`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, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to __________

Commission File Number: 333-28249

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

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

Suite 601 - 938 Howe Street, Vancouver, British Columbia, CANADA    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:

Title of each class Name of each exchange on which registered

None N/A

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. (1) Yes [X ]

No [ ] (2) 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. [N/A]

State issuer's revenues for its most recent fiscal year: -0-
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days: The aggregate market value of the voting stock held
by non-affiliates of the Registrant (21,978,666 shares) computed by using the
closing sale price on April 9, 2002, was $1,758,293.

State the number of shares outstanding of each of the Issuer's classes of
common equity as of the latest practicable date: At February 13, 2002, there
were 22,898,666 shares of the Registrant's Common Stock outstanding.
Documents Incorporated by Reference: Exhibits from the Registrant's
registration statement on Form S-4 and from prior periodic reports are
incorporated by reference into Item 13 of Part III.


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 the inability of the
Company to raise the additional capital necessary to commence its principal
operations or the failure to consummate a definitive agreement with Voyager
Airways Limited.


PART I

  ITEM 1. DESCRIPTION OF BUSINESS

General

Prime Air, Inc. (the "Company") 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.

The Company is the parent of a wholly owned 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." for the purpose of establishing air service to serve
the Whistler, British Columbia, Canada, area. 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.
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.

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

On or about April 4, 1995, the Utah Corporation effected a change of domicile
to the State of Delaware by incorporating another corporation in such state,
acquiring all of the assets and liabilities of the Utah Corporation, and
issuing shares of the Delaware corporation to the shareholders of the Utah
Corporation on a one-for-one basis. The Utah Corporation was voluntarily
dissolved by the State of Utah on May 18, 1995. The change of domicile was
initiated and completed based upon the recommendations of Mr. Paul Parshall,
an officer and director of the Utah Corporation at such time.
The original purpose of the Utah Corporation incorporated in 1993 as set forth
in its articles of incorporation, was to acquire the assets and certain
liabilities of another Utah corporation incorporated in 1985 and previously
dissolved by the State of Utah on May 1, 1990, and also incorporated under the
name "Astro Enterprises, Inc." Current management of the Company, none of whom
were affiliated with the Utah Corporation prior to the share exchange in June
1994, believe that the former management of the Utah Corporation at the time
of its incorporation issued approximately 120,000 shares of the company's
common stock to the shareholders of the corporation dissolved in 1990 with the
same name thus creating approximately 170 shareholders of the Utah
Corporation. Management does not believe that any other relationship existed
between the two entities or with former management of the corporation
dissolved in 1990 and known as Astro Enterprises, Inc.

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.

Commencing June 1998, the Company attempted to offer and sell up to 8,000,000
common shares. This offering terminated August 31, 1998. No shares were sold.
Commencing October 1998, the Company engaged the Investment Banking firm of
Chanen, Painter & Company Ltd. for the purpose of providing equity financing
to enable start up of air services. That engagement was not completed and all
associations thereto expired and were terminated in February 2000.
The Company entered into a "Memorandum of Proposed Agreement" with 519222
Ontario Limited, a corporate entity associated with Voyageur Airways Limited,
which, subject to the final approval of Voyageur and the Company, will allow a
merger which combines 25% of the assets of Voyageur with 70% of the assets of
the Company.  That engagement was not completed, however, Voyageur continues
to work with the Company for the purpose of establishing an air service.
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 to enable Prime Air (BC) to undertake the planning, development,
construction, management, and operation of a terminal facility.
The Pemberton Airport is approximately 20 miles north of Whistler Resort on
Highway 99. Whistler Resort is a ski resort located at the base of Whistler
Mountain and Blackcomb Mountain approximately 75 miles north of Vancouver,
British Columbia, Canada. The resort has approximately 8,000 permanent
residents and attracts approximately 3,000,000 visitors annually. Currently
only ground transportation is available to the resort, except for private
flights into Pemberton Airport. The nearest airport facility to Whistler
Resort is Pemberton Airport. There is presently no regular air service into
Pemberton Airport.

The Airport Agreement provided that Prime Air (BC) must construct a terminal
facility on or before October 21, 1994, which date was extended to June 1,
1996, by the Council for the Village of Pemberton. Prior to such extended
date, Prime Air (BC) completed the terminal facility at the Pemberton Airport.
The terminal constructed by Prime Air (BC) has a total square footage of
11,200 square feet, of which approximately 5,500 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.

Air Service

Prime Air (BC) initially intends to establish scheduled and charter passenger
and cargo air service between Vancouver International Airport and Pemberton
Airport. Thereafter, Prime Air (BC) will seek to establish such services
between Pemberton Airport and other Canadian and United States destinations.
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,
and thereafter from other Canadian and United States locations, to the
Pemberton Airport. The Voyager Agreement provides that Prime Air (BC) will
operate the terminal facility at Pemberton Airport and the scheduled and
charter passenger and cargo service, and will market the air services.
Voyageur will provide the certifications, authorizations, expertise,
facilities, personnel, and resources necessary to operate, maintain and
service the aircraft. The parties intend to negotiate and enter into a
definitive agreement prior to commencing operations.

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. 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.

Voyageur will conduct all in-flight operations as an independent contractor to
Prime Air (BC). Management of Prime Air (BC) believes that Voyageur meets all
of the criteria set forth above.

Voyageur will be responsible for the carriage of full flight and ground risk
insurance including aircraft hull and passenger and third party liability for
the operations conducted by Voyageur. Prime Air (BC) will be responsible for
insuring the terminal building and property at the Pemberton Airport and for
passenger liability at the airport terminal operation.

Voyageur will be responsible for any environmental damage caused by the
operation and maintenance of its aircraft. Prime Air (BC) will be responsible
for any environmental damage caused by the operation and maintenance of its
aircraft.

Marketing

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

Prime Air (BC) will compete with other charter and airline companies based in
the Vancouver and Seattle area which currently service customers whose final
destination is Whistler Resort. 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 employee as of December 31, 2001,
consisting of Mr. Haug, who was employed part-time.

  ITEM 2. DESCRIPTION OF PROPERTY

In addition to the Pemberton Airport facility described above, the Company
maintains its principal executive offices at facilities shared with the
business of the President of the Company, which facilities are furnished at no
cost to the Company.

  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. Management of the Company does not
believe that there are any material proceedings to which any director, officer
or affiliate of the Company, or its subsidiary, any owner of record of
beneficially of more than 5 percent of the Common Stock of the Company, or any
associate of any such director, officer, affiliate of the Company, or its
subsidiary, or security holder is a party adverse to the Company, or it
subsidiary, or has a material interest adverse to the Company, or it
subsidiary.

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

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

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

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

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

Consolidated Financial Statements

December 31, 2001 and 2000




Auditors' Report

Consolidated Balance Sheets

Consolidated Statements of  Operations

Consolidated Statements of Shareholders' Equity and Deficit

Consolidated Statements of  Cash Flows

Notes to Consolidated Financial Statements







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


AUDITORS' REPORT


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

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

We have conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.

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

     As reported in Note 1 to these financial statements, the results of
operations and cash flows for the period from the date of inception of this
organization as a development stage company on March 10, 1989 to December 31,
2001 have been compiled from information provided by management.  We have not
audited, reviewed or otherwise attempted to verify the accuracy or
completeness of such information.  Readers are cautioned that these statements
may not be appropriate for their purposes.


                                                  "Rutherford & Company"
Richmond, Canada
April 9, 2002                                      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 2 to the financial statements.  Our report to
the shareholders dated  April 9, 2002 is expressed in accordance with Canadian
reporting standards which do not permit a reference to such events and
conditions in the auditors' report when these are adequately disclosed in the
financial statements.








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









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









ACCOUNTANTS' CONSENT



We hereby consent to the use of our audit report of Prime Air, Inc. (Nevada),
dated April 9, 2002, for the years ended December 31, 2001 and 2000 in the
Form 10K SB Statement for Prime Air, Inc. (Nevada).

We also consent to the use of our auditing firm as experts in the 10K SB
Registration Statement for Prime Air, Inc. (Nevada).




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









PRIME AIR, INC.
(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS
(all figures in US dollars)


                                                  December 31          December 31
                                                    2001                   2000
ASSETS
Current Assets
     Cash and short-term deposits             $        2,089         $      2,605
     Prepaid expenses                                  1,550                1,467
     GST recoverable                                   1,148                1,490
                                                       4,787                5,562


Capital Assets  (Note 4)                             523,278              542,432

                                               $     528,065         $    547,994


LIABILITIES
Current Liabilities
     Accounts payable and accrued liabilities  $     210,305         $    212,450
     Notes and advances payable (Note 5)              14,989               15,184
                                                     225,294              227,634
SHAREHOLDER'S EQUITY

Capital Stock (Note 6)
     Authorized:
          150,000,000 common shares with a
            stated par value of $.001/share
          5,000,000 preferred cumulative convertible
            shares with a stated par value of
            $.001/share
     Issued:
          21,978,666 common shares
          (2000: 21,022,666)                           21,979             21,023

     Capital in excess of par value                 1,696,427          1,652,977
                                                    1,718,406          1,674,000
Accumulated Deficit During
     Development Stage                             (1,415,635)        (1,353,640)
                                                      302,771            320,360

                                                 $    528,065       $    547,994
Approved on Behalf of the Board:

               "Blaine Haug"                 Director

               "Wayne Koch"                 Director

See Accompanying Notes To Financial Statements




PRIME AIR, INC.
( A Development Stage Company )

CONSOLIDATED STATEMENTS OF OPERATIONS
 (all figures in US dollars)



                                                            Year Ended     Year Ended
                                                            December 31    December 31
                                                               2001           2000

Administrative And General Expense

     Accounting and audit                              $        6,781     $      20,280
     Advertising                                                  666             3,434
     Amortization                                              19,154            20,053
     Association membership fees                                5,768                 -
     Commissions and finders' fees                              3,261            11,361
     Consulting  (Note 7)                                         400             ( 209)
     Insurance                                                  2,374             2,304
     Interest and service charges                               1,289             5,153
     Legal costs                                                    -             9,681
     Office and general                                         1,249               410
     Repairs and maintenance                                    1,420             2,171
     Rent and property taxes - airport facility  (Note 8)       8,426             9,294
     Telephone and utilities                                    4,754             4,051
     Transfer agent, listing and filing fees                    6,405             6,277
     Travel, promotion and entertainment                        5,654             5,706
                                                               67,601            99,966
Other Income

      Gain on foreign exchange conversion                      (5,606)           (3,176)
      Interest income                                               -              (454)
                                                               (5,606)           (3,630)


Net Loss For The Year                                   $      61,995     $      96,336



Net Loss Per Common Share                               $     (0.0029)    $     (0.0048)


Weighted Average Common Shares Outstanding                 21,586,358        20,169,124




See Accompanying Notes To Financial Statements




PRIME AIR, INC.
( A Development Stage Company)

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

                                                            Capital in                        Accumulated
                                                            Excess of         Share           Deficit During
                                        Common Shares       (Less than)       Subscriptions   Development
                                   Shares           Amount  Par Value         Receivable      Stage
Balance at Inception on
   March 10, 1989                       -           $    -    $         -    $           -    $                -
Issue of common shares for cash
   at $.001/share                 630,237              630              -                -                     -
Net loss for the year ended
   March 31, 1990                       -                -              -                -               (17,956)

Balance, March 31, 1990           630,237              630              -                -               (17,956)

Issue of common shares for cash
   at $.001/share                 157,559              158              -                -                     -
Net loss for the year ended
   March 31, 1991                       -                -              -                -               (49,419)

Balance, March 31, 1991           787,796              788              -                -               (67,375)
Net loss for the year ended
   March 31, 1992                       -                -              -                -               (10,990)

Balance, March 31, 1992           787,796              788              -                -               (78,365)

Issue of common shares for cash
   at $.277/share                 132,088              132         36,499                -                     -
   at $.214/share                  17,069               17          3,628                -                     -
Net loss for the year ended
   March 31, 1993                       -                -              -                -               (38,426)
Balance, March 31, 1993           936,953              937         40,127                -              (116,791)

Issue of common shares for services
   at nominal value                92,173               92            (92)               -                     -

Issue of common shares for cash
   at $.001/share                 300,000              300              -                -                     -
   at $.109/share                   3,340                3            361                -                     -
   at $.154/share                  23,634               24          3,619                -                     -
   at $.280/share                  19,401               19          5,400                -                     -
   at $.330/share                  23,161               23          7,624                -                     -
   at $.463/share                  87,445               88         40,330                -                     -
   at $.694/share                  15,756               16         10,907                -                     -
   at $.925/share                   7,878                8          7,274                -                     -
Net loss for the year ended
   March 31, 1994                       -                -              -                -               (36,272)
Balance, March 31, 1994         1,509,741         $  1,510   $    115,550       $        -       $      (153,063)

See Accompanying Notes To Financial Statements




PRIME AIR, INC.
( A Development Stage Company)

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

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

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

Issue of common shares for services
   at nominal value                  937,478            937           (937)             -                   -

Issue of common shares for cash
   at $.374/share                    248,692            249         92,697              -                   -
   at $.463/share                    304,089            304        140,286              -                   -
Net loss for the year ended
   June 28, 1994                           -              -              -              -             (40,947)

Balance, June 28, 1994             3,000,000          3,000        347,596              -            (194,010)

Share subscription at $.367/share          -              -         (7,313)           (20)                  -

Net loss for the year ended
   December 31, 1994                       -              -              -              -            (135,530)

Balance, December 31, 1994         3,000,000          3,000        340,283            (20)           (329,540)

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

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

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

Issue of common shares for cash
   at $.50/share                   1,510,558          1,511        753,769              -                   -

Issue of common shares for services
   at nominal value                1,483,673          1,483              -              -                   -

Net loss for the year ended
   December 31, 1996                       -              -              -              -            (238,416)

Balance, December 31, 1996         6,556,781      $   6,557   $  1,225,244      $     (20)        $  (639,222)

See Accompanying Notes To Financial Statements




PRIME AIR, INC.
( A Development Stage Company)

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

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


Balance Forward                     6,556,781   $     6,557 $     1,225,244   $      (20)     $      (639,222)

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

Issue of common shares for
   debt settlements:
   at $.500/share                     124,252           124          62,001            -                    -
   at $.504/share                      36,380            36          18,303            -                    -
   at $.530/share                      94,800            95          50,192            -                    -

Net loss for the year ended
   December 31, 1997                        -             -               -            -             (189,697)

Balance, December 31, 1997          7,140,213         7,140       1,355,740          (20)
(828,919)

Issue of common shares for
   debt settlements:
   at $.3935/share                     10,000            10           3,863            -                    -
   at $.4006/share                     18,215            18           7,279            -                    -

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

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

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

Issue of common shares for services
   at nominal value                   290,000           290               -            -                    -

Transfer Agent adjustment              (6,000)           (6)              -            -                    -

Write off of uncollectable share
   subscription receivable                  -             -           7,313           20                    -
Net loss for the year ended
   December 31, 1998                        -             -               -            -             (151,268)
Balance, December 31, 1998         18,013,110   $    18,013  $    1,381,498   $        -           $ (980,187)

See Accompanying Notes To Financial Statements



PRIME AIR, INC.
( A Development Stage Company)

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

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

Balance Forward                18,013,110     $     18,013  $ 1,381,498       $        -      $     (980,187)

Issue of common shares for
   debt settlements:
   at $.20/share                  201,250              202       40,048                -                   -
   at $.25/share                  423,200              423      105,377                -                   -

Issue of common shares for services
   at nominal value             1,010,000            1,010            -                -                   -

Net loss for the year ended
   December 31, 1999                    -                -            -                -            (277,117)
Balance, December 31, 1999     19,647,560           19,648    1,526,923                -          (1,257,304)

Issue of common shares for cash
   at $.08/share                  500,000              500       39,500                -                   -

Issue of common shares for
   debt settlements:
   at $.08/share                    4,100                4          324                -                   -
   at $.10/share                  871,006              871       86,230                -                   -

Net loss for the year ended
   December 31, 2000                    -                -            -                -             (96,336)
Balance, December 31, 2000     21,022,666           21,023    1,652,977                -          (1,353,640)

Issue of common shares for cash
   at $.08/shre                   300,000              300       23,700                -                   -

Issue of common shares for
   debt settlement
   at $.08/share                  250,000              250       19,750                -                   -

Issue of common shares for
services
   at nominal value               400,000              400            -                -                   -

Transfer Agent adjustment           6,000                6            -                -                   -
Net loss for the year ended
   December 31, 2000                    -                -            -                -             (61,995)

Balance, December 31, 2001     21,978,666    $      21,979  $ 1,696,427           $    -       $  (1,415,635)

See Accompanying Notes To Financial Statements




PRIME AIR, INC.
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(all figures in US dollars)




                                                                 Year Ended     Year Ended
                                                                 December 31    December 31
                                                                    2001           2000



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

OPERATING
     Net loss for the year                                   $      (61,995)     $   ( 96,336)
     Non-cash charge - amortization                                  19,154            20,053
                                                                    (42,841)          (76,283)

     Change in non-cash working capital
        balances relating to operations                             ( 1,886)          (27,575)
                                                                    (44,727)         (103,858)



FINANCING
     Notes and advances payable                                        (195)          (23,977)
     Issue of capital stock                                          44,406           127,429

                                                                     44,211           103,452



INVESTING
      Recovery of terminal facility construction costs                    -             2,539


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

CASH, BEGINNING OF YEAR                                               2,605               472

CASH, END OF YEAR                                           $         2,089        $    2,605


See Accompanying Notes To Financial Statements





PRIME AIR, INC.
(A Development Stage Company)

Notes To Consolidated Financial Statements
December 31, 2001 and 2000


1.      Incorporation, Principles of Consolidation and Accounting Presentation

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

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

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

The results of operations and cash flows for the period from the date of
inception of this organization as a development stage company on March 10,
1989 to December 31, 2000 are presented herein for information purposes only.
These amounts are unaudited and accordingly no audit opinion has been
expressed thereon.

2.      Nature of Operations / Going Concern Considerations

The Company is presently in its developmental stage and currently has minimal
sources of revenue to provide incoming cash flows to sustain future
operations.  The Company's present activities relate to the construction and
ultimate exclusive operation of an international passenger and cargo air
terminal facility in the Village of Pemberton, British Columbia and the
operation of scheduled flight services between that facility and certain major
centers in Canada and the United States in conjunction with Voyageur Airways
Limited.  Terminal building construction was substantially completed in May,
1996. The future successful operation of the Company is dependent upon its
ability to obtain the financing required to complete and operationalize the
terminal facility and to commence operation thereof on an economically viable
basis.

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









PRIME AIR, INC.
(A Development Stage Company)

Notes To Consolidated Financial Statements
December 31, 2001 and 2000

3.      Significant Accounting Policies

Reporting Currency

All amounts in these consolidated financial statements are reported in U.S.
funds.  Monetary assets and liabilities have been converted from Canadian
funds where applicable utilizing the year-end closing exchange rate of $
1.5906 CDN/$1.00 U.S.  Transactions recorded throughout the year in the
accounts of the Canadian subsidiary have been converted to their U.S.
equivalent at actual amounts where available or by utilizing the average
annual rate as posted by the Internal Revenue Service of the United States as
follows: $ 1.5484 CDN/$1.00 U.S. (2000: $1.4852 CDN/ $1.00 U.S.).

Fair Value of Financial Instruments

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

Receivables and Prepaid Expenses

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

Capital Assets

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

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

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
In these financial statements, assets, liabilities and results of operations
involve significant reliance on management estimates.  Actual results could
differ from the use of those estimates.









PRIME AIR, INC.
(A Development Stage Company)

Notes To Consolidated Financial Statements
December 31, 2001 and 2000




3.    Significant Accounting Policies (continued)

Income Taxes

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

Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes", requires an asset and liability approach for financial accounting and
reporting for income tax purposes.  This statement recognizes (a) the amount
of taxes payable or refundable for the current year and (b) deferred tax
liabilities and assets for future tax consequences of events that have been
recognized in the financial statements or tax returns.

Deferred income taxes result from temporary differences in the recognition of
accounting transactions for income tax and financial reporting purposes.
There were no temporary differences at December 31, 2001 and earlier years and
accordingly, no deferred tax liabilities have been recognized for all years.

The operating subsidiary Company has cumulative net operating loss carry
forwards of approximately
$668,000 at December 31, 2001 and $ 790,000 at December 31, 2000.  No effect
has been shown in the financial statements for these carry forwards as the
likelihood of future tax benefit from such is not presently determinable.  The
potential income tax benefits of these net operating loss carry forwards of
approximately $ 118,000 at December 31, 2001 and $ 144,000 at December 31,
2000 (based upon current income tax rates) have been offset by valuation
reserves of the same amount.  Net operating losses expire after seven (7)
years.  Operating losses of the US parent corporation have not been
determined.










PRIME AIR, INC.
(A Development Stage Company)

Notes To Consolidated Financial Statements
December 31, 2001 and 2000



4.    Capital Assets

Capital assets consist of the following at December 31, 2001 and December 31,
2000:

                                                December 31, 2001
                                                                Accumulated         Net Book
                                              Cost              Amortization        Value
     Air terminal construction costs         $ 641,972            $ 120,267         $ 521,705

     Furniture and equipment                     5,154                3,581             1,573
                                              --------             --------          --------
                                             $ 647,126            $ 123,848         $ 523,278
                                              --------             --------          --------

                                                December 31, 2000
                                                                 Accumulated        Net Book
                                               Cost              Amortization       Value
     Air terminal construction costs         $ 641,972           $  101,434         $ 540,538

     Furniture and equipment                     5,154                3,260             1,894
                                              --------             --------          --------
                                             $ 647,126           $  104,694         $ 542,432
                                              --------             --------          --------


5.    Notes and Advances Payable

The notes and advances payable are unsecured, non-interest bearing and are
without specific terms of repayment.  Included therein is an amount of $11,846
which has been advanced to the Company by a shareholder and/or a corporation
controlled by that shareholder who is the beneficial owner of 2,245,226 shares
of common stock of the Company, that holding representing 10.22% of the issued
and outstanding capital of the Company.






PRIME AIR, INC.
(A Development Stage Company)

Notes To Consolidated Financial Statements
December 31, 2001 and 2000

6. Capital Stock
    Authorized:
       150,000,000 common shares with a stated par value of $.001/share
         5,000,000 preferred cumulative convertible shares with a stated par value of $.001/share

                                                        Number of Shares            Consideration
     Common Shares Issued:
           To August 31, 1993
                 - for cash                                      300,000            $       300
           Prime Air Inc. share exchange
                 - June 28, 1994                               2,700,000                350,296
           During year ended December 31, 1995
                 - for cash                                      562,550                131,756
                                                              ----------              ---------
           Balance at December 31, 1995                        3,562,550                482,352
                                                              ----------              ---------
           During year ended December 31, 1996
                 - for cash                                    1,510,558                755,279
                 - for consulting and related services         1,483,673                  1,483
                                                              ----------              ---------
                                                               2,994,231                756,762
                                                              ----------              ---------
           Balance, December 31, 1996                          6,556,781              1,239,114
                                                              ----------              ---------
           During the year ended December 31, 1997
                 - shares-for-debt settlements                   255,432                130,751
                 - consulting and related services               328,000                    328
                                                              ----------              ---------
                                                                 583,432                131,079
                                                              ----------              ---------
           Balance, December 31, 1997                          7,140,213              1,370,193
                                                              ----------              ---------
           During the year ended December 31, 1998
                 - shares-for-debt settlements                    93,015                 27,370
                 - consulting and related services             1,953,727                  1,954
                 - Transfer Agent correction                      (6,000)                    (6)
                                                               2,040,742                 29,318
                                                              ----------              ---------
                                                               9,180,955              1,399,511

                 - "Two for One" share split                   8,832,155                      -
                                                              ----------              ---------
           Balance, December 31, 1998                         18,013,110              1,399,511
                                                              ----------              ---------
           During the year ended December 31, 1999
                 - shares-for-debt settlements                   624,450                146,050
                 - consulting and related services             1,010,000                  1,010
                                                              ----------              ---------
                                                               1,634,450                147,060
                                                              ----------              ---------
           Balance, December 31, 1999                         19,647,560              1,546,571
                                                              ----------              ---------
           During the year ended December 31, 2000
                 - for-cash                                      500,000                 40,000
                 - shares-for-debt settlements                   875,106                 87,429
                                                              ----------              ---------
                                                               1,375,106                127,429
                                                              ----------              ---------
           Balance, December 31, 2000                         21,022,666           $  1,674,000
                                                              ==========              =========


PRIME AIR, INC.
(A Development Stage Company)

Notes To Consolidated Financial Statements
December 31, 2001 and 2000


6.    Capital Stock (continued)

                                                           Number of Shares          Consideration

         Balance, December 31, 2000                           21,022,666           $   1,674,000

         During year ended December 31, 2001
              - for cash                                         300,000                  24,000
              - shares-for-debt settlements                      250,000                  20,000
              - consulting and related services                  400,000                     400
              - Transfer Agent correction                          6,000                       6
                                                              ----------              ----------
                                                                 956,000                  44,406
                                                              ----------              ----------
         Balance, December 31, 2001                           21,978,666            $  1,718,406
                                                              ==========              ==========


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

7.   Related Party Transactions

During the years ended December 31, 2001 and 2000, no cash remuneration was
paid to any director or officer of the Company.  The Company has adopted the
policy of issuing "restricted" common shares to certain directors and officers
for services rendered.  Specifically billed amounts have been settled by way
of "shares-for-debt" arrangements, the share value thereof being determined by
securities regulations.  In addition, further shares have been issued to
certain directors and officers for services provided to the Company of a more
general nature, these shares being attributed a nominal value of $ 0.001 per
share.  During the year ended December 31, 2001, an officer and director of
the Company received 250,000 common shares by way of a debt settlement
covering an obligation of $20,000 and another director and officer received
400,000 common shares with an attributed value of $400 for general
management/consulting services.  During the year ended December 31, 2000,
shares issued to related parties consisted of debt settlements only, such
issuances being 871,006 common shares covering obligations of $87,100.

On January 28, 2002, the Board of Directors authorized the issuance of 800,000
"restricted" common shares to directors and officers of the Company in
recognition of services provided thereto to December 31, 2001.  These shares
were issued from Treasury on February 13, 2002.  The attributed value of these
shares ($800) has not been reflected in the accounts of the Company for the
year ended December 31, 2001.









PRIME AIR, INC.
(A Development Stage Company)

Notes To Consolidated Financial Statements
December 31, 2001 and 2000


8.    Rent, Property Taxes and Lease Commitment

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

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

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

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




ARTICLE 5



PERIOD TYPE      12 MOS
FISCAL YEAR END      DEC 31 2001
PERIOD END      DEC 31 2001
CASH      2,089
SECURITIES      0
RECEIVABLES      2,698
ALLOWANCES      0
INVENTORY      0
CURRENT ASSETS      4,787
PP&E      523,278
DEPRECIATION      0
TOTAL ASSETS      528,065
CURRENT LIABILITIES      225,294
BONDS      0
PREFERRED MANDATORY      0
PREFERRED      0
COMMON      21,979
OTHER SE      0
TOTAL LIABILITY AND EQUITY      528,065
SALES      0
TOTAL REVENUES      0
CGS      0
TOTAL COSTS      61,995
OTHER EXPENSES      0
LOSS PROVISION      0
INTEREST EXPENSE      1,289
INCOME PRETAX      (61,995)
INCOME TAX      (0)
INCOME CONTINUING      (61,995)
DISCONTINUED      0
EXTRAORDINARY      0
CHANGES      0
NET INCOME      (61,995)
EPS BASIC      0
EPS DILUTED      0



End of Filing`