SECURITIES AND EXCHANGE COMMISSION
                                              WASHINGTON, D.C. 20549

                                                    FORM 10-KSB

[x]     Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
 Act of 1934 [Fee Required]

For the fiscal year ended December 31, 2001

[ ]     Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]

For the transition period from                          to

Commission file number 333-46672
CIK 0001123580

                                               ALBION AVIATION, INC.
                           (Exact name of small business issuer in its charter)

                         Delaware                                   33-0619254
(State or other jurisdiction of incorporation or organization)  (I.R.S. Employer
                                                        Identification No.)

24351 Pasto Road Suite B, Dana Point, California               92629

           (Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code:               (949) 489-2400
                                                             -------------------

Securities registered pursuant to Section 12(b) of the Act:              None
                                                             ----------------

Securities registered pursuant to Section 12(g) of the Act:  None
                                                             -----------------

           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

           Check if there is no disclosure  of delinquent  filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
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 ]

           State issuer's revenues for its most recent fiscal year: None

           The aggregate market value of the voting stock held by non-affiliates
of the registrant as of December 31, 2001 was not determinable  since the Common
Stock was not traded.

           The number of shares  outstanding  of the issuer's  classes of Common
Stock as of December 31, 2001:

Common Stock, $.001 Par Value - 1,018,000 Shares

Transitional Small Business Disclosure Format           YES            NO   X

                                    DOCUMENTS INCORPORATED BY REFERENCE:  NONE

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILEED PURSUANT TO SECTION
 15(D) OF THE EXCHANGE ACT BY NON-REPORTING ISSUERS: No annual report or proxy
statement was sent to security holders.
<PAGE>



                                                      PART I

Item 1.   DESCRIPTION OF BUSINESS

General

 Albion  was  incorporated  in April  1994 in order to  engage  in the  aviation
business.  Management  investigated  the  industry  and decided to engage in the
charter airline business in particular,  and management also evaluated what kind
of aircraft would be most suitable. Beginning in 1987 we started looking for the
right  aircraft,  and  finally in October  1998 we acquired by purchase a Cessna
421-B to use in proposed charter operations. In January 2002 we sold the Cessna.
Due to the downturn in travel and charter  activity,  we decided at this time it
would be less risky to utilize a smaller aircraft. In December 2001 we purchased
a four-seater  Mooney aircraft which we will utilize for charter.  Mr. Hand, our
president,  guaranteed  the loan.  All  operations  are  conducted  by  Svetlana
Aviation,  and Albion functions as a holding company.  However, for simplicity's
sake we refer in this prospectus to the combined enterprise as "Albion."

 Albion's  business plan is to offer  aircraft  charter  service based at Orange
County  Airport in Southern  California.  The aircraft is owned by a subsidiary,
"Svetlana  Aviation".  We plan to obtain our  operating  permit and  conduct all
operations in the name of this subsidiary.

Charter Services

 Orange  County  Airport  served  more  than  7.4  million  passengers  in 1998,
according to airport management,  and is the principal airport for Orange County
with more than 3 million population.  Orange County enjoys a growing economy and
is  also  a  popular  tourist  destination  featuring  Disneyland  and  some  of
California's best beaches.  We think that there is a growing market for aircraft
charter  services in Orange  County.  The area is affluent.  Pursuant to airport
rules the number of commercial and commuter flights is limited. Growing consumer
dissatisfaction  with  airline  service,  we  think,  will  cause  more and more
travelers to consider charter service.  The cost of charter aircraft for flights
of one to two hour  flights can be  equivalent  to the cost of first or business
class tickets, but the convenience and prestige of charter services can outweigh
the cost factor.  Charter can be especially  attractive  for business  travelers
with a busy schedule.

Operations

 More detail on the  operations  aspects of a charter  airline is provided under
the caption "Plan of  Operations."  You should read that section if you have not
already.  We plan to commence service  approximately six months after receipt of
proceeds of this offering.

 In  brief,  aircraft  charter  operations  have to be  carefully  managed.  The
aircraft  does not  generate  any  revenue  unless it is flying  for hire.  Most
charter airlines don't engage in much  advertising,  but rely on charter brokers
or customer referrals.  A potential customer usually requests information from a
charter broker on price,  availability and types of aircraft,  when the need for
services arises. Aircraft brokers receive a negotiable percentage of the charter
fee.  Fees are  based on  hourly  flight  time,  usually  with a one or two hour
minimum.

 Fixed expenses such as debt service, insurance, tiedown rental and some minimum
level of maintenance are incurred regardless of the hours flown.  However,  most
of the  expenses  are incurred  only when the  aircraft is being  operated,  and
include fuel and oil, crew expenses,  maintenance  and engine  reserves.  Engine
life is limited by FAA rules to fixed hours of total  operation,  after which an
engine must be replaced or  overhauled.  Maintenance  expenses  can arise at any
time and although  difficult to predict are generally  consistent with each type
of  aircraft.  With  each  hour of  operation  we are going to set aside a fixed
amount of cash for future engine  overhauls,  and another amount for maintenance
expenses.



                                                         2

<PAGE>



Government Regulation

 Before we can transport  passengers for hire we must obtain authorization under
Part  135  of  the  Federal  Aviation  Regulations.  Part  135  imposes  various
requirements relating to aircraft maintenance,  pilot training,  inspections and
maintenance of records,  supervision and  operations.  These rules have as their
purpose the safety of the flying public. If we don't follow all the requirements
of Part 135, the FAA will ground the aircraft.  The FAA is continually  striving
to  improve  aviation  safety,  and it will from  time to time  impose or modify
regulations or how they are interpreted.  Although the FAA can and does evaluate
the economic impact of changes in regulations,  it views safety as paramount and
the FAA could adopt or change  rules to the extent that it renders our  business
not economically feasible.

 The  aircraft  will be based at Orange  County,  where  there are strict  noise
limitations and a night curfew. Other airports can have similar restrictions. If
the  aircraft is operated  correctly  it will satisfy  those  requirements,  but
violation can bring fines or even the banishment of the violating  aircraft from
the affected airport.

 The  Department  of  Transportation  will need to be  satisfied  that Albion is
financially  able to carry on its business.  Generally  three month's  operating
expenses must be on hand. We believe our  financial  operating  plan exceeds DOT
requirements.

 We expect to begin the approval process with the FAA and DOT in 2002 and expect
that about six months and  $10,000 in  expenditures  will be  required  for this
process.

Competition

 In  general,  we will  compete  with other  modes of  transport  in a traveling
distance of 100 miles to 400 miles. For smaller distances,  automobile transport
is less  costly  and the time and  comfort  difference  is  minimal.  For  large
distances  jet travel is as or nearly as economical  and the time  difference is
greater.  Our main competition is commercial  scheduled  airline  carriers.  The
competition  advantage of charter  aircraft has in its ability to fly on demand,
on the customer's own schedule, with better comfort and prestige, and to be able
to fly to smaller airports where there is little or no scheduled service.

 Within the  charter  industry  itself we have five  competitors  known to us at
Orange County  Airport.  They all have more operating  history and may likely be
better  financed.   Charter  operations  compete  on  price,  level  of  service
availability, in increasing order or importance. We think by making our aircraft
available we will be able to acquire enough business.

Employees

 As is typical in the industry we will pay pilots and  maintenance  personnel on
any hourly basis. We think we can find personnel  without  difficulty,  but it's
possible that it will be increasingly  difficult to find  experienced  pilots if
commercial  airlines  continue to expand  hiring.  The rate of  compensation  is
subject to pilot  availability  and could increase to an amount we can't afford.
The two officers  serve without  compensation  at this time and will only devote
part time to the business until warranted by business.

Item 2.   DESCRIPTION OF PROPERTY

 It is not necessary  for us to have  dedicated  office space.  We are using the
office space of our president. Since sales will be effected through brokers, all
that is needed  is  telephone  availability  and a place to keep  records  and a
checkbook. The amount of space is minimal.


Item 3.   LEGAL PROCEEDINGS

 Not Applicable.

                                                         3

<PAGE>





Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 No matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of the fiscal year ended December 31, 2001.

                                                      PART II


Item 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 Our common  stock has never been traded.  As of December  31, 2001,  there were
approximately 112 record holders of common stock.

 There are no warrants or options  outstanding and no  registration  rights have
been granted.  At the present time all 1,000,000 shares outstanding are eligible
to be sold under Rule 144, subject to volume limitations  (10,000 shares each 90
days) by each individual who is an  "affiliate,"  which includes any director or
executive officer, or otherwise as defined under Rule 144.

         Albion has not paid any dividends on its common stock. Albion currently
intends to retain any earnings for use in its business,  and therefore  does not
anticipate paying cash dividends in the foreseeable future.


Item 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

             We have made a plan of  operations  for fiscal 2002.  Obtaining the
135 permit will cost  $10,000,  primarily for  consultants  to write manuals for
operating  procedures.  We plan to market  our  charter  services  primarily  to
charter  brokers  or via  the  internet.  Although  using  brokers  reduces  our
profitability,  its  more  cost  effective  than  employing  our  own  marketing
department,  and most charter operations rely on brokers.  The variable costs of
operation  include  fuel,  oil and crew  labor,  which will be paid  solely from
charter revenues.  Crew will be hired on an hourly basis, as needed when flights
commence. The hourly operating costs are widely understood to be as follows:

                  Crew 1 pilot                                              $ 40
                  Fuel - 10 gallons per hour at $2.50 per gallon              25
                  Oil - 1 quart per hour at $2.00 per quart                    2
                  Air frame and Avionics - Parts Reserve                      10
                  Engine Reserve (1 engines)                                  10


                  TOTAL                                                     $ 87

         The price of charter  flights are based upon hourly usage.  In Southern
California  the hourly  charter rate for the Aircraft is about  $200.00,  less a
brokerage commission of 10%. The resulting operating profit per hour is $113.00.
Since annual fixed costs are  estimated  to be $12,000 per year,  the  projected
break even point is 106 hours flown per year.

         The above assumptions are based upon current prices.  The most volatile
cost is fuel.  Fuel  prices are at a record high in 2002 but they could go still
higher.  If they do our  profitability  could be  adversely  affected.  We don't
intend to engage in hedging for fuel prices while we only operate one aircraft.

         Another  assumption we have made is on  maintenance  expenses.  We have
budgeted  $6,000 for  annual  maintenance.  However,  we can't  forecast  future
maintenance expenses.


                                                         4

<PAGE>



         Other factors can also adversely affect  operations.  There has been an
abundant  supply of pilots in the past.  However,  many airline  pilots are near
retirement  age and a pilot  shortage  could  develop as commuter  airlines hire
qualified pilots.  Mechanical problems can delay or ground flights.  Waiting for
parts or  maintenance  personnel  can  also  ground  the  aircraft.  Weather  is
generally  good in the our planned area of operations  but bad weather can delay
or cancel flights.  Also,  currently Orange County Airport is closed to takeoffs
and landings from 11:00 pm to 7:00 am. This could limit flights.

         The aircraft was acquired  December 2001 from an unrelated  party.  The
purchase  price was $45,000,  paid $4,500 in cash and the rest in debt financing
from Red River Bank. The loan is payable over 7 years in monthly installments of
$628, and the interest rate is 7.9%. Mr. Hand guaranteed the loan which financed
the  purchase of the  aircraft.  As of December  31, 2000 the amount owed on the
loan was $40,400.  In the event Albion  defaults on the loan,  Mr. Hand would be
personally  liable  for any  unpaid  balance,  and he might  have  the  right as
guarantor to take possession of or sell the aircraft.

         We  are a  development  stage  company  as  that  term  is  defined  in
paragraphs  8 and 9 of SFAS No. 7. Our  activities  to date have been limited to
selection and purchase of an aircraft, aircraft maintenance,  and development of
a business plan.  Our auditors have included an  explanatory  paragraph in their
report on our  financial  statements,  to the effect  that there is  substantial
doubt about  Albion's  ability to continue as a going  concern.  The factors for
this assessment  include our lack of operating history or current revenues,  the
nature of our business as a start up business,  management's  limited experience
and our limited funds Management believes that the funds raised by this offering
and funds  provided by the majority  shareholder  will be  sufficient  to ensure
viability of the enterprise for at least 18 months following  completion of this
offering. However, risks inherent in the business as discussed under the caption
"Risk Factors" may affect the outcome of Management's plans.

Item 7.  FINANCIAL STATEMENTS

            The consolidated  financial statements of the Company required to be
            included in Item 7 are set forth in the Financial Statements Index.

Item 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE

            Not Applicable.

                                                         5

<PAGE>



                                                     PART III

Item 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
            COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

            The member of the Board of  Directors of Albion serve until the next
annual meeting of stockholders,  or until his successors have been elected.  The
officer  serves at the pleasure of the Board of Directors.  The following is the
director and executive officer of Albion.

            Jehu Hand, age 45, has been President and Chief Financial Officer of
Albion  since  its  inception.  Mr.  Hand  has been  engaged  in  corporate  and
securities  law  practice  and has been a partner of the law firm of Hand & Hand
since 1992.  Hand & Hand  incorporated  as a law  corporation in May 1994.  From
January 1992 to December  1992 he was the Vice  President-Corporate  Counsel and
Secretary of Laser Medical  Technology,  Inc.,  which designs,  manufactures and
markets  dental  lasers and  endodontics  equipment.  He was a director of Laser
Medical from February 1992 to February 1993.  From January to October,  1992 Mr.
Hand was Of Counsel to the Law Firm of Lewis, D'Amato, Brisbois & Bisgaard. From
January  1991 to  January  1992 he was a  shareholder  of  McKittrick,  Jackson,
DeMarco & Peckenpaugh, a law corporation. From January to December 1990 he was a
partner of Day,  Campbell & Hand,  and was an associate of its  predecessor  law
firm from July 1986 to  December  1989.  From 1984 to June 1986 Mr.  Hand was an
associate attorney with Schwartz,  Kelm, Warren & Rubenstein in Columbus,  Ohio.
Jehu Hand received a J.D. from New York University School of Law and a B.A. from
Brigham Young University.  He is a registered principal (Series 7, 24 and 63) of
SoCal  Securities,  a  broker-dealer  and member of the National  Association of
Securities  Dealers,  Inc. SoCal Securities will not participate in the offering
of the common stock, does not make a market in the securities of any company and
will not make a market  in  Albion's  common  stock.  Mr.  Hand was  formerly  a
director and president of Las Vegas Airlines,  Inc., a Delaware corporation.  In
1998 Las Vegas Airlines purchased a controlling  interest in Las Vegas Airlines,
Inc., a Nevada corporation, engaged in Part 135 operations in Las Vegas. Shortly
after the acquisition Mr. Hand  discovered that  significant  liabilities of the
Nevada company had not been disclosed that its liabilities  greatly exceeded its
assets,  and that its  costs of doing  business  exceeded  market  price for its
flights and decided it was necessary to discontinue operations.  Accordingly, in
mid  December  1998 Las  Vegas  Airlines,  Inc.  notified  the FAA that it would
discontinue all flight operations effective immediately.  At this time the fleet
of leased planes was returned to the lessor,  and  receivables  were used to pay
obligations  to  employees.  Mr.  Hand  was  never  involved  in the  day to day
operations of the Nevada subsidiary.

            Kimberly  Peterson,  age 35,  has  been  corporate  secretary  since
October 2000. She is self employed as a legal secretary.  Prior to July 1999 she
was employed by Hand & Hand for more than five years.



                                                         6

<PAGE>



Item 10. EXECUTIVE COMPENSATION

            The  following  table sets forth the cash  compensation  of Albion's
executive officers and directors during each of the last three fiscal years. The
remuneration  described  in the  table  does not  include  the cost to Albion of
benefits  which may be  furnished  to the named  executive  officers,  including
premiums  for  health  insurance  and  other  benefits  provided  to the  listed
individual  that are  extended  in  connection  with  the  conduct  of  Albion's
business. The value of any benefits listed below cannot be precisely determined,
but the  executive  officers  named  below did not  receive  any  other  similar
compensation in the years set forth below.
<TABLE>
<CAPTION>


                                            Summary Compensation Table

                       ANNUAL COMPENSATION                                        LONG TERM COMPENSATION



    Name and                                                   Other Annual          Awards     Payouts         All
    Principal Position      Year     Salary         Bonus      Compensation                                   Other
                                                                              Restricted         Options/ LTIP
                                                                              Stock ($) SARs(#)Payouts ($)



<S>                        <C>               <C>             <C>              <C>     <C>       <C>        <C>     <C>
 Jehu Hand                 2001              $0              0                0       0         0          0       0
 President and CFO         2000               0              0                0       0         0          0
                           1999               0              0                0       0         0          0       0


</TABLE>

Item 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The  following  table  sets forth  information  relating  to the  beneficial
ownership of Albion  common stock as of March 31, 2002 by (I) each
person  known  by  Albion  to be the  beneficial  owner  of more  than 5% of the
outstanding shares of common stock (ii) each of Albion's directors and executive
officers.

<TABLE>
<CAPTION>

                                                                           Percentage
    Name and Address(1)                        Common Stock

<S>                                              <C>                            <C>
    Jehu Hand                                    815,800(2)                     80.1%
    24351 Pasto Road, #B
    Dana Point, California 92629

    Kimberly Peterson                                93,850                      9.4%
    18776 Fairfax Lane
    Huntington Beach, California 92648

    All officers and directors
    as a group (2 persons)                       909,650(2)                     89.4%
</TABLE>

(1)      Unless otherwise noted below, Albion believes that all persons named in
         the table have sole  voting and  investment  power with  respect to all
         shares of common stock beneficially owned by them. For purposes hereof,
         a person is deemed to be the beneficial owner of securities that can be
         acquired by the listed  person within 60 days from the date hereof upon
         the exercise of warrants or options or the  conversion  of  convertible
         securities.  Each beneficial owner's percentage ownership is determined
         by assuming that any warrants,  options or convertible  securities that
         are held by the listed  person (but not those held by any other person)
         and which are  exercisable  within 60 days from the date  hereof,  have
         been exercised.
(2)      Includes 15,800 shares held of record by Brighton Capital, Inc., a
corporation controlled by Mr. Hand, and 800,000
         shares held by Ecco Petroleum Family Limited Partnership which i
 controlled by Mr. Hand.

                                                         7

<PAGE>





Item 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

            From  time to time Mr.  Hand  has  advanced  general  administrative
operating  expenses  of Albion of less than $5,000 per year,  and these  amounts
have been  classified  as  related  party  payables.  The  amount of $1,249  was
contributed  to capital by Mr. Hand upon  completion of the 2001 initial  public
offering. Those expenses related to the purchase and maintenance of aircraft and
other  expenses  of the  operating  subsidiary,  Svetlana  Aviation,  have  been
accounted for as contributions to capital,  and were $500,  $40,063 and $41,770,
for the years ended December 31, 2001, 2000 and 1999,  respectively.  Mr. Hand's
contributions have consisted only of cash.

            Albion  acquired a Cessna  421B in December  1998 from an  unrelated
party, an aircraft broker in Mississippi.  The purchase price was $159,400, paid
$16,000 in cash and $143,900 in debt  financing from  Greentree  Financial.  The
loan is payable over 7 years in monthly installments of $2,297, and the interest
rate is 8.75%.  Mr. Hand  guaranteed the loan which financed the purchase of the
aircraft.  The Aircraft was sold in January 2002. In December we bought a Mooney
aircraft,  for  $45,000.  Mr.  Hand also  guaranteed  the loan of $40,050 and he
loaned the $4,500 down payment (subsequently repaid to him in January, 2002). In
the event Albion  defaults on the loan, Mr. Hand would be personally  liable for
any unpaid  balance,  and he might have the right as guarantor to take posession
of or sell the aircraft.


                                                      PART IV


Item 13.    EXHIBITS AND REPORTS ON FORM 8-K

       (a) Exhibits.  The following exhibits of the Company are included herein.

         Exhibit No.       Document Description


3.       Certificate of Incorporation and Bylaws

         3.1.     Articles of Incorporation(1)
         3.2      Articles of Amendment(1)
         3.3      Bylaws(1)

10.      Material Contracts

         10.1     Loan Agreement with Greentree Financial(2)
         10.2     Funding Agreement between Jehu Hand and the Issuer(2)

21.      Subsidiaries of the small business issuer-Svetlana Aviation, a
 Nevada corporation, is the only subsidiary.
         It does business under the name Svetlana Aviation.


(1)      Filed with original registration statement, file no. 333-46672.
(2)      Filed with amendment no. 1.

         (b)      Reports on Form 8-K.

                  Not Applicable.

                                                         8

<PAGE>


                                                    SIGNATURES

        Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized April 29, 2001.


                                                           ALBION AVIATION, INC.


                                                           By: /s/Jehu Hand
                                                            President

        Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities on April 29, 2001.



By:     /s/ Jehu Hand                 President, Secretary, Chief Financial
                                             Officer and Director





                                                         9

<PAGE>



ALBION AVIATION, INC.
(A Development Stage Company)
Consolidated Financial Statements
December 31, 2001 and 2000


<TABLE>
<CAPTION>

<PAGE>



                                                                                     ALBION AVIATION, INC.
                                                                             (A Development Stage Company)
                                                                                                     Index

-------------------------------------------------------------------------------------------------------------------



                                                                                             Page


<S>                                                                                             <C>
Independent auditors' report                                                                  F-2


Consolidated Balance sheet                                                                    F-3


Consolidated Statement of operations                                                          F-4


Consolidated Statement of stockholders' equity                                                F-5


Consolidated Statement of cash flows                                                          F-6


Notes to consolidated financial statements                                                    F-7
</TABLE>

--------------------------------------------------------------------------------


                                             F-1

<PAGE>



                       INDEPENDENT AUDITORS' REPORT









To the Board of Directors of
Albion Aviation, Inc.


We have audited the accompanying  consolidated balance sheet of Albion Aviation,
Inc. and Subsidiary,  (a development stage company) as of December 31, 2001, and
the  related  consolidated   statements  of  operations,   stockholders'  equity
(deficit) and cash flows for the years ended  December 31, 2001 and 2000 and the
cumulative amounts from April 20, 1994 (date of inception) to December 31, 2001.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits 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 consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Albion Aviation,
Inc. and Subsidiary,  (a development  stage company) as of December 31, 2001 and
the  results  of their  operations  and their  cash  flows  for the years  ended
December 31, 2001 and 2000 and  cumulative  amounts from April 20, 1994 (date of
inception)  to  December  31,  2001 in  conformity  with  accounting  principles
generally accepted in the United States of America.



                                F-2

<PAGE>



The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered recurring losses and
has an accumulated  deficit.  These conditions raise substantial doubt about its
ability to continue  as a going  concern.  Management's  plans  regarding  those
matters also are  described in Note 2. The  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.



                                                              TANNER + CO.

































Salt Lake City, Utah
April 11, 2002

                       F-3

<PAGE>

<TABLE>
<CAPTION>

                                                                                     ALBION AVIATION, INC.
                                                                             (A Development Stage Company)

                                                                                Consolidated Balance Sheet

                                                                                         December 31, 2000
-------------------------------------------------------------------------------------------------------------------





              Assets

Current assets:
<S>                                                                                     <C>
     Cash                                                                               $              642
     Aircraft held for sale                                                                         20,000
                                                                                        ------------------

                  Total current assets                                                              20,642
                                                                                        ------------------

Aircraft, net of accumulated depreciation of $87,834                                               117,266
                                                                                        ------------------

                  Total assets                                                          $          137,908
                                                                                        ------------------



              Liabilities and Stockholders' Deficit

Current liabilities:
     Accounts payable                                                                   $            2,366
     Related party payables                                                                          4,490
     Current portion of long-term debt                                                              29,772
                                                                                        ------------------

                  Total current liabilities                                                         36,628
                                                                                        ------------------

Long-term debt                                                                                     106,679
                                                                                        ------------------

Stockholders' deficit:
     Preferred stock; $.001 par value; 1,000,000 shares
       authorized; no shares issued and outstanding                                                      -
     Common stock; $.001 par value; 20,000,000
       shares authorized; 1,018,000 shares issued
       and outstanding                                                                               1,018
     Additional paid-in capital                                                                    204,488
     Deficit accumulated during the
       development stage                                                                          (210,905)
                                                                                        ------------------

                  Total stockholders' deficit                                                       (5,399)
                                                                                        ------------------

                  Total liabilities and stockholders' deficit                           $          137,908
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                                      Consolidated Statement of Operations



--------------------------------------------------------------------------------





                                                                                            Cumulative
                                                          Years Ended December 31,           Amounts
                                                                                              Since
                                                     -----------------------------------
                                                            2001             2000           Inception
                                                     -----------------------------------------------------

<S>                                                  <C>                                <C>
Revenue                                              $                 $  -             $  -                 -
                                                     -----------------------------------------------------

Costs and expenses:
     General and administrative expenses                         45,959           33,126           142,209
     Loss on impairment of aircraft                                                    -            35,000
       held for sale                                             35,000
     Interest expense                                             9,901           10,539            33,696
                                                     -----------------------------------------------------

                                                                 90,860           43,665           210,905
                                                     -----------------------------------------------------

Loss before income taxes                                        (90,860)         (43,665)         (210,905)

Income tax benefit                                                    -                -                 -
                                                     -----------------------------------------------------

Net loss                                             $          (90,860$         (43,665$         (210,905)
                                                     -----------------------------------------------------

Loss per share - basic and diluted                   $              (.0$)              (.04)

                                                     -----------------------------------

Weighted average common shares -                              1,012,000        1,000,000
  basic and diluted
                                                     -----------------------------------



</TABLE>

--------------------------------------------------------------------------------


See accompanying notes to consolidated financial statements.
                                                  F-4

<PAGE>
<TABLE>
<CAPTION>


                                                                                     ALBION AVIATION, INC.
                                                                             (A Development Stage Company)

                                                  Consolidated Statement of Stockholders' (Deficit) Equity

                                                                        April 20, 1994 (Date of Inception)
                                                                                 Through December 31, 2001
-------------------------------------------------------------------------------------------------------------------



                                                                                      Deficit
                                                                                    Accumulated
                                                                        Additional  During the
                               Preferred Stock        Common Stock        Paid-In   Development
                             -------------------------------------------
                              Shares    Amount      Shares     Amount     Capital      Stage        Total
                             --------------------------------------------------------------------------------

<S>                         <C>         <C>       <C>        <C>       <C>        <C>           <C>
Balance, April 20, 1994              -$            -        -$          $ -        $   -        $     -          -

Shares issued for cash
  ($.001 per share)                  -          -   1,000,000      1,000         15            -        1,015

Net loss                             -          -           -          -          -         (144)        (144)
                             --------------------------------------------------------------------------------

Balance, December 31, 1994           -          -   1,000,000      1,000         15         (144)         871

Net loss                             -          -           -          -          -         (338)        (338)
                             --------------------------------------------------------------------------------

Balance, December 31, 1995           -          -   1,000,000      1,000         15         (482)         533

Net loss                             -          -           -          -          -         (320)        (320)
                             --------------------------------------------------------------------------------

Balance, December 31, 1996           -          -   1,000,000      1,000         15         (802)         213

Net loss                             -          -           -          -          -         (314)        (314)
                             --------------------------------------------------------------------------------

Balance, December 31, 1997           -          -   1,000,000      1,000         15       (1,116)        (101)

Contributions to capital             -          -           -          -     30,909            -       30,909

Net loss                             -          -           -          -          -      (18,470)     (18,470)
                             --------------------------------------------------------------------------------

Balance, December 31, 1998           -          -   1,000,000      1,000     30,924      (19,586)      12,338

Contributions to capital             -          -           -          -     41,770            -       41,770

Net loss                             -          -           -          -          -      (56,794)     (56,794)
                             --------------------------------------------------------------------------------

Balance, December 31, 1999           -          -   1,000,000      1,000     72,694      (76,380)      (2,686)

Contributions to capital             -          -           -          -     40,063            -       40,063

Net loss                             -          -           -          -          -      (43,665)     (43,665)
                             --------------------------------------------------------------------------------

Balance, December 31, 2000           -$            -1,000,000$     1,000$   112,757$    (120,045$      (6,288)

Shares issued for cash
  ($5 per share)                     -          -      18,000         18     89,982            -       90,000

Contributions to capital             -          -           -          -      1,749            -        1,749

Net loss                             -          -           -          -          -      (90,860)     (90,860)
                             --------------------------------------------------------------------------------

Balance, December 31, 2001           -$            -1,018,000$       1,01$  204,488$    (210,905$      (5,399)
                             --------------------------------------------------------------------------------


--------------------------------------------------------------------------------
</TABLE>


See accompanying notes to consolidated financial statements.
                                                    F-5

<PAGE>

<TABLE>
<CAPTION>

                                                                                     ALBION AVIATION, INC.
                                                                             (A Development Stage Company)

                                                                      Consolidated Statement of Cash Flows


-------------------------------------------------------------------------------------------------------------------



                                                                                            Cumulative
                                                                                             Amounts
                                                          Years Ended December 31,            Since
                                                     -----------------------------------
                                                            2001             2000           Inception
                                                     -----------------------------------------------------

Cash flows from operating activities:
<S>                                                  <C>                         <C>              <C>
     Net loss                                        $          (90,860$         (43,665$         (210,905)
     Adjustments to reconcile net loss to
       net cash used in operating activities:
         Depreciation and amortization                           26,650           26,650            88,849
         Loss on impairment of aircraft
            held for sale                                        35,000                -            35,000
         Increase in
              Accounts payable                                    2,366                              2,366
              Related party payables                              3,241              148             4,490
                                                     -----------------------------------------------------

                  Net cash used in
                  operating activities                          (23,603)         (16,867)          (80,200)
                                                     -----------------------------------------------------

Cash flows from investing activities:
     Purchase of aircraft                                        (4,790)               -           (20,690)
     Purchase of aircraft held for sale                         (55,000)               -           (55,000)
     Organization costs                                               -                -            (1,015)
                                                     -----------------------------------------------------

                  Net cash used in
                  investing activities                          (59,790)               -           (76,705)
                                                     -----------------------------------------------------

Cash flows from financing activities:
     Principal payments on long-term debt                       (15,263)         (15,647)          (47,959)
     Contributions to capital                                     1,749           40,063           114,491
     Issuance of common stock                                    90,000                -            91,015
                                                     -----------------------------------------------------

                  Net cash provided by
                  financing activities                           76,486           24,416           157,547
                                                     -----------------------------------------------------

(Decrease) increase in cash                                      (6,907)           7,549               642

Cash, beginning of period                                         7,549                -                 -
                                                     -----------------------------------------------------

Cash, end of period                                  $              642$           7,549$              642
                                                     -----------------------------------------------------

</TABLE>


-------------------------------------------------------------------------------


See accompanying notes to consolidated financial statements.
                                            F-6

<PAGE>


                                                 ALBION AVIATION, INC.
                                     (A Development Stage Company)



--------------------------------------------------------------------------------



                        Notes to Consolidated Financial Statements

                                        December 31, 2001 and 2000
------------------------------------------------------------------------------


1.   Organization
     and
     Summary of
     Significant
     Accounting
     Policies
Organization
The Company was  organized  under the laws of the state of Delaware on April 18,
1994 (date of  inception).  The  Company  has not  commenced  planned  principal
operations and purposes to seek business ventures which will allow for long-term
growth.  Further,  the Company is  considered  a  development  stage  company as
defined in SFAS No. 7. Its principal  activities  since inception have consisted
of the offer and sale of common stock and the purchase of  commercial  aircraft,
financed by  long-term  debt.  The Company  intends to engage in the charter air
carrier  business.  The Company has, at the present time, not paid any dividends
and any dividends  that may be paid in the future will depend upon the financial
requirements of the Company and other relevant factors.


Principles of Consolidation
The consolidated  financial  statements include the accounts of the Company, and
its  consolidated   subsidiary.   All  significant   intercompany  balances  and
transactions have been eliminated.


Cash and Cash Equivalents
Cash  equivalents are generally  comprised of certain highly liquid  investments
with maturities of less than three months.


Aircraft
The Company's  aircraft is carried at cost.  Maintenance and repairs,  including
overhauls,  are charged to operating expenses as they are incurred. The aircraft
is depreciated on a straight-line basis over the estimated useful lives, ranging
from 6 to 12 years.


Use of Estimates in the  Preparation of Financial  Statements The preparation of
financial statements in conformity with generally accepted accounting principles
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.



--------------------------------------------------------------------------------


                                                    F-7

<PAGE>


                                          ALBION AVIATION, INC.
                              (A Development Stage Company)


                                Notes to Consolidated Financial Statements
                                                       Continued

-------------------------------------------------------------------------------



2.   Going
     Concern
The  accompanying  consolidated  financial  statements  have been  prepared on a
going-concern   basis,   which  contemplates   profitable   operations  and  the
satisfaction  of  liabilities  in the  normal  course  of  business.  There  are
uncertainties  that raise  substantial doubt about the ability of the Company to
continue  as a  going  concern.  As  shown  in  the  consolidated  statement  of
operations,  the Company has had no  revenues,  and  reported  net losses in all
periods since inception.


The Company  intends to fund  start-up  costs during the next twelve months with
capital  contributions from related parties and proceeds from the sale of equity
securities (see note 7),  however,  such related parties are not obligated under
any  agreement to  contribute  such funds,  and there is no  guarantee  that the
Company will be successful  in raising  equity  capital  through its offering of
common stock.


The  Company's  ability  to  continue  as a  going  concern  is  dependent  upon
management's  ability to secure  additional debt or equity  financing.  There is
also no guarantee that, if successful, such financing will be sufficient to fund
necessary  start up costs  and  sustain  operations  upon  commencement  of such
operations. The consolidated financial statements do not include any adjustments
that might result from the outcome of these uncertainties.


3.   Long-term
     Debt
In October 1998,  the Company  entered into a note  agreement,  with a financing
company,  in the  amount of  $143,900,  due in monthly  installments  of $2,297,
including interest at 8.75%,  secured by aircraft and a personal guarantee of an
officer of the Company,  maturing in November  2005. The total loan proceeds and
cash of $16,000 were used to purchase used aircraft for a total  purchase  price
of  $159,900.  The note  balance  outstanding  at December 31, 2001 was $95,941.
Subsequent  to year end, the Company sold the  aircraft  securing  this note and
used the proceeds to retire the note.


-------------------------------------------------------------------------------

                                                        F-8

<PAGE>


                                             ALBION AVIATION, INC.
                                     (A Development Stage Company)


                             Notes to Consolidated Financial Statements
                                           Continued

-------------------------------------------------------------------------------



3.   Long-term
     Debt
     Continued
In December 2001, the Company  entered into a note  agreement,  with a financing
company,  in the  amount  of  $40,410,  due in  monthly  installments  of  $628,
including  interest at 7.9%,  secured by aircraft and a personal guarantee of an
officer of the Company,  maturing in January  2009.  The total loan proceeds and
cash of $4,690 were used to purchase used aircraft for a total purchase price of
$45,200. The note balance outstanding at December 31, 2001 was $40,410.


Future maturities of the note payable are as follows:


Years Ending December 31:                                      Amount
                                                          -----------------

     2002                                                 $          29,772
     2003                                                            27,062
     2004                                                            29,483
     2005                                                            29,824
     2006                                                             6,090
     Thereafter                                                      14,220
                                                          -----------------

                                                          $         136,451
                                                          -----------------


4.   Income
     Taxes
The difference  between income taxes at statutory rates and the amount presented
in the financial statements is a result of the following:


                                                               Cumulative
                                           Years Ended          Amounts
                                          December 31,           Since
                                    -------------------------
                                        2001         2000      Inception
                                    ---------------------------------------

Income tax benefit at statutory
  rate                              $      19,000$      7,000$       42,000
Change in estimated rate                    9,000           -             -
Change in valuation allowance             (28,000)     (7,000)      (42,000)
                                    ---------------------------------------

                                    $           -$           $-             -
                                    ---------------------------------------



--------------------------------------------------------------------------------


                                                    F-9

<PAGE>


                                            ALBION AVIATION, INC.
                                         (A Development Stage Company)


                                 Notes to Consolidated Financial Statements
                                                   Continued

-------------------------------------------------------------------------------




4.   Income
     Taxes
     Continued
Deferred tax assets are as follows:


                                  December 31,
                                                          -----------------
                                                                2001
                                                          -----------------

Operating loss carryforwards                              $          39,000
Depreciation                                                         (4,000)
Impairment of aircraft                                                7,000
Valuation allowance                                                 (42,000)
                                                          -----------------

                                                          $                 -
                                                          -----------------



The Company has net operating  loss  carryforwards  of  approximately  $198,000,
which  begin to expire  in the year  2009.  The  amount  of net  operating  loss
carryforward  that can be used in any one year will be  limited  by  significant
changes in the ownership of the Company and by the applicable tax laws which are
in effect at the time such  carryforwards  can be  utilized.  No tax benefit has
been reported in the financial  statements,  because the Company  believes it is
more likely than not that the deferred  tax asset will not be realized.  The tax
benefits of the loss  carryforwards  are offset by a valuation  allowance of the
same amount.


5.   Related
     Party
     Transactions
At December 31, 2001 and 2000,  the Company  owed the  Company's  president  and
majority  shareholder  $4,490  and  $1,249,   respectively.   The  advances  are
unsecured, non-interest bearing and have no specific repayment terms.


During   the   years   ended   December   31,   2001  and  2000  the   Company's
president/majority  shareholder made capital contributions of cash of $1,749 and
$40,063, respectively.


6.   Supplemental
     Cash Flow
     Information
During the year ended December 31, 2001, the Company  purchased an aircraft with
a note payable of $40,410.


--------------------------------------------------------------------------------


                                                    F-10

<PAGE>


                                      ALBION AVIATION, INC.
                                         (A Development Stage Company)


                                 Notes to Consolidated Financial Statements
                                                 Continued

--------------------------------------------------------------------------------




6.   Supplemental
     Cash Flow
     Information
     Continued
Actual amounts paid for interest and income taxes are as follows:


                                   Cumulative
                                     Amounts
                            Years Ended December 31,           Since
                       -----------------------------------
                             2001              2000          Inception
                       ---------------------------------------------------

Interest               $           9,901$           10,539$         33,696
                       ---------------------------------------------------

Income taxes           $                $-               -$                -
                       ---------------------------------------------------



7.   Public
     Offering
In February  2001, the Company's  initial  public  offering of its common stock,
registered on Form SB-2,  was declared  effective by the Securities and Exchange
Commission.  In connection with this offering, the Company sold 18,000 shares of
its common stock,  $.001 par value, at an offering price of $5.00 per share with
net proceeds of $90,000 received during May 2001.


8.   Recent
     Accounting
     Pronounce-
     ments
In July 2001,  Statement  of  Financial  Accounting  Standards  (SFAS) No.  141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets"
were issued. SFAS 142 addresses financial  accounting and reporting for acquired
goodwill and other  intangible  assets.  It requires,  among other things,  that
companies no longer amortize goodwill,  but instead test goodwill for impairment
at least annually. SFAS 142 is required to be applied for fiscal years beginning
after  December 15,  2001.  The Company will assess how the adoption of SFAS 141
will effect the recording of any future acquisitions.


--------------------------------------------------------------------------------


                                                           F-11

<PAGE>


                                        ALBION AVIATION, INC.
                                  (A Development Stage Company)


                         Notes to Consolidated Financial Statements
                                              Continued

-------------------------------------------------------------------------------


8.   Recent
     Accounting
     Pronounce-
     ments
     Continued
The Financial  Accounting  Standards Board (FASB) recently issued FASB Statement
No. 143, Accounting for Asset Retirement  Obligations.  This Statement addresses
financial   accounting  and  reporting  for  obligations   associated  with  the
retirement of tangible  long-lived  assets and the associated  asset  retirement
costs. This Statement  applies to all entities.  It applies to legal obligations
associated  with the  retirement  of  long-lived  assets  that  result  from the
acquisition,  construction,  development  and (or)  the  normal  operation  of a
long-lived  asset,  except for certain  obligations  of leases.  This  Statement
amends  SFAS  19.  The  effective  date  for this  Statement  is June 15,  2002.
Management  does not believe the adoption of Statement  143 will have a material
effect on its financial statements.


The Financial  Accounting  Standards  Board (FASB) recently issued FASB No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. The new guidance
resolves  significant  implementation  issues related to FASB Statement No. 121,
Accounting for the Impairment of Long-Lived  Assets and for Long-Lived Assets to
be Disposed of.  Statement  144 is effective  for fiscal years  beginning  after
December 15,  2001.  Management  does not believe the adoption of Statement  144
will have a material effect on its financial statement.


9.   Subsequent
     Event
In January  2002,  the Company sold an aircraft for $115,000 for an  approximate
gain of $43,000.


In March  2002,  the  Company  sold the  aircraft  held for sale for $20,000 and
recognized no gain or loss.


--------------------------------------------------------------------------------


                                      F-12

<PAGE>