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

Consolidated Financial Statements

December 31, 1997 and 1996









Auditors' Report

Consolidated Balance Sheets

Consolidated Statements of  Operations 

Consolidated Statements of Shareholders' Equity and Deficit

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements








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


AUDITORS' REPORT


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

We have audited the consolidated balance sheets of Prime Air, Inc. (A 
Development Stage Company) as at December 31, 1997 and 1996 and the 
consolidated statements of operations, shareholders' equity and deficit and 
cash flows for the years then ended.  These financial statements are the 
responsibility of the company's management.  Our responsibility is to express 
an opinion on these financial statements based on our audits.

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

In our opinion, these financial statements present fairly, in all material 
respects, the financial position of the company as at December 31, 1997 and 
1996 and the results of its operations and cash flows for the years then ended 
in accordance with generally accepted accounting principles.

     As reported in Note 1 to these financial statements, the results of 
operations and cash flows for the period from the date of inception of this 
organization as a development stage company on March 10, 1989 to December 31, 
1997 have been compiled from information provided by management.  We have not 
audited, reviewed or otherwise attempted to verify the accuracy or 
completeness of such information.  Readers are cautioned that these statements 
may not be appropriate for their purposes.



Richmond, Canada                              
April 4, 1998                                              Chartered 
Accountants

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



<PAGE>


Comments by Auditor for U.S. Readers
on Canada-U.S. Reporting Difference





     In the United States, reporting standards for auditors require the 
addition of an explanatory paragraph (following the opinion paragraph) when 
the financial statements are affected by conditions and events that cast 
substantial doubt on the company's ability to continue as a going concern, 
such as those described in Note 2 to the financial statements.  Our report to 
the shareholders dated  April 4, 1998 is expressed in accordance with Canadian 
reporting standards which do not permit a reference to such events and 
conditions in the auditors' report when these are adequately disclosed in the 
financial statements.




Richmond, Canada                              
April 4, 1998                                        Chartered Accountants


<PAGE>


                                                    
                                                                 
                                                                 
                               PRIME AIR, INC.  
                        (A Development Stage Company)

                         CONSOLIDATED BALANCE SHEETS
                         (all figures in US dollars)
                                                                
                                                                 
                                       December 31               December 31
                                           1997                      1996

                               ASSETS                                        
                                                                 
                                                                 
Current Assets                                                            
  Cash and short-term 
  deposits                              $  11,388                 $  101,314
  Prepaid expenses 
  and deposit                                -                        12,592
  GST recoverable                           1,587                     51,208
                                           12,975                    165,114

Capital Assets (Note 4)                   613,516                    620,208
                                                                  
                                        $ 626,491                 $  785,322

                                                                 
                         LIABILITIES                                        
                                                                 
Current Liabilities                                                            
  Accounts payable 
  and accruals                          $  83,655                 $  158,174
  Notes and advances
  payable  (Note 5)                         3,495                      9,067
  Notes and advances
  from related parties
  (Note 6)                                  5,400                     25,522
                                           92,550                    192,763


                    SHAREHOLDERS' EQUITY

Capital Stock  (Note 7)                            
  Authorized:                                                            
   50,000,000 common shares with 
   a stated par value of $.001/share
   3,000,000 preferred cumulative 
   convertible shares with a stated
   par value of $.001/share
  Issued:                                                            
   7,140,213 common shares
   (1996: 6,556,781)                        7,140                      6,557

  Share subscription receivable               (20)                      (20)

  Capital in excess of par value        1,355,740                 1,225,244
                                        1,362,860                 1,231,781 
Accumulated Deficit During
  Development Stage                      (828,919)                 (639,222)
                                          533,941                   592,559

                                     $    626,491            $      785,322


Approved on Behalf of the Board:

                         Director                                        
                                                                 
                         Director                                        
                                                                 

                         See Accompanying Notes

<PAGE>

                          PRIME AIR, INC.                                   
                       (A Development Stage Company)

                CONSOLIDATED STATEMENTS OF OPERATIONS
                       (all figures in US dollars)

                                                             Period from
                                                          Date of Inception
                       Year Ended          Year Ended      on March 10, 1989
                       December 31         December 31      to December 31
                           1997                1996              1997          
                                                             (Unaudited)
                                                               (Note 1)
Direct Costs     
 Flight operations     $     -             $   114,720    $     114,720    

Administrative and 
General                                                            
 Audit and accounting      23,826               10,140           50,199
 Advertising                 -                   9,017            9,094
 Amortization              21,603               21,809           43,718
 Automotive                  -                    -              19,164
 Consulting fees           24,583                7,156           94,368
 Insurance                  9,240                6,342           15,582
 Interest and service
  charges                   1,769                7,547            9,565
 Legal                     34,192               25,610           59,802
 Management
  remuneration               -                    -              77,287
 Office and general        10,176                5,728           85,253
 Promotion and
  entertainment               711                2,702           22,004
 Rent                         279                2,399           34,603
 Telephone and utilities   18,039               14,865           55,561    
 Transfer agent and 
  filing fees              13,636                7,149           24,865
 Travel                    25,464               11,172           55,879
                          183,518              131,636          656,944

Other Income (Expense)
 Gain (loss) on foreign
  exchange conversion     (10,199)               5,581           14,890
 Interest income            4,020                2,359            6,379
                           (6,179)               7,940           21,269


Net Loss Before 
Non-recurring Item       (189,697)            (238,416)        (750,395)

Non-recurring Expense 
 Consulting costs to
 set up US corporation       -                    -             (78,524)

Net Loss For Period    $ (189,697)          $ (238,416)     $  (828,919)


Net Loss Per Common 
Share                  $  (0.0275)          $  (0.0424)

Weighted Average 
Common Shares 
Outstanding             6,896,225            5,624,974

                                                                 
                              See Accompanying Notes


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

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





                                                             Period from
                                                          Date of Inception
                            Year ended       Year ended   on March 10, 1989
                            December 31      December 31    to December 31
                               1997             1996             1997          
                                                             (Unaudited)
                                                               (Note 1)     
                                                                 

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

OPERATING                                                            
 Net loss                $  (189,697)     $  (238,416)     $    (828,919)
 Non-cash charge -
 amortization                 21,603           21,809             43,721     
                            (168,094)        (216,607)          (785,198)

 Change in non-cash 
 working capital                                                            
   balances relating
   to operations             (12,306)        (118,373)            82,068    
                            (180,400)        (334,980)          (703,130)


FINANCING                                                            
 Notes and advances 
  payable                     (5,572)           5,425              3,495    
 Notes and advances 
  from related parties       (20,122)          (2,822)             5,400    
 Issue of capital stock      131,079          756,763          1,362,860

                             105,385          759,366          1,371,755    


INVESTING                                                            
 Acquisition of capital
 assets                      (14,911)        (327,647)          (657,237)    

NET CASH INFLOW (OUTFLOW)    (89,926)          96,739             11,388     

CASH, BEGINNING OF PERIOD    101,314            4,575               -

CASH, END OF PERIOD        $  11,388       $  101,314       $     11,388  




                                See Accompanying Notes

<PAGE>


                    PRIME AIR, INC.                                             
                    (A Development Stage Company)                           
               
              Consolidated Statements of Shareholders' Equity and Deficit
               (all figures in US dollars)

                                   Capital in                    Accumulated
                                   Excess of          Share      Deficit During
                Common Shares      (Less than)   Subscriptions   Development
              Shares     Amount     Par Value      Receivable       Stage
Balance at
Inception on                                                                 
March 10, 
1989             -     $     -     $     -     $     -         $    -

Issue of 
common 
shares for 
cash at 
$.001/share   630,237      630           -          -               -

Net loss
for the year 
ended                                                                 
March 31,
1990             -           -           -          -            (17,956)

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

Issue of
common
shares for
cash at
$.001/share  157,559       158           -          -                -

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

Balance,
March 31,
1991         787,796       788           -          -            (67,375)

Net loss
for the
year ended                                                
March 31,
1992            -           -            -          -            (10,990)

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

Issue of
common
shares for 
cash at
$.277/share  132,088       132         36,499       -               -
at
$.214/share   17,069        17          3,628       -               -

Net loss
for the
year ended                                                                 
March 31, 
1993             -          -            -          -            (38,426)

Balance,
March 31,
1993         936,953       937         40,127       -           (116,791)

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

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

Balance, 
March 31,
1994       1,509,741    $ 1,510   $ 115,550   $     -     $     (153,063)

                                                                 
               See Accompanying Notes

<PAGE>

                        PRIME AIR INC.
                 (A Development Stage Company)
             
       Consolidated Statements of Shareholders' Equity and Deficit
               (all figures in US dollars)

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

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

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

Issue of 
common 
shares for 
cash at 
$.374/share  248,692         249       92,697          -           -
at
$.463/share  304,089         304      140,286          -           -

Net loss
for the 
period 
ended                                                                 
June 28,
1994            -             -             -          -       (40,947)

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

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

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

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

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

Net loss
for the
period 
ended
December 31,
1995            -              -          -            -       (71,266)
Balance, 
December 31,
1995        3,562,550       3,563      471,475       (20)     (400,806)

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

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

Net loss
for the
period 
ended                                                                 
December 31,
1996             -            -            -           -      (238,416)  
Balance,
December 31, 
1996        6,556,781       6,557     1,225,244      (20)     (639,222)

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

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

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

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

                        See Accompanying Notes


PRIME AIR, INC.
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996


 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 date 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, 1997 are presented herein for information purposes only.  
These amounts are unaudited and accordingly no audit opinion has been 
expressed thereon.

 1.     Nature of Operations / Going Concern Considerations

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

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

PRIME AIR, INC.
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996


 1.     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 $ 
1.4305 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 utilizing the average annual rate as posted by the Internal Revenue 
Service of the United States as follows:
     $ 1.3844 CDN / $1.00 U.S. (1996: $1.3636 CDN / $1.00 U.S.). 

     Fair Value of Financial Instruments

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

     Receivables and Prepaid Expenses

All amounts reported as receivables or prepaid expenses 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. 

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's estimates.  Actual results could 
differ from the use of those estimates.


PRIME AIR, INC.
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996




     3.    Significant Accounting Policies (continued)

     Income Taxes

The Company has adopted Statement of Financial Accounting Standards No. 109, 
"Accounting For Income Taxes", in the fiscal year ended December 31, 1997 and 
has applied the provisions of that statement on a retroactive basis to the 
previous fiscal year which resulted in no significant adjustment.
     
Statement of Financial Accounting Standards No. 109, "Accounting for Income 
Taxes", requires an asset and liability approach for financial accounting and 
reporting for income tax purposes.  This statement recognizes (a) the amount 
of taxes payable or refundable for the current year and (b) deferred tax 
liabilities and assets for future tax consequences of events that have been 
recognized in the financial statements or tax returns.

Deferred income taxes result from temporary differences in the recognition of 
accounting transactions for income tax and financial reporting purposes.  
There were no temporary differences at December 31, 1997 and earlier years and 
accordingly, no deferred tax liabilities have been recognized for all years.

The Company has cumulative net operating loss carryforwards of approximately 
$830,000 at December 31, 1997 and $ 640,000 at December 31, 1996.  No effect 
has been shown in the financial statements for these carryforwards as the 
likelihood of future tax benefit from such is not presently determinable.  The 
potential income tax benefits of the net operating loss carryforwards of 
approximately $195,000 at December 31, 1997 and $150,000 at December 31, 1996 
(based upon current income tax rates) have been offset by valuation reserves 
of the same amount.  The net operating losses began to expire as of December 
31, 1997.
















PRIME AIR, INC.
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996


 
4.    Capital Assets

Capital assets consist of the following at December 31, 1997 and December 31, 
1996:

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

Furniture and equipment            5,154           1,663                3,491
                               $ 657,237        $ 43,721            $ 613,516
     
     
                                                December 31, 1996
                                                Accumulated       Net Book 
                                  Cost          Amortization       Value
Air terminal construction 
costs                          $ 639,490        $ 21,304            $ 618,186

Furniture and equipment            2,836             814                2,022
                               $ 642,326        $ 22,118            $ 620,208
          

5.    Notes and Advances Payable

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

6.   Related Party Transactions

During the years ended December 31, 1997 and 1996, the Company paid  no 
remuneration to any director.

Directors have advanced funds to the Company in the amount of $ 5,400 as of 
December 31, 1997 (1996: $25,522). These advances are unsecured, non-interest 
bearing and are without specific terms of repayment.


<PAGE>



PRIME AIR, INC.
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996



7.    Capital Stock
     Authorized:
          50,000,000 common shares with a 
                       stated par value of $ .001/share
            3,000,000 preferred cumulative convertible shares 
                       with a stated par value of $ .001/share

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

     During year ended December 31, 1996
          - for cash                      1,510,558                755,279
          - consulting and related 
            services                      1,483,673                  1,483
                                          2,994,231                756,762     
     Balance, December 31, 1996           6,556,781              1,239,114 

During the year ended December 31, 1997               
   -     shares-for-debt settlements        255,432                130,751
   -     consulting and related services    328,000                    328
                                            583,432                131,079

     Balance, December 31, 1997           7,140,213            $ 1,370,193

The directors of the Company have authorized the issue of up to a further 
500,000 common shares in the form of a director, officer and employee stock 
options at a price to be determined.  The granting of these options is subject 
to the receipt of regulatory approval.

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



PRIME AIR, INC.
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996




8.    Lease Commitment

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

n     $100 per annum for the initial six (6) years (1993 through 1998); and 
thereafter
     
n     5% of gross receipts per annum derived from the operation of the 
terminal facilities, excluding amounts received in connection with the sale of 
airline tickets and other forms of transportation. The lease commitment 
amounts for 1999 through 2002 cannot be quantified as the amount of gross 
receipts for those years cannot be determined.