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
[ ] TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to ______________
Commission file number 000-30797
EAST COAST AIRLINES, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 14-1818396
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
C/O SULLIVAN, MCBRIDE, HESS & YOUNGBLOOD, P.C.
4 TOWER PLACE, ALBANY, NEW YORK 12203
(Address of principal executive offices)
(518) 438-5364
(Issuer's telephone number)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Outstanding at
CLASS SEPTEMBER 30, 2000
COMMON STOCK, PAR VALUE $0.0001 604,500
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
Exhibit Index on Page 11 Page 1 of 14
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
East Coast Airlines, Inc. - A Development Stage Company
Balance Sheets
<TABLE>
<CAPTION>
(Unaudited)
September 30,
2000
-------------
Assets
<S> <C>
Cash $ 4,075
---------
Total Assets $ 4,075
=========
Liabilities and Shareholders' Deficiency
Accrued Liabilities $ 18,300
Taxes Payable 800
---------
Total Liabilities 19,100
---------
Shareholders' Deficiency
Common Stock, Par Value $0.0001,
20,000,000 Shares Authorized
604,500 Shares Issued
and Outstanding at September 30, 2000 60
Paid In Capital 10,889
Deficit Accumulated During
Development (25,974)
---------
Total Shareholders' Deficiency (15,025)
---------
Total Liabilities and Shareholders'
Deficiency $ 4,075
=========
</TABLE>
See Accompanying Footnotes to Financial Statements
2
<PAGE>
East Coast Airlines, Inc.
Statements of Loss (unaudited)
<TABLE>
<CAPTION>
Since Inception
November 17, Nine Months Three Months
1999 through Ended September 30, Ended September 30,
SEPTEMBER 30, 2000 2000 2000
------------------ ---- ----
<S> <C> <C> <C>
Revenue - - -
------------------------------------------------------
Expenses
Legal and Accounting Services $ 22,438 $ 22,438 $ 16,876
Other Corporate Expenses 2,552 2,552 2,511
Taxes 984 984 185
------------------------------------------------------
(Loss) for the Period $(25,974) $(25,974) $(19,572)
======================================================
Weighted Average Shares of Common Stock 567,960 567,960 567,960
======================================================
(Loss ) per Common Share $ (0.045) $ (0.046) $ (0.034)
======================================================
</TABLE>
See Accompanying Footnotes to Financial Statements
3
<PAGE>
East Coast Airlines, Inc. - A Development Stage Company
Statements of Cash Flows (unaudited)
<TABLE>
<CAPTION>
For the Period
Since Inception
November 17, Nine Months
1999 through Ended September 30,
SEPTEMBER 30, 2000 2,000
------------------ -----
Operating Cash Flow
<S> <C> <C>
(Loss) For the Period $(25,974) $(19,572)
Less- Accounts Payable 18,300 12,738
Less- Franchise Taxes Payable 800 -
---------------------------------
Net Cash Used by Operations (6,874) (6,834)
---------------------------------
Financing
Sale of Common Stock 10,949 7,850
---------------------------------
Net Cash From Financing 10,949 7,850
---------------------------------
Increase/Decrease In Cash 4,075 1,016
Cash Beginning - 3,059
---------------------------------
Cash Ending $ 4,075 $ 4,075
=================================
Cash Paid for Interest - -
=================================
Cash Paid for Income Taxes - -
=================================
</TABLE>
See Accompanying Footnotes to Financial Statements
4
<PAGE>
East Coast Airlines Inc.- A Development Stage Company
Statement of Shareholders' Deficiency (unaudited)
<TABLE>
<CAPTION>
Common Paid In
Shares Stock Capital Deficit Total
<S> <C> <C> <C> <C> <C>
Balance at Inception
(Mid November 1999) - - - - -
Sale of Common Stock 500,000 $50 $ 450 - $ 500
Deficit from Inception to
May 31, 2000 (4,652) (4,652)
----------------------------------------------------------
Balance at May 31, 2000 500,000 50 450 (4,652) (4,152)
----------------------------------------------------------
Sale of Common Stock 26,000 2 2,597 - 2,599
Loss for the Month Ended
June 30, 2000 - - - (1,751) (1,751)
----------------------------------------------------------
Balance at June 30, 2000 526,000 52 3,047 (6,403) (3,304)
Sale of Common Stock 78,500 8 7,842 - 7,850
Loss for the Three Months Ended
September 30, 2000 - - - (19,572) (19,572)
----------------------------------------------------------
Balance at September 30, 2000 604,500 $60 $10,889 $(25,974) $(15,025)
==========================================================
</TABLE>
See Accompanying Footnotes to Financial Statements
5
<PAGE>
Note 1 - Organization and Summary of Significant Accounting Policies
Basis Of Presentation:
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") for interim financial
information and Item 310(b) of Regulation SB. They do not include all of the
information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the financial statements of the Company as of May 31, 2000
and for the period since inception (November 17,1999) then ended, including
notes thereto included in the Company's Form 10-SB filed on June 13, 2000.
Organization:
The Company was incorporated in the State of Delaware on November 17, 1999.
From inception through the end of calendar year 1999, and through the end of the
first quarter of calendar year 2000, the Company was dormant and there were no
activities conducted by the Company. The Company intends to become a fully
certified Federal Aviation Regulation Part 121 air carrier.
East Coast's business purpose is to provide scheduled air service to small and
medium sized markets which have experienced either a total or partial loss of
air service as a result of shifts in emphasis by major airlines and their
regional counterparts. The Company intends to be an independent carrier, not
affiliated with any major airline.
Starting with operations in New York State, the Company intends to expand
throughout the Northeast and then to the Middle Atlantic States.
Development Stage Operations:
From inception through the end of calendar year 1999, and through the end of the
first quarter of calendar year 2000, the Company was dormant and there were no
activities conducted by the Company. Accordingly, financial transactions were
first recorded in April of calendar year 2000.
The Company is in its start-up phase and has no operating history. From
inception to September 30, 2000, the Company has not recognized any revenue;
also, the Company has not capitalized any costs associated with its start-up.
6
<PAGE>
The Company's business is subject to most of the risks inherent in the
establishment of a new business enterprise. The likelihood of success of the
Company must be considered in light of the expenses, difficulties, delays and
unanticipated challenges encountered in connection with the formation of a new
business, raising operating and development capital, and the marketing of a new
product.
The Company presently does not have sufficient liquid assets to finance its
anticipated funding needs and obligations. If fundraising activities are not
successfully completed, the Company may not be able to meet its obligations as
they become due and, accordingly, may not be able to continue its business
operations as presently anticipated.
Income Taxes:
The Company has not recognized any provision for the tax benefits associated
with its loss from inception to September 30, 2000. Such loss may be carried
forward for tax-return purposes. However, the Company is unable to predict the
nature, timing and extent of near-term profitability; accordingly the Company
presently intends to recognize such carryforward benefits when realized.
Note 2 - Shareholders' Equity
The Company has a single class of Common Stock with a par value of $0.0001
per share. At September 30, 2000, 604,500 shares were issued and outstanding.
The president of the Company was issued 475,000 shares in April of 2000. The
secretary of the Company was also issued 25,000 shares in April of 2000.
Since inception, the Company issued shares of its stock to investors for cash as
follows:
<TABLE>
<CAPTION>
Number of
DATE OF ISSUE SHARES AMOUNT
---------------------------------------------
<S> <C> <C>
April, 2000 500,000 500
June, 2000 26,000 2,600
July, 2000 78,500 7,850
---------- ----------
604,500 10,950
========== ==========
</TABLE>
Such shares were issued without registration in reliance on exemptions in
federal securities laws, including, in part, an exemption that permits issuance
of stock up to $1 million without registration of the securities.
Note 3 - Related Party Transactions
As described in Note 2, during April 2000, 475,000 shares were sold to the
president of the Company, and 25,000 shares were sold to the vice president of
the Company at $.001 per share
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATION
The Company is in the initial stages of startup and is exploring the feasibility
of raising sufficient capital to implement its business plan. The Company has
been in the development stage since inception (November 17, 1999).
The Company has registered its common stock on a Form 10-SB registration
statement filed pursuant Section 12(b) of the Securities Exchange Act of 1934
(the "Exchange Act"). The Company would like to have its common shares listed
for quotation on the Over-the-Counter Bulletin Board (the "OTC-BB") system
operated by the National Association of Securities Dealers. Management believes
that the Company will be unable to raise sufficient capital to begin its
operations until the Company's common shares are listed on the OTC-BB. To date,
the Company has been unable to get its common shares listed on the OTC-BB. As
such, the Company will remain essentially dormant until its shares are listed.
Even if the Company obtains such a listing, there are no assurances the Company
will be successful in raising sufficient capital to commence its operations.
The Company has, and will continue to have until it raises sufficient funds,
limited capital with which to commence operational activities. At the present
time, the Company has not commenced operations or any activities beyond the
planning stage; furthermore, the Company is unable to predict at the present
time when its initial startup stage will be complete and it will be able to
commence any operational activities.
The Company has incurred, and will continue to incur, expenses relating to its
operations. Specifically, as long as the Company is required to file reports
under the Exchange Act, the Company will continue to incur accounting and legal
fees relating to its filings. The Company enjoys the non-exclusive use of
office, telecommunication and incidental supplies of stationary, provided by its
officers. As of the date of this report, the Company has not received any
revenues.
The Company must rely upon loans and investments from affiliates to pay its
operating expenses. There are no assurances that such affiliates will continue
to advance funds to the Company or will continue to invest in the Company's
securities. In the event the Company is unable to obtain additional capital or
funding it may be unable to pursue its business plan. During the twelve months
following the filing of this report, management intends to seek a listing of the
Company's common shares on the OTC-BB and conduct additional financings to raise
the capital necessary to pursue the Company's business plan. As of the date of
this report, the Company does not have any commitments for any such financings.
Once the Company completes its business planning and commences acquiring the
assets and resources necessary to execute its business plan, the Company will
need additional funding. No significant cash or funds are expected to be
required for the Company to complete its business planning.
The Company does not anticipate that it will have a significant change in the
number of employees until such time as it is able to begin its intended
operations.
8
<PAGE>
LIQUIDITY
At September 30, 2000, the Company had a working capital deficit of $15,025,
compared to a working capital deficit of $4,152 at May 31, 2000. The decrease in
working capital is the result of the net loss incurred during the four months
ended September 30, 2000, which was partially offset by the receipt of $10,450
received from the sale of common stock during the four-month period.
From inception through September 30, 2000, the Company received $10,949 from the
sale of its common stock.
Subsequent to September 30, 2000, management has provided the Company with
approximately $7,500. As of the date of this report, management has not
decided whether the funds will be accounted for as a loan or an equity
investment. It is anticipated that the Company will continue to rely upon
advances and/or equity investments from affiliates for the foreseeable future.
The following language is found in the notes of the Company's financial
statements at May 31, 2000 (such statements being included in a previously filed
Form 10-SB):
Note 2 - Development Stage Operations
The Company is in its start-up phase and has no operating history. The
Company's business is subject to most of the risks inherent in the
establishment of a new business enterprise. The likelihood of success
of the Company must be considered in light of the expenses,
difficulties, delays and unanticipated challenges encountered in
connection with the formation of a new business, raising operating and
development capital, and the marketing of a new product.
The Company presently does not have sufficient liquid assets to finance
its anticipated funding needs and obligations. If fundraising
activities are not successfully completed, the Company may not be able
to meet its obligations as they become due and, accordingly, may not be
able to continue its business operations as presently anticipated.
RESULTS OF OPERATIONS
During the nine months ended September 30, 2000, the Company recorded a loss of
$25,974, of which $22,438 was the result of legal and accounting expenses
incurred during the period. In part, the legal and accounting expenses relate to
the filing of the Company's Form 10-SB registration statement with the
Securities and Exchange Commission and the preparation of the Company's Form 211
for submission to the OTC-BB, both of which occurred during the period. In
addition, the fees relate to advisory services provided to the Company in
connection with the development of its business plan.
During the nine months ended September 30, 2000, net cash used by operations was
$6,834. During the period, the Company increased its accrued liabilities by
$12,738. Net cash from financing activities during the nine months ended
September 30, 2000 was $7,850.
9
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no legal proceedings against the Company and the Company is unaware of
such proceedings contemplated against it.
ITEM 2. CHANGES IN SECURITIES.
During July 2000, 78,500 shares of common stock were sold for $7,850. The
purchasers were family, friends and associates of the officers and directors of
the Company, or family, friends and associates of those persons. The sales were
made without general solicitation or advertising and during the 12 months prior
to the sales the Company had not sold more than $1,000,000 in securities
pursuant to Regulation D. No commissions paid in connection with the sales.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
On October 18, 2000, Daniel J. Baier, CPA, P.C. (the "Firm") resigned as the
Company's independent public accountant and terminated any continuing services.
The resignation was caused by concern that the Firm's independence relating to
future attest services may be impaired as a result of fees that had been unpaid
as of October 18, 2000. If left unpaid, the Firm may have been considered to
have accepted a contingent fee arrangement that neither the Firm nor the Company
had intended.
The Company is sensitive to the concern of the auditor and has reluctantly
acknowledged the resignation. Further, the Company is attempting to make payment
of all fees owed.
Prior to the resignation of the Firm, the Company did not consult any other
accountant regarding any of the matters identified in Item 304(a)(2) of
Regulation S-B.
Daniel J. Baier, CPA, P.C. audited the Company's financial statements for the
period from inception (November 17, 1999) to May 31, 2000. The Firm's report for
the period did not contain an adverse opinion or a disclaimer of opinion, nor
was the report qualified or modified as to uncertainty, audit scope or
accounting principles except for an explanatory paragraph stating that the
Company is in its start-up phase, has no operating history and does not have
sufficient liquid assets to finance its anticipated funding needs and
obligations. In addition, the explanatory paragraph states that if the Company
is not successful in raising additional funds it may not be able to meet its
obligations as they become due and the Company may not be able to continue its
business operations. During the period of the engagement of the Firm there were
10
<PAGE>
no disagreements on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of the Firm would have caused such firm to make
reference to the subject matter of the disagreements in connection with its
reports on the Company's financial statements. In addition, there were no such
events as described under Item 304 of Regulation S-B during the period from
inception (November 17, 1999) to May 31, 2000 and the subsequent interim periods
through October 18, 2000.
On November 10, 2000, the Company engaged Wiener, Goodman & Company, P.C. of
Eatontown, New Jersey as its new independent public accountant. Prior to the
engagement of Wiener, Goodman & Company, the Company did not consult that firm
regarding any of the matters identified in Item 304(a)(2) of Regulation S-B.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
<TABLE>
<CAPTION>
REGULATION CONSECUTIVE PAGE
S-B NUMBER EXHIBIT NUMBER
<S> <C> <C>
3.1 Certificate of Incorporation (1)<F1> N/A
3.2 Bylaws (1)<F1> N/A
16 Letter re: change in certifying accountant 13
27 Financial Data Schedule 14
---------------
<FN>
(1)<F1> Incorporated by reference to the Exhibits previously filed
with the Company's Form 10-SB filed with the Securities and
Exchange Commission on June 13, 2000.
</FN>
</TABLE>
(b) The following reports on Form 8-K were filed during the last quarter of the
period covered by this report:
None.
11
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EAST COAST AIRLINES, INC.
Dated: November 20, 2000 By: /s/Robert J. Salluzzo
-------------------------------------
Robert J. Salluzzo, President
(Principal Financial and Chief
Accounting Officer)
12
