UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
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, 2014 |
[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
BALTIA AIR LINES, INC.
(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 December 31, 2014 is
$42,085,431
|
The number of shares of the registrant's common stock
outstanding as of March 20, 2015
was 5,806,560,449 |
TABLE OF CONTENTS
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 - Required FD Disclosure of Nonpublic Material 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 |
PART
I
Item
1. Business.
Baltia Air Lines, Inc. (the "Company" or "Baltia" or "Baltia Air Lines"), a Part 121 (heavy jet operator) start-up United States airline with headquarters at JFK International Airport, New York, and base of operations on the Willow Run Airport, Ypsilanti, Michigan. The FAA Eastern Michigan FISDO has oversight of Baltia's Air Carrier Certification and operations. Upon completion of the Certification, Baltia will commence scheduled non-stop service from JFK Int'l Airport to Pulkovo II Int'l Airport of St. Petersburg. Baltia Air Lines, Inc. was organized in the State of New York on August 24, 1989.
In the last quarter of 2010, Baltia purchased a Boeing 747 aircraft from Kalitta Air.
Baltia carries $500,000,000 aircraft liability insurance and will carry airline liability insurance as required for a US airline by DOT regulation.
Following the commencement of service on the JFK-St. Petersburg route, Baltia's objective is to develop its route network to Russia, Latvia, Ukraine, and Belarus.
Baltia intends to provide full service, i.e. passenger, cargo and mail.
There is currently no non-stop service from JFK to St. Petersburg. Connecting service is provided mainly by foreign carriers. Finnair, Lufthansa and SAS are the leading competitors in the US-Russia market. KLM, British Airways, Air France, Austrian Airlines, Ukraine Airlines and Swiss International also provide service. United Airlines code shares with Swiss International and Lufthansa flights into St. Petersburg. Delta and two Russian airlines, Aeroflot and Transaero, currently operate between JFK and Moscow. With the exception of the JFK-Moscow route, there exists no non- stop competitive air transportation service on the routes for which Baltia intends to apply.
A comparison of direct and connecting services with respect to passenger convenience and cargo transport efficiency is set forth below.
BALTIA - US flag, non-stop service:
With non-stop service, a passenger can fly from JFK to St. Petersburg in about 8 hours in a Boeing B747 wide body airplane. Cargo arrives containerized, palletized, and secure.
Foreign, connecting service:
With connecting service, it would take a passenger 10 to 18 hours to fly through Helsinki, Copenhagen, Moscow, or Frankfurt. In addition, passengers must change to narrow-body aircraft at a layover airport. Cargo is "broken up" and manually loaded onto narrow-body aircraft, or trucked from Helsinki.
Baltia intends to initiate service with its Boeing 747 wide-body aircraft carrying three-class passengers, mail and cargo in containers, on pallets, and in block space arrangements. Baltia has passenger service and ground service arrangements at JFK and at Pulkovo II Airport in St. Petersburg. As a US carrier flying into a foreign country, Baltia will be eligible to the same degree of priority that a foreign carrier receives when arriving in the US.
Baltia intends to start the JFK-St. Petersburg service with one round- trip flight per week, then increase the frequency to three round trips, and then to five round trips.
Baltia plans to build operating modules and apply them in developing new markets. Once established, Baltia plans to duplicate its JFK-St. Petersburg standards on flights on other transatlantic routes.
Concurrently with its Part 121 Air Carrier Certification ("Part 121") for scheduled service, Baltia is certifying for world-wide charter service, opening the opportunity to earn additional revenues from charters.
As of December 31, 2014, Baltia's staff of thirty-one includes professionals with airline experience.
administration.
Item
1A. Risk Factors.
We are a smaller reporting
company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide the information
under this item.
Item
1B. Unresolved Staff Comments.
We are a smaller reporting
company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide the information
under this item.
Item
2. Properties.
The Company rents space at
Concourse A, Terminal 4, JFK International Airport and has
headquarters at Building 151, JFK Airport. Baltia has an
office space in Pulkovo Airport, St. Petersburg, Russia. In
addition, in 2012, Baltia opened its operations office in at
Willow Run Airport, Ypsilanti, Michigan.
Item
3. Legal Proceedings.
None.
Item 4. Reserved
PART
II.
Item
5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities.
The following table sets
forth the high and low sales prices, as quoted by the OTCBB,
for our common stock for each quarter during our two most
recent fiscal years ended December 31, 2013 and 2014. These
quotations reflect inter-dealers prices, without retail
mark-ups, mark-downs or commissions, and may not represent
actual transactions.
Fiscal Quarter
Ended
|
High
|
Low
|
March 31, 2013
|
.04
|
.01
|
June 30, 2013
|
.03
|
.02
|
September 30,
2013
|
.02
|
.01
|
December 31,
2013
|
.02
|
.01
|
March 31, 2014
|
.04
|
.01
|
June 30,2014
|
.03
|
.02
|
September 30,
2014
|
.02
|
.01
|
December 31,
2014
|
.02
|
.01
|
The Company currently estimates that there are approximately 5,400 holders of record of its common stock. Given its continuing need to retain any earnings to fund its future operations and desired growth, the Company has not declared or paid, nor does it currently anticipate declaring or paying for the foreseeable future, any dividends on the Company's common stock.
Baltia plans to increase its fleet of airplanes after initiating revenue service but currently has no specific equity purchase plan, written purchase, savings, option, bonus, appreciation, profit sharing, thrift, incentive, or pension.
Item 6. Selected Financial Information.
We are a smaller reporting
company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Statements in this discussion 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.
Baltia is currently in Phase III of the FAA Air Carrier Certification. Upon completion of the Air Carrier Certification, Baltia intends to commence scheduled non-stop service from its Base of Operations at Terminal 4, JFK Int'l Airport in New York to Pulkovo II Int'l Airport of St. Petersburg.
The accompanying 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 minimum cash available for payment of ongoing operating expenses and it has incurred operating losses and experienced negative cash flows from operations since inception. The Company has funded its activities through December 31, 2014 almost exclusively from debt and equity financings. For the years ended December 31, 2014 and 2013, the Company raised approximately $9.9 and $4.1 million, respectively, from private placements, funds needed to continue with the certification process, a process that must be completed before it can commence revenue service. In addition to raising funds from private placements, the Company issued common stock to pay certain operating expenses.
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.
PLAN OF OPERATION
As indicated above, we continued to finance our operations through the issuance of our common stock during 2013 and 2014. Until revenue operations begin, our monthly expenditures for administrative and regulatory compliance can be controlled at about $700,000-$1,000,000. At the time flight service is inaugurated, the Company plans to employee approximately 30 management and 50 crew members and staff.
While the Company believes it will be successful in obtaining the necessary financing to fund its operations, there are no assurances that such additional funding will be achieved and that it will succeed in its future operations. If adequate funds are not available or are not available on acceptable terms, we may not be able to fund operations
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-lived 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
The Company complies with
FASB ASC Topic 718 Compensation - Stock Compensation, whichestablishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. FASB ASC Topic 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. FASB ASC Topic 718 requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award the requisite service period (usually the vesting period). No compensation costs are recognized for equity instruments for which employees do not render the requisite service. The grant-date fair value of employee share options and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those instruments (unless observable market prices for the same or similar instruments are available). If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.
Our primary type of share-based compensation consists of stock-based awards. We use the fair value method in accordance with ASC 718. We also may use stock options. We use the Black-Scholes option pricing model in valuing options. No stock options were issued during the year ended December 31, 2014. All outstanding stock options were canceled in 2012.
Income taxes
Income taxes are recorded in accordance with ASC Topic 740, Accounting for Income Taxes ("ASC 740"), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company determines its deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are provided, when necessary, to reduce the deferred income tax assets to the amount expected to be realized.
The determination of the Company's provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company's financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes in the financial statements as appropriate.
In accordance with GAAP, The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company's management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months
Generally, the tax filings are no longer subject to income tax examinations by major taxing authorities for years before 2011.
RESULTS OF OPERATIONS
We had no revenues during the fiscal years ended December 31, 2013 and 2014, because (1) we did not fly aircraft in passenger, charter, or freight service, and (2) we could not sell tickets for those services
For the years ended December 31, 2014 and 2013, general and administrative expenses were $13,820,392 and $5,910,517, respectively, an increase of $7,909,875, or 133.8%. This increase resulted from the general and administrative costs incurred in connection with aircraft maintenance.
FAA certification costs increased $585,216, or 71.8% for the year ended December 31, 2014 from $814,982 reported for the year ended December 31, 2013. This increase resulted from the additional costs incurred for FAA certification activities in connection the air certification process.
We reported net losses of $15,403,415 and $6,868,196 for the years ended December 31, 2014 and 2013, respectively, an increase of $8,535,219 or 125%. This increase is primarily attributable to the $7,909,875 increase in general and administrative expenses and the $585,216 increase in FAA certification costs.
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 initial operations. 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 December 31, 2014, we had cash of $185,613 an increase of $174,064 from the cash balance of $11,549, reported at December 31, 2013. At December 31, 2014, our stockholders' deficit was $1,777,773, an increase of $1,475,245 from the stockholders' deficit balance of $302,528 reported at December 31, 2013.
Our operating activities utilized $9,140,945 in cash during the fiscal year ended December 31, 2014, an increase of $5,047,672 from the $4,093,273 in cash utilized during the fiscal year ended December 31, 2013.
Our financing activities provided $9,894,043 and $4,132,514 in cash during the fiscal year ended December 31, 2014 and 2013, respectively.
We had no significant planned capital expenditures, budgeted or otherwise, as of December 31, 2014, except continuous support in air carrier certification activities.
Off-Balance Sheet Arrangements: We do not have any off-balance sheet arrangements which have, or are reasonably likely to have, an effect on our financial condition, financial statements, revenues or expenses.
Item
7A. Quantitative and Qualitative Disclosures About Market
Risk.
We are a smaller reporting
company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item
8. Financial Statement Supplementary Data.
None.
Item 9. Changes in and Disagreements with Accountants on Accounting And Financial Disclosures
As reported by Form 8-K filed April 14, 2014, the Company changed its certifying accountant as the prior certifying auditor withdrew due to time constraints created by the Company.
On April 9, 2015, Baltia's independent auditor, Mr. Terry L. Johnson, having completed his financial reports for the audit, advised the Company that he was unable to certify the filing. The Company could not complete a new audit prior to the deadline.
Item 9A(T). Controls and Procedures.
Evaluation of Disclosure
Controls and Procedures. As of the end of the period covered
by this report, we conducted an evaluation under the
supervision and with the participation of our chief executive
and financial officer of our disclosure
controls and procedures (as defined in Rule 13a-15(e) and
Rule 15d-15(e) of the Exchange Act). Based upon this
evaluation, our chief executive and financial
officer concluded that our disclosure controls and procedures
are effective to ensure 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.
Management's Annual Report
on Internal Control over Financial Reporting. Our management
is responsible for establishing and maintaining adequate
internal control over financial reporting (as defined in Rule
13a-15(f) under the Exchange Act). Our internal control over
financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for
external purposes of accounting principles generally accepted
in the United States.
Because of its inherent
limitations, internal control over financial reporting may
not prevent or detect misstatements. Therefore, even those
systems determined to be effective can provide only
reasonable assurance of achieving their control
objectives.
Our management evaluated the
effectiveness of our internal control over financial
reporting as of December 31, 2014. Based on this
evaluation, our management concluded that, as of December 31,
2014, our internal control over financial reporting was
effective.
This annual report does not
include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation
by our registered public accounting firm pursuant to
temporary rules of the SEC that permit the company to provide only management's report in this annual report.
Changes in Internal Control
Over Financial Reporting. 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.
Item 9B. Other Information.
None.
PART III
Item 10. Directors and Executive Officers of the
Registrant.
The following table
summarizes certain information with respect to the executive
officers and directors of the board :
Name
|
Age
|
Position
|
|
Igor Dmitrowsky
|
60
|
President, CEO, CFO, Chairman of the Board
|
Russell Thal
|
81
|
Executive Vice President
|
|
Barry Clare
|
56
|
Vice President Finance
|
|
Walter Kaplinsky
|
77
|
Secretary, Director
|
|
Andris Rukmanis
|
53
|
Vice President Europe, Director
|
|
Vick Luis Bolanos
|
55
|
Director
|
|
Our directors serve until the next annual meeting and until their successors are elected and qualified. Our officers are appointed to serve for one year until the meeting of the board of directors following the annual meeting of stockholders and until their successors have been elected and qualified. There are no family relationships between any of our directors or
officers.
A. Board of Directors:
Igor Dmitrowsky
Igor Dmitrowsky, chairman and president, chief executive officer and CFO, founded the Company in August 24, 1989. Managing daily operations of the Company has been his full-time occupation and executive profession throughout those years.
No organization to which Mr.
Dmitrowsky has been associated is a parent, subsidiary or
other affiliate of Baltia Air Lines.
Walter Kaplinsky
Walter Kaplinsky is a retired engineer and has been director and corporate secretary since 1993. No organization to which Mr. Kaplinsky has been associated is a parent, subsidiary or other affiliate of Baltia Air Lines.
No organization to which Mr. Kaplinsky has been
associated is a parent, subsidiary or
other affiliate of Baltia Air Lines.
Andris Rukmanis
Andris Rukmanis, director and vice president Europe, is and has been for more than twenty years a full-time qualified licensed attorney in Latvia, specializing in business law, and has been a Director of the Company since 1990. No organization to which Mr. Rukmanis has been associated is a parent, subsidiary or other affiliate of Baltia Air Lines.
Vick Luis
Bolanos
Vick Luis Bolanos, has served as director since 2009. He is, and has been, president and chairman of Eastern Construction & Electric, Inc. throughout those years. No organization to which Mr. Bolanos has been associated is a parent, subsidiary or other affiliate of Baltia Air Lines.
B. Executive Officers In
Addition to Mr. Dmitrowsky, Mr. Kaplinsky, and Mr. Rukmanis:
Russell Thal
Russell Thal, executive vice president, joined the Company in year 2000 and has since been working for Baltia. No organization to which Mr. Thal has been associated is a parent, subsidiary or other affiliate of Baltia Air Lines, Inc.
Barry Clare
Barry Clare, vice president of finance, joined the Company in 2006 and has been working with Baltia since 2006. No organization to which Mr. Clare has been associated is a parent, subsidiary or other affiliate of Baltia Air Lines, Inc.
C. Nominations for Director:
No recent nominations.
Item 11. Executive Compensation.
Minimal weekly base salaries of $500 plus bonuses have been paid to executive officers commencing the second quarter of fiscal year ended December 31, 2014. No executive officer was paid a base salary in fiscal year ended December 31, 2013. During the fiscal year ended December 31, 2014, no executive options were granted.
During the fiscal year ended December 31, 2014, no executive stock options were issued or exercised.
No shares were issued to executive officers in 2014.
In 2013, the Company issued a total of 19,000,000 of its $.0001 par value common stock to an executive officer and a member of the board of directors. These shares were awarded as bonus fully earned and non-assessable, and containing no future earned performance or forfeiture requirements. Of this, 19,000,000 total, 18,000,000 of the shares, valued at $180,000 were issued to the Company's president and CEO, Igor Dmitrowsky.
SUMMARY COMPENSATION TABLE
Name & Principal
Position
(a) |
Year (b)
|
Salary ($) (c)
|
Bonus ($) (d) |
Stock awards* ($) (e) |
Option awards* ($) (f) |
Non-equity incentive plan compensation ($) (g) |
Change in Pension
Value and
Non-qualified
deferred
compensation ($) (h) |
All Other
Compensation ($)** (i) |
Total ($) (j) |
Igor Dmitrowsky President, CEO |
2014 2013 |
$ 19,600 0 |
$ 102,000 0 |
$ 0 180,000 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 0 27,853 |
$ 121,600 207,853 |
Barry Clare Vice-President |
2014 2013 |
$ 20,850 0 |
$ 0 0 |
$ 0 16,200 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 748,511 443,550 |
$ 769,361 459,730 |
Russell Thal Vice-President |
2014 2013 |
$ 83,800 0 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 24,000 46,500 |
$ 107,800 46,500 |
Walter Kaplinsky Secretary |
2014 2013 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 11,968 15,800 |
$ 11,968 15,800 |
Andris Rukmanis VP, Europe |
2014 2013 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
$ 0 0 |
* 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 $0 and $196,200 for stock awards for the years ended December 31, 2014 and 2013, respectively.
** During the year ended December 31, 2013, Mr. Dmitrowsky was charged additional compensation of $15,000, which represents one-hundred percent of the rent the Company paid for its original corporate headquarters. In addition, during the years ended December 31, 2014 and 2013, Mr. Dmitrowsky received salary and other compensation of $121,600 and $12,853 respectively for services provided to the Company.
** Mr. Clare was paid salary and other compensation of $769,361 and $427,350 for the years ended December 31, 2014 and 2013, respectively, which represents amounts paid him in connection with the raise of new equity capital.
** Russell Thal earned salary and other compensation of $107,800 and $46,500 for services provided the Company during the years ended December 31, 2014 and 2013.
** Mr. Kaplinsky was paid additional compensation of $11,968 and $15,800 for services provided the Company during the years ended December 31, 2014 and 2013.
EMPLOYMENT AGREEMENTS
The Company has no
individual employment agreements with any of its executive
officers or employees.
Future Compensation of
Executive Officers
The board of directors approves salaries for the Company's executive officers as well as the Company's overall salary structure. For year one following commencement flight operations, the rate of compensation for the Company's executive officers is expected to be: president $420,000, executive vice president $230,000, vice president-finance $270,000.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
As of December 31, 2014, there were 5,582,213,346 shares of common stock, par value $0.0001 outstanding. The following table sets forth, as of December 31, 2014, the ownership of the Company's Common Stock by (i) each director and officers of the Company, (ii) all executive officers and directors of the Company as a group, and (iii) all other persons known to the Company to own more than 5% of the Company's Common Stock. Each person named in the table has or shares voting and investment power with respect to all shares shown as beneficially owned by such person.
Directors and
Officers
|
Common Shares
Beneficially Owned
|
Percent of Total
Outstanding, %
|
Igor Dmitrowsky 63-26
Saunders St., Suite 7-I Rego Park, NY 11374
|
797,662,766
|
14.29
|
Russell Thal 26 Ridge
Drive
Port Washington, NY 11050
|
26,850,000
|
0.48
|
Barry Clare
4319 215th St. Bayside, NY 11361
|
115,849,998
|
2.08
|
Vick Luis Bolanos 633 Monroe St.
Riverside, NJ 08075
|
445,025,001
|
7.97
|
Walter Kaplinsky 2000
Quentin Rd. Brooklyn, NY 11229
|
15,500,000
|
0.28
|
Andris Rukmanis
Kundzinsala,
8 Linija 9. Riga, Latvia LV-1005
|
6,468,750
|
0.12
|
Shares of all directors and executive officers as a group (6
persons)
|
1,407,356,515
|
25.21%
|
Other 5% Owners
|
Common Shares
Beneficially Owned
|
Percent of Total
Outstanding, %
|
John A. Drago
1911 Route 110,
Farmingdale, NY 11735
|
322,651,000
|
5.78
|
Item 13. Certain Relationships and Related Transactions.
Mr. Vick Luis Bolanos was elected to the Baltia board of directors while he was, and remains, president and chairman of Eastern Construction & Electric, Inc. The transaction between Baltia and Eastern was made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender; and did not involve more than the normal risk of collectibility or present other unfavorable features. This transaction is discussed further in Note 8 to the Financial Statements infra.
The principal of $1.150 million remained outstanding during 2014 and accrued interest of $515,325 was outstanding as of December 31, 2014. By agreement of Parties, no interest was paid in 2014, and the rate of interest is 9% per annum. An amended, agreement was concluded and submitted in Company's 10-Q filing for 3rd quarter 2013, filed November 19, 2013, Exhibit 10.18 therein.
Item 14. Principal Accountant Fees and Services.
Services Provided | 2014 | 2013 |
Audit Fees | $ 12,000 | $ 11,500 |
Audit-Related Fees | 0 | 0 |
Tax Fees | 10,000 | 0 |
All other Fees | 0 | 0 |
Total | $ 22,000 |
$ 11,500 |
Audit Fees
The aggregate fees billed for the year that ended on December 31, 2014 for professional services rendered by the independent auditor for the audit of our annual financial statements and review of financial statements included in our Form 10-Q, or services that are normally provided by the accountant in connection with the statutory and regulatory filings or engagements for such fiscal year, amount to approximately $12,000.
The aggregate fees billed for the year that ended on December 31, 2013 for professional services rendered by the independent auditor for the audit of our annual financial statements and review of financial statements included in our Form 10-Q, or services that are normally provided by the accountant in connection with the statutory and regulatory filings or engagements for such fiscal year, amount to approximately $11,500.
Audit -Related Fees
For the years ended on December 31, 2014 and 2013, there were no fees billed for assurance and related services by the independent auditor that are reasonably related to the performance of the audit or review of our financial statements and are not reported under Item 9(e) (1) of Schedule 14A.
Tax Fees
The aggregate fees billed during the fiscal years ended December 31, 2014 and 2013, for professional services rendered by our principal independent accountant for tax compliance, tax advice and tax planning were $10,000 and $0 respectively.
All Other Fees
For the year ended December 31, 2014 and 2013 there were no fees billed for products and services by the principal independent accountant (other than services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A).
PART IV.
Item
15. Exhibits and Financial Statements.
APPENDIX
A - Financial Statements for the Years Ended December 31,
2014 ad 2013
Report of Independent Registered Accounting firm
|
F-1
|
Balance Sheet as of December 31, 2014 and 2013
|
F-2
|
Statement of Operations for the years ended December 31, 2014 and
2012, and the period August 29, 1989 (inception) to December 31, 2014
|
F-3
|
Statement of Changes of Stockholders' Equity for the years ended
December 31, 2008 through 2014
|
F-4
|
Statement of Cash Flows for the years ended December 31, 2014 and 2013,
and the period August 9, 1989 (inception) to December 31, 2014
|
F-5
|
Notes to Financial Statements
|
F-6 to F-15
|
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Years Ended December 31, 2014 and
2013
CURRENT REPORT IS UNAUDITED as discussed in Item 9 supra.
F-1
Baltia Air Lines, Inc.
BALANCE SHEETS
(A Development Stage Company)
|
|
December 31, |
|
|
|
|
|
|
2013
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
Current assets
|
|
|
|
|
|
|
Cash
|
|
$ |
185,613 |
|
|
$ |
11,549 |
|
Other current assets
|
|
|
24,908 |
|
|
$ |
- |
|
Total current assets
|
|
|
210,521 |
|
|
|
11,549 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
2,316,036 |
|
|
|
1,794,486 |
|
|
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security deposit and other
|
|
|
318,683 |
|
|
|
317,293 |
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
2,845,240 |
|
|
$ |
2,123,328 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$ |
2,572,165 |
|
|
$ |
621,208 |
|
Short-term debt
|
|
|
50,000 |
|
|
|
- |
|
Accrued interest
|
|
|
515,325 |
|
|
|
319,125 |
|
Total current liabilities
|
|
|
3,137,490 |
|
|
|
940,333 |
|
|
|
|
|
|
|
|
|
|
Noncurrent liabilities
|
|
|
|
|
|
|
|
|
Long-term debt, net of discount
|
|
|
1,150,000 |
|
|
|
1,150,000 |
|
Long-term accounts payables and accrued expenses
|
|
|
335,523 |
|
|
|
335,523 |
|
|
|
|
|
|
|
|
|
|
Total noncurrent liabilities
|
|
|
1,485,523 |
|
|
|
1,485,523 |
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
4,623,013 |
|
|
|
2,425,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity (deficit)
|
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value; 2,000,000 shares authorized, 66,500 issued and outstanding
|
|
|
665 |
|
|
|
665 |
|
Common stock, $.0001 par value; 5,986,000,000 shares authorized, 5,582,213,346 and 3,296,126,988 issued and outstanding at December 31, 2014 and 2013, respectively
|
|
|
549,741 |
|
|
|
329,612 |
|
Additional paid-in capital
|
|
|
108,215,743 |
|
|
|
94,507,702 |
|
Deficit accumulated during development stage
|
|
|
(110,543,922 |
) |
|
|
(95,140,507 |
) |
|
|
|
|
|
|
|
|
|
Total stockholders' equity (deficit)
|
|
|
(1,777,773 |
) |
|
|
(302,528 |
) |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity (deficit)
|
|
$ |
2,845,240 |
|
|
$ |
2,123,328 |
|
The accompanying footnotes are an integral part of these financial statements.
STATEMENT OF OPERATIONS
(A Development Stage Company)
|
|
|
|
|
|
|
|
From
|
|
|
|
|
|
|
|
|
|
Inception to
|
|
|
|
Years Ended December 31,
|
|
|
December 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
|
(Unaudited)
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
General and admiinistrative
|
|
|
13,820,392 |
|
|
|
5,910,517 |
|
|
|
100,505,804 |
|
FAA certification costs
|
|
|
1,400,198 |
|
|
|
814,982 |
|
|
|
5,361,389 |
|
Training
|
|
|
- |
|
|
|
- |
|
|
|
225,637 |
|
Depreciation
|
|
|
56,094 |
|
|
|
16,488 |
|
|
|
442,522 |
|
Other
|
|
|
- |
|
|
|
- |
|
|
|
568,245 |
|
Interest
|
|
|
126,731 |
|
|
|
122,609 |
|
|
|
1,810,124 |
|
Loss on sale of assets
|
|
|
- |
|
|
|
- |
|
|
|
1,607,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
|
15,403,415 |
|
|
|
6,864,596 |
|
|
|
110,520,904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss befoe income taxes
|
|
|
(15,403,415 |
) |
|
|
(6,864,596 |
) |
|
|
(110,520,904 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
- |
|
|
|
3,600 |
|
|
|
23,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit accumulated during development stage
|
|
$ |
(15,403,415 |
) |
|
$ |
(6,868,196 |
) |
|
$ |
(110,543,922 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per weighted share, basice and fully diluted
|
|
$ |
(0.004 |
) |
|
$ |
(0.002 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, basic and fully diluted
|
|
|
4,302,033,740 |
|
|
|
2,984,068,462 |
|
|
|
|
|
The accompanying footnotes are an integral part of these financial statements.
Baltia Air Lines, Inc.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLERS'S EQUTIY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
|
|
|
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Development
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2008 :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
66,500 |
|
|
$ |
665 |
|
|
|
355,767,159 |
|
|
$ |
35,577 |
|
|
$ |
18,716,994 |
|
|
$ |
(18,002,863 |
) |
|
$ |
750,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants and options
|
|
|
|
|
|
|
|
|
|
|
32,000,000 |
|
|
|
3,200 |
|
|
|
|
|
|
|
|
|
|
|
3,202 |
|
Shares issued and issuable for cash
|
|
|
|
|
|
|
|
|
|
|
154,034,244 |
|
|
|
15,403 |
|
|
|
3,686,497 |
|
|
|
|
|
|
|
3,701,900 |
|
Shares issued for services
|
|
|
|
|
|
|
|
|
|
|
200,778,636 |
|
|
|
20,078 |
|
|
|
9,430,413 |
|
|
|
|
|
|
|
9,450,491 |
|
Oprions issued for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
243,787 |
|
|
|
|
|
|
|
243,787 |
|
Stock issued to purchase airplane
|
|
|
|
|
|
|
|
|
|
|
1,000,000 |
|
|
|
100 |
|
|
|
24,900 |
|
|
|
|
|
|
|
25,000 |
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,175,550 |
) |
|
|
(12,175,550 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2009
|
|
|
66,500 |
|
|
|
665 |
|
|
|
743,580,039 |
|
|
|
74,358 |
|
|
|
32,102,591 |
|
|
|
(30,178,413 |
) |
|
|
1,999,201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued and issuable for cash
|
|
|
|
|
|
|
|
|
|
|
115,776,464 |
|
|
|
11,578 |
|
|
|
4,365,876 |
|
|
|
|
|
|
|
4,377,454 |
|
Shares issued for services
|
|
|
|
|
|
|
|
|
|
|
252,658,491 |
|
|
|
25,266 |
|
|
|
14,984,584 |
|
|
|
|
|
|
|
15,009,850 |
|
Fair value of options issued as loan incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,745 |
|
|
|
|
|
|
|
92,745 |
|
Stock issued as loan incentive
|
|
|
|
|
|
|
|
|
|
|
6,800,000 |
|
|
|
680 |
|
|
|
201,552 |
|
|
|
|
|
|
|
202,232 |
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,394,527 |
) |
|
|
(19,394,527 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010
|
|
|
66,500 |
|
|
|
665 |
|
|
|
1,118,814,994 |
|
|
|
111,881 |
|
|
|
51,747,348 |
|
|
|
(49,572,940 |
) |
|
|
2,286,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued and issuable for cash
|
|
|
|
|
|
|
|
|
|
|
241,369,947 |
|
|
|
24,137 |
|
|
|
7,783,105 |
|
|
|
|
|
|
|
7,807,242 |
|
Shares issued for services
|
|
|
|
|
|
|
|
|
|
|
357,846,441 |
|
|
|
35,786 |
|
|
|
17,403,106 |
|
|
|
|
|
|
|
17,438,892 |
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25,075,498 |
) |
|
|
(25,075,498 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2011
|
|
|
66,500 |
|
|
|
665 |
|
|
|
1,718,031,382 |
|
|
|
171,804 |
|
|
|
76,933,559 |
|
|
|
(74,648,438 |
) |
|
|
2,457,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior period adjustment
|
|
|
|
|
|
|
|
|
|
|
147,987,304 |
|
|
|
14,798 |
|
|
|
(14,798 |
) |
|
|
|
|
|
|
- |
|
Stock issued and issuable for cash
|
|
|
|
|
|
|
|
|
|
|
271,270,882 |
|
|
|
27,127 |
|
|
|
3,599,755 |
|
|
|
|
|
|
|
3,626,882 |
|
Shares issued for services
|
|
|
|
|
|
|
|
|
|
|
329,248,482 |
|
|
|
32,925 |
|
|
|
7,653,663 |
|
|
|
|
|
|
|
7,686,588 |
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,623,873 |
) |
|
|
(13,623,873 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2012
|
|
|
66,500 |
|
|
|
665 |
|
|
|
2,466,538,050 |
|
|
|
246,654 |
|
|
|
88,172,179 |
|
|
|
(88,272,311 |
) |
|
|
147,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued and issuable for cash
|
|
|
|
|
|
|
|
|
|
|
701,621,438 |
|
|
|
70,162 |
|
|
|
4,062,352 |
|
|
|
|
|
|
|
4,132,514 |
|
Shares issued for services
|
|
|
|
|
|
|
|
|
|
|
127,967,500 |
|
|
|
12,796 |
|
|
|
2,273,171 |
|
|
|
|
|
|
|
2,285,967 |
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,868,196 |
) |
|
|
(6,868,196 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2013
|
|
|
66,500 |
|
|
|
665 |
|
|
|
3,296,126,988 |
|
|
$ |
329,612 |
|
|
$ |
94,507,702 |
|
|
$ |
(95,140,507 |
) |
|
$ |
(302,528 |
) |
Stock issued and issuable for cash
|
|
|
|
|
|
|
|
|
|
|
1,974,254,019 |
|
|
|
197,425 |
|
|
|
9,707,018 |
|
|
|
|
|
|
|
9,904,443 |
|
Shares issued for services
|
|
|
|
|
|
|
|
|
|
|
232,534,764 |
|
|
|
23,254 |
|
|
|
4,060,873 |
|
|
|
|
|
|
|
4,084,127 |
|
Shares cancelled
|
|
|
|
|
|
|
|
|
|
|
(5,500,000 |
) |
|
|
(550 |
) |
|
|
(59,850 |
) |
|
|
|
|
|
|
(60,400 |
) |
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,403,415 |
) |
|
|
(15,403,415 |
) |
Balance, December 31, 2014 (Unaudited)
|
|
|
66,500 |
|
|
|
665 |
|
|
|
5,497,415,771 |
|
|
$ |
549,741 |
|
|
$ |
108,215,743 |
|
|
$ |
(110,543,922 |
) |
|
$ |
(1,777,773 |
) |
The accompanying footnotes are an integral part of these financial statements.
STATEMENTS OF CASH FLOWS
(A Development Stage Compmay)
|
|
|
|
|
|
|
|
From
|
|
|
|
|
|
|
|
|
|
Inception to
|
|
|
|
Years Ended December 31,
|
|
|
December 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
|
(Unaudited)
|
|
|
|
|
|
(Unaudited)
|
|
Cash flows from operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit accumulated during development stage
|
|
$ |
(15,403,415 |
) |
|
$ |
(6,868,196 |
) |
|
$ |
(110,543,922 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to reconcile deficit accumlated during development stage to cash used in opeating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
56,094 |
|
|
|
16,488 |
|
|
|
442,522 |
|
Amortization of loan discount
|
|
|
- |
|
|
|
- |
|
|
|
294,977 |
|
Expenses paid issuance of common stock and options
|
|
|
4,084,127 |
|
|
|
2,285,967 |
|
|
|
100,276,956 |
|
Loss on sale of assets
|
|
|
|
|
|
|
|
|
|
|
1,607,183 |
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(24,908 |
) |
|
|
|
|
|
|
375,393 |
|
Accounts payable and accrued expenses
|
|
|
2,147,157 |
|
|
|
472,468 |
|
|
|
6,574,496 |
|
Net cash used by operating activities
|
|
|
(9,140,945 |
) |
|
|
(4,093,273 |
) |
|
|
(972,395 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
(577,644 |
) |
|
|
(40,018 |
) |
|
|
(4,447,290 |
) |
Proceeds from sale of assets
|
|
|
- |
|
|
|
- |
|
|
|
144,164 |
|
Security deposit
|
|
|
(1,390 |
) |
|
|
- |
|
|
|
(318,683 |
) |
Net cash used by investing activities
|
|
|
(579,034 |
) |
|
|
(40,018 |
) |
|
|
(4,621,809 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financiang activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
9,844,043 |
|
|
|
4,132,514 |
|
|
|
40,892,418 |
|
Proceeds from issuance of prefrerred stock
|
|
|
- |
|
|
|
- |
|
|
|
2,753 |
|
Proceeds from short-term loans
|
|
|
50,000 |
|
|
|
- |
|
|
|
50,000 |
|
Loans from related parties
|
|
|
- |
|
|
|
- |
|
|
|
1,351,573 |
|
Repayment of related party loans
|
|
|
- |
|
|
|
- |
|
|
|
(368,890 |
) |
Principal payments on long-term debt
|
|
|
- |
|
|
|
- |
|
|
|
1,109,183 |
|
Acquisition of treasury stock
|
|
|
- |
|
|
|
- |
|
|
|
(500,100 |
) |
Net cash provided by financing activities
|
|
|
9,894,043 |
|
|
|
4,132,514 |
|
|
|
42,536,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
174,064 |
|
|
|
(777 |
) |
|
|
185,613 |
|
Cash, beginning of period
|
|
|
11,549 |
|
|
|
12,326 |
|
|
|
- |
|
Cash, end of period
|
|
$ |
185,613 |
|
|
$ |
11,549 |
|
|
$ |
185,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the year for interest
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
The accompanying footnotes are an integral part of these financial statements.
BALTIA AIR LINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
(Unaudited)
1. Nature of Operations
The Company was formed as a U.S. airline on August 24, 1989 in the State of New York. Our objective is to provide scheduled air transportation from the U.S. to Russia, the Baltic States and Ukraine. In 1991, the Department of Transportation (DOT) granted the Company routes to provide nonstop 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. We have two registered trademarks, "BALTIA" and "VOYAGER CLASS," and five trademarks subject to registration. Our activities to date have been devoted principally to raising capital, obtaining route authority and approval from the DOT and the FAA, training crews, and conducting market research to develop the Company's marketing strategy.
Regulatory Compliance
We intend to operate as a Part 121 carrier, a heavy jet operator. As such, following certification we will be required to maintain our air carrier standards as prescribed by DOT and FAA regulation and as specified in the FAA approved Company manuals. As part of its regulatory compliance, we will be required to submit periodic reports of our operations to the DOT.
2. Summary of Significant Accounting Policies
Basis of Presentation
The financial statements have been presented in a "development stage" format. Since inception, our primary activities have been raising of capital, obtaining financing and of obtaining route authority and approval from the DOT and the FAA. We have not commenced our principal revenue-producing activities.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires our management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.
Cash and Cash Equivalents
For financial statement presentation purposes, we consider those short-term, highly liquid investments with original maturities of three months or less to be cash or cash equivalents. There are no cash equivalents at December 31, 2014 and 2013.
Fair Value of Financial Instruments
FASB ASC Topic 825, Financial Instruments ("ASC 825"), requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. FASB ASC 825 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. At December 31, 2014 and 2013, the carrying value of certain financial instruments (cash and cash equivalents, accounts payable and accrued expenses.) approximates fair value due to the short-term nature of the instruments or interest rates, which are comparable with current rates.
BALTIA AIR LINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
(Unaudited)
2. Summary of Significant Accounting Policies (continued)
Fair Value Measurements
FASB ASC Topic 820, Fair Value Measurements and Disclosure ("ASC 820"), defines fair value and establishes a framework for measuring fair value and establishes a fair value hierarchy which prioritizes the inputs to the inputs to the valuation techniques. Fair value is the price that would be received to sell an asset or amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income or cost approach, as specified by FASB ASC 820, are used to measure fair value.
Fair Value Hierarchy
FASB ASC 820 specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs), or reflect the Company's own assumptions of market participant valuation (unobservable inputs). In accordance with FASB ASC 820, these two types of inputs have created the following fair value hierarchy:
|
Level 1 - Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities.
|
|
|
|
Level 2 - Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly.
|
|
|
|
Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. |
FASB ASC 820 requires the use of observable market data if such data is available without undue cost and effort.
Measurement of Fair Value
The Company measures fair value as an exit price using the procedures described below for all assets and liabilities measured at fair value. When available, the Company uses unadjusted quoted market prices to measure fair value and classifies such items within Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use whenever possible current market-based or independently-sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be inputs that are readily observable. If quoted market prices are not available, the valuation model used generally depends on the specific asset or liability being valued. The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments.
BALTIA AIR LINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
(Unaudited)
2. Summary of Significant Accounting Policies (continued)
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and amortization. Improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the respective assets or the lease term. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 5-15 years. Expenditures for renewals and betterments are capitalized. Expenditures for minor items, repairs, and maintenance are charged to operations as incurred. Gain or loss upon sale or retirement due to obsolescence is reflected in the operating results in the period the event takes place.
Valuation of Long-Lived Assets
The Company periodically evaluates its long-lived assets for potential impairment in accordance with ASC 360, Property, Plant and Equipment, and records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts. There was no impairment charges during the years ended December 31, 2013 and 2012.
Stock-Based Compensation Plans
Stock-based awards are accounted for using the fair value method in accordance with ASC 718, Share-Based Payments. Our primary type of share-based compensation consists of stock options and stock-based awards. We use the Black-Scholes option pricing model in valuing options. The inputs for the valuation analysis of the options include the market value of the Company's common stock, the estimated volatility of the Company's common stock, the exercise price of the warrants and the risk free interest rate.
Loss per Common Share
The Company complies with accounting and disclosure requirements of ASC 262, Earnings Per Share. Basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share incorporates the dilutive effect of common stock equivalents on an average basis during the period. All stock options either expired or were cancelled during the year ended December 31, 2012. No adjustment was made to the weighted-average number of shares outstanding in the calculation of loss per share for the years ended December 31, 2014 and 2013.
Income Taxes
Income taxes are recorded in accordance with ASC Topic 740, Accounting for Income Taxes ("ASC 740"), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company determines its deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are provided, when necessary, to reduce the deferred income tax assets to the amount expected to be realized.
BALTIA AIR LINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
(Unaudited)
2. Summary of Significant Accounting Policies (continued)
The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of December 31, 2014 and 2013, the Company did not have any uncertain tax positions.
Generally, tax filings are no longer subject to income tax examinations by major taxing authorities for years before 2011. Any potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, state, and local tax laws. The Company's management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
The Company's policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2014 and 2013, the Company has not accrued interest or penalties related to uncertain tax positions.
Upon the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize a deferred tax asset at that time.
Recent Accounting Pronouncements
In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220) - Reporting of Amounts Reclassified out of Accumulative Other Comprehensive Income (ASU 2013-02), which replaces the presentation requirements for reclassifications out of accumulated other comprehensive income in ASU 2011-05 and ASU 2011-12. ASU 2013-02 requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component and to present significant amounts reclassified out of accumulated other comprehensive income by respective line items of net income if the amount reclassified is required to be reclassified to net income in its entirety. The adoption of ASU 2013-02 did not have any impact on our financial position, results of operations or cash flows.
In March 2013, the FASB issued Accounting Standards Update No. 2013-05, Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (ASU 2013-05). ASU 2013-05 provides guidance on releasing cumulative translation adjustments when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or a business within a foreign entity. ASU 2013-05 is effective on a prospective basis for fiscal years and interim reporting periods within those years, beginning after December 15, 2013. Early adoption is permitted. The adoption of ASU 2013-05 is not expected to have a material impact on our financial position, results of operations or cash flows.
In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740) which provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exits. The update is effective for hears beginning after December 15, 2013. The Company does not expect the implementation of this standard to have a material impact on its financial position or results of operations.
BALTIA AIR LINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
(Unaudited)
2. Summary of Significant Accounting Policies (continued)
Recent Accounting Pronouncements (continued)
In June 2014, the FASB issued ASU 2014-10-Development Stage Entities - Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation The guidance removes the definition of a development stage entities and other reporting entities from U.S. GAAP. The guidance eliminates the requirements for development stage entities to (1) present inception-to-date information on the statements of income, cash flows, and shareholder's equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The guidance is effective for fiscal years, beginning after December 15, 2014. Early adoption is permitted The Company is currently evaluating the impact that the adoption of this guidance will have on the Company's financial statements and related disclosures.
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition of the award. A reporting entity should apply existing guidance in Accounting Standards Codification Topic 718, Compensation-Stock Compensation, as it relates to such awards. The guidance is effective for fiscal years beginning after December 15, 2015, and may be applied prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company's financial statements and related disclosures.
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. The guidance requires an entity to evaluate whether there are conditions or events, in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the financial statements are available to be issued when applicable) and to provide related footnote disclosures in certain circumstances. The guidance is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. We do not believe the adoption of this guidance will have a significant impact the Company's financial statements and related disclosures.
In November 2014, the FASB issued ASU 20-14-16, Derivatives and Hedging - Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The guidance requires an entity to determine the nature of the host contract by considering the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 and interim periods beginning after December 15, 2016. Early adoption, including adoption in an interim period, is permitted The Company is currently evaluating the impact that the adoption of this guidance will have on the Company's financial statements and related disclosures.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC") did not or are not believed by management to have a material impact on the Company's present or future financial statements.
BALTIA AIR LINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
(Unaudited)
3. Property and Equipment
A summary of property and equipment is as follows:
|
|
Estimated
Useful Life |
|
2014
|
|
|
2013
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Airplane
|
|
10- 15 years |
|
$ |
2,079,135 |
|
|
$ |
1,540,756 |
|
Office equipment and other
|
|
5 - 7 years |
|
|
433,751 |
|
|
|
394,486 |
|
Less accumulated depreciation
|
|
|
|
|
(196,850 |
) |
|
|
(140,756 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,316,036 |
|
|
$ |
1,794,486 |
|
|
|
|
|
|
|
|
|
|
|
|
Current depreciation
|
|
|
|
$ |
56,094 |
|
|
$ |
16,500 |
|
4. Stockholders' Equity
Description of Securities
Common Stock
We are authorized to issue 5,986,000,000 shares of common Stock at $.0001 par value per share. As of December 31, 2014, a total of 5,582,213,346 shares of common Stock were issued and outstanding and held by approximately 5,400 shareholders. Holders of common Stock are entitled to receive dividends, when and if declared by the board of directors, subject to prior rights of holders of any Preferred Stock then outstanding and to share ratably in the net assets of the company upon liquidation. Holders of common Stock do not have preemptive or other rights to subscribe for additional shares. The Certificate of Incorporation does not provide for cumulative voting. Shares of common Stock have equal voting, dividend, liquidation and other rights, and have no preference, exchange, or appraisal rights.
Preferred Stock
We are authorized to issue up to a maximum of two million shares of preferred stock. At December 31, 2014, 66,500 shares of preferred stock were issued and outstanding. We can issue these shares upon the adoption of a resolution by the board of directors. Our preferred stock is not entitled to share in any dividends declared on the Common Stock and has no voting rights. Each share is convertible in to 3 shares of common. The liquidation preference is set by this conversion formula and results in a pro rata claim on the Company's assets based upon the underlying common shares issuable (199,500) upon conversion.
Recent Issuance of Unregistered Securities
2014:
Stock Issued for Cash
We issued 1,974,255,019 shares of our common stock in exchange for receiving a total of $9,904,443 in cash net of offering expenses. The 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.
BALTIA AIR LINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
(Unaudited)
4. Stockholders' Equity (continued)
Recent Issuance of Unregistered Securities (continued)
2014:
Stock Issued for Services
We issued 232,534,764 shares of our common stock in exchange for services. The shares were valued at $4,084,127 or approximately $0.018 per share, which reflected the weighted average market value at the time of issuance.
2013:
Stock Issued for Cash
We issued 701,621,438 shares of our common stock in exchange for receiving a total of $4,132,514 in cash net of offering expenses. The 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
We issued 127,967,500 shares of our common stock in exchange for services. The shares were valued at $2,285,967 or approximately $0.018 per share, which reflected the weighted average market value at the time of issuance. Of the total shares issued for services, 18,000,000 of these shares valued at approximately $180,000 were issued to Igor Dmitrowsky, our president and CEO.
5. Stock options and Warrants
Stock Options
No stock options were issued during the year ended December 31, 2014.
BALTIA AIR LINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
(Unaudited)
5. Stock options and Warrants (continued)
Warrants
For the years ended December 31, 2014 and 2013, warrant activity was as follows:
Warrants Outstanding
|
|
|
Warrants Excercisable
|
|
|
|
|
Number
|
|
|
Weighted
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
Outstanding
|
|
|
Average
|
|
|
Weighted
|
|
|
Exercisable
|
|
|
Weighted
|
|
|
|
|
At
|
|
|
Remaining
|
|
|
Average
|
|
|
At
|
|
|
Average
|
|
|
|
|
December 31,
|
|
|
Contractual
|
|
|
Exercise
|
|
|
December 31,
|
|
|
Exercise
|
|
Price |
|
|
2014
|
|
|
Life
|
|
|
Price
|
|
|
2014
|
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.02 |
|
|
|
480,000 |
|
|
|
0.26 |
|
|
$ |
0.02 |
|
|
|
480,000 |
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
$ |
0.05 |
|
|
|
20,075,000 |
|
|
|
0.38 |
|
|
$ |
0.05 |
|
|
|
20,075,000 |
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
$ |
0.08 |
|
|
|
4,458,333 |
|
|
|
0.30 |
|
|
$ |
0.08 |
|
|
|
4,458,333 |
|
|
$ |
0.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
$ |
0.10 |
|
|
|
252,500 |
|
|
|
0.12 |
|
|
$ |
0.10 |
|
|
|
252,500 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
$ |
0.25 |
|
|
|
156,000 |
|
|
|
0.16 |
|
|
$ |
0.25 |
|
|
|
156,000 |
|
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,421,833 |
|
|
|
0.80 |
|
|
$ |
0.06 |
|
|
|
25,421,833 |
|
|
|
|
|
|
|
Number of
|
|
|
Weighted
|
|
|
Remaining
|
|
|
|
Warrants
|
|
|
Average
|
|
|
Term
|
|
|
|
Outstanding
|
|
|
Price
|
|
|
(In Years)
|
|
|
|
|
|
|
|
|
|
|
|
Warrants outstanding at December 31, 2013
|
|
|
60,428,066 |
|
|
$ |
0.07 |
|
|
|
1.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted in 2013
|
|
|
32,046,508 |
|
|
|
|
|
|
|
- |
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Canceled in 2013
|
|
|
20,146,566 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants outstanding at December 31, 2013
|
|
|
72,328,008 |
|
|
$ |
0.05 |
|
|
|
0.80 |
|
|
|
|
|
|
|
|
0.05 |
|
|
|
|
|
Granted in 2014
|
|
|
327,500 |
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
- |
|
|
|
|
|
|
|
|
|
Canceled in 2014
|
|
|
47,233,675 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants outstanding at December 31, 2014 (Unaudited)
|
|
|
25,421,833 |
|
|
$ |
0.06 |
|
|
|
0.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants exercisable at December 31, 2014 (Unaudited)
|
|
|
25,421,833 |
|
|
|
|
|
|
|
|
|
BALTIA AIR LINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
(Unaudited)
6. Income Taxes
The Company has approximately $42.7 million in available net operating loss carryovers available to reduce future income taxes. These carryovers expire at various dates through the year 2034. The Company has adopted ASC 740, Accounting for Income Taxes which provides for the recognition of a deferred tax asset based upon the value the loss carry-forwards will have to reduce future income taxes and management's estimate of the probability of the realization of these tax benefits. We have determined it more likely than not that these timing differences will not materialize and have provided a valuation allowance against our entire net deferred tax asset of approximately $8.6 million.
Utilization of federal and state NOL and tax credit carry-forwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of NOL and tax credit carry-forwards before full utilization.
7. Commitments and Contingencies
The Company leases office space for its administrative offices and an airport terminal facility under terms of these operating leases, which expire on August 15, 2015 and on a month to month basis. The payments are charged to rental expense as incurred. Rental payments for these two operating leases for the years ended December 31, 2014 and 2013 were $438,000 and $465,000 and are included in general administrative expenses in the statement of operations. Future minimum payments are $286,000 for the years ended December 31, 2015.
The Company also leases office space, an airport terminal facility at Willow Run Airport, and other facilities under terms of an operating lease, which expire on May 31, 2015. The payments are charged to rental expense as incurred. Rental payments for the years ended December 31, 2014 and 2013 were $23,000 and $20,000, respectively, and are included in general administrative expenses in the statement of operations. Future minimum payments are $286,000 and $467,000 for the years ended December 31, 2015. Future minimum payments are $10,000 for the years ended December 31, 2015.
The Company also leases office space for its administrative offices in St. Petersburg, Russia under the terms of an operating lease which expires on September 1, 2015. The payments are charged rental expense as incurred. Rental payments for the year ended 2014 and 2013 were approximately $15,000, and are included in general administrative expenses in the statement of operations. Future minimum payments are $10,000 for the years ended December 31, 2015
BALTIA AIR LINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
(Unaudited)
8. Long-Term Debt-Related Party
On December 1, 2010, the Company entered into a loan arrangement with a company owned or controlled by one of our directors for a total amount of $1,150,000. The Company issued a note ("Note") bearing interest at 9% per annum, payable quarterly, with a maturity date of March 31, 2013. Under terms of the Note dated December 1, 2010, the Company was obligated to repay the $1,150,000 prior to the maturity date upon raising $4 million or from proceeds of operating revenue. In connection with the terms of the Note, the Company issued the lender 6.8 million shares of common stock and 3.4 million warrants. The Company recorded the relative fair value of the shares and warrants of $294,297 as additional paid-in capital and established a discount on the debt. The discount was amortized over 24 months at an effective rate of 14.98%. The note is secured by aircraft to a limit of $2.9 million.
On March 31, 2013, the repayment terms of the Note were modified, wherein the Company is obligated to repay the principal amount of $1,150,000 to the lender on or before the second anniversary of the date upon which the Company commences its revenue flight operations. The modification further provides that the Company will pay accrued interest to date on or before the first anniversary of the date upon which the Company commences its revenue flight operations. There were no other changes to the terms of the original note.
9. Development Stage Activities and Going Concern
The Company is currently in the development stage and has not as of yet generated any revenue from its planned operation to provide scheduled air transportation from the United States to Russia, the Baltic States, and the Ukraine.
The accompanying financial statements have been prepared using the accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business.
Currently, the Company has a minimum cash balance available for the payment of ongoing operating expenses, which would allow it to cover its operational costs and allow it to continue as a going concern, and it has incurred operating losses and experienced negative cash flows from operations since inception. The Company has a deficit accumulated as of December 31, 2014 of approximately $110.5 million. The Company has funded its activities through December 31, 2014 almost exclusively from debt and equity financings. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
For the years ended December 31, 2014 and 2013, the Company raised approximately $9.9 and $4.1 million, respectively, from private placements, funds needed to continue with the certification process, a process that must be completed before it can launch nonstop revenue service to Russia with its 747 aircraft. In addition to raising funds from private placements, the Company supplemented the financing of its ongoing operations through the issuance of common stock to pay operating expenses not paid with cash raised from the private placements. The continued operations of the Company over the long-term is dependent upon implementing airline service that will generate profits; until such time, however, it will continue to require substantial funds to continue with its aircraft and operational certification and carry out its business plan. In order to meet its ongoing operating cash requirements, management's plans include financing activities such as private placements of its common stock and the continued issuance of common stock for services rendered by vendors, consultants, and other professionals. Management has also considered the overall pipeline effect that enhances the initial cash position of a startup carrier. It is the industry practice for passengers to purchase tickets in advance of their flights while service vendors bill the carrier later. So that a new airline will not fly empty on day one, approximately 30 days prior to the expected inaugural date, the DOT authorizes sales of tickets and cargo. Such funds from advance sales, estimated at approximately $3 million for the company, accumulate in an escrow account, and are released upon the issuance of the air carrier certificate.
BALTIA AIR LINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
(Unaudited)
9. Development Stage Activities and Going Concern (continued)
In the event we do not generate sufficient funds from revenues or financing through the issuance of our common stock or from debt financing, we may be unable to fully implement our business plan and pay our obligations as they become due, any of which circumstances would have a material adverse effect on our business prospects, financial condition, and results of operations
While the Company believes it will be successful in obtaining the necessary financing to fund its operations, there are no assurances that such additional funding will be achieved and that it will succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should the Company be unable to continue in existence
10. Related Party
During the year ended December 31, 2014 and 2013, the Company issued 0 and 19,000,000, respectively, restricted shares of its $0.001 par value common stock to officers and directors. These restricted shares were valued at $0 and $1,980,000, respectively, or a weighted average price of approximately $ 0 and $0.018 per share, respectively. Its president and CEO was charged additional compensation of $ 0 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, 2014 and 2013, respectively. Also, during the years ended December 31, 2014 this officer received salary of $121,600 and for the year ended December 31, 2013 received other compensation (in lieu of salary) of $12,853. A second officer, vice president - finance, was paid salary and additional compensation of $769,361 and $427,350 for the years ended December 31, 2014 and 2013, respectively, which represents amounts paid him for negotiating services in connection with the raise of new equity capital. A third officer, vice president, was paid additional compensation of $107,800 and $46,500 for services provided the Company during the years ended December 31, 2014 and 2013, respectively. A fourth officer, corporate secretary, was additional compensation of $11,968 and $15,960 for services provided the Company during the years ended December 31, 2014 and 2013, respectively.
11. Subsequent Events
The Company has evaluated subsequent events through the date these financial statements were issued and has determined that there are no subsequent events or transactions requiring recognition or disclosure in the financial statements.
F-15
Item 6.
Exhibits.
3. CORPORATE CERTIFICATES AND BYLAWS
3.1.1
Certificate of Incorporation (as amended) of Baltia Air Lines, Inc.
Incorporated by reference to Exhibit 3.1.1 to
Baltia Air Lines Inc.'s reported on Form 10-K, for the year ended December 31,
2012, as filed April 16, 2013
3.1.2
Certificate of Incorporation amendment of Baltia Air Lines, Inc. (as amended and
filed on June 24, 2011)
Incorporated by reference to Exhibit 3.1.2 to
Baltia Air Lines Inc.'s reported on Form 10-K, for the year ended December 31,
2012, as filed April 16, 2013
3.1.3
Certificate of Incorporation amendment of Baltia Air Lines, Inc. (as amended and
filed on May 24, 2012)
Incorporated by reference to Exhibit 3.1.3 to
Baltia Air Lines Inc.'s reported on Form 10-K, for the year ended December 31,
2012, as filed April 16, 2013
3.1.4
Certificate of Incorporation amendment of Baltia Air Lines, Inc. (as amended and
filed on December 27, 2012).
Incorporated by reference to Exhibit 3.1.4 to
Baltia Air Lines Inc.'s reported on Form 10-K, for the year ended December 31,
2012, as filed April 16, 2013
3.1.5
Certificate of Incorporation amendment of Baltia Air Lines, Inc. (as amended and
filed on July 29, 2013). Incorporated
by reference to Exhibit 3.1.5 as reported on Baltia Air Lines's Form Q-10 filed
21 August 2013.
3.1.6
Certificate of Incorporation amendment of Baltia Air Lines, Inc. (as amended and
filed on February 12, 2014).
Incorporated by reference to Exhibit 3.1.6 as
reported on Baltia Air Lines's Form 10-K filed April 15 2014.
3.1.7
Certificate of Incorporation amendment of Baltia Air Lines, Inc. (as amended and
filed on June 18, 2014).Incorporated by reference to Exhibit 3.1.7 as
reported on Baltia Air Lines's Form 10-Q for period ending June 30, 2014, filed August 19, 2014.
3.1.8
Certificate of Incorporation amendment of Baltia Air Lines, Inc. (as amended and
filed on July 20, 2014).Incorporated by reference to Exhibit 3.1.8 as
reported on Baltia Air Lines's Form 10-Q for period ending June 30, 2014, filed August 19, 2014.
3.2 Bylaws of
Baltia Air Lines, Inc. (amended and ratified November 7, 2011)
Incorporated by reference to Exhibit 3.2.2 to
Baltia Air Lines Inc.'s reported on Form 10-K, 21 Dec 2011 from the year ended
December 31, 2010.
10. MATERIAL CONTRACTS
10.1.- Fuel Agreement, World Fuel Services Inc., initial term September 1, 2013 to September 1, 2016, automatic renewal for one year extensions unless terminated.
10.2 - Amendment II - Aircraft Engine Lease Agreement, Logistic Air Inc.,
executed May 15, 2014, effective through February 1, 2015.
Incorporated by reference to Exhibit 10.2 to Company's Form 10-Q for period ending June 30, 2014, filed August 19, 2014.
10.3 -
Product and Services Agreements between Navtech Systems Support Inc. and Baltia
Air Lines, Inc. Dated January 15, 2010 with confidential portion omitted and
filed separately with the Commission pursuant to a request for confidential
treatment. Incorporated by
reference to Exhibit 10.7 to Company's 10-K/A for year 2010 as filed December
21, 2011 effective to January 14, 2015.
10.4 - Ground
Handling Agreement at Pulkovo Airport between ZAO Cargo Terminal Pulkovo and
Baltia Air Lines, Inc. effective June 1, 2014 through May 31, 2016.
Incorporated by reference to Exhibit 10.4 to Company's Form 10-Q for period ending June 30, 2014, filed August 19, 2014.
10.5 -
Aircraft and/or Engine Maintenance Services Agreement between Kalitta Air, LLC
and Baltia Air Lines, Inc., and Letter Agreement to Extend Aircraft Maintenance
Service Agreement between Kalitta Air and Baltia Air Lines, Inc. effective
December 24, 2013 until December 24, 2015 with 1-year extension with 60-day
notice. Incorporated by reference to
Exhibit 10.5 to Company's 10-K for 2013 filed April 15, 2014.
10.6 - First Amendment to Product and Services Agreements between Navtech
Systems Support Inc. and Baltia Air Lines, Inc. dated January 15, 2010,
and effective to January 15, 2015.
Incorporated by reference to Exhibit 10.10 to
Company's 10-Q/A for 3rd quarter 2011, corrected and filed March 29,
2012.
10.7 Lockton Aircraft Hull, Spares and Airline Legal Liability Insurance,
Baltia Air Lines, Inc. insured, effective June 15, 2014 to June 15, 2015.
Incorporated by reference to Exhibit 10.7 to Company's Form 10-Q for period ending June 30, 2014, filed August 19, 2014.
10.8
Certificate of Insurance, The Boeing Company and Boeing Commercial Airplanes
insured, Hull, Aircraft and Airport Premises, including war perils, ground risks
only, excluding passenger liabilities, effective January 8, 2013 to April 1,
2015. Incorporated by reference
to Exhibit 10.8 to Company's 10-K for 2013 filed April 15, 2014.
10.9 Kalitta
Maintenance Agreement Certificate of Insurance, Kalitta Air, LLC insured, Hull
& Liability ground only, Airport Premises, effective April 1, 2014 to April
1, 2015. Incorporated by reference to
Exhibit 10.9 to Company's 10-K for 2013 filed April 15, 2014.
10.10
Certificate of Insurance, Port Authority of New York and New Jersey insured,
Airport Premises, effective April 1, 2014 to April 1, 2015.
Incorporated by reference to Exhibit 10.10 to
Company's 10-K for 2013 filed April 15, 2014.
10.11 Premium
Financing Agreement by Premium Assignment Corporation. Effective as of April 1,
2014 to April 1, 2015.
Incorporated by reference to Exhibit 10.11 to
Company's 10-Q for period ending March 30, 2014, filed May 20, 2014
10.12 - John
F. Kennedy Airport - Terminal 4, Lease Agreement between JFK International Air
Terminal, LLC and Baltia Air Lines, dated November 17, 2008, effective until
terminated by either party.
Incorporated by reference to Exhibit 10.12 to Baltia Air Lines Inc.'s report on
Form 10-K for the year ended December 31, 2012.
10.12.1 -
Certificate of Insurance, JFK International Air Terminal LLC insured, Terminal 4
Leased space to Baltia Air Lines, Inc., effective April 1, 2014 to April 1,
2015. Incorporated by reference to
Exhibit 10.12.1 to Company's 10-K for 2013 filed April 15, 2014.
10.13 - JFK
Airport Building 151 Lease Agreement, between Japan Airlines Management Corp.
and Baltia Air Lines, effective on September 1, 2011, valid through November 30,
2015. Incorporated by reference to
Exhibit 10.13 to Baltia Air Lines Inc.'s report on Form 10-K for the year ended
December 31, 2012 as filed April 16, 2013.
10.13.1 -
Certificate of Insurance, Japan Airlines Management Corp. insured, Building 151
Sublease Agreement, effective April 1, 2014 to April 1, 2015.
Incorporated by reference to Exhibit 10.13.1
to Company's 10-K for 2013 filed April 15, 2014.
10.14 -
Willow Run Airport facility lease between Wayne County Airport Authority and
Baltia Air Lines, effective from June 1, 2013 until May 31, 2015.
Incorporated by reference to Exhibit 10.14 to
Company's 10-Q for 3rd quarter 2013 filed November 19, 2013.
10.14.1 -
Amendment to Willow Run Airport facility lease, effective October 13, 2013 to
May 31, 2015. Incorporated by
reference to Exhibit 10.14.1 to Company's 10-Q for 3rd quarter 2013 filed
November 19, 2013.
10.14.2 -
Amendment to Willow Run Airport facility lease, effective February 2013 to May
21, 2015. Incorporated by
reference to Exhibit 10.14.2 to Company's 10-Q for 3rd quarter 2013 filed
November 19, 2013.
10.14.3 -
Certificate of Insurance, Wayne County Airport Authority insured, Airport
Premises, effective April 1, 2014 to April 1, 2015.
Incorporated by reference to Exhibit 10.14.3
to Company's 10-K for 2013 filed April 15, 2014.
10.15 -
Pulkovo Airport facility SubLease Agreement between LLC Northern Capital Gateway
and Baltia Air Lines, effective from March 1, 2013, auto renewed unless objected
to by Sublessor.
Incorporated by reference to Exhibit 10.15 to
Company's 10-Q for period ending March 30, 2014, filed May 20, 2014
10.16 -
Contract affirmed by Board resolution affirming Agreements between the Company
and its officers agreeing not to sell the shares issued to them until the
Company receives FAA Certification and commence its revenue flights.
Incorporated by reference to Exhibit 10.16 to
Baltia Air Lines Inc.'s report on Form 10-K for the year ended December 31,
2012.
10.17 - Purchase of Cessna Citation 500 aircraft N606KR.
Incorporated by reference to Form 8-K filed
May 21, 2013.
10.17.1 - Certificate of Insurance, Baltia Air Lines, Inc. insured, Cessna 500 N606KR to
July 26, 2014. Incorporated by
reference to Exhibit 10.17.1 to Company's 10-Q for 3rd quarter 2013 filed
November 19, 2013. (NOTE: Aircraft currently not being operated.)
10.18 - Loan
Agreement (amended) dated October 14, 2013 between Baltia Air Lines, Inc. and
Eastern Construction & Electric, Inc. for purchase of Boeing 747 aircraft.
Incorporated by reference to
Exhibit 10.18 to Company's 10-Q for 3rd quarter 2013 filed November 19,
2013.
10.19 -
Flight Training Agreement Aircraft Type B747-200 between Kalitta Air, LLC and
Baltia Air Lines, Inc. effective October 10, 2013 to December 31, 2014.
Incorporated by reference to Exhibit
10.19 to Company's 10-Q for 3rd quarter 2013 filed November 19, 2013. (NOTE: Contract completed)
10.20 - B747 Aircraft Hull and Liability Binder - Renewal, Registration N706BL,
Meadowbrook Insurance Group, effective April 1, 2014 to April 1, 2015.
Incorporated by reference to Exhibit 10.20 to
Company's 10-K for 2013 filed April 15, 2014.
10.21 - Purchase Report - T-500 A/C Tractor, Costal Engine Service (2013)
Incorporated by reference to Exhibit 10.21 to
Company's 10-K for 2013 filed April 15, 2014.
10.22 - Loan Agreement - Legal services rendered by International
Business Law Firm PC to Baltia Air Lines, executed June 30, 2014.
Incorporated by reference to Exhibit 10.22 to
Company's 10-K for 2013 filed April 15, 2014.
10.23 -
Workers Compensation and Employer Liability Insurance - CHUBB Group to Baltia
Air Lines, executed June 30, 2014, effective February 6, 2014 to February 6, 2015.
Incorporated by reference to Exhibit 10.23 to
Company's 10-Q for period ending March 30, 2014, filed May 20, 2014.
10.24 – Cargo Handling at JFK
– Cargo Airport Services USA and Baltia, valid to 1 January
2017 and continued annually until one party serves the other party
with written notice not to renew.
Incorporated by reference to Exhibit 10.24 to
Company's 10-Q for period ending June 30, 2014, filed November 19, 2014.
10.25 - Security Service at JFK –
FJC Security Services, Inc., valid to 9/18/15 with automatic annual
renewal unless one party serves the other party with written notice
not to renew. Incorporated by reference to Exhibit 10.25 to
Company's 10-Q for period ending June 30, 2014, filed November 19, 2014.
10.26- Ground Handling at JFK - Swissport Agreement, Standard IATA
Agreement of 1998 Ramp and Passenger Handling valid to May 16, 2017.
Incorporated by reference to Exhibit 10.26 to
Company's 10-Q for period ending June 30, 2014, filed November 19, 2014.
10.27- Maintenance Services Agreement, Standard IATA
Agreement of 1998 with F&E Maintenance valid to May 16, 2017.
Incorporated by reference to Exhibit 10.27 to
Company's 10-Q for period ending June 30, 2014, filed November 19, 2014.
10.28 - Jeppessen Sanderson, Inc. Services Agreement dated February 3, 2014 effective to February 3, 2019, automatic extension for one-year additional terms unless terminated as provided.
10.29 - 121 Inflight Catering, Inc., Services Agreement dated October 7, 2014 effective to October 7, 2015.
CERTIFICATIONS
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.
Baltia Air Lines, Inc.
Date: April 15, 2015
/s/ Igor Dmitrowsky
By: Igor
Dmitrowsky, President, CEO and CFO
Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the
registrant and in the capacities and on the dates
indicated.
SIGNATURE
|
TITLE
|
DATE
|
/s/ Igor Dmitrowsky
Igor Dmitrowsky
|
Chairman, CEO and
CFO (Principal Executive Officer and
Principal Accounting Officer)
|
April 15, 2015
|
/s/ Walter Kaplinsky
Walter Kaplinsky
|
Secretary and
Director
|
April 15, 2015
|
/s/ Andris Rukmanis
Andris Rukmanis
|
V.P. Europe and
Director
|
April 15, 2015
|
/s/ Vick Luis Bolanos
Vick Luis Bolanos
|
Director
|
April 15, 2015
|
Exhibit
31.1
BALTIA
AIR LINES INC.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Igor Dmitrowsky, certify
that:
1. I have reviewed this
annual report on Form 10-K 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 registrant 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)) and
internal controls over financial reporting (as defined in
Exchange Act Rules 13a- 15(f) and 15d-15(f))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
(d) 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: April 15, 2015
/s/ Igor Dmitrowsky
Chairman, CEO and CFO April 15, 2015
Igor Dmitrowsky
(Principal Executive Officer)
/s/ Igor Dmitrowsky
Chairman, CEO and CFO April 15, 2015
Igor Dmitrowsky
(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
Annual Report for Baltia Air Lines, Inc. (the "Company") on
Form 10-K for the period ended December 31, 2014 as filed
with the Securities and Exchange Commission on the date
hereof (the Report),
I, Igor Dmitrowsky, 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: April 15, 2015
/s/Igor Dmitrowsky
Chairman, CEO and CFO April 15, 2015
Igor Dmitrowsky
(Principal Executive Officer)
/s/ Igor Dmitrowsky
Chairman, CEO and CFO April 15, 2015
Igor Dmitrowsky
(Principal Accounting Officer)
EXHIBIT 10.1 WORLD FUEL SERVICES
FUEL SERVICES SUPPORT AGREEMENT
THIS FUEL SERVICES SUPPORT AGREEMENT (this "Agreement") is made
effective as of the 1st day of September, 2013 (the "Effective Date"), by and between WORLD
FUEL SERVICES, INC., a Texas corporation, through its World Fuel Management division
("World Fuel") and Baltia Air Lines, Inc., a _New York_ corporation-("Customer").
WITNESSETH:
WHEREAS, Customer is a commercial airline with flight operations throughout the
Americas and Europe.
WHEREAS, World Fuel is in the business of providing comprehensive fuel management
services.
WHEREAS, Customer and World Fuel desire to enter into an agreement where World
Fuel will provide certain fuel management, operations and risk management services and
Customer shall pay for such services, all as provided below.
NOW THEREFORE, for valuable consideration, the parties hereby agree to the
following terms and conditions:
1. Fuel Management Services. World Fuel will assist Customer in planning, coordinating,
sourcing and purchasing jet fuel to satisfy Customer's needs. In order to carry out the foregoing,
World Fuel will: (a) supply fuel to Customer in accordance with the terms of this Agreement;
and (b) make available to Customer reports of its fuel uplifts, including the date, location, price
and quantity thereof.
2. Bidding Process; Fuel Sales. All fuel and related services sold pursuant to this
Agreement will be sold by World Fuel or a World Fuel subsidiary or affiliate (each, individually,
a "World Fuel Affiliate" or collectively the "World Fuel Affiliates") directly to Customer. World
Fuel will arrange and contract for all fuel supply, fuel transportation and fuel storage for
Customer through a competitive bid process. World Fuel will seek bids from various fuel
vendors to satisfy Customer's anticipated fuel needs over a specified period. World Fuel will
analyze all bids received, review the analysis of bids with Customer, and (unless otherwise
instructed by Customer) select the final bid. Promptly after selection of a final bid, World Fuel
will notify Customer. World Fuel will purchase fuel from the selected bidder and other sources
as and when required to satisfy Customer's fuel requirements, and sell fuel to Customer at the
price specified in such bid. World Fuel will be solely responsible for paying fuel vendors for all
purchases made by World Fuel for the purpose of supplying Customer hereunder.
Notwithstanding the foregoing, World Fuel shall have the opportunity to bid on Customer's fuel
requirements for any and all locations operated by Customer in accordance with the written
requirements and guidelines set forth by Customer and Customer will give equal consideration to
purchasing its fuel requirements from World Fuel; provided however, that any final decision of
Customer regarding fulfillment of its fuel requirements shall be at Customer's sole discretion.
3. Inventory. World Fuel may maintain fuel inventory at various locations in order to
satisfY Customer's fuel purchase requirements. World Fuel assumes all risk related to price
fluctuations with respect to this inventory. In certain locations, only airlines may hold title to
inventory maintained in airport storage tanks. In such locations, World Fuel will purchase and
pay for the inventory on behalf of Customer, and Customer will hold title to such inventory on
behalf of World Fuel and, sign such assignments and other documents as may be reasonably
necessary to transfer its interest in such inventory to World Fuel while such inventory is held in
storage.
4. Into-plane and Supplier Agreements. Customer shall, for all locations within the United
States, contract separately for any into-plane fueling services directly with the applicable into-plane fueling agent. Customer acknowledges that in such cases any into-plane fueling service
fees shall be separate from and in addition to the selling price of any fuel, and any agreements
related thereto shall be distinct contracts for into-plane fuel delivery. To the extent that World
Fuel negotiates and enters into any fuel supply, transportation and storage agreements directly
with the selected suppliers and other third parties ("Third Party Suppliers") in accordance with
this Agreement ("Supplier Agreements"), Customer acknowledges and agrees that all such
Supplier Agreements, including any indenmification provisions contained therein, shall apply
back-to-back from World Fuel to Customer as if Customer had entered into such agreements
directly with the Third Party Suppliers, with World Fuel taking on the rights and responsibilities
of the Third Party Supplier and Customer taking on the rights and responsibilities of World Fuel
under such Supplier Agreements. World Fuel shall cooperate with Customer in the event
Customer desires to pursue any claims against any Third Party Suppliers. Customer shall not
accept any terms, offers or agreements on behalf of World Fuel or any of the World Fuel
subsidiaries or affiliates ("World Fuel Affiliates"), or otherwise bind World Fuel or any of the
World Fuel Affiliates in connection with any Supplier Agreement, unless authorized to do so in
writing by World Fuel.
5. Risk Management Support. World Fuel will provide Customer the following general
price risk management support as follows:
a) Provide Customer with fuel pricing trends, including but not limited to, a weekly
oil market update and commentary report.
b) Provide general guidance on Customer's fuel hedging policies, strategies and
procedures as requested by Customer. Specifically, World Fuel will provide
guidance and support in the development and implementation of price risk
management strategies that can be integrated and embedded into Customer's fuel
supply arrangements.
c) Provide price risk management training as may be reasonably requested by
Customer.
d) Compile and submit to Customer such other related management reports,
summaries and data as may be reasonably requested by Customer.
e) Perform such other risk management services as may be reasonably requested by
Customer from time to time. Such other risk management services shall be
provided on a negotiated fee basis as mutually agreed by World Fuel and
Customer.
6. Term. This Agreement shall have an initial term of three (3) years, commencing on
September I, 2013; provided, that after the first year, either party may terminate the Agreement
with or without cause at any time upon ninety (90) days prior written notice to the other party.
This Agreement shall be automatically renewed for subsequent terms of one (I) year each, unless
either party provides the other written notice, no less than ninety (90) days prior to the end of the
initial term or any renewal thereof, that it does not wish to renew this Agreement upon the
expiration of the term for which the party has given such notice. In the event of any termination
of this Agreement, all outstanding balances due and owing, plus all amounts billed after
termination for fuel purchases prior to such termination, shall be paid as provided in the
applicable invoice.
7. Fees and Expenses.
7.1 Management Fees. As compensation for the fuel management services provided
by World Fuel, Customer will pay World Fuel the management fees ("Management Fees") set
forth in Schedule "A" hereto.
7.2 Expenses. Customer shall reimburse World Fuel for all reasonable out-of-pocket
expenses incurred by World Fuel directly in connection with the performance of the fuel
management and risk management services; so long as such expenses are properly documented
and such documentation is presented to Customer.
During the term of8. Product Specifications. All fuel sold to Customer pursuant to this Agreement will be jet fuel meeting one of the specifications set forth below ("Product"):
- ASTM D-1655, Jet-A, latest issue,
- ASTM D 1655, Jet-A-!, latest issue,
- Defense Standard 9 I -9 I, latest issue,
- Canadian specification CAN/CGSB-3.23.93, Jet-A Fuel, latest issue.
9. Payment and Credit Terms.
9.1 All payments shall be made prior to the delivery of any Products or services in
U.S. Dollars electronic funds transfer of immediately available funds to the account of World
Fuel shown on Schedule "B." Payments shall be made as necessary so that Customer will at all
times comply with the due dates of payment for each invoice as set forth herein. Invoices will be
sent to Customer electronically, by telecopier, or by U.S. mail or overnight courier services, and
at such times, as may be agreed upon by World Fuel and Customer.
9.2 World Fuel reserves the right, in addition to all other rights and remedies
available to it under applicable law, to terminate this Agreement, suspend further deliveries
and/or services under the Agreement, and demand payment of all outstanding balances, if
Customer fails to make any payment as herein provided. World Fuel reserves the right to apply
Customer's payments to any outstanding invoices or obligations of Customer, as may be
determined by World Fuel in its discretion, without regard to aging of the account.
9.3 In the event a bankruptcy or similar proceeding is filed by or against Customer,
World Fuel will have the right, but not the obligation, to continue to provide fuel and/or services
and credit to Customer under this Agreement; but only if Customer assumes this Agreement,
pays any pre-petition obligations (either in cash or by posting payment guarantees acceptable to
World Fuel in its discretion), and provides adequate assurances of future payment. Absent such
assumption, payment and assurances, World Fuel is not required to continue fuel sales under this
Agreement. In no event shall World Fuel be required to increase either the Payment Days or the
Credit Limit (inclusive of all pre-petition and post-petition debt/obligations of Customer to
World Fuel).
10. Taxes and Fees. Any tax (except for income or franchise taxes of World Fuel), license
fee, inspection fee, landing fee, into-plane fee, airport fee, fee for buying, selling or loading
aviation fuel, or other charges in1posed by any governmental authority or other person or entity
upon, any fuel sold hereunder, or on the transportation, sale, use, delivery or other handling of
such fuel, or any component thereof, or on any feature or service related thereto or provided
under this contract, existing at the time of any sale hereunder, shall be added to the applicable
price specified herein, and shall be paid by Customer to World Fuel if such tax, fee or charge is
required to be, or is paid by World Fuel. Failure to add such tax, fee or other charge to any
invoice shall not relieve Customer from liability therefor. World Fuel will use commercially
reasonable efforts to cause vendors to specify, in any bid submitted hereunder, whether
applicable taxes are included in, or in addition to, the prices shown in the bid (although the
specific amount of tax need not be shown in any bid).
11. Force Majeure. Neither party shall be liable for its failure to perform hereunder as a
result of any contingency beyond its reasonable control, including but not limited to, acts of God,
fires, floods, wars, sabotage, accidents, labor disputes or shortages, governmental laws,
ordinances, rules and regulations, whether valid or invalid (including, but not limited to,
priorities, requisitions, allocations, and price adjustment restrictions), inability to obtain product,
equipment or transportation and any other similar or different contingency. Notwithstanding the
foregoing, in no event shall an event of force majeure release Customer from its obligation to
pay, on a timely basis, for Product already delivered and/or services already performed by World
Fuel upon the occurrence of such event.
12. Interest; Attorneys' Fees and Costs for Litigation; Jurisdiction. In the event of default by
Customer, World Fuel shall be entitled to prejudgment interest on the unpaid outstanding
invoices at the highest rate allowable by the laws of the State of Florida. In the event of any
litigation between the parties to this Agreement relating to or arising out of this Agreement, the
prevailing party shall be entitled to an award of reasonable attorneys' fees and costs, including
such fees and costs at trial and all appellate levels. This Agreement shall be considered as
having been entered into in the State of Florida, United States of America, and shall be construed
and interpreted in accordance with the laws of that state. In any action or proceeding arising out
of or relating to this Agreement, each of the parties hereby irrevocably submits to the nonexclusive
jurisdiction of any federal or state court sitting in Miami, Florida, and further agrees
that any action may be heard and determined in such Florida federal court or in such state court.
13. Assignment. This Agreement shall not be assignable by either party without the prior
written consent of the other party, which may be withheld in the sole and absolute discretion of
the non-assigning party. Customer acknowledges that certain fuel and services provided
hereunder, particularly in foreign locations, may be provided by the World Fuel Affiliates.
14. Miscellaneous.
14.1 This Agreement:
(i) contains the entire Agreement between the parties and there
are no oral Agreements with respect to the subject matter of this Agreement which are not fully
expressed herein; (ii) is intended by the parties as a final expression of their Agreellent and as a
complete and exclusive statement of its terms; (iii) can only be modified by a writirig signed by
both parties or their duly authorized agents; and (iv) may be executed in any! number of
counterparts, each of which shall be deemed an original, and all of which shall constitute one and
the same instrument. Facsimile signatures herein will be effective for all purposes to the same
extent as original signatures. No provision of this Agreement is to be interpreted for or against
any party because that party or that party's legal representative drafted such provision. No
course of prior dealings between the parties and no usage of trade shall be relevant or admissible
to supplement, explain, or vary any of the terms of this Agreement. Acceptance of, or
acquiescence in, a course of performance rendered under this or any prior agreement shall not be
relevant or admissible to determine the meaning of this Agreement even though the accepting or
acquiescing party has knowledge of the nature of the performance and an opportunity to make
objection. No representations, understandings, or agreements have been made or relied upon in
the making of this Agreement other than those specifically set forth herein. If any provision of
this Agreement is invalid, illegal or incapable of being enforced, by reason of any rule of law,
administrative order, judicial decision, or public policy, all other conditions and provisions of
this Agreement nevertheless shall remain in full force. No third party dealing with World Fuel as
it performs its responsibilities hereunder shall be deemed a third party beneficiary hereunder.
14.2 This Agreement is for the supply of fuel and services to Customer. Nothing
contained herein is intended to create a relationship of partnership, principal-agent or any similar
relationship between World Fuel and Customer, or to give rise to any duties or obligations
between the parties other than those expressly set forth herein.
14.3 The parties agree that any information, data, processes, reports, and other
information that the parties may share with each other that is reasonably evident by its nature to
be confidential or proprietary, whether written, oral or electronic in nature, as well as the specific
terms of this Agreement (collectively, the "Confidential Information"), shall be deemed to be
confidential and proprietary in nature, and maintained in the strictest confidence, and that neither
party hereto shall in the future, without the written consent of the other party, disclose
Confidential Information to anyone who is not a party hereto, either orally or in writing,
provided that such restriction shall not apply to: (i) the parties' disclosure of Confidential
Information to their attorneys, advisors or accountants; or (ii) the parties' disclosure as may be
required by law (e.g., tax reporting, regulatory requirements, securities laws) or as may be
necessary to enforce this Agreement, or (iii) information that is already generally available to the
public. Nothing herein shall preclude the parties from obeying lawful process. Either party's
disclosure of the existence ofthis Agreement and/or general description of the services provided
hereunder shall not be deemed a violation of this Section 14.
15. Representations; Disclaimer of Warranty and Liability.
15.1 Each of the parties hereby represents and warrants to the other that (i) it is duly
incorporated and validly existing, in good standing in all applicable jurisdictions, and has duly
authorized the execution of this Agreement, (ii) it shall comply with all laws and governmental
regulations in connection with its performance of its obligations under this Agreement, and (iii)
its performance of its obligations under this Agreement will not conflict with its obligations
under any other binding agreement.
15.2 Customer shall cooperate with World Fuel in the performance of any services by
World Fuel under this Agreement, including without limitation, providing World Fuel with
timely access to data, information and personnel of Customer. Customer shall be responsible for
the performance of its employees and agents and for the accuracy and completeness of all data
and information provided to World Fuel for purposes of the performance by World Fuel of any
services hereunder.
15.3 Customer acknowledges and agrees that any services provided by World Fuel to
Customer under this Agreement may include advice, recommendations, information or work
product (collectively the "Information"). Such Information shall be for the internal use of
Customer. World Fuel shall have no responsibility for any decision made by Customer or any
other party based on such Information. Except as otherwise required by law, Customer will not
disclose or permit access to such Information to any third party or summarize or refer to
Information without the prior written consent of World Fuel. In furtherance of the foregoing,
Customer shall indemnifY, defend and hold harmless World Fuel from and against any and all
claims, liabilities, losses, expenses (including reasonable attorneys' fees), fines, penalties or
damages suffered by or asserted against World Fuel in connection with a third party claim to the
extent resulting from such party's use or possession of or reliance upon the Information as a
result of Customer's use or disclosure of the Information.
15.4 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, (A) ALL
FUEL PRODUCT, SERVICES AND INFORMATION PROVIDED BY WORLD FUEL
HEREUNDER ARE PROVIDED "AS IS"; (B) NEITHER WORLD FUEL NOR ANY OF THE
WORLD FUEL AFFILIATES HAS MADE OR MAKES ANY WARRANTIES OR
REPRESENTATIONS WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE
FUEL PRODUCTS, INFORMATION AND/OR SERVICES PROVIDED HEREUNDER, AND
(C) WORLD FUEL AND EACH OF THE WORLD FUEL AFFILIATES EXPRESSLY
DISCLAIM, AND CUSTOMER HEREBY WAIVES, ALL WARRANTIES, GUARANTEES,
OBLIGATIONS AND LIABILITIES WITH RESPECT TO ANY FUEL PRODUCT,
SERVICES OR INFORMATION PROVIDED HEREUNDER, EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE, INCLUDING BUT NOT LIMITED TO: (1) ANY
IMPLIED WARRANTY OF MERCHANTABILITY, (2) ANY IMPLIED WARRANTY
ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF
TRADE, OR (3) ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE.
15.5 IN NO EVENT SHALL WORLD FUEL OR ANY OF THE WORLD FUEL
AFFILIATES BE LIABLE FOR ANY ACTS OR OMISSIONS OF AGENTS AND/OR
SUBCONTRACTORS OF WORLD FUEL OR ANY SUCH AFFILIATE, INCLUDING
WITHOUT LIMITATION, FIELD TRANSPORTERS, INTO PLANE AGENTS OR SERVICE
SUPPLIERS.
15.6 IN NO EVENT SHALL WORLD FUEL BE LIABLE TO CUSTOMER FOR
ANY CLAIMS, LIABILITIES OR EXPENSES RELATING TO THE PRODUCTS OR
SERVICES PROVIDED UNDER TillS AGREEMENT FOR AN AGGREGATE AMOUNT IN
EXCESS OF THE TOTAL FEES PAID BY CUSTOMER TO WORLD FUEL FOR SUCH
PRODUCT OR SERVICES. NEITHER PARTY, NOR ITS DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, REPRESENTATIVES OR AFFILIATES, WILL BE LIABLE TO
THE OTHER PARTY, NOR ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
REPRESENTATIVES OR AFFILIATES, FOR CLAIMS FOR PUNITIVE, SPECIAL,
EXEMPLARY, TREBLE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES,
INCLUDING DAMAGES FOR LOSS OF PROFITS, LOSS OF USE OR REVENUE, OR
LOSSES BY REASON OF COST OF CAPITAL, CONNECTED WITH OR RESULTING
FROM ANY PERFORMANCE OR LACK OF PERFORMANCE UNDER TillS
AGREEMENT, REGARDLESS OF WHETHER A CLAIM IS BASED ON CONTRACT,
WARRANTY, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, VIOLATION OF
ANY APPLICABLE DECEPTIVE TRADE PRACTICES ACT OR ANY OTHER LEGAL OR
EQUITABLE PRINCIPLE.
16. Notices. All notices, requests, demands, or other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given upon receipt if
delivered in person or by facsimile transmission, or upon the expiration of three (3) days after the
date sent, if sent by Federal Express (or similar overnight courier service) to the parties at the
addresses and fax numbers set forth in this letter.
Notices to World Fuel shall be sent to:/p>
9800 N.W. 41st Street, Suite 400
Miami, FL 33178
Attention: Patricia Katsanos
Fax: (305) 392-5613
Email: pkatsanos@wfscorp.com
With a copy to:
General Counsel
Fax: (305) 392-5645
Notices to Customer shall be sent to:
Baltia Airlines, Inc.
JFK International Airport
Bldg. 151, Room 361
Jamaica, NY 11430
Attention: Russell Thal
Tel: (718) 244-8880
Fax: (718) 244-8882
Email: russ.thal@baltia.com
17. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTIONS OR COURSE OF DEALING HEREUNDER
Dated to be effective as of the Effective Date.
WORLD FUEL SERVICES, INC.
By: __/signed/__
Patricia Katsanos (YG)
Division President
BALTIA AIR LINES, INC.
Signature: __/signed/__
Title: __Executive Vice President__
Name (Print): __Russell THAL__
Date: __08/22/2013__
SCHEDULE A - MANAGEMENT FEES
Customer shall pay World Fuel the following Management Fee for the first year of the term of the Agreement: $0.006/US gallon
The Management Fee will be invoiced, in whole or in part, as a separate line item, along with Customer's fuel purchases and will be paid in advance of any fuel delivery. The Management Fee shall be fixed for the first year during the term of the Agreement and subject to adjustment by World Fuel each year thereafter.
SCHEDULE B
ACCOUNT INFORMATION
All payments will be by wire transfer to the following account:
La Salle Bank
ABN AMRO North America
200 West Monroe Suite 500
Chicago, IL 60606
SWIFT: LASLUS 44
ABA: 071000505
ACCT#: 5800259219
EXHIBIT 10.28 - JEPPESEN SERVICES AGREEMENT
Contract No. BAL-20463
MASTER SERVICES AGREEMENT
THIS MASTER SERVICES AGREEMENT ("MSA") is made and entered into as of this _3_ day of _February_, 201_4 by and between JEPPESEN SANDERSON, INC. ("Jeppesen"), a company organized
and existing under the laws of the State of Delaware, U.S.A, having its principal offices at 55 Inverness
Drive East, Englewood, Colorado 80112-5498 and BALTIA AIR LINES, INC. ("Customer"), a
company organized and existing under the laws of New York having its principal office at JFK
International Airport, Building 151, Jamaica, New York.
RECITALS
WHEREAS, Jeppesen is engaged in the business of providing services and products to aviation customers
worldwide; and
WHEREAS, Customer is engaged in air transport activities which require certain of Jeppesen's services
and products; and
WHEREAS, Jeppesen desires to furnish Customer, and Customer desires to purchase from Jeppesen,
those services and products described herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above premises and the mutual covenants and promises of
the parties herein contained, and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Jeppesen and Customer do hereby agree as follows:
- Services and Products to be Furnished. Jeppesen will furnish to Customer, subject to the terms
and conditions of this MSA, the services and products ("Services") as specified in each services
supplement ("Supplement"). Each individual Supplement will refer to a specific Service, will
incorporate the terms and conditions of this MSA as an integral part of the Supplement, and will
constitute the services agreement for such Service. This MSA and the Supplements will hereafter
be collectively referred to herein as the "Agreement'.
-
Term and Renewal. The initial term of this MSA will commence on the date hereof and continue
for a period of five (5) years. The term of any Supplement attached to this MSA will be in
accordance with the term set forth therein; provided, however, in the event no term is set forth in
the Supplement, the term will be in accordance with this MSA.
Thereafter, this MSA will automatically renew for successive one ( 1) year periods. Either party
may withhold consent to renewal of this MSA by providing written notice at least 180 days prior
to the end of the initial term or any renewal term; provided, however that this MSA may not be
terminated under this Section as long as any Supplement is still in effect.
-
Price. Customer agrees to pay to Jeppesen for Customer's receipt of any Service the prices set
forth in the then-current fee schedule for such Service. All fees and other prices stated are net of
withholding or other similar taxes to which such payments may be subject and are exclusive of
value added or similar taxes. Fee schedules are subject to revision at any time with 30 days
written notice.
-
Invoicing. Jeppesen will invoice Customer for any payments due hereunder. Payment terms are
net 30 days from the date of invoice. In the event Jeppesen determines the creditworthiness of
Customer is in question, a security deposit or advance payment may be required by Jeppesen.
Customer's creditworthiness may be determined by Jeppesen based upon, among other things,
public information that Customer is experiencing financial challenges or cash flow problems,
Rev 29 October 1, 2013 Page 1
Contract No. BAL-20463
Customer fails to make timely payments, or the change in legal structure of Customer. Customer
will provide such deposit within 30 days after written notice by Jeppesen or make advance
payment prior to receipt of Services, as the case may be. Customer is liable for all costs incurred
by Jeppesen for collection of delinquent amounts.
-
Taxes. "Taxes" are defined as all taxes, fees, charges or duties and any interest, penalties, fines,
or other additions to tax, including, but not limited to, income, withholding, sales, use, valueadded,
gross receipts, stamp, excise, transfer ru1d similar taxes imposed by any domestic or
foreign taxing authority arising out of or in connection with this Agreement Except for United
States, German, Swedish and United Kingdom corporate income and/or trade taxes imposed on
Jeppesen, Customer will be responsible for and pay all Taxes. If any payments to Jeppesen under
this Agreement are subject to withholding tax, Customer will pay to Jeppesen such gross amount
that after payment of the withholding tax, would result in the receipt by Jeppesen of the full
amount due under this Agreement (i.e., Jeppesen will receive as net payments the full runount
specified in this Agreement regardless of the amount of withholding taxes paid). Customer will
notifY Jeppesen of the payment of any Taxes made in the name of Jeppesen and provide Jeppesen
with the appropriate receipts for such tax payments. Jeppesen is responsible for all tax
administration decisions for taxes imposed on Jeppesen.
-
Warranty and Limitation of Liabilities.
A. Warranty. Each Supplement sets forth the express warranty, if any, as to each
Service.
B. DISCLAIMER AND RELEASE. THE CONDITIONS, REPRESENTATIONS,
OBLIGATIONS, LIABILITIES AND WARRANTIES (IF ANY) OF JEPPESEN
AND REMEDIES OF CUSTOMER SET FORTH IN THIS AGREEMENT ARE
EXCLUSIVE AND IN SUBSTITUTION FOR, AND CUSTOMER HEREBY
WAIVES, RELEASES AND RENOUNCES, ALL OTHER WARRANTIES,
OBLIGATIONS AND LIABILITIES OF JEPPESEN, AND ANY OTHER
RIGHTS, CLAIMS AND REMEDIES OF CUSTOMER AGAINST JEPPESEN,
EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH
RESPECT TO ANY CUSTOMER-SUPPLIED INFORMATION, THE SERVICES
OR OTHER THINGS PROVIDED, AND ANY NONCONFORMANCE OR
DEFECT IN THE DESIGN, ADEQUACY, ACCURACY, RELIABILITY,
SAFETY, OR CONFORMANCE WITH GOVERNMENT STANDARDS OR
REGULATIONS OF SUCH SERVICES OR OTHER THINGS PROVIDED
UNDER THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO:
(i) ANY IMPLIED WARRANTY OF MERCHANTABILITY,
SATISFACTORY QUALITY, OR FITNESS;
(ii) ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
(iii) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY
ARISING IN STRICT LIABILITY OR IN TORT, WHETHER OR NOT
ARISING FROM THE NEGLIGENCE OF JEPPESEN; AND
(iv) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR
LOSS OF OR DAMAGE TO ANY PROPERTY OF CUSTOMER,
INCLUDING WITHOUT LIMITATION ANY AIRCRAFT.
Rev 29 October 1, 2013 Page 2
Contract No. BAL-20463
C. EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES. JEPPESEN
WILL HAVE NO OBLIGATION OR LIABILITY WHATSOEVER, WHETHER
ARISING IN CONTRACT (INCLUDING WARRANTY), TORT (WHETHER OR
NOT ARISING FROM THE NEGLIGENCE OF JEPPESEN), STRICT
LIABILITY OR OTHERWISE
(i) FOR LOSS OF USE, REVENUE OR PROFIT;
(ii) FOR DAMAGES RESULTING FROM BUSINESS INTERRUPTION;
(iii) FOR DAMAGES RESULTING FROM DELAY IN PERFORMANCE AND
COST OF SUBSTITUTE PROCUREMENT;
(iv) FOR COSTS OF REPRODUCTION OR RECOVERY OF DATA OR
INFORMATION WinCH IS LOST IN WHOLE OR IN PART; OR
(v) FOR ANY OTHER INCIDENTAL, CONSEQUENTIAL OR SPECIAL
DAMAGES ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT.
D. If an arbitration panel or court of competent jurisdiction determines that applicable law
implies warranties and liabilities which cannot be excluded or limited or which can only
partly be excluded or limited, then the limit on Jeppesen's liability set forth in this
Section will apply to the fullest extent permitted by law. If Jeppesen cannot exclude or
limit a warranty or liability implied by law, this Agreement will be read and construed
subject to such provisions of law.
E. Effect of Limitation. The parties acknowledge that the limitations set forth in this Section
were arrived at in consideration of the mutual agreements of the parties set forth herein,
and are integral to the amount of fees charged for the Services provided hereunder, and
recognize that were Jeppesen to assume any further liability beyond that set forth in this
Section, such fees would be substantially higher.
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Indemnities. Except to the extent of any claim or liability caused by Jeppesen's failure to provide
the remedy contained in any express warranty set forth in a Supplement, Customer will indemnifY
and hold harmless Jeppesen and its licensors, contractors, subcontractors and agents from and
against all claims and liabilities (including claims by third parties), and costs and expenses
(including attorneys' fees), incident thereto or incident to successfully establishing the right to
indemnification, for injury to or death of any person or persons, including employees of Customer
but not employees of Jeppesen, or for loss of or damage to any property, including without
limitation any aircraft, arising out of or in any way relating to the utilization or processing of any
Service or any other things provided to Customer under this Agreement, whether or not arising in
strict liability or tort or occasioned by the negligence of Jeppesen, except to the extent of any
obligation, liability, claim or remedy in tort is due to the recklessness or willful misconduct of
Jeppesen. Customer's obligations under this indemnity will survive the expiration, termination,
completion or cancellation of this Agreement.
For purposes of this Section, the term "Jeppesen" includes Jeppesen, its parent company, their
respective parents, affiliates, and the assignees of each, and their respective directors, officers,
employees and agents.
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Intellectual Propertv Rights. Jeppesen is the owner of or has licensed from third parties the
intellectual property and proprietary rights embodied in or pertaining to Jeppesen's Services
Rev 29 October 1, 2013 Page 3
Contract No. BAL-20463
("Jeppesen Intellectual Property"), all of which are and will remain the valuable property of
Jeppesen and/or its third party licensors. Jeppesen Intellectual Property includes but is not limited
to all skills, expertise, know-how and experience gained in creating and maintaining Jeppesen's
proprietary databases, compilations of information, symbology, charts, compilations of charts, the
chart format, data (but not including data obtained from third party source), Jeppesen software
and its documentation and any modifications or other enhancements developed in the course of
configuring, providing or managing the Services, and all trademarks, trade secrets, copyrights,
patents and other intellectual and proprietary rights therein.
Material from the Australian Aeronautical Information Publication has been used by agreement
with Airservices Australia. For purposes of clarity, Jeppesen's Intellectual Property does not
include data obtained from third party source that is included in Jeppesen's Services. Aspects of
Jeppesen's Intellectual Property that are Jeppesen's trade secrets include the specific design and
structure of the individual software programs and their interaction, and the unique programming
techniques employed therein for certain tasks. Customer understands and agrees that
(i) Jeppesen's Intellectual Property constitutes the valuable properties and trade secrets of
Jeppesen embodying substantial creative efforts and confidential information, ideas and
expressions; and (ii) Jeppesen's Intellectual Property is unpublished works; and (iii) the existence
of any copyright notice will not be construed as an admission or presumption that publication has
occurred. Except as otherwise provided herein or in any Supplement, Customer has no right to
use any of Jeppesen's Intellectual Property, which may not be copied, reproduced, stored in a
retrieval system, published or transmitted in whole or in part, in any form or by any means,
whether electrical, mechanical, photocopying, recording or otherwise without the prior written
permission of Jeppesen. Customer will observe strict confidentiality with regard to all aspects of
Jeppesen's Intellectual Property in any form whatsoever.
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Confidentiality and Non-Disclosure. This Section creates a non-disclosure agreement between the
parties for any disclosure of confidential and proprietary information by one party to the other
during the term of this MSA, thus eliminating the need for separate non-disclosure agreements.
A. Confidential Information. For purposes of this Agreement, "Confidential Information"
means written, documentary, oral or visual information of any kind disclosed by Jeppesen
or Customer to the other, including, but not limited to, (i) the terms and conditions of this
Agreement; (ii) information of a business, planning, marketing or technical nature,
including financial data, plans, forecasts, market intelligence, concepts, fixed assets,
customer information, strategies, agreements or other proprietary or confidential material
which the disclosing party may, at its sole discretion, disclose to the receiving party,
(iii) models, tools, hardware and software, and (iv) any documents, reports, memoranda,
notes, files or analyses prepared by or on behalf of the receiving party that contain,
summarize or are based upon any Confidential Information.
B. Treatment and Protection.
(i) Each party agrees to (i) hold in strict confidence all Confidential Information of
the other party, (ii) where applicable only to this Agreement, use the Confidential
Information solely to perform or to exercise its rights under this Agreement, and
(iii) not transfer, display, convey or otherwise disclose or make available all or
any part of such Confidential Information to any third party.
(ii) The receiving party will not disclose all or any part of the disclosing party's
Confidential Information to any agents, officers, directors, employees or
representatives (collectively, "Representatives") of the receiving party except on
a need-to-know basis. The receiving party agrees to inform its Representatives
who receive the disclosing party's Confidential Information of the confidential
Rev 29 October 1, 2013 Page 4
Contract No. BAL-20463
and proprietary nature thereof and of such Representative's obligations with
respect to the maintenance of such Confidential Information in conformance with
the terms of this Section. Notwithstanding the foregoing, Jeppesen may disclose
Confidential Information received from Customer to its affiliated companies,
auditors, licensors, contractors, and subcontractors (collectively, "Jeppesen
Representatives") on a need-to-know basis; provided that Jeppesen will remain
responsible for the Jeppesen Representatives' compliance with this Section.
(iii) Each party will take the same measures to protect against the disclosure or use of
the other party's Confidential Information as it takes to protect its own
proprietary or confidential information (but in no event will such measures be
less than reasonable care). Each party represents that such degree of care
provides adequate protection for its own confidential and proprietary
information.
(iv) The receiving party will immediately advise the disclosing party in writing of any
misappropriation or misuse by any person of the disclosing party's Confidential
Information of which the receiving party is aware.
(v) Any documents or materials that are furnished by or on behalf of the disclosing
party, and all other Confidential Information in whatever form, including
documents, reports, memoranda, notes, files or analyses prepared by or on behalf
of the receiving party, including all copies of such materials, will be promptly
returned by the receiving party to the disclosing party upon written request by the
disclosing party for any reason.
C. Exclusions. Each party acknowledges that neither party is bound by the obligations
hereto regarding Confidential Information that is proven to be:
(i) publicly known through no fault of the receiving party or of any other person or
entity that is similarly contractually or otherwise obligated to protect such
Confidential Information;
(ii) obtained independently from a third party without an obligation of confidentiality
to the disclosing party and without breach of this Section;
(iii) furnished to others by the disclosing party without similar restrictions on their
right to use or disclose;
(iv) known by the receiving party without any proprietary restrictions at the time of
receipt of such information from the disclosing party; or
(v) independently developed by the receiving party by persons who did not have
access, directly or indirectly, to the Confidential Information of the other party.
D. Disclosures Required by Law. The receiving party may disclose the Confidential
Information of the other to the extent required under order of a court of competent
jurisdiction, a valid administrative or congressional subpoena, law, rule, regulation
(including any securities exchange regulation), or other governmental action provided
that the receiving party (i) promptly notifies the disclosing party in writing prior to
disclosure of the information, and (ii) assists the disclosing party, at the disclosing party's
expense, in any attempt by the disclosing party to limit or prevent the disclosure of the
Confidential Information.
Rev 29 October 1, 2013 Page 5
Contract No. BAL-20463
E. Remedies Upon Breach. Each rece1vmg party acknowledges that the Confidential
Information of the disclosing party is central to the disclosing party's business and was
developed by or for the disclosing party at a significant cost. Each party further
acknowledges and agrees that the other party may have no adequate remedy at law if
there is a breach or threatened breach of this Section. Accordingly, either party may be
entitled to injunctive or other equitable relief to prevent or remedy such breach. Such
remedy will not be deemed to be the exclusive remedy for any such breach of this
Section, but will be in addition to all other remedies available at law or in equity to the
disclosing party.
F. No Licenses or Warranties. Confidential Information disclosed hereunder is provided
"AS IS" without warranty of any kind. No license to the Receiving Party under any trade
secrets or patents is granted or implied by conveying Confidential Information or other
information to such party, and none of the information transmitted or exchanged
constitutes any representation, warranty, assurance, guaranty or inducement with respect
to the infringement of patents or other rights of others.
G. Return or Destruction. Upon the termination or expiration of this MSA, the receiving
party will, at its own expense, (i) destroy all Confidential Information and certify such
destruction in writing to the disclosing party, or (ii) if requested by the disclosing party,
promptly return to the disclosing party all Confidential Information (and all copies
thereof). The receiving party will cease all further use of the other party' s Confidential
Information. Notwithstanding the foregoing, each party may maintain one (1) copy of
Confidential Information of the other party (excluding Jeppesen Services) solely for
archival purposes.
H. Survival. Each party's obligations set forth in the "Treatment and Protection" Section
above will continue for a period of five (5) years from the termination of this MSA.
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Default and Remedies.
A. Events of Default. The occurrence of any one or more of the following events ("Events
of Default') will constitute a default under this Agreement:
(i) Failure to timely pay any invoice due; or
(ii) Breach of the "Export" Section of this Agreement; or
(iii) A material breach of this Agreement (other than any payments due hereunder),
which is not corrected or diligently prosecuted within 60 days after written notice
thereof from the non-defaulting party; or
(iv) A party hereunder becomes insolvent or bankrupt or makes an assignment for the
benefit of creditors or consents to the appointment of a trustee or receiver or
either is appointed for a party or for a substantial portion of a party's property
without its consent, or bankruptcy, management, reorganization or insolvency
proceedings me instituted by or against a party or the equivalent occurs in any
jurisdiction to which the party is subject; or
(v) A party hereunder dissolves, terminates or suspends its business or operations.
B. Remedies and Waivers. Upon the occurrence of any one or more Events of Default, the
non-defaulting party may immediately terminate this Agreement or any individual
Supplement to which the Event of Default relates and, at its option and without notice,
Rev 29 October 1, 2013 Page 6
Contract No. BAL-20463
exercise any remedy (subject to the limitations of this Agreement) afforded by law,
equity or this Agreement, which remedies, in the case of Jeppesen, will include but not be
limited to, the recovery of any monies that would have been owing Jeppesen under the
initial term of the Agreement. No failure or delay by a party to exercise any right or
remedy will be a waiver thereof, nor will any written waiver or consent extend to any
instance other than the one for which it is given. Without limiting the foregoing, the
acceptance by Jeppesen of late invoice payments or other payments will not constitute
waiver of Default in payment or of any other default. Notwithstanding any other provision
of this Agreement, Jeppesen may set off any amounts owed to Customer including
credits, overpayments or other forms of security or deposits including such amounts
owed by an affiliate of Jeppesen against any amounts that Customer owes under this
Agreement. Jeppesen may charge interest in the amount of one and one-half percent
(1.5%) per month or the maximum amount permitted by law for any invoices in default.
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Effects of Termination.
A. Return or Destruction of the Services. ln addition to all other Customer obligations set
forth herein, upon termination of this Agreement or any individual Supplement for any
reason whatsoever, Customer will, at its own expense and within ten (10) days of the date
of Termination, return to Jeppesen all software and associated documentation (and all
copies thereof) including but not limited to user manuals and backup media provided to
Customer as part of the Services (the "Software"). Additionally, Customer agrees to
delete from any machine storage (i.e., hard disk) previously loaded copies of all Software
in all forms, including modifications and merged portions. ln lieu of the foregoing,
Customer will destroy all Software in its possession and provide Jeppesen with written
certification of such destruction. Notwithstanding anything to the contrary contained
herein, Customer will not keep a copy of the Software for any reason whatsoever,
including archival purposes.
B. Survival of Provisions. Notwithstanding any termination of this Agreement, the parties'
respective obligations under the "Taxes", "Disclaimer and Release", "Exclusion of
Consequential and Other Damages", "Indemnities", "Intellectual Property",
"Confidentiality and Non-Disclosure", "Effects of Termination", "Export", and
"Governing Law" Sections and any other clauses that by their nature should survive
termination, will survive any such Termination.
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Security Deposit. If, upon the occurrence of an Event of Default related to insolvency or
bankruptcy as set forth above, and provided that Customer fails to pay any amounts (whether pre or
post-petition) when due and Jeppesen elects not to terminate this Agreement or the applicable
Service Supplement(s), then Customer will pay Jeppesen a security deposit equal to the most
recent three (3) months invoices for Services. Such security deposit will be provided to Jeppesen
by Customer within ten (10) days after written notice from Jeppesen to Customer.
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Force Majeure. Except for any payments due hereunder, neither party will be responsible or liable
for any failure to perform due to unforeseen circumstances or to causes beyond its reasonable
control, including but not limited to acts of God, war, riots, terrorism, embargoes, acts of civil or
military authorities, fires, floods, earthquakes, accidents, labor unrest, interruptions in the
delivery of required Services, failure of communications services, or shortage or failure of other
critical materials or services for the duration of any such circumstances or cause.
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14. Export. Customer is responsible for its compliance with any applicable export control restrictions,
laws and regulations as may be modified from time to time, imposed by the governments of the
United States and, if applicable, other countries. Customer will not attempt to, or knowingly
export or re-export the Services or any products using such Services covered under this
Rev 29 October 1, 2013 Page 7
Contract No. BAL-20463
Agreement to any country, or national thereof, prohibited from obtaining such data, either directly
or indirectly through affiliates, Licensees or subsidiaries of Customer.
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Miscellaneous Provisions.
A. GOVERNING LAW. THIS AGREEMENT WILL BE INTERPRETED UNDER
AND GOVERNED BY THE LAWS OF THE STATE OF COLORADO, U.S.A.
WITHOUT RECOURSE TO CHOICE OF LAW STATUTES OR PRINCIPLES
THAT WOULD OTHERWISE RESULT IN THE APPLICATION OF THE LAW
OF ANY OTHER JURISDICTION TO THIS AGREEMENT. THE UNITED
NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL
SALE OF GOODS WILL NOT APPLY TO THIS AGREEMENT.
B. Severability. If any term or provision of this Agreement is held invalid or unenforceable,
such term or provision will be replaced by a valid and enforceable provision containing
as close to the original intent of the parties as possible in light of the intent of this
Agreement. The remainder of this Agreement will not be affected thereby and each
remaining te1m and provision of this Agreement will be valid and enforceable to the
fullest extent permitted by law.
C. Notices. All notices required or permitted under this Agreement will be in writing and
deemed sufficiently served if dispatched by certified or registered mail, postage prepaid,
return receipt requested, or delivered via overnight courier, in person, or by facsimile to
Jeppesen or Customer as the case may be, at the addresses specified below:
As to Jeppesen: | Jeppesen Sanderson, Inc.
Attn: Senior Manager, Legal & Contracts
55 Invemess Drive East
Englewood, Colorado 80112-5498
Phone: (303) 328-4556
Fax.: (303) 328-4163
|
with a copy to: |
Jeppesen Sanderson, Inc.
Attn: Ron Patton, Sales Director
55 Inverness Drive East
Englewood, Colorado 80112-5498
Phone: (303) 328-4592
Email: mn.natton@jeppeseu.mm
|
As to Customer:
|
Baltia Air Lines, Inc.
Attn: Frank Acquavella, VP Operations
JFK International Airport. Bldg 151
Jamaica, New York 11430
Phone: 718-244-8880
Email: frankacquavella@sbcglobal.net
|
The above-designated addresses for each party may be changed by written notification to
the other party.
D. Jeppesen Affiliates. Customer understands and agrees that Jeppesen or its affiliates,
namely Jeppesen Sanderson, Inc., Jeppesen GmbH, Jeppesen U.K. Limited, and Jeppesen
Systems AB (each individually a "Jeppesen Affiliate") may, as a contracting party,
execute Supplements under this MSA, in which event the terms and conditions of the
applicable Supplement and this MSA will be binding upon and inure to the benefit of
Rev 29 October 1, 2013 Page 8
Contract No. BAL-20463
only the Jeppesen Affiliate and Customer. Any Jeppesen Affiliate may invoice and
receive payments for Services provided under a Supplement. In such event, the Jeppesen
Affiliate will not be considered a contracting party hereunder and will only act as a
subcontractor of Jeppesen performing billing suppmt.
E. Assignment. This Agreement is for the benefit of and is binding upon each of the parties
hereto and their respective successors and permitted assigns. No rights or duties of either
party under this Agreement may be assigned, delegated or contracted to be assigned or
delegated by either party except that:
(i) Either party may assign its interest to a corporation that (a) results from any
merger or reorganization of such party or (b) acquires substantially all the assets
of such party;
(ii) Jeppesen may assign any of its rights to receive money;
(iii) Jeppesen may assign all or any part of its contractual rights and obligations to its
ultimate parent company or any wholly-owned subsidiary thereof provided that
Jeppesen will remain responsible for all obligations and liabilities and Customer
will continue to deal exclusively with Jeppesen.
No action taken by Customer or Jeppesen relating to the assigrunent of Customer's or
Jeppesen's rights under this Agreement will subject Jeppesen or Customer to any liability
beyond that in this Agreement.
F. Dispute Resolution. Any dispute, claim or controversy of whatsoever kind or nature
arising between the parties hereto as a result of this Agreement (if not resolved amicably)
will be solely subject to the jurisdiction of the state or federal coarts located in Denver,
Colorado and the parties specifically submit to the jurisdiction of such courts. The
foregoing will not apply in the event a third party claims any injury, damage or loss
against Jeppesen in a court or other proceeding wherein Customer is joined, interpleaded
or impleaded by Jeppesen, or Customer is otherwise a necessary or indispensible party to
the action or proceeding. Customer waives sovereign innnunity and related defeuses with
respect to this Agreement.
G. Entire Agreement. This Agreement, including all exhibits attached hereto, constitutes the
entire agreement between Jeppesen and Customer with respect to the subject matter
hereof, superseding any prior or contemporaneous oral or written agreements,
representations, or understandings not specifically incorporated herein. The terms of this
Agreement may not be amended except by a written document signed by duly authorized
representatives of each of the parties. This requirement may only be modified by a
written amendment to this Agreement.
H. Conflicting Documents. In the event of a conflict between the terms and provisions of
this MSA and any Supplement, the terms of any specific Supplement will govern. In the
event Customer issues a purchase order for its request of Services, the terms and
conditions of this Agreement will govern and take precedence over all terms and
conditions contained on or referenced by such purchase order. In the event this
Agreement is translated, this English version will govern and take precedence over any
translation.
Rev 29 October 1, 2013 Page 9
Contract No. BAL-20463
IN WITNESS WHEREOF, this MSA has been executed by the parties hereto as of the day and year first
written above.
JEPPESEN SANDERSON, INC.
By: ___ signed___
Name: ___Thomas Wede ___
Title: ___ President ___
|
|
BALTIA AIR LINES, INC.
By: ___ /signed/___
Name: ___ Frank A. Aquavella ___
Title: ___ VP of Operations ___
|
Rev 29 October 1, 2013 Page 10
EXHIBIT 10.29 - 121 INFLIGHT CATERING SERVICES AGREEMENT
MEMORANDUM OF UNDERSTANDING
THIS MEMORANDUM OF UNDERSTANDING, dated October 7, 2014 is between 121 INFLIGHT CATERING LLC, a New York Limited Liability Company, with offices at 2 Dingle Ridge Road, North Salem, NY 10560 ("121 INFLIGHT") and BALTIA AIR LINES, INC., a New York Corporation, with offices at JFK lnt'l Airport, Building 151, Room 361, Jamaica, NY 11430 ("BALTIA").
WHEREAS,121 INFLIGHT is in the business of providing in-flight catering to air carriers;
WHEREAS, BALTIA is assessing its catering options and is interested in seeing what 121 INFLIGHT has to offer;
WHEREAS, 121 INFLIGHT desires to provide its catering service to BALTIA and BALTIA is interested to purchase catering service from 121 INFLIGHT under such premise; and
WHEREAS, BALTIA and 121 INFLIGHT want to have only such business engagement that is mutually gratifying.
NOW,THEREFORE, the parties to this Memorandum of Understanding agree as follows:
TERM AND TERMINATION
The parties understand and agree that this Memorandum of Understanding shall serve as an introductory agreement for BALTIA and 121 INFLIGHT to test their engagement. Provided BALTIA and
121 INFLIGHT have a mutually gratifying experience, a more definitive agreement may be prepared.
This agreement commences on October 7, 2014 and will continue for one year, unless terminated earlier by either party by service of a 20-day Notice to Terminate. Any such termination on the part of BALTIA will not affect BALTIA's obligations to pay for services already rendered in accordance with the terms of this Agreement.
HOURS OF OPERATION
121 INFLIGHT represents and agrees that its facilities are capable of operating 24 hours, seven days per week including holidays and that it is available to accept orders and provide the agreed upon services.
PROVISION AND SCOPE OF SERVICE
While this agreement is in effect, 121 INFLIGHT will be the primary catering provider to BALTIA for flights departing from JFK (passengers and crew). However, BALTIA may at its discretion engage restaurant caterers to supplement the service by 121 INFLIGHT (hereinafter referred to as a "Supplemental Restaurant Caterer"), which may or may not be coordinated. In the event that a Supplemental Restaurant Caterer requires that 121 INFLIGHT handle, transport, service or place any food or other item in connection with inflight catering, 121 lnflight shall approve and accept said Supplemental Restaurant Caterer provided that said Supplemental Restaurant Caterer:
Baltia -121 INFLIGHT, page# 1
1. adheres to 121 INFLIGHT's standards for flight security, food safety and food quality;
2. fully complies with any and all of the rules, regulations and requirements of any governmental agency having jurisdiction over the inflight services provided; and
3. holds 121 INFLIGHT harmless against any and all claims in connection with flight security, food safety and quality, compliance with governmental rules, regulations and requirements and all other claims in connection with the items provided by said Supplemental Restaurant Caterer.
The service to be provided by 121 INFLIGHT hereunder shall include the handling, transport, service or placement of any food or other item in connection with inflight catering provided by said Supplemental Restaurant Caterer and 121 INFLIGHT shall charge for same in accordance with the terms set forth in Addendum A annexed hereto.
In the event that BALTIA desires 121 INFLIGHT to provide a service or item during the term hereof that is not currently set forth in Addendum A, 121 INFLIGHT will make a reasonable attempt to provide such service or item to BALTIA at a competitive price.
121 INFLIGHT will attempt to satisfy increasing catering volume as BALTIA's schedule increases.
121 INFLIGHT may not subcontract the service to its affiliates or other first-class catering service provider, without an authorization from BALTIA.
During the term of this Agreement, 121 INFLIGHT may provide similar services to another party, except that 121 INFLIGHT shall not provide to other parties those unique service items that are commissioned specifically by BALTIA for its use, nor can 121 INFLIGHT disclose to other parties the specifics of BALTIA's service standards, or contacts of supplementing restaurants which BALTIA may engage, if any.
PRICING
Pricing for service hereunder shall be in accordance with the pricing set forth in Addendum A Annexed hereto. The parties may modify the pricing herein only by mutual agreement.
FLIGHT CANCELLATION
In the event BALTIA cancels a scheduled flight, 121 INFLIGHT will not invoice BALTIA for the catering service ordered for that flight provided BALTIA notifies 121 INFLIGHT in writing, by email or by personal delivery, of such cancellation at least twelve (12) hours prior to the scheduled departure of the flight,.
PAYMENT
121 INFLIGHT shall invoice BALTIA immediately upon delivery provided herein. BALTIA agrees to pay such invoices within fourteen (14) days of the original date of said invoices. Unpaid invoices shall accrue interest at rate of 1.5% per month from the due date and, should there be past due invoices, BALTIA agrees to bear the costs of collection of unpaid invoices, including but not limited to reasonable attorney's fees. BALTIA shall supply 121 INFLIGHT with a deposit paid by either a check drawn on a New
Baltia -121 INFLIGHT, page# 2
York State bank or by a domestic wire in the amount of FIFTEEN THOUSAND (US$15,000.00) within two (2) weeks prior to the start of scheduled service hereunder as security for payment by BALTIA in accordance with the terms herein. BALTIA hereby agrees and authorizes 121 INFLIGHT to charge against such security or any other security provided for herein or by any other agreement between the parties without notice in the event BALTIA fails to pay any invoice or other charge within the time period set forth herein. In the event that 121 INFLIGHT charges against such security in accordance with the terms hereof then BALTIA shall, within three (3) business days of notification by 121 INFLIGHT of such charge, replenish such security so that, at all times during the term of this Agreement, there shall be held by
121 INFLIGHT the deposit required hereinabove.
LINE ITEM DISPUTES
In the event BALTIA disputes any item on an invoice (the "Line Item Discrepancy"). BALTIA will pay the balance of the invoice and notify 121 INFLIGHTin writing of such dispute within 10 days of the receipt of the invoice and such written notice shall specifically identity the terms in dispute. A failure by BALTIA to provide such written notice within 10 days of receipt of an invoice will constitute a waiver of any Line Item Discrepancy with respect to such invoice. The parties shall resolve any such Line Item Discrepancies identified by BALTIA within 10 days of notification of discrepancy. In the event such Line Item Discrepancies cannot be resolved within such time period, then 121 INFLIGHT reserves the right to do either or both of the following in its sole discretion: a) immediately suspend services pursuant to this agreement; and/or b) cancel this agreement by written notice given in accordance with Paragraph 18 herein below. Nothing herein shall be deemed to limit the right of 12 INFLIGHT to utilize any and all other additional remedies provided by law to satisfy any outstanding obligations hereunder.
REPORTS
121 INFLIGHT agrees to supply BALTIA with monthly reports of all catering services supplied hereby no later than on the fifteenth day of the next month. It is understood that monthly reports are for informational purposes only.
FOOD SAFETY AND QUALITY
121 INFLIGHT agrees to abide by and maintain the health, sanitation and food requirements specified by any U.S. agency having jurisdiction over the service provided herein. Upon report of a food borne incident,such as contamination or illness,121 INFLIGHT's facility may be inspected by any independent entity licenses to provide such inspections in the jurisdiction without notice. If the root cause of food borne illness is found at the 121 INFLIGHT's facility, 121 INFLIGHT will pay costs for inspection. If root cause of food borne illness is not found at 121 INFLIGHT's facility, BALTIA will pay the costs for any such inspection. In addition,121 INFLIGHT agrees to self-disclose within
24 hours of any and all service deviations or confirmed food-borne illnesses reported to 121
INFLIGHT for which 121 INFLIGHT might be responsible.
Under BALTIA's policy regarding food quality, Baltia requires that all ingredients and production used to produce the foods and services herein be of the highest and best quality. For example, only first cold pressed olive oil, quality butter, quality fresh squeezed orange juice (non-reconstituted) and other highest quality items shall be used in the provision of inflight services hereunder. Upon demand,121 INFLIGHT will present the ingredient list to BALTIA for approval. Baltia shall have the right to
Baltia -121 INFLIGHT, page# 3
reject any ingredient used or proposed by 121 INFLIGHT and, in the event that 121 INFLIGHT fails or refuses to substitute same with an ingredient having the quality required hereunder, BALTIA may cancel this Agreement in accordance with its terms.
MENUS
121 INFLIGHT agrees to design and make available exclusively to BALTIA via web-link, a passenger catering menu for use by BALTIA customers and/or crew members within thirty days of a written request from BALTIA to do so. This menu will be updated per mutual cooperation by 121 INFLIGHT.
FORCE MAJEURE
Neither party will be responsible for its failure to perform due to causes beyond its reasonable control such as Acts of God,fire, theft, war, riot, embargoes, union strike, or acts of civil or military authorities. If services are to be delayed by Force Majeure events, then 121 INFLIGHT shall immediately notify BALTIA in writing and BALTIA may either extend the time of performance or terminate all or part of the uncompleted portion of services yet to be provided.
GOVERING LAW
This agreement will be governed by the laws of the State of New York. The parties agree that the
State of New York,County of New York shall be the venue for any disputes herein.
INSURANCE
Without limiting any liabilities or any other obligations of 121 INFLIGHT, 121 INFLIGHT shall, without expense to BALTIA,maintain at all times during the term of this agreement, with insurers of recognized reputation,responsibility and having at least an A.M. Best rating of an A or better, Comprehensive General Liability insurance against Third Party Bodily Injury or Property Damage, including Products- Completed Operations Liability in an amount, the greater of their current policy limit or not less than $1,000,00 Combined Single Limit each occurrence and $1,000,000 in the General Aggregate with respect to the Products/Completed Operations liability coverage. All insurance requirements shall be evidenced by certificates of insurance, naming BALTIA and its officers, directors, employees and agents as an Additional Insured. 121 INFLIGHT will provide at least
30 days written notice of cancellation or changes adverse to the interests of BALTIA (if available
from Insurer.)
COMPLIANCE WITH LAWS AND RULES
121 INFLIGHT will comply with all U.S. federal, state, and local laws and regulation governing the manufacture, transportation, import, export, and/or sale of items and/or the performance of services in the course of this Agreement.
INDEPENDENT CONTRACTOR
In performing service under this Agreement, 121 INFLIGHT (inclusive of subcontractors) is an independent contractor and its personnel and other representatives shall neither act as nor be agents or employees of BALTIA.
Baltia -121 INFLIGHT, page# 4
MODIFICATION,WAIVER
No waiver of any breach hereof shall be held to be a waiver of any other or subsequent breach. No modification of this agreement shall be valid unless signed by the parties.
REMEDIES
In the event that either party seeks to enforce any provision of this agreement as and against the other party or in the event of a dispute or default hereunder, then that party shall notify the defaulting party of its breach and provide a 10 day period in which to cure said default In the event the default is not cured within the 10 day period, the defaulting party may be given additional time If it has commenced and diligently pursues the cure. In the event that said default is not cured,either
party may commence an action. The parties irrevocably consent to the jurisdiction of the courts of
the State of New York.
NOTICES
Notices will be directed as provided below and will be deemed to be duly given: on the day of delivery if delivered by hand or 2 business days after being sent by certified or registered mail (postage pre 0aid and return receipt requested) or one (ll business day after being sent by overnight courier. Notices will be send as follows:
If to BAlTIA AIRLINES, send notices to;
BALTIA AIR LINES,INC.
Building 151, Room 361
JFK International Airport
Jamaica, NY 11430
If to 121 INFLIGHT, send notices to:
121 INFLIGHT CATERING, LLC
Corporate Office
7 Juliano Drive
Oxford, CT 06878
Attn: Michele Savino, Managing Member
IN WITNESS WHEREOF, the parties have executed this Memorandum of Understanding on the date first above written.
BALTIA AIR LINES, INC.
By: __/signed/__
IGOR DMITROWSKY
President
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121 INFLIGHT CATERING LLC
By: ___ /signed/___
MICHELE SAVINO
Managing Member
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