UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the Fiscal Year Ended October 31, 1996
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from____________________to___________________
Commission File Number 33-9218
AIR BROOK AIRPORT EXPRESS, INC.
(Exact name of Registrant as specified in its Charter)
DELAWARE 22-2742564
(State of incorporation) (I.R.S. Employer Identification No.)
115 WEST PASSAIC STREET, ROCHELLE PARK, NEW JERSEY 07662
(Address of principal executive offices) (Zip Code)
(201) 843-6100
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
SECURITIES EXCHANGE ACT OF 1934:
Title of Each Class
-------------------
Common stock $.0001 par value
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B 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-KSB or any amendment to
this Form 10-KSB YES |X| NO |_|
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. YES |X| NO |_|
The aggregate market value of the voting stock held by non-affiliates of the
Registrant at October 31, 1996 was approximately $62,500.
The number of shares of Registrant's Common Stock outstanding on October 31,
1996 was 2,014,500.
Revenue for most recent fiscal year was $81,296.
<PAGE>
AIR BROOK AIRPORT EXPRESS, INC.
INDEX
PART I
Item 1. Business 1-2
Item 2. Properties 2
Item 3. Legal Proceedings 2
Item 4. Submission of Matters to a Vote of Security Holders 2
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 3
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations 4
Item 7. Consolidated Financial Statements 5
PART III
Item 9. Directors and Executive Officers of the Registrant 6
Item 10. Executive Compensation 6
Item 11. Security Ownership of Certain Beneficial Owners and Management 6-7
Item 12. Certain Relationships and Related Transactions 7-8
PART IV
Item 13 Exhibits, Financial Statement Schedules and Reports on Form 8K 9
<PAGE>
Part I
Item 1. Business
The Registrant, Air Brook Airport Express, Inc. (the "Company"), through its
subsidiary, A.B. Park and Fly Inc. ("Abex"), receives fees related to two
airport ground transportation terminals ("Satellite Terminals"). One Satellite
Terminal is located in the Village of Ridgewood, New Jersey and the second is
located in the Borough of Montvale, New Jersey. The related bus service is
provided directly to and from Newark International Airport.
On February 4, 1991, Abex transferred all of the operating activities of its
Ridgewood Satellite Terminal to an affiliate, Air Brook Limousine, Inc. ("Air
Limo"). On July 1, 1991 Abex transferred all of its transportation equipment to
Air Limo. The majority stockholder of Air Limo is also the majority stockholder
and President of the Company. Air Limo, in return, agreed to pay Abex a fee
equal to ten percent (10%) of the gross collections of such Satellite Terminal.
During May, 1993, Air Limo, through a license agreement with the New Jersey
Highway Authority (the "Authority"), opened a second Satellite Terminal located
in the Borough of Montvale. The license agreement included a lease agreement
between Air Limo and the Authority for a period of three years from February 1,
1993 to January 31, 1996. The lease agreement has been continued on a month to
month basis. As consideration for the use of the Satellite Terminal, Air Limo
pays the Authority twelve and one half percent (12 1/2%) of the gross sales.
Abex receives from Air Limo a three percent (3%) fee of the gross collections
from this site.
The Satellite Terminals
Ridgewood
The Satellite Terminal is located on New Jersey Route 17, approximately 35 miles
north of Newark Airport. The Satellite Terminal grounds include parking for
approximately 99 cars as well as a 600 square foot climate controlled ticket
office and waiting area. The Satellite Terminal operates on a 7 day a week, 20
hours per day, basis and provides direct bus service to and from Newark
International Airport every 30 minutes in the most active pick up periods during
the week and hourly in other periods and on weekends.
Montvale
The second Satellite Terminal is located on the Garden State Parkway at the
Montvale Rest Area. The Terminal is located in the Parkway's Transportation
Center, which is also occupied by Airline Ticket Counters and Tourist
Information. The Montvale Satellite Terminal is open 20 hours per day, 7 days a
week, and provides transportation to and from Newark International Airport.
-1-
<PAGE>
Item 1. Business (Cont'd)
The Satellite Terminals (Cont'd)
Competition
Air Limo primarily competes against private limousine services and other forms
of public transportation to and from Newark International Airport for passengers
in and around Bergen County, New Jersey who might otherwise use their own means
of transportation to reach and return from the airport.
Employees
Currently, the Registrant and its subsidiary Abex have no employees since all
the operations were transferred to Air Limo on February 4, 1991.
Item 2. Properties
As of October 31, 1996, the Registrant maintained its principal executive
offices at 115 West Passaic Street, Rochelle Park, New Jersey, on a rent free
basis pursuant to a verbal agreement with Donald M. Petroski, the Registrant's
President and principal shareholder.
Abex entered into a lease agreement during September 1988 with the village of
Ridgewood, N.J, for space necessary for the Satellite Terminal located in
Ridgewood. The lease was for an initial term of 15 months with four renewal
periods of one year each. Abex is currently leasing such Satellite Terminal on a
month to month basis.
Item 3. Legal Proceedings
As of February, 1995 Abex was named as a defendant in the matter of Super Fuel
Oil Company vs. Abex, et al. In this matter, the Plaintiff claimed that it sold
and delivered diesel fuel oil to several of the Defendants, including Abex,
between 1981 and 1992. Plaintiff claimed it was entitled to $130,000 plus
interest, costs and attorney fees. While Abex admitted that it purchased diesel
fuel oil at certain times, it denied that it made many of the purchases claimed
by the Plaintiff. Abex further asserted that it did not receive credit for many
of the payments made to the Plaintiff. In addition, Abex asserted that
Plaintiff's action was time barred by the expiration of the applicable statute
of limitations. A judgment was entered in favor of the Plaintiff in March, 1996
in the amount of $88,262 inclusive of legal fees.
As of October 31, 1995 Abex had included in its accounts payable an accrual of
$93,346. In April 1996, this judgment was satisfied by Air Limo on behalf of
Abex. Accordingly, Abex recorded a gain on the settlement amounting to $5,084.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the last quarter
of the period covered by this report.
-2-
<PAGE>
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
(a) As of May 1, 1999, the Registrant's Common Stock is traded in the
over-the-counter market. The range of high and low bid quotations, as
reported by the National Quotation Bureau Incorporated, for the
Registrant's securities through the three months ended October 31, 1996,
is as follows:
Common Stock
Bid
-------------
High Low
Year Ended October 31, 1996
Three months ended January 31, 1996 1/16 1/32
Three months ended April 30, 1996 1/16 1/32
Three months ended July 31, 1996 1/16 1/16
Three months ended October 31, 1996 1/16 1/16
Year Ended October 31, 1995
Three months ended January 31, 1995 13/16 1/2
Three months ended April 30, 1995 5/8 1/2
Three months ended July 31, 1995 1/2 1/2
Three months ended October 31, 1995 15/32 1/2
(b) As of October 31, 1996, the approximate number of holders of record of the
Registrant's Common Stock was 130.
(c) The Registrant has never paid cash dividends on its Common Stock. Payment
of dividends is within the sole discretion of the Registrant's Board of
Directors and depends, among other factors, on earnings, capital
requirements and the operating and financial condition of the Registrant.
-3-
<PAGE>
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Pursuant to an agreement signed on February 4, 1991, the Company transferred all
of its operating activities for its Satellite Terminal located in Ridgewood, New
Jersey and, on July 1, 1991, its transportation equipment to Air Limo. Air Limo
in return agreed to pay the Company a fee equal to ten percent (10%) of gross
collections from such Satellite terminal.
On May 1, 1993, the Company entered into an agreement with Air Limo in which Air
Limo agreed to open and operate a second Satellite Terminal located in the
borough of Montvale, New Jersey. Pursuant to the agreement, Air Limo bears all
costs of opening and operating such Satellite Terminal and pays the Company
three percent (3%) of Air Limo's gross receipts from such Satellite Terminal.
On August 10, 1993, the Company entered into an agreement with Air Limo which
stipulates that Air Limo will fund the Company's operations for as long as Air
Limo deems necessary and as long as Air Limo is financially able. Such advances
are due on demand. Air Limo may terminate such agreement at any time at its own
discretion.
In conjunction with these agreements, the Registrant has generated revenue of
$81,296 and $71,927 for the years ended October 31, 1996 and 1995, respectively.
For the years ended October 31, 1996 and 1995, the Registrant's expenses
amounted to $(1,431), including a nonrecurring $5,084 gain on settlement, and
$6,533, respectively. The Registrant's expenses are administrative in nature
since all of the operational expenses are borne by the affiliate based on the
agreements discussed above. General and administrative expenses decreased to
$3,653 for the year ended October 31, 1996 from $6,355 for the year ended
October 31, 1995. This decrease is primarily as a result of a reduction in
professional fees.
As a result of assigning its operations to an affiliate, the Registrant has been
able to generate net income of $82,727 and $65,394, respectively, for the years
ended October 31, 1996 and 1995.
Liquidity and Capital Resources
The Company's consolidated financial statements have been prepared assuming that
it will continue as a going concern. As shown in the consolidated financial
statements, at October 31, 1996 the Company had a working capital deficiency of
$1,233,128 as well as an accumulated deficit of $1,435,615. The Company obtains
its entire financial support from an affiliate which is under the common control
of the Company's majority stockholder. These factors, among other things, raise
substantial doubt about its ability to continue as a going concern. The
consolidated financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts or
classification of liabilities that might be necessary should the Company be
unable to continue in operation.
The Company was named as a defendant in a lawsuit brought by a creditor related
to amounts owed for the purchase of fuel. The creditor claimed that it sold and
delivered diesel fuel oil to the Company and its affiliates from 1981 to 1992.
Such creditor claimed it was owed $130,000 plus interest, costs and attorney
fees. While the Company admitted that it purchased diesel fuel oil at certain
times, it denied it made many of the purchases claimed. The Company further
asserted that it did not receive credit for many of the payments made to such
creditor. As of October 31, 1995 the Company had recorded a provision of $93,346
related to this uncertainty. During December 1995 such lawsuit was settled
whereby Abex was liable for a total of $88,262, inclusive of legal fees. By
April 1996 such judgment was satisfied by Air Limo on behalf of Abex.
Accordingly, Abex recorded a gain in such settlement amounting to $5,084.
-4-
<PAGE>
Item 7. Consolidated Financial Statements.
Independent Auditors' Report F-1
Consolidated balance sheet
October 31, 1996 F-2
Consolidated statements of income
For the years ended October 31, 1996 and 1995 F-3
Consolidated statements of stockholders' deficit
For the years ended October 31, 1996 and 1995 F-4
Consolidated statements of cash flows F-5
For the years ended October 31, 1996 and 1995
Notes to consolidated financial statements F-6 - F-10
-5-
<PAGE>
[LETTERHEAD OF ROBERT G. JEFFREY]
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
Air Brook Airport Express, Inc. and Subsidiary
I have audited the accompanying consolidated balance sheet of Air Brook Airport
Express, Inc. and its wholly owned subsidiary ("the Company") as of October 31,
1996, and the related consolidated statements of income, stockholders' deficit,
and cash flows for the years ended October 31, 1996 and 1995. These consolidated
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these consolidated financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, based on my audit, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of Air
Brook Airport Express, Inc. and its wholly owned subsidiary as of October 31,
1996 and the results of their operations and cash flows for the years ended
October 31, 1996 and 1995 in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in the accompanying
consolidated financial statements, at October 31, 1996, the Company had a
working capital deficiency of $1,233,128 as well as an accumulated deficit of
$1,435,615. As more fully described in Notes 1 and 6, the Company obtains its
entire financial support from an affiliate which is under the common control of
the Company's majority stockholder. These factors, among other things, also
discussed in Notes 1 and 6 to the consolidated financial statements, raise
substantial doubt about its ability to continue as a going concern. The
consolidated financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts or
classification of liabilities that might be necessary should the Company be
unable to continue in operation.
Wayne, New Jersey
July 22, 1999
F1
<PAGE>
AIR BROOK AIRPORT EXPRESS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
OCTOBER 31, 1996
ASSETS
Current assets:
Cash $ 313
-----------
Total current assets 313
Deposits 650
-----------
Total assets $ 963
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 314,913
Accrued expenses 4,951
Due to affiliate 913,577
-----------
Total current liabilities 1,233,441
-----------
Stockholders' deficit:
Common stock, $.0001 par value: 98,800,000 shares
authorized; 2,014,500 issued and outstanding 201
Preferred stock, $.0001 par value:
1,200,000 shares authorized; none issued --
Additional paid-in capital 202,936
Accumulated deficit (1,435,615)
-----------
Total stockholders' deficit (1,232,478)
-----------
Total liabilities and stockholders' deficit $ 963
===========
The accompanying notes and accountant's audit report are an
integral part of these financial statements.
F2
<PAGE>
AIR BROOK AIRPORT EXPRESS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED OCTOBER 31
1996 1995
----------- -----------
Revenue $ 81,296 $ 71,927
Expense:
General, administrative and operating (1431) 6,533
----------- -----------
Total expenses (1431) 6,533
----------- -----------
Net income $ 82,727 $ 65,394
=========== ===========
Income per common equivalent share:
Net income $ 04 $ .03
=========== ===========
Weighted average number of shares outstanding:
Primary 2,014,500 2,014,500
=========== ===========
The accompanying notes and accountant's audit report are an
integral part of these financial statements.
F3
<PAGE>
AIR BROOK AIRPORT EXPRESS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED OCTOBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
Common Stock Additional Total
------------------------- Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Deficit
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balances, October 31, 1994
as Previously reported 2,014,500 $ 201 $ 202,936 $(1,624,169) $(1,421,032)
Reduction of accounts
payable balance 40,433 40,433
----------- ----------- ----------- ----------- -----------
Balances, as corrected 2,014,500 201 $ 202,936 (1,583,736) $(1,380,599)
Net income, for the year
ended October 31, 1995 65,394 65,394
----------- ----------- ----------- ----------- -----------
Balances, October 31, 1995 2,014,500 201 202,936 (1,518,342) (1,315,205)
Net income, for the year
ended October 31, 1996 82,727 82,727
----------- ----------- ----------- ----------- -----------
Balances, October 31, 1996 2,014,500 $ 201 $ 202,936 $(1,435,615) $(1,232,478)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes and accountant's audit report are an
integral part of these financial statements.
F4
<PAGE>
AIR BROOK AIRPORT EXPRESS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED OCTOBER 31
1996 1995
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 82,727 $ 65,394
Adjustments to reconcile net income to net cash
provided by operating activities:
Earnings from settlement at less than recorded
liability (5,084) --
Changes in current liabilities:
Increase (decrease) in amount due to affiliate 11,066 (31,415)
Decrease in accounts payable (88,262) (35,716)
Increase (decrease) in accrued expenses (366) 1,817
-------- --------
Net cash flows provided by operating activities 81 80
CASH FLOWS FROM INVESTING ACTIVITIES -- --
CASH FLOWS FROM FINANCING ACTIVITIES -- --
-------- --------
Increase in cash 81 80
Cash, beginning of period 232 152
-------- --------
Cash, end of period $ 313 $ 232
======== ========
The accompanying notes and accountant's audit report are an
integral part of these financial statements.
F5
<PAGE>
AIR BROOK AIRPORT EXPRESS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996
NOTE 1 ORGANIZATION
Air Brook Airport Express, Inc. ("the Company") was incorporated in the
State of Delaware on April 3, 1986 under the name Bay Head Ventures, Inc.
The Company changed to the present name on December 8, 1988. The Company
was formed primarily to investigate potential merger candidates, asset
purchases and other possible business acquisitions.
On July 29, 1988 the Company acquired 100% of the issued and outstanding
shares of A.B. Park & Fly, Inc. ("Abex"), by issuing 1,010,000 shares of
common stock to the sole shareholder of Abex. Abex is a New Jersey
Corporation incorporated on December 9, 1987. Until 1991, it provided
direct bus service to and from a local airport.
At October 31, 1996 and 1995, approximately twenty seven percent of the
Company's outstanding common stock was owned by a publicly held Company.
BUSINESS
The Company continues to seek business acquisitions, but its primary
activities are the realization of commissions from the operation by an
affiliate of two airport ground transportation terminals in Bergen County.
These terminal operations transport passengers to and from Newark Airport.
The Company is dependent on this affiliate for its revenue and for the
financing of day to day operations. These arrangements are described in
Notes 5 and 8.
NOTE 2 GOING CONCERN UNCERTAINTY
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As shown in
the consolidated financial statements, the Company had a material working
capital deficiency and an accumulated deficit at October 31, 1996.
Additionally, the Company receives significant financial support and
generates all of its revenue from an affiliated entity, Air Brook
Limousine, Inc. ("Air Limo"), pursuant to agreements dated February 4,
1991 and May 1, 1993 (See Note 6). These factors raise substantial doubt
about the ability of the Company to continue as a going concern. The
consolidated financial statements do not include adjustments relating to
the recoverability of assets and classification of liabilities that might
be necessary should the Company be unable to continue in operation with
its affiliate.
The Company's present plans, the realization of which cannot be assured,
to overcome these difficulties include but are not limited to the
continuing effort to investigate business acquisition and merger
opportunities.
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Consolidated Statements
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary, Abex. All significant intercompany
balances and transactions have been eliminated in consolidation.
F6
<PAGE>
AIR BROOK AIRPORT EXPRESS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
b. Cash
For purposes of the Statement of Cash Flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
c. Net Income Per Share
Net income per share is based upon the weighted average number of shares
outstanding during the respective periods.
d. Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes",
which requires the use of the "liability method". Accordingly, deferred
tax liabilities and assets are determined based on differences between the
financial statement and tax bases of assets and liabilities, using enacted
tax rates in effect for the year in which the differences are expected to
reverse. Current income taxes are based on the income that is currently
taxable.
e. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
F7
<PAGE>
NOTE 4 CORRECTION OF AMOUNTS PREVIOUSLY REPORTED
The October 31, 1994 balance of accumulated deficit has been restated to
reflect a $40,433 correction of the accounts payable balance reported on
the balance sheet of October 31, 1994.
The consolidated statement of income for the year ended October 31, 1995
has also been restated to correct a provision that had been made for
accrued expenses. General administrative and operating expenses have been
reduced by $21,529, and net income has been increased by that amount. Net
income per share has been increased from $.02 to $.03 per share.
NOTE 5 RELATED PARTY TRANSACTIONS
Pursuant to two 1991 agreements, Abex transferred all of its
transportation equipment and the operating activities of a ground
transportation facility in Ridgewood, New Jersey to its affiliate, Air
Limo. Air Limo in return has agreed to pay Abex a fee equal to ten percent
(10%) of gross collections from such facility.
On May 1, 1993, Abex entered into an agreement with Air Limo concerning a
second Satellite Terminal operated by Air Limo in the Borough of Montvale.
Pursuant to this agreement, Air Limo bears all costs of operating the
facility and pays Abex three percent (3%) of the gross receipts generated
by the facility.
Air Limo has stated its intention to advance funds on behalf of the
Company and its subsidiary as long as Air Limo deems this necessary and as
long as Air Limo is financially able to do so. Such advances are due on
demand and Air Limo may terminate this arrangement at any time.
The Company's principal offices are in a building owned by its president.
The Company occupies these offices on a month to month basis, free of
charge.
F8
<PAGE>
AIR BROOK AIRPORT EXPRESS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996
NOTE 6 DUE TO AFFILIATE
As of October 31, 1996, there was a balance due to Air Limo of $913,577,
the net amount of advances made by Air Limo partially offset by earnings
on the contracts for the operation of the two terminals. This balance
bears no interest and is payable on demand.
NOTE 7 INCOME TAXES
The Company and its subsidiary have each experienced significant net
operating losses in previous years. These losses can be deducted as net
operating losses in any year in which the companies have taxable income.
Under Statement of Financial Accounting Standards No. 109, recognition of
deferred tax assets is permitted unless it is more likely than not that
the assets will not be realized. The Company has not recognized any
deferred tax assets.
NOTE 8 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
There were no noncash investing and financing activities during the years
ended October 31, 1996 and 1995. There was no cash paid for interest or
taxes during these years.
F9
<PAGE>
AIR BROOK AIRPORT EXPRESS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996
NOTE 9 COMMITMENTS AND CONTINGENCIES
a. Litigation
Abex was a defendant in a lawsuit involving fuel oil deliveries which was
settled in April, 1996. While Abex admitted that it purchased diesel fuel
oil at certain times, it denied that it made many of the purchases claimed
by the Plaintiff. Abex further asserted that it did not receive credit for
many of the payments made to the Plaintiff. A judgment was entered in
favor of the Plaintiff in March, 1996 in the amount of $88,262, inclusive
of legal fees. At October 31, 1995 Abex had included in its accounts
payable an accrual of $93,346. In April, 1996 the judgment was satisfied
by Air Limo on behalf of Abex. Accordingly, Abex recorded a gain on such
settlement amounting to $5,084.
b. Dependence on Affiliate
Air Limo advances funds on behalf of the Company and its subsidiary to
finance day to day operations. This arrangement could be terminated at any
time by Air Limo, and these advances are due on demand. In addition, all
Company revenue comes from commissions on revenue of the two facilities
operated by Air Limo.
c. Dependence on Lease Terms
The Ridgewood terminal, which is operated by Air Limo, is leased by Abex
on a month to month basis from the village of Ridgewood, New Jersey. This
facility produced 90% of Company revenue during the year ended October 31,
1996. Termination of this lease would eliminate this revenue stream.
The lease term of the Montvale facility ended in January, 1996. Since
then, it has been leased by Air Limo on a month to month basis.
NOTE 10 SUBSEQUENT EVENTS
a. Issuance of Common Stock in Satisfaction of Past Due Liabilities
On February 8, 1995, the Company committed to issue 136,000 shares of its
common stock to settle a $204,913 past due account payable. On April 11,
1997, the Company agreed to issue 277,422 shares of its common stock to
settle a $17,339 past due account payable. Neither of these blocks of
stock has been issued, and the unpaid bills are included as liabilities.
b. Disputed Liability
The Company has disputed a $110,000 bill for professional services, which
is included in current liabilities. This bill was settled in July, 1999
for $7,500.
F10
<PAGE>
Item 9. Directors and Executive Officers of the Registrant
Name Position Term-Served Since
- - ---- -------- -----------------
Donald M. Petroski President, Chief July, 1988
Financial Officer,
Director
Jeffrey Petroski Secretary August, 1989
Donald M. Petroski (58 years old) has been President, Chief Financial Officer
and a Director of the Registrant since July 1988 when the Registrant acquired
all of the outstanding stock of Abex; Mr. Petroski was the sole shareholder of
Abex. Mr. Petroski has been involved in the ground transportation industry for
over twenty five (25) years, beginning in 1971 when he founded Air Limo of which
he remains President.
Jeffrey Petroski (34 years old) has been Secretary of the Registrant since
August 1989. A graduate of Rutgers University, Mr. Petroski has been involved in
the transportation industry for 12 years. Mr. Petroski is the son of Donald
Petroski and also a Vice President of Air Limo, an affiliate of the Registrant.
The above officers and directors shall serve for a term of one year or until
their successors have been elected.
Item 10. Executive Compensation
For the year ended October 31, 1996 no executive officers or directors of the
Registrant were paid or accrued remuneration in excess of $60,000.
No compensation has been or will be paid on account of services rendered by a
director in such capacity other than for the reasonable expenses incurred in
connection with the Registrant's business.
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners:
Set forth below is certain information concerning persons/entities who are
known by the Registrant to have owned beneficially more than 5% of the
Registrant's Common Stock, $.0001 par value, on October 31, 1996:
Amount and Nature
Name and Address of Beneficial Percent
of Beneficial Owner Ownership of Class(l)
- - ------------------- --------- -----------
Donald M. Petroski (2) 1,011,875 50.2%
P.O. Box 123 President
115 West Passaic Street
Rochelle Park, NJ
New America Group, Inc. 550,500 27.3%
513 Main Avenue
Bay Head, NJ
Rosary De Filippis Tobia 50,000 2.5%
513 Main Avenue
Bay Head, NJ (3).
-6-
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management (Cont'd)
(1) Based upon 2,014,500 shares of Common Stock outstanding as of October 31,
1996.
(2) Donald M. Petroski's shares include 1,010,000 shares owned by Mr.
Petroski, l,750 shares owned by his son, Jeffrey Petroski, and 125 shares
owned by his wife, Barbara Petroski.
(3) Does not include an additional 65,000 shares held by related parties, over
which Ms. Tobia disclaims any beneficial ownership (except for that which
may nevertheless be attributed by operation of law despite such
disclaimer).
(b) Security Ownership of Management:
Set forth below is certain information concerning the number and
percentage of shares of Common Stock of the Registrant owned of record and
beneficially by each officer and director of the Registrant and by all
officers and directors as a group as of October 31, 1996.
Name and Address Amount Percent of
of Beneficial of Beneficial Class
Title of Class Owner Ownership (1)
- - -------------- ----- --------- ---
Common Stock Donald M. Petroski 1,010,000 50.1%
$.0001 par value President, Director
Common Stock Jeffrey Petroski 1,750 0.1%
$.0001 par value Secretary --------- -----
Total 1,011,750 50.2%
========= =====
(1) Based upon 2,014,500 shares of Common Stock outstanding as of October 31,
1996.
Item 12. Certain Relationships and Related Transactions
The Company occupies its principal executive offices on a month to month basis,
free of charge, from its President.
Pursuant to an agreement signed on February 4, 1991, Abex transferred all of its
operating activities for its Ridgewood Satellite Terminal to Air Limo and, on
July 1, 1991, transferred its transportation equipment to Air Limo. Air Limo in
return has agreed to pay Abex a fee equal to ten percent (10%) of gross
collections of such Satellite Terminal.
On May 1, 1993, Abex entered into an agreement with Air Limo whereby Air Limo
opened and operated a second Satellite Terminal in the Borough of Montvale on
behalf of Abex. Pursuant to the agreement, Air Limo bears all costs of opening
and operating such Satellite Terminal and pays Abex three percent (3%) of Air
Limo's gross receipts from such Satellite Terminal.
On August 10, 1993, Air Limo agreed to advance funds on behalf of the Company
and its subsidiary as long as Air Limo deems necessary and as long as Air Limo
is financially able. Such advances are due on demand. Air Limo may terminate
this arrangement at any time at its own discretion.
-7-
<PAGE>
Item 12. Certain Relationships and Related Transactions (Cont'd)
In November 1988, Abex executed an agreement to acquire Central Transit Lines,
Inc., ("CTL") by issuance of additional shares of common stock in exchange for
100% of the issued and outstanding common shares of CTL. CTL is a wholly owned
subsidiary of Air Limo. The agreement provided for a transition period during
which several contingencies had to be met before the acquisition became
effective. The transaction was terminated in 1989. The agreement stipulated that
if the acquisition was not consummated, Abex would be responsible to CTL for all
reasonable costs associated with such transition period. Abex is indebted to CTL
in the amount of $231,272 at October 31, 1996 and 1995 relating to costs
associated with this transaction.
In addition to the above, as of October 31, 1996 and 1995 the Company and its
subsidiary were obligated to Air Limo for advances in the amount of $682,305 and
$671,239, respectively. These advances were made directly to or on behalf of the
Company and Abex to fund operations and liquidate liabilities. Such advances
bear no interest and are payable on demand.
-8-
<PAGE>
Part IV
Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8K
All other schedules required by Regulation S-B are omitted because they are not
applicable or the required information is included in the financial statements
or the notes thereto.
-9-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
AIR BROOK AIRPORT EXPRESS, INC.,
AND SUBSIDIARY (Registrant)
Dated: July 22, 1999 By:/Donald M. Petroski
--------------------------------------------
DONALD M. PETROSKI
President
By:/Donald M. Petroski
--------------------------------------------
DONALD M. PETROSKI
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
July 22, 1999 /Donald M. Petroski
--------------------------------------------
Donald M. Petroski, President,
Chief Financial Officer and Director
July 22, 1999 /Jeffrey Petroski
--------------------------------------------
Jeffrey Petroski, Secretary
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<CASH> 313
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 313
<PP&E> 650
<DEPRECIATION> 0
<TOTAL-ASSETS> 963
<CURRENT-LIABILITIES> 1,233,441
<BONDS> 0
0
0
<COMMON> (1,232,478)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 963
<SALES> 81,296
<TOTAL-REVENUES> 81,296
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (1,431)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 82,727
<INCOME-TAX> 0
<INCOME-CONTINUING> 82,727
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 82,727
<EPS-BASIC> 0.04
<EPS-DILUTED> 0.04
</TABLE>
