UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                  FORM 10-KSB/A
                                 Amendment No. 3

(Mark  One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF  1934
For  the  fiscal  year  ended  December  31,  2001

[  ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(D)  OF  THE
SECURITIES  EXCHANGE  ACT  OF  1934
For  the  transition  period  from  ________  to  __________

Commission  File  Number:  333-28249

                                 PRIME AIR, INC.
               (Exact name of Registrant as specified in charter)

            Nevada                                          Not  Applicable
            ------                                    --------------------------
State or other jurisdiction of                        I.R.S.  Employer  I.D. No.
incorporation or organization

Suite 601 - 938 Howe Street, Vancouver, British Columbia,              V6Z 1N9
----------------------------------------------------------------     ----------
          (Address  of  principal  executive  offices)               (Zip Code)

         Issuer's telephone number, including area code:  (604) 684-5700

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

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

Check  whether  the  Issuer  (1)  has  filed all reports required to be filed by
section  13  or 15(d) of the Exchange Act during the past 12 months (or for such
shorter  period  that the registrant was required to file such reports), and (2)
has been subject to such fling requirements for the past 90 days.
Yes [X ] No [ ]

Check  if  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-KSB or any amendment to
this  Form  10-KSB.  [  ]

State  issuer's  revenues  for  its  most  recent  fiscal  year:  -0-

Documents  Incorporated  by  Reference:  None


<PAGE>

<TABLE>
<CAPTION>
                                               TABLE OF CONTENTS
                                               -----------------

                                                PRIME AIR, INC.

                                                     INDEX

PART I                                                                                                  PAGE NO.
                                                                                                        --------
<S>          <C>                                                                                             <C>
ITEM 1       Description
             General                                                                                          3
ITEM 2       Description of Property                                                                         13
ITEM 3       Legal Proceedings                                                                               13
ITEM 4       Submission of Matters to a Vote of Security Holders                                             14

PART II

ITEM 5       Market for Common Equity and Related Stockholder Matters                                        14
ITEM 6       Management's Discussion and Analysis or Plan of Operation                                       15
ITEM 7       Financial Statements                                                                            16
ITEM 8       Changes in and Disagreements with Accountants on Accounting and Financial Disclosure            31

PART III

ITEM 9       Directors, Executive Officers, Promoters and Control Persons                                    31
ITEM 10      Executive Compensation                                                                          32
ITEM 11      Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters  33
ITEM 12      Certain Relationships and Related Transactions                                                  34
ITEM 13      Exhibits and Reports on Form 8-K                                                                34
ITEM 14      Principal Accounting Fees                                                                       35
</TABLE>


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<PAGE>

FORWARD-LOOKING  STATEMENTS

Some  of  the  information  presented  in or incorporated by reference into this
report  constitutes  "forward-looking statements." Although the Company believes
that its expectations are based upon reasonable assumptions within the bounds of
its  knowledge  of  its  proposed  business  and operations, it is possible that
actual  results may differ materially from its expectations.  Factors that could
cause  actual results to differ from expectations include but are not limited to
the  inability  of the Company to raise the additional capital necessary to fund
its principal operations, dependence on a limited number of persons, and ability
to  attract  tenants and air service to its terminal facility at the Permberton,
British  Columbia  airport.

                                     PART I

ITEM  1.     DESCRIPTION  OF  BUSINESS

General

     Prime  Air,  Inc,  a  Nevada  corporation  (the "Company") is engage in the
business  of managing and operating a commercial and local air terminal facility
in  the  Whistler  -  Pemberton, British Columbia, Canada, area.  Thereafter, it
intends  to  operate aircraft service out of the facility.  The Company conducts
its  operations  through  its  subsidiary, Prime Air, Inc. ("Prime Air (BC)"), a
company  originally  incorporated  under  the  laws  of  the Province of British
Columbia,  Canada,  on  March  10,  1989, under the name "High Mountain Airlines
Inc."  Prime  Air (BC) has entered into a lease and operating agreement with the
Village  of  Pemberton,  British  Columbia, Canada, to plan, develop, construct,
manage,  and  operate  a terminal facility at the Pemberton Airport.   Prime Air
(BC)  has constructed the basic terminal building and proposes to facilitate air
service  to  Pemberton Airport to serve the nearby resort community of Whistler.
In  addition,  on September 26, 2003, the Company entered into an agreement with
Galvin  Flying Service, Inc. to provide Fixed Basic Operations (FBO) services in
anticipation  providing  air  service  to  Permberton.  Previously,  the Company
entered  into  a  Memorandum  of  Understanding  with  Voyageur  Airways Limited
("Voyageur")  to  provide scheduled and charter passenger and cargo service from
Vancouver  International Airport.  That Memorandum of Understanding has expired,
although  the  parties  continue  to  have  discussions.  Currently, there is no
commercial  passenger  service  to  Pemberton  Airport.

History

     Prime  Air,  Inc.  was  incorporated in the State of Nevada on November 10,
1996,  for the purpose of changing the domicile of the Company from the State of
Delaware.  The  predecessor  to  the  Company  was  incorporated in the State of
Delaware on April 4, 1995.  The change of domicile was completed on December 15,
1997.

     Prior to incorporation in the State of Delaware, the Company was originally
incorporated  pursuant to the laws of the State of Utah on August 30,1993, under


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<PAGE>

the  name  "Astro  Enterprises,  Inc."  (referred  to  hereafter  as  "the  Utah
Corporation").  The  Utah  corporation  changed its name to "Prime Air, Inc." on
June  28,  1994.

     In  June  1994,  the  Utah Corporation entered into a Merger Agreement with
Prime Air (BC).  Pursuant to the terms of the Merger Agreement, the shareholders
of Prime Air (BC) exchanged all of their outstanding Prime Air (BC) shares for a
controlling  number of shares of the Utah corporation, such that upon completion
of  the  exchange, the shareholders of Prime Air (BC) owned approximately 90% of
the  outstanding  shares  of  the  Utah  Corporation and Prime Air (BC) became a
wholly  owned  subsidiary  of  the  Utah Corporation.  The transaction was not a
statutory  merger.  Management  believes  that the closing of such agreement was
effected  on June 28, 1994.  In connection with the exchange of shares, the Utah
Corporation  effected  a  one-for-one  hundred  reverse split of its outstanding
shares  effective June 28, 1994, immediately prior to such closing.  As a result
of  the  stock-for-stock  exchange,  the  former  shareholders of Prime Air (BC)
received  2,700,000  post-reverse  spit shares, the 170 existing shareholders of
the  Utah  Corporation  retained  120,000  post-reverse  split  shares,  and the
Worthington Company, an entity controlled by Mr. Paul Parshall, retained 180,000
post-reverse  split  shares.  In  addition,  the  Worthington  Company  received
consulting  fees  totaling $70,000 US from Prime Air (BC) for services performed
in  connection  with the reorganization.  Also, as a part of the reorganization,
Mr. Parshall resigned as the sole director of the Utah Corporation and appointed
Mr.  Blaine  Haug  as  the  sole  director.  Also  in  connection  with  the
reorganization,  the name of the Utah Corporation was changed to Prime Air, Inc.
and  the number of authorized shares of Common Stock of the Utah Corporation was
changed  to  25,000,000  shares,  par  value  $0.001.  At  the  time  of  the
stock-for-stock  exchange  between  the Utah Corporation and Prime Air (BC), the
Utah  Corporation  had  no  assets.  The reorganization was entered into because
Prime  Air  (BC)  wanted  controlling  interest  in  a public shell corporation.

     On  or  about  April  4,  1995,  the  Utah Corporation effected a change of
domicile  to  the State of Delaware by incorporating another corporation in such
state,  acquiring all of the assets and liabilities of the Utah Corporation, and
issuing  shares  of  the  Delaware  corporation  to the shareholders of the Utah
Corporation  on  a  one-for-one  basis.  The  Utah  Corporation  was voluntarily
dissolved  by  the  State  of  Utah on May 18, 1995.  The change of domicile was
initiated  and completed based upon the recommendations of Mr. Paul Parshall, an
officer  and  director  of  the  Utah  Corporation  at  such  time.

     The  original  purpose  of the Utah Corporation incorporated in 1993 as set
forth  in  its  articles of incorporation, was to acquire the assets and certain
liabilities  of  another  Utah  corporation  incorporated in 1985 and previously
dissolved  by  the State of Utah on May 1, 1990, and also incorporated under the
name  "Astro  Enterprises, Inc." Current management of the Company, none of whom
were  affiliated  with  the Utah Corporation prior to the share exchange in June
1994,  believe that the former management of the Utah Corporation at the time of
its  incorporation  issued  approximately 120,000 shares of the company's common
stock  to  the  shareholders  of the corporation dissolved in 1990 with the same
name  thus  creating  approximately  170  shareholders  of the Utah Corporation.
Management  does not believe that any other relationship existed between the two
entities  or  with  former  management  of the corporation dissolved in 1990 and
known  as  Astro  Enterprises,  Inc.


                                        4
<PAGE>

     Commencing  February  1998,  the  Company attempted to offer and sell up to
2,000,000 units (the "Units"), each Unit consisting of one share of common stock
of  the Company and one Class A Warrant and one Class B Warrant.  The Units were
offered  by  British West Indies Securities Company Limited as selling agent for
the  offering.  The  offering terminated March 31, 1998, and no Units were sold.
The  selling  agreement with British West Indies Securities Company Limited also
expired  on  such  date.

     On  April  23,  1998,  the  shareholders  approved  a  forward split of the
outstanding  shares of common stock of the Company at the rate of two shares for
each  one  share  outstanding.  The forward stock split was effective on May 15,
1998.  In  addition,  the shareholders approved a stock option plan on April 23,
1998,  known  as  the  1998  Stock Option and Stock Appreciation Right Plan (the
"Plan").  The  Plan  provides  for  the  issuance  of  options  to acquire up to
1,000,000  shares  of common stock of the Company.  No options have been granted
pursuant  to  the  Plan  -  that  plan  has  subsequently  been rescinded in its
entirety.

     Commencing  June  1998,  the  Company  attempted  to  offer  and sell up to
8,000,000  common  shares.  This offering terminated August 31, 1998.  No shares
were  sold.  Commencing October 1998, the Company engaged the Investment Banking
firm  of  Chanen,  Painter  &  Company  Ltd. for the purpose of providing equity
financing to enable start up of air services.  That engagement was not completed
and  all  associations  thereto  expired  and  were terminated in February 2000.

     The  Company  entered into a "Memorandum of Proposed Agreement" with 519222
Ontario  Limited,  a  corporate entity associated with Voyageur Airways Limited,
which,  subject  to the final approval of Voyageur and the Company, will allow a
merger  which  combines  25% of the assets of Voyageur with 70% of the assets of
the  Company.  No  definitive agreement was ever entered into and no transaction
with  Voyageur is contemplated at this time.  However, although no agreement was
entered  into,  Voyageur  continues  to work with the Company for the purpose of
establishing  an air service.   See "Proposed Air Service" contained in the Item
1.

     Prime  Air,  Inc.,  does  not  intend  to own or directly operate aircraft.
However,  Prime  Air,  Inc.  intends  to  derive  income  from the Company, "wet
leasing"  aircraft  for  the  purpose of transporting passengers from and to the
Pemberton  facility  and  intends  to  derive  income from leasing/operating the
Terminal  Building  as  a rental property for retail space available and collect
and  receive passenger fees from individuals utilizing the facility as described
and  permitted  in  the "Airport Lease and Operating Agreement" discussed below.

Airport  Lease  And  Operating  Agreement

     On  October  29,  1993,  Prime  Air (BC) entered into a Lease and Operating
Agreement  (the  "Airport  Agreement")  with  the  Corporation of the Village of
Pemberton, British Columbia, Canada (hereinafter the "Village of Pemberton"), in
which  Prime  Air  (BC)  agreed  to  undertake  the  planning,  development,
construction,  management, and operation of a terminal facility at the Pemberton


                                        5
<PAGE>

Airport.  In  return,  the  Village  of  Pemberton  granted to Prime Air (BC) an
exclusive  lease  involving  certain  lands  located  at  the  Pemberton Airport
(registered  under  the  Land  Title  Act,  KN056037 under Parcel Identification
Number  002-606-801,  being  that  part of District Lot 4769, Lillooet District,
Except  Plan  KAP  44479)  to  enable  Prime Air (BC) to undertake the planning,
development,  construction,  management,  and  operation of a terminal facility.

     There  are  no  competing  facilities  at the Pemberton airport.  The Lease
between  the  Village  of  Pemberton  and Prime Air Inc., provides Prime Air the
exclusive  use  of  the  terminal  facility  and  lands  to:

     (a)     operate  the  terminal  facilities  as  an  international  airport
terminal  serving  passengers  and  cargo  arriving  at  and  departing from the
airport;  and

     (b)     operate,  or  cause  to  be operated, from the terminal facilities,
such  services,  concessions,  agencies and businesses as it, in its discretion,
determines  necessary or desirable for the proper and efficient operation of the
airline  business,  including  without  limitation:  (i)  ground  transportation
service  to  and  from  the  Airport; (ii) motor vehicle rentals; (iii) food and
beverage  outlets;  (iv)  souvenir  sales; and (v) air and ground transportation
ticket  sales.

     Construction  of  the air terminal building was completed in 1996.  To that
extent,  the  overall  size  of the building is in excess of 10,000 square feet,
with  approximately  6,240  square  feet  presently  being fully habitable.  The
remaining  area requires "finishing" with anticipated construction costs to cost
approximately  $50/square  foot  to  $100/square foot depending on requirements.
Management  intends to defer that cost to tenant improvement until it has signed
a  lease  with  tenants  who  will  ultimately  occupy  the  space.

     The  Company's  priority  is  to establish an air services related activity
base,  then  lease  a  portion  of  the  terminal  facility to related potential
tenants.  Until  there  is air service activity at the site, it is unlikely that
the  undeveloped  space  would  reach  its  highest  and  best  use.

     Once operational, there are three potential sources of revenues; commercial
air  services, Pemberton airport services and Fixed Base Operations.  Commercial
air  services  include the actual operation of charter or scheduled air services
to the site.  It is anticipated that the Company would contract with an aircraft
company  to  provide  these  services.  However,  in  order to realize potential
revenues  from  this  source,  additional  amounts  must  be  invested  in
infra-structure  which  may  be  shorthanded  depending  on the type of aircraft
operations.  The  Company  anticipates  that it will not initiate commercial air
services  activities  until  it  is  satisfied  that sufficient capital for this
purpose is in place.  No assurance can be given that the Company will be able to
provide  commercial  aircraft  services.  The second source of potential income,
Pemberton  Airport  services,  is  largely  predicated  on  the existence of air
services.  This income source would include baggage handling and other passenger
related  services.  Rental  of  commercial  space  at the terminal facility also
falls  into  this  category.  The  third  source  of income is rent derived from
Galvin Flying (or alternative experienced FBO) which will perform the Fixed Base
Operations  (FBO)  activities  that  include  providing  fuel,  logistics,
hangar/tie-down  rental,  accommodation,  and  other  services,  to  both  the


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<PAGE>

commercial  and  privately  operated  aircraft.  It  is Prime Air's intention to
assign  that  function  to  an  established FBO company; in that event Prime Air
would  earn certain amounts from ancillary activities related to FBO activities.

     Subsequent  to  year  ended  December  31,  2001,  on September 26, 2003, a
Memorandum of Understanding was entered into between Prime Air, Inc., and Galvin
Flying  Service,  Inc., of Seattle Washington in which Galvin intends to provide
Fixed  Based Operation Services at the Pemberton Airport.  Under the Memorandum,
the  Company will engage Galvin to operate as its exclusive FBO for all aircraft
services  not  related  to  any proposed transaction with Voyageur Airways.  The
engagement  of  Galvin  is  subject  to  the  Company and Galvin entering into a
definitive  agreement.  No  assurance  can  be given that a definitive agreement
will  be  entered  into.  Further  during  the  later  part of 2003, an aviation
excursion  trip  operator  tenant  entered  into a month to month agreement with
Prime  Air to use the terminal for Cdn $500 per month.   Management continues to
meet  with individuals and businesses with respect to developing the prospect of
charter  or scheduled air service operations.  No commitments, to the date, have
been  received  with  respect  to  this  item.

     Based  on  its  Memorandum  of  Understanding with Galvin Flying, Prime Air
Inc.,  the  Company  intends  to provide notice to the Village of Pemberton with
respect  to  the  exercise of its option to use lands for purposes of future FBO
activity.  The  lands specified are physically detailed within the Lease between
the  Village  of Pemberton and Prime Air Inc. and are appropriately filed in the
Land  Registry  office  of  the  Province  of  British  Columbia.

     The term of the lease commenced as of the Effective Date (June 1, 1995) and
is  set  to  continue in full force and effect for an initial term ending on the
second  anniversary  of the Terminal Opening Date.  Effective October 31, 1996 a
further  notice  was provided to complete the Extension of Term for three years,
completed  by  delivering  to  Pemberton written notice of extension of the Term
prior  to the second anniversary of the Terminal Opening Date and a further five
years to October 31, 2005 by delivering to Pemberton written notice of extension
of  the  Term.  An  additional  ten  years  may  be  exercised  by delivering to
Pemberton written notice of extension of the Term not less than six months prior
to  the  tenth  anniversary of the Terminal Opening Date; and a final additional
ten years by delivering to Pemberton written notice of the extension of the Term
not  less  than  six  months  prior to the twentieth anniversary of the Terminal
Opening  Date.  Therefore, provided that the Company is not in default under the
lease,  it  will  have  the  right  to  use  the  terminal  facility until 2025.

     Payment  of  terminal  rent  to  the  Village  of Pemberton is described as
follows.  Prime  Air  shall  pay  to  Pemberton as a basic rent for the Terminal
Lands for each and every year without set-off, deduction or abatement the amount
calculated  and  paid  in  accordance  with the following: (a) the Terminal Rent
payable for the first, second, third, fourth, fifth and sixth years shall be the
full  amount  of Cdn$100; and (b) for each year subsequent to the sixth year, an
amount  equal  to  five percent (5%) of the gross receipts for such year, but no
less  than  Cdn  $2,500.


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<PAGE>

     The Pemberton Airport is approximately 20 miles north of Whistler Resort on
Highway  99.  Whistler  Resort  is  a ski resort located at the base of Whistler
Mountain  and  Blackcomb  Mountain  approximately  75  miles north of Vancouver,
British  Columbia,  Canada.  The  resort  has  approximately  8,000  permanent
residents  and  attracts  approximately  3,000,000 visitors annually.  Currently
only  ground  transportation  is  available  to  the  resort, except for private
flights into Pemberton Airport.  The nearest airport facility to Whistler Resort
is  Pemberton Airport.  There is presently no regular air service into Pemberton
Airport.

     The  Airport  Agreement  provided  that  Prime  Air  (BC)  must construct a
terminal facility on or before October 21, 1994, which date was extended to June
1,  1996,  by  the Council for the Village of Pemberton.  Prior to such extended
date,  Prime  Air (BC) completed the terminal facility at the Pemberton Airport.
The  terminal constructed by Prime Air (BC) has a total square footage of 10,240
square  feet,  of  which approximately 6,240 of interior space has been finished
and  is ready for its intended use as an airport terminal.  The finished portion
consists  of  an arrival and departure lounge, baggage holding area, office, two
public  washrooms  with  a  total  of 14 cubicles, reception area, and a utility
room.  There  is  also  a water and a waste treatment plant housed in a separate
building.  The  total construction costs of the facility were $647,126 ($595,335
for  the  terminal  building,  $20,989  for  engineering and design, $18,699 for
environmental  work;  and  $12,103  for insurance and permits) and were financed
through the sale of the Company's stock.  During calendar year 1996, the Company
sold  1,510,558 shares of its common stock at $0.50 per share for total proceeds
of  $755,279.  The  limited  offering  was  conducted  pursuant  to  Rule 504 of
Regulation  D  promulgated  by  the  Securities  and  Exchange  Commission.  The
offering  was  conducted  for the purpose of raising funds for the completion of
construction of the airport terminal facility at Pemberton.  At the time of such
offering the Company was not subject to the reporting requirements of Section 13
or  15(d)  of  the  Securities  Exchange Act of 1934, as amended, and was not an
investment  company.  The aggregate offering price of all securities sold within
the  twelve months preceding the start of and during the offering did not exceed
$1,000,000.  There  is  currently  no  debt  against the terminal building.  The
initial  term  of  the  Airport  Agreement,  and  the right of Prime Air (BC) to
operate  the terminal facility, was two years with provisions allowing Prime Air
(BC)  to  extend  such initial term for addition terms totaling in the aggregate
thirty  years,  provided  that  Prime  Air  (BC)  shall  continue to fulfill its
obligations  under  the  Airport Agreement, including the payment of rent in the
amount  of  $100  per year for the first five years, and the payment of property
taxes  imposed  by  municipal  authorities plus 5% of the gross receipts derived
from  the  operation  of  the  terminal  facility for each year thereafter.  The
Airport  Agreement  also  grants  to  Prime Air (BC) the option to lease and use
certain  other  lands  at  the Pemberton Airport for fixed base operations.  The
Airport  Agreement may be terminated by the Village of Pemberton in the event of
a material default by Prime Air (BC) or if Prime Air shall become bankrupt.  The
terminal facilities shall become the property of the Village of Pemberton at the
expiration  of  the  Airport Agreement.   Prime Air (BC) has submitted a request
under  the  Airport  Agreement  for  a five year extension beginning October 31,
1999.  The  Airport Agreement provides for two additional ten year extensions of
the  lease  following the five year extension.   The Company believes that it is
in  compliance  with  the  terms  of  lease.


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<PAGE>

Proposed  Air  Service

Prime  Air  (BC)  initially intends to establish scheduled and charter passenger
and  cargo  air  service  between  Vancouver International Airport and Pemberton
Airport  by  contracting  with an aircraft services company.  Prime Air (BC) has
entered  into  a  Memorandum  of  Agreement dated January 5, 1995 (the "Voyageur
Agreement"),  with Voyageur Airways Limited, an Ontario corporation ("Voyageur")
to  provide  the  initial  service  by  supplying,  operating,  and  maintaining
DeHavilland Dash-7 aircraft to provide scheduled and charter passenger and cargo
service,  from  Vancouver  International Airport, to the Pemberton Airport.  The
Voyager  Agreement  provides  that  Prime  Air  (BC)  will  operate the terminal
facility  at Pemberton Airport and the scheduled and charter passenger and cargo
service,  and  will  market  the  air  services.  Voyageur  will  provide  the
certifications,  authorizations, expertise, facilities, personnel, and resources
necessary to operate, maintain and service the aircraft.  The Voyageur Agreement
expired under its terms.  However, Prime Air (BC) and Voyageur are continuing to
have  discussion  with  Voyageur  to  provide  aircraft  services  to Pemberton.

Government  Regulation  And  Licensing

Any  corporation  conducting  commercial  air  service operations in Canada must
possess  a  valid  operating  certificate  and  other  licenses,  permits,
accreditations  and  certificates  that are issued and administered by Transport
Canada.  For the purpose of this Report, initially Voyageur is identified as the
corporation  intended for conduct commercial air service operation in Canada and
it  is  the  understanding of Prime Air, Inc. that Voyageur satisfies all of the
following  criteria.  Qualification  for  the  required  operating  certificate
requires  that:

     1.     the  operator  (being  the entity actually providing the air service
operations)  must  have  at  least  one  aircraft registered under its operating
certificate.  This  aircraft  may  either be owned directly or dry leased by the
operator;

     2.     the aircraft utilized by the operator must be approved and certified
in  Canada;

     3.     in  respect  of  a  domestic Canadian air service, the operator must
satisfy  the  statutory  Canadian  ownership criteria which essentially requires
that  75%  of  the  voting  interest  in  the operator is controlled by Canadian
citizens  or  permanent  residents  of  Canada;

     4.     the  management of the operator must include a chief pilot who holds
appropriate  Canadian  certification;

     5.     all  of  the  operator's  pilots must meet proficiency standards and
hold  sufficient  ratings  to  operate  the  type  of  aircraft  being utilized;

     6.     the  operator  must  demonstrate and certify that it will be able to
carry  out  maintenance  of its aircraft according to regulated standards.  Such


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<PAGE>

maintenance can either be conducted directly by the operator or subcontracted to
a  qualified  maintenance  facility;  and

     7.     an  operations manual must be prepared for the operator and approved
by  Transport  Canada.

     It  will  be  a  condition  of  any  definitive agreement that the aircraft
servicing  company  meets  all  of  the  criteria  set  forth  above.

Marketing

     Prime  Air  (BC)  intends  to  conduct  a marketing program through a third
marketing  company  as  soon as sufficient funds are available.  Advertising and
promotion  would  focus  both  on  the  Whistler area as the destination, and on
creating  an  image of convenience, quality and reliability for the air service.
Final  approval  of  all  advertising  and promotion would remain with Prime Air
(BC).  The  corporate  name  and  logo  would  be  used throughout the companies
advertising  materials  in  order  to  develop  consumer  and  travel  agency
familiarity.

     Through  a  marketing  company, Prime Air (BC) plans to prepare promotional
materials  that  would introduce the new air service, first to travel agents and
tour  wholesalers, and then to the consumer.  Promotion would constitute a major
portion of Prime Air (BC)'s overall marketing strategy.  Familiarization flights
would  be  offered  to  select  travel  agencies,  tour  operators,  and others,
potentially  in  conjunction  with  the  ski areas, hotels, Whistler's Trade and
Convention  Center, and the Whistler Resort Association.  The objective would be
for  the  industry  to  become  familiar  enough with the service so that when a
customer  books  travel  to  Whistler,  the  travel agent would suggest that the
customer  make  airline  reservations  all the way to the Whistler area by using
Prime  Air  (BC)'s  services.

     Prime  Air (BC) also plans to contact travel industry journals to introduce
and  promote  the  service.

     Prime Air (BC) also plans to focus much of its advertising on accessibility
to  Whistler.  Advertising  would include direct mail to the travel industry and
specific potential corporate clients, brochures, schedules, and various forms of
media advertising, including magazines and newspapers.  Whenever possible, Prime
Air  (BC)  would  participate in cooperative advertising in order to develop and
reinforce  the  consumer's  associating  Prime  Air  (BC)  with  easy  access to
Whistler.

     Prime  Air (BC) intends also to provide hotels at Whistler and the Whistler
Resort  Association  with  schedule support materials to generate airline ticket
sales  in  conjunction  with  hotel  bookings.

     Prime  Air  (BC)  plans  to  begin  marketing  and sales of its services in
advance of operating its first flight.  The objective would be to generate sales
on  all  flights  from  the very beginning of flight operations.  Prime Air (BC)


                                       10
<PAGE>

also  plans  to  focus initially on creating awareness of the service within the
travel  industry.  Specifically, marketing staff would contact tour wholesalers,
travel agencies, convention and meeting planners and other groups that currently
book  clients  to  Whistler.

     A  major  component  of  Prime  Air (BC)'s sales strategy would include the
integration  of  the flight schedules and fares into all of the major worldwide,
computerized  reservations systems.  Such networks allow travel agencies to book
their  clients  directly  through the computerized system.  To do this properly,
Prime  Air  (BC)  would  engage  Voyageur  management to provide the appropriate
expertise  in the development of flight schedules and fares, which would include
assisting  Prime  Air  (BC)  in  making  the  final  selection of a computerized
reservation  system  to  join.

     In  order  to  generate  sales  in the local Seattle and Vancouver markets,
Prime  Air  (BC)  intends  to plan several types of promotional programs.  These
would likely include ticket packages (purchasing tickets for ten flights for the
price  of  nine), special introductory fares, and/or joint promotions with other
advertisers  in  the  area.

     Prime  Air  (BC)  intends  to maximize the use of the Internet as a tool to
reach  the  consumer with specific marketing and sales related information about
the  service.  As  more  and more airlines and computerized reservations systems
make  their  flight  schedules  and  fares available on the Internet, management
believes  the  general  public will become more adept at using the Internet as a
ready  source  of  up-to-date  marketing and sales related information about the
product.  The  target  market group for this air service would be frequent users
of computers and the Internet.  Prime Air (BC) intends to seek the services of a
marketing  firm  to  exploit  this  new  area  of  marketing  potential.

Competition

     Regarding  certain  aspects  of  Prime Air (BC)'s business model, Prime Air
(BC)  does  not  have  any  competition  regarding  the exclusive lease with the
Village  of  Pemberton through December 31, 2025 concerning the operation of the
airport  because Prime Air (BC) has the exclusive right conveyed under the terms
of  the  lease.

     However,  regarding  other facets of Prime Air (BC)'s business model, Prime
Air  (BC)  will  compete  with  other charter and airline companies based in the
Vancouver  and  the  Seattle  area which currently service customers whose final
destination  is  Whistler  Resort.  However,  the other competing airlines still
have  to conduct operations at the airport and Prime Air (BC) will derive income
from  other competitors' use of the airport.  To a limited degree Prime Air (BC)
will  compete  with  buses  chartered or owned by tour operators.  Most of these
entities are more established companies having much greater financial resources,
experience,  and  personnel  resources  than  Prime  Air  (BC).

Employees

     The  Company,  including  Prime Air BC, had one full-time and two part-time
employees as of December 31, 2001.   In addition, Messrs. Horsley and Koch spend


                                       11
<PAGE>

approximately 1-2% and 10% of their respective time on Prime Air related work as
consultants.

Risk  Factors

     An  investment  in the Company involves certain risks.  Before investing in
the  Company's common shares, potential investors should consider the following:

NO  SALES  REVENUES;  UNCERTAIN PROFITABILITY; DEVELOPMENT STAGE COMPANY.  Since
its  inception,  the  Company  has been principally engaged in developmental and
organizational  activities.  To  date,  the  Company  has  not  yet  initiated
activities  which  would  bring  revenues  to  the  air  terminal  facility and,
consequently,  has had no sales revenues.  No sales revenues are expected until,
and  only  if, the Company secures adequate funds to complete the infrastructure
required  to  commence  either  charter  or  scheduled  commercial  air  service
activities.

The  Company  is in the development stage, and its business is subject to all of
the  risks  inherent  in  the  establishment  of a new business enterprise.  The
likelihood  of  success  of  the  Company  must  be  considered  in light of the
problems,  expenses,  complications  and  delays  frequently  encountered  in
connection  with  the  formation  of  a  new  business,  the  development of new
products,  the  competitive  and  regulatory environment in which the Company is
operating  and  the  possibility  that  its  activities  will  not result in the
development  of  any  commercially viable activities.  There can be no assurance
that  the  Company's  activities  will  ultimately  result in the development of
commercial  charter  or  scheduled  air  service.

NEED  FOR  FUTURE  FINANCING.  The  Company will be required to raise additional
funds through public or private financing including grants that may be available
to  complete  the  infrastructure  requirements to allow air service operations.
There  can  be  no  assurance,  however, that the Company will be able to obtain
additional financing on terms favorable to it, if at all.  If adequate funds are
not  available  to  satisfy  short-term  or  long-term capital requirements, the
failure  of  the  Company  to obtain any other acceptable financing would have a
material  adverse  effect  on  the plans and operations of the Company.  Without
additional  financing,  the  Company would become unable to maintain its current
operations  and would be unable to carry out its business plan.  The Company has
no current understandings or commitments to obtain any additional financing from
the  sale of its securities or otherwise.  Additional financing from the sale of
its  securities  may  result  in  dilution  of  the  Company's  then  current
stockholders.

DEPENDENCE  UPON  A KEY OFFICER; ATTRACTION AND RETENTION OF KEY PERSONNEL.  The
business of the Company is highly dependent upon the active participation of its
founder and Chief Executive Officer, Blaine Haug.  The loss or unavailability to
the  Company  of  Mr. Haug would have a material adverse effect on the Company's
business  prospects  and potential earning capacity.  The recruitment of skilled
airline  personnel  is  critical  to  the  Company's  success.  There  can be no
assurance  that  it  will  be  able  to attract and retain such personnel in the
future.


                                       12
<PAGE>

The  process of obtaining required regulatory approvals required to commence air
service  operations  can  be  time-consuming  and expensive and other regulatory
requirements  can  be  burdensome.  Moreover, there can be no assurance that the
required  regulatory  clearances  will  be  obtained.

DEPENDENCE  ON  THIRD  PARTY  CONTRACTORS.  The  Company  intends  to  provide
commercial  air  services, fixed based operations, and marketing of its services
through third party contractors.  Therefore, a substantial part of the Company's
business  will  depend  on  third  parties.

ITEM  2.     DESCRIPTION  OF  PROPERTY

     See  Item  1.  Description  of  Business  -  Airport  Lease  and  Operating
Agreement.

ITEM  3.     LEGAL  PROCEEDINGS

     Neither  the  Company  nor any of its properties is a party to any material
pending  legal  proceedings  or  government  actions,  including  any  material
bankruptcy,  receivership,  or  similar  proceedings.

     In  December  1994  the  U.S.  Securities  and  Exchange Commission filed a
complaint in the United States District Court for the District of Columbia (Case
Number  1:94CV02633)  against  an entity known as "Astro Enterprises, Inc.," and
against Ernst Hiestand, Thomas Hiestand, Elizabeth Kuriger, Henry Strubin, Peter
Thaler,  and  Leonard  Gotshalk, all of whom were allegedly affiliated with such
entity.  The  basis  for such complaint was the dissemination to the public from
approximately  March  1989 through May 1990, of false and misleading information
concerning  the  business  of such entity.  The entity referenced in such action
was  incorporated  in  the  State of Utah on May 23, 1985, and was involuntarily
dissolved on May 1, 1990, for failure to file an annual report with the State of
Utah.  In  1995  Mr.  Paul  Parshall  executed  a  consent and settlement of the
foregoing action, ostensibly as the president, director, and authorized agent of
the entity named in such action.  Management does not believe such action in any
way  involved the Utah Corporation which was subsequently incorporated under the
same  name  on August 30, 1993, and which subsequently changed its name to Prime
Air,  Inc.  and  changed its domicile to the State of Delaware.  Management does
not  believe  there  is  or  was  any  legal  relationship  between  the  "Astro
Enterprises,  Inc."  incorporated  on  May 23, 1985, and the "Astro Enterprises,
Inc." which was incorporated in 1993 and was the predecessor to the Company.  In
addition,  management  does  not  believe  that  Mr.  Parshall was authorized to
execute  such consent on behalf of either entity.  Management is unaware whether
Mr.  Parshall  ostensibly  executed such consent on behalf of the original Astro
Enterprises,  Inc. or the predecessor to the Company by the same name.  However,
the  allegations contained in such action reference events all of which occurred
prior  to  the  incorporation  of  the  predecessor to the Company in 1993.  Mr.
Parshall  provided  and  the  company  accepted his resignation as a director on
February  1,  1996,  at which time Mr. Haug became the sole director of the Utah
Corporation.


                                       13
<PAGE>

     In May 1996 the Company entered into a settlement agreement and undertaking
with the Alberta Securities Commission (file number 100164) in which the Company
agreed  to  be  more  diligent in complying with the requirements of the Alberta
Securities  Act  and  the  rules made thereunder.  In addition, the Company paid
$2,000  to the commission toward the costs of the investigation conducted by the
Commission.  In  February  1996  the Company announced an offering of its common
shares in Alberta newspapers.  Between February 1 and March 1, 1996, the Company
received  $93,040  from fifteen investors in Alberta.  The investors received an
offering  document which did not conform with the form of an offering memorandum
required  pursuant  to  the  Alberta  Securities Act and the distribution to the
investors did not qualify for an exemption under such act.  Upon being contacted
by  the  staff  of  the securities commission, the Company placed all investment
monies  in  trust pending the disposition of the matter.  Thereafter the Company
sent  an  offering memorandum in the required form and an offer of rescission to
all  of  the  investors.  After the return of monies to investors who either did
not  qualify  for  an  exemption  or who elected rescission, and the filing of a
proper report with the securities commission, no further action was taken by the
securities  commission.

ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITIES  HOLDERS

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

ITEM  5.     MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS

     Beginning  June  30, 2002, the Company's Common Stock is quoted on the Pink
Sheets  under  the  symbol  "PMAR".  Previously,  the Company's common stock was
quoted  on  the  OTC Bulletin Board under the symbol "PMAR".  The market for the
Company's  Common  Stock is limited, volatile and sporadic.  The following table
sets  forth the OTCBB high and low sales prices relating to the Company's Common
Stock  for  the  last  two  fiscal years.  These quotations reflect inter-dealer
prices  without  retail  mark-up, mark-down, or commissions, and may not reflect
actual  transactions.

                               FISCAL YEARS ENDED
                     DECEMBER  31,  2001         DECEMBER  31,  2000
                     HIGH BID   LOW BID          HIGH BID   LOW BID
First  Quarter        $0.08      $0.01            $0.09      $0.02
Second  Quarter       $0.01          *            $0.08      $0.04
Third  Quarter        $0.01          *            $0.10      $0.05
Fourth  Quarter           *          *            $0.80      $0.05
*  Less  than  $0.01


                                       14
<PAGE>

     As  of  March  31,  2004,  the Company had approximately 352 holders of its
common  stock.

     The  Company  has  never  paid  cash  dividends.

ITEM  6.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION

Executive  Summary

     The  Company's  primary  operation  is  the  construction  and  subsequent
management  and  operations of an airport facility located in Pemberton, British
Columbia.  Through  the  Company's subsidiary, Prime Air (BC) has entered into a
lease  and  operating agreement with the Village of Pemberton, British Columbia,
Canada  to  plan,  develop, construct, manage and operate a terminal facility at
the  Pemberton  Airport.

     Prime  Air (BC) has constructed the basic terminal building and proposes to
facilitate  regular,  scheduled  air  service  to Pemberton Airport to serve the
nearby resort community of Whistler.  Sufficient funding has not been secured to
provide  for  costs  for  completion  of  certain infrastructure items including
landing  lights, airside and groundside related equipment, advance marketing and
working  capital  requirements.  Management  estimates  the  requirement  for  a
commitment of approximately $3,000,000 to provide a satisfactory start up of the
British  Columbia  operation.

     During  2001,  the Company received no revenues.  Historically, the Company
has  financed  its  building  of  terminal and operation through the issuance of
equity  securities.

     The  Company  intends to market and provide commercial aircraft services to
the  Pemberton  airport  to  provide  access  to primarily the Whistler, British
Columbia  recreational  area.  To facilitate these services, the Company intends
to  provide  FBO  for  both  commercial  and  private  aircraft  services.

Results  Of  Operations

     During  the  year  ended December 31, 2001 the Company derived no revenues.

     Expenses  totaled  $136,201  consisting of primarily $69,000 for consulting
fees,  of  which  $60,000 was attributable to directors and officers, $19,154 in
amortization  related  to the terminal build at Pemberton and $8,426 in rent and
property  taxes  paid  to  the  city  of  Pemberton.  The  $60,000 attributed to
directors and officers relate to $20,000 in director fees and $40,000 attributed
to  the  compensation  for  the  Company's  president.

     The  Company incurred a loss of $(136,201), a per share loss of $(0.01) for
the  year  ended  December  31,  2001.


                                       15
<PAGE>

Liquidity

As  of  December 31, 2001 and 2000, the Company had a working capital deficit of
$(341,507) and $(314,072).  Included in accounts payable and accrued liabilities
of  $231,305  and  $224,450  as  at December 31, 2001 and 2000 are a substantial
amount  of  accounts payables and accrued liabilities due to prior year expenses
that  the  Company  has  yet  been  able  to pay due to the lack or revenues and
capital.   As a result of the lack of revenues, and working capital deficit, the
auditor's  report contains a paragraph about the Company's ability to operate as
a  going  concern.  Historically,  the Company has received loans and issued its
shares  of  common  stock to finance its operations, and building of and further
expansion of the terminal at Pemberton.  It is anticipated that the Company will
continue  to  issue  its  equity securities and rely on loans from affiliates to
finance  its  operations.  However,  no  assurance can be given that the Company
will  be  able  to  rely  on  these  sources  for  capital.

ITEM  7.     FINANCIAL  STATEMENTS

     Auditors'  Report

     Consolidated  Balance  Sheets

     Consolidated  Statements  of  Operations

     Consolidated  Statements  of  Shareholders'  Equity  and  Deficit

     Consolidated  Statements  of  Cash  Flows

     Notes  to  Consolidated  Financial  Statements


                                       16
<PAGE>

                                                            Rutherford & Company
                                                           Chartered Accountants
                                ________________________________________________
                                                 9511 Bates Road, Richmond, B.C.
                                                                  CANADA V7A 1E3
                                      Telephone (604)272-5454  Fax (604)272-5874




                                AUDITORS' REPORT



To  the  Shareholders  of
Prime  Air,  Inc.  (A  Nevada  Corporation)

     We  have  audited  the  consolidated  balance  sheets of Prime Air, Inc. (A
Development Stage Company) as at December 31, 2001 and 2000 and the consolidated
statements  of  operations,  shareholders' equity and deficit and cash flows for
the  years then ended.  These financial statements are the responsibility of the
company's  management.  Our  responsibility  is  to  express an opinion on these
financial  statements  based  on  our  audits.

     We have conducted our audits in accordance with generally accepted auditing
standards.  Those  standards require that we plan and perform an audit to obtain
reasonable  assurance  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.

     In  our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at December 31, 2001 and 2000
and  the  results  of  its operations and cash flows for the years then ended in
accordance  with  United  States  generally  accepted  accounting  principles.



                                          "Rutherford  &  Company"
Richmond,  Canada
April 9, 2002                              Chartered Accountants


                                       17
<PAGE>

                                                            RUTHERFORD & COMPANY
                                                           Chartered Accountants
______________________________________________________________________________
                                                 9511 Bates Road, Richmond, B.C.
                                                                  CANADA V7A 1E3
                                      Telephone (604)272-5454  Fax (604)272-5874







                      COMMENTS BY AUDITOR FOR U.S. READERS
                       ON CANADA-U.S. REPORTING DIFFERENCE





     In the United States, reporting standards for auditors require the addition
of an explanatory paragraph (following the opinion paragraph) when the financial
statements  are affected by conditions and events that cast substantial doubt on
the company's ability to continue as a going concern, such as those described in
Note  2  to the financial statements.  Our report to the shareholders dated June
26,  2002  is expressed in accordance with Canadian reporting standards which do
not  permit  a  reference  to such events and conditions in the auditors' report
when  these  are  adequately  disclosed  in  the  financial  statements.







                                        "Rutherford  &  Company"
Richmond,  Canada
April  9, 2002                           Chartered Accountants


                                       18
<PAGE>

<TABLE>
<CAPTION>

                                  PRIME AIR, INC.
                           (A Development Stage Company)
                            CONSOLIDATED BALANCE SHEETS
                            (all figures in US dollars)


                                                       December 31    December 31
                                                          2001           2000
                                                      -------------  -------------
<S>                                                   <C>            <C>
ASSETS
CURRENT ASSETS
  Cash and short-term deposits . . . . . . . . . . .  $      2,089   $      2,605
  Prepaid expenses . . . . . . . . . . . . . . . . .         1,550          1,467
  Goods and Services Tax recoverable . . . . . . . .         1,148          1,490
                                                      -------------  -------------
                                                             4,787          5,562
CAPITAL ASSETS  (Note 4) . . . . . . . . . . . . . .       441,251        488,392
                                                      -------------  -------------

                                                      $    446,038   $    493,954
                                                      =============  =============

LIABILITIES
CURRENT LIABILITIES
  Accounts payable and accrued liabilities . . . . .  $    231,305   $    224,450
  Due to related parties (Note 7). . . . . . . . . .       111,846         91,846
  Notes and advances payable (Note 5). . . . . . . .         3,143          3,338
                                                      -------------  -------------
                                                           346,294        319,634
                                                      -------------  -------------

SHAREHOLDER'S EQUITY
CAPITAL STOCK (Note 6)
  Authorized:
    50,000,000 common shares with a
      stated par value of $.001/share
    3,000,000 preferred cumulative convertible
      shares with a stated par value of $.001/share
  Issued:
    21,978,666 common shares (2000: 21,022,666). . .        21,979         21,023

CAPITAL IN EXCESS OF PAR VALUE . . . . . . . . . . .     4,021,532      3,938,482
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS). . . .       (13,115)         9,266
DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE . . . .    (3,930,652)    (3,794,451)
                                                      -------------  -------------
                                                            99,744        174,320
                                                      -------------  -------------

                                                      $    446,038   $    493,954
                                                      =============  =============
</TABLE>

                 See Accompanying Notes To Financial Statements


                                       19
<PAGE>

<TABLE>

<CAPTION>

                                              PRIME AIR, INC.
                                      ( A Development Stage Company )
                                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                        (all figures in US dollars)


                                                             *                 *           From Inception
                                                             *                 *           March 10, 1989
                                                        Year ended        Year ended             To
                                                        December 31       December 31        December 31
                                                           2001              2000               2001
                                                        (Audited)          (Audited)      (Unaudited-Note 1)
                                                       -------------  -------------------  -----------------
<S>                                                    <C>            <C>                  <C>
Administrative And General Expenses
  Flight operations . . . . . . . . . . . . . . . . .  $          -   $                -   $       114,720
  Audit and accounting. . . . . . . . . . . . . . . .         6,781               20,280           104,621
  Advertising . . . . . . . . . . . . . . . . . . . .           666                3,434            18,083
  Amortization. . . . . . . . . . . . . . . . . . . .        19,154               20,053           124,144
  Association membership fees . . . . . . . . . . . .         5,768                    -             5,768
  Automotive. . . . . . . . . . . . . . . . . . . . .             -                    -            19,164
  Bad debts . . . . . . . . . . . . . . . . . . . . .             -                    -             1,933
  Commissions and finders' fees . . . . . . . . . . .         3,261               11,361            22,311
  Consulting. . . . . . . . . . . . . . . . . . . . .         9,000               11,791            20,791
  Consulting to related parties  (Note 7) . . . . . .        60,000               80,000         2,639,696
  Foreign currency translation loss . . . . . . . . .             -                    -            60,131
  Insurance . . . . . . . . . . . . . . . . . . . . .         2,374                2,304            28,875
  Interest and service charges. . . . . . . . . . . .         1,289                4,699            21,361
  Legal costs . . . . . . . . . . . . . . . . . . . .             -                9,681           181,941
  Management remuneration . . . . . . . . . . . . . .             -                    -            77,287
  Office and general. . . . . . . . . . . . . . . . .         1,249                  410           165,009
  Repairs and maintenance . . . . . . . . . . . . . .         1,420                2,171            10,262
  Rent and property taxes - airport facility (Note 8)         8,426                9,294            60,799
  Telephone and utilities . . . . . . . . . . . . . .         4,754                4,051            88,040
  Transfer agent, listing and filing fees . . . . . .         6,405                6,277            57,494
  Travel, promotion and entertainment . . . . . . . .         5,654                5,705           108,222
                                                       -------------  -------------------  -----------------
                                                            136,201              191,511         3,930,652
                                                       -------------  -------------------  -----------------

Net Loss For The Period . . . . . . . . . . . . . . .  $    136,201   $          191,511   $     3,930,652
                                                       =============  ===================  =================


Net Loss Per Common Share . . . . . . . . . . . . . .  $      (0.01)  $            (0.01)
                                                       =============  ===================


Weighted Average Common Shares Outstanding. . . . . .    21,586,358           20,169,124
                                                       =============  ===================
</TABLE>

                 See Accompanying Notes To Financial Statements


                                       20
<PAGE>

<TABLE>
<CAPTION>

                                                         PRIME AIR, INC.
                                                 ( A Development Stage Company)
                                   CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND DEFICIT
                                                 (  all figures in US dollars )

                                                                     Capital in                        Accumulated     Accumulated
                                                                     Excess of          Share            Other       Deficit During
                                             Common Shares          (Less than)      Subscriptions    Comprehensive    Development
                                         Shares         Amount       Par Value         Receivable     Income (loss)       Stage
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
<S>                                   <C>            <C>            <C>              <C>              <C>             <C>
Balance at Inception on
   March 10, 1989 (unaudited). . . .              -  $           -  $            -   $             -  $            -  $       -
Issue of common shares for cash
   at $.001/share. . . . . . . . . .      1,260,474          1,260            (630)                -               -          -
Net loss for the year ended
   March 31, 1990. . . . . . . . . .              -              -               -                 -               -    (17,956)
Balance, March 31, 1990 (unaudited).      1,260,474          1,260            (630)                -               -    (17,956)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Issue of common shares for cash
   at $.001/share. . . . . . . . . .        315,118            315            (157)                -               -          -
Net loss for the year ended
   March 31, 1991. . . . . . . . . .              -              -               -                 -               -    (49,419)
Balance, March 31, 1991 (unaudited).      1,575,592          1,575            (787)                -               -    (67,375)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Net loss for the year ended
   March 31, 1992. . . . . . . . . .              -              -               -                 -               -    (10,990)
Balance, March 31, 1992 (unaudited).      1,575,592          1,575            (787)                -               -    (78,365)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Issue of common shares for cash
   at $.13866/share. . . . . . . . .        264,176            264          36,367                 -               -          -
   at $.10677/share. . . . . . . . .         34,138             34           3,611                 -               -          -
Net loss for the year ended
   March 31, 1993. . . . . . . . . .              -              -               -                 -               -    (38,426)
Balance, March 31, 1993 (unaudited).      1,873,906          1,873          39,191                 -               -   (116,791)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Issue of common shares for services
   at $.07906/share. . . . . . . . .        184,346            184          14,390                 -               -          -
Issue of common shares for cash
   at $.001/share. . . . . . . . . .        600,000            600            (300)                -               -          -
   at $.05449/share. . . . . . . . .          6,680              7             357                 -               -          -
   at $.07707/share. . . . . . . . .         47,268             47           3,596                 -               -          -
   at $.13966/share. . . . . . . . .         38,802             39           5,380                 -               -          -
   at $.16508/share. . . . . . . . .         46,322             46           7,601                 -               -          -
   at $.23111/share. . . . . . . . .        174,890            175          40,243                 -               -          -
   at $.34663/share. . . . . . . . .         31,512             32          10,891                 -               -          -
   at $.46217/share. . . . . . . . .         15,756             16           7,266                 -               -          -
Net loss for the year ended
   March 31, 1994. . . . . . . . . .              -              -               -                 -               -    (50,846)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Balance, March 31, 1994 (unaudited).      3,019,482  $       3,019  $      128,615   $             -  $            -  $(167,637)
                                      =============  =============  ===============  ===============  ==============  =============
</TABLE>

                         See  Accompanying  Notes  To  Financial  Statements


                                       21
<PAGE>

<TABLE>
<CAPTION>
                                                   PRIME AIR, INC.
                                            (A Development Stage Company)
                             CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND DEFICIT
                                            (all figures in US dollars )

                                                                     Capital in                        Accumulated     Accumulated
                                                                     Excess of          Share            Other       Deficit During
                                             Common Shares          (Less than)      Subscriptions    Comprehensive    Development
                                         Shares         Amount       Par Value         Receivable     Income (loss)       Stage
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
<S>                                   <C>            <C>            <C>              <C>              <C>             <C>
Balance Forward. . . . . . . . . . . .   3,019,482   $       3,019  $      128,615   $             -   $           -   $  (167,637)
Issue of common shares for services
   at $.21124/share. . . . . . . . . .   1,874,956           1,875         394,191                 -               -             -
Issue of common shares for cash
   at $.18687/share. . . . . . . . . .     497,384             498          92,448                 -               -             -
   at $.23117/share. . . . . . . . . .     608,178             608         139,982                 -               -             -
Net loss for the year ended
   June 28, 1994 . . . . . . . . . . .           -               -               -                 -               -      (437,013)
Balance, June 28, 1994 (unaudited) . .   6,000,000           6,000         755,236                 -               -      (604,650)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Share subscription at $.1835/share . .           -               -          (7,313)              (20)              -
Net loss for the year ended
   March 31, 1994. . . . . . . . . . .           -               -               -                 -               -      (135,530)
Balance, December 31, 1994 . . . . . .   6,000,000           6,000         747,923               (20)              -      (740,180)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Issue of common shares for cash
   and/or services at $.11711/share. .   1,125,100           1,125         130,630                 -               -             -
Net loss for the year ended
   March 31, 1995. . . . . . . . . . .           -               -               -                 -               -       (71,266)
Balance, December 31, 1995 (unaudited)   7,125,100           7,125         878,553               (20)       (811,446)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Issue of common shares for cash
   at $.25/share . . . . . . . . . . .   3,021,116           3,021         752,259                 -               -             -
Issue of common shares for services
   at $.25/share . . . . . . . . . . .   2,967,346           2,967         738,870                 -               -             -
Net loss for the year ended
   December 31, 1996 . . . . . . . . .           -               -               -                 -               -      (978,770)
Balance, December 31, 1996 (unaudited)  13,113,562          13,113       2,369,682               (20)              -    (1,790,216)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Issue of common shares for services
   at $.26/share . . . . . . . . . . .     656,000             656         169,904                 -               -             -
Issue of common shares for
   debt settlements:
   at $.25/share . . . . . . . . . . .     248,504             249          61,876                 -               -             -
   at $.25205/share. . . . . . . . . .      72,760              73          18,266                 -               -             -
   at $.26523/share. . . . . . . . . .     189,600             189          50,098                 -               -             -
Net loss for the year ended
   December 31, 1997 . . . . . . . . .           -               -               -                 -               -      (359,929)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Balance, December 31, 1997 (unaudited)  14,280,426   $      14,280  $    2,669,826   $           (20)  $           -  $ (2,150,145)
                                      =============  =============  ===============  ===============  ==============  =============
</TABLE>

                 See Accompanying Notes To Financial Statements


                                       22
<PAGE>

<TABLE>
<CAPTION>

                                                    PRIME AIR, INC.
                                             (A Development Stage Company)
                              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND DEFICIT
                                              (all figures in US dollars )

                                                                     Capital in                        Accumulated     Accumulated
                                                                     Excess of          Share            Other       Deficit During
                                             Common Shares          (Less than)      Subscriptions    Comprehensive    Development
                                         Shares         Amount       Par Value         Receivable     Income (loss)       Stage
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
<S>                                   <C>            <C>            <C>              <C>              <C>             <C>
Balance Forward. . . . . . . . . . . .  14,280,426   $     14,280   $    2,669,826   $           (20)  $           -   $(2,150,145)
Issue of common shares for
   debt settlements:
   at $.19415/share. . . . . . . . . .      20,000             20            3,853                 -               -             -
   at $.20082/share. . . . . . . . . .      36,430             37            7,260                 -               -             -
Issue of common shares for services
   at $.19790/share. . . . . . . . . .   3,327,454          3,327          655,177                 -               -             -
Issue of common shares for
   debt settlements:
   at $.25/share . . . . . . . . . . .      64,800             65           16,135                 -               -             -
Issue of common shares for services
   at $.25/share . . . . . . . . . . .     290,000            290           72,210                 -               -             -
Transfer agent adjustment. . . . . . .      (6,000)            (6)
Write off of uncollectable share
   subscription receivable . . . . . .           -              -            7,313                20               -             -
Net loss for the year ended
   December 31, 1998 . . . . . . . . .           -              -                -                 -               -      (880,318)
Balance, December 31, 1998 (unaudited)  18,013,110         18,013        3,431,774                 -               -    (3,030,463)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Issue of common shares for
   debt settlements:
   at $.20/share . . . . . . . . . . .     201,250            202           40,048                 -               -             -
   at $.25/share . . . . . . . . . . .     423,200            423          105,377                 -               -             -
Issue of common shares for services
   at $.2339/share . . . . . . . . . .   1,010,000          1,010          235,229                 -               -             -
Foreign currency translation . . . . .           -              -                -                 -          21,491             -
Net loss for the year ended
   December 31, 1999 . . . . . . . . .           -              -                -                 -               -      (572,477)
Balance, December 31, 1999-(unaudited)  19,647,560         19,648        3,812,428                 -          21,491    (3,602,940)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Issue of common shares for cash
   at $.08/share . . . . . . . . . . .     500,000            500           39,500                 -               -             -
Issue of common shares for
   debt settlements:
   at $.08/share . . . . . . . . . . .       4,100              4              324                 -               -             -
   at $.10/share . . . . . . . . . . .     871,006            871           86,230                 -               -             -
Foreign currency translation . . . . .           -              -                -                 -         (12,225)            -
Net loss for the year ended
   December 31, 2000 . . . . . . . . .           -              -                -                 -               -      (191,511)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Balance, December 31, 2000 . . . . . .  21,022,666   $     21,023   $    3,938,482   $             -   $       9,266   $(3,794,451)
                                      =============  =============  ===============  ===============  ==============  =============
</TABLE>

                 See Accompanying Notes To Financial Statements


                                       23
<PAGE>

<TABLE>
<CAPTION>

                                              PRIME AIR, INC.
                                       (A Development Stage Company)
                        CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND DEFICIT
                                        (all figures in US dollars )

                                                                     Capital in                        Accumulated     Accumulated
                                                                     Excess of          Share            Other       Deficit During
                                             Common Shares          (Less than)      Subscriptions    Comprehensive    Development
                                         Shares         Amount       Par Value         Receivable     Income (loss)       Stage
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
<S>                                   <C>            <C>            <C>              <C>              <C>             <C>
Balance Forward . . . . . . . .         21,022,666   $     21,023   $    3,938,482   $             -   $       9,266   $(3,794,451)
Issue of common shares for cash
   at $.08/share. . . . . . . .            300,000            300           23,700                 -               -             -
Issue of common shares for
   debt settlement
   at $.08/share. . . . . . . .            250,000            250           19,750                 -               -             -
   at $.10/share. . . . . . . .            400,000            400           39,600                 -               -             -
Transfer agent adjustment . . .              6,000              6
Foreign currency translation. .                  -              -                -                 -         (22,381)            -
Net loss for the year ended
   December 31, 2001. . . . . .                  -              -                -                 -               -      (136,201)
                                      -------------  -------------  ---------------  ---------------  --------------  -------------
Balance, December 31, 2001. . .         21,978,666   $     21,979   $    4,021,532   $             -   $     (13,115)  $(3,930,652)
                                      =============  =============  ===============  ===============  ==============  =============
</TABLE>

                 See Accompanying Notes To Financial Statements


                                       24
<PAGE>

<TABLE>
<CAPTION>

                                                PRIME AIR, INC.
                                         (A Development Stage Company)
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (all figures in US dollars)


                                                        From Inception
                                                          Year ended         Year ended        March 10, 1989
                                                         December 31         December 31       To December 31
                                                             2001               2000                2001
                                                         (Unaudited)         (Unaudited)     (Unaudited Note 1)
                                                       ----------------  -------------------  -----------------
<S>                                                    <C>               <C>                  <C>
NET INFLOW (OUTFLOW) OF CASH RELATED
  TO THE FOLLOWING ACTIVITIES:

OPERATING
  Net loss for the period . . . . . . . . . . . . . .  $      (136,201)  $         (191,511)  $    (3,930,652)
  Adjustments to reconcile net loss to net cash used
     in operating activities:
  Services paid by issue of common stock. . . . . . .                -                    -         2,290,280
  Amortization. . . . . . . . . . . . . . . . . . . .           19,154               20,053           119,606
  (Increase) in prepaid expenses. . . . . . . . . . .             (172)                 (19)           (1,627)
  Decrease (increase) in goods and services tax . . .              262                2,972            (1,205)
     recoverable
  Increase (decrease) in due to related parties . . .           20,000               80,000           100,000
  Increase (decrease) in accounts payable . . . . . .           72,938               68,901           811,958
                                                       ----------------  -------------------  -----------------
                                                               (24,019)             (19,604)         (611,640)
                                                       ----------------  -------------------  -----------------

FINANCING
  Notes and advances payable. . . . . . . . . . . . .                -              (23,977)           32,139
  Issue of capital stock. . . . . . . . . . . . . . .           24,000               40,000         1,301,631
                                                       ----------------  -------------------  -----------------
                                                                24,000               16,023         1,333,770
                                                       ----------------  -------------------  -----------------

INVESTING
  Recovery (cost) of terminal facility
       construction costs . . . . . . . . . . . . . .                -                2,539          (647,126)
                                                       ----------------  -------------------  -----------------


Effect of exchange rate changes on cash . . . . . . .             (497)               3,175           (72,915)
                                                       ----------------  -------------------  -----------------

NET CASH INFLOW (OUTFLOW) . . . . . . . . . . . . . .             (516)               2,133             2,089

CASH, BEGINNING OF PERIOD . . . . . . . . . . . . . .            2,605                  472                 -
                                                       ----------------  -------------------  -----------------

CASH, END OF PERIOD . . . . . . . . . . . . . . . . .  $         2,089   $            2,605   $         2,089
                                                       ================  ===================  =================

NON-CASH FINANCING ACTIVITIES
  Common stock issued for services. . . . . . . . . .                -                    -         2,290,280
  Common stock issued for debt. . . . . . . . . . . .           60,000               87,429           451,600
</TABLE>

                  See Accompanying Notes To Financial Statements


                                       25
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


1.     INCORPORATION,  PRINCIPLES  OF  CONSOLIDATION AND ACCOUNTING PRESENTATION

The  Company  was  incorporated  under  the  laws of the State of Nevada, USA on
November  10,  1996,  the  purpose  of  which  was to change the domicile of the
Company  from  the  State  of  Delaware to the State of Nevada.  This change was
approved  by  the  shareholders  of  both  corporations on November 26, 1997 and
effected through a "plan and agreement of merger" with the surviving corporation
being  Prime  Air,  Inc.  (Nevada).  The  articles of merger were filed with the
appropriate  State  authorities  on December 15, 1997 which became the effective
date  of  the  merger.

The  Delaware  corporation was incorporated on April 4, 1996 and acquired all of
the  assets,  liabilities and shareholders of a previous Utah corporation of the
same  name.  The  Utah corporation had been reincorporated on August 30, 1993 as
Astro  Enterprises,  Inc.  and  on  June  28,  1994,  pursuant  to  appropriate
shareholder  agreements,  acquired  all  outstanding shares of Prime Air Inc. (a
Canadian  corporation)  in exchange for shares of its capital stock on a .787796
to 1 basis, thereby providing the shareholders of Prime Air Inc. with 90% of the
outstanding  capital  stock  of Astro Enterprises, Inc.  Astro Enterprises, Inc.
then  changed  its  name  to  Prime  Air,  Inc.  Following  incorporation of the
Delaware  company,  the  Utah  corporation  was  dissolved  on  May  15,  1996.

These  consolidated financial statements include the accounts of the Company and
its wholly-owned operating subsidiary, Prime Air Inc. (the Canadian corporation)
and  have  been  prepared  in  accordance  with  U.S.  GAAP  standards.

The  results  of  operations  and  cash  flows  for  the period from the date of
inception  of this organization as a development stage company on March 10, 1989
to  December 31, 2001 are presented herein for information purposes only.  These
amounts  are  unaudited  and  accordingly  no  audit  opinion has been expressed
thereon.

2.     NATURE  OF  OPERATIONS  /  GOING  CONCERN  CONSIDERATIONS

The  Company  is  presently in its developmental stage and currently has minimal
sources  of revenue to provide incoming cash flows to sustain future operations.
The  Company's  present  activities  relate  to  the  construction  and ultimate
exclusive  operation  of  an  international  passenger  and  cargo  air terminal
facility  in  the  Village  of  Pemberton, British Columbia and the operation of
scheduled  flight  services  between  that facility and certain major centers in
Canada  and  the  United  States  in  conjunction with Voyageur Airways Limited.
Terminal  building  construction  was  substantially  completed in May 1996. The
future  successful  operation  of  the  Company is dependent upon its ability to
obtain  the  financing  required  to  complete  and  operationalize the terminal
facility  and  to  commence  operation  thereof on an economically viable basis.
Management  believes  the  Company  will be able to generate sufficient funds to
meet  its  obligations  for  a period of at least twelve months from the balance
sheet  date. There is no guarantee that the Company will be able to complete any
of  the  above  objectives.  These factors raise substantial doubt regarding the
Company's  ability  to  continue  as  a  going  concern.

These  consolidated financial statements have been prepared on a "going concern"
basis  which  assumes  the  Company  will  be able to realize its assets, obtain
financing  as  required  and  discharge  its  liabilities and commitments in the
normal  course  of  business.


                                       26
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2001 and 2000

3.     SIGNIFICANT  ACCOUNTING  POLICIES

Foreign  Currency  Translation
------------------------------

The Company's functional and reporting currency is the United States dollar. The
financial  statements  of the Company are translated to United States dollars in
accordance  with  Statement  of  Financial  Accounting Standards ("SFAS") No. 52
"Foreign  Currency  Translation". Monetary assets and liabilities denominated in
foreign  currencies  are  translated  using  the exchange rate prevailing at the
balance  sheet  date.  Gains  and losses arising on translation or settlement of
foreign  currency  denominated  transactions  or  balances  are  included in the
determination  of income. Foreign currency transactions are primarily undertaken
in  Canadian  dollars.  The  Company  has  not,  to the date of these financials
statements,  entered into derivative instruments to offset the impact of foreign
currency  fluctuations.

As  the  functional  currency  of  the  wholly-owned  subsidiary is the Canadian
dollar, SFAS No. 52 requires the use of the current rate method to translate the
subsidiary's  financial  statements  into  US  dollars.  Under  the current rate
method,  all  assets  and  liabilities are translated at the current rate, while
stockholders' equity accounts are translated at the appropriate historical rate.
The  revenues  and  expenses that occur evenly over the period are translated at
the weighted-average rate for the period. The cumulative translation adjustments
balance  is  reported  as a component of accumulated other comprehensive income.

Fair  Value  of  Financial  Instruments
---------------------------------------

In  accordance  with  the  requirements  of SFAS No. 107, "Disclosure About Fair
Value  Of  Financial  Instruments", the carrying amounts reported on the balance
sheets  for  cash  and cash equivalents, namely, "cash and short-term deposits",
"prepaid  expenses",  "GST  recoverable",  "accounts  payable  and  accrued
liabilities"  and  "notes  and  advances  payable" approximate their fair market
value.

Receivables  and  Prepaid  Expenses
-----------------------------------

All  amounts  reported  as receivables or prepaid expenses have been recorded at
their  original  values.  There have been no amounts written off as bad debts or
provided  for  as  an  allowance  against  the  recovery  of  these  assets.

Capital  Assets
---------------

a)     Air  Terminal  Construction  Costs: Expenditures relating directly to the
       ----------------------------------
construction  of  the  air  terminal facility and related engineering and design
have  been  recorded in the accounts of the Company at cost, net of amortization
which is provided on a straight-line basis over the 30-year term of the property
lease.

b)     Furniture  and  Equipment: Furniture and equipment is stated at cost, net
       -------------------------
of  amortization  which  is  provided  for  at  the rate of 20% per annum on the
declining  balance  basis.


                                       27
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


3.     SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Use  of  Estimates  in  the  Preparation  of  Financial  Statements
-------------------------------------------------------------------

The  preparation  of  financial statements in conformity with generally accepted
accounting principals 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 periods.  In
these  financial  statements,  assets,  liabilities  and  results  of operations
involve  significant  reliance  on  management  estimates.  Actual results could
differ  from  the  use  of  those  estimates.

Income  Taxes
-------------

The  Company  adopted  SFAS  No.  109, "Accounting For Income Taxes", during the
fiscal year ended December 31, 1998 and applied the provisions of that statement
on  a  retroactive  basis  to  the  previous  fiscal years, which resulted in no
significant  adjustments.  SFAS No. 109, "Accounting for Income Taxes", requires
an  asset  and  liability  approach  for  financial accounting and reporting for
income  tax purposes.  This statement recognizes (a) the amount of taxes payable
or  refundable  for the current year and (b) deferred tax liabilities and assets
for future tax consequences of events that have been recognized in the financial
statements  or  tax  returns.  Potential  benefits  of income tax losses are not
recognized  in  the  accounts  until  realization  is  more  likely  than  not.

The  Company  has cumulative net operating losses of approximately $1,363,000 at
December  31, 2001 and $1,296,000 at December 31, 2000. The operating subsidiary
Company  has  cumulative  net  operating  losses  of  approximately  $668,000 at
December  31,  2001 and $790,000 at December 31, 2000.  Pursuant to SFAS 109 the
Company  is  required  to  compute  tax  asset benefits for net operating losses
carried  forward.  Potential  benefit  of  net  operating  losses  have not been
recognized  in  these financial statements because the Company cannot be assured
it  is  more  likely  than  not it will utilize the net operating losses carried
forward  in  future  years.  The  potential  income  tax  benefits  of these net
operating loss carry forwards of approximately $581,000 at December 31, 2001 and
$  585,000  at December 31, 2000 (based upon current income tax rates) have been
offset by valuation reserves of the same amount.  Net operating losses in Canada
expire  after  seven  (7) years and net operating losses in United States expire
after  twenty  (20)  years.

Other  Comprehensive  Loss
--------------------------

SFAS  No.  130,  "Reporting Comprehensive Income," establishes standards for the
reporting  and display of comprehensive loss and its components in the financial
statements.  As  at  December  31,  2001,  the  Company  had  accumulated  other
comprehensive  loss  of  $13,115,  which  is  comprised  of  foreign  currency
translation  loss.


                                       28
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2001 and 2000

4.    CAPITAL  ASSETS

Capital  assets  consist  of the following at December 31, 2001 and December 31,
2000:
<TABLE>
<CAPTION>
                                              December  31,  2001        December  31,  2000
                                      ---------------------------------  -------------------
                                                 Accumulated  Net  Book       Net  Book
                                        Cost    Amortization    Value           Value
                                      --------  ------------  ---------       ----------
<S>                                   <C>       <C>           <C>             <C>
     Air terminal construction costs  550,684     $110,684     $440,000        $486,731

     Furniture and equipment . . . .    4,516        3,265        1,251        $  1,661
                                      --------  ------------  ---------       ----------
                                      555,200     $113,949     $441,251        $488,392
                                      ========  ===========  ==========       ==========
</TABLE>

5.    NOTES  AND  ADVANCES  PAYABLE

The  notes  and  advances  payable  are  unsecured, non-interest bearing and are
without  specific  terms  of  repayment.


6.    CAPITAL  STOCK

In  July,  1996,  management  of  the  Company voluntarily halted trading of its
common  shares based upon the conclusion that information concerning the history
of  the  Company  provided  by  former  management  may  not have been complete.
Adequate  information  was subsequently provided to the public by management and
trading  was  recommenced  on  March 27, 1997.  The Company prepared and filed a
registration statement in connection with the change of domicile (referred to in
Note 1) to register all of the outstanding common shares of capital stock in the
Company.  This  registration  has  been declared effective by the Securities and
Exchange  Commission and the change of domicile became effective on December 15,
1997.

Shares  issued  for  non-cash  consideration are valued based on the fair market
value  of  the  common  stock  on  the  measurement  date  for  the transaction.


                                       29
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2001 and 2000

7.    RELATED  PARTY  TRANSACTIONS

Included  in  due  to  related  parties  is  an amount of $11,846 which has been
advanced to the Company by a shareholder and/or a corporation controlled by that
shareholder  who  is the beneficial owner of 2,245,226 shares of common stock of
the  Company,  that  holding  representing  10.22% of the issued and outstanding
capital  of  the  Company.

During the years ended December 31, 2001 and 2000, no cash remuneration was paid
to  any  director  or  officer  of  the  Company.  The  Company records services
provided  by related parties at their fair value in the period when the services
are  rendered  and the obligation accrued. The Company has adopted the policy of
issuing  "restricted"  common  shares  to  certain  directors  and  officers for
services  rendered.  Occasionally  the  Company  issues shares in a later period
than  when  the  services  were  performed.  The  common  shares later issued in
settlement  of  these  obligations  are  recorded based on the fair value of the
services performed, being the measurement date.  Also included in due to related
parties  is  an  amount  of  $100,000  (2000  -  $80,000), which is the value of
services  rendered  by directors for consulting services provided in the current
and  prior  fiscal  years.

During  the  year  ended  December  31,  2001, directors of the Company received
650,000  common  shares  by  way  of  a  debt settlement covering obligations of
$60,000.  During  the  year  ended  December  31, 2000, a director and a company
controlled by a significant shareholder received 871,006 common shares by way of
a  debt  settlement  covering  obligations  of  $87,101.


8.    RENT,  PROPERTY  TAXES  AND  LEASE  COMMITMENT

The  Canadian  subsidiary  corporation  has  entered  into  an Airport Lease and
Operating  Agreement with The Corporation of The Village of Pemberton in British
Columbia whereby it has been granted an exclusive and irrevocable lease over the
lands and airport facilities associated with the Pemberton Airport.  The term of
the Lease and Operating Agreement, including extension options relating thereto,
is  for  a  total  of  30  years  with  terminal  rent  payable  as  follows:

     $  67  US  ($100 CDN) per annum for the initial six (6) years (1993 through
     1999);  and  thereafter

     5%  of  gross receipts per annum derived from the operation of the terminal
     facilities,  excluding  amounts  received  in  connection  with the sale of
     airline  tickets  and  other  forms of transportation. The lease commitment
     amounts  for  2001 through 2005 cannot be quantified as the amount of gross
     receipts  for  those years cannot be determined and active operation of the
     terminal  facilities  has  not  yet  commenced.

No  lease payments were made during the years ended December 31, 2001 or 2000 as
there  were  no  gross  receipts  derived  from  operations  in those years. The
Company,  however,  was  obligated  to  pay  property taxes imposed by municipal
authorities,  such  levies  amounting  to $8,426 for the year ended December 31,
2001  (2000:  $9,294).

The Airport Agreement may be terminated by the Village of Pemberton in the event
of  a  material default by Prime Air (BC) or if Prime Air shall become bankrupt.
The terminal facilities shall become the property of the Village of Pemberton at
the  expiration  of  the  Airport  Agreement.


                                       30
<PAGE>

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

None

ITEM  8A.  CONTROLS  AND  PROCEDURES.

     We  carried  out  an  evaluation,  under  the  supervision  and  with  the
participation  of  the our management, including our Chief Executive Officer and
Chief  Financial Officer, about the effectiveness of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-15(e).  Based upon that evaluation,
our  Chief  Executive  Officer  and  Chief  Financial Officer concluded that our
disclosure  controls  and procedures as of the end of the period covered by this
Form  10-KSB  are  effective  in  timely  alerting  them to material information
required  to  be  included  in  this  Form  10-KSB.

                                    PART III

ITEM  9.     DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTORS  AND  CONTROL  PERSONS

     Set  forth  below is the background of the executive officers and directors
for  at  least  the  past  five  years  of  the  Company.

The  directors and executive officers of the Company as of December 31, 2001 are
as  follows:

Name                Age          Position
----                ---          --------
Blaine  Haug         56          Chief  Executive  Officer,  Chairman
Wayne  Koch  (1)     53          Treasurer  and  Director
Nigel  Horsley       56          VP  Communications
John  Eberhard       61          Director
Greg  Duffy          49          Director
(1)  Mr.  Wayne Koch resigned as director, and as an officer effective March 19,
2004.

BLAINE  HAUG has served as the Company's Chief Executive Officer and Chairman of
the  Board  since  1997.  Mr.  Haug  is a founding director of the company.  Mr.
Haug,  an  Airline Transport Pilot rated (Transport Canada) and Federal Aviation
Administration  (FAA) equivalent for over twenty years, has flight experience in
propeller  and  jet  aircraft  and  over 7,000 hours of flying time.  Background
includes  education in mechanical engineering.  From March 1980 through December
1986,  Mr.  Haug  was  with  Air Alberta, based in Red Deer, Alberta, as General
Manager and Chief Pilot, where he directed the turnaround of the company.  Prior
to  this  he  was  self-employed  for  ten  years  as  an  aircraft  broker.


                                       31
<PAGE>

WAYNE  KOCH  - serves as Treasurer and Director of Prime Air, Inc.  For at least
the past five years, Mr. Koch has been principal of Koch & Associates, Certified
Management  Accountants, a public accounting practice (established 1987) serving
a  large number of individual, small business and non-resident clients.  He also
provides  accounting  services  to  the  Company  as  a  consultant.  Previous
experience  includes  several  years  as  Controller  of  a diversified property
development  company;  Managing Director of a Whistler based property management
and  accommodation  company;  lecturer  at  the  British  Columbia  Institute of
Technology;  Supervisor,  Budgets  and Program Administration, Airports Branch -
Pacific  Region,  Transport  Canada;  Systems  Design  Consultant  within  the
Government  of  Canada,  Department  of  Supply  and  Services, Ottawa, Ontario.

R.  NIGEL  M.  HORSLEY - Director.  For at least the past five years Mr. Horsley
has  been  involved in investor relations, with an extensive background in print
and  broadcast media, both in the UK and Canada including IRN in London and CKVU
TV  as an Executive Producer in Vancouver.  He has worked for more than a decade
in  PR,  mostly  in  high  technology, including two years with Hill & Knowlton.
Currently, he is also a director of RailPower Technologies Corp. (TSX V: P).  He
is  also  a  former  Vice  President  with  General  Hydrogen  Corporation.

JOHN  EBERHARD,  QC -  Director.  For at least the past five years, Mr. Eberhard
has  been  a practising lawyer, although not on a full-time basis.  He is also a
former Crown Prosecutor, Judge on the Civil Aviation Tribunal.  Mr. Eberhard has
also served as Chief Administrative Officer of the Canadian Rotary Committee for
International  Development  (CRCID)  since  2000.

GREG  DUFFY  -  Director.  Since  1994,  Mr. Duffy has served as Comptroller and
General  Manager  of  Welcome  Ford Sales, Fort Saskatunewan, Alberta, Canada, a
Ford  car  dealership.

ITEM  10.     EXECUTIVE  COMPENSATION

     The  Company,  including  Prime Air BC, had one employee as of December 31,
2001,  consisting  of  Mr.  Haug.

<TABLE>
<CAPTION>

                                                    SUMMARY COMPENSATION TABLE

                                   Annual Compensation                         Long Term Compensation
                           -------------------------------------  ----------------------------------------------
                                                                          Awards             Payout
                                                                  -----------------------   --------
                                                                  Restricted   Securities     LTIP    All Other
                                                Other Annual       Stock       Underlying    Payout   Compensa
                     Year   Salary  Bonus ($)   Compensation ($)   Award(s)    Options (#)   ($)      tion ($)
<S>          <C>           <C>      <C>         <C>               <C>          <C>          <C>       <C>
Blaine Haug          2001  $     0        -0-               -0-   400,000 (1)          -0-       -0-        -0-
President .          2000  $     0        -0-               -0-   400,000 (1)          -0-       -0-        -0-
                     1999  $     0        -0-               -0-   400,000 (1)          -0-       -0-        -0-
</TABLE>

(1)     Mr.  Haug  receives  400,000  shares of the Company common stock for his
services.  In  addition he is reimbursed for expenses he incurs in the course of
performing  his  duties  for  the Company.  Mr. Haug currently has no employment
agreement.


                                       32
<PAGE>

OPTION  GRANTS  IN  2001

The  Company  made  no  stock  option  grants  during  calendar  year,  2001

AGGREGATED  OPTION  EXERCISES  IN  LAST  FISCAL  YEAR  AND  TEN-YEAR OPTIONS/SAR
REPRICINGS

     There  was  no  repricing of options for the fiscal year ended December 31,
2001.

FISCAL  YEAR  END  OPTION  VALUES

          No  executive  officer  had  any options outstanding at the end of the
year.

DIRECTOR  FEES

     Those  directors who provide advice and consultation to the Company receive
compensation  for  their  services as determined by the Board of Directors.  For
years  ended  December  31,  2001,  and  2000,  Messrs. Haug, Koch, Eberhard and
Horsley each earned $5,000 per year which was accrued on the Company's financial
statements.  These  fees  were  paid  in  the  year 2002 through the issuance of
266,667  shares  of common stock in the aggregate at a value of $0.15 per share.

COMPENSATION  PLAN  TABLE

     No  compensation  plan  table has been provided since the Company has never
issued  options  for  compensation.

ITEM  11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED  STOCKHOLDER  MATTERS

The  following  table  sets  forth  certain information regarding the beneficial
ownership  of  Common  Stock  of the Company as of December 31, 2001 to (i) each
person  who  is  known by the Company to own beneficially more than five percent
(5%)  of  the  outstanding shares of its Common Stock, (ii) each director of the
Company,  (iii)  each of the Named Executive Officers and (iv) all directors and
executive  officers  as a group.  This table is based on information provided to
us  or  filed  with  the  Securities  and  Exchange  Commission by the Company's
directors,  executive  officers and principal shareholders.  Except as otherwise
indicated,  the Company believes that the beneficial owners of the shares listed
below have sole investment and voting power with respect to such shares, subject
to  community  property  laws.  The  Company  does not know of any arrangements,
including  any  pledge by any person of securities of the Company, the operation
of  which may at a subsequent date result in a change of control of the Company.


                                       33
<PAGE>

<TABLE>
<CAPTION>

Five Percent Shareholders, Directors      Common Stock      Percentage Owned
and certain Executive Officers         Beneficially Owned
-------------------------------------  -------------------  -----------------
<S>                                    <C>                  <C>

Patricia Jarvis . . . . . . . . . . .           1,101,410               5.01%
P.O. Box 1056
Renton, WA 98057
-------------------------------------  -------------------  -----------------
Blaine Haug . . . . . . . . . . . . .           2,106,666              10.22%
-------------------------------------  -------------------  -----------------
Wayne Koch. . . . . . . . . . . . . .             856,230               3.90%
-------------------------------------  -------------------  -----------------
Nigel Horsley . . . . . . . . . . . .                   -                  0%
-------------------------------------  -------------------  -----------------
John Eberhard . . . . . . . . . . . .             395,340                .80%
-------------------------------------  -------------------  -----------------
Greg Duffy. . . . . . . . . . . . . .              94,720               0.43%
-------------------------------------  -------------------  -----------------
All directors and current executive .           3,591,516              16.35%
officers as a group (5 persons)
-------------------------------------  -------------------  -----------------
</TABLE>

ITEM  12.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     During  the  years  ended December 31, 2001, and 2000, certain officers and
directors  received  common stock for their services or consulting services.  In
addition,  an  entity that may be deemed an affiliate of an officer and director
of  the  Company has lent money to the Company for its operations.  However, the
amount  in  valued  for  each  transaction  did  not  exceed  $60,000.

ITEM  13.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)     Index  to  Exhibits.

     The  following  is  a  list  of  all exhibits filed as part of this Report:

Exhibit
 Number   Name
-------   --------
3.1       Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to
          Registration  Statement  on Form S-4 filed with the Commission on June
          2,  1997)
3.2       Bylaws  (Incorporated  by  reference  to  Exhibit  3.1 to Registration
          Statement  on  Form  S-4  filed  with  the Commission on June 2, 1997)
10.1      Airport  Lease  and  Operating Agreement (Incorporated by reference to
          Exhibit  10.1  to  Registration  Statement  on Form S-4 filed with the
          Commission  on  June  2,  1997)
10.2      Employment  Agreement  with  Blaine Haug (Incorporated by reference to
          Exhibit  10.2  to  Registration  Statement  on Form S-4 filed with the
          Commission  on  June  2,  1997)


                                       34
<PAGE>

10.3      Memorandum Agreement with Voyager Airways (Incorporated by reference
          to  Exhibit  10.5  to  pre-effective  Amendment  No. 2 to Registration
          Statement on Form S-4 filed with the Commission on September 26, 1997)
10.4      Addendum  to  Haug  Employment Agreement (Incorporated by reference to
          Exhibit  10.6  to  pre-effective  amendment  no.  1  to  Registration
          Statement  on  Form  S-4  filed with the Commission on August 6, 1997)
31.1      CEO  and  CFO  certifications  under Section 302 of Sarbanes-Oxley Act
32.1      CEO  and  CFO  Certifications  under Section 906 of Sarbanes-Oxley Act

(b)     Reports  on  Form  8-K.

     None

ITEM  14.     PRINCIPAL  ACCOUNTING  FEES  AND  SERVICES.

     Charted Accountants served as the Company's independent accountants for the
fiscal  year  ended December 31, 2001, and during the course of that fiscal year
they  were  not  engaged  by  the Company to provide certain non-audit services.
During  the  year ended December 31, 2001 and 2000, the following fees were paid
for  services  provided  by  Chartered  Accountants.

     Audit  Fees.  The  aggregate  fees  paid  for the annual audit of financial
statements  included  in  the Company's Form 10-KSB for the years ended December
31,  2001  and  2000  and the review of the Company's quarterly reports for such
years,  amounted  to  approximately  $4,200  and  $4,800  respectively.

     Audit  Related  Fees.  For  the years ended December 31, 2001 and 2000, the
Company  paid  no  fees  to Chartered Accountants related to other audit related
fees.

     Tax Fees.  For the years ended December 31, 2001 and 2000, the Company paid
no  fees  to  Chartered  Accountants  related  to  tax  fees.

     All  Other  Fees.  For  the  years  ended  December  31, 2001 and 2000, the
Company  did  not  pay  Chartered  Accountants  for  any  non-audit  services.


                                       35
<PAGE>

                                    SIGNATURE

          In  accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this Amendment No. 2 to Annual Report on
Form  10-KSB  to  be  signed  on  its  behalf by the undersigned, thereunto duly
authorized.

                          Prime Air, Inc.


April  30,  2004          By:  /s/  Blaine  Haug
                               -----------------
                          Blaine  Haug
                          Chairman of the Board and Chief Executive Officer
                          (Principal Executive and Principal Financial and
                          Accounting Officer)


                                       36
<PAGE>