Page 1
      UNITED STATES
      SECURITIES AND EXCHANGE COMMISSION
     Washington, D.C.  20549

            Form 10-KSB
AMENDMENT NO. 1

(Mark One)
     [X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934

     For the fiscal year ended December 31, 1997

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

     For the transition period from ________ to __________

          Commission File Number: 333-28249

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

     NEVADA                         APPLIED FOR
State or other jurisdiction of               I.R.S. Employer I.D. No.
incorporation or organization

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

Issuer's telephone number, including area code:  (403) 998-3400

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:

     Title of each class          Name of each exchange on which registered
     None                    N/A

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.     [X]

State issuer's revenues for its most recent fiscal year:     -0-

State the aggregate market value of the voting stock held by non-affiliates of 
the Registrant computed by reference to the price at which the stock was sold, 
or the average bid and asked prices of such stock, as of a specified date 
within the past 60 days:  The aggregate market value of the voting stock held 
by non-affiliates of the Registrant computed by using the closing sale price 
on April 13, 1998, was $1,282,155.

State the number of shares outstanding of each of the Issuer's classes of 
common equity as of the latest practicable date: At April 13, 1998, there were 
8,282,155 shares of the Registrant's Common Stock outstanding.

Documents Incorporated by Reference: Exhibits from the Registrant's 
registration statement on Form S-4 and from prior periodic reports are 
incorporated by reference into Item 13 of Part III.

PART I

ITEM 1.  DESCRIPTION OF BUSINESS

General

     Prime Air, Inc. (the "Company") was incorporated in the State of Nevada 
on November 10, 1996, for the purpose of changing the domicile of the Company 
from the State of Delaware.  The predecessor to the Company was incorporated 
in the State of Delaware on April 4, 1995.  The change of domicile was 
completed on December 15, 1997.

     The Company is the parent of a wholly owned subsidiary, Prime Air, Inc. 
("Prime Air (BC)"), a company originally incorporated under the laws of the 
Province of British Columbia, Canada, on March 10, 1989, under the name "High 
Mountain Airlines Inc." for the purpose of establishing air service to serve 
the Whistler, British Columbia, Canada, area.  Prime Air (BC) has entered into 
a lease and operating agreement with the Village of Pemberton, British 
Columbia, Canada, to plan, develop, construct, manage, and operate a terminal 
facility at the Pemberton Airport.  Prime Air (BC) has constructed the basic 
terminal building and proposes to facilitate regular, scheduled air service to 
Pemberton Airport to serve the nearby resort community of Whistler.

     Prior to incorporation in the State of Delaware, the Company was 
originally incorporated pursuant to the laws of the State of Utah on August 
30,1993, under the name "Astro Enterprises, Inc."  (referred to hereafter as 
"the Utah Corporation"). The Utah corporation changed its name to "Prime Air, 
Inc." on June 28, 1994.

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

      On or about April 4, 1995, the Utah Corporation effected a change of 
domicile to the State of Delaware by incorporating another corporation in such 
state, acquiring all of the assets and liabilities of the Utah Corporation, 
and issuing shares of the Delaware corporation to the shareholders of the Utah 
Corporation on a one-for-one basis.  The Utah Corporation was voluntarily 
dissolved by the State of Utah on May 18, 1995.  The change of domicile was 
initiated and completed based upon the recommendations of Mr. Paul Parshall, 
an officer and director of the Utah Corporation at such time.

     The original purpose of the Utah Corporation incorporated in 1993 as set 
forth in its articles of incorporation, was to acquire the assets and certain 
liabilities of another Utah corporation incorporated in 1985 and previously 
dissolved by the State of Utah on  May 1, 1990, and also incorporated under 
the  name "Astro Enterprises, Inc."  Current management of the Company, none 
of whom were affiliated with the Utah Corporation prior to the share exchange 
in June 1994, believe that the former management of the Utah Corporation at 
the time of its incorporation issued approximately 120,000 shares of the 
company's common stock to the shareholders of the corporation dissolved in 
1990 with the same name thus creating approximately 170 shareholders of the 
Utah Corporation.  Management does not believe that any other relationship 
existed between the two entities or with former management of the corporation 
dissolved in 1990 and known as Astro Enterprises, Inc.

     Commencing February 1998, the Company attempted to offer and sell up to 
2,000,000 units (the "Units"), each Unit consisting of one share of common 
stock of the Company and one Class A Warrant and one Class B Warrant.  The 
Units were offered by British West Indies Securities Company Limited as 
selling agent for the offering.  The offering terminated March 31, 1998, and 
no Units were sold.  The selling agreement with British West Indies Securities 
Company Limited also expired on such date.

Airport Lease and Operating Agreement

     On October 29, 1993, Prime Air (BC) entered into a Lease and Operating 
Agreement (the "Airport Agreement") with the Corporation of the Village of 
Pemberton, British Columbia, Canada (hereinafter the "Village of Pemberton"), 
in which Prime Air (BC) agreed to undertake the planning, development, 
construction, management, and operation of a terminal facility at the 
Pemberton Airport.  In return the Village of Pemberton granted to Prime Air 
(BC) an exclusive lease involving certain lands located at the Pemberton 
Airport to enable Prime Air (BC) to undertake the planning, development, 
construction, management, and operation of a terminal facility.

     The Pemberton Airport is approximately 20 miles north of Whistler Resort 
on Highway 99.  Whistler Resort is a ski resort located at the base of 
Whistler Mountain and Blackcomb Mountain approximately 75 miles north of 
Vancouver, British Columbia, Canada.  The resort has approximately 6,800 
permanent residents and attracts approximately 1,500,000 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 provides 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 $644,740 ($592,949 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 
$2,500 per year thereafter, plus 5% of the gross receipts derived from the 
operation of the terminal facility.  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.

Air Service

     Prime Air (BC) initially intends to establish scheduled and charter 
passenger and cargo air service between Vancouver International Airport and 
Pemberton Airport.  Thereafter, Prime Air (BC) will seek to establish such 
services between Pemberton Airport and other Canadian and United States 
destinations.  Prime Air (BC) has entered into a Memorandum of Agreement dated 
January 5, 1995 (the "Voyageur Agreement"), with Voyageur Airways Limited, an 
Ontario corporation ("Voyageur") to provide the initial service by supplying, 
operating, and maintaining DeHavilland Dash-7 aircraft to provide scheduled 
and charter passenger and cargo service, from Vancouver International Airport, 
and thereafter from other Canadian and United States locations, to the 
Pemberton Airport.  The Voyager Agreement provides that Prime Air (BC) will 
operate the terminal facility at Pemberton Airport and the scheduled and 
charter passenger and cargo service, and will market the air services.  
Voyageur will provide the certifications, authorizations, expertise, 
facilities, personnel, and resources necessary to operate, maintain and 
service the aircraft.  The parties intend to negotiate and enter into a 
definitive agreement prior to commencing operations.

Government Regulation and Licensing

     Any corporation conducting commercial air service operations in Canada 
must possess a valid Operating Certificate and other licenses, permits, 
accreditations and certificates that are issued and administered by Transport 
Canada.  Qualification for the required Operating Certificate requires that:

     1.   the operator (being the entity actually providing the air service 
operations) must have at least one aircraft registered under its Operating 
Certificate.  This aircraft may either be owned directly or dry leased by the 
operator;

     2.   the aircraft utilized by the operator must be approved and certified 
in Canada;

     3.   in respect of a domestic Canadian air service, the operator must 
satisfy the statutory Canadian ownership criteria which essentially requires 
that 75% of the voting interest in the operator is controlled by Canadian 
citizens or permanent residents of Canada:

     4.   the management of the operator must include a chief pilot who holds 
appropriate Canadian certification;

     5.   all of the operator's pilots must meet proficiency standards and 
hold sufficient ratings to operate the type of aircraft being utilized;

     6.   the operator must demonstrate and certify that it will be able to 
carry out maintenance of its aircraft according to regulated standards.  Such 
maintenance can either be conducted directly by the operator or subcontracted 
to a qualified maintenance facility; and

     7.   an operations manual must be prepared for the operator and approved 
by Transport Canada.

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

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

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

Marketing

     Prime Air (BC) intends to hire two industry professionals to spearhead 
its sales drive by making direct sales calls to key tour wholesalers and 
operators, attending travel, ski, and golf shows, and calling on connector 
airlines and hotel groups.  Particular emphasis will be placed on targeting 
certain geographic regions which traditionally provide the greatest number of 
visitors to Whistler.  Management believes also that a major part of the 
marketing strategy will involve seeking a major international airline and 
negotiating Whistler as a final destination in their ticketing and 
reservations.

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 the company 
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 two employees as of December 1, 
1997, consisting of Mr. Smith and Mr. Haug who were employed part-time.

ITEM 2.  DESCRIPTION OF PROPERTY

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

ITEM 3.  LEGAL PROCEEDINGS

     Neither the Company nor any of its properties is a party to any material 
pending legal proceedings or government actions, including any material 
bankruptcy, receivership, or similar proceedings.  Management of the Company 
does not believe that there are any material proceedings to which any 
director, officer or affiliate of the Company, or its subsidiary, any owner of 
record of beneficially of more than 5 percent of the Common Stock of the 
Company, or any associate of any such director, officer, affiliate of the 
Company, or its subsidiary, or security holder is a party adverse to the 
Company, or it subsidiary, or has a material interest adverse to the Company, 
or it subsidiary.

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

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

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

     On November 26, 1997, the Company held a special meeting of shareholders 
to vote upon the merger of the Delaware corporation into the Nevada 
corporation for purposes of changing the domicile of the Company from the 
State of Delaware to the State of Nevada.  The number of shares which voted 
for the proposal was 4,028,417, the number of shares which voted against the 
proposal was 50, and the number of shares which withheld authority to vote was 
none.  There were 70 shares which abstained and no broker non-votes.


PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Common Stock of the Company was quoted on the OTC Electronic Bulletin 
Board through approximately July 23, 1996, and from March 27, 1997 until 
present.  There is currently no established public trading market for the 
Common Stock.  The table below sets forth for the periods indicated the high 
and low bid quotations as reported by the OTC Bulletin Board.  These 
quotations reflect inter-dealer prices, without retail market-up, mark-down, 
or commission and may not necessarily represent actual transactions.

                       Quarter            High           Low
FISCAL YEAR ENDED
DECEMBER 31, 1996     First              $0.50          $0.25
                      Second             $0.9375        $0.4375
                      Third              $0.75          $0.25
                      Fourth              --             --

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


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

     As of April 13, 1998, there were approximately 368 holders of record of 
the Common Stock as reported to the Company by its transfer agent.

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

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

     The Company is a development stage company and conducts all operations 
through its wholly owned subsidiary, Prime Air (BC).  The Company has had no 
material revenues in the past.  During the year ended December 31, 1997, the 
only income received was bank interest of $4,020.

     During the last three years, the operations of the Company have been 
funded from equity participation of the owners.  Total cash raised from equity 
funding from March 1992 to December 31, 1994 was $349,808, $131,755 for 1995 
and $756,763 for 1996.  No funds were raised during 1997, but the Company did 
convert $130,751 into common stock of the Company.

     The Company has realized a cumulative loss of $828,919 since March 1992, 
and anticipates similar losses until operations begin, which is expected in 
late 1998.

     The Company has sufficient working capital to meet its immediate 
obligations, but does not have any cash available to allow operations to 
commence.  The Company intends to use the net proceeds of this offering to 
commence its principal operations.  No significant purchases of equipment, 
other than outlined above, are anticipated in the next year.  See "Use of 
Proceeds."

     Prime Air (BC)'s sole fixed obligation is the payment of $CND100 per 
annum to the Village of Pemberton under the terms of its Airport Lease and 
Operating Agreement.  At present the company also expects to pay an additional 
$50,000 in the current year to cover legal fees, insurance, and property 
taxes, regardless of the date of operations commencement.

     Should operations commence during the next twelve months, the Company 
expects to hire approximately seven employees to handle terminal operations 
and marketing.

ITEM 7.  FINANCIAL STATEMENTS

     The financial statements of the Company are attached to this annual 
report.


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

     On February 27, 1998, the Company engaged Rutherford & Company, Chartered 
Accountants, as independent auditors of the Company for the year ended 
December 31, 1997.  The decision to retain Rutherford & Company, and not to 
re-engage Orton & Company, the former independent auditor, was made by the 
Board of Directors on such date.  The decision not to re-engage Orton & 
Company did not involve a dispute with the Company over accounting policies or 
practices.  The report of Orton & Company  on the Company's financial 
statements for the year ended December 31, 1996, did not contain an adverse 
opinion or disclaimer of opinion, nor was it modified as to uncertainty, audit 
scope, or accounting principals.  In connection with the audit of the 
Company's financial statements for such year ended December 31, 1996, there 
were no disagreements with Orton & Company on any matters of accounting 
principles or practices, financial statement disclosure, or auditing scope or 
procedure which, if not resolved to the satisfaction of Orton & Company, would 
have caused such firm to make reference to the matter in its report.  Neither 
the Company, nor anyone on its behalf, has consulted Rutherford & Company 
regarding the application of accounting principles to a specific completed or 
contemplated transaction, or the type of audit opinion that might be rendered 
on the Company's financial statements, and neither written nor oral advice was 
provided by Rutherford & Company that was an important factor considered by 
the Company in reaching a decision as to any accounting, auditing, or 
financial reporting issue.

PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND 
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     The officers and directors of the Company are as follows: 

          NAME             AGE        POSITIONS                DIRECTOR SINCE
          Blaine Haug      50         Chairman                 1994
          Royle Smith      48         President                --
          John Eberhard    53         Secretary and Director   1995
          Gregory Duffy    39         Treasurer                --

     The officers and directors of the subsidiary, Prime Air (BC), are as 
follows:

          NAME             AGE        POSITIONS                DIRECTOR SINCE
          Blaine Haug      50         President and Director   1989
          Richard T. 
          Shrieves         43         Secretary and Director   1992

     Set forth below is the business experience and biographical information 
on each of the executive officers and directors of the Company and Prime Air 
(BC):

     BLAINE HAUG has been employed as the general manager of the Company since 
1989.  Mr. Haug currently holds an airline transport pilot license first 
issued in 1978 by Canada.

     ROYLE SMITH has been the president of Welcome Ford Sales Ltd., a Ford 
dealership located in Edmonton, Alberta, Canada, since 1981.

     JOHN EBERHARD has operated his own law practice in London, Ontario, 
Canada, since 1973, and is a member of the Canadian Bar Association.  He is 
also a member of the Law Association of Upper Canada, Middlesex Law 
Association, Association of Transportation Practitioners (U.S.A.), 
Lawyer-Pilot Bar Association (U.S.A.-Canada).  Mr. Eberhard graduated in 1966 
with a bachelor of arts degree and in 1969 with a law degree from the 
University of Western Ontario.

     GREGORY DUFFY has been employed as general manager of Welcome Ford Sales 
Ltd. since 1991.

     RICHARD T. SHRIEVES has practiced law since 1980.

     There are no known arrangements or understandings between any of the 
foregoing individuals and any other person pursuant to which he or she was 
elected as a director.

     No remuneration was paid to the incumbent directors by the Company during 
1996, except for reimbursement of out-of-pocket expenses incurred by such 
individuals on behalf of the Company.

     There are no arrangements known to management the effect of which would 
result in a change of control of the Company, nor has such a change of control 
occurred during 1997.


Compliance with Section 16(a) of the Exchange Act:

     The Company's common stock is not registered pursuant to Section 12(g) of 
the Securities Exchange Act of 1934, as amended, and therefore no disclosure 
is required pursuant to this item.

ITEM 10.  EXECUTIVE COMPENSATION

     The following table sets forth the aggregate executive compensation 
earned by or paid to the named executive officers by any person for all 
services rendered in all capacities to the Company for the fiscal years ended 
December 31, 1995, 1996, and 1997:

     Name and Principal Position         Year          Restricted Stock Awards

     Blaine Haug                         1995          -0-
     Chairman                            1996         $62,500(1)
                                         1997         $50,000(2)

     Royle Smith                         1995          -0-
     President                           1996         $173,438(3)
                                         1997         $62,500(4)
          
     (1)These shares were issued to Mr. Haug as remuneration for management 
fees for 1996.  For purposes of this table only, the valuation of the 200,000 
shares of restricted stock is based upon the market value of the stock which 
was approximately $0.3125 on March 18, 1996, the date of the award.  The value 
of these shares is based solely upon the closing bid price of the shares on 
such date.  No dividends have been paid on these shares.  Notwithstanding the 
valuation of the shares for purposes of this table, the Board of Directors 
valued the shares at a significant discount of the market value at the time of 
award based upon the limited trading volume of market shares, the relatively 
short operating history of the company and the risks associated therewith, the 
limited cash resources of the Company, and as an incentive to retain the 
continued services of this party.

     (2)These shares were issued to Mr. Haug as remuneration for management 
fees for 1997.  For purposes of this table only, the valuation of the 200,000 
shares of restricted stock is based upon the market value of the stock which 
was approximately $0.25 on April 3, 1997, the date of the award.  The value of 
these shares is based solely upon the closing bid price of the shares on such 
date.  No dividends have been paid on these shares.  Notwithstanding the 
valuation of the shares for purposes of this table, the Board of Directors 
valued the shares at a significant discount of the market value at the time of 
award based upon the limited trading volume of market shares, the relatively 
short operating history of the company and the risks associated therewith, the 
limited cash resources of the Company, and as an incentive to retain the 
continued services of this party.

     (3)Of these shares, 100,000 were issued to Mr. Smith on January 9, 1996, 
for accepting the office of Executive Vice-President; 300,000 were issued to 
him on January 9, 1996, for consulting fees regarding the completion of the 
Pemberton Airport terminal facility; 200,000 were issued to him on March 18, 
1996, as remuneration for management fees for 1996; and 25,000 were issued to 
Welcome Ford Sales Ltd., a company controlled by him, on March 29, 1996, for 
administration fees rendered regarding the completion of the Pemberton Airport 
terminal facility.  The valuation of 100,000 and the 300,000 shares of the 
restricted shares is based upon the market value of the stock which was 
approximately $0.25 on January 9, 1996, the date of the award; the valuation 
of 200,000 shares of the restricted shares is based upon the market value of 
the stock which was approximately $0.3125 on March 18, 1996, the date of the 
award; and the valuation of 25,000 shares of the restricted shares is based 
upon the market value of the stock which was approximately $0.4375 on March 
29, 1996, the date of the award.  The aggregate value of these shares is based 
solely upon the closing bid price of the shares on such dates.  No dividends 
have been paid on these shares.  Notwithstanding the valuation of the shares 
for purposes of this table, the Board of Directors valued the shares at a 
significant discount of the market value at the time of award based upon the 
limited trading volume of market shares, the relatively short operating 
history of the company and the risks associated therewith, the limited cash 
resources of the Company, and as an incentive to retain the continued services 
of this party.

     (4)Of these shares, 100,000 were issued to Mr. Smith on April 3, 1997, 
and another 100,000 were issued on June 18, 1997, as remuneration for 
management fees for 1997.  The valuation of 100,000 awarded on April 3, 1997, 
is based upon the market value of the stock which was approximately $0.25 on 
such date, and the valuation of other 100,000 shares is based upon the market 
value of the stock which was approximately $0.375 on June 18, 1997, the date 
of the award.  The aggregate value of these shares is based solely upon the 
closing bid prices of the shares on such dates.  No dividends have been paid 
on these shares.  Notwithstanding the valuation of the shares for purposes of 
this table, the Board of Directors valued the shares at a significant discount 
of the market value at the time of award based upon the limited trading volume 
of market shares, the relatively short operating history of the company and 
the risks associated therewith, the limited cash resources of the Company, and 
as an incentive to retain the continued services of this party.

     Blaine Haug has a written employment agreement with the Company to act as 
assistant general manager of the company and which covers any and all services 
performed by him for the Company or any of its wholly or majority owned 
subsidiaries.  Mr. Haug will devote all of his time to the affairs of the 
Company and its subsidiary under this agreement.  The agreement provides that 
the Company will pay him $100,000 US per annum, payable in cash or in common 
stock of the company at a price of $0.50  per share for the year ended 
December 31, 1996, and for future years at a price mutually agreed by the 
parties.  The agreement expressly states that Mr. Haug will exercise the share 
option payment for 1996.  Therefore, the Company issued 200,000 shares of 
Common Stock to Mr. Haug in lieu of any cash compensation for 1996.  Mr. Haug 
is also to receive reimbursement for all out-of-pocket expenses incurred in 
connection with his duties; to receive all reasonable travel expenses incurred 
in the course of his duties as assistant general manager; and to be permitted 
to participate in any profit sharing, deferred compensation, stock 
appreciation rights, stock option and other plans and programs adopted by the 
company.  If Mr. Haug is unable to perform his duties because of illness or 
mental or physical disability, he will receive compensation and benefits for 
one year.  The term of the agreement is from January 1, 1996, through December 
31, 2000, renewable by mutual consent for successive five year periods.  The 
agreement also allows Mr. Haug to provide management services to any other 
person, firm, or corporation during the term of the agreement.  The Company 
may terminate the employment agreement upon 90 days' written notice, but would 
be obligated to pay compensation through the remaining term of the agreement.  
Mr. Haug may terminate the agreement upon 90 days' written notice but would 
only receive compensation through the date of termination.  Upon Mr. Haug's 
death, his widow or estate would receive compensation for six months from the 
date of death.  If the employment agreement is terminated by the company 
because of illness or mental or physical disability, Mr. Haug would receive 
compensation and benefits for six months from such date.  Also, the employer 
may not amalgamate, merge, or consolidate with another person or corporation 
unless such other person or corporation either expressly assumes the agreement 
for a term of five years from the closing date or pays Mr. Haug his full 
compensation for a term of five years or $500,000.  (This provision has been 
waived by Mr. Haug for purposes of the Merger.)  The employment contract is 
deemed to provide personal services by Mr. Haug and therefore, the duties and 
obligations of Mr. Haug are not assignable by him, although he is permitted to 
assign all or a portion of his compensation.  The agreement contains an 
indemnity provision which requires the Company to indemnify and save harmless 
Mr. Haug, his heirs, successors and legal representatives, from expenses and 
costs associated with any action to which he is a party by reason of being or 
having been an assistant general manager of the company, if he acted honestly 
and in good faith with a view to the best interests of the company, and 
otherwise in accordance with the bylaws of the company.  The employment 
agreement is to be governed by and construed in accordance with the laws of 
the Province of British Columbia, and any controversy or claim relating to the 
agreement is to be settled by arbitration in accordance with the provisions of 
the Arbitration Act of British Columbia.

     Royle Smith has a written employment agreement with the Company to act as 
general manager of the company and which covers any and all services performed 
by him for the Company or any of its wholly or majority owned subsidiaries.  
Mr. Smith will devote approximately 75% of his time to the affairs of the 
Company and its subsidiary under this agreement.  The agreement provides that 
the Company will pay him $100,000 US per annum, payable in cash or in common 
stock of the company at a price of $0.50  per share for the year ended 
December 31, 1996, and for future years at a price mutually agreed by the 
parties.  The agreement expressly states that Mr. Smith will exercise the 
share option payment for 1996.  Therefore, the Company issued 200,000 shares 
of Common Stock to Mr. Smith in lieu of any cash compensation for 1996.  Mr. 
Smith is also to receive reimbursement for all out-of-pocket expenses incurred 
in connection with his duties; to receive all reasonable travel expenses 
incurred in the course of his duties as assistant general manager; and to be 
permitted to participate in any profit sharing, deferred compensation, stock 
appreciation rights, stock option and other plans and programs adopted by the 
company.  If Mr. Smith is unable to perform his duties because of illness or 
mental or physical disability, he will receive compensation and benefits for 
one year.  The term of the agreement is from January 1, 1996, through December 
31, 2000, renewable by mutual consent for successive five year periods.  The 
agreement also allows Mr. Smith to provide management services to any other 
person, firm, or corporation during the term of the agreement.  The Company 
may terminate the employment agreement upon 90 days' written notice, but would 
be obligated to pay compensation through the remaining term of the agreement.  
Mr. Smith may terminate the agreement upon 90 days' written notice but would 
only receive compensation through the date of termination.  Upon Mr. Smith's 
death, his widow or estate would receive compensation for six months from the 
date of death.  If the employment agreement is terminated by the company 
because of illness or mental or physical disability, Mr. Smith would receive 
compensation and benefits for six months from such date.  Also, the employer 
may not amalgamate, merge, or consolidate with another person or corporation 
unless such other person or corporation either expressly assumes the agreement 
for a term of five years from the closing date or pays Mr. Smith his full 
compensation for a term of five years.  (This provision has been waived by Mr. 
Smith for purposes of the Merger.)  The employment contract is deemed to 
provide personal services by Mr. Smith and therefore, the duties and 
obligations of Mr. Smith are not assignable by him, although he is permitted 
to assign all or a portion of his compensation.  The agreement contains an 
indemnity provision which requires the Company to indemnify and save harmless 
Mr. Smith, his heirs, successors and legal representatives, from expenses and 
costs associated with any action to which he is a party by reason of being or 
having been an assistant general manager of the company, if he acted honestly 
and in good faith with a view to the best interests of the company, and 
otherwise in accordance with the bylaws of the company.  The employment 
agreement is to be governed by and construed in accordance with the laws of 
the Province of British Columbia, and any controversy or claim relating to the 
agreement is to be settled by arbitration in accordance with the provisions of 
the Arbitration Act of British Columbia.

     ITEM 11.  SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information furnished by current 
management concerning the ownership of common stock of the Company as of April 
1, 1998, of (i) each person who is known to the Company to be the beneficial 
owner of more than 5 percent of the Common Stock; (ii) all directors and 
executive officers; and (iii) directors and executive officers of the Company 
as a group:

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

Phillip Johnston                2,408,226(2)               29.08%
PMB7 Hibiscus Square Pond St.
Grand Turk
Turks and Caicos Island, BWI

British West Indies Securities    600,000                   7.24%
P.O. Box CB-13926
Nassau, The Bahamas, B.W.I.

Patricia Jarvis                   522,705                   6.31%
P.O. Box 1056
Renton, WA 98057

Blaine Haug                        40,000                   *

Royle Smith                        -0-

John Eberhard                     107,670(3)                1.3%

Gregory Duffy                     129,000                   1.56%

Officers and Directors
as a Group (4 persons)            276,670                   3.34%
___________
     * Less than 1%


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

     (2)Of  these  shares,   1,469,470  are  held   directly  of  record by 
Confederation Capital Corporation Ltd., and 938,756 are held directly of  
record by Dolphin Trading Ltd.

     (3)Of theses shares, 5,000 are beneficially  owned directly and of 
record  by Mr. Eberhard's wife, and  88,000 are held in  a brokerage account 
controlled  by Mr. Eberhard.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

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

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

     The Company entered into a consulting contract (the "Consulting 
Agreement") on June 10, 1996, with Silverthorn Investments, Ltd. (the 
"Consultant") in which the Company agreed to retain the services of the 
Consultant through June 1, 2000, unless earlier terminated as provided in the 
Consulting Agreement.  Pursuant to the terms of the Consulting Agreement, the 
Consultant is required to be available for a minimum of 60 business days per 
year to provide consulting and assistance as may be necessary to assist in 
facilitating the full operations of the Company's business.  In return, the 
Company has agreed to pay the Consultant $100 per hour for such services.  At 
the option of the Company 75% of the amount due may be paid to the Consultant 
in the form of common stock of the Company, based upon the average of the last 
three months closing bid prices for the common shares.  The Consultant is 
controlled by Matthew Smith who is also the assistant secretary of the 
Company.
ITEM 13.  EXHIBITS, LIST AND REPORTS ON FORM 8-K

     (a)(1)     Financial Statements.  The following financial statements are 
included in this report:
          Auditors' Report
          Comments by Auditor for U.S. Readers
          Consolidated Balance Sheets as of December 31, 1997 and 1996
          Consolidated Statements of Operations for the fiscal years ended 
December 31, 1997 and 1996, and from inception to December 31, 1997
          Consolidated Statements of Cash Flows for the years ended December 
31, 1997 and 1996, and from inception to December 31, 1997
          Consolidated Statements of Stockholders' Equity and Deficit from 
          inception to December 31, 1997
          Notes to Financial Statements

     (a)(2)     Exhibits.  The following exhibits are included as part of this 
report:

     EXHIBIT NO.     DESCRIPTION OF EXHIBIT                             PAGE

     2.1           Plan and Agreement of Merger dated March 10, 1997      *
     2.2           Merger Agreement dated June 29, 1994                   *

     3.1           Articles of Incorporation                              *
     3.2           Articles of Merger dated November 26, 1997         Attached
     3.4           Bylaws of the Company                                  *
     10.1          Airport Lease and Operating Agreement, as amended      *
     10.2          Employment Agreement with Blaine Haug                  *
     10.3          Employment Agreement with Royle Smith                  *
     10.4          Consulting Agreement with Siverthorn Investments, Ltd. *
     10.5          Memorandum of Agreement with Voyageur Airways          *
     10.6          Addendum to Haug Employment Agreement                  *
     10.7          Addendum to Smith Employment Agreement                 *
     23            Consent of auditor                                 Attached

          *Incorporated by reference from the Company's registration statement 
on Form S-4 filed with the Securities and Exchange Commission, file no. 
333-28249.

     (b)  Reports on Form 8-K: A report on Form 8-K dated February 27, 1998, 
was filed by the Company under Item 4 in connection with the change of 
accountants.

SIGNATURES

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

                                   PRIME AIR, INC.

Date: April 15, 1998                    By  /s/ Royle Smith, President


     In accordance with the Exchange Act, this report has been signed below by 
the following person on behalf of the registrant and in the capacitates and on 
the dates indicated.


Date: April 15, 1998                    /s/ John Eberhard, Director


Date: April 15, 1998                    /s/ Blaine Haug, Director and Chairman


Date: April 15, 1998                    /s/ Gregory Duffy, Chief Financial 
                                            Officer

<PAGE>

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.  

<PAGE>
EXHIBIT 3.2

ARTICLES OF MERGER
of
PRIME AIR, INC.
(A Delaware Corporation)
into
PRIME AIR, INC.
(A Nevada Corporation)


     The undersigned officers, the respective presidents and secretaries of 
Prime Air, Inc., a Delaware corporation ("Prime Air (Del)"), and Prime Air, 
Inc., a Nevada corporation ("Prime Air (NV)"), hereby certify that the Plan 
and Agreement of Merger dated March 10, 1997, (hereinafter the "Plan") was 
approved by the shareholders of Prime Air (Del) at a duly called meeting held 
on November 26, 1997, after due notice was given, and was approved by the sole 
shareholder of Prime Air (NV) by unanimous consent action of such sole 
shareholder.

     1.     The number of shares outstanding of each class of each corporation 
which were entitled to vote on the Plan, and the number of shares of each 
class of each corporation consenting and not consenting to the Plan, is as 
follows:

                                   Number of
                                   Shares              Number of Shares
                    Class          Outstanding       Consenting  Not Consenting

Prime Air (Del)     Common Stock   7,140,213         4,028,417   120
                    ($.001 par value)

Prime Air (NV)      Common Stock   10                10          -0-
                    ($.001 par)

     2.     The number of votes cast for the Plan by each constituent entity 
was sufficient for approval of the Plan.

     3.     All of the presently outstanding shares of Prime Air (NV) are 
owned and held by Prime Air (Del).

     4.     The effective date of the merger shall be at the time of the 
latter of the completion of filing of the Articles of Merger in the State of 
Delaware and the State of Nevada.

     5.     A copy of the complete executed Plan, including exhibits and 
schedules, is on file at the principal offices of Prime Air (NV) at 8598 112 
Street, Ft. Saskatchewan, Alberta, Canada T8L 3V8.  A copy of the entire Plan 
will be furnished by Prime Air (NV), on request and without cost, to any owner 
of Prime Air (NV) or Prime Air (Del).

     IN WITNESS WHEREOF, Prime Air, Inc., a Nevada corporation, and Prime Air, 
a Delaware corporation, have caused these Articles of Merger to be executed in 
their respective corporate names by their respective presidents and their 
respective secretaries this 26th day of November 1997.

Attest:                                   Prime Air, Inc.
                                          A Delaware Corporation

/s/ John Eberhard, Secretary              By /s/ Royle Smith, President



Attest:                                   Prime Air, Inc.
                                          A Nevada Corporation

/s/ John Eberhard, Secretary              By /s/ Royle Smith, President

<PAGE>
Exhibit 23

        Accountant's Consent

We hereby consent to the use of our audit report of Prime Air, Inc.
(Nevada), dated April 4, 1998 for the years ended December 31, 1997
and 1996 in the Form 10KSB Statement for Prime Air, Inc. (Nevada).

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


April 6, 1998
Richmond, Canada                         CHARTERED ACCOUNTANTS