U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 333-70437
Cardinal Airlines, Inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 59-3492127
(State of incorporation) (I.R.S. Employer Identification No.)
1380 Sarno Road, Suite B
Melbourne, FL 32935
(Address of principal executive offices)
Registrant's telephone number: 407-757-7388
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
The number of shares of the registrant's common stock, par value $0.01 per
share, outstanding as of September 30, 2000 was 2,033,900.
<PAGE>
Cardinal Airlines, Inc.
Index to Form 10QSB
Part I - Financial Information Page
Item 1. Financial Statements (unaudited)
Condensed Balance Sheet - September 30, 2000...............................2
Condensed Statements of Operations - Three Months
and Six Months Ended September 30, 2000 and 1998
and for the period February 10, 1997 (Date of
Inception) through September 30, 2000......................................3
Condensed Statements of Cash Flows - Six Months Ended
September 30, 2000 and 1998 and for the period
February 10, 1997 (Date of Inception) through September 30, 2000...........5
Notes to Condensed Financial Statements....................................6
Item 2. Management's Discussion and Analysis or Plan of Operations...........8
Part II - Other Information
Item 2. Changes in Securities and Use of Proceeds...........................15
Item 4. Submission of Matters to a Vote of Security Holders.................15
Item 5. Other Information...................................................16
Item 6. Exhibits and Reports on Form 8-K....................................16
Signatures...................................................................17
Exhibit Index................................................................17
<PAGE>
Part I Financial Information
Item 1. Financial Statements
<TABLE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
BALANCE SHEETS
For the three months ended
September 30
2000 1999
------------ ------------
unaudited
<S> <C> <C>
CURRENT ASSETS
Cash $ 4,122 $ 1,034
Interest Receivable 0 10,096
------------- --------------
TOTAL CURRENT ASSETS 4,122 11,130
NOTE RECEIVABLE 3,500
PROPERTY AND EQUIPMENT, net 5,023 7,078
DEPOSITS 9,200 4,200
------------- --------------
TOTAL ASSETS $ 21,845 $ 22,408
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 36,617 $ 85,721
-
------------- --------------
TOTAL LIABILITIES $ 36,617 85,721
COMMITMENTS 52,000 5,000
------------- --------------
TOTAL LIABILITIES AND COMMITMENTS $ 88,617 $ 90,721
============= ==============
TOTAL STOCKHOLDERS' EQUITY, (DEFICIT)
including deficit accumulated during the
development stage of $333,705 (66,772) (68,313)
------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 21,845 $ 22,408
============= ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
- 1 -
<PAGE>
<TABLE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FEBRUARY 10, 1997 FOR THE THREE MONTHS ENDED
(INCEPTION) TO SEPTEMBER 30
SEPTEMBER 30, 2000 2000 1999
<S> <C> <C> <C>
-------------- ---------------- ------------------
REVENUES $ - $ - $ -
-------------- ---------------- ------------------
EXPENSES
Consulting Fees 205,856 24,321 36,484
Professional Fees 230,515 51,575 34,351
Rent 51,675 4,770 4,770
Supplies 23,669 2,247 5,185
Utilities 22,919 2,032 2,053
Depreciation and amortization 6,642 514 513
Miscellaneous 10,208 0 2,206
Taxes 608 50 -
-------------- ---------------- -----------------
552,092 85,509 85,562
OTHER INCOME
Interest Income 11,870 0 1,350
-------------- ---------------- -----------------
NET (LOSS) before provision for
income taxes $ (540,222) $ (85,509) $ (84,212)
Provision for Income Taxes - - -
-------------- ---------------- -----------------
NET (LOSS) $ (540,222) $ (85,509) $ (84,212)
============== ================ =================
Net loss per share $ (0.25) $ (0.04) $ (0.04)
============== ================ =================
Shares used in computing net
loss per share 2,189,700 2,189,700 2,033,900
============== ================ =================
The accompanying notes are an integral part of these financial statements.
- 2 -
</TABLE>
<PAGE>
<TABLE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOW
FEBRUARY 10, 1997 FOR THE THREE MONTHS ENDED
(INCEPTION) TO SEPTEMBER 30
SEPTEMBER 30, 2000 2000 1999
<S> <C> <C> <C>
-------------------- ----------------- ----------------
CASH FLOWS FROM
OPERATING ACTIVITIES:
Cash paid for operating expenses $ (533,580) $ (84,995) $ (84,212)
Increase in accounts payable 36,617 10,866
--------------- --------------- ----------------
NET CASH USED IN OPERATING
ACTIVITIES: (496,963) (74,129) (84,212)
--------------- --------------- ----------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and equipment (11,664) 0 0
Increase in security deposits (9,200) 0 0
--------------- --------------- ----------------
NET CASH USED IN INVESTING
ACTIVITIES (20,864) 0 0
--------------- --------------- ----------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of common stock 473,450 -2,000 27,000
Increase in notes receivable -
related parties (3,500) 762
Increase in Notes Payable 52,000 50,000 47,111
Payments on notes receivable -
related parties 0 0 5,000
--------------- --------------- ----------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 521,950 48,000 79,873
--------------- --------------- ----------------
NET INCREASE (DECREASE) IN CASH 4,122 (26,129) (4,339)
CASH AT BEGINNING OF PERIOD 0 30,251 5,373
--------------- --------------- ----------------
CASH AT END OF PERIOD $ 4,122 $ 4,122 $ 1,034
=============== =============== ================
The accompanying notes are an integral part of these financial statements.
- 3 -
</TABLE>
<PAGE>
<TABLE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOW
FEBRUARY 10, 1997 FOR THE THREE MONTHS
(INCEPTION) TO ENDED SEPTEMBER 30
SEPTEMBER 30, 2000 2000 1999
<S> <C> <C> <C>
-------------------- ----------------- -----------------
RECONCILIATION OF NET LOSS TO NET
CASH USED IN OPERATING ACTIVITIES:
Net loss $ (540,222) $ (85,509) $ (84,212)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 6,642 514 513
Increase in payables 36,617 10,866 (1,350)
Increase in receivables 3,735
--------------- --------------- ----------------
NET CASH USED IN
OPERATING ACTIVITIES $ (496,963) $ (74,129) $ (81,314)
=============== =============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 4 -
<PAGE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
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).
- 5 -
<PAGE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
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 three month period ended Sept 30, 2000 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 September 30, 2000, 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
September 30, 2000, the Company has Sixty-Two Stockholders.
- 6 -
<PAGE>
<TABLE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 3 - PROPERTY AND EQUIPMENT
Feburary 10, 1997
(inception) to
September 30, 2000 September 30,1999
<S> <C> <C>
--------------- ---------------
Computers and equipment $ 9,955 $ 9,955
Furniture and fixtures 159 159
Leasehold Improvements 1,550 1,550
--------------- ---------------
11,664 11,664
Less accumulated depreciation
and amortization (6,641) (4,415)
--------------- ---------------
$ 5,023 $ 7,249
=============== ===============
</TABLE>
Depreciation and amortization expense was $514 for the three month period
ended Sept. 30, 2000; and $6,641 for the period from February 10, 1997
(Inception) to September 30, 2000.
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, 2000, 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
$0.00 as of June 30, 2000.
- 7 -
<PAGE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company leases its facilities from an unrelated third party
under an operating lease expiring July, 2001. Rent expense was
$4,770 and $2,915 for the three month period ended September 30,
2000 and 1999 respectively.
NOTE 6 - INCOME TAXES
The Company's effective tax rate differs from the expected federal
income tax rate as follows:
<TABLE>
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>
- 8 -
<PAGE>
<TABLE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 6 - INCOME TAXES CONT.
The components of the deferred tax assets and liabilities are as
follows:
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 carry forwards 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 September 30, 2000, 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.
- 9 -
<PAGE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
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, 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 Dec 31, 1998, the Company's common stock had a par value
$.01 per share with 50,000,000 shares authorized and 1,712,400
shares issued and outstanding.
As of Dec 31, 1999, the Company's common stock had a par value
$.01 per share with 50,000,000 shares authorized and 2,033,900
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 Dec 31, 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.
- 10 -
<PAGE>
CARDINAL AIRLINES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 8 - OFFERING
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.
- 11 -
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations.
Results of Operations
Cardinal is a development stage, airline company. Cardinal is considered to
be in the development stage because we have devoted substantially all of our
efforts to establishing the business plan, organization and raising capital.
Since inception in February 1997 our efforts have principally been devoted
to organization, development and raising capital. Cardinal has not received
any revenues from flight services, and does not expect any of its flights to
be commercially available until one month after 600,000 units are sold. From
inception through September 30, 2000, we have sustained cumulative losses of
$447,818 of which $194,869 was for consulting fees, $172,638 was for
professional fees, $37,365 for rent, $20,398 for supplies, $17,581 for
utilities, $5,090 in depreciation, $10,938 for miscellaneous expenses, and
$366 in taxes. For the three months ended September 30, 2000, we sustained a
cumulative loss of $29,960 of which $4,600 was for consulting fees, $16,401
was for professional fees, $4,770 for rent, $300 for supplies, $3,750 for
utilities, $512 in depreciation, $833 for miscellaneous expenses, and $125 in
taxes. These losses have resulted primarily from expenditures incurred in
connection with general and administrative activities, organization and
development, trademark registration and offering costs.
Between June 10, 1998, and March 23, 1999, Cardinal sold 506,200 common
shares for $0.50 per share to 34 purchasers in a private placement. We
received a total of $253,100 in the private placement.
We expect to incur substantial costs in the future resulting from the
acquisition of aircraft, equipment, agreements with airport service providers
such as baggage handling, and fuel service. Additional expenses will include
airport facilities, maintenance costs, and marketing. There can be no
assurance that Cardinal will ever achieve profitable operations.
To date, Cardinal has not marketed or generated revenues from the
commercialization of any service. Our current planned flights will not begin
until at least one month after 600,000 units of this offering are sold.
During this period following the sale of 600,000 units, we expect to hire
additional personnel. Depending on how rapidly units are sold, we may also be
finalizing arrangements for aircraft which could increase the time in which
scheduled operations would begin.
Cardinal has only a limited operating history upon which an evaluation of
its prospects can be based. The risks, expenses and difficulties encountered
by companies at an early stage of development must be considered when
evaluating Cardinal's prospects. To address these risks, Cardinal must, among
other things, successfully develop and commercialize its services, secure all
necessary proprietary rights, respond to competitive developments and
continued government regulation, and continue to attract, retain and motivate
qualified persons. There can be no assurance that we will be successful in
addressing these risks. See "Risk Factors- Cardinal Has Not Begun Operations
And There Is No Guarantee We Will Ever Operate As An Airline" for additional
discussion of how the limited offering history may affect investment in
Cardinal.
Our operating expenses will depend on several factors, including the level
of aircraft maintenance and repair expenses. Development of Cardinal's
planned flights will depend upon economic factors which we cannot predict.
Management may, in some cases, be able to control the timing of developmental
expenses, in part, by controlling growth. As a result of these factors, we
believe that period-to-period comparisons are not necessarily meaningful and
should not be relied upon as an indicator of future performance. Due to all
of the foregoing factors, it is possible that our operating results will be
below the expectations of market
12
<PAGE>
analysts, if any, and investors. In such event, the prevailing market price,
if any, of the common stock would likely be materially adversely affected.
Cardinal entered into negotiations with Capstone Partners, Inc., for selling
agent and investment banking services. Cardinal has signed an agreement with
Capstone which will provide for the formation of a selling group and will
solicit subscriptions on a best efforts bases. Under that Agreement, Capstone
shall receive 10% compensation equal to 10% commissions on sales.
Liquidity and Capital Resources
Until such time that Cardinal receives the proceeds of this public offering
or other financing, it will continue to operate on a limited basis. Our
approximate monthly expenditures during this interim development period are
approximately $17,000 per month. Without additional funding, Cardinal can
maintain its present operating level through the end of April 1, 2000.
Cardinal can delay the majority of the expenditures which are necessary to
carry out its business plan until adequate funds are on hand or appear to be
available. Put another way, Cardinal will delay incurring significantly
greater costs than its present expenditures of $17,000 per month, such as
additional personnel and the purchase or lease of aircraft, until funds are
available from its public offering. The bulk of FAA certification expenses
will be incurred when sufficient funds are available.
Cardinal has incurred negative cash flows from operations since its
inception. We have expended and expect to continue to expend in the future,
substantial funds to complete our planned service development efforts. Our
future capital requirements and the adequacy of available funds will depend
on numerous factors including:
o the successful commercialization of planned flights o obtaining sufficient
funding to acquire aircraft and equipment o fuel price and availability o
hiring qualified personnel o keeping pace with government regulation o
obtaining adequate insurance o the development of contractual agreements with
airports o the use of airport service providers
Expenditures relating to aircraft and certification will be made prior to
crew and maintenance salaries being incurred. If Cardinal determines that the
offering is not likely to raise at least $5.35 million, it will defer
flight-related and certification expenses to seek additional financing or
revise its business plan to provide for the use of less expensive aircraft.
At such time as Cardinal sells 600,000 units, the proceeds of the offering
would be used to commence operations by purchasing one MD-80 Aircraft.
$540,000 would be used for aircraft deposit. Over a period of three to nine
months from the date of commencement, $1,037,902 would be used to staff
operations at both Melbourne International Airport and Baltimore Washington
International Airport. Approximately $1,140,459 would be used to finance
flight operations beginning in the fifth month of operations. Fuel and
maintenance expense totaling approximately $846,204 for the six month period
would begin in the fifth month of operations. Beginning in the third month of
operations, Cardinal would expend a total of $702,417 for advertising and
initial promotions. During this period, Cardinal anticipates expending
approximately $659,018 on general and administrative expenses, $50,000 for
computer leases and software and $24,000 for key man insurance. FAA and DOT
certification expenses are expected to be approximately $350,000 during the
period of three to six months following commencement of operations.
In the event our plans change or our assumptions change or prove to be
inaccurate or the proceeds of our public offering prove to be insufficient to
fund operations, we could be required to seek additional financing. The terms
and prices of any additional financing may be significantly more favorable
than those of the units sold in our public offering. Cardinal does not have
any material committed sources of additional financing, and there can be no
assurance that additional funding, if necessary, will be available on
acceptable terms, if at all. If adequate funds are not available, we may be
required to delay, scale back, or eliminate certain aspects of our
operations. If adequate additional funds are not available, Cardinal's
business, financial condition, and results of operations will be materially
and adversely affected
13
<PAGE>
Cardinal may receive additional funding under the provisions pertaining to
the exercise of the warrants which are part of the units offered herein. See
"Warrants" for the terms of warrant exercise and pricing information.
Currently, we have no plans to sell or issue any additional preferred stock.
The net proceeds from the sale of 600,000 units in our public offering is
estimated to be the minimum amount necessary to begin operations. If fewer
than 600,000 units are sold, then we would use the proceeds to pay the
offering expenses and possibly commissions. Any remaining proceeds would be
used to secure additional funding to implement Cardinal's business plan or to
amend the plan and operate with less expensive aircraft or contract services.
If less than 600,000 units are sold, as an alternative until we are able to
receive our own certificate, Cardinal could contract its flight services to
another company which holds a FAA Operators Certificate. If this occurs,
Cardinal may be required to make certain deposits and bonds and would
contract actual flight operations. The usual cost per aircraft operating hour
is $3,000 to $5,000. Assuming average operating hours of 240 per month, the
estimated monthly cost of using contracted flight services would range from
approximately $720,000 to $ 1,200,000 per month. Costs vary widely depending
on operating requirements, including the time of day and time of year.
Contract flight service fees typically include flight crew, fuel, insurance
and maintenance. This option could be accomplished with substantially fewer
capital resources than required to begin independent flight operations with
our own operating certificate.
Year 2000
Defective date programming in computer hardware and software might cause
problems in the year 2000. Date errors may impact computer applications and
also production resources, and the procedures of outside suppliers and
independent contractors. Importantly, it is not always known where such date
information is used.
If all computer systems and imbedded computers on which we relied failed as
a result of the Year 2000, the Company would be forced to cancel flights. In
order to avoid this, Cardinal has entered into a letter of intent for its
ticketing system and has received written assurance that this system is year
2000 compliant. Melbourne International Airport, Baltimore Washington
International Airport and First Union Bank have also stated that they are
Year 2000 compliant. The MD-80 series aircraft and the EQUALS Airline
Computer Software system, are year 2000 compliant. We will continue to
request written assurances of year 2000 compliance from all software,
hardware and information technology vendors.
Cardinal plans to conduct regular back-ups of ticket sales throughout 1999
and immediately prior to the year 2000 to preserve previously received
reservations. We will not make significant changes in operation, such as
adding destinations or flights, during the period immediately before and
after September 30, 2000. As a contingency we will prepare to adjust flight
schedules just as the FAA has stated it would reduce air traffic capacity
before compromising the safety of the National Airspace System. The FAA has
adopted the U.S. Government Accounting Office's recommended five-phase repair
process to address the Year 2000 issue, the final phase is scheduled to be
complete on June 30, 1999. Cardinal has complied with the FAA's Year 2000
5-Phase Repair Approach. The 5 phases are:
1 Awareness
2 Assessment
3 Renovation
4 Validation
5 Implementation
<PAGE>
14
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Description Page
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession None
(3) Articles and By-Laws None
(4) Instruments defining the Rights of Security Holders None
(10) Material Contracts None
(11)* Statement re: Computation of Per Share Earnings Note 1(G)
to Financial
Statements
(15) Letter re: Unaudited Interim Financial Information None
(18) Letter re: Change in Accounting Principles None
(19) Report Furnished to Security Holders None
(22) Published Report re: Matters Submitted to Vote of
Security Holders None
(23) Consents of Experts and Counsel None
(24) Power of Attorney None
(27)* Financial Data Schedule
(99) Additional Exhibits None
*Filed herewith
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CARDINAL AIRLINES, INC.
SIGNATURE TITLE DATE
/S/ Lawrence A. Watson
_________________________ President, Chairman of the Board February 14, 2000
LAWRENCE A. WATSON Chief Executive Officer
/S/ H. Lawrence Mason
________________________ Secretary Treasurer, February 14, 2000
H. LAWRENCE MASON Chief Financial Officer
<PAGE>
Exhibit Index
Exhibit Description Page
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession None
(3.5) Articles and By-Laws
(4) Instruments defining the Rights of Security Holders None
(10) Material Contracts None
(11)* Statement re: Computation of Per Share Earnings Note 1(G)
to Financial
Statements
(15) Letter re: Unaudited Interim Financial Information None
(18) Letter re: Change in Accounting Principles None
(19) Report Furnished to Security Holders None
(23) Published Report re: Matters Submitted to Vote of
Security Holders None
(23) Consents of Experts and Counsel None
(24) Power of Attorney None
(27)* Financial Data Schedule
(99) Additional Exhibits None
*Filed herewith
This schedule contains summary financial information extracted from Financial
Statements for the three (3) months ended September 30, 2000, and is qualified
in its entirety by reference to such form 10-QSB for quarterly period ended
September 30, 2000.
