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 June 30, 2002
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 [] Yes [x]
Class Number of Shares
Common Stock - Par Value $.0001 Per Share 48,679,757
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.
WANT & ENDER
C.P.A. P.C.
Certified Public Accountants
MARTIN ENDER CPA
STANLEY Z. WANT CPA CFP
Want & Ender CPA, P.C.
Certified Public Accountants
New York, NY
August 9,2002
To Whom it May Concern:
Want & Ender, CPA, P.C. grants Baltia Airlines permission to use the
[any] information contained in the following signed letter. Any questions
or problems, please call Martin Ender, CPA at 212-684-2414.
Regards,
Want & Ender, CPS, P.C.
386 PARK AVENUE SOUTH - SUITE 1618 NEW YORK, NY 10016
TEL 212.684.2414 - FAX 212 684-5433 - EMAIL: WECPAPC@SPRYNET.COM
WANT & ENDER
C.P.A. P.C.
Certified Public Accountants
MARTIN ENDER CPA
STANLEY Z. WANT CPA CFP
Baltia Airlines, Inc.
To the Board of Directors and Stockholders:
We have reviewed the accompanying balance sheets of Baltia Airlines,
Inc. as of June 30, 2002 and the related income statement for the
period then ended in accordance with standards established by the
American Institute of Certified Public Accountants. All information
in these financial statements is the representation of the
management of Baltia Airlines Inc.
A review consists principally of inquiries of company personnel and
analytical procedures applied to financial data. It is substantially
less in scope than an audit in accordance with generally accepted
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statement
in order for them to be in conformity with generally accepted
accounting principles.
Respectfully submitted,
Want & Ender P.C. (signed)
Want & Ender CPA, P.C.
Certified Public Accountants
New York, NY
August 9, 2002
386 PARK AVENUE SOUTH - SUITE 1618 NEW YORK, NY 10016
TEL 212.684.2414 - FAX 212 684-5433 - EMAIL: WECPAPC@SPRYNET.COM
BALTIA AIR LINES, INC.
BALANCE SHEETS
As At JUNE 30, 2002
ASSETS
Current Assets
Cash $2,543
Total Current Assets 2,543
Fixed Assets
Property, Plant and Equipment
Property, Plant and Equipment 60,191
Less Accumulated Depreciation 21,767
Net Property, Plant and Equipment 38,424
TOTAL ASSETS $ 40,967
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts Payable $ 1,501
Total Current Liabilities 1,501
Stockholders Equity
Common Stock 4,868
Preferred Stock 2,753
Paid-in-Capital 8,147,775
Retained Earnings (8,115,829)
Treasury Stock (100)
Total Stockholders Equity 39,466
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 40,967
BALTIA AIR LINES INC.
STATEMENTS OF CHANGES OF SHAREHOLDERS EQUITY
THREE MONTHS ENDED JUNE 30, 2002
Preferred Stock Common Stock
Additional
Shares Par Value Shares Par Value Paid
In Capital
Balance - Dec 31, 2001 275,250 $2,753 48,679,757 $4,868 $8,138,593
2002 Issue-Preferred Stock 0 0 - -
2002 Issue-Common Stock - - 0 0 9,182
Balance - June 30, 2002 275,250 $2,753 48,679,757 $4,868 $8,147,775
STATEMENT OF OPERATIONS
Three months Ended August 24, 1989
June 30, (Inception) to
2002 2001 June 30, 2002
(Unaudited) (Unaudited)
Revenues 0 0 0
Expenses
Depreciation $ 6,404 $ 6,404 $ 267,440
Interest Expense 0 0 1,066,659
General and
Administrative 7,464 8,371 2,416,547
Professional fees 0 3,748 2,012,152
Service contributions 0 0 1,352,516
Training Expense 0 0 225,637
FAA Certification 0 0 206,633
Media Costs 52,812 52,812 363,083
Abandoned fixed assets 0 0 205,162
Total expenses 66,680 71,335 8,115,829
Net loss $ (66,680) $(71,335) $ (8,115,829)
STATEMENT OF CASH FLOWS
Cash flows from Operations Three months Ended Aug 24, 1989
June 30, (inception) to
2002 2001 June 30, 2002
(Unaudited) (Unaudited)
Net Income $(66,680) $(60,920) $(8,115,829)
Adjustments to reconcile net
loss to net cash provided by
operations:
Depreciation 6,404 6,404 267,440
Change in Property, Plant and
Equipment 0 0 (309,066)
Interest paid by stock 0 0 63,500
Change in Premedia costs 52,812 52,812 400,301
Change in Accounts Payable (2,379) 0 1,800,194
Change in Officers Loan 0 0 (368,890)
Service Contributions 0 0 1,352,516
Rounding (1)
Total Adjustments 56,837 59,216 3,205,995
Net Cash Provided by Operations (9,843) ( 1,704) (4,909,834)
Cash flows from Financing Activities:
Shareholder Loans 0 0 1,351,573
Paid In Capital 9,182 41 2,924,175
Issuance of Common Stock 0 0 1,133,976
Issuance of Preferred Stock 0 0 2,753
Issuance of Treasury Stock 0 299 (500,100)
Net Increase(Decrease) in Cash (661) (1,434) 2,543
Equivalents
Cash and Cash Equivalents - 3,204 3,627 0
Beginning
CASH AND CASH EQUIVALENTS - $ 2,543 $ 2,193 $ 2,543
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 March 31, 2002 (Unaudited)
consisted of the following;
Office Equipment $53,406
Furniture & Fixtures 6,782
Total 60,191
Less, Accumulated Depreciation (21,767)
Total Property and Equipment $38,424
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 5,626,250 shares
of common stock at June 30, 2002 or approximately 11.56% of the
Company's issued and outstanding common stock. The stock had been issued
to her periodically in exchange for legal work performed since 1989 in
connection with various certifications, authorities, financial matters,
regulatory reporting and litigation.
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 December 31, 2001 the Company has a net operating loss
carry forward of $7,001,186 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 December 31, 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) Retirement or Stock
On November 4, 1992, the Company issued 72,912 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.
(B) Acquisition of Common Treasury Stock
On September 28, 1998 the Company purchased from Igor
Dmitrowsky, president of the Company, 5,833,331 common shares for $100
and has granted him an option to repurchase 7,000,000 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.
(C) 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.
On November 30, 2001 the Board of Directors authorized and
the majority of the current shareholders ratified a seven for one
stock split of the Company's $0.0001 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 stock splits.
(D) 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.
(E) 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.
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. Intentionally omitted.
Item 2. Changes in Securities. Intentionally omitted.
Item 3. Default Upon Senior Securities. Intentionally omitted.
Item 4. Submission of Matters to a Vote of Security Holders.
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: 8-12-2002 ____ IGOR DMITROWSKY (signed) _____
By: Igor Dmitrowsky, President
Date: 8-12-2002 ____ WALTER KAPLINKSY (signed)_____
By: Walter Kaplinsky, Secretary
[BLTQ02-1.wpd 020514]