SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
SPECIAL FINANCIAL REPORT
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1999
Commission file number: 333-70437
Cardinal Airlines, Inc.
(Exact name of registrant as specified in its charter)
Delaware 59-3492127
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1380 Sarno Road, Suite B Melbourne, FL 32935
(Address of principal executive offices) (Zip Code)
(407)757-7388
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act: NONE
Securities Registered Pursuant to Section 12(g) of the Act: NONE
<PAGE>
Pursuant to Rule 15d-2 of the Act, this annual report contains only financial
statements for the fiscal year ended June 30, 1999.
Indicate by check mark whether the registrant (1) has filed all reports
required 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. X Yes 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 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. X
As of October 13, 1999, there were outstanding 2,033,800 shares of
Common Stock and 102,600 warrants for the purchase of common stock. One
hundred shares of Series A Preferred Stock were also outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Form S-1, File No. : 333-70437 which went effective with the Securities and
Exchange Commission on July 21, 1999
Part II
Item 8. Financial Statements and Supplementary Data.
<PAGE>
This Annual Report on Form 10-K for the fiscal year ended June 30, 1999 is
being filed pursuant to Rule 15d-2 under the Securities Exchange Act of 1934 and
contains only certified financial statements as required by Rule 15d-2. Rule
15d-2 provides generally that, if a registrant files a registration statement
under the Securities Act of 1933, as amended, which does not contain certified
financial statements for the registrant's last full fiscal year (or for the life
of the registrant if less than a full year), than the registrant shall, within
90 days of the effective date of the registration statement, file a special
report furnishing certified financial statements for such last fiscal year or
other period as the case may be. Rule 15d-2 further provides that such special
financial report is to be filed under cover of the facing sheet appropriate for
the annual report of the registrant. Cardinal Airline Inc.'s
Registration Statement on Form S-1 (File No. 333-70437), declared
effective July 21, 1999, did not contain the certified financial statements
for the Registrant's last full fiscal year, that is, the fiscal year ended
June 30, 1999. Therefore, as required by Rule 15d-2, certified financial
statements for the year ended June 30, 1999 are filed herewith.
Part II
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) 1. Financial Statements:
INDEX TO FINANCIAL STATEMENTS
Cardinal Airlines, Inc.
<PAGE>
Independent Auditors' Report
Consolidated Balance Sheets as of June 30, 1999 and 1998
Consolidated Statements of Operations for the years ended
June 30, 1999, 1998 and 1997.
Consolidated Statement of Changes in Stockholders' Equity (Deficit)
for the years ended December 31, 1999, 1999 and 1997
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998, and 1997
Notes to Consolidated Financial Statements
2. Financial Statement Schedules:
All schedules are omitted because they are not required or the required
information is shown in the financial statements or notes thereto.
3. Exhibits:
(27) Financial Data Schedule
All other schedules and exhibits are omitted because they are either not
<PAGE>
applicable or not required in this filing.
(b) Reports on Form 8-K
No reports were filed by the Company during the fiscal year ended June 30,1999.
<PAGE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
Financial Statements
June 30, 1999 and 1998
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Cardinal Airlines, Inc.
Melbourne, Florida
We have audited the accompanying balance sheets of Cardinal Airlines, Inc. (a
Delaware corporation in the development stage) as of June 30, 1999 and 1998, and
the related statements of operations, stockholders' equity (deficit) and cash
flows for each of the two years in the period ended June 30, 1999 and for the
period from inception (February 10, 1997) to June 30, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cardinal Airlines, Inc. as of
June 30, 1999, and 1998, and the results of its operations and its cash flows
for each of the two years in the period ended June 30, 1999, and for the period
from inception to June 30, 1999, in conformity with generally accepted
accounting principles.
September 24, 1999
Orlando, Florida
<PAGE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
BALANCE SHEETS.........................................................1
STATEMENTS OF OPERATIONS...............................................2
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)..........................3-4
STATEMENTS OF CASH FLOWS.............................................5-6
NOTES TO FINANCIAL STATEMENTS.......................................7-13
<PAGE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,1999 JUNE 30,1998
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 5,373 $ 14,169
Interest Receivable 8,746 -
------------- --------------
TOTAL CURRENT ASSETS 14,119 14,169
PROPERTY AND EQUIPMENT, net 7,591 8,091
DEPOSITS 4,200 1,740
------------- --------------
TOTAL ASSETS $ 25,910 $ 24,000
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 51,002 $ -
Due to related parties 30,984 -
------------- --------------
TOTAL LIABILITIES $ 81,986 -
COMMITMENTS
TOTAL STOCKHOLDERS' EQUITY, (DEFICIT)
including deficit accumulated during the
development stage of $333,705 (56,076) 24,000
------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 25,910 $ 24,000
============= ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS.
- 1 -
<PAGE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FEBRUARY 10, 1997
(INCEPTION) TO YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1999 JUNE 30, 1998
-------------- ---------------- ------------------
<S> <C> <C> <C>
REVENUES $ - $ - $ -
-------------- ---------------- ------------------
EXPENSES
Consulting Fees 153,785 153,785 -
Professional Fees 121,886 119,945 756
Rent 27,825 14,310 11,920
Supplies 14,913 11,907 2,942
Utilities 11,778 8,584 2,870
Depreciation and amortization 4,074 2,051 2,023
Miscellaneous 7,899 7,899 -
Taxes 241 241 50
-------------- ---------------- -----------------
342,451 318,722 20,561
OTHER INCOME
Interest Income 8,746 8,746 -
-------------- ---------------- -----------------
NET (LOSS) before provision for
income taxes $ (333,705) $ (309,976) (20,561)
Provision for Income Taxes - - -
-------------- ---------------- -----------------
NET (LOSS) $ (333,705) $ (309,976) $ (20,561)
============== ================ =================
Net loss per share $ (0.16) $ (0.15) $ (0.01)
============== ================ =================
Shares used in computing net
loss per share 2,031,200 2,031,200 2,031,200
============== ================ =================
</TABLE>
The accompanying notes are an integral part of these financial
statements.
- 2 -
<PAGE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
February 10, 1997 (Inception) to June 30, 1999
<TABLE>
<CAPTION>
Number Common Preferred Additional Accumulated Total Stockholders'
of Shares Stock Stock Paid-In Capital Deficit Equity (Deficit)
---------- -------- ----------- ---------------- ----------- --------------------
<S> <C> <C> <C> <C> <C> <C>
ISSUANCE OF SHARES
OF COMMON STOCK:
March 1, 1997 940,000 $ 9,400 $ - $ - $ - 9,400
July 1, 1997 240,000 2,400 - 117,600 - 120,000
June 10, 1998 30,000 300 - 14,700 - 15,000
August 10, 1998 20,000 200 - 9,800 - 10,000
August 20, 1998 10,000 100 - 4,900 - 5,000
August 31, 1998 35,400 354 - 17,346 - 17,700
September 10, 1998 10,000 100 - 4,900 - 5,000
September 30, 1998 16,000 160 - 7,840 - 8,000
October 2, 1998 115,000 1,150 - - - 1,150
October 3, 1998 17,000 170 - 8,330 - 8,500
October 5, 1998 5,000 50 - 2,450 - 2,500
November 5, 1998 90,000 900 - - - 900
November 16, 1998 20,000 200 - 9,800 - 10,000
November 28, 1998 20,000 200 - 9,800 - 10,000
November 30, 1998 46,000 460 - 22,540 - 23,000
December 9, 1998 10,000 100 - 4,900 - 5,000
December 10, 1998 70,000 700 - - - 700
December 28, 1998 8,000 80 - 3,920 - 4,000
December 29, 1998 10,000 100 - 4,900 - 5,000
January 6, 1999 6,000 60 - 2,940 - 3,000
January 11, 1999 40,000 400 - - - 400
January 15, 1999 58,000 580 - 13,720 - 14,300
January 19, 1999 20,000 200 - 9,800 - 10,000
January 28, 1999 20,000 200 - 9,800 - 10,000
March 2, 1999 18,800 188 - 9,212 - 9,400
(CONTINUED ON NEXT PAGE)
</TABLE>
The accompanying notes are an integral part of these financial
statements.
- 3 -
<PAGE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
February 10, 1997 (Inception) to June 30, 1999
<TABLE>
<CAPTION>
Number Common Preferred Additional Accumulated Total Stockholders'
of Shares Stock Stock Paid-In Capital Deficit Equity (Deficit)
---------- -------- ----------- ---------------- ----------- --------------------
<S> <C> <C> <C> <C> <C> <C>
ISSUANCE OF SHARES
OF COMMON STOCK
(continued):
March 3, 1999 4,000 40 - 1,960 - 2,000
March 5, 1999 40,000 400 - 19,600 - 20,000
March 11, 1999 62,000 620 - 30,380 - 31,000
March 13, 1999 10,000 100 - 4,900 - 5,000
March 17, 1999 30,000 300 - 14,700 - 15,000
March 19, 1999 6,000 60 - 2,940 - 3,000
March 23, 1999 4,000 40 - 1,960 - 2,000
-------------
TOTAL ISSUANCE OF
SHARES OF COMMON STOCK: 2,031,200
=============
ISSUANCE OF PREFERRED
STOCK:
October 16, 1998-
Series A 100,000 - 1,000 - - 1,000
=============
LESS: NOTES RECEIVABLE-
RELATED PARTIES (2,186) - (107,135) - (109,321)
NET (LOSS) - - - (333,705) (333,705)
------------ --------- ------------ ------------ -----------
BALANCE - JUNE 30, 1999 $ 18,126 $ 1,000 258,503 $ (333,705) $(56,076)
============ ========= ============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
- 4 -
<PAGE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
FEBRUARY 10, 1997
(INCEPTION) TO YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1999 JUNE 30, 1998
-------------------- ----------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Cash paid for operating expenses $ (256,392) $ (234,686) $ (18,538)
--------------- --------------- ----------------
NET CASH USED IN OPERATING
ACTIVITIES: (256,392) (234,686) (18,538)
--------------- --------------- ----------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and equipment (11,664) (1,550) (10,114)
Increase in security deposits (2,460) (2,460) -
--------------- --------------- ----------------
NET CASH USED IN INVESTING
ACTIVITIES (14,124) (4,010) (10,114)
--------------- --------------- ----------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of common stock 287,539 241,550 42,821
Increase in notes receivable -
related parties (25,650) (25,650) -
Payments on notes receivable -
related parties 14,000 14,000 -
--------------- --------------- ----------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 275,889 229,900 42,821
--------------- --------------- ----------------
NET INCREASE (DECREASE) IN CASH 5,373 (8,796) 14,169
CASH AT BEGINNING OF PERIOD - 14,169 -
--------------- --------------- ----------------
CASH AT END OF PERIOD $ 5,373 $ 5,373 $ 14,169
=============== =============== ================
</TABLE>
The accompanying notes are an integral part of these financial
statements.
- 5 -
<PAGE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
FEBRUARY 10, 1997
(INCEPTION) TO YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1999 JUNE 30, 1998
-------------------- ----------------- -----------------
<S> <C> <C> <C>
RECONCILIATION OF NET LOSS TO NET
CASH USED IN OPERATING ACTIVITIES:
Net loss $ (333,705) $ (309,976) $ (20,561)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 4,073 2,050 2,023
Increase in receivables (8,746) (8,746) -
Increase in accounts payable 51,002 51,002 -
Increase in due to related parties 30,984 30,984 -
--------------- --------------- ----------------
NET CASH USED IN
OPERATING ACTIVITIES $ (256,392) $ (234,686) $ (18,538)
=============== =============== ================
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING ACTIVITIES:
Issuance of common stock in exchange
for Notes Receivable - Related Parties $ 122,320 $ 25,650 $ 96,670
=============== =============== ================
Issuance of preferred stock in exchange
for Notes Receivable - Related Parties $ 1,000 $ 1,000 $ -
=============== =============== ================
</TABLE>
The accompanying notes are an integral part of these financial
statements.
- 6 -
<PAGE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) NATURE OF OPERATIONS
The planned principal business activity of Cardinal Airlines, Inc.
("Company") is to provide commercial airline service to and from major
airports throughout the eastern United States with operations based in
Melbourne, Florida.
B) CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, the Company considers
all highly liquid debt instruments purchased with an original maturity
of three months or less to be cash and/or cash equivalents.
C) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation computed using
the straight-line method over the assets' expected useful lives.
Leasehold improvements are amortized over the lessor of the term of
the lease or the assets' expected useful lives.
D) MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported assets and liabilities.
Actual results could differ from these estimates.
E) INCOME TAXES
Deferred income taxes arise from the expected tax consequence of
temporary differences between the carrying amounts and the tax basis
of certain assets and liabilities. The differences result primarily
from different depreciation methods on property and equipment.
F) ORGANIZATION COSTS
Organization costs consist of expenses related to the start-up of the
Company. These costs are expensed as incurred in accordance with
Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" (SOP 98-5).
- 7 -
<PAGE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT.
G) EARNINGS PER SHARE
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 128, "Earnings Per Share" (SFAS 128) effective February 10, 1997
(Inception). As such, net loss per share is computed using the
weighted average number of common shares outstanding during the
period. Pursuant to the Securities and Exchange Commission Staff
Accounting Bulletins and Staff Policy, such computations include all
common and equivalent shares issued as if they were outstanding for
all periods presented. Common equivalent shares consist of the
incremental common shares issuable upon the conversion of the
convertible preferred stock (using the if converted method).
The Series A Preferred Stock issued has no preferences other than
voting rights over the common stock and no dividend payment
arrangements. The preferred stock has no effect in arriving at income
available to common shareholders in computing earnings per share.
H) NEW ACCOUNTING STANDARDS
There have been no new significant accounting pronouncements issued
for the year ended June 30, 1999 that would have a direct material
effect on the financial statements, except for Statement of Position
98-5, "Reporting on the Costs of Start-Up Activities" (SOP 98-5) which
is addressed in NOTE 1F.
NOTE 2 - DEVELOPMENT STAGE OPERATIONS
The Company was formed February 10, 1997, and began operations April
1, 1997. Through June 30, 1999, operations have been devoted primarily
to raising capital, negotiating leasing of airplanes, related
equipment, and related facilities as well as the performance of
general administrative functions. As of June 30, 1999, the Company has
49 Stockholders.
- 8 -
<PAGE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 3 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
June 30, 1999 June 30,1998
--------------- ---------------
<S> <C> <C>
Computers and equipment $ 9,955 $ 9,955
Furniture and fixtures 159 159
Leasehold Improvements 1,550 -
--------------- ---------------
11,664 10,114
Less accumulated depreciation
and amortization (4,073) (2,023)
--------------- ---------------
$ 7,591 $ 8,091
=============== ===============
</TABLE>
Depreciation and amortization expense was $2,050 for the year ended
June 30, 1999; and $2,023 for the period from February 10, 1997
(Inception) to June 30, 1998.
NOTE 4 - RELATED PARTIES
The Company has made loans to four of its stockholders in exchange for
issuance of shares of common stock and preferred stock (NOTE 7). As of
June 30, 1999, these four stockholders own 56% of the outstanding
common shares of stock.
The loans are unsecured, are due June 30, 2003 and bear interest at 8%
annually. Notes receivable due from related parties were $109,321 as
of June 30, 1999, and $96,671 as of June 30, 1998. A summary of Notes
receivable due from related parties is as follows:
<TABLE>
<S> <C>
Common stock issued during the year ended June 30, 1998 $ 92,179
Common stock issued from March 1, 1997 to June 30, 1997 4,492
Preferred stock issued during the year ended June 30, 1999 1,000
Conversion of stock subscriptions to notes receivable
during the year ended June 30, 1999 (NOTE 7) 25,650
Repayment of notes receivable during the year ended
June 30, 1999 (14,000)
--------------
$ 109,321
==============
</TABLE>
- 9 -
<PAGE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 4 - RELATED PARTIES CONT.
The Notes receivable due from related parties are reported as a
reduction in stockholders' equity (deficit).
In addition, as of June 30, 1999, the Company had accrued $30,984 in
consulting fees payable to stockholders of the Company for management
and professional services rendered.
NOTE 5 - COMMITMENTS
The Company leases its facilities from an unrelated third party under
an operating lease expiring July, 2000. Rent expense was $14,310 and
$11,920 for the years ended June 30, 1999 and 1998 respectively.
Future minimum lease payments are as follows:
Year ending June 30,
2000 $ 19,080
2001 1,590
--------
$ 20,670
========
NOTE 6 - INCOME TAXES
The Company's effective tax rate differs from the expected federal
income tax rate as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1999 June 30, 1998
---------------- ----------------
<S> <C> <C>
Income tax benefit at statutory Rate $ (113,460) $ (8,068)
Increase in valuation Allowance 113,460 8,068
---------------- ----------------
Actual income taxes $ - $ -
================ ================
</TABLE>
- 10 -
<PAGE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 6 - INCOME TAXES CONT.
The components of the deferred tax assets and liabilities are as
follows:
<TABLE>
<CAPTION>
June 30, 1999 June 30, 1998
---------------- ----------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 113,460 $ 8,068
---------------- ----------------
Total deferred tax assets 113,460 8,068
Less valuation allowance (113,460) (8,068)
Deferred tax assets, net of
valuation allowance - -
Deferred tax liabilities - -
---------------- ----------------
Net deferred tax asset (liability) $ - $ -
================ ================
</TABLE>
A summary of the net operating loss carryforwards is as follows:
Generated June 30, 1997 $ 3,168 Expires June 30, 2012
Generated June 30, 1998 20,561 Expires June 30, 2013
Generated June 30, 1999 309,976 Expires June 30, 2014
---------
$ 333,705
=========
As of June 30, 1999, the Company is still in development stage. As
such, all income and deductions for tax purposes are deferred until
the Company's planned principal operations have commenced.
NOTE 7 - STOCKHOLDERS' EQUITY
A summary of issuance of common stock involving non-cash consideration
is as follows:
On April 1, 1997, the Company issued 449,200 shares of stock in
consideration for notes receivable due from related parties (NOTE
4) of $4,492. The shares were sold at $.01 par value per share.
- 11 -
<PAGE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 7 - STOCKHOLDERS' EQUITY CONT.
On July 1, 1997, the Company issued 184,358 shares of stock in
consideration for notes receivable due from related parties (NOTE
4) of $92,179. The shares were sold at $.01 par value per share,
with $.50 per share consideration. As of June 30, 1999, $14,000
was received in payment of these notes (NOTE 4).
During the year ended June 30,1999, the Company issued 83,300
shares of stock in consideration for stock subscriptions of
$41,650. The shares were sold at $.01 par value per share, with
$.50 per share consideration. These subscriptions were converted
to a note receivable (NOTE 4).
As of June 30, 1997, the Company's common stock had a par value $.01
per share with 50,000,000 shares authorized and 940,000 shares issued
and outstanding.
As of June 30, 1998, the Company's common stock had a par value $.01
per share with 50,000,000 shares authorized and 1,210,000 shares
issued and outstanding.
As of June 30, 1999, the Company's common stock had a par value $.01
per share with 50,000,000 shares authorized and 2,031,200 shares
issued and outstanding.
A summary of issuance of preferred stock involving non-cash
consideration is as follows:
On October 16, 1998, the Company issued 100,000 shares of $.01
par value "Series A" preferred stock in consideration for notes
receivable due from related parties (NOTE 4) of $1,000.
As of June 30, 1999, the Company's preferred stock had a par value
$.01 per share with 1,000,000 shares authorized. There are 100,000
shares issued and outstanding as "Series A" preferred stock. The
900,000 unissued shares have not been designated.
The shares of "Series A" preferred stock have super voting rights at
the multiple of 100 votes per share. In the event of liquidation, the
preferred stock has preference over the common stock. The shares are
not convertible into common stock and do not have any other rights or
preferences.
- 12 -
<PAGE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 8 - SUBSEQUENT EVENTS
On July 21, 1999, the Company issued its initial S-1 filing with the
Securities and Exchanges Commission. This is an initial public
offering of 2,000,000 shares of common stock for $10 per share.
- 13 -
<PAGE>
SIGNATURES
In accordance with Rule 15d-2, the Company caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CARDINAL AIRLINES, INC.
By: ____/s/_______________________
Lawrence A. Watson,
Chairman of the Board and Chief Executive Officer
In accordance with the requirements of the Exchange Act, this report has
been signed by the following persons on behalf of the Company and in the
capacities indicated on October 13, 1999.
SIGNATURE TITLE
______/s/_________________________ Chairman of the Board, President
Lawrence A. Watson and Director
_____/s/___________________________ Secretary and Treasure, Director
H. Lawrence Mason
____/s/____________________________ Director
Vincent T. Paris
___/s/_____________________________ Director
Ted A. Walker
___/s/_____________________________
Lawrence A. Watson, Attorney in Fact
