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, 2007
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, SUITE 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 an (X) whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of August 9, 2007 the issuer had 197,721,559 shares of common stock
outstanding.
Transitional Small Business Disclosure Format (Check one): No [X]
PART ONE - FINANCIAL INFORMATION
Item 1. Financial Statements.
BALTIA AIR LINES, INC.
BALANCE SHEETS
(A Development Stage Company)
ASSETS
6/30/2007 12/31/2006
(Unaudited)
Current Assets
Cash $ 664,184 $ 4,185
Plant and Equipment
Equipment 63,264 63,264
Less Accumulated Depreciation (60,897) (60,735)
Net Property, Plant and Equipment 2,367 2,529
TOTAL ASSETS $ 666,551 $ 6,714
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts Payable $ 26,200 $ 1,200
Equity
Preferred Stock 665 665
Common Stock 17,260 12,239
Paid-in-Capital 12,641,491 10,486,192
Deficit Accumulated During
Development Stage (12,019,065) (10,493,592)
Total Equity 640,351 5,514
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 666,551 $ 6,714
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
2007 2006 2007 2006 June
30, 2007
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Unaudited)
Revenues $ 0 0 0 0
0
Costs & Expenses
General and
Administrative $1,390,454 $ 86,738 $ 1,515,321 $ 802,031 $
9,634,173
FAA Certification 10,000 0 10,000 0
216,633
Training Expense 0 0 0 0
225,637
Depreciation 81 81 162 162
306,570
Other 0 0 0 0
568,245
Interest 0 0 0 0
1,066,659
Total expenses 1,400,535 86,819 1,525,483 802,193
12,017,917
Loss before
income taxes (1,400,535) (86,819) (1,525,483) (802,193)
(12,017,917)
Income Taxes 0 0 0 0
1,148
Deficit Accumulated
During
Development Stage:(1,400,535) (86,819) (1,525,483) (802,193)
(12,019,065)
Per share amounts:
Loss ($0.01) Nil ($0.01) ($0.01)
Weighted Average
Shares
Outstanding 138,878,056 80,418,450 131,708,747 77,982,982
See Notes to Unaudited Interim Financial Statements.
STATEMENT OF CASH FLOWS
(A Development Stage Company)
Three Months Ended Aug 24, 1989
June 30,
(inception)to
2007 2006 June 30,
2007
(Unaudited) (Unaudited)
(Unaudited)
Cash flows from Operating
Activities:
Deficit Accumulated During
Development Stage $(1,525,483) $ (802,193) $ (12,019,065)
Adjustments to reconcile net
loss to net cash provided by
operations:
Depreciation 162 162 306,188
Expenses paid by issuance of
common stock 1,350,320 744,328 3,091,071
(Increase) decrease in prepaid
expenses 0 0 400,301
Change in payables & accrued expenses 25,000 0 3,177,681
Cash used by operating activities: (150,001) (57,703) (5,043,442)
Cash flows from investing activities:
Purchase of Equipment 0 0 (311,339)
Deposit on Airplane Lease 0 0 0
Cash used in investing activities: 0 0 (311,339)
Cash flows from financing activities:
Issuance of Common Stock 809,999 45,813 5,534,428
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)
Acquisition of Treasury Stock 0 0 (500,100)
Cash generated by financing: 809,999 45,813 6,019,764
Change in cash 659,998 (11,890) 664,183
Cash-beginning of period 4,185 14,947 0
Cash -end of period 664,183 3,057 664,183
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, 2007
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,
2006 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-QSB 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-month six month periods ended June 30, 2007 and
2006. All such adjustments are of a normal recurring nature. The Financial
Statements have been prepared in accordance with the instructions to Form
10-QSB 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, 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.
During the six months ended June 30, 2006 we issued 9,324,000 shares of
our common stock in exchange for services. The shares were valued at
$744,000 or about $0.08 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
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.
In connection with the offering each subscriber was entitled to warrants
of our common stock exercisable for a period of 3 years after issuance
at a strike price of $.10 per share. As of June 30, 2007 we had issued
15,230,000 of such warrants.
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 March 31, 2007 and 2006, the Company's
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 March 31, 2007.
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, 2007, there was no unrecognized compensation cost related
to non-vested options granted under the plan. The total fair value of
shares vested during the three-month period ended June 30, 2007 was $0
(also none during the three-month period ended June 30, 2006).
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.
Item 2. Management's Discussion and Analysis and Plan of Operation.
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 current products, 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, 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 are 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. 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's starting revenue operations is 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.
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, 2007 and 2006, the Company's
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, 2007.
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, 2007, there was no unrecognized compensation cost related
to non-vested options granted under the plan. The total fair value of
shares vested during the three-month period ended June 30, 2007 was $0
(also none during the three-month period ended June 30, 2006).
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, 2007 and 2006
because we do not fly any aircraft and cannot sell tickets.
Our general and administrative expenses increased $1,303,716 to $1,390,454
in the three months ended June 30, 2007 as compared to $86,738 in the three
months ended June 30, 2006. This increase is mainly the result of increased
activity in preparing for air carrier certification. Primarily as a result
of the foregoing, we incurred a net loss of $1,400,535 in the three months
ended June 30, 2007 as compared to a net loss of $86,819 in the three months
ended June 30, 2006.
Our future ability to achieve profitability in any given future fiscal
period remains highly contingent upon our beginning flight operations.
Our ability to realize revenue from flight operations in any given future
fiscal period remains highly contingent upon our obtaining significant
equity infusions and/or long-term debt financing sufficient to fund leasing
and operating a Boeing 747. Even if we were to be successful in procuring
such funding, there can be no assurance that we will be successful in
commencing revenue operations or, if commenced, 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, 2007, our working
capital was $637,984 and our stockholders' equity was $640,351. This
reflects an increase from June 30, 2006 when our working capital was
$1,857 and our stockholders' equity was $3,806. We had a cash balance
of $664,184 at June 30, 2007, as compared to $3,057 at June 30, 2006.
Our operating activities utilized $150,001 in cash during the three months
ended June 30, 2007, an increase of $92,298 from the $57,703 in cash
utilized during the three months ended June 30, 2006.
Our financing activities, from issuance of common stock, provided $809,999
and $45,813 in cash during the three months ended June 30, 2007 and 2006,
respectively.
As a result of the foregoing, our unrestricted cash increased by $661,126
to $664,183 at June 30, 2007, as compared to $3,057 at June 30, 2006.
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. In connection with this offering, each
subscriber was entitled to warrants of our common stock exercisable for
a period of 3 years after issuance at a strike price of $.10 per share.
As of June 30, 2007, we had issued 15,230,000 of such warrants.
We had no significant planned capital expenditures, budgeted or otherwise,
as of June 30, 2007.
As of August 9, 2007 we had $1,200,000 in working capital. We have plans
to lease a Boeing 747 aircraft, have rented additional office space for
air carrier certification and start of service at JFK, Terminal 4, and
are in the process of making necessary arrangements for aircraft
maintenance, ground servicing, and passenger services.
Item 3. 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, 2007, 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, 2007,
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 our last fiscal quarter 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, 2007, we issued 31,262,998 shares
of our common stock in exchange for services performed on our behalf.
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.
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. In connection with
this offering, each subscriber was entitled to warrants of our common
stock exercisable for a period of 3 years after issuance at a strike price
of $.10 per share. As of June 30, 2007 we had issued 15,230,000 of such
warrants.
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
the Company or executive officers of the Company, and transfer was
restricted. 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 9th DAY OF AUGUST, 2007
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-QSB 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 small business issuer'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 small business issuer 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 small business issuer,
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) Evaluated the effectiveness of the small business issuer'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 small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the small business
issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer'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 small business issuer'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 small business issuer's
internal control over financial reporting.
Date: August 9, 2007
/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-QSB for the period ended June 30, 2007
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 9, 2007
/s/ Igor Dmitrowsky
------------------------
Igor Dmitrowsky
Chief Executive Officer and Chief Financial Officer
(principal accounting officer)