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 JUNE 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 August 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
6/30/2008 12/31/2007
(Unaudited)
Current Assets
Cash $ 1,413,807 $ 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 $ 1,459,491 $ 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 29,972 27,945
Paid-in-Capital 16,547,077 16,233,527
Deficit Accumulated During
Development Stage (15,133,223) (14,254,325)
Total Equity 1,444,491 2,007,812
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 1,459,491 $ 2,052,180
See notes to unaudited interim financial statements.
STATEMENT OF OPERATIONS
(A Development Stage Company)
Three Months Ended Six Months Ended August 24, 1989
June 30, June 30, (Inception) to
2008 2007 2008 2007 June 30, 2008
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $ 0 0 0 0 0
Costs & Expenses
General and
Administrative $537,331 $1,390,454 $ 875,044 $ 1,515,321 $ 12,699,569
FAA Certification 2,036 10,000 4,419 10,000 259,528
Training Expense 0 0 0 0 225,637
Depreciation 2,000 81 4,047 162 315,103
Other 0 0 0 0 568,245
Interest (7,557) 0 (7,373) 0 1,061,232
Total expenses 533,809 1,400,535 876,136 1,525,483 15,129,313
Loss before
income taxes (533,809)(1,400,535) (876,136) (1,525,483) (15,129,313)
Income Taxes 0 0 2,762 0 3,910
Deficit Accumulated During
Development Stage: (533,809)(1,400,535) (878,898) (1,525,483) (15,133,223)
Per share amounts:
Loss Nil ($0.01) Nil ($0.01)
Weighted Average Shares
Outstanding 298,865,511 138,878,056 293,219,421 131,708,747
See notes to unaudited interim financial statements.
STATEMENT OF CASH FLOWS
(A Development Stage Company)
Six Months Ended Aug 24, 1989
June 30, (inception) to
2008 2007 June 30, 2008
(Unaudited) (Unaudited) (Unaudited)
Cash flows from Operating Activities:
Deficit Accumulated During
Development Stage $(878,898) $(1,525,483) $ (15,133,223)
Adjustments to reconcile net
loss to net cash provided by
operations:
Depreciation 4,000 162 315,056
Expenses paid by issuance of
common stock 269,127 1,350,320 5,141,414
(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: (615,771) (150,001) (6,109,971)
Cash flows from investing activities:
Purchase of Equipment 0 0 (323,125)
Deposit on Airplane Lease 0 0 0
Cash used in investing activities: 0 0 (323,125)
Cash flows from financing activities:
Issuance of Common Stock 46,450 809,999
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: 27,082 809,999 7,846,903
Change in cash (588,689) 659,998 1,413,807
Cash-beginning of period 2,002,496 4,185 0
Cash -end of period $1,413,807 $ 664,183 $ 1,413,807
See notes to unaudited interim financial statements.
Baltia Air Lines, Inc.
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 3,450,000 345 225,655
Options issued for services 41,527
Net Loss (878,898)
Balance at June 30, 2008 66,500 665 299,717,159 29,972 16,547,077 (15,133,223)
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
JUNE 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 six-month periods ended June 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 six months ended June 30, 2008 we issued 3,450,000 shares of our
common stock in exchange for services. The shares were valued at $ 226,000
or about $0.07 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 six months ended June 30, 2007 we issued 31,262,998 shares of our
common stock in exchange for services. The shares were valued at $
1,525,320 or about $0.042 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 six months ended June 30, 2008 we issued 816,625 and 16,000,000
shares of our common stock in exchange for cash and for the exercise of
options by Igor Dmitrowsky (our President), respectively. The shares sold
for cash were subscribed at $ 46,250 or about $0.047 weighted average per
share. The company 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 18,940,662 shares of our common stock in exchange for
cash. The shares were subscribed at $ 803,020 or about $0.049 weighted
average per share. We also received about $70,000 for 1.35 million shares
that were issuable at June 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
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
inaccordance 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 andestimates 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 six months ended June 30, 2008 and 2007, the Company
recognized (2005 on a pro forma basis) 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.
As of June 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 six-month period ended June 30, 2008 was $0 (also none
during the six-month period ended June 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 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.
RESULTS OF OPERATIONS
We had no revenues during the three months ended June 30, 2008 and 2007
because we do not fly any aircraft and cannot sell tickets.
Our general and administrative expenses decreased $854,123 to $537,331 in
the three months ended June 30, 2008 as compared to $1,390,454 in the three
months ended June 30, 2007. This decrease is mainly the result of activity
in preparing for air carrier certification.
Primarily as a result of the foregoing, we incurred a net loss of $533,809
in the three months ended June 30, 2008 as compared to a net loss of
$1,400,535 in the three months ended June 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 June 30, 2008, our working
capital was $1,398,807 and our stockholders' equity was $1,444,491. As
compared to June 30, 2008, our working capital increased from $637,984 at
June 30, 2007 and our stockholders' equity increased from $640,351 at June
30, 2007. We had unrestricted cash balance of $1,413,807 at June 30, 2008,
as compared to $664,184 at June 30, 2007.
Our operating activities utilized $359,283 in cash during the three months
ended June 30, 2008, an increase of $209,282 from the $150,001 in cash
utilized during the three months ended June 30, 2007.
Our financing activities, from issuance of common stock, provided $0 and
$809,999 in cash during the three months ended June 30, 2008 and 2007,
respectively.
Our unrestricted cash increased by $749,624 to $1,413,807 at June 30, 2008,
as compared to $664,183 at June 30, 2007.
We had no significant planned capital expenditures, budgeted or otherwise,
as of June 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 June 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 June 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 June 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 June 30, 2008 we issued 3,450,000 shares of
our common stock in exchange for services. The shares were valued at
$226,000 or about $0.07 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 12th DAY OF AUGUST 2008
BALTIA AIR LINES, INC.
/s/ Igor Dmitrowsky
------------------------
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: August 12, 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 June 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: August 12, 2008
/s/ Igor Dmitrowsky
------------------------
Igor Dmitrowsky
Chief Executive Officer and Chief Financial Officer (principal accounting
officer)