UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

(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,  2003

[  ]  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:  $2,364

Documents  Incorporated  by  Reference:  None

State the number of shares outstanding of each of the Issuer's classes of common
equity  as  of  the  latest  practicable  date: At December 31, 2003, there were
27,084,000  shares  of  the  Registrant's  Common  Stock  outstanding.

The  aggregate  market  value  of the voting common stock held by non-affiliates
based on the closing price for a share of common stock as of January 20, 2004 of
$0.25  was  $5,341,348.


<PAGE>

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

                                 PRIME AIR, INC.

                                      INDEX

PART I                                                                      PAGE NO.
                                                                            --------
<S>          <C>                                                            <C>
ITEM 1. . .  Description of Business                                         3
ITEM 2. . .  Description of Property                                        12
ITEM 3. . .  Legal Proceedings                                              12
ITEM 4. . .  Submission of Matters to a Vote of Security Holders            13

PART II

ITEM 5. . .  Market for Common Equity and Related Stockholder Matters       13
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                                       33
ITEM 8A.. .  Controls and Procedures                                        34

PART III

ITEM 9. . .  Directors, Executive Officers, Promoters and Control Persons;
             Compliance with Section 16(a) of Exchange Act                  34
ITEM 10.. .  Executive Compensation                                         36
ITEM 11.. .  Security Ownership of Certain Beneficial Owners and
             Management and Related Stockholder Matters                     37
ITEM 12.. .  Certain Relationships and Related Transactions                 37
ITEM 13.. .  Exhibits and Reports on Form 8-K                               38
ITEM 14.. .  Principal Accounting Fees and Services                         39
</TABLE>


                                        2
<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.  It also 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  Pemberton.  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
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.


                                        3
<PAGE>

     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.  Mr. Parshall is no longer associated with
the  Company.  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, believed 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,  and  the  Plan  has  subsequently  been  terminated.

     Commencing  June  1998,  the  Company  attempted  to  offer  and sell up to
8,000,000 shares of common stock.  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
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,


                                        5
<PAGE>

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.  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 may be rental income
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  commercial and privately operated aircraft.  It is Prime Air's intention to
assign  that  function  to  an  established  FBO  company resulting in Prime Air
earning  certain  amounts  from  ancillary activities related to FBO activities.


                                        6
<PAGE>

     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, 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 not
less  than  Cdn  $2,500.

     The  Pemberton  Airport is approximately 20 miles north of Whistler Resort.
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.


                                        7
<PAGE>

     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.

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


                                        8
<PAGE>

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 Annual 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
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 party
marketing  company  as  soon as sufficient funds are available.  Advertising and
promotion  would  focus  both  on  the  Whistler area as the destination, and on


                                        9
<PAGE>

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)
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


                                       10
<PAGE>

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 employee as of
December  31,  2003.   In addition, Messrs. Horsley and Koch spend approximately
1-2%  and  10% of their respective time on Prime Air related work as consultants
during  2003.

                                  RISK FACTORS

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

LIMITED  RENTAL  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 limited rental revenue.
No  substantial  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.


                                       11
<PAGE>

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.

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.


                                       12
<PAGE>

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,  2003.

                                     PART II

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.

<TABLE>
<CAPTION>
                       FISCAL YEARS ENDED
                       ------------------
              DECEMBER 31, 2003  DECEMBER 31, 2002
              -----------------  -----------------
                 HIGH    LOW        HIGH    LOW
                ------  -----       -----  -----
<S>             <C>     <C>         <C>    <C>

First Quarter.     (1)    (1)       $0.09  $0.01
--------------  ------  -----       -----  -----
Second Quarter     (1)    (1)       $0.01      *
--------------  ------  -----       -----  -----
Third Quarter.  $0.25   $.01        $0.01      *
--------------  ------  -----       -----  -----
Fourth Quarter  $0.27   $.03        $0.01      *
--------------  ------  -----       -----  -----
</TABLE>
*  Less  than  $0.01
(1)  No  trades  during  the  quarter.

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

     The  Company  has  never  paid  cash  dividends.

Recent  Sales  of  Unregistered  Securities.

     During the past year ended December 31, 2003, the Company sold unregistered
common  stock  in  the  following  transactions.

1.     On  May 8, 2003, the Company issued 400,000 shares of common stock in the
aggregate  at  a  value  of  $0.05  per share to Messrs. Haug, Koch, Horsley and
Eberhard  for  2002  director fees.  Each director received 100,000 shares.  The
Company  relied  on  section  4(2)  as  an  exemption  from  registration.


                                       13
<PAGE>

     2.     On May 8, 2003, the Company issued 400,000 shares of common stock in
the  aggregate at a value of $0.05 per share to Mr. Koch, a then director of the
Company,  for  accounting services provided to the Company in 2002   The Company
relied  on  section  4(2)  as  an  exemption  from  registration.

     3.     On May 8, 2003, the Company issued 400,000 shares of common stock in
the  aggregate  at  a  value  of $0.10 per share to Mr. Haug for his services as
president  for  2002.  The  Company  relied on section 4(2) as an exemption from
registration.

     4.     On  September  10, 2003, the Company sold 1,000,000 shares of common
stock  to  one  corporate  investor  at $0.05 per share raising in the aggregate
$50,000.  No underwriter or placement agent was involved.  The Company relied on
section  4(2)  as  an  exemption  from  registration.

     5.     On  October  9,  2003,  the  Company issued 400,000 shares of common
stock  in  the  aggregate  at  a value of $0.05 per share to Messrs. Haug, Koch,
Horsley  and  Eberhard  for  2003 director fees.  Each director received 100,000
shares.  The  Company  relied on section 4(2) as an exemption from registration.

     6.     On  October  9,  2003,  the  Company issued 185,000 shares of common
stock  in  the  aggregate  at  a  value  of $0.05 per share to three persons for
aviation  consulting  services  in  2003.  Each consultant was familiar with the
Company and the Company relied on section 4(2) as an exemption from registration

     7.     On  October  9,  2003,  the  Company issued 400,334 shares of common
stock  in  the  aggregate  at  a  value  of  $0.05 per share to Mr. Koch, a then
director  of  the  Company,  for  accounting services provided to the Company in
2003.   The  Company and the Company relied on section 4(2) as an exemption from
registration.

     8.     On  October  9,  2003,  the  Company issued 400,000 shares of common
stock  in  the  aggregate  at  a  value  of  $0.05 per share to Mr. Haug for his
services  as  president  for  2003.  The  Company  relied  on section 4(2) as an
exemption  from  registration.

     9.     On  October  9,  2003,  the  Company issued 150,000 shares of common
stock  at  a value of $0.1667 per share to its former attorneys in settlement of
an  outstanding  debt.  The  Company relied on section 4(2) as an exemption from
registration.

     10.     On  October 9, 2003, the Company sold 30,000 shares of common stock
to  one  investor  at  $0.1667  per  share  raising in the aggregate $5,000.  No
underwriter or placement agent was involved.  The Company relied on section 4(2)
as  an  exemption  from  registration.


                                       14
<PAGE>

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
principal  operations  of  the  Pemberton  terminal  facility.

     During  2003,  the Company received limited rental 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,  2003  the  Company derived limited
revenues  of  $2,364  derived  from  the  leasing  of  terminal  space.

     Expenses  totaled  $156,752  consisting of primarily $88,943 for consulting
fees,  $21,411 in amortization related to the terminal building at Pemberton and
$35,696  in  administrative  expenses.  Of  the  $88,943 in consulting services,
$80,000  was  attributed  to directors and officers consisting of $40,000 to the
President  for  his  services,  $20,000  in  director  fees  and  $20,000  to an
accounting firm controlled by a director for accounting services rendered.  Also
during  the  year  2003,  the Company settled outstanding trade accounts payable
which  resulted  in  a  gain  of  $99,814.  Expenses  for  2002  were  similar,
aggregating  in  the  amount  of  $146,207.

     The  Company  incurred  a  loss  from  operations of $154,388 and $146,207,
respectively, for the years ended December 31, 2003 and 2002, and a net loss for
the year ended December 31, 2003 and 2002 of $54,574 and $146,207.  Net loss per
share  was  $(0.00)  and $(0.01) for the years ended December 31, 2003 and 2002.


                                       15
<PAGE>

LIQUIDITY

     As of December 31, 2003 and 2002, the Company had a working capital deficit
of  $(141,227)  and  $(323,374).  Included in accounts payable of $213,682 as at
December  31,  2002 is a substantial amount of accounts payable from prior years
that  the  Company  has  not  been  able  to pay due to the lack of revenues and
capital.  During  the  year  ended  December  31,  2003,  the  Company  settled
outstanding  trade  accounts payables owing from prior years which resulted in a
reduction  in  accounts  payables  and  accrued  liabilities.  In  addition, the
Company  reduced  its  amounts  due  to  related parties through the issuance of
shares.   As  a  result of the lack of significant revenues, and working capital
deficit,  the  auditor's  report  indicates there is substantial doubt 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  related  parties  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

<TABLE>
<CAPTION>
                      Prime Air, Inc.
               (A Development Stage Company)
Index
-----
<S>                                                     <C>
Independent Auditors' Report . . . . . . . . . . . . .  17

Consolidated Balance Sheets. . . . . . . . . . . . . .  20

Consolidated Statements of Operations. . . . . . . . .  21

Consolidated Statements of Comprehensive Income (Loss)  22

Consolidated Statement of Stockholders' Equity . . . .  23

Consolidated Statements of Cash Flows. . . . . . . . .  27

Notes to the Consolidated Financial Statements . . . .  28
</TABLE>


                                       16
<PAGE>

              [LETTERHEAD OF MANNING ELLIOT CHARTERED ACCOUNTANTS]

                          INDEPENDENT AUDITORS' REPORT


To  the  Stockholders  and  Board  of  Directors  of
Prime  Air,  Inc.  (A  Development  Stage  Company)

We  have  audited the accompanying consolidated balance sheet of Prime Air, Inc.
(A  Development Stage Company) as of December 31, 2003 and the related statement
of operations, comprehensive income, stockholders' equity and cash flows for the
year  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 audit. Other independent auditors audited the
accompanying  consolidated  balance  sheet of Prime Air, Inc. as of December 31,
2002  and  the  related  statement of operations, stockholders' deficit and cash
flows  for  the year then ended. Those auditors expressed an unqualified opinion
on  those consolidated financial statements in their report dated July 23, 2003.

We  conducted  our  audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material misstatement. An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audit  provides  a
reasonable  basis  for  our  opinion.

In  our  opinion,  the  aforementioned consolidated financial statements present
fairly,  in all material respects, the financial position of Prime Air, Inc., as
of  December  31, 2003, and the results of its operations and its cash flows for
the year then ended, in conformity with accounting principles generally accepted
in  the  United  States.

The  accompanying  consolidated financial statements have been prepared assuming
the  Company  will  continue  as  a going concern. As discussed in Note 1 to the
consolidated  financial  statements,  the  Company has incurred operating losses
since  inception  and  has  a  working  capital  deficiency. These factors raise
substantial  doubt  about  the Company's ability to continue as a going concern.
Management's  plans in regard to these matters are also discussed in Note 1. The
consolidated  financial  statements  do  not  include any adjustments that might
result  from  the  outcome  of  this  uncertainty.

/s/ MANNING ELLIOT
CHARTERED  ACCOUNTANTS
Vancouver,  Canada
June  10,  2004


                                       17
<PAGE>

          [LETTERHEAD OF RUTHERFORD & COMPANY CHARTERED ACCOUNTANTS]

                                                            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,  2002  and  the consolidated
statements  of  operations,  shareholders' equity and deficit and cash flows for
the  year  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 Canadian and United States
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, 2002 and the
results of its operations, the change in stockholders' equity and its cash flows
for  the  years  then  ended in accordance with United States generally accepted
accounting  principles.


                                                    /s/ "Rutherford  &  Company"
Richmond,  Canada
July 23, 2003                                       CHARTERED ACCOUNTANTS


                                       18
<PAGE>

          [LETTERHEAD OF RUTHERFORD & COMPANY CHARTERED ACCOUNTANTS]

                                                            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  1  to the financial statements.  Our report to the shareholders dated July
23,  2003  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.


                                                    /s/ "Rutherford  &  Company"
Richmond,  Canada
July  23, 2003                                      CHARTERED ACCOUNTANTS


                                       19
<PAGE>

<TABLE>
<CAPTION>
                                                    PRIME  AIR,  INC.
                                              (A Development Stage Company)
                                               CONSOLIDATED BALANCE SHEETS
                                                (Expressed in US dollars)

                                                                                            December 31,    December 31,
                                                                                                2003            2002
                                                                                           --------------  --------------
<S>                                                                                        <C>             <C>
ASSETS

Current Assets
 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $       2,691   $         512
 Prepaid expenses and deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          5,382           1,586
 Other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,292           1,357
                                                                                           --------------  --------------
Total Current Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          9,365           3,455

Property and Equipment (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        508,158         427,305
                                                                                           --------------  --------------

Total Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $     517,523   $     430,760
                                                                                           ==============  ==============



LIABILITIES

Current Liabilities
 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $      78,436   $     213,682
 Accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         10,500               -
 Due to related parties (Note 5). . . . . . . . . . . . . . . . . . . . . . . . . . . . .         39,248          91,846
 Notes and advances payable (Note 4). . . . . . . . . . . . . . . . . . . . . . . . . . .         22,408          21,301

Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        150,592         326,829

Contingencies and Commitments (Notes 1 and 7)

STOCKHOLDERS' EQUITY

Preferred Stock, 5,000,000 cumulative and convertible preferred shares authorized with a
par value of $0.001, none issued. . . . . . . . . . . . . . . . . . . . . . . . . . . . .              -               -

Common Stock, 150,000,000 common shares authorized with a par value of $0.001,
27,084,000 and 23,318,666 issued and outstanding, respectively. . . . . . . . . . . . . .         27,084          23,319

Additional Paid In Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      4,412,694       4,167,192

Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . .         58,586          (9,721)

Deficit accumulated during the development stage. . . . . . . . . . . . . . . . . . . . .     (4,131,433)     (4,076,859)
                                                                                           --------------  --------------

Total Stockholders' Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        366,931         103,931
                                                                                           --------------  --------------

Total Liabilities and Stockholders' Equity. . . . . . . . . . . . . . . . . . . . . . . .  $     517,523   $     430,760
                                                                                           ==============  ==============
</TABLE>


                                       20
<PAGE>

<TABLE>
<CAPTION>

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

                                                                                   Accumulated From
                                                                                    March 10, 1989
                                                  Year Ended      Year Ended      (Date of Inception)
                                                 December 31,    December 31,        December 31,
                                                     2003            2002                2003
                                                --------------  --------------  -----------------------
                                                                                      (Unaudited)
<S>                                             <C>             <C>             <C>
Revenue
 Rental income . . . . . . . . . . . . . . . .  $       2,364   $           -   $                2,364
                                                --------------  --------------  -----------------------

Expenses
 Flight operations . . . . . . . . . . . . . .              -               -                  114,720
 Advertising and Promotion . . . . . . . . . .             67               -                   40,461
 Amortization. . . . . . . . . . . . . . . . .         21,411          18,978                  164,533
 Consulting. . . . . . . . . . . . . . . . . .          8,943          10,000                   39,734
 Consulting to related parties (Note 5(b)) . .         80,000          80,000                2,799,696
 General and Administrative. . . . . . . . . .         35,696          29,766                  769,807
 Professional fees . . . . . . . . . . . . . .         10,635           7,463                  304,660
                                                --------------  --------------  -----------------------

                                                      156,752         146,207                4,233,611
                                                --------------  --------------  -----------------------

Loss from Operations . . . . . . . . . . . . .       (154,388)       (146,207)              (4,231,247)

Gain on settlement of debt . . . . . . . . . .         99,814               -                   99,814
                                                --------------  --------------  -----------------------

Net Loss For the Period. . . . . . . . . . . .  $     (54,574)  $    (146,207)  $           (4,131,433)
                                                ==============  ==============  =======================


Net Loss Per Common Share - Basic and Diluted.  $       (0.00)  $       (0.01)
                                                ==============  ==============


Weighted Average Shares Outstanding. . . . . .     24,957,000      22,899,000
                                                ==============  ==============

</TABLE>


                                       21
<PAGE>

<TABLE>
<CAPTION>
                                  PRIME AIR, INC.
                            (A Development Stage Company)
               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                              (Expressed in US dollars)


                                                                     From March 10,
                                                                     1989 (date of
                                          Year Ended   Year Ended    inception) to
                                          December 31  December 31    December 31
                                             2003         2002           2003
                                                                      (Unaudited)
                                          -----------  -----------  ----------------
<S>                                       <C>          <C>          <C>
Net loss                                  $  (54,574)  $ (146,207)  $    (4,131,433)

Other comprehensive income:
 Foreign currency translation adjustment      68,307        3,394            58,586
                                          -----------  -----------  ----------------

Comprehensive income (loss):              $   13,733   $ (142,813)  $    (4,072,847)
                                          ===========  ===========  ================
</TABLE>


                                       22
<PAGE>

<TABLE>
<CAPTION>
                                                          PRIME AIR, INC.
                                                   (A Development Stage Company)
                                          CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                   From March 10, 1989 (Date of Inception) to December 31, 2003
                                                     (Expressed in US dollars)

                                                                           Deficit
                                                                         Accumulated      Accumulated
                                             Additional      Share          Other         During The
                            Common Shares                   Paid In     Subscriptions    Comprehensive    Development
                                Shares         Amount       Capital      Receivable      Income (loss)       Stage        Total
                                                 $             $              $                $               $            $
<S>                         <C>             <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)               -                -              -         630
Net loss for the year
   ended March 31, 1990. .              -             -            -                -                -        (17,956)    (17,956)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance, March 31, 1990
   (unaudited) . . . . . .      1,260,474         1,260         (630)               -                -        (17,956)    (17,326)
Issue of common shares
   for cash
   at $.001/share. . . . .        315,118           315         (157)               -                -              -         158
Net loss for the year
   ended March 31, 1991. .              -             -            -                -                -        (49,419)    (49,419)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance, March 31, 1991
   (unaudited) . . . . . .      1,575,592         1,575         (787)               -                -        (67,375)    (66,587)
Net loss for the year
   ended March 31, 1992. .              -             -            -                -                -        (10,990)    (10,990)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance, March 31, 1992
   (unaudited) . . . . . .      1,575,592         1,575         (787)               -                -        (78,365)    (77,577)
Issue of common shares
   for cash
at $.13866/share . . . . .        264,176           264       36,367                -                -              -      36,631
at $.10677/share . . . . .         34,138            34        3,611                -                -              -       3,645
Net loss for the year
   ended March 31, 1993. .              -             -            -                -                -        (38,426)    (38,426)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance, March 31, 1993
   (unaudited) . . . . . .      1,873,906         1,873       39,191                -                -       (116,791)    (75,727)
Issue of common shares
   for  services
   at $.07906/share. . . .        184,346           184       14,390                -                -              -      14,574
Issue of common shares
   for cash
at $.001/share . . . . . .        600,000           600         (300)               -                -              -         300
at $.05449/share . . . . .          6,680             7          357                -                -              -         364
at $.07707/share . . . . .         47,268            47        3,596                -                -              -       3,643
at $.13966/share . . . . .         38,802            39        5,380                -                -              -       5,419
at $.16508/share . . . . .         46,322            46        7,601                -                -              -       7,647
at $.23111/share . . . . .        174,890           175       40,243                -                -              -      40,418
at $.34663/share . . . . .         31,512            32       10,891                -                -              -      10,923
at $.46217/share . . . . .         15,756            16        7,266                -                -              -       7,282
Net loss for the year
   ended March 31, 1994. .              -             -            -                -                -        (50,846)    (50,846)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance, March 31, 1994
   (unaudited) . . . . . .      3,019,482         3,019      128,615                -                -       (167,637)    (36,003)
Issue of common shares
   for services
   at $.21124/share. . . .      1,874,956         1,875      394,191                -                -              -     396,066
Issue of common shares
   for cash
at $.18687/share . . . . .        497,384           498       92,448                -                -              -      92,946
at $.23117/share . . . . .        608,178           608      139,982                -                -              -     140,590
Net loss for the year
   ended June 28, 1994 . .              -             -            -                -                -       (437,013)   (437,013)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance, June 28, 1994
   (unaudited) . . . . . .      6,000,000         6,000      755,236                -                -       (604,650)    156,586
</TABLE>


                                       23
<PAGE>

<TABLE>
<CAPTION>
                                                                           Deficit
                                                                         Accumulated      Accumulated
                                             Additional      Share          Other         During The
                            Common Shares                   Paid In     Subscriptions    Comprehensive    Development
                                Shares         Amount       Capital      Receivable      Income (loss)       Stage        Total
                                                 $             $              $                $               $            $
<S>                         <C>             <C>           <C>          <C>              <C>              <C>            <C>
Balance Forward. . . . . .      6,000,000         6,000      755,236                -                -       (604,650)    156,586
Share subscription
   at $.1835/share . . . .              -             -       (7,313)             (20)               -         (7,333)
Net loss for the year
   ended March 31, 1994. .              -             -            -                -                -       (135,530)   (135,530)
Balance,
   December 31, 1994
   (unaudited) . . . . . .      6,000,000         6,000      747,923              (20)               -       (740,180)    (13,723)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Issue of common shares
   for cash  and/or
   services
   at $.11711/share. . . .      1,125,100         1,125      130,630                -                -              -     131,755
Net loss for the year
   ended March 31, 1995. .              -             -            -                -                -        (71,266)    (71,266)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance,
   December 31, 1995
   (unaudited) . . . . . .      7,125,100         7,125      878,553              (20)        (811,446)        74,212
Issue of common shares
   for cash at $.25/share.      3,021,116         3,021      752,259                -                -              -     755,280
Issue of common shares
   for services
   at $.25/share . . . . .      2,967,346         2,967      738,870                -                -              -     741,837
Net loss for the year
   ended
   December 31, 1996 . . .              -             -            -                -                -       (978,770)   (978,770)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance,
   December 31, 1996
   (unaudited) . . . . . .     13,113,562        13,113    2,369,682              (20)               -     (1,790,216)    592,559
Issue of common shares
   for services
   at $.26/share . . . . .        656,000           656      169,904                -                -              -     170,560
Issue of common shares
   for debt settlements:
at $.25/share. . . . . . .        248,504           249       61,876                -                -              -      62,125
at $.25205/share . . . . .         72,760            73       18,266                -                -              -      18,339
at $.26523/share . . . . .        189,600           189       50,098                -                -              -      50,287
Net loss for the year
   ended
   December 31, 1997 . . .              -             -            -                -                -       (359,929)   (359,929)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance,
   December 31, 1997
   (unaudited) . . . . . .     14,280,426        14,280    2,669,826              (20)               -     (2,150,145)    533,941
Issue of common shares
   for debt settlements:
at $.19415/share . . . . .         20,000            20        3,853                -                -              -       3,873
at $.20082/share . . . . .         36,430            37        7,260                -                -              -       7,297
Issue of common shares
   for services
   at $.19790/share. . . .      3,327,454         3,327      655,177                -                -              -     658,504
Issue of common shares
   for debt settlements
   at $.25/share . . . . .         64,800            65       16,135                -                -              -      16,200
Issue of common shares
   for services
   at $.25/share . . . . .        290,000           290       72,210                -                -              -      72,500
Transfer agent adjustment.         (6,000)           (6)           -                -                -              -          (6)
Write off of
   uncollectable share
   subscription
   receivable. . . . . . .              -             -        7,313               20                -              -       7,333
Net loss for the year
   ended
   December 31, 1998 . . .              -             -            -                -                -       (880,318)   (880,318)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance,
   December 31, 1998
   (unaudited) . . . . . .     18,013,110        18,013    3,431,774                -                -     (3,030,463)    419,324
</TABLE>


                                       24
<PAGE>

<TABLE>
<CAPTION>
                                                                           Deficit
                                                                         Accumulated      Accumulated
                                             Additional      Share          Other         During The
                            Common Shares                   Paid In     Subscriptions    Comprehensive    Development
                                Shares         Amount       Capital      Receivable      Income (loss)       Stage        Total
                                                 $             $              $                $               $            $
<S>                         <C>             <C>           <C>          <C>              <C>              <C>            <C>
Balance Forward. . . . . .     18,013,110        18,013    3,431,774                -                -     (3,030,463)    419,324
Issue of common shares
   for debt settlements:
At $.20/share. . . . . . .        201,250           202       40,048                -                -              -      40,250
At $.25/share. . . . . . .        423,200           423      105,377                -                -              -     105,800
Issue of common shares
   for services
   at $.2339/share . . . .      1,010,000         1,010      235,229                -                -              -     236,239
Foreign currency
   translation . . . . . .              -             -            -                -           21,491              -      21,491
Net loss for the year
   ended
   December 31, 1999 . . .              -             -            -                -                -       (572,477)   (572,477)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance,
   December 31, 1999
   (unaudited) . . . . . .     19,647,560        19,648    3,812,428                -           21,491     (3,602,940)    250,627
Issue of common shares
   for cash at $.08/share.        500,000           500       39,500                -                -              -      40,000
Issue of common shares
   for debt settlements
at $.08/share. . . . . . .          4,100             4          324                -                -              -         328
at $.10/share. . . . . . .        871,006           871       86,230                -                -              -      87,101
Foreign currency
   Translation . . . . . .              -             -            -                -          (12,225)             -     (12,225)
Net loss for the year
   ended
   December 31, 2000 . . .              -             -            -                -                -       (191,511)   (191,511)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance,
   December 31, 2000 . . .     21,022,666        21,023    3,938,482                -            9,266     (3,794,451)    174,320
Issue of common shares
   for cash at $.08/share.        300,000           300       23,700                -                -              -      24,000
Issue of common shares
   for debt settlement
at $.08/share. . . . . . .        250,000           250       19,750                -                -              -      20,000
at $.10/share. . . . . . .        400,000           400       39,600                -                -              -      40,000
Transfer agent
   Adjustment. . . . . . .          6,000             6            -                -                -              -           6
Foreign currency
   translation . . . . . .              -             -            -                -          (22,381)             -     (22,381)
Net loss for the year
   ended
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
   December 31, 2001 . . .              -             -            -                -                -       (136,201)   (136,201)
Balance,
   December 31, 2001 . . .     21,978,666        21,979    4,021,532                -          (13,115)    (3,930,652)     99,744
Issue of common shares
   For cash
   at $.05/share . . . . .        320,000           320       15,680                -                -              -      16,000
Issue of common shares
   for debt settlement
at $.10/share. . . . . . .        500,000           500       49,500                -                -              -      50,000
at $.15/share. . . . . . .        420,000           420       62,580                -                -              -      63,000
at $.18/share. . . . . . .        100,000           100       17,900                -                -              -      18,000
Foreign currency
   translation . . . . . .              -             -            -                -            3,394              -       3,394
Net loss for the year
   ended
   December 31, 2002 . . .              -             -            -                -                -       (146,207)   (146,207)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance,
   December 31, 2002 . . .     23,318,666        23,319    4,167,192                -           (9,721)    (4,076,859)    103,931
</TABLE>


                                       25
<PAGE>

<TABLE>
<CAPTION>
                                                                           Deficit
                                                                         Accumulated      Accumulated
                                             Additional      Share          Other         During The
                            Common Shares                   Paid In     Subscriptions    Comprehensive    Development
                                Shares         Amount       Capital      Receivable      Income (loss)       Stage        Total
                                                 $             $              $                $               $            $
<S>                         <C>             <C>           <C>          <C>              <C>              <C>            <C>
Balance Forward. . . . . .     23,318,666        23,319    4,167,192                -           (9,721)    (4,076,859)    103,931
Issue of common shares
   for cash
at $.05/share. . . . . . .      1,000,000         1,000       49,000                -                -              -      50,000
at $.1667/share. . . . . .         30,000            30        4,970                -                -              -       5,000
Issue of common shares
   for debt settlement
at $.05/share. . . . . . .      1,785,334         1,785       87,482                -                -              -      89,267
at $.10/share. . . . . . .        800,000           800       79,200                -                -              -      80,000
at $.1667/share. . . . . .        150,000           150       24,850                -                -              -      25,000
Foreign currency
   translation . . . . . .              -             -            -                -           68,307              -      68,307
Net loss for the year
   ended
   December 31, 2003 . . .              -             -            -                -                -        (54,574)    (54,574)
                            --------------  ------------  -----------  ---------------  ---------------  -------------  ----------
Balance,
   December 31, 2003 . . .     27,084,000        27,084    4,412,694                -           58,586     (4,131,433)    366,931
                            ==============  ============  ===========  ===============  ===============  =============  ==========
</TABLE>


                                       26
<PAGE>

<TABLE>
<CAPTION>

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

                                                                                                     Accumulated from
                                                                                                      March 10, 1989
                                                                   Year Ended      Year Ended     (Date of Inception) to
                                                                  December 31,    December 31,         December 31,
                                                                      2003            2002                 2003
                                                                                                       (Unaudited)
                                                                 --------------  --------------  ------------------------
<S>                                                              <C>             <C>             <C>
CASH FLOWS TO OPERATING ACTIVITIES

Net loss for the period . . . . . . . . . . . . . . . . . . . .  $     (54,574)  $    (146,207)  $            (4,131,433)
Adjustments to reconcile net loss to net cash used in operating
   activities:
Expenses settled with issuance of debt. . . . . . . . . . . . .         89,267          90,000                   179,267
Services paid by issue of common stock. . . . . . . . . . . . .              -               -                 3,071,182
Amortization. . . . . . . . . . . . . . . . . . . . . . . . . .         21,411          18,978                   159,995
Gain on settlement of debt. . . . . . . . . . . . . . . . . . .        (99,814)              -                   (99,814)

Changes in operating assets and liabilities:

(Increase) in other receivables . . . . . . . . . . . . . . . .           (206)              -                    (1,292)
(Increase) in prepaid expenses. . . . . . . . . . . . . . . . .         (2,657)           (221)                    5,382
Increase in due to related parties. . . . . . . . . . . . . . .         10,471               -                    39,248
(Decrease) increase in accounts payable and accrued
   liabilities. . . . . . . . . . . . . . . . . . . . . . . . .         (5,823)          2,486                    88,936
                                                                 --------------  --------------  ------------------------

Net Cash Used by Operating Activities . . . . . . . . . . . . .        (41,925)        (34,964)                 (688,529)
                                                                 --------------  --------------  ------------------------

CASH FLOWS TO INVESTING ACTIVITIES

Purchase of property and equipment. . . . . . . . . . . . . . .        (10,123)           (953)                 (658,202)
                                                                 --------------  --------------  ------------------------

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from notes and advances payable. . . . . . . . . . . .          1,433          18,205                    51,777
Proceeds from issuance of common shares . . . . . . . . . . . .         55,000          16,000                 1,372,631
                                                                 --------------  --------------  ------------------------

Net Cash Provided by Financing Activities . . . . . . . . . . .         56,433          34,205                 1,424,408
                                                                 --------------  --------------  ------------------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH . . . . . . . . . . . .         (2,206)            135                   (74,986)
                                                                 --------------  --------------  ------------------------

INCREASE (DECREASE) IN CASH . . . . . . . . . . . . . . . . . .          2,179          (1,577)                    2,691

CASH, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . .            512           2,089                         -
                                                                 --------------  --------------  ------------------------

CASH, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . .  $       2,691   $         512   $                 2,691
                                                                 ==============  ==============  ========================


NON-CASH FINANCING AND INVESTING ACTIVITIES
Common stock issued for services. . . . . . . . . . . . . . . .  $           -   $           -   $             3,071,182
Common stock issued for debt. . . . . . . . . . . . . . . . . .  $     194,267   $     131,000   $               776,867
Expenses settled with issuance of debt. . . . . . . . . . . . .  $      89,267   $      90,000   $               179,267

SUPPLEMENTAL DISCLOSURES
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . .  $           -   $           -   $                     -
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . .  $           -   $           -   $                     -
</TABLE>


                                       27
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)
                  NOTES TO THE CONSOLIDATED FINANCIAL SATEMENTS

1.     Development  Stage  Company

The  Company  was incorporated under the laws of the State of Nevada on November
10, 1996, for the purpose of changing 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, 1995, for the purpose of
changing  the  domicile  of  the  Company from the State of Utah to the State of
Delaware by 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  Utah  Corporation was incorporated on August 30, 1993 as Astro Enterprises,
Inc.  ("Astro").  On  June  28,  1994,  pursuant  to  appropriate  shareholder
agreements,  the  Utah  Corporation acquired all outstanding shares of Prime Air
(BC)  Inc.,  a  private  Canadian  corporation  ("the  Canadian Corporation") in
exchange  for  shares  of  its  capital  stock  on a .787796 to 1 basis, thereby
providing  the  shareholders  of  the  Canadian  Corporation  with  90%  of  the
outstanding  common  shares of Astro.  The acquisition was a capital transaction
in substance and therefore was accounted for as a recapitalization of Astro. The
Canadian  Corporation was incorporated on March 10, 1989. Astro then changed its
name  to  Prime  Air,  Inc.,  which  subsequently was acquired as a wholly owned
subsidiary  by  the  Delaware  Corporation,  as  described  above.  Prior to the
acquisition,  Astro  had  no  principal  operations  and had nominal net assets.

The  Company is a development stage company as defined by Statement of Financial
Accounting  Standards ("SFAS") No. 7. In a development stage company, management
devotes  most  of  its activities in developing a market for its products and/or
services.  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 the terminal facility and commence
operations on an economically viable basis. The ability of the Company to emerge
from  the  development  stage  with  respect  to  any planned principal business
activity  is  dependent  upon  its successful efforts to raise additional equity
financing  and/or  attain profitable operations. 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 raise any equity financing or sell any of its
services at a profit. There is substantial doubt regarding the Company's ability
to  continue  as  a  going  concern.

2.     Summary  of  Significant  Accounting  Policies

a)     Basis  of  Presentation
These  consolidated financial statements include the accounts of the Company and
its  wholly-owned operating subsidiary, Prime Air Inc. (a Canadian corporation).
All  intercompany transactions and balances have been eliminated. The results of
operations  and  cash flows for the period from the date of inception (March 10,
1989)  to  December  31, 2003 are presented for information purposes only. These
amounts  are  unaudited  and  accordingly  no  audit  opinion has been expressed
relating  to  these  amounts.

b)     Year  End
The  Company's  fiscal  year  end  is  December  31.

c)     Use  of  Estimates
The  preparation  of  consolidated  financial  statements  in  conformity  with
accounting  principles  generally  accepted  in  the  United  States  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 periods. Actual results could differ from those estimates.

d)     Cash  and  Cash  Equivalents
The  Company  considers  all  highly  liquid  instruments with maturity of three
months  or  less  at  the  time  of  issuance  to  be  cash  equivalents.


                                       28
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)
                  NOTES TO THE CONSOLIDATED FINANCIAL SATEMENTS

2.     Summary  of  Significant  Accounting  Policies  (continued)

e)     Other  Comprehensive  Income  (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, 2003 and 2002, the Company's only component of
comprehensive  income  (loss)  was  foreign  currency  translation  adjustments.

f)     Property  and  Equipment
Property  and  equipment  is  carried  at  cost  less  accumulated amortization.
Amortization is computed on the following methods over the estimated useful life
of  the  asset  at  the  following  annual  rates:

Air  terminal  -  Straight-line over 30-year term of land and airport facilities
lease

Furniture  and  equipment  -  20%  Declining-balance

Computer  equipment  -  30%  Declining-balance

g)     Long-Lived  Assets
In  accordance  with  SFAS No. 144, Accounting for the Impairment or Disposal of
Long  Lived  Assets",  the  carrying value of long-lived assets is reviewed on a
regular  basis  for  the  existence  of  facts or circumstances that may suggest
impairment.  The  Company  recognizes an impairment when the sum of the expected
undiscounted  future  cash  flows is less than the carrying amount of the asset.
Impairment  losses, if any, are measured as the excess of the carrying amount of
the  asset  over  its  estimated  fair  value.

h)     Foreign  Currency  Translation
The  functional  currency  of  the Company's Canadian subsidiary is the Canadian
dollar.  The  financial  statements  of this subsidiary are translated to United
States  dollars  in  accordance  with SFAS No. 52 "Foreign Currency Translation"
using period-end rates of exchange for assets and liabilities, and average rates
of  exchange  for the year for revenues and expenses. Translation gains (losses)
are  recorded in accumulated other comprehensive income (loss) as a component of
stockholders' equity. Foreign currency transaction gains and losses are included
in  current  operations.

i)     Revenue  Recognition
The  Company  recognizes  revenue  in  accordance  with  Securities and Exchange
Commission  Staff  Accounting Bulletin No. 104 ("SAB 104"), "Revenue Recognition
in  Financial Statements." Revenue is recognized only when the price is fixed or
determinable,  persuasive  evidence  of  an  arrangement  exists, the service is
performed, and collectibility is reasonably assured. The Company receives income
from  the  rental  of  the  air  terminal  located  in  Pemberton,  BC,  Canada.

j)     Basic  and  Diluted  Net  Income  (Loss)  Per  Share
The  Company  computes  net  income (loss) per share in accordance with SFAS No.
128,  "Earnings  per  Share"  (SFAS 128). SFAS 128 requires presentation of both
basic  and diluted earnings per share (EPS) on the face of the income statement.
Basic  EPS  is  computed  by  dividing  net  income  (loss)  available to common
shareholders  (numerator)  by  the weighted average number of shares outstanding
(denominator)  during  the  period.  Diluted  EPS  gives  effect to all dilutive
potential  common  shares outstanding during the period including stock options,
using  the  treasury  stock  method,  and convertible preferred stock, using the
if-converted  method.  In computing Diluted EPS, the average stock price for the
period  is used in determining the number of shares assumed to be purchased from
the  exercise  of  stock  options or warrants. Diluted EPS excludes all dilutive
potential  shares  if  their  effect  is  anti  dilutive.

k)     Stock-Based  Compensation
The  Company  records  stock-based compensation in accordance with SFAS No. 123,
"Accounting  for  Stock-Based  Compensation". Common stock issued by the Company
for  services  is  recognized  as  compensation expense based on the fair market
value  of  the  stock  award  or  fair  market  value  of the goods and services
received,  whichever is more reliably measurable. The Company does not currently
have  a  stock  option  plan.


                                       29
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)
                  NOTES TO THE CONSOLIDATED FINANCIAL SATEMENTS

2.     Summary  of  Significant  Accounting  Policies  (continued)

l)     Financial  Instruments
The  fair  values  of  cash, prepaid expenses, other receivables, notes payable,
advances  payable,  accounts  payable  and accrued liabilities were estimated to
approximate their carrying values due to the immediate or short-term maturity of
these  financial  instruments.  The  Company's  operations  are  in  Canada  and
virtually  all  of its assets and liabilities have exposure to market risks from
changes  in  foreign  currency  rates.  The  financial  risk  is the risk to the
Company's  operations that arise from fluctuations in foreign exchange rates and
the  degree  of  volatility  of these rates. Currently, the Company does not use
derivative  instruments  to  reduce  its  exposure  to  foreign  currency  risk.

m)     Income  Taxes
The  Company utilizes the liability method of accounting for income taxes as set
forth  in  SFAS  No.  109,  Accounting  for Income Taxes ("SFAS 109"). Under the
liability  method,  deferred  taxes  are  determined  based  on  the  temporary
differences  between  the  financial  statement  and  tax  bases  of  assets and
liabilities  using  enacted tax rates. A valuation allowance is recorded when it
is  more  likely  than  not  that  some  of  the deferred tax assets will not be
realized.

n)     Recent  Accounting  Pronouncements
In December 2003, the Securities and Exchange Commission issued Staff Accounting
Bulletin  No.  104,  "Revenue  Recognition" (SAB 104), which supersedes SAB 101,
"Revenue Recognition in Financial Statements." The primary purpose of SAB 104 is
to  rescind accounting guidance contained in SAB 101 related to multiple element
revenue  arrangements,  which was superseded as a result of the issuance of EITF
00-21,  "Accounting  for Revenue Arrangements with Multiple Deliverables." While
the  wording  of  SAB 104 has changed to reflect the issuance of EITF 00-21, the
revenue  recognition  principles  of  SAB  101  remain  largely unchanged by the
issuance  of  SAB 104. The adoption of SAB 104 did not have a material impact on
the  Company's  financial  statements.

In  January  2003  the  FASB  issued  FIN 46, Consolidation of Variable Interest
Entities  ("FIN  46"),  which  was  amended in December 2003. FIN 46 requires an
investor  with  a  majority of the variable interests (primary beneficiary) in a
variable  interest  entity  ("VIE")  to consolidate the entity and also requires
majority  and  significant  variable  interest  investors  to  provide  certain
disclosures. A VIE is an entity in which the voting equity investors do not have
a  controlling  financial  interest  or  the  equity  investment  at  risk  is
insufficient  to  finance  the  entity's activities without receiving additional
subordinated  financial  support  from  the  other  parties.  Development  stage
entities that have sufficient equity invested to finance the activities they are
currently engaged in and entities that are businesses, as defined in FIN 46, are
not  considered  VIE's.  The provisions of FIN 46 were effective immediately for
all arrangements entered into with new VIE's created after January 31, 2003. For
arrangements  entered  into  with  VIE's  created  before  January 31, 2003, the
provisions  of  FIN  46  are  effective at the end of the first reporting period
ending  after  March  15,  2004.  The  Company  does  not  have  VIE's.

In  May  2003,  the  FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments  with  Characteristics of both Liabilities and Equity". SFAS No. 150
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments  with  characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). The requirements of SFAS No.
150  apply  to issuers' classification and measurement of freestanding financial
instruments,  including  those  that  comprise  more  than one option or forward
contract.  SFAS  No.  150  does  not  apply  to  features that are embedded in a
financial  instrument  that is not a derivative in its entirety. SFAS No. 150 is
effective for financial instruments entered into or modified after May 31, 2003,
and  otherwise  is  effective  at  the  beginning  of  the  first interim period
beginning  after  June  15,  2003,  except  for  mandatory  redeemable financial
instruments  of  non-public  entities.  It is to be implemented by reporting the
cumulative  effect  of  a  change  in  an  accounting  principle  for  financial
instruments  created before the issuance date of SFAS No. 150 and still existing
at  the  beginning  of  the  interim  period  of  adoption.  Restatement  is not
permitted.  The  adoption of this standard did not have a material effect on the
Company's  results  of  operations  or  financial  position.

o)     Reclassifications
Certain  amounts  and/or  disclosures  in  the prior year consolidated financial
statements  have  been  reclassified  or  disclosure revised to conform with the
current  year  presentation.


                                       30
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)
                  NOTES TO THE CONSOLIDATED FINANCIAL SATEMENTS

3.     Property  and  Equipment

Property  and  equipment  consist  of  the  following  at  December 31, 2003 and
December  31,  2002:

<TABLE>
<CAPTION>
                                                            December 31,
                                 December 31, 2003               2002
                         ---------------------------------  ---------
                                    Accumulated   Net Book  Net Book
                           Cost    Amortization    Value     Value
                         --------  -------------  --------  --------
<S>                      <C>       <C>            <C>       <C>
Air terminal. . . . . .  $687,619  $     181,130  $506,489  $425,493
Computer equipment. . .     1,150            403       747       802
Furniture and equipment     5,550          4,628       922     1,010

                         $694,319  $     186,161  $508,158  $427,305
</TABLE>

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

5.     Related  Party  Transactions

a)     Included  in  due  to  related  parties  is  an amount of $12,846 (2002 -
$11,846),  which  has  been  advanced  to  the Company by a shareholder and/or a
corporation  controlled  by  that shareholder. This shareholder controls 100% of
the  related  corporation.

b)     During  the  years ended December 31, 2003 and 2002, 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 is accrued. The Company has adopted the policy
of  issuing  "restricted"  common  shares  to certain directors and officers for
services  rendered. During the year ended December 31, 2003 the Company incurred
$80,000 (2002: $80,000) of consulting expense provided by directors and officers
of  the Company. The Company issued a total of 2,400,334 common shares to settle
debt  obligations  of $160,017, which related to consulting services provided by
these related parties. This amount included 1,200,000 shares issued for services
provided  in  the prior year. During the year ended December 31, 2002, directors
of  the  Company  received  800,000  common  shares  by way of a debt settlement
covering  obligations  of $100,000. The common shares issued were recorded based
on  the  fair  value  of  the  services  received.

6.     Common  Shares

a)     During  the  year  ended  December 31, 2003, the Company issued 1,000,000
shares  of  common  stock  at  $0.05  per share for cash proceeds of $50,000 and
30,000  shares of common stock at $0.1667 per share for cash proceeds of $5,000.

b)     During  the  year  ended  December  31,  2003, the Company issued 185,000
shares of common stock at $0.05 per share, and 150,000 shares of common stock at
$0.1667  per  share  to  creditors  to  settle  debt  of  $34,250.

c)     During  the  year  ended  December  31,  2003, the Company issued 800,000
shares of common stock at $0.10 per share to a director of the Company to settle
debt  of  $80,000,  and  1,600,334  shares of common stock at $0.05 per share to
directors  of  the  Company  to  settle  debt  of  $80,017.

7.     Commitments
The  Company's  wholly  owned Canadian subsidiary ("subsidiary") entered into an
Airport Lease and Operating Agreement ("the "Agreement") with The Corporation of
The  Village  of Pemberton in British Columbia in 1993 whereby it was granted an
exclusive and irrevocable lease over the lands and airport facilities associated
with the Pemberton Airport. The initial lease term commenced on October 29, 1993
and  ended  on  October  31,  1996.  The  subsidiary  exercised  its  option for
extensions  of  the  Agreement,  which  currently  expires  in 2004, however the
Company  has two ten-year options for extension available, which require written
notice  within six months prior to the expiry of the Extension Term. The Company
plans to file written notice with the Village of Pemberton to exercise the first
10-year  option  extension.

Rent  payable  under  the  Agreement  is based on 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  Company  paid  rent  expense  of  $165  for the year ended
December  31,  2003  (2002: NIL), which represented 5% of gross rental receipts.
The  lease  commitment amounts for 2003 through 2007 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. The Company paid
property taxes imposed by municipal authorities amounting to $9,383 for the year
ended  December  31,  2003  (2002:  $9,859).
The  Village  of  Pemberton, in the event of a material default or bankruptcy by
the  Company,  may terminate the Agreement. The terminal facilities shall become
the  property  of  the  Village of Pemberton at the expiration of the Agreement.

                                       31
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)
                  NOTES TO THE CONSOLIDATED FINANCIAL SATEMENTS

8.     Income  Taxes
Potential benefits of income tax losses are not recognized in the accounts until
realization  is  more  likely  than  not.  The  Company has adopted Statement of
Financial  Accounting  Standards  No.  109 ("SFAS 109") as of its inception. The
Company  has  incurred  net  operating losses of approximately $1,444,000, which
expire  starting  in  2015.  Net  operating  losses in Canada expire after seven
years.  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  components  of  the  net  deferred  tax asset at December 31, 2003, and the
statutory  tax  rate,  the  effective  tax  rate  and  the elected amount of the
valuation  allowance  are  scheduled  below:

<TABLE>
<CAPTION>
                         December 31,
                             2003
                              $
<S>                     <C>
Net Operating Loss . .         65,000
Statutory Tax Rate . .             35%
Effective Tax Rate . .              -
Deferred Tax Asset . .         22,750
Valuation Allowance. .        (22,750)
--------------------------------------
Net Deferred Tax Asset              -
======================================
</TABLE>

9.     Subsequent  Events

In  January,  2004 the Company issued 90,000 shares of common stock to creditors
to  settle  debt  obligations  of  $6,497.


                                       32
<PAGE>

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

     (a)     Previous  independent  accountants

     (i)     On  March  19,  2004,  the  Company  dismissed Rutherford & Company
Chartered  Accountants  as  the  Company's  independent  accountants.

     (ii)     Rutherford  &  Company's  reports  on  the  Company's  financial
statements  as  of  and  for the years ended December 31, 2002, and December 31,
2001,  contained  no  adverse  opinions  or  disclaimers of opinion and were not
modified  or  qualified  as to audit scope or accounting principles, but did not
contain  modifications  as  to  the  Company's  ability  to  continue as a going
concern.

     (iii)     The  Company's Board of Directors approved the decision to change
independent  accountants.

     (iv)     During  the  two fiscal years ended December 31, 2002 and December
31,2001,  and through the subsequent interim period ended March 19, 2004, to the
best  of  the  Company's  knowledge,  there  have  been  no  disagreements  with
Rutherford  &  Company,  Chartered  Accountants  on  any  matters  of accounting
principles  or  practices,  financial statement disclosure, or auditing scope or
procedures, which disagreement if not resolved to the satisfaction of Rutherford
&  Company,  Chartered  Accountants  would have caused them to make reference in
connection  with  its  report  on the financial statements of the Registrant for
such  years.

     (v)     During  the  two  fiscal years ended December 31, 2002 and December
31,  2001,  and  through  the  subsequent  interim  period ended March 19, 2004,
Rutherford  & Company did not advise the Company on any matter set forth in Item
304(a)(1)(iv)(B)  of  Regulation  S-B.

     (vi)     The  Company requested that Rutherford & Company furnish it with a
letter  addressed  to  the  SEC  stating whether or not it agrees with the above
statements.  A  copy  of  such  letter was filed as Exhibit 16.1 to the Form 8-K
reporting  the  event.

     (b)     New  Independent  Accountants

     On  March  19,  2004,  the  Company  engaged  Manning  Elliot,  Chartered
Accountants  to  audit  its financial statements for the year ended December 31,
2003.  During  the  two  most  recent  fiscal  years  end  December 31, 2003 and
December  31, 2002, and through March 19, 2004, the Company did not consult with
Manning  Elliot,  Chartered  Accountants  regarding  the  (1) the application of
accounting  principles  to a specific transaction, either completed or proposed,
or  the  type of audit opinion that might be rendered on the Company's financial
statements,  and no written report or oral advice was provided to the Company by
concluding  there  was  an  important  factor to be considered by the Company in
reaching  a decision as to an accounting, auditing or financial reporting factor
to  be  considered  by  the  Company  in  reaching  a decision to an accounting,
auditing  or  financial  reporting issue; or (ii) any matter that was either the


                                       33
<PAGE>

subject  of  a  disagreement, as the term is defined in Item 304(a)(1)(iv)(A) of
Regulation  S-B or an event, as that term is defined in Item 304(a)(1)(iv)(B) or
Regulation  S-B.

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, 2003 are
as  follows:

<TABLE>
<CAPTION>
Name               Age              Position
-----------------  ---  ---------------------------------
<S>                <C>  <C>
Blaine Haug . . .   56  Chief Executive Officer, Chairman
Wayne Koch (1). .   53  Treasurer and Director
Nigel Horsley (2)   56  VP Communications
John Eberhard . .   61  Director
Greg Duffy. . . .   49  Director
</TABLE>
(1)     Mr.  Wayne Koch resigned as a director and as an officer effective March
19,  2004.
(2)     Mr.  Nigel  Horsley  resigned  as  a  director  on  June  7,  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.


                                       34
<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. Mr.
Koch  resigned  as  a director and executive officer of the Company on March 19,
2004.

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.  Mr. Horsley
resigned  on  June  7,  2004.

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.

DR.  ALBERT  BRUNO - Director since March 19, 2004.   Dr. Bruno DC is a graduate
of the Palmer College of Chiropractic. In private practice since 1990, Dr. Bruno
operates  a chiropractic practice and consulting business in Seattle, WA.  He is
licensed in both Washington and Pennsylvania. Utilizing his business experience,
he  assists in the start-up of new chiropractic clinics and the restructuring of
multi-clinic  operations.  Dr.  Bruno  has been actively involved with Prime Air
for  the  past  9  years  as  a  consultant.

CHRISTOPHER  BENSON  -  Director since June 7, 2004.  For at least the past five
years,  Mr.  Benson has been a practicing real estate and business lawyer in the
states  of Washington and Arizona. Mr. Benson represents numerous pilots and has
gained  extensive working knowledge of a wide range of airport operation matters
ranging  from  public  to  private  airports  through  his cases and the experts
involved.  Mr.  Benson  is  currently  on the Board of Directors for Habitat for
Humanity,  Seattle-South  King  County  and  for  the  past  12 years has taught
Washington  State  Certified  Real  Estate  Law classes for continuing education
credits  to  real  estate  brokers,  appraisers  and  surveyors.


                                       35
<PAGE>

ITEM  10.     EXECUTIVE  COMPENSATION

     The  Company,  including  Prime Air BC, had one employee as of December 31,
2003,  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   Compensation
             Year  Salary   Bonus ($)  Compensation ($)   Award(s)    Options (#)   ($)         ($)
             ----  -------  ---------  ----------------  -----------  -----------  ------  -------------
<S>          <C>   <C>      <C>        <C>               <C>          <C>          <C>     <C>
Blaine Haug  2003  $     0        -0-               -0-  400,000 (1)          -0-     -0-            -0-
President .  2002  $     0        -0-               -0-  400,000 (1)          -0-     -0-            -0-
* . . . . .  2001  $     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.

OPTION  GRANTS  IN  2003

The  Company  made  no  stock  option  grants  during  calendar  year  2003.

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,
2003.

FISCAL  YEAR  END  OPTION  VALUES

          There  are  no  options  outstanding.

DIRECTOR  FEES

     During  the year ended December 31, 2003, Messrs. Haug, Koch, Eberhard, and
Horsley  each  earned  $5,000  for director services as determined by the Board.
These  fees  were  paid through the issuance of common shares at a value of $.05
per  share  in  2003.

COMPENSATION  PLAN  TABLE

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

COMPLIANCE  WITH  SECTION  16(A)  OF  THE  EXCHANGE  ACT.

     Because the Company is not registered under Section 12 of the Exchange Act,
it  is  not  subject  to  the  reporting  requirements  under  Section  16(a).


                                       36
<PAGE>

CODE  OF  ETHICS

     Due to limited resources, the Company has not yet adopted a code of ethics.
The  Company  has  recently  engaged  new  corporate counsel who will assist the
Company  in  drafting  and  adopting  a  code  of  ethics.

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 March 31, 2004 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.

<TABLE>
<CAPTION>

Five Percent Shareholders, Directors      Common Stock      Percentage
and certain Executive Officers         Beneficially Owned      Owned
-------------------------------------  -------------------  -----------
<S>                                    <C>                  <C>
Blaine Haug . . . . . . . . . . . . .        5,228,547 (1)        19.2%
-------------------------------------  -------------------  -----------
Dr. Albert Bruno. . . . . . . . . . .                   0            0
-------------------------------------  -------------------  -----------
Nigel Horsley . . . . . . . . . . . .             100,000           .4%
-------------------------------------  -------------------  -----------
John Eberhard . . . . . . . . . . . .             395,340          1.5%
-------------------------------------  -------------------  -----------
Greg Duffy. . . . . . . . . . . . . .              94,720          0.3%
-------------------------------------  -------------------  -----------
All directors and current executive
officers as a group (5 persons) . . .           5,818,607         21.4%
-------------------------------------  -------------------  -----------
</TABLE>
(1)  Includes  shares  held  by  a  trust  under  Mr.  Haug's  control.

ITEM  12.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     During  the  years  ended  December 31, 2003 and 2002, 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 funds to the Company for its operations.  However, the
amount  in  value  for  each  transaction  did  not  exceed  $60,000.


                                       37
<PAGE>

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:

<TABLE>
<CAPTION>

Exhibit Number  Name
--------------  -------------------------------------------------------------------------
<C>             <S>
 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)
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)
10.5            Memorandum of Understanding with Galvin Flying Service, Inc.
                (Incorporated by reference to Exhibit 10.5 to Form 10-QSB for the
                nine months ended September 30, 2003 filed with the Commission on
                May 6, 2004.)
16.1            Letter regarding change in Certifying Accountants (incorporated to
                Form 8-K filed with the Commission on April 1, 2004.)
31.1            CEO certification under Section 302 of Sarbanes-Oxley Act
31.2            CFO certification under Section 302 of Sarbanes-Oxley Act
32.1            CEO and CFO Certifications under Section 906 of Sarbanes-Oxley Act
</TABLE>

(b)     Reports on Form 8-K.
     None


                                       38
<PAGE>

ITEM 14.     PRINCIPAL ACCOUNTING FEES AND SERVICES.

     Manning & Elliot served as the Company's independent accountants for the
fiscal year ended December 31, 2003, 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, 2003 and 2002, the following fees were paid
for services provided by Manning & Elliot and Rutherford & Company,
respectively.

     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, 2003 and 2002 and the review of the Company's quarterly reports for such
years, amounted to approximately $6,000 to Manning & Elliott and $7,323 to
Rutherford & Company, respectively.

     Audit Related Fees.  For the years ended December 31, 2003 and 2002, the
Company paid no fees to Manning & Elliott or Rutherford & Company related to
other audit related fees.

     Tax Fees.  For the years ended December 31, 2003 and 2002, the Company paid
no fees to Manning & Elliott nor Rutherford & Company related to tax fees.

     All Other Fees.  For the years ended December 31, 2003 and 2002, the
Company did not pay Manning & Elliott nor Rutherford & Company for any non-audit
services.

The Company does not have an audit committee.  Prior to engaging the Company's
Independent auditors, the board of directors will review and approve the scope
of the engagement and any other services proposed to be offered by the Company's
Independent accountants.  During the years ended 2003 and 2002, the Company did
not engage its Independent accountants to perform services as set for in Items
9(e)(2) and 9(e)(4) of Schedule 14A.


                                       39
<PAGE>

                                   SIGNATURES

          In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has duly caused this Annual Report on Form 10-KSB  to be signed on
its behalf by the undersigned, thereunto duly authorized.
Prime Air, Inc.


June 16 2004                   By: /s/ Blaine Haug
                                   -----------------------------------------
                               Blaine Haug
                               Chairman of the Board and Chief Executive Officer
                               (Principal Executive and Principal Financial and
                               Accounting Officer)


          In accordance with the Exchange Act, this Annual Report has been
signed below by the following persons on behalf of the Registrant and of the
corporations and on the dates indicated:

<TABLE>
<CAPTION>
<S>                     <C>
Date:    June 16, 2004  /s/ Blaine Haug
                        ----------------------------
                        Blaine Haug, Director

Date:
        -------------   ----------------------------
                        John Eberhard, Director

Date:   June 17, 2004   /s/ Greg Duffy
                        ----------------------------
                        Greg Duffy, Director

Date:   June 17, 2004   /s/ Albert Bruno
                        ----------------------------
                        Albert Bruno, Director

Date:   June 18, 2004   /s/Christopher Benson
                        ----------------------------
                        Christopher Benson, Director
</TABLE>


                                       40
<PAGE>