UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED September 30, 2008
BALTIA AIR LINES, INC.
(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, STE 7I, 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 [ ] Yes [X]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definition of "large accelerated filer", "accelerated filer"
and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [ ] (do not check if smaller reporting company)
Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Number of shares of the registrant's common stock outstanding
as of November 12, 2008: 310,240,159 shares of Common Stock
PART ONE - FINANCIAL INFORMATION
Item 1. Financial Statements.
BALTIA AIR LINES, INC.
BALANCE SHEETS
(A Development Stage Company)
ASSETS
9/30/2008 12/31/2007
(Unaudited)
Current Assets
Cash $ 1,081,708 $ 2,002,496
Plant and Equipment
Equipment 115,067 115,067
Less Accumulated Depreciation (69,383) (65,383)
Net Property, Plant and Equipment 45,684 49,684
TOTAL ASSETS $ 1,127,393 $ 2,052,180
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts Payable $ 15,000 $ 25,000
Current portion of long-term debt 0 7,000
Total current liabilities 15,000 32,000
Long-term debt 0 12,368
Equity
Preferred Stock 665 665
Common Stock 30,332 27,945
Paid-in-Capital 16,632,117 16,233,527
Deficit Accumulated During
Development Stage (15,550,721) (14,254,325)
Total Equity 1,112,393 2,007,812
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 1,127,393 $ 2,052,180
See notes to unaudited interim financial statements.
STATEMENT OF OPERATIONS
(A Development Stage Company)
Three Months Ended Nine Months Ended August 24, 1989
Sept 30, Sept 30, (Inception) to
2008 2007 2008 2007 Sept 30, 2008
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $ 0 0 0 0 0
Costs & Expenses
General and
Administrative $265,852 $4,236,071 $1,140,896 $5,751,392 $ 12,965,421
FAA Certification 158,553 0 162,972 10,000 418,081
Training Expense 0 0 0 0 225,637
Depreciation (47) 3,181 4,000 3,343 315,056
Other 0 0 0 0 568,245
Interest (7,929) (3,520) (15,302) (3,520) 1,053,303
Total expenses 416,429 4,235,732 1,292,566 5,761,215 15,545,743
Loss before
income taxes (416,429) (4,235,732) (1,292,566) (5,761,215) (15,545,743)
Income Taxes 1,068 0 3,830 0 4,978
Deficit Accumulated During
Development Stage: (417,497) (4,235,732) (1,296,396) (5,761,215) (15,550,721)
Per share amounts:
Loss Nil ($0.02) Nil ($0.04)
Weighted Average Shares
Outstanding 302,343,246 206,884,199 296,296,946 157,042,599
See notes to unaudited interim financial statements.
STATEMENT OF CASH FLOWS
(A Development Stage Company)
Nine Months Ended Aug 24, 1989
Sept 30, (inception) to
2008 2007 Sept 30, 2008
(Unaudited) (Unaudited) (Unaudited)
Cash flows from Operating Activities:
Deficit Accumulated During
Development Stage $(1,296,396) $(5,761,215) $ (15,550,721)
Adjustments to reconcile net
loss to net cash provided by
operations:
Depreciation 4,000 3,343 315,056
Expenses paid by issuance of
common stock 354,527 5,484,660 5,226,814
(Increase) decrease in prepaid
expenses 0 0 400,301
Change in payables & accrued expenses (10,000) 25,000 3,166,481
Cash used by operating activities: (947,869) (249,412) (6,442,069)
Cash flows from investing activities:
Purchase of Equipment 0 (32,691) (323,125)
Deposit on Airplane 0 0 0
Cash used in investing activities: 0 (32,691) (323,125)
Cash flows from financing activities:
Issuance of Common Stock 46,450 1,746,573 7,402,383
Issuance of Preferred Stock 0 0 2,753
Loans from related parties 0 0 1,351,573
Repayment of related party loans 0 0 (368,890)
Principal payments on long-term debt (19,368) 0 (40,816)
Acquisition of Treasury Stock 0 0 (500,100)
Cash generated by financing: 27,082 1,746,573 7,846,903
Change in cash (920,787) 1,464,470 1,081,709
Cash-beginning of period 2,002,496 4,185 0
Cash -end of period $1,081,709 $1,468,665 $ 1,081,709
See notes to unaudited interim financial statements.
STATEMENT OF SHAREHOLDERS' EQUITY
(A Development Stage Company)
Preferred Common Deficit
Accumulated
Common Additional During
Par Stock Paid-In Development
Shares Value Shares Amount Capital Stage
Balance at December 31, 2005 66,500 $665 67,298,009 $6,730 $9,293,365 (9,284,902)
Exercise of Warrants and Options 22,000,000 2,200 9,000
Shares issued for cash 13,550,000 1,355 98,655
Shares issued for services 19,546,900 1,955 941,213
Options issued for services 143,959
Net Loss (1,208,680)
Balance at December 31, 2006 66,500 665 122,394,909 12,240 10,486,192 (10,493,582)
Exercise of Warrants and Options 58,000,000 5,800 239,700
Shares issued for cash 60,670,637 6,067 2,450,488
Shares issued for services 38,384,988 3,838 3,021,429
Options issued for services 35,768
Net Loss (3,760,743)
Balance at December 31, 2007 66,500 665 279,450,534 27,945 16,233,577 (14,254,325)
Exercise of Warrants and Options 16,000,000 1,600 0
Shares issued for cash 816,625 82 46,368
Shares issued for services 7,050,000 705 310,695
Options issued for services 41,527
Net Loss (1,296,396)
Balance at Sept 30, 2008 66,500 665 303,317,159 30,332 16,632,117 (15,550,721)
See notes to unaudited interim financial statements.
NOTES TO FINANCIAL STATEMENTS
BALTIA AIR LINES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
1. Basis of Presentation
The Financial Statements presented herein have been prepared by us in
accordance with the accounting policies described in our December 31,
2007 Annual Report on Form 10-KSB and should be read in conjunction
with the notes to financial statements which appear in that report.
The preparation of these financial statements in conformity with
accounting principles generally accepted in the United States requires
us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on going basis, we evaluate
our estimates, including those related to intangible assets, income
taxes, insurance obligations and contingencies and litigation. We base
our estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other
resources. Actual results may differ from these estimates under different
assumptions or conditions.
In the opinion of management, the information furnished in this Form 10-Q
reflects all adjustments necessary for a fair statement of the financial
position and results of operations and cash flows as of and for the three
and nine-month periods ended September 30, 2008 and 2007. All such adjustments
are of a normal recurring nature. The Financial Statements have been prepared
in accordance with the instructions to Form 10-Q and therefore do not include
some information and notes necessary to conform to annual reporting
requirements.
The financial statements have been presented in a "development stage" format.
Since inception, our primary activities have been raising of capital,
obtaining financing and obtaining route authority and approval from the
U.S. Department of Transportation. We have not commenced our principal
revenue producing activities.
2. Earnings/Loss Per Share
Basic earnings per share is computed by dividing income available to
common shareholders (the numerator) by the weighted-average number of
common shares outstanding (the denominator) for the period. Diluted
earnings per share assumes that any dilutive convertible securities
outstanding were converted, with related preferred stock dividend
requirements and outstanding common shares adjusted accordingly. It
also assumes that outstanding common shares were increased by shares
issuable upon exercise of those stock options for which market price
exceeds the exercise price, less shares which could have been purchased
by us with the related proceeds. In periods of losses, diluted loss per
share is computed on the same basis as basic loss per share as the
inclusion of any other potential shares outstanding would be anti-dilutive.
Due to the net losses reported, dilutive common equivalent shares were
excluded from the computation of diluted loss per share, as inclusion would
be anti-dilutive for the periods presented.
3. Stockholders' Equity
Stock Issued for Services
During the nine months ended September 30, 2008 we issued 7,050,000 shares
of our common stock in exchange for services. The shares were valued at
$ 311,000 or about $0.04 per share and reflected the share market value
at the time of issuance. The shares are not registered and are subject to
restrictions as to transferability.
During the nine months ended September 30, 2007 we issued 79,552,988 shares
of our common stock in exchange for services. The shares were valued at
$ 5,659,659 or about $0.071 per share and reflected the share market value
at the time of issuance. The shares are not registered and are subject to
restrictions as to transferability
Stock Issued for Cash
During the nine months ended September 30, 2008 we issued 816,625 and
16,000,000 shares of our common stock in exchange for cash and the for
the exercise of options by Igor Dimitrowsky (our President), respectively.
The shares sold for cash were subscribed at $ 46,250 or about $0.047
weighted average per share. We also paid an additional $56,000 in
commissions due on the 2007 common stock offering and reduced paid-in
capital accordingly. The options were exercised at par value.
In 2007, we issued 37,064,845 shares of our common stock in exchange for
cash. The shares were subscribed at $ 1,747,160 or about $0.047 weighted
average per share. We also received about $150,000 for 3 million shares
that were issuable at September 30, 2007. The shares were issued pursuant
to our private placement offering, are not registered and are subject to
restrictions as to transferability.
4. New Accounting Standards-Adoption of SFAS 123R
On January 1, 2006, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") 123R, "Share-Based Payment"
("SFAS 123(R)"), which requires that companies measure and recognize
compensation expense at an amount equal to the fair value of share-based
payments granted under compensation arrangements. Prior to January 1, 2006,
the Company accounted for its stock-based compensation plans under the
recognition and measurement principles of Accounting Principles Board
("APB") Opinion 25, "Accounting for Stock Issued to Employees," and related
interpretations, and recognized no compensation expense for stock option
grants since all options granted had an exercise price equal to the market
value of the underlying common stock on the date of grant.
The Company adopted SFAS 123(R) using the "modified prospective" method,
which results in no restatement of prior period amounts. Under this method,
the provisions of SFAS 123(R) apply to all awards granted or modified after
the date of adoption. In addition, compensation expense must be recognized
for any unvested stock option awards outstanding as of the date of adoption
on a straight-line basis over the remaining vesting period. The Company
calculates the fair value of options using a Black-Scholes option pricing
model. For the three months ended June 30, 2008 and 2007, the Company's
recognized no compensation expense related to stock option grants. The
Company did not grant any options during the three months ended June 30,
2008.
SFAS 123(R) also requires the benefits of tax deductions in excess of
recognized compensation expense to be reported in the Statement of Cash
Flows as a financing cash inflow rather than an operating cash inflow.
In addition, SFAS 123(R) required a modification to the Company's
calculation of the dilutive effect of stock option awards on earnings per
share. For companies that adopt SFAS 123(R) using the "modified prospective"
method, disclosure of pro forma information for periods prior to adoption
must continue to be made.
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and
Error Corrections," which
replaces APB Opinion No. 20 "Accounting Changes," and FASB Statement
No. 3 "Reporting Accounting Changes in Interim Financial Statements,"
and changes the requirements for the accounting for and reporting of
a change in accounting principle. This Statement requires retrospective
application to prior periods' financial statements of changes in accounting
principle, unless it is impracticable to determine either the period-specific
effects or the cumulative effect of the change. This Statement shall be
effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. Early adoption is permitted for
accounting changes and corrections of errors made in fiscal years beginning
after the date this Statement is issued. We do not believe that adoption
of SFAS 154 will have a material impact on our financial statements.
In September 2006, the SEC staff issued Staff Accounting Bulletin No. 108,
Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements ("SAB 108"). SAB 108
establishes an approach that requires quantification of financial statement
misstatements based on the effects of the misstatements on each of the
Company's financial statements and the related financial statement
disclosures. SAB 108 is effective for the year ending December 31, 2006.
We are currently evaluating the effect that the adoption of SAB 108
will have on our results of operations and financial statements.
In June 2006, the FASB issued FASB Interpretation No. 48, Accounting
for Uncertainty in Income Taxes - an Interpretation of FASB Statement 109
("FIN 48"), which clarifies the accounting for uncertain tax positions.
This Interpretation allows the tax effects from an uncertain tax position
to be recognized in the Company's financial statements if the position
is more likely than not to be sustained upon audit, based on the technical
merits of the position. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition. FIN 48 is effective for fiscal years beginning
after December 15, 2006. We do not expect the adoption of FIN 48 to have
a material impact on our financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The following discussion includes certain forward-looking statements
within the meaning of the safe harbor protections of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Statements that include words such as
"believe," "expect," "should," intend," "may," "anticipate," "likely,"
"contingent," "could," "may," or other future-oriented statements, are
forward-looking statements. Such forward-looking statements include,
but are not limited to, statements regarding our business plans,
strategies and objectives, and, in particular, statements referring
to our expectations regarding our ability to continue as a going concern,
generate increased market awareness of, and demand for, our service,
realize profitability and positive cash flow, and timely obtain required
financing. These forward-looking statements involve risks and uncertainties
that could cause actual results to differ from anticipated results. The
forward-looking statements are based on our current expectations and what
we believe are reasonable assumptions given our knowledge of the markets;
however, our actual performance, results and achievements could differ
materially from those expressed in, or implied by, these forward-looking
statements.
Our fiscal year ends on December 31. References to a fiscal year refer
to the calendar year in which such fiscal year ends.
OVERVIEW
The Company was organized in the State of New York on August 24, 1989.
Its objective is to provide scheduled air transportation from the U.S. to
Russia, and former Soviet Union countries. In 1991, the Department of
Transportation (DOT) granted the Company routes to provide non-stop
passenger, cargo and mail service from JFK to St. Petersburg and from JFK
to Riga, with online service to Minsk, Kiev and Tbilisi as well as back
up service to Moscow. For lack of sufficient working capital, the US
Department of Transportation terminated the Company's route authority
without prejudice to reapply when financing was in hand. Since such time,
Baltia has engaged in market research, operations development and planning,
as well as activities to raise requisite funding. These costs were borne
by Baltia shareholders and principals.
With the exception of the JFK - Moscow route, there exists no non-stop
competitive air transportation service on the routes for which Baltia
can reapply pending financing. In October 2007 Baltia filed with the DOT
for non-stop service from JKF to St. Petersburg, Russia. Baltia intends
to supply full service, i.e. passenger, cargo and mail, and will not be
dependent upon one or a few major customers. Baltia has two registered
trademarks "BALTIA" and "VOYAGER CLASS" and five trademarks subject to
registration.
The accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.
The Company has capital which management believes is sufficient to
start revenue operations on the JFK-St. Petersburg route. The Company's
operational success may be dependent upon its timely procuring significant
external debt and/or equity financing to fund its immediate and nearer-term
operations, and subsequently realizing operating cash flows from ticket
sales sufficient to sustain its longer-term operations and growth
initiatives.
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results
of operations are based upon our financial statements, which have been
prepared in accordance with accounting principles generally accepted in
the U.S. The preparation of our financial statements requires us to make
certain estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Our estimates, judgments and assumptions are continually
re-evaluated based upon available information and experience. Because of
the use of estimates inherent in the financial reporting process, actual
results could differ from those estimates. Areas in which significant
judgment and estimates are used include, but are not limited to valuation
of long lives assets and deferred income taxes.
Valuation of Long-Lived Assets: We review the recoverability of our
long-lived assets, including buildings, equipment and intangible assets,
when events or changes in circumstances occur that indicate that the
carrying value of the asset may not be recoverable. The assessment of
possible impairment is based on our ability to recover the carrying value
of the asset from the expected future pre-tax cash flows (undiscounted
and without interest charges) of the related operations. If these cash
flows are less than the carrying value of such asset, an impairment loss
is recognized for the difference between estimated fair value and carrying
value. Our primary measure of fair value is based on discounted cash flows.
The measurement of impairment requires management to make estimates of
these cash flows related to long-lived assets, as well as other fair value
determinations.
We amortize the costs of other intangibles (excluding goodwill) over their
estimated useful lives unless such lives are deemed indefinite. Amortizable
intangible assets are tested for impairment based on undiscounted cash flows
and, if impaired, written down to fair value based on either discounted
cash flows or appraised values. Intangible assets with indefinite lives are
tested for impairment, at least annually, and written down to fair value as
required.
Stock-Based Compensation Plans: Stock-based awards to non-employees are
accounted for using the fair value method in accordance with SFAS No. 123(R),
Accounting for Stock-Based Compensation, and EITF Issue No. 96-18, Accounting
for Equity Instruments that are Issued to Other Than Employees for Acquiring,
or in Conjunction with Selling Goods or Services.
On January 1, 2006, we adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") 123R, "Share-Based Payment" ("SFAS 123(R)"),
which requires that companies measure and recognize compensation expense at
an amount equal to the fair value of share-based payments granted under
compensation arrangements. Prior to January 1, 2006, we accounted for our
stock-based compensation plans under the recognition and measurement
principles of Accounting Principles Board ("APB") Opinion 25, "Accounting
for Stock Issued to Employees," and related interpretations, and would
typically recognize no compensation expense for stock option grants if
options granted had an exercise price equal to the market value of the
underlying common stock on the date of grant.
The Company adopted SFAS 123(R) using the "modified prospective" method,
which results in no restatement of prior period amounts. Under this method,
the provisions of SFAS 123(R) apply to all awards granted or modified after
the date of adoption. In addition, compensation expense must be recognized
for any unvested stock option awards outstanding as of the date of adoption
on a straight-line basis over the remaining vesting period. The Company
calculates the fair value of options using a Black-Scholes option pricing
model. For the nine months ended September 30, 2008 and 2007, the Company
recognized no compensation expense related to stock option grants. The
Company did not grant any options during the three months ended September
30, 2008.
SFAS 123(R) also requires the benefits of tax deductions in excess of
recognized compensation expense to be reported in the Statement of Cash
Flows as a financing cash inflow rather than an operating cash inflow. In
addition, SFAS 123(R) required a modification to the Company's calculation
of the dilutive effect of stock option awards on earnings per share. For
companies that adopt SFAS 123(R) using the "modified prospective" method,
disclosure of pro forma information for periods prior to adoption must
continue to be made.
As of September 30, 2008, there was no unrecognized compensation cost
related to non-vested options granted under the plan. The total fair
value of shares vested during the nine-month period ended September 30,
2008 was $0 (also none during the nine-month period ended September 30,
2007).
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections," which replaces APB Opinion No. 20 "Accounting Changes," and
FASB Statement No. 3 "Reporting Accounting Changes in Interim Financial
Statements," and changes the requirements for the accounting for and
reporting of a change in accounting principle. This Statement requires
retrospective application to prior periods' financial statements of changes
in accounting principle, unless it is impracticable to determine either the
period-specific effects or the cumulative effect of the change. This
Statement shall be effective for accounting changes and corrections of
errors made in fiscal years beginning after December 15, 2005. Early
adoption is permitted for accounting changes and corrections of errors
made in fiscal years beginning after the date this Statement is issued.
We do not believe that adoption of SFAS 154 will have a material impact
on our financial statements.
In September 2006, the SEC staff issued Staff Accounting Bulletin No.
108, Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements ("SAB 108"). SAB 108
establishes an approach that requires quantification of financial statement
misstatements based on the effects of the misstatements on each of the
Company's consolidated financial statements and the related financial
statement disclosures. SAB 108 is effective for the year ending December
31, 2006. We are currently evaluating the effect that the adoption of SAB
108 will have on our results of operations and financial
In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes - an Interpretation of FASB Statement 109
("FIN 48"), which clarifies the accounting for uncertain tax positions.
This Interpretation allows the tax effects from an uncertain tax position
to be recognized in the Company's financial statements if the position is
more likely than not to be sustained upon audit, based on the technical
merits of the position. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition. FIN 48 is effective for fiscal years beginning
after December 15, 2006. We do not expect the adoption of FIN 48 to have
a material impact on our financial statements.
RESULTS OF OPERATIONS
We had no revenues during the three months ended September 30, 2008 and
2007 because we do not fly any aircraft and cannot sell tickets.
Our general and administrative expenses decreased $3,970,219 to $265,852
in the three months ended September 30, 2008 as compared to $4,236,071 in
the three months ended September 30, 2007. This decrease is mainly the
result of the work already accomplished for air carrier certification.
Primarily as a result of the foregoing, we incurred a net loss of $416,429
in the three months ended September 30, 2008 as compared to a net loss of
$4,235,732 in the three months ended September 30, 2007.
Our future ability to achieve profitability in any given future fiscal
period remains highly contingent upon us beginning flight operations.
Management believes that the company has the necessary funding to commence
revenue flight operations, subject to DOT authorization. If commenced, there
can be no assurance that such operations would be profitable.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have incurred substantial operating and net losses,
as well as negative operating cash flows. As of September 30, 2008, our
working capital was $1,066,708 and our stockholders' equity was $1,112,393.
As compared to September 30, 2008, our working capital decreased from
$1,438,656 at September 30, 2007 and our stockholders' equity decreased
from $1,519,645 at September 30, 2007. We had unrestricted cash balance
of $1,081,708 at September 30, 2008, as compared to $1,468,656 at
September 30, 2007.
Our operating activities utilized $332,098 in cash during the three months
ended September 30, 2008, an increase of $82,686 from the $249,412 in cash
utilized during the three months ended September 30, 2007.
Our financing activities, from issuance of common stock, provided $0 and
$759,784 in cash during the three months ended September 30, 2008 and
2007, respectively.
Our unrestricted cash decreased by $386,957 to $1,081,708 at September
30, 2008, as compared to $1,468,665 at September 30, 2007.
We had no significant planned capital expenditures, budgeted or
otherwise, as of September 30, 2008.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
None
Item 4T. Controls and Procedures.
Our Chief Executive Officer and Chief Financial Officer, based on
evaluation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934,
as amended) required by paragraph (b) of Rule 13a-15 or Rule 15d-15, as
of September 30, 2008, have concluded that our disclosure controls and
procedures were effective in ensuring that information required to be
disclosed by us in the reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the Commission's rules and forms. Our Chief Executive Officer
and Chief Financial Officer also concluded that, as of September 30, 2008
our disclosure controls and procedures are effective in ensuring that
information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial
Officer, to allow timely decisions regarding required disclosure.
There was no change in our internal controls or in other factors that
could affect these controls during the three months ended September 30,
2008 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting. While existing
controls may be adequate at present, upon the commencement of flight
revenue service we intend to implement controls appropriate for airline
operations.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended September 30, 2008 we issued 3,300,000
shares of our common stock in exchange for services. The shares were
valued at $120,000 or about $0.04 per share and reflected the share
market value at the time of issuance. The shares are not registered
and are subject to restrictions as to transferability.
All of the above issuances were deemed to be exempt under rule 506 of
Regulation D and Section 4(2) of the Securities Act of 1933, as amended.
No advertising or general solicitation was employed in offering the
securities. The offerings and sales were made to a limited number of
persons, all of whom were accredited investors, business associates
of Baltia or executive officers of Baltia, and transfer was restricted
by Baltia in accordance with the requirements of the Securities Act of
1933, as amended. In addition to representations by the above-referenced
persons, we have made independent determinations that all of the above-
referenced persons were accredited or sophisticated investors, and that
they were capable of analyzing the merits and risks of their investment,
and that they understood the speculative nature of their investment.
Furthermore, all of the above-referenced persons were provided with access
to our Securities and Exchange Commission filings.
Item 3. Default Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits.
31.1 Certification by Chief Executive Officer and Chief Financial
Officer pursuant to Sarbanes-Oxley Section 302, provided herewith.
32.1 Certification by Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S. C. Section 1350, provided herewith.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Act
of 1934, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned thereunto duly authorized.
DATED THIS 13th DAY OF NOVEMBER 2008
BALTIA AIR LINES, INC.
/s/ Igor Dmitrowsky
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Igor Dmitrowsky
Chief Executive Officer and Chief Financial Officer(
principal accounting officer)
EXHIBIT 31.1
BALTIA AIR LINES, INC.
OFFICER'S CERTIFICATE PURSUANT TO SECTION 302
I, Igor Dmitrowsky, the Chief Executive Officer and
Chief Financial Officer of Baltia Air Lines, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Baltia
Air Lines, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present
in all material respects the financial condition, results of
operations and cash flows of the small business issuer as of, and
for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
Date: November 13, 2008
/s/ Igor Dmitrowsky
- ------------------------
Igor Dmitrowsky
Chief Executive Officer and Chief Financial Officer
(principal accounting officer)
EXHIBIT 32.1
BALTIA AIR LINES, INC.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report Baltia Air Lines, Inc.
(the "Company") on Form 10-Q for the period ended September 30, 2008
as filed with the Securities and Exchange Commission on the date hereof
(the Report), I, Igor Dmitrowsky, Chief Executive Officer and Chief
Financial Officer (principal accounting officer) of the Company, certify,
pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
A signed original of this written statement required by Section 906
has been provided to Baltia Air Lines, Inc. and will be retained by
Baltia Air Lines, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.
Date: November 13, 2008
/s/ Igor Dmitrowsky
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Igor Dmitrowsky
Chief Executive Officer and Chief Financial Officer
(principal accounting officer)