Item 1. FINANCIAL STATEMENTS
BALTIC INTERNATIONAL USA, INC.
Consolidated Balance Sheets
(unaudited)
March 31, December 31,
2020 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,979 $ 2,979
----------- -----------
Total assets $ 2,979 $ 2,979
=========== ===========
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LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 468,635 $ 462,322
Dividends payable 3,588,588 3,549,112
Short-term debt to officers and directors 69,481 69,481
----------- -----------
Total liabilities 4,126,704 4,080,915
----------- -----------
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT
Preferred stock:
Series A, convertible, $10 par value,
499,930 shares authorized, 123,000 shares
issued and outstanding 1,230,000 1,230,000
Series B, convertible, $10 par value,
$25,000 stated value, 70 shares authorized,
14 shares issued and outstanding 350,000 350,000
Common stock, $.01 par value, 40,000,000 shares
authorized, 16,629,229 shares issued and
10,975,760 shares outstanding 166,292 166,292
Additional paid-in capital 13,019,530 13,019,530
Accumulated deficit (18,084,973) (18,039,184)
Treasury stock, at cost (804,574) (804,574)
----------- -----------
Total shareholders' deficit (4,123,725) (4,077,936)
----------- -----------
Total liabilities and shareholders' deficit $ 2,979 $ 2,979
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See accompanying notes to consolidated financial statements.
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BALTIC INTERNATIONAL USA, INC.
Consolidated Statements of Operations
(unaudited)
Three Months Ended March 31,
2020 2019
REVENUES $ - $ -
------- -------
OPERATING EXPENSES:
General and administrative 3,906 3,906
------- -------
LOSS FROM OPERATIONS (3,906) (3,906)
------- -------
OTHER INCOME (EXPENSE):
Interest expense (2,407) (2,381)
------- -------
Total other income (expense) (2,407) (2,381)
------- -------
LOSS BEFORE INCOME TAXES (6,313) (6,287)
INCOME TAX EXPENSE - -
------- -------
NET LOSS $ (6,313) $ (6,287)
======= =======
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LOSS PER SHARE:
Basic and diluted $ (0.00) $ (0.00)
WEIGHTED AVERAGE OUTSTANDING
COMMON SHARES:
Basic and diluted 10,975,760 10,975,760
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See accompanying notes to consolidated financial statements.
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BALTIC INTERNATIONAL USA, INC.
Consolidated Statements of Shareholders' Deficit
(Unaudited)
Preferred Stock
Series A Series B Common Stock
Warrants Shares Amount Shares Amount Shares Amount
Balance, December 31, 2019 $ - 123,000 $1,230,000 14 $ 350,000 16,629,229 $166,292
Net loss
Dividends on preferred stock:
Series A, $0.25 per share
Series B, $623.29 per share
---------- -------- ---------- --- ---------- ---------- -------
Balance, March 31, 2020 $ - 123,000 $1,230,000 14 $ 350,000 16,629,229 $166,292
========== ======== ========== === ========== ========== =======
Balance, December 31, 2018 $ - 123,000 $1,230,000 14 $ 350,000 16,629,229 $166,292
Net loss
Dividends on preferred stock:
Series A, $0.25 per share
Series B, $616.43 per share
---------- -------- ---------- --- ---------- ---------- -------
Balance, March 31, 2019 $ - 123,000 $1,230,000 14 $ 350,000 16,629,229 $166,292
========== ======== ========== === ========== ========== =======
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See accompanying notes to consolidated financial statements.
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BALTIC INTERNATIONAL USA, INC.
Consolidated Statements of Shareholders' Deficit
(Continued)
(Unaudited)
Additional
paid-in Accumulated Treasury stock
capital deficit Shares Amount Total
Balance, December 31, 2019 $13,019,530 $(18,039,184) 5,653,469 $(804,574) $(4,077,936)
Net loss (6,313) (6,313)
Dividends on preferred stock:
Series A, $0.25 per share (30,750) (30,750)
Series B, $623.29 per share (8,726) (8,726)
----------- ------------ ----------- --------- -----------
Balance, March, 2020 $13,019,530 $(18,084,973) 5,653,469 $(804,574) $(4,123,725)
=========== ============ =========== ========= ===========
Balance, December 31, 2018 $13,019,530 $(17,855,905) 5,653,469 $(804,574) $(3,894,657)
Net loss (6,287) (6,287)
Dividends on preferred stock:
Series A, $0.25 per share (30,750) (30,750)
Series B, $616.43 per share (8,630) (8,630)
----------- ------------ ----------- --------- -----------
Balance, March, 2019 $13,019,530 $(17,901,572) 5,653,469 $(804,574) $(3,940,324)
=========== ============ =========== ========= ===========
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See accompanying notes to consolidated financial statements.
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BALTIC INTERNATIONAL USA, INC.
Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended March 31,
2020 2019
Cash flows from operating activities:
Net loss $ (6,313) $ (6,287)
Adjustments to reconcile net loss to
net cash flows from operating activities:
Change in operating assets and liabilities:
Accounts payable and accrued liabilities 6,313 6,286
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Net cash used in operating activities - -
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Net increase in cash and cash equivalents - -
Cash and cash equivalents, beginning of period 2,979 2,979
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Cash and cash equivalents, end of period $ 2,979 $ 2,979
=========== ===========
Supplemental disclosures:
Cash paid for interest $ - $ -
Cash paid for income taxes - -
Noncash investing and financing activities:
Dividends declared and unpaid on preferred stock $ 39,476 $ 39,380
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See accompanying notes to consolidated financial statements.
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BALTIC INTERNATIONAL USA, INC.
Notes to Consolidated Financial Statements
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements of
Baltic International USA, Inc. have been prepared in accordance with accounting
principles generally accepted in the United States of America and the rules of
the Securities and Exchange Commission, and should be read in conjunction with
the financial statements and notes thereto contained in our Annual Report filed
with the SEC on Form 10-K. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation
of financial position and the results of operations for the interim periods
presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year. Notes to the consolidated financial statements which would
substantially duplicate the disclosure contained in the consolidated financial
statements for fiscal 2019 as reported in the Form 10-K have been omitted.
NOTE 2 - FINANCIAL CONDITION
We have incurred operating losses since inception. At March 31, 2020, we
had an accumulated deficit of $18,084,973 and current assets and current
liabilities of $2,979 and $4,126,704, respectively, resulting in a working
capital deficit of $4,123,725. Net cash used in operating activities was $0 in
the three months ended March 31, 2020 and $0 in three months ended March 31,
2019. We currently have limited cash resources available and have obligations
due or past due.
Management believes that we will be able to achieve a satisfactory level
of liquidity to meets its business plan and capital needs for the next twelve
months. Additionally, management believes we have the ability to obtain
additional financing from key officers, directors and certain investors.
Management also believes that we can continue to defer certain amounts payable
by us that are either currently payable or past due. However, there can be no
assurance we will be successful to meet its liquidity needs. There is
substantial doubt about our ability to continue as a going concern.
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NOTE 3 - LOSS PER COMMON SHARE
Stock warrants and options are considered to be dilutive for earnings per
share purposes if the average market price during the period exceeds the
exercise price and we had earnings for the period. For the periods ended
March 31, 2020 and 2019, all stock warrants and options are considered
anti-dilutive. Supplemental disclosures for loss per share are as follows:
Three Months Ended March 31,
2020 2019
Net loss to be
used to compute loss
per share:
Net loss $ (6,313) $ (6,287)
Less preferred dividends (39,476) (39,280)
---------- ----------
Net loss attributable to common
shareholders $ (45,789) $ (45,667)
========== ==========
Weighted average number
of shares:
Basic and diluted 10,975,760 10,975,760
========== ==========
Loss per common share:
Basic and diluted $ (0.00) $ (0.00)
========== ==========
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BALTIC INTERNATIONAL USA, INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussions contain forward-looking information. Readers
are cautioned that such information involves risks and uncertainties, including
those created by general market conditions, competition and the possibility of
events may occur which limit our ability to maintain or improve its operating
results or execute its primary growth strategy. Although we believe that the
assumptions underlying the forward-looking statements are reasonable, any of
the assumptions could be inaccurate, and there can therefore be no assurance
that the forward-looking statements included herein will prove to be accurate.
The inclusion of such information should not be regarded as a representation by
us or any other person that our objectives and plans will be achieved.
Current Plan of Operations
Our current business objective for the next 12 months is to investigate
and, if such investigation warrants, acquire a target company or business
seeking the perceived advantages of being a publicly held corporation. Our
principal business objective for the next 12 months and beyond will be to
achieve long-term growth potential through a combination with a business rather
than immediate, short-term earnings. We will not restrict our potential
candidate target companies to any specific business, industry or geographical
location and, thus, may acquire any type of business.
We do not currently engage in any business activities that provide us with
positive cash flows. As such, the costs of investigating and analyzing
business combinations for the next approximately 12 months and beyond will be
paid with our current cash on hand and through funds from financing to be
obtained.
During the next 12 months, we anticipate incurring costs related to filing
of Exchange Act reports and costs relating to consummating an acquisition.
We believe we will be able to meet these costs with our current cash on
hand and additional amounts, as necessary, to be loaned to or invested in us by
our stockholders or other investors.
We may consider a business which has recently commenced operations, is a
developing company in need of additional funds for expansion into new products
or markets, is seeking to develop a new product or service, or is an
established business which may be experiencing financial or operating
difficulties and is in need of additional capital. In the alternative, a
business combination may involve the acquisition of, or merger with, a company
which does not need substantial additional capital, but which desires to
establish a public trading market for its shares, while avoiding, among other
things, the time delays, significant expense, and loss of voting control which
may occur in a public offering.
Any target business that is selected may be a financially unstable company
or an entity in its early stages of development or growth, including entities
without established records of sales or earnings. In that event, we will be
subject to numerous risks inherent in the business and operations of
financially unstable and early stage or potential emerging growth companies.
In addition, we may effect a business combination with an entity in an industry
characterized by a high level of risk, and, although our management will
endeavor to evaluate the risks inherent in a particular target business, there
can be no assurance that we will properly ascertain or assess all significant
risks.
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We anticipate that the selection of a business combination will be complex
and extremely risky. Because of general economic conditions, rapid
technological advances being made in some industries and shortages of available
capital, our management believes that there are numerous firms seeking even the
limited additional capital which we will have and/or the perceived benefits of
becoming a publicly traded corporation. Such perceived benefits of becoming a
publicly traded corporation include, among other things, facilitating or
improving the terms on which additional equity financing may be obtained,
providing liquidity for the principals of and investors in a business, creating
a means for providing incentive stock options or similar benefits to key
employees, and offering greater flexibility in structuring acquisitions, joint
ventures and the like through the issuance of stock. Potentially available
business combinations may occur in many different industries and at various
stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex.
Liquidity and Capital Resources
We had $2,979 in cash at March 31, 2020, compared to $2,979 at
December 31, 2019.
At March 31, 2020, we had working capital deficit of $4,123,725 as
compared to $4,077,936 at December 31, 2019. The increase in the working
capital deficit is due primarily to the accrual of additional liabilities.
Net cash provided by operating activities for the three months ended
March 31, 2020 was $0 as compared to $0 for the same period of 2019.
We have incurred operating losses since inception. At March 31, 2020, we
had an accumulated deficit of $18,084,973 and current assets and current
liabilities of $2,979 and $4,126,704, respectively, resulting in a working
capital deficit of $4,123,725. We currently have limited cash resources
available and have obligations due or past due.
Item 4. CONTROLS AND PROCEDURES
Our Chief Executive Officer and Chief Financial Officer, after evaluating
the effectiveness of our "disclosure controls and procedures" (as defined in
the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the
end of the period covered by this Quarterly Report on Form 10-Q, has concluded
that our disclosure controls and procedures were effective to provide
reasonable assurance that information we are required to disclose in reports
that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission rules and forms, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.
There were no significant changes in our internal control over financial
reporting during our most recent fiscal quarter that materially affected, or
were reasonably likely to materially affect, our internal control over
financial reporting.
Limitations on the Effectiveness of Internal Control
Our management does not expect that our disclosure controls and procedures
or our internal control over financial reporting will necessarily prevent all
fraud and material errors. An internal control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because
of the inherent limitations on all internal control systems, no evaluation of
controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, and/or by management's override of
the controls. The design of any system of internal control is also based in
part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions. Over time, controls may become
inadequate because of changes in circumstances, and/or the degree of compliance
with the policies and procedures may deteriorate. Because of the inherent
limitations in a cost-effective internal control system, financial reporting
misstatements due to error or fraud may occur and not be detected on a timely
basis.
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BALTIC INTERNATIONAL USA, INC.