UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

            Form 10-KSB/A-1

(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, 1998

     [   ]     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                                  Applied For
State or other jurisdiction of               I.R.S. Employer I.D. No.
incorporation or organization

8598 112 STREET, FT. SASKATCHEWAN, ALBERTA, CANADA      T8L 3V8
(Address of principal executive offices)               (Zip Code)

Issuer's telephone number, including area code:  (780) 998-3400

     The following items from the Company's annual report on Form 10-KSB for 
the year ended December 31, 1998, are hereby amended as follows:

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Common Stock of the Company was quoted on the OTC Electronic Bulletin 
Board through approximately July 23, 1996, and from March 27, 1997 until 
present.  There is currently no established public trading market for the 
Common Stock.  The table below sets forth for the periods indicated the high 
and low bid quotations as reported by the OTC Bulletin Board.  These 
quotations reflect inter-dealer prices, without retail mark-up, mark-down, or 
commission and may not necessarily represent actual transactions.
                    Quarter          High       Low
FISCAL YEAR ENDED
DECEMBER 31, 1996   First          $0.50       $0.25
                    Second         $0.9375     $0.4375
                    Third          $0.75       $0.25
                    Fourth          --          --

FISCAL YEAR ENDED
DECEMBER 31, 1997   First          $0.25       $0.25
                    Second         $1.125      $0.25
                    Third          $0.812      $0.25
                    Fourth         $0.6875     $0.28125
FISCAL YEAR ENDING
DECEMBER 31, 1998   First          $0.6875     $0.3125


     None of the shares of Common Stock is subject to outstanding options or 
warrants to purchase, or securities convertible into, the Common Stock of the 
Company.  As of April 13, 1998, the Company had 4,203,601 shares of its Common 
Stock, or approximately 50.75% of the total outstanding shares, which were 
control shares as defined in Rule 144 promulgated by the U.S. Securities and 
Exchange Commission pursuant to the Securities Act of 1933, as amended.  None 
of the shares of Common Stock is being, nor have any shares been proposed to 
be, publicly offered by the Company.

     As of April 13, 1999, there were approximately 368 holders of record of 
the Common Stock as reported to the Company by its transfer agent.

     No cash dividends have been declared or paid as yet on the Common Stock 
and the Board of Directors has not established a dividend policy.

     During the quarter ended December 31, 1998, the Company sold the 
following shares of common stock of the Company without registration under the 
Securities Act of 1933:

     a.On November 18, 1998, the Company issued 20,000 shares of its common 
stock to McNeal & Associates for consulting services rendered to the Company 
by Mr. Wayne McNeal.

     b.Also on November 18, 1998, the Company issued 150,000 shares of its 
common stock to Richard Shrieves for consulting services rendered to the 
Company by Mr. Schrieves.

     c.Also on November 18, 1998, the Company issued 40,000 shares of common 
stock to James Parkes for consulting services rendered to the Company by Mr. 
Parkes.
     All of the aforesaid securities set forth immediately above were issued 
without registration under the Act by reason of the exemption from 
registration afforded by the provisions of Section 4(2) thereof, as 
transactions by an issuer not involving any public offering, each recipient of 
securities having delivered appropriate investment representations to 
Registrant with respect thereto and having consented to the imposition of 
restrictive legends upon the certificates evidencing such securities.  No 
underwriting discounts or commissions were paid in connection with such 
issuances.

ITEM 7.  FINANCIAL STATEMENTS

     Amended financial statements of the Company are attached to this amended 
report.

     ITEM 11.  SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information furnished by current 
management concerning the ownership of common stock of the Company as of April 
1, 1999, of (i) each person who is known to the Company to be the beneficial 
owner of more than 5 percent of the Common Stock; (ii) all directors and 
executive officers; and (iii) directors and executive officers of the Company 
as a group:

                                  Amount and Nature
Name and Address                  of Beneficial
of Beneficial Owner               Ownership(1)           Percent of Class

Phillip Johnston                  1,834,450(2)            9.34%
PMB7 Hibiscus Square Pond St.
Grand Turk
Turks and Caicos Island, BWI

Patricia Jarvis                   1,037,410               5.28%
P.O. Box 1056
Renton, WA 98057

Blaine Haug                         650,000               3.31%

Royle Smith                         966,000               4.92%

John Eberhard                       415,340(3)            2.11%

Gregory Duffy                       375,000               1.90%

Officers and Directors
as a Group (4 persons)            2,406,340              12.25%
___________

     (1)Unless otherwise indicated, this column reflects amounts as to which 
the beneficial owner has sole voting power and sole investment power.

     (2)Of  these  shares,   140,000  are  held   directly  of  record by 
Confederation Capital Corporation Ltd., 1,170,625 are held directly of  record 
by Dolphin Trading Ltd., and 523,825 are held directly of record by TRD 
Investments Ltd.  See "Item 12. Certain Relationships and Related 
Transactions."

     (3)Of theses shares, 10,000 are beneficially  owned directly and of 
record  by Mr. Eberhard's wife, and 205,340 are held in  a brokerage account 
controlled  by Mr. Eberhard.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During the year ended December 31, 1998, the Company borrowed $106,500 
from TRD Investments Ltd. ("TRD"), a company believed to be controlled by 
Phillip Johnston, owning in excess or 5% of the outstanding Common Stock of 
the Company.  (See "Item 11.  Security Ownership of Certain Beneficial Owners 
and Management.") During the first quarter of 1999 the Company and TRD 
converted $92,000 of such debt into Common Stock of the Company and the 
Company issued to TRD 423,200 shares of Common Stock.  The remaining balance 
of $14,500 is due and payable by the Company immediately upon receiving 
funding to commence operations, or payable upon demand at any time after July 
31, 1999.  No interest is payable upon such outstanding balance.  During the 
first quarter of 1999 the Company borrowed $27,900 from TRD and $17,500 from 
Dolphin Trading Ltd. ("Dolphin"), another company believed to be controlled by 
Mr. Johnston.  Of the funds borrowed from TRD during the first quarter of 
1999, $17,500 has been converted into 100,625 shares of Common Stock of the 
Company.  All of the funds borrowed from Dolphin during the first quarter of 
1999 have been converted into 100,625 shares of Common Stock of the Company.  
The Company has no specific arrangements with TRD concerning the repayment of 
the remaining balance of $10,400.

     Pursuant to the terms of the employment agreement between the Company and 
Blaine Haug, an officer and a director of the Company, the Company issued 
200,000 shares of common stock of the company to Mr. Haug for services 
rendered during the year ended December 31, 1996, and 200,000 shares for 
services rendered during the year ended December 31, 1997.

     Pursuant to the terms of the employment agreement between the Company and 
Royle Smith, an officer and a director of such entity, the Company issued 
200,000 shares of common stock of the company to Mr. Smith for services 
rendered during the year ended December 31, 1996, and 200,000 shares for 
services rendered during the year ended December 31, 1997.  In addition, Mr. 
Smith was issued 100,000 shares on January 9, 1996, for accepting the office 
of Executive Vice-President, and 300,000 shares were issued to him on January 
9, 1996, for consulting services.  Also, 25,000 shares were issued to Welcome 
Ford Sales Ltd., a company controlled by Mr. Smith for administration fees.

     On or about January 3, 1996, the Company issued 370,336 shares of common 
stock to Confederation Capital Corporation Ltd., a company controlled by Mr. 
Phillip Johnston, a shareholder owning in excess of 5% of the outstanding 
stock, for previous money loaned to the company.  In addition, the Company 
issued 94,800 shares to such entity on April 3, 1997, for repayment of 
advances of $25,583 made by such entity to the Company.

     The Company entered into a consulting contract (the "Consulting 
Agreement") on June 10, 1996, with Silverthorn Investments, Ltd. (the 
"Consultant") in which the Company agreed to retain the services of the 
Consultant through June 1, 2000, unless earlier terminated as provided in the 
Consulting Agreement.  Pursuant to the terms of the Consulting Agreement, the 
Consultant is required to be available for a minimum of 60 business days per 
year to provide consulting and assistance as may be necessary to assist in 
facilitating the full operations of the Company's business.  In return, the 
Company has agreed to pay the Consultant $100 per hour for such services.  At 
the option of the Company 75% of the amount due may be paid to the Consultant 
in the form of common stock of the Company, based upon the average of the last 
three months closing bid prices for the common shares.  The Consultant is 
controlled by Matthew Smith who is also the assistant secretary of the 
Company.

SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the 
registrant caused this amended report to be signed on its behalf by the 
undersigned, thereunto duly authorized.

                                     PRIME AIR, INC.

Date: May 14, 1999                    By /s/ Blaine Haug, President



Date: May 14, 1999                    By /s/ Gregory Duffy, Director 
                                             and Chief Financial Officer


<PAGE>
PRIME AIR, INC.
(A Development Stage Company)
(A Nevada Corporation)

Consolidated Financial Statements

December 31, 1998 and 1997


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


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, 1998 and 1997 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, 1998 and 
1997 and the results of its operations and cash flows for the years then ended 
in accordance with generally accepted accounting principles.

     As reported in Note 1 to these financial statements, 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, 
1998 have been compiled from information provided by management.  We have not 
audited, reviewed or otherwise attempted to verify the accuracy or 
completeness of such information.  Readers are cautioned that these statements 
may not be appropriate for their purposes.



Richmond, Canada                              
April 15, 1999                                              Chartered 
Accountants


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  April 15, 1999 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.


Richmond, Canada                              
April 15, 1999                                        Chartered Accountants
<PAGE>


PRIME AIR, INC.                         
(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS
(all figures in US dollars)
                                                  
                                   December 31          December 31     
                                     1998                 1997     

ASSETS                         
                                                  
Current Assets                      
 Cash and short-term deposits     $     7,433        $     11,388 
       Prepaid expenses                 3,091                 -
       GST recoverable                  5,116               1,587 
                                       15,640              12,975 

 Capital Assets (Note 4)              592,843             613,516 

                                  $   608,483        $    626,491 

LIABILITIES                    

Current Liabilities                                        
 Accounts payable and accruals    $    79,405        $     83,655 
 Notes and advances payable  
  (Note 5)                            109,754               3,495 
 Advances from related parties  
  (Note 6)                               -                  5,400 
                                      189,159              92,550 

SHAREHOLDERS' EQUITY                         

Capital Stock  (Note 7)                                        
 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:                   
  18,013,110 common shares 
   (1997: 7,140,213)                   18,013               7,140 
                                             
 Share subscription receivable           -                    (20)

 Capital in excess of par value     1,381,498           1,355,740 
                                    1,399,511           1,362,860 
 Accumulated Deficit During         
  Development Stage                  (980,187)           (828,919)
                                      419,324             533,941 

                                $     608,483        $    626,491 

Approved on Behalf of the Board:                                        

                          Director

                          Director

    See Accompanying Notes To Financial Statements                    


<PAGE>

PRIME AIR, INC.                    
(A Development Stage Company)                    

CONSOLIDATED STATEMENTS OF OPERATIONS                    
(all figures in US dollars)                         

                                      Year Ended          Year Ended     
                                     December 31         December 31     
                                        1998                 1997     

Administrative And General Expenses                                             

 Audit and accounting               $     27,685      $     23,826      
       Advertising                         3,949               -     
       Amortization                       20,673            21,603      
       Bad debts                           1,933               -     
       Consulting                          9,862            24,583      
       Insurance                           5,043             9,240 
       Interest and service charges        1,041             1,769 
       Legal costs                         9,840            34,192 
       Office and general                  8,737            10,176 
       Repairs and maintenance             5,047               -
       Rent - airport facility (Note 8)       67               279 
       Telephone and utilities            15,280            18,039 
       Transfer agent, listing and 
        filing fees                       13,825            13,636 
       Travel, promotion and 
        entertainment                     29,823            26,175 
                                         152,805           183,518 

Other Income (Expense)                                        

 Gain (loss) on foreign exchange 
  conversion                                 286           (10,199)
 Interest income                           1,251             4,020 
                                           1,537            (6,179)

Net Loss For Year                 $     (151,268)       $ (189,697)     

Net Loss Per Common Share         $      (0.0089)       $  (0.0138)     

Weighted Average Common Shares 
Outstanding                           16,943,937        13,792,450      
 (Giving effect to 2:1 share split)                                        

 See Accompanying Notes To Financial Statements                         
<PAGE>

PRIME AIR, INC.                         
(A Development Stage Company)    

CONSOLIDATED STATEMENTS OF CASH FLOWS                         
(all figures in US dollars)                         
                                      Year ended         Year ended     
                                      December 31        December 31     
                                        1998               1997     

NET INFLOW (OUTFLOW) OF CASH RELATED 
 TO THE FOLLOWING ACTIVITIES:                                             

OPERATING                                             
 Net loss                            $  (151,268)      $   (189,697)     
 Non-cash charge - amortization           20,673             21,603      
                                        (130,595)          (168,094)     

 Change in non-cash working capital  
  balances relating to operations        (10,870)           (12,306)
                                        (141,465)          (180,400)

FINANCING                                        
 Notes and advances payable              106,259             (5,572)
 Advances from related parties            (5,400)           (20,122)
 Issue of capital stock                   36,651            131,079 

                                         137,510            105,385 

INVESTING                                        
 Acquisition of capital assets              -               (14,911)

NET CASH INFLOW (OUTFLOW)                 (3,955)           (89,926)

CASH, BEGINNING OF YEAR                   11,388            101,314 

CASH, END OF YEAR                    $     7,433       $     11,388 

See Accompanying Notes To Financial Statements

<PAGE> 
PRIME AIR, INC.                                                       
(A Development Stage  Company)

Consolidated Statements of Shareholders' Equity and Deficit
(all figures in US dollars)
                                        Capital in                Accumulated
                                        Excess of       Share    Deficit During
                      Common Shares    (Less than)  Subscriptions  Development
                  Shares       Amount   Par Value     Receivable     Stage

Balance at 
Inception on
March 10, 1989       -     $       -    $    -      $       -     $     -

Issue of common 
shares for cash
at $ .001/share    630,237        630        -              -           -
                                                                 
Net loss for the 
year ended
March 31, 1990       -             -         -              -       (17,956)
                                                                 
Balance, 
March 31, 1990     630,237        630        -              -       (17,956)
                                                                 
Issue of common 
shares for cash 
at $ .001/share    157,559        158        -              -           -

Net loss for the 
year ended                                               
March 31, 1991       -             -         -              -       (49,419)

Balance, 
March 31, 1991     787,796        788        -              -       (67,375)
                                                                 
Net loss for the 
year ended
March 31, 1992       -             -         -              -       (10,990)
                                                                 
Balance, 
March 31, 1992     787,796        788        -              -       (78,365)
                                                                 
Issue of common 
shares for cash
at $ .277/share    132,088        132      36,499           -          -
at $ .214/share     17,069         17       3,628           -          -
                                                                 
Net loss for the 
year ended                                                         
March 31, 1993       -             -         -              -       (38,426)
                                                                 
Balance, 
March 31, 1993     936,953        937      40,127           -      (116,791)
                                                                 
Issue of common 
shares for services                                     
at nominal value    92,173         92         (92)          -          -
                                                                 
Issue of common 
shares for cash                                                 
at $ .001/share    300,000        300        -              -          -
at $ .109/share      3,340          3         361           -          -
at $ .154/share     23,634         24       3,619           -          -
at $ .280/share     19,401         19       5,400           -          -
at $ .330/share     23,161         23       7,624           -          -  
at $ .463/share     87,445         88      40,330           -          -
at $ .694/share     15,756         16      10,907           -          -
at $ .925/share      7,878          8       7,274           -          -
                                                                 
Net loss for the 
year ended                                                        
March 31, 1994        -            -         -              -       (36,272)
                                                                 
Balance, 
March 31, 1994   1,509,741    $ 1,510    $115,550      $    -     $(153,063)
                                                                 
See Accompanying Notes To Financial Statements             

<PAGE>                                                                 
PRIME AIR INC.                                        
(A Development Stage Company)                                        

Consolidated Statements of Shareholders' Equity and Deficit
(all figures in US dollars)                                             

                                        Capital in                Accumulated
                                        Excess of       Share    Deficit During
                      Common Shares    (Less than)  Subscriptions  Development
                  Shares       Amount   Par Value     Receivable     Stage

Balance Forward  1,509,741  $   1,510  $  115,550    $      -     $   (153,063)

Issue of common 
shares for 
services
at nominal value   937,478        937        (937)          -            -
  
Issue of common 
shares for cash
at $ .374/share    248,692        249      92,697           -            -
at $ .463/share    304,089        304     140,286           -            -
                                                                 
Net loss for the 
period ended
June 28, 1994         -            -         -              -          (40,947)
                                                                 
Balance, 
June 28, 1994    3,000,000      3,000     347,596           -         (194,010)
   
Share 
subscription 
at $ .367/share       -            -       (7,313)        (20)           -
 
Net loss for the 
year ended
December 31, 1994     -            -         -              -         (135,530)
 
Balance, 
December 31, 
1994             3,000,000      3,000     340,283         (20)        (329,540)

Issue of common 
shares for cash
and/or services 
at an average
of $ .234/share    562,550        563     131,192           -            -

Net loss for the 
period ended
December 31, 1995     -            -         -              -          (71,266)

Balance, 
December 31, 
1995             3,562,550      3,563    471,475          (20)        (400,806)

Issue of common 
shares for cash
at $ .500/share  1,510,558      1,511    753,769            -            -

Issue of common 
shares for 
services 
at nominal value 1,483,673      1,483        -              -            -
                                                                      
Net loss for the 
period ended                 
December 31, 1996     -            -         -              -        (238,416)
                                                                      
Balance, 
December 31, 
1996             6,556,781    $ 6,557 $1,225,244      $   (20)     $ (639,222)

                See Accompanying Notes To Financial Statements

<PAGE>
PRIME AIR INC.
(A Development Stage Company)

Consolidated Statements of Shareholders' Equity and Deficit
(all figures in US dollars)

                                        Capital in                Accumulated
                                        Excess of       Share    Deficit During
                      Common Shares    (Less than)  Subscriptions  Development
                  Shares       Amount   Par Value     Receivable     Stage
                                                                 
Balance Forward  6,556,781    $  6,557 $ 1,225,244    $  (20)     $  (639,222)

Issue of common 
shares for 
services                                                            
at nominal value   328,000         328        -            -            -

Issue of common 
shares for debt
settlements:   
at $ .500/share    124,252         124      62,001         -            -   
at $ .504/share     36,380          36      18,303         -            -     
at $ .530/share     94,800          95      50,192         -            -      
 
Net loss for the 
year ended
December 31, 1997     -              -        -            -         (189,697) 
    
Balance, 
December 31, 
1997             7,140,213       7,140   1,355,740       (20)        (828,919)
 
Issue of common 
shares for debt
settlements:
at $ .3935/share    10,000           10      3,863         -            -
at $ .4006/share    18,215           18      7,279         -            -

Issue of common 
shares for 
services                                                            
at nominal value 1,663,727        1,664        -           -            -
                 8,832,155        8,832  1,366,882       (20)        (828,919)

Two for one 
stock split, 
May 18, 1998     8,832,155        8,832     (8,832)        -            -
                17,664,310       17,664  1,358,050       (20)        (828,919)

Issue of common 
shares for debt
settlement:                   
at $ .25/share      64,800           65     16,135         -            -

Issue of common 
shares for 
services 
at nominal value   290,000          290        -           -            -
                                      
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     -              -          -          -         (151,268)

Balance, 
December 31, 
1998             18,013,110     $ 18,013 $1,381,498     $  -     $   (980,187)

See Accompanying Notes To Financial Statements 


<PAGE>


<PAGE>
PRIME AIR, INC.
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997


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, 1998 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.  

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.


<PAGE>
PRIME AIR, INC.
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997

3.  Significant Accounting Policies

Reporting Currency

All amounts in these consolidated financial statements are reported in U.S. 
funds.  Monetary assets and liabilities have been converted from Canadian 
funds where applicable utilizing the year-end closing exchange rate of $ 
1.5368 CDN/$1.00 U.S.  Transactions recorded throughout the year in the 
accounts of the Canadian subsidiary have been converted to their U.S. 
equivalent at actual amounts where available or by utilizing the average 
annual rate as posted by the Internal Revenue Service of the United States as 
follows:
     $ 1.4831 CDN / $1.00 U.S. (1997: $1.3844 CDN / $1.00 U.S.). 

     Fair Value of Financial Instruments

In accordance with the requirements of Statement of Financial Accounting 
Standards 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", 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

     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. 

     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.

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.


PRIME AIR, INC.
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997


     3.    Significant Accounting Policies (continued)

     Income Taxes

The Company has adopted Statement of Financial Accounting Standards No. 109, 
"Accounting For Income Taxes", in the fiscal year ended December 31, 1998 and 
has applied the provisions of that statement on a retroactive basis to the 
previous fiscal year which resulted in no significant adjustment.
     
Statement of Financial Accounting Standards 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.

Deferred income taxes result from temporary differences in the recognition of 
accounting transactions for income tax and financial reporting purposes.  
There were no temporary differences at December 31, 1998 and earlier years and 
accordingly, no deferred tax liabilities have been recognized for all years.

The Company has cumulative net operating loss carryforwards of approximately 
$ 980,000 at December 31, 1998 and $ 830,000 at December 31, 1997.  No effect 
has been shown in the financial statements for these carryforwards as the 
likelihood of future tax benefit from such is not presently determinable.  The 
potential income tax benefits of the net operating loss carryforwards of 
approximately $  230,000 at December 31, 1997 and $195,000 at December 31, 
1997 (based upon current income tax rates) have been offset by valuation 
reserves of the same amount.  The net operating losses began to expire as of 
December 31, 1997.



PRIME AIR, INC.
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997


 
4.    Capital Assets

Capital assets consist of the following at December 31, 1998 and December 31, 
1997:

                                                December 31, 1998
                                                  Accumulated        Net Book 
                                     Cost         Amortization       Value
Air terminal construction costs   $ 652,083     $ 62,076            $ 590,007

Furniture and equipment               5,154        2,318                2,836
                                  $ 657,237     $ 64,394            $ 592,843
     

                                                December 31, 1997  
                                                  Accumulated        Net Book 
                                     Cost         Amortization       Value
Air terminal construction costs   $ 652,083     $ 42,058            $ 610,025

Furniture and equipment               5,154        1,663                3,491
                                  $ 657,237     $ 43,721            $ 613,516


5.    Notes and Advances Payable

The notes and advances payable are unsecured, non-interest bearing and are 
without specific terms of repayment.  Included therein is an amount of 
$106,500 which has been advanced to the Company by a shareholder and/or a 
corporation controlled by that shareholder who is the beneficial owner of 
1,310,625 shares of common stock of the Company, that holding representing 
7.28% of the issued and outstanding capital of the Company.


6.   Related Party Transactions

During the years ended December 31, 1998 and 1997, no cash remuneration was 
paid to  any director or officer of the Company.  However, 2,000,000 
(post-split) restricted common shares of capital stock were issued to 
directors and officers during the year ended December 31, 1998 (1997: 650,000 
shares) for services rendered.  These shares have been attributed a nominal 
value of $ .001 per share. 


PRIME AIR, INC.
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997

7.    Capital Stock
     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

     Common Shares Issued:
                                    Number of Shares       Consideration
     To August 31, 1993
          - for cash                        300,000          $      300
     Prime Air Inc. share exchange
          - June 28, 1994                 2,700,000             350,296
     During year ended 
      December 31, 1995
          - for cash                        562,550             131,756
     Balance at December 31, 1995         3,562,550             482,352

     During year ended 
      December 31, 1996
          - for cash                      1,510,558             755,279
          - consulting and 
            related services              1,483,673               1,483
                                          2,994,231             756,762     

     Balance, December 31, 1996           6,556,781           1,239,114 

     During the year ended 
      December 31, 1997      
          - shares-for-debt settlements     255,432             130,751
          - consulting and 
            related services                328,000                 328
                                            583,432             131,079 
     
     Balance, December 31, 1997           7,140,213           1,370,193

     During the year ended 
      December 31, 1998               
          - shares-for-debt settlements      93,015              27,370
          - consulting and 
            related services              1,953,727               1,954
          - Transfer Agent correction        (6,000)                 (6)
                                          2,040,742              29,318
                                          9,180,955           1,399,511     
          - "Two for One" share split     8,832,155          __________

     Balance, December 31, 1998          18,013,110        $  1,399,511


<PAGE>
PRIME AIR, INC.
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997


7.    Capital Stock (continued)


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 approved 
by the Securities and Exchange Commission and the change of domicile became 
effective on December 15, 1997.


8.    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:

   $100 per annum for the initial six (6) years (1993 through 1998); 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 
1999 through 2003 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.