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, 2002

          [ ] 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-


                                       (i)
<PAGE>

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.


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

                                                     PRIME AIR, INC.

                                                         INDEX

                                                                                                                  PAGE NO.
                                                         PART I
<S>               <C>                                                                                             <C>
ITEM 1            Description
                  General                                                                                             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                                           14
ITEM 6            Management's Discussion and Analysis or Plan of Operation                                          14
ITEM 7            Financial Statements                                                                            17-35
ITEM 8            Changes in and Disagreements with Accountants on Accounting and Financial Disclosure               36

                                                        PART III
ITEM 9            Directors, Executive Officers, Promoters and Control Persons                                       36
ITEM 10           Executive Compensation                                                                             37
ITEM 11           Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters     37
ITEM 12           Certain Relationships and Related Transactions                                                     38
ITEM 13           Exhibits and Reports on Form 8-K                                                                   38
                  Signatures                                                                                         39
</TABLE>


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


                                        2
<PAGE>

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 Voyageur
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.


                                        3
<PAGE>

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


                                        4
<PAGE>

addition, the shareholders approved a stock option plan on April 23, 1998, known
as  the  1998  Stock  Option and Stock Appreciation Right Plan (the "Plan"). The
Plan  provides  for the issuance of options to acquire up to 1,000,000 shares of
common stock of the Company. No options have been granted pursuant to the Plan -
that  plan  has  subsequently  been  rescinded  in  its  entirety.

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

The  Company  entered  into  a  "Memorandum  of  Proposed Agreement" with 519222
Ontario  Limited,  a  corporate entity associated with Voyageur Airways Limited,
which,  subject  to the final approval of Voyageur and the Company, will allow a
merger  which  combines  25% of the assets of Voyageur with 70% of the assets of
the  Company.  That  engagement  was not completed.   Although no formal written
Agreement is in place with respect to obligations and responsibilities, Voyageur
remains  materially  supportive  and  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 (registered under the
Land  Title  Act, KN056037 under Parcel Identification Number 002-606-801, being
that  part  of  District  Lot 4769, Lillooet District, Except Plan KAP 44479) to
enable  Prime  Air  (BC)  to  undertake the planning, development, construction,
management,  and  operation  of  a  terminal  facility.

There  are  no  competing facilities at the Pemberton airport. The Lease between
the  Village  of  Pemberton and Prime Air Inc., provides Prime Air the exclusive
use  of the terminal facility and lands as follows, "Prime Air shall be entitled
to use the Terminal Lands and operate the Terminal Facilities in connection with
its  operation of the Airline Business and for any other lawful purpose. Without
in  any  way  limiting  the  generality  of  the  foregoing,  Prime Air shall be
entitled, at its option and without interruption or interference from Pemberton,
to:

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

(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


                                        5
<PAGE>

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;
     (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 12,000 square feet,
with  approximately  4,000  square  feet  presently  being fully habitable.  The
remaining area requires "finishing" - construction costs to do so can range from
$50/square  foot  to  over  $100/square  foot  depending  on  finishing,  etc.
Management  intends  to  defer  that  cost to prospective tenants, ie., costs of
further developing the space would remain as a "tenant improvement" in the hands
of  the  airport  related activity tenants who will ultimately occupy the space.

The  priority  of  the company has been to first establish it's own air services
related  activity  base,  then  offer  the  additional  real  estate  to related
potential  tenants.  Without  adequate activity at the site, it is unlikely that
the  undeveloped  space  would  reach  its  highest  and  best  use.

Once  operational,  there  are  three  primary  sources  of  revenues  expected;
commercial  air  services, Pemberton airport services and Fixed Base Operations.
Commercial  air  services  includes the actual operation of charter or scheduled
air  services  to  the  site  -  in  order to realize revenues from this source,
additional  amounts  must  be invested in infra-structure.  Operations utilizing
"Visual  Flight  Rules"  (VFR)  would  require  minimal  investment.  Operations
utilizing "Instrument Flight Rules" (IFR) would require considerable investment.
The  site  particularities are such that the most suited aircraft for service is
the DeHavilland Dash 7.  That particular aircraft is designed for Short Take-off
and  Landing  (STOL)  and  with  it's  4 engine capacity can safely complete the
"missed  approach"  to the site with an engine out.  The subject site is located
in  a  mountainous  area.  The  Dash  7  has  a  seating  capacity  of  46 to 48
passengers. Costs of leasing the Dash 7 exceed $3,000 per hour.  The company has
determined  that the feasibility of the air service using the Dash 7 does exist,
however,  costs to provide for start-up, working capital, etc. are considerable.
The  company  does not wish to commence commercial air services activities until
it  is  satisfied  that  sufficient  capital  for this purpose is in place.  The
second  source  of  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 also
falls  into  this  category.    The  third  source  of income is from Fixed Base
Operations  (FBO)  activities  -  that  includes  providing  fuel,  logistics,
accommodation,  etc.,  to  privately  operated  aircraft.  It  is  Prime  Air's
intention  to  assign that function to an established FBO company; in that event
Prime  Air  would  earn  certain  amounts  from  ancillary  activities

Subsequent  to  the  original  reporting  date of this document, a Memorandum of
Understanding  has  been  completed  between  Prime Air, Inc., and Galvin Flying
Service,  Inc.,  of Seattle Washington.  A news release dated September 30, 2003
was  prepared  announcing  the  foundation  of  this relationship.  Further, two


                                        6
<PAGE>

commercial  tenants  have entered into month to month agreements with Prime Air,
both  tenants  are in aviation related businesses.  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 of
this  Amended  reporting  have  been  received  with  respect  to  this  item.

Co-incidental  with  completion  of  the Memorandum of Understanding with Galvin
Flying, Prime Air Inc., provided Notice to the Village of Pemberton with respect
to  the  exercise  of  its option to use lands for purposes of the 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  (2nd)  anniversary  of the Terminal Opening Date.  Effective October 31,
1996  a  further notice was provided to complete the Extension of Term for three
(3)  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 (5) years [to October 31, 2005] by delivering to Pemberton written
notice  of  extension  of the Term.  The remaining portion of a further ten (10)
years  will  be completed by delivering to Pemberton written notice of extension
of  the  Term not less than six (6) months prior to the tenth (10th) anniversary
of  the  Terminal  Opening  Date [June 1, 2005]; and the final ten (10) years by
delivering  to  Pemberton  written  notice of the extension of the Term not less
than  six  (6)  months prior to the twentieth (20th) anniversary of the Terminal
Opening  Date.

Payment  of  Terminal  Rent  is  described  as  follows:

Prime Air shall pay to Pemberton as a basic rent for the Terminal Lands for each
and  every  Accounting Period without set-off, deduction or abatement the amount
calculated  and  paid  in accordance with the following (all figures in Canadian
funds):

(a)  the  Terminal  Rent payable for the first, second, third, fourth, fifth and
sixth  Accounting  Periods  shall  be  the  full  amount  of  $100;  and

(b)  for  each  Accounting  Period  subsequent  to  the sixth Accounting Period,

     (i)  $2,500  by  way  of  an  advance on the Terminal Rent on or before the
          first  day  of  July  in  such  Accounting  Period;  and
     (ii) an  amount  equal  to five percent (5%) of the Gross Receipts for such
          Accounting  Period,  less  the  advance  made  pursuant  to  paragraph
          (i)above, on or before the first day of April of the Accounting Period
          following  the  Accounting  Period  for  which  the  Terminal  Rent is
          payable.

     An  amount  of  $2,500 by way of an advance was completed and is treated in
the  books  of  the company as a "prepaid expense". Since no gross receipts have
been  received  to  the  date  of  this  publication, no further $2,500 "advance
payments"  are  required until there is an amount exceeding that figure on which
it  is  to  be  applied.

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


                                        7
<PAGE>

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.


                                        8
<PAGE>

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.


                                        9
<PAGE>

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.


                                       10
<PAGE>

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, 2002,
consisting  of  Mr.  Haug,  who  was  employed  part-time.


                                       11
<PAGE>

ITEM  2.     DESCRIPTION  OF  PROPERTY

     The  Pemberton  Airport  facility,  and  supporting Lease agreement is more
particularly  described  as  follows:

 "Terminal  Lease"  means  the  exclusive  and irrevocable lease of the Terminal
Lands  granted  by  Pemberton  to  Prime  Air  pursuant  to  the  agreement;

 "Terminal  Facilities"  means  the  airline  terminal  building and  associated
facilities  constructed  on  the  Terminal  Lands  by  Prime  Air;

 "Terminal  Lands"  means  a  portion  of the Lands which portion shall be large
enough  to  locate  the  Terminal Facilities thereon and shall be configured and
located  as  necessary  to  accommodate  the  Terminal  Facilities;

 "Airline Business" means the scheduled and chartered commuter and cargo airline
service  which  Prime Air is engaged in planning, implementing and operating and
which  it  currently  proposes will provide and chartered airline service to the
Airport  from  Seattle,       Washington,  Portland,  Oregon, Vancouver, British
Columbia  and  other  locations;

 "Airport"  means  the Pemberton Airport located in Pemberton, British  Columbia
as  more  particularly  shown  in  the  survey  documents provided in the Lease;

 "Airport  Facilities" means, collectively, the Runway, Parking Apron, MLS, NDB,
('ME  and all other buildings, structures, improvements and equipment located on
the Lands or owned by Pemberton and used in connection with the operation of the
Airport  or  the  use  thereof  by  any  of  aircraft.

     Additionally,  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


                                       12
<PAGE>

Utah.  In  1995  Mr.  Paul  Parshall  executed  a  consent and settlement of the
foregoing action, ostensibly as the president, director, and authorized agent of
the  entity named in such action. Management does not believe such action in any
way  involved the Utah Corporation which was subsequently incorporated under the
same  name  on August 30, 1993, and which subsequently changed its name to Prime
Air, Inc. and changed its domicile to the State of Delaware. Management does not
believe  there  is or was any legal relationship between the "Astro Enterprises,
Inc."  incorporated on May 23, 1985, and the "Astro Enterprises, Inc." which was
incorporated  in  1993  and  was  the  predecessor  to the Company. In addition,
management  does  not  believe  that Mr. Parshall was authorized to execute such
consent  on  behalf of either entity. Management is unaware whether Mr. Parshall
ostensibly  executed  such  consent on behalf of the original Astro Enterprises,
Inc.  or  the  predecessor  to  the  Company  by  the  same  name.  However, the
allegations  contained  in  such  action  reference events all of which occurred
prior  to  the  incorporation  of  the  predecessor to the Company in 1993.  Mr.
Parshall  provided  and  the  company  accepted his resignation as a director on
February  1,  1996,  at which time Mr. Haug became the sole director of the Utah
Corporation.

The  opening  balance  sheet  of  the  Utah  company  on  acquisition showed the
following:

     Assets:  Re-incorporation  Cost                       $200.00
     ----------------------------------------------------------------
     Total  Liabilities  and  Shareholders  Equity:        $200.00
     ----------------------------------------------------------------

The  Utah  predecessor company received no additional assets or liabilities from
the  "Astro  Enterprises,  Inc."  incorporated  in  1985  and dissolved in 1990.

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 year ended
December  31,  2002.


                                       13
<PAGE>

ITEM  5.     MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS

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  (23,318,666  shares)  computed by using the
closing  sale  price  on April 9, 2002, was $1,865,493. however, trading through
market  makers  and  through  other  electronic  means  has  ceased  pending
reinstatement of approval to market maker representation, therefore no value can
be  stated  as  it  would apply to normal trading activities until reinstatement
occurs.

State the number of shares outstanding of each of the Issuer's classes of common
equity  as  of  the  latest  practicable date: At September 18, 2003, there were
25,518,666  shares  of  the  Registrant's  Common  Stock  outstanding.

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

GENERAL

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION AND RESULTS OF
--------------------------------------------------------------------------------
OPERATION
---------

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.

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.

To  the present date, 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


                                       14
<PAGE>

marketing  and  working  capital  requirements.  Management  estimates  the
requirement  for  a  commitment  of  approximately  $3,000,000  to  provide  a
satisfactory  start  up  of  the  British  Columbia  operation.

During  the  year ended December 31, 2002, management continued discussions with
principals  in  the airline industry and with interested parties with respect to
providing  air  service  to the Whistler/Pemberton destination.  The Company has
identified the need for scheduled air service to this location and in particular
believes  the  capability  of  the  Dash  7  aircraft would be ideal in terms of
safety,  reliability  and  cost  effectiveness.

The results of the operations for the year ended December 31, 2002 show costs at
approximately  43%  greater  than the same period of the previous year, however,
because  of  the "development stage" nature of the company, those figures may be
representative  of  the continuing nature of the Company on a current basis, but
not  representative  of  the company if it is successful at securing funding for
the  Whistler,  British  Columbia  component  of  its  intended  operation.

QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK
----------------------------------------------------------------

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  future successful operation of the Company is dependent upon its ability to
obtain  the  financing  required  to  complete  and  operationalize the terminal
facility  in  Pemberton, British Columbia and to commence air service operations
to  Pemberton,  British  Columbia  on  an  economically  viable  basis.

The  financial statements of the Company 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.  Other than a commitment from management to provide
funds  for  minimal operational requirements, there is no present commitment for
funds  adequate to provide for operational items necessary to complete the start
up  of  air  service  activities.

THE  PAST  YEAR.  Due  to the Company's negative working capital,  the year 2002
was  difficult.  The  Company  has  sought  to  minimize  operating  costs.  The
overriding  constraint  has  been  cash  flow.

RESULTS  OF  OPERATIONS

The  Company  has  not  yet  initiated  air  operations.

LIQUIDITY  AND  CAPITAL  RESOURCES

As  of December 31, 2002, the Company's negative working capital was ($243,328).


                                       15
<PAGE>

ADDITIONAL  FACTORS  THAT  MAY  AFFECT  FUTURE  RESULTS

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

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

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

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

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


                                       16
<PAGE>

ITEM  7.     FINANCIAL  STATEMENTS



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

                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001


     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


                                       17
<PAGE>

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



                                AUDITORS' REPORT



To  the  Shareholders  of
PRIME  AIR,  INC.  (A  Nevada  Corporation)

     We  have  audited  the  consolidated  balance  sheets of PRIME AIR, INC. (A
Development Stage Company) as at December 31, 2002 and 2001 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 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 2001
and  the  results  of its operations, the change in stockholders' equity and its
cash  flows  for  the  years  then  ended  in accordance with generally accepted
accounting  principles.


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


                                       18
<PAGE>

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




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



     In the United States, reporting standards for auditors require the addition
of an explanatory paragraph (following the opinion paragraph) when the financial
statements  are affected by conditions and events that cast substantial doubt on
the company's ability to continue as a going concern, such as those described in
Note  2 to the financial statements.  Our report to the shareholders dated  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.





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


                                       19
<PAGE>

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

                            CONSOLIDATED BALANCE SHEETS
                            (all figures in US dollars)


                                                       December 31    December 31
                                                          2002           2001
                                                      -------------  -------------
<S>                                                   <C>            <C>
                                     ASSETS
CURRENT ASSETS
  Cash and short-term deposits . . . . . . . . . . .  $        512   $      2,089
  Prepaid expenses and deposits. . . . . . . . . . .         1,585          1,550
  GST recoverable. . . . . . . . . . . . . . . . . .         1,357          1,148
                                                      -------------  -------------
                                                             3,454          4,787

CAPITAL ASSETS  (Note 4) . . . . . . . . . . . . . .       505,261        523,278
                                                      -------------  -------------

                                                      $    508,715   $    528,065
                                                      =============  =============


                                  LIABILITIES
CURRENT LIABILITIES
  Accounts payable and accrued liabilities . . . . .  $    214,643   $    210,305
  Consulting fees payable (Note 5) . . . . . . . . .             -         20,000
  Notes and advances payable (Note 5). . . . . . . .        32,139         14,989
                                                      -------------  -------------
                                                           246,782        245,294
                                                      -------------  -------------

                              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:
    23,318,666 common shares  (2001: 21,978,666) . .        23,319         21,979

  Capital in excess of par value . . . . . . . . . .     2,189,451      2,123,792
                                                      -------------  -------------
                                                         2,212,770      2,145,771
ACCUMULATED DEFICIT DURING
  DEVELOPMENT STAGE. . . . . . . . . . . . . . . . .    (1,950,837)    (1,863,000)
                                                      -------------  -------------
                                                           261,933        282,771
                                                      -------------  -------------

                                                      $    508,715   $    528,065
                                                      =============  =============
</TABLE>

Approved  on  Behalf  of  the  Board:

  "Blaine  Haug"   Director
 --------------

  "Wayne  Koch"    Director
  -------------


                                       20
<PAGE>

<TABLE>
<CAPTION>

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


                                                                             From Inception
                                                                             March 10, 1989
                                                Year Ended     Year Ended          To
                                                December 31    December 31     December 31
                                                   2002           2001            2002
                                               -------------  -------------  ---------------
                                                                               (Unaudited)
<S>                                            <C>            <C>            <C>
Administrative And General Expenses
  Flight operations . . . . . . . . . . . . .             -              -   $       114,720
  Audit and accounting. . . . . . . . . . . .  $      7,323   $      6,781           111,944
  Advertising . . . . . . . . . . . . . . . .             -            666            18,083
  Amortization. . . . . . . . . . . . . . . .        18,964         19,154           143,108
  Association membership fees . . . . . . . .             -          5,768             5,768
  Automotive. . . . . . . . . . . . . . . . .             -              -            18,209
  Bad debts . . . . . . . . . . . . . . . . .             -              -             1,933
  Commissions and finders' fees . . . . . . .             -          3,261            22,311
  Consulting. . . . . . . . . . . . . . . . .        31,000              -           680,229
  Insurance . . . . . . . . . . . . . . . . .         3,056          2,374            31,931
  Interest and service charges. . . . . . . .         1,634          1,289            16,842
  Legal costs . . . . . . . . . . . . . . . .             -              -           181,941
  Management remuneration . . . . . . . . . .             -              -            77,287
  Office and general. . . . . . . . . . . . .           627          1,249           165,636
  Repairs and maintenance . . . . . . . . . .           245          1,420            10,507
  Rent and property taxes - airport facility.         9,852          8,426            70,651
  Telephone and utilities . . . . . . . . . .         2,619          4,754            90,659
  Transfer agent, listing and filing fees . .         5,444          6,405            62,938
  Travel, promotion and entertainment . . . .         6,425          5,654           115,583
                                               -------------  -------------  ---------------
                                                     87,189         67,201         1,940,280
                                               -------------  -------------  ---------------
  Loss (gain) on foreign
     exchange conversion. . . . . . . . . . .           668         (5,606)            4,404
  Interest income . . . . . . . . . . . . . .                                          6,153
                                               -------------  -------------  ---------------
                                                        668         (5,606)           10,557
                                               -------------  -------------  ---------------

Net Loss For The Period . . . . . . . . . . .  $     87,857   $     61,595   $     1,950,837
                                               =============  =============  ===============



Net Loss Per Common Share . . . . . . . . . .       (0.0038)       (0.0029)
                                               =============  =============


Weighted Average Common
  Shares Outstanding. . . . . . . . . . . . .    22,898,666     21,022,666
                                               =============  =============
</TABLE>


                                       21
<PAGE>

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

                                                                                                       Accumulated
                                                                   Capital in                         Deficit During
                                                                    Excess of         Share             Development
                                        Common        Shares       (Less than)      Subscriptions          Stage
                                        Shares        Amount        Par Value        Receivable     (Unaudited-Note 1)
                                      -----------  ------------  ----------------  ---------------  -------------------
<S>                                   <C>          <C>           <C>               <C>              <C>
Balance at Inception on
   March 10, 1989. . . . . . . . . .           -   $         -   $             -   $            -   $                -
Issue of common shares for cash
   at $.001/share. . . . . . . . . .   1,260,474         1,260              (630)               -                    -
Net loss for the year ended
   March 31, 1990. . . . . . . . . .           -             -                 -                -              (17,956)
                                      -----------  ------------  ----------------  ---------------  -------------------

Balance, March 31, 1990. . . . . . .   1,260,474         1,260              (630)               -              (17,956)

Issue of common shares for cash
   at $.001/share. . . . . . . . . .     315,118           315              (157)               -                    -
Net loss for the year ended
   March 31, 1991. . . . . . . . . .           -             -                 -                -              (49,419)
                                      -----------  ------------  ----------------  ---------------  -------------------

Balance, March 31, 1991. . . . . . .   1,575,592         1,575              (787)               -              (67,375)
Net loss for the year ended
   March 31, 1992. . . . . . . . . .           -             -                 -                -              (10,990)
                                      -----------  ------------  ----------------  ---------------  -------------------

Balance, March 31, 1992. . . . . . .   1,575,592         1,575              (787)               -              (78,365)

Issue of common shares for cash
   at $.277/share. . . . . . . . . .     264,176           264            36,367                -                    -
   at $.214/share. . . . . . . . . .      34,138            34             3,611                -                    -
Net loss for the year ended
   March 31, 1993. . . . . . . . . .           -             -                 -                -              (38,426)
                                      -----------  ------------  ----------------  ---------------  -------------------
Balance, March 31, 1993. . . . . . .   1,873,906         1,873            39,191                -             (116,791)

Issue of common shares for services
   at nominal value. . . . . . . . .     184,346           184              (184)               -                    -

Issue of common shares for cash
   at $.001/share. . . . . . . . . .     600,000           600              (300)               -                    -
   at $.109/share. . . . . . . . . .       6,680             7               357                -                    -
   at $.154/share. . . . . . . . . .      47,268            47             3,596                -                    -
   at $.280/share. . . . . . . . . .      38,802            39             5,380                -                    -
   at $.330/share. . . . . . . . . .      46,322            46             7,601                -                    -
   at $.463/share. . . . . . . . . .     174,890           175            40,243                -                    -
   at $.694/share. . . . . . . . . .      31,512            32            10,891                -                    -
   at $.925/share. . . . . . . . . .      15,756            16             7,266                -                    -
Net loss for the year ended
   March 31, 1994. . . . . . . . . .           -             -                 -                -              (36,272)
                                      -----------  ------------  ----------------  ---------------  -------------------
Balance, March 31, 1994. . . . . . .   3,019,482   $     3,019   $       114,041   $            -   $         (153,063)
                                      -----------  ------------  ----------------  ---------------  -------------------
                                  See Accompanying Notes To Financial Statements


                                       22
<PAGE>

Balance Forward. . . . . . . . . . .   3,019,482   $     3,019   $       114,041   $            -   $         (153,063)

Issue of common shares for services
   at nominal value. . . . . . . . .   1,874,956         1,875            (1,875)               -                    -

Issue of common shares for cash
   at $.374/share. . . . . . . . . .     497,384           498            92,448                -                    -
   at $.463/share. . . . . . . . . .     608,178           608           139,982                -                    -
Net loss for the year ended
   June 28, 1994 . . . . . . . . . .           -             -                 -                -              (40,947)
                                      -----------  ------------  ----------------  ---------------  -------------------

Balance, June 28, 1994 . . . . . . .   6,000,000         6,000           344,596                -             (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 . . . . .   6,000,000         6,000           337,283              (20)            (329,540)

Issue of common shares for cash
   and/or services at an average
   of $.234/share. . . . . . . . . .   1,125,100         1,125           130,630                -                    -

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

Balance, December 31, 1995 . . . . .   7,125,100         7,125           467,913              (20)            (400,806)

Issue of common shares for cash
   at $.50/share . . . . . . . . . .   3,021,116         3,021           752,259                -                    -

Issue of common shares for services
   at fair value . . . . . . . . . .   2,967,346         2,967           145,400                -                    -

Net loss for the year ended
   December 31, 1996 . . . . . . . .           -             -                 -                -             (385,300)
                                      -----------  ------------  ----------------  ---------------  -------------------

Balance, December 31, 1996 . . . . .  13,113,562   $    13,113   $     1,365,572   $          (20)  $         (786,105)
                                      -----------  ------------  ----------------  ---------------  -------------------
                                  See Accompanying Notes To Financial Statements


                                       23
<PAGE>

Balance Forward. . . . . . . . . . .  13,113,562   $    13,113   $     1,365,572   $          (20)  $         (786,105)
                                      -----------  ------------  ----------------  ---------------  -------------------

Issue of common shares for services
   at fair value . . . . . . . . . .     656,000           656            32,472                -                    -

Issue of common shares for
   debt settlements:
   at $.500/share. . . . . . . . . .     248,504           249            61,876                -                    -
   at $.504/share. . . . . . . . . .      72,760            73            18,266                -                    -
   at $.530/share. . . . . . . . . .     189,600           189            50,098                -                    -

Net loss for the year ended
   December 31, 1997 . . . . . . . .           -             -                 -                -             (222,169)
                                      -----------  ------------  ----------------  ---------------  -------------------

Balance, December 31, 1997 . . . . .  14,280,426        14,280         1,529,284              (20)          (1,008,274)

Issue of common shares for
   debt settlements:
   at $.3935/share . . . . . . . . .      20,000            20             3,853                -                    -
   at $.4006/share . . . . . . . . .      36,430            37             7,260                -                    -

Issue of common shares for services
   at fair value . . . . . . . . . .   3,327,454         3.327           163,046                -                    -
                                      -----------  ------------  ----------------  ---------------  -------------------
Balance, May 17, 1998. . . . . . . .  17,664,310        17,664         1,702,115              (20)          (1,008,274)

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

Issue of common shares for services
   at fair value . . . . . . . . . .     290,000           290            14,210                -                    -

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

Write off of uncollectable share
   subscription receivable . . . . .           -             -             7,313               20                    -

Net loss for the year ended
   December 31, 1998 . . . . . . . .           -             -                 -                -             (330,188)
                                      -----------  ------------  ----------------  ---------------  -------------------
Balance, December 31, 1998 . . . . .  18,013,110   $    18,013   $     1,739,773   $            -   $       (1,338,462)
                                      -----------  ------------  ----------------  ---------------  -------------------
                                  See Accompanying Notes To Financial Statements


                                       24
<PAGE>

Balance Forward. . . . . . . . . . .  18,013,110   $    18,013   $     1,739,773   $            -   $       (1,338,462)

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 fair value . . . . . . . . . .   1,010,000         1,010            49,490                -                    -

Net loss for the year ended
   December 31, 1999 . . . . . . . .           -             -                 -                -             (326,607)
                                      -----------  ------------  ----------------  ---------------  -------------------
Balance, December 31, 1999 . . . . .  19,647,560        19,648         1,934,688                -           (1,665,069)

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 . . . . . . . .           -             -                 -                -             (116,336)
                                      -----------  ------------  ----------------  ---------------  -------------------
Balance, December 31, 2000 . . . . .  21,022,666        21,023         2,062,742                -           (1,781,405)

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

Issue of common shares for
   debt settlement
   at $.08/share (Note 7). . . . . .     250,000           250            19,750                -                    -

Issue of common shares for services
   at fair value (Note 7). . . . . .     400,000           400            19,600                -                    -

Transfer Agent adjustment. . . . . .       6,000             6                 -                -                    -

Net loss for the year ended
   December 31, 2001 . . . . . . . .           -             -                 -                -              (81,595)
                                      -----------  ------------  ----------------  ---------------  -------------------
Balance, December 31, 2001 . . . . .  21,978,666   $    21,979   $     2,123,792   $            -   $       (1,863,000)
                                      ===========  ============  ================  ===============  ===================


                                       25
<PAGE>

Balance Forward. . . . . . . . . . .  21,978,666   $    21,979   $     2,123,792   $            -   $       (1,863,000)

Issue of common shares for . . . . .   1,020,000         1,020            49,979                -                    -
   services at fair value

Issue of common shares for . . . . .     320,000           320            15,680                -                    -
   cash at $0.05/share

Net loss for the year ended
   December 31, 2002 . . . . . . . .           -             -                 -                -              (87,837)
                                      -----------  ------------  ----------------  ---------------  -------------------
Balance, December 31, 2002 . . . . .  23,318,666   $    23,319   $     2,189,451   $            -   $       (1,950,837)
                                      ===========  ============  ================  ===============  ===================
</TABLE>
                                  See Accompanying Notes To Financial Statements


                                       26
<PAGE>

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

                                                                                 From Inception
                                                                                 March 10, 1989
                                                   Year Ended     Year Ended           to
                                                   December 31    December 31     December 31
                                                      2002           2001             2002
                                                                                   (Unaudited)
                                                  -------------  -------------  ----------------
<S>                                               <C>            <C>            <C>

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


OPERATING
  Net loss . . . . . . . . . . . . . . . . . . .  $    (87,837)  $    (61,595)  $    (1,950,837)
  Non-cash charge - amortization . . . . . . . .        18,964         19,154           143,108
  Consulting services - shares issued. . . . . .        30,999              -                 -
                                                  -------------  -------------  ----------------
                                                       (37,894)       (42,441)          143,108

  Change in non-cash working capital
     balances relating to operations:
       Prepaid expenses. . . . . . . . . . . . .           (35)           (83)
       Goods and Services Tax recoverable. . . .          (209)           342
       Accounts payable and accrued liabilities.         4,338         (2,145)           (5,475)
                                                  -------------  -------------  ----------------
                                                         4,094         (1,886)           (5,475)
                                                  -------------  -------------  ----------------
                                                       (33,780)

FINANCING
  Notes and advances payable . . . . . . . . . .        17,150           (195)          244,557
  Issue of capital stock . . . . . . . . . . . .        16,000         44,006         2,212,770
                                                  -------------  -------------  ----------------
                                                        33,150         43,811
                                                  -------------  -------------  ----------------


INVESTING
    Acquisition of capital assets. . . . . . . .          (947)             -          (648,364)
                                                  -------------  -------------  ----------------

NET CASH INFLOW (OUTFLOW). . . . . . . . . . . .        (1,597)          (516)         (652,897)

CASH, BEGINNING OF YEAR. . . . . . . . . . . . .         2,089          2,605                 0
                                                  -------------  -------------  ----------------

CASH, END OF PERIOD. . . . . . . . . . . . . . .  $        512   $      2,089               512
                                                  =============  =============  ================

Supplemental Information
    Capital stock issued in settlement of debts.  $          -   $     20,000
                                                  -------------  -------------
     Interest paid . . . . . . . . . . . . . . .         1,634          1,289
                                                  -------------  -------------
</TABLE>


                                       27
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2002 and 2001

1.     INCORPORATION,  PRINCIPLES  OF  CONSOLIDATION AND ACCOUNTING PRESENTATION

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

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

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

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

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


                                       28
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)

     NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
                           December 31, 2002 and 2001


2.      NATURE  OF  OPERATIONS  /  GOING  CONCERN  CONSIDERATIONS  (CONTINUED)

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.  This includes the expectation that sufficient funds
will be operated to meet corporate obligations for the ensuring timeable - month
period.  In  addition,  management  of the Company does not believe the delay in
becoming  operational  has  impaired  the  value  of  its  capital  assets.

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
$1.5769  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: $ 1.5704
CDN/$1.00  U.S.  (2001:  $1.5484  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 and deposits", "GST
recoverable", "accounts payable and accrued liabilities" and "notes and advances
payable"  approximate  their  fair  market  value.


                                       29
<PAGE>

                                PRIME AIR, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2002 and 2001

3.     SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Receivables  /  Prepaid  Expenses  and  Deposits
------------------------------------------------

All  amounts  reported as receivables or prepaid expenses and deposits 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.

Computer  Equiptment:Computer  equiptment  is stated at cost net of amortization
---------------------
which  is  provided  for  at  the note of 30% per annum on the declining balance
basis.

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.

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


                                       30
<PAGE>

                                PRIME AIR, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2002 and 2001

Income  Taxes  (continued)
--------------------------
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.


                                       31
<PAGE>

                                   PRIME AIR, INC.
                             (A Development Stage Company)
     NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
                           December 31, 2002 and 2001

4.    CAPITAL  ASSETS

Capital  assets  consist  of the following at December 31, 2002 and December 31,
2001:

                                                    December  31,  2002
                                          --------------------------------------
                                                       Accumulated     Net  Book
                                            Cost      Amortization       Value
                                          --------------------------------------
     Air  terminal  construction  costs   $  641,972   $  138,836     $  503,136
     Computer  equiptment                        948          142            806
     Furniture  and  equipment                 5,154        3,835          1,319
                                          --------------------------------------
                                          $  648,074   $  142,813     $ 505,261
                                          ======================================

                                                    December  31,  2001
                                          --------------------------------------
                                                       Accumulated     Net  Book
                                            Cost      Amortization       Value
                                          --------------------------------------
     Air  terminal  construction  costs   $  641,972   $ 120,267      $  521,702

     Furniture  and  equipment                 5,154       3,581           1,573
                                          --------------------------------------
                                          $  647,126   $ 104,694      $  523,278
                                          ======================================

5.    CONSULTING  FEES  PAYABLE  /  NOTES  AND  ADVANCES  PAYABLE

Consulting  fees  in the amount of NIL (2001: $20,000) have been accrued and are
payable  to  a director and officer of the corporation.  These amounts have been
discharged  by  way of issuance of "restricted" common shares with an attributed
fees  value  of  $0.05/share.

The  notes  and  advances  payable  are  unsecured, non-interest bearing and are
without  specific  terms of repayment.  Included therein is an amount of $27,700
which  has  been  advanced  to the Company by a shareholder and/or a corporation
controlled  by  that shareholder who is the beneficial owner of 2,745,226 shares
of  common  stock of the Company, that holding representing 11.77% of the issued
and  outstanding  capital  of  the  Company.


                                       32
<PAGE>
<TABLE>
<CAPTION>
                                     PRIME AIR, INC.
                              (A Development Stage Company)
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2002 and 2001

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
                                                       ------------------  -------------
<S>                                                  <C>                  <C>
Common Shares Issued:
       To August 31, 1993
              - for cash. . . . . . . . . . . . . .              600,000   $        300
        Prime Air Inc. share exchange
              - June 28, 1994 . . . . . . . . . . .            5,400,000        350,296
        Share subscription. . . . . . . . . . . . .                              (7,313)
        During year ended December 31, 1995
              - for cash. . . . . . . . . . . . . .            1,125,100        131,755
                                                       ------------------  -------------
        Balance at December 31, 1995. . . . . . . .            7,125,100        475,038
                                                       ------------------  -------------

        During year ended December 31, 1996
              - for cash. . . . . . . . . . . . . .            3,021,116        755,280
              - for consulting and related services            2,967,346        148,367
                                                       ------------------  -------------
                                                               5,988,462        903,647
                                                       ------------------  -------------
        Balance, December 31, 1996. . . . . . . . .           13,113,562      1,378,685
                                                       ------------------  -------------

        During the year ended December 31, 1997
              - shares-for-debt settlements . . . .              510,864        130,751
              - consulting and related services . .              656,000         32,800
                                                       ------------------  -------------
                                                               1,166,864        163,551
                                                       ------------------  -------------
        Balance, December 31, 1997. . . . . . . . .           14,280,426      1,542,236
                                                       ------------------  -------------

        During the year ended December 31, 1998
              - shares-for-debt settlements . . . .               93,015         27,370
              - consulting and related services . .            3,617,454        180,873
              - transfer agent correction . . . . .               (6,000)            (6)
              - write off of uncollectible share. .                               7,313
                                                       ------------------  -------------
                                                               3,732,684        215,550
                                                       ------------------  -------------
        Balance, December 31, 1998. . . . . . . . .           18,013,110      1,757,786
                                                       ------------------  -------------

        During the year ended December 31, 1999
              - shares-for-debt settlements . . . .              624,450        146,050
              - consulting and related services . .            1,010,000         50,500
                                                       ------------------  -------------
                                                               1,634,450        196,550
                                                       ------------------  -------------
        Balance, December 31, 1999. . . . . . . . .           19,647,560      1,954,336
                                                       ------------------  -------------

        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     $2,081,765
                                                       ------------------  -------------
</TABLE>


                                       33
<PAGE>

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

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2002 and 2001

6.    CAPITAL  STOCK  (CONTINUED)


                                                       Number  of  Shares  Consideration
                                                       ------------------  -------------
<S>                                                  <C>                  <C>
         Balance, December 31, 2000 . . . . . .               21,022,666  $   2,081,765
                                                       ------------------  -------------

         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         20,000
              - Transfer Agent correction . . . . .                6,000              6
                                                       ------------------  -------------
                                                                 956,000         64,406
                                                       ------------------  -------------
         Balance, December 31, 2001 . . . . . . . .           21,978,666      2,145,771
                                                       ------------------  -------------

         During  year  ended  December  31,  2002
              - for cash. . .. . . . . . . . . . . .             320,000         16,000
              -  consulting  and  related  services.           1,020,000         50,999
                                                       ------------------  -------------
                                                               1,342,000         66,999
                                                       ------------------  -------------

         Balance,  December  31,  2002 . . . . . . .          23,318,666    $ 2,212,770
                                                       ==================  =============
</TABLE>

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

7.   RELATED  PARTY  TRANSACTIONS

During the years ended December 31, 2002 and 2001, 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,


                                       34
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


7.   RELATED  PARTY  TRANSACTIONS  (CONTINUED)

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 fair value of $ 0.05 per share.  During the year ended December 31,
2002, directors and officers' of the company received 800,000 common shares with
an  attributed  value  of  $20,000  for  general management/consulting services.
During  the  year  ended  December  31,  2001,  shares issued to related parties
consisted of debt settlements of 250,000 common shares covering an obligation of
$20,000  and  further  400,000 common shares with an attributed value of $20,000
for  general  management  /  consulting  services.

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:

     -    $  64 US ($100 CDN) per annum until such time as the terminal facility
          becomes  operational  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 2002 through 2006 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.

In addition, the Company is obligated to pay property taxes imposed by municipal
authorities,  such  levies  amounting  to $9,788 for the year ended December 31,
2002  (2001:  $8,426).

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


                                       35
<PAGE>

ITEM  8.

CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND FINANCIAL
--------------------------------------------------------------------------------
DISCLOSURE
----------

"NONE"

                                    PART III

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

Set forth below is a brief background of the executive officers and directors of
the  Company,  based  on  information  supplied  by  them.

The  directors  and  executive  officers  of  the  Company  are  as  follows:

     Name               Age         Position
-----------             --          --------
Blaine  Haug            56          Chief  Executive  Officer,  Chairman

Wayne  Koch             53          Treasurer

Nigel  Horsley          56          VP  Communications

John  Eberhard          61          Director

Greg  Duffy             49          Director


BLAINE HAUG, serves as the Company's Chief Executive Officer and Chairman of the
--------------------------------------------------------------------------------
Board.  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.

WAYNE KOCH - serves as Treasurer - one of three managing directors of Prime Air,
--------------------------------  Inc.  Principal,  Koch & Associates, Certified
Management  Accountants,  has  provided  accounting and head office services for
Prime  Air  since  1989,  owns  a  public accounting practice (established 1987)
serving  a  large number of individual, small business and non-resident clients.
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.


                                       36
<PAGE>

R.  NIGEL  M.  HORSLEY  -  one of three managing directors of Prime Air, Inc.  A
----------------------------------------------------------------------------
specialist  in  investor  relations,  Mr. Horsley has 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,  a  director  of  Currently  a  director  of  RailPower
Technologies  Corp.  (TSX  V:  P)  and  Prime Air, Inc. He is also a former Vice
President  with  General  Hydrogen  Corporation.

JOHN  EBERHARD,  QC  -  Director.  A former Crown Prosecutor, Judge on the Civil
--------------------------------  Aviation  Tribunal  and  practising lawyer for
30 years. Now retired from full time practice, among other business pursuits, he
has  been  the Chief Administrative Officer of the Canadian Rotary Committee for
International  Development  (CRCID)  since  2000.

ITEM  10.     EXECUTIVE  COMPENSATION

The  Company,  including Prime Air BC, had one employee as of December 31, 2002,
consisting of Mr. Haug, who was employed part-time.  Compensation, in accordance
with an employment agreement, was based on issuance of 400,000 restricted common
shares  annually  to  be  valued  at  fair  market  price.

Active  directors  within  the  company received 50,000 restricted common shares
annually  valued  at  fair  market  price.

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 the Record Date as 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 and each
nominee  for 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.


                                       37
<PAGE>

<TABLE>
<CAPTION>

Five Percent Shareholders,
Directors and certain        Common Stock Beneficially   Approximate Percentage
Executive Officers                     Owned                    Owned (1)
---------------------------  --------------------------  -----------------------
<S>                          <C>                         <C>

Blaine Haug . . . . . . . .                  2,645,226                    11.34%
---------------------------  --------------------------  -----------------------
Wayne Koch. . . . . . . . .                  1,256,230                     5.39%
---------------------------  --------------------------  -----------------------
Nigel Horsley . . . . . . .                    100,000                    .43%*
---------------------------  --------------------------  -----------------------
John Eberhard . . . . . . .                    395,340                     1.70%
---------------------------  --------------------------  -----------------------
Greg Duffy. . . . . . . . .                     94,720                   0.41%*
---------------------------  --------------------------  -----------------------
All directors and current
executive officers as a
group (5 persons) . . . . .                  4,491,516                    19.26%
---------------------------  --------------------------  -----------------------
Patricia Jarvis  . . . . .                   1,101,410                     4.72%
---------------------------  --------------------------  -----------------------
</TABLE>


*Less  than  one  percent

(1)  Applicable  percentage  of  ownership  is  based  on shares of Common Stock
outstanding  as of the Record Date together with applicable options held by such
shareholder.  Beneficial ownership is determined in accordance with the rules of
the  Securities and Exchange Commission and includes voting and investment power
with  respect  to  shares.  Shares  of Common Stock subject to options currently
exercisable  or  exercisable  within  sixty  (60) days after the Record Date are
deemed  outstanding for computing the percentage ownership of the person holding
such options, but are not deemed outstanding for computing the percentage of any
other  person.  (No  options  are  provided  by  the  company)

ITEM  12.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

None

ITEM  13.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

(A)     Reports  on  Form  8-K.

     None

(B)     Index  to  Exhibits.

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

   EXHIBIT     DESCRIPTION OF
    NUMBER     DOCUMENT
   -------     --------

    *99.1      Consent  of  Independent  Auditors.
    *99.2      Power  of  Attorney  (included  on  signature  page).

*Filed  herewith.

                                       38
<PAGE>

                                   SIGNATURES

Pursuant  to  the requirements of Section 13 or 15(d) of the Securities Exchange
Act  of  1934,  the  Registrant  has duly caused this Report to be signed on its
behalf  by the undersigned, thereunto duly authorized, in the City of Vancouver,
province  of  British  Columbia,  on  the  20th  day  of  October  2003.
Prime  Air,  Inc.

                                                   By: /s/ Blaine Haug
                                                       -----------------
                                                       Blaine Haug
                                                       Chairman of the Board and
                                                       Chief Executive Officer

KNOW  ALL  MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes  and  appoints  Blaine  Haug  and  Wayne  Koch,  and  each  of  them
individually,  his  true and lawful attorney-in-fact, proxy and agent, with full
power  of  substitution  and  resubstitution, for him and in his name, place and
stead, in any and all capacities, to act on, sign any and all amendments to this
Annual  Report  on  Form 10-KSB, and to file the same, with all exhibits thereto
and  other  documents  in connection therewith, with the Securities and Exchange
Commission,  granting  unto said attorneys-in-fact, proxies and agents, and each
of  them individually, full power and authority to do and perform each and every
act and thing necessary and appropriate to be done in and about the premises, as
fully  as  he  might  or  could  do  in  person, hereby approving, ratifying and
confirming  all  that  said attorneys-in-fact, proxies and agents or any of his,
her  or  their substitute or substitutes, may lawfully do or cause to be done by
virtue  hereof.

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

     SIGNATURE(S)                     TITLE(S)                        DATE
     ------------                     --------                        ----
     /s/  Blaine  Haug          Chairman of the Board and       October 20, 2003
     -----------------          Chief  Executive  Officer
     Blaine  Haug

     /s/ Wayne Koch             Treasurer                       October 20, 2003
     --------------
     Wayne  Koch


                                       39
<PAGE>