UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
| Mark One | |
| [ X ] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the Fiscal Year ended December 31, 2011 | |
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from _____ to _____ |
Date of Report: March 20, 2013
(Exact name of Registrant as specified in its charter)
| NEW YORK (State of Incorporation) |
11-2989648 (IRS Employer Identification No.) |
| JFK International Airport, Building 151, Jamaica, NY 11430 (Address of principal executive offices) (718) 244 8880 (Registrant's telephone number, including area code) | |
| Title of each class -None- | Name of each Exchange on which registered -None- |
| Securities Registered pursuant to Section 12(g) of the Exchange Act: | |
| Common Stock, (Title of Class) | $.0001 Par Value |
| Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] - - No [X] | |
| Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] - - No [X] | |
| Indicate by check mark whether the Registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. Yes [X] - - No [ ] | |
| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes [X] - - No [ ] | |
| 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 definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): | |
| Large accelerated filer [ ] Non-accelerated filer [ ] |
Accelerated filer [ ] 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 of 1934). Yes [ ] No [X] | |
| The aggregate market value of the voting common equity held by non-affiliates as of April 10, 2012 is $31,233,039. | |
| The number of shares of the registrant's common stock outstanding as of April 10, 2012 was 1,909,599,529. | |
[EXPLANATORY NOTE: Certain
clerical errors were discovered in the previous 10-K filings
which necessitated a complete review and recalculation of
executive compensation for all directors and officers. The
result of this review has resulted in the corrections that
have been made to prior 10-K filings and in Item 11.
Executive Compensation, the Report of the Independent
Registered Public Accounting Firm, and Financial Notes,
Recent Accounting Pronouncements, Notes 4
and 8.
All other parts of the report have been omitted and are the
same as previously filed.]
| PART 1 | |
| Item 1. | Business |
| Item 1A. | Risk Factors |
| Item 1B. | Unresolved Staff Comments |
| Item 2. | Properties |
| Item 3. | Legal Proceedings |
| PART II | |
| Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
| Item 6. | Selected Financial Information |
| Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
| Item 8. | Financial Statement Supplementary Data |
| Item 9. | Changes in and Disagreements with Accountants on Accounting And Financial Disclosures |
| Item 9A | Controls and Procedures |
| Item 9B | Other Information |
| PART III | |
| Item 10. | Directors and Executive Officers of the Registrant |
| Item 11. | Executive Compensation |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
| Item 13. | Certain Relationships and Related Transactions |
| Item 14. | Principal Accountant Fees and Services |
| PART IV | |
| Item 15. | Financial Statements and Other Exhibits |
No cash compensation was paid to the executive officers of the Company during the fiscal years ended December 31, 2011 and 2010.
During the year ended December 31, 2011, the Company issued 245,749,998 shares of its $.0001 par value common stock to its executive officers; the shares were recorded at fair value and were awarded as bonus fully earned and non-assessable, and containing no future earned performance of forfeiture requirements. Of this 245,749,998 total, 208,500,000 shares, valued at $10,712,000, was issued to Igor Dmitrowsky, president and CEO.
SUMMARY COMPENSATION TABLE
| Name & Principal Position |
Year |
Base Salary |
Bonus | Stock Awards* |
Option Awards* |
Non-Equity Incentive Plan Compensation Earnings |
Change in Pension Value and Nonqualified Incentive Plan Compensation |
All Other Compensation ** |
Total |
| Igor Dmitrowsky President, CEO |
2011 2010 |
$ 0 0 |
$ 0 0 |
$ 10,712,000 8,759,000 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 75,106 145,453 |
$10,787,106 8,904,453 |
| Barry Clare Vice-President |
2011 2010 |
0 0 |
0 0 |
1,426,000 2,024,000 |
0 0 |
0 0 |
0 0 |
347,948 293,427 |
1,773,948 2,317,427 |
| Rusell Thal Vice-President |
2011 2010 |
0 0 |
0 0 |
362,000 293,000 |
0 0 |
0 0 |
0 0 |
51,000 0 |
413,000 293,000 |
| Walter Kaplinsky Secretary |
2011 2010 |
0 0 |
0 0 |
214,000 202,000 |
0 0 |
0 0 |
0 0 |
0 3,930 |
214,000 205,930 |
| Andris Rukmanis VP, Europe |
2011 2010 |
0 0 |
0 0 |
0 162,000 |
0 0 |
0 0 |
0 0 |
0 0 |
0 162,000 |
* These columns represent the grant date fair value of the awards as calculated in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. The fair value of these equity awards on the date of grant was approximately $12,714,000 and $11,440,000 for stock awards for the years ended December 31, 2011 and 2010. The fair value was estimated using the Black-Sholes option pricing model with the following assumptions: risk free interest rate of 3.3% and 4.4%, for the years ended December 31, 2011 and 2010, respectively, no dividend yield, expected lives between one and five years, and volatility of 200%. The expected term of the equity instruments granted is based on the “simplified method for “plain vanilla” options discussed in SEC Staff Accounting Bulletin (“SAB”) No. 107, as amended by SAB No. 110. The expected volatility is derived from historic volatility of the Company’s stock on the OTCBB for a period that matches the expected term of the equity award. The risk-free interest rate is the yield from a Treasury note corresponding to the expected term of the equity awards.
** Mr. Dmitrowsky was charged additional compensation of $15,000 and $15,000, which represents one-hundred percent of the rent the Company paid for its original corporate headquarters during the years ended December 31, 2011 and 2010, respectively. In addition, during the years ended December 31, 2011 and 2010, Mr. Dmitrowsky received other compensation of $60,106 and $130,453 for services provided the Company in lieu of salary.
Mr. Clare was paid additional compensation of $347,948 and $293,427 for the years ended December 31, 2011 and 2010, respectively, which represents amounts paid him for negotiating services in connection with the raise of new equity capital.
Russell Thal was paid additional compensation of $51,000 for services provided the Company during the year ended December 31, 2011.
Mr. Kaplinsky was paid additional compensation of $3,930 for services provided the Company during the year ended December 31, 2010.
APPENDIX A - Financial States for the Years Ended December 31, 2011 ad 2010
| Report of Independent Registered Accounting firm | F-1 |
| Balance Sheets as of December 31, 2011 and 2010 | F-2 |
| Statements of Operations for the years ended December 31, 2011 and 2010, and the period August 29, 1989 (inception) to December 31, 2011 | F-3 |
| Statements of Cash Flows for the years ended December 31, 2011 and 2010, and the period August 9, 1989 (inception) to December 31, 2011 | F-4 |
| Statement of Changes of Stockholders' Equity for the years ended December 31, 2011, 2010, 2009, and 2008 | F-5 |
| Notes to Financial Statements | F-6 to F-26 |
Board of Directors and Shareholders
Baltia Air Lines, Inc.
New York, NY
I have audited the accompanying balance sheets of Baltia Air Lines, Inc. ("the Company") as of December 31, 2011 and 2010 and the statements of operations, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. I was not engaged to perform an audit of its internal control over financial reporting. My audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.
In my opinion, these financial statements present fairly, in all material respects, the financial position of Baltia Air Lines, Inc. as of December 31, 2011 and 2010 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 8 of the financial statements, the Company has incurred a deficit during its development stage of approximately $75 million and consumed approximately $21 million of cash due to its operating activities. The Company may not have adequate readily available resources to fund operations through December 31, 2012. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Patrick Rodgers, CPA, PA
Patrick Rodgers, CPA, PA
Altamonte Springs, Florida
April 16, 2012
Except
Note 3 and Note 9—March 8, 2013
PAGE F-1
BALTIA AIR LINES, INC.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESDECEMBER 31, 2011
[SECTION OMITTED – Introductory Discussion]
Recent Accounting Pronouncements:
Recently Adopted Standards
The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (FASB), the SEC, and the Emerging Issues Task Force (EITF), to determine the impact of new pronouncements on GAAP and the impact on the Company. The following are recent accounting pronouncements that have been adopted during 2012, or will be adopted in future periods.
In May 2011, the FASB issued ASC update No. 2011-04, Fair Value Measurement (Topic 820), Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments in this update result in common fair value measurement and disclosure requirements in US generally accepted accounting principles ("U.S. GAAP") and International Financial Reporting Standards ("IFRS"). Consequently, the amendments converge the fair value measurement guidance in U.S. GAAP and IFRS. Some of the amendments clarify the application of existing fair value measurement requirements, while other amendments change a particular principle in ASC 820. The amendments in this update that change a particular principle or requirement for measuring fair value or disclosing information about fair value measurements include the following: 1) measuring the fair value of financial instruments that are managed within a portfolio, 2) application of premiums and discounts in a fair value measurement, and 3) additional disclosures about fair value measurements. The amendments in this update are to be applied prospectively and are effective during interim and annual periods beginning after December 15, 2011. We do not believe that adoption of this update will have a material impact on our financial statements.
In June 2011, the FASB issued ASC update No. 2011-05, Comprehensive Income (Topic 220), Presentation of Comprehensive Income. The FASB decided to eliminate the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity, among other amendments in this update. The amendments require that all non-owner changes in stockholder’s equity be presented in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, the Company is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The statement of other comprehensive income should immediately follow the statement of net income and include the components of other comprehensive income and total for other comprehensive income, along with a total for comprehensive income.
The entity is also required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the components of comprehensive income are presented. The amendments in this update should be applied retrospectively, and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.
In February 2013, the FASB amended the ASC to require entities to provide information about amounts reclassified out of other comprehensive income by component. The Company is required to present, either on the face of the financial statements or in the notes, the amounts reclassified from other comprehensive income to the respective line items in the statements of operations. This amendment is effective for interim and annual periods beginning after December 15, 2012.
BALTIA AIR LINES, INC.NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2011
[SECTION OMITTED – Financial Notes 1-2]
Note 3. Stockholders' Equity
Recent Issuance of Unregistered Securities
Year Ended December 31, 2011
Stock issued for cash: For the year ended December 31, 2011, the Company issued 241,369,947 shares of its $0.0001 par value common stock in exchange for cash in the amount of $7,807,242. These shares were deemed to have been issued pursuant to an exemption provided by Section 4(2) of the Act, which exempts from registration “transactions by an issuer not involving any public offering.
Stock issued for services: For the year ended December 31, 2011, the Company issued 357,846,441 shares of its $0.0001 par value common stock in exchange for services in the amount of $17,438,892, or $0.049 per share, which reflected the weighted average market value at the time of issuance. Of these 357,846,441 total, 208,500,000 shares, valued at $10,712,0000 were issued to Igor Dmitrowsky, president and CEO.
Year Ended December 31, 2010
Stock issued for cash: For the year ended December 31, 2010, the Company issued 115,776,464 shares of its $0.0001 par value common stock in exchange for cash in the amount of $4,377,454, net of offering expense of $1,094,366. These shares were deemed to have been issued pursuant to an exemption provided by Section 4(2) of the Act, which exempts from registration “transactions by an issuer not involving any public offering.
Stock issued for services: For the year ended December 31, 2010, the Company issued 252,658,491 shares of its $0.0001par value common stock in exchange for services. These shares were valued at $15,009,850, or about $0.059 per share, which reflected the weighted average market value at the time of issuance. Of the 252,658,491 total, 149,000,000 shares, valued at $8,759,000 were issued to Igor Dmitrowsky, president and CEO. We also issued 6.8 million shares of our $0.0001 par value common stock as a debt incentive; these shares were valued at $202,000.
Stock Options and Warrants
The Company accounts for its stock option awards under FASB ASC Topic 718 “Compensation—Stock compensation.” The fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for each grant for the year ended December 31, 2011; risk free interest rate of 3.3% and 4.4%, for the years ended December 31, 2011 and 2010, respectively, no dividend yield, expected lives of between one to five years and volatility of 200%. The expected term of stock option awards granted is generally based up the “simplified” method for “plain vanilla” options discussed in SEC Staff Accounting Bulletin (“SAB”) No. 107, as amended by SAB No. 110. The expected volatility is derived from historical volatility of the Company’s stock on the OTCBB for a period that matches the expected term of the option. The risk free interest rate is the yield from a Treasury note corresponding to the expected term of the option. For the years ended December 31, 2011 and 2010, the Company recognized approximately $17,438,892 and $15,009,850 , respectively, of stock-based expenses related to the issuance of options and shares.
The Company has not paid cash dividends and does not expect to pay cash dividends in the future.
At December 31, 2011, the Company had the following options outstanding:
|
Exercise Price |
Outstanding at December 31, 2011 |
Average Remaining Contractual Life |
Weighted Average Exercise Price |
Exercisable at December 31, 2011 |
Weighted Average Exercise Price |
|||||
|
$ 0.01 - $ 0.05 |
3,276,818 |
3.3 |
$ 0.01 |
3,276,818 |
$ 0.01 |
|||||
|
$ 0.06 - $ 0.25 |
2,280,000 |
4.0 |
$ 0.17 |
2,280,000 |
$ 0.17 |
|||||
|
5,556,818 |
3.6 |
$ 0.07 |
5,556,818 |
$ 0.07 |
||||||
|
Number
of |
Weighted Average Price |
Average Remaining Term (in years) |
Aggregate Intrinsic Value | |||||
|
Options outstanding at December 31, 2009 |
28,979,318 |
$ |
0.02 |
|||||
|
Granted |
3,400,000 |
$ |
0.04 |
|||||
|
Exercised |
- |
$ |
- |
|||||
|
Lapsed |
- |
$ |
- |
|||||
|
Options outstanding at December 31, 2010 |
32,379,318 |
$ |
0.03 |
1.6 |
$ 661,076 |
|||
|
Granted |
- |
$ |
- |
|||||
|
Exercised |
- |
$ |
- |
|||||
|
Lapsed |
(26,822,500) |
$ |
- |
|||||
|
Options outstanding at December 31, 2011 |
5,556,818 |
$ |
0.07 |
3.6 |
$ 111,073 |
|||
|
Exercisable at December 31, 2011 |
5,556,818 |
$ |
0.07 |
3.6 |
$ 111,073 |
|||
* Amount by which the fair value of the stock at the balance sheet date exceeds the exercise price
[SECTION OMITTED]
Note 9—Related Party
During the year ended December 31, 2011 and 2010, the Company issued 245,749,998 and 187,600,000, respectively, restricted shares of its $0.0001 par value common stock to officers and directors. These restricted shares were valued at $12,714,000 and $11,440,000, respectively, or a weighted average price of approximately $.05 and $.06 per share, respectively. Its president and CEO was charged additional compensation of $15,000 and $15,000, which represents one-hundred percent of the rent the Company paid for its original corporate headquarters during the years ended December 31, 2011 and 2010, respectively. Also, during the year ended December 31, 2011 and 2010, this officer received other compensation of $60,106, and $130,453, respectively, for services provided the Company in lieu of salary. A second officer, vice president-finance, was paid additional compensation of $347,948 and $293,427 for the years ended December 31, 2011 and 2010, respectively, which represents amounts paid him for negotiating services in connection with the raise of new equity capital. A third officer, corporate secretary, was paid additional compensation of $3,930 for services provided the Company during the year ended December 31, 2010. A fourth officer was paid additional compensation of $51,000 for services provided the Company during the year ended December 31, 2011. During the year ended December 31, 2010, a company controlled by a member of the board of directors, was issued 6.8 million restricted shares of the Company’s $0.0001 par value common stock, as loan cost paid in connection with the financing of a 747-200 airplane. In addition, this company was issued 3.4 million warrants to purchase a like number of the Company’s $0.0001 par value common stock within one year of December 1, 2010. These warrants expired in 2011
[END OF NOTES TO FINANCIAL STATEMENTS]
[SECTION OMITTED]
SIGNATURES
In accordance with Section 13 or 15(d) 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.
Date: March 20, 2013
/s/ Igor Dmitrowsky
By: Igor Dmitrowsky, President, CEO and CFO