cash at the per share price listed.
Neil Jones 8,333 $0.17
Neil Jones 20,000 Par
Socrates Skiadas 4,167 0.17
Socrates Skiadas 10,000 Par
Hart Rotenberg 4,167 0.17
Hart Rotenberg 10,000 Par
Richard Charbit 16,667 0.17
Richard Charbit 40,000 Par
David Marston 6,000 Par
Joseph Rotenberg 4,167 0.17
Joseph Rotenberg 10,000 Par
Item 3. Intentionally omitted.
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Shareholders' Meeting was held on August 24, 2001, at
63-25 Saunders St., Rego Park, NY 11374 at 9:00 AM. Notices were
mailed via first class mail to all shareholders on August 4, 2001.
With an absolute majority of shares being present, the shareholders
unanimously reelected the Directors:
Igor Dmitrowsky - to serve as Chairman
Walter Kaplinsky - to serve as Secretary
Andris Rukmanis
Anita Schiff-Spielman
The issuance of the following shares to the below names persons was
ratified and authorized.
Igor Dmitrowsky 2,396,000
Aina Dmitrowsky 26,000
Steffanie Lewis 245,000
Walter Kaplinsky 210,000
Richard Charbit 256,667
Yorktown Consulting Srvs.380,000
Airline Software 80,000
Paul Roth 30,000
E.S.P. Dos 40,000
Andris Rukmanis 10,000
Robert Strom 80,000
Terry Warren 25,000
Pandu Gururaj 20,000
Sriam Das 5,000
John Stolarz 10,000
Mark Drimer 10,000
Ilona Priedite 15,000
Regina Kaplinsky 15,000
Steven Orlikoff 15,000
Daina Jerumanis 15,000
Neil Jones 28,333
Socrates Skiadas 14,167
Hart Rotenberg 14,167
David Marston 6,000
Joseph Rotenberg 14,167
Thomas McDermott 30,000
Stock options in the following amounts, for the purchase of an
equal number of common shares at par value exercisable anytime after
January 1, 2002, were issued to the following persons: Igor Dmitrowsky
- 1,200,000; Steffanie Lewis - 300,000; Walter Kaplinsky - 200,000;
Richard Charbit - 230,000; Andris Rukmanis - 20,000; Paul Roth -
30,000. Igor Dmitrowsky is authorized to execute documents and make
any arrangements he deems appropriate in order to obtain financing,
and to purchase or lease aircraft. Igor Dmitrowsky and the Company's
Legal Counsel were authorized to prosecute legal action, as they deem
appropriate, against CIBC Oppenheimer Corp. and its parent Canadian
Imperial Bank of Commerce.
Item 5. Intentionally omitted.
Item 6. Intentionally omitted.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALTIA AIR LINES, INC., Registrant
Date: 12-16-2001 ____ IGOR DMITROWSKY (signed) _____
By: Igor Dmitrowsky, President
Date: 12-16-2001 ____ WALTER KAPLINKSY (signed)_____
By: Walter Kaplinsky, Secretary
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