UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



                                   FORM 10-KSB

            ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the Fiscal Year Ended: December 31, 2007


                        Commission File Number 333-128758



                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                 (Name of Small Business Issuer in Its Charter)

             Nevada                                      20-1990623
 (State or other jurisdiction of
  incorporation or organization)            (I.R.S. Employer Identification No.)

                  7339 Paeso Del Volcan
                 Albuquerque, New Mexico                         87121
        (Address of principal executive offices)               (Zip Code)



                    Issuer's telephone number: (866) 843-1348


      Securities registered under Section 12(b) of the Exchange Act: None.

         Securities registered under Section 12(g) of the Exchange Act:
                          Common Stock, no par value.

 Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. |_|

Check  whether the issuer (1) 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 filing requirements for the past 90 days. Yes |X| No |_|

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer, or a smaller reporting company. See
the definitions of "large accelerated  filer,"  "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act:

         Large Accelerated Filer [ ].          Accelerated Filer    [ ].

         Non-Accelerated Filer [ ].            Smaller Reporting Company [X]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B 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|

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): Yes |_| No |X|

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




<PAGE>


The aggregate  market value of the voting and  non-voting  common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold,  or the  average  bid and  asked  price  of such  common  equity,  as of a
specified date within the past 60 days: $8,831,480 as of March 5, 2008.

The  number of shares  outstanding  of each of the  issuer's  classes  of common
equity,  as of the latest  practicable date:  179,493,552  common shares, no par
value, outstanding as of March 20, 2008.

Documents Incorporated By Reference:   None.

Transitional Small Business Disclosure Format (check one):   Yes  |_|  No  |X|


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                                TABLE OF CONTENTS
                                     Part I

1.           Description of Business                                           1

2.           Description of Property                                           5

3.           Legal Proceedings                                                 5

4.           Submission of Matters to a Vote of Security Holders               5

                                     Part II

5.           Market for Common Equity and Related Stockholder Matters and
             Small Business Issuer Purchases of Equity Securities              6

6.           Management's Discussion and Analysis or Plan of Operation         8

7.           Financial Statements                                             10

8.           Changes In and Disagreements With Accountants on Accounting
             and Financial Disclosure                                         10

8A.          Controls and Procedures                                          10

8B.          Other Information                                                11

                                    Part III

9.           Directors and Executive Officers of the Registrant               11

10.          Executive Compensation                                           13

11.          Security Ownership of Certain Beneficial Owners and Management
             and Related Stockholder Matters                                  16

12.          Certain Relationships and Related Transactions                   17

13.          Exhibits                                                         18

14.          Principal Accountant Fees and Services                           20




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                                     PART 1

FORWARD-LOOKING STATEMENTS

This annual report on Form 10-KSB includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, which we refer
to in  this  annual  report  as  the  Securities  Act,  and  Section  21E of the
Securities  Exchange Act of 1934,  as amended,  which we refer to in this annual
report as the Exchange Act.  Forward-looking  statements  are not  statements of
historical  fact but rather  reflect our  current  expectations,  estimates  and
predictions about future results and events. These statements may use words such
as "anticipate," "believe," "estimate," "expect," "intend," "predict," "project"
and similar  expressions  as they relate to us or our  management.  When we make
forward-looking  statements,  we are basing them on our management's beliefs and
assumptions,  using information currently available to us. These forward-looking
statements are subject to risks,  uncertainties  and assumptions,  including but
not limited to, risks,  uncertainties  and assumptions  discussed in this annual
report.  Factors that can cause or contribute to these differences include those
described  under the headings  "Risk  Factors" and  "Management  Discussion  and
Analysis and Plan of Operation."

If one or more of these or other risks or uncertainties  materialize,  or if our
underlying assumptions prove to be incorrect, actual results may vary materially
from what we projected.  Any  forward-looking  statement you read in this annual
report  reflects our current  views with respect to future events and is subject
to  these  and  other  risks,  uncertainties  and  assumptions  relating  to our
operations, results of operations, growth strategy and liquidity. All subsequent
written and oral  forward-looking  statements  attributable to us or individuals
acting  on our  behalf  are  expressly  qualified  in  their  entirety  by  this
paragraph.  You should  specifically  consider  the factors  identified  in this
annual  report  which  would cause  actual  results to differ  before  making an
investment  decision.  We are under no duty to update any of the forward-looking
statements  after the date of this annual report or to conform these  statements
to actual results.

ITEM 1. DESCRIPTION OF BUSINESS

Development of Utilicraft Aerospace Industries, Inc.

Utilicraft  Aerospace  Industries,   Inc.  is  a  Nevada  corporation  that  was
incorporated  on  December  10,  2004.  The  Company  was  formed  to  effect  a
reorganization  (the   "Reorganization")  of  American  Utilicraft   Corporation
("AMUC"). The Reorganization was deemed necessary by the AMUC Board of Directors
because they  concluded  that the business of AMUC could not be continued by the
corporation  in its current form due to its inability to facilitate  significant
investment to satisfy capital  requirements for bringing its products to market.
Among other things,  delinquencies  and deficiencies in its public filings under
federal  securities  laws and certain  pending  litigation were reasons AMUC was
unable  to  facilitate  significant  investment  necessary  to  fund  continuing
operations.  Upon  formation,  the  Company:  (1)  obtained  from  John  Dupont,
assignments  of patent rights for the design of the  FF-1080-300  aircraft,  the
method patent for the Express  Turn-Around  (ETA)  electronic  freight  tracking
system and for the Automated Flat Rate System (AFRS);  (2) entered into separate
employment  agreements  with John Dupont,  Darby Boland,  John Dapogny and Karen
Shoemaker;  (3) entered  into lease  agreements  for  facilities  for use in its
business operations, including a sublease (which has since been terminated) from
AMUC  of  facilities  located  at  554  Briscoe  Blvd.,  Lawrenceville,  Georgia
(formerly AMUC headquarters);  and (4) recognized and resolved to honor deferred
compensation obligations of AMUC to its officers.

To effect the  Reorganization,  the Company executed a Reorganization  Agreement
with AMUC pursuant to which it issued  111,444,769 shares of its common stock to
AMUC  to  be  distributed  as  a  share  dividend  to  AMUC  shareholders  on  a
share-for-share  basis.  AMUC declared a dividend of the shares of the Company's
common stock to its shareholders on September 22, 2005. Pursuant to the terms of
the  Reorganization  Agreement  the  Company  also  issued  warrants  (the  "UAI
Warrants") exercisable for the purchase of 17,287,664 shares of our common stock
to holders of AMUC issued warrants (the "AMUC Warrants").

The reorganization could be characterized as a chain of transactions designed to
effect an  unregistered  distribution  of the  Company's  shares  that would not
qualify for an exemption under the Securities Act, which may subject the Company
to private or  regulatory  liabilities.  The Company  considers the prospects of
liability  remote,  in that there was no  consideration  paid for the dividended
shares,  and it  promptly  took steps to register an offering of such shares for
resale.  Though the Company contends there are exemptions available for the AMUC
dividend,  in the event  that  state or  federal  securities  regulators  pursue
enforcement  actions  the  Company  may be  limited  in its  ability  to  effect
securities offerings or obtain financing in the future.

Pursuant to the  Reorganization,  the Company's officers entered into employment
agreements  with the Company and the Company  assumed the obligation to pay them
compensation  deferred on AMUC's books (see " EXECUTIVE  COMPENSATION " section)
as well as AMUC's debt to John Dupont (see " CERTAIN  RELATIONSHIPS  AND RELATED
TRANSACTIONS  "  section).  John  Dupont  and Darby  Boland  each also  received
10,000,000  shares  of stock in the  Company  for  services  rendered  and their
agreement to serve as a director of the Company.


                                        1

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<PAGE>

The reorganization could be characterized as a chain of transactions designed to
effect an  unregistered  distribution  of the  Company's  shares  that would not
qualify for an exemption under the Securities Act, which may subject the Company
to private or  regulatory  liabilities.  The Company  considers the prospects of
liability  remote,  in that there was no  consideration  paid for the dividended
shares,  and it  promptly  took steps to register an offering of such shares for
resale.  Though the Company contends there are exemptions available for the AMUC
dividend,  in the event  that  state or  federal  securities  regulators  pursue
enforcement  actions  the  Company  may be  limited  in its  ability  to  effect
securities offerings or obtain financing in the future.

Pursuant to the  Reorganization,  the Company's officers entered into employment
agreements  with the Company and the Company  assumed the obligation to pay them
compensation  deferred on AMUC's books (see " EXECUTIVE  COMPENSATION " section)
as well as AMUC's debt to John Dupont (see " CERTAIN  RELATIONSHIPS  AND RELATED
TRANSACTIONS  "  section).  John  Dupont  and Darby  Boland  each also  received
10,000,000  shares  of stock in the  Company  for  services  rendered  and their
agreement to serve as a director of the Company.


Business Overview

Until  December  12,  2007,  the  Company  was  engaged in the  development  and
marketing of a freight  forwarding  aircraft,  and certain  information  systems
relating to the operation  and function of the aircraft and freight  management.
The goal of the Company was to  implement  solutions to the problem of declining
capacity in the short haul (or feeder)  route  segments of the air cargo hub and
spoke system. Since the strategic sale of its assets and Freight Feeder aircraft
technology  in December of 2007,  the Company is now focusing its  business-plan
efforts to actively  seeking new strategic  aerospace  products for development,
particularly  related to the  enhancement of the Freight Feeder  aircraft in the
air-cargo  markets  worldwide -- to continue to build the asset base, to develop
cash-flow, all aimed at building shareholder value.

The  Company's  funding  has  been  hindered  since  the  beginning  of  2007 as
PacifiCorp  Funding  Partners  Trust  ("PacifiCorp"),  operating  under a Master
Financing  Agreement  entered into on September  12, 2005 for a total funding of
$80,000,000  over a two year period,  was  unsuccessful  in  providing  required
funding to the  Company.  PacifiCorp's  lack of  success  was due  primarily  to
undisciplined  shareholders  causing a decreasing  share price since the Company
began trading in December 2006 which, in turn, has hindered PacifiCorp's ability
to attract the capital to exercise  warrants at $.50, $1.50 and $2.50 per share.
On December 6, 2007, the Board of Directors of Utilicraft Aerospace  Industries,
Inc. (the "Company")  terminated the Master Financing  Agreement with PacifiCorp
and clawed-back  49,223,003 of the Company's  shares of common stock  previously
issued to PacifiCorp. The 49,223,003 has subsequently been reduced to 40,185,397
through  conversions into PacifiCorp  shares by stockholders who had outstanding
loans to the Company - See Note 9 Subsequent Events, to the financial statements
included in this filing,  for a discussion of stockholder  advances converted to
stock through an agreement to  participate  in the  PacifiCorp  Agreement.  This
termination  was reported in a Form 8k filed by the Company on December 7, 2007.
The lack of  performance  by PacifiCorp  moved the Company to seek other options
and led to the agreement  with Freight  Feeder  Aircraft  Corporation  discussed
below.

On December 12, 2007,  Utilicraft  Aerospace  Industries,  Inc. (the "Company"),
with approval by consent of majority shareholders owning approximately 62.53% of
the  Company's  outstanding  common  stock  and  by  approval  of its  Board  of
Directors, entered into an Asset Purchase Agreement with Freight Feeder Aircraft
Corporation  ("FFAC")  to sell all of its assets and  technology  for a purchase
price consisting of the following;

          (a)  Common  stock.   Fifteen   Million  Two  Hundred  Fifty  Thousand
(15,250,000) restricted shares (the "Shares") of FFAC common stock (representing
approximately 25% of FFAC's initial capitalization).

          (b)  Warrants.  Warrants for  30,500,000  restricted  shares of FFAC's
Common Stock,  with a strike price of US$1.00 per share of Common Stock and with
a term of 5 (five) years from first-flight.

          (c) Royalty. Subject to the provisions of this Section, FFAC agrees to
pay UITA a 1% Royalty of the Gross Aircraft Sales recorded by FFAC in accordance
with  generally  accepted  accounting  principles,   less  profit,  commissions,
royalties and mark-up on Freight Feeder  Aircraft  number 51 to Aircraft  number
2051 sold by FFAC.

    (d) Assumed  liabilities.  FFAC agreed to assume certain  liabilities of the
Company  which,  after  allowing  for  stockholder  advances of  $384,500  being
converted to equity as part of the PacifiCorp funding, amounted to $2,553,683.

          (e) Public  Company  Assistance.  FFAC  agreed to assist UITA with its
public company filing  requirements  (including  audit and legal  expenses),  to
provide for the Company's  continued reporting under the Securities and Exchange
Act of 1934 until the later of first flight of the Freight Feeder  Aircraft,  or
two years from the date of the Agreement.



                                        2

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<PAGE>

EMPLOYEES

As of  December  31,  2007,  we had a total of 4  employees,  all of  which  are
considered  full-time  employees.  We have also employed outside consultants and
contractors from time to time to provide various services. None of our employees
are represented by a labor union. We consider our employee relations to be good.

RISK FACTORS

YOU  SHOULD  READ  THE  FOLLOWING  DISCUSSION  AND  ANALYSIS  TOGETHER  WITH OUR
FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS ANNUAL REPORT.
SOME OF THE  INFORMATION  CONTAINED IN THIS DISCUSSION AND ANALYSIS OR SET FORTH
ELSEWHERE IN THIS ANNUAL REPORT, INCLUDING INFORMATION WITH RESPECT TO OUR PLANS
AND  STRATEGIES  FOR OUR  BUSINESS,  INCLUDES  FORWARD-LOOKING  STATEMENTS  THAT
INVOLVE RISKS AND UNCERTAINTIES. YOU SHOULD REVIEW THE "RISK FACTORS" SECTION OF
THIS REPORT FOR A  DISCUSSION  OF  IMPORTANT  FACTORS  THAT COULD  CAUSE  ACTUAL
RESULTS TO DIFFER  MATERIALLY  FROM THE RESULTS  DESCRIBED  IN OR IMPLIED BY THE
FORWARD-LOOKING  STATEMENTS  CONTAINED IN THIS REPORT.  IF ANY OF THE  FOLLOWING
RISKS  ACTUALLY  OCCUR,  OUR  BUSINESS,   FINANCIAL  CONDITION  AND  RESULTS  OF
OPERATIONS COULD SUFFER.

Risks Relating to Our Ability to Continue
-----------------------------------------

Our independent  registered  public  accounting  firm's report,  dated March 28,
2008, includes an explanatory  paragraph expressing  substantial doubt as to our
ability to continue as a going concern,  due to our working  capital  deficit at
December 31, 2007.  The Company has suffered  losses from  operations  and has a
working  capital  deficiency that raise  substantial  doubt about its ability to
continue as a going  concern.  Since  inception  (December 10, 2004) and through
December  31,  2007,  the Company has a loss from  operations  of  approximately
$8,692,000.  The  loss  is  largely  attributable  to the  reorganization  costs
associated with AMUC and the costs of sustaining a corporate  infrastructure and
the related overhead deemed necessary to support the Company's  operations while
seeking  potential  acquisitions  and waiting for the common stock and royalties
received from Freight Feeder  Aircraft  Corporation  to mature.  There can be no
assurance that management's efforts to adequately capitalize the Company will be
successful.  In  light  of the  Company's  current  financial  position  and the
uncertainty of raising sufficient capital to achieve its goals, its viability as
a going concern is uncertain.

Risks Relating to Our Business
------------------------------

The Company has a limited  operating  history for  investors to analyze and draw
conclusions  regarding our potential future performance.

The Company was formed in December of 2004 and, therefore, has a limited history
of operations.  As a result,  prospective investors will have little information
to use in which to analyze the prior performance of the Company.

Since  the   Company  was   incorporated   to  effect  a   reorganization   (the
"Reorganization") of American Utilicraft  Corporation  ("AMUC"),  it is possible
that we may be deemed an "alter ego" of AMUC thereby  subjecting  the Company to
the  liabilities  of AMUC.

Though  the  Company   acquired  no  assets  of  AMUC  in  connection  with  the
Reorganization  and paid debts owed by AMUC to trade and other creditors,  it is
possible  that a claimant may seek to hold us  responsible  for any  outstanding
known or unknown AMUC  liabilities  under an alter ego theory.  Facts that could
augment an alter ego claim against the Company  include the  following:  (1) the
Company  and AMUC share the same  officers  and  directors;  (2) the Company was
created to solve problems in obtaining  necessary  financing for development and
marketing of the Company's products due to AMUC's delinquencies and deficiencies
in its  public  filings  under  federal  securities  laws  and  certain  pending
litigation against AMUC; and (3) the fact that the Company  effectively  adopted
the business of AMUC by virtue of the  Reorganization.  AMUC liabilities include
not only  liabilities  that would be apparent  from its balance  sheet but could
also include latent  liabilities  that could exist or might arise as a result of
the fact that AMUC was delinquent and deficient in its reporting obligations.

The Company has  sustained  losses which we expect to continue  into the future.
There is no  assurance  we will  have  future  operations  that  will  result in
profitable  revenues.  If we cannot  generate  sufficient  revenues  to  operate
profitably,  we may  suspend  or cease  operations.

Our activities have been primarily directed towards research and development and
administrative  activities.  The Company may  experience  many of the  problems,
delays and expenses  encountered  by early stage  businesses,  some of which are
beyond the Company's control.

The Company has  incurred  losses  since  formation,  resulting  in  accumulated
deficits.

The Company has incurred net losses from operations of approximately  $8,800,000
from inception through December 31, 2007.  Because of our losses from operations
and our working capital deficiency, our independent registered public accounting
firm has  expressed  substantial  doubt about our ability to continue as a going
concern.  The Company expects to incur additional  operating losses and negative
cash  flow in the  future  unless  and  until it is able to  generate  operating
revenues  sufficient  to support  expenditures.  There is no assurance  that the
Company  will be able to generate  sufficient  revenues  to fund its  continuing
operations, that the Company will generate positive cash flow from operations or
that the Company will attain and thereafter sustain  profitability in any future
period.


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We  currently  have only one  independent  director  which  limits  the board of
directors'  ability  to  assure  investors  that  that  decisions  are made on a
disinterested basis .

Edward F. Eaton is the only independent  director currently serving on our board
of directors.

The Board of Directors has not  established  independent  audit or  compensation
committees.

The Company does not have a separately designated standing audit committee.  The
functions  of an audit  committee  are  currently  assumed  by our full Board of
Directors.  As a result,  we do not have a member of our Board of Directors that
has been designated as an audit committee  "financial expert." We also currently
do not have a  compensation  committee of the Board of  Directors.  The Board of
Directors as a whole determines executive compensation.

The Company did not make  adequate  provisions  for  withholding  FICA and other
taxes from employee compensation during 2005, 2006 and 2007, and anticipates the
total under-funded obligation, including estimated interest and penalties, to be
approximately   $520,000,   which,  were  assumed  by  Freight  Feeder  Aircraft
Corporation,  must be settled as soon as possible.

There are possible civil and criminal penalties that may be assessed against the
Company and its officers unless this shortfall is promptly funded,  any of which
could severely impact the Company's ability to continue in business.

Risks Relating to Our Current Financing Arrangements
----------------------------------------------------

We currently have limited net working  capital which is insufficient to meet our
anticipated expenses and cash requirements. Though the Company may receive up to
$4,498,155 in proceeds from the exercise of the warrants for the purchase of the
19,132,052 shares  outstanding as of December 31, 2007 as set forth below, there
can  be  no  assurance  that  any  of  the  warrants  will  ever  be  exercised.
Consequently,  we may be unable to fund our  anticipated  costs and expenses set
forth in this annual report.

The exercise of  outstanding  warrants may adversely  affect our stock price and
stockholders'  percentage ownership.  There are outstanding warrants exercisable
for the purchase of up to 19,132,052  shares of our common  stock.  All of these
warrants were issued at exercise  prices  ranging from $0.10 to $5.00 per share.
In the future, we may grant more warrants or options under stock option plans or
otherwise.  The exercise of stock  options  authorized in the future or warrants
that are  presently  outstanding  or may be issued in the future will dilute the
percentage ownership of our other stockholders.

The lack of additional capital could force us to substantially  curtail or cease
operations.  Further,  there can be no assurance that any such required capital,
if available,  will be available on attractive terms or that such terms will not
have a  significantly  dilutive effect on existing  shareholders.  The financial
statements  do  not  include  any  adjustments  that  might  result  from  these
uncertainties.

Risks Relating to Our Common Stock
----------------------------------

Our stock price is volatile.

The trading price of our common stock fluctuates widely and in the future may be
subject to similar fluctuations in response to quarter-to-quarter  variations in
the future prospects of the Company and other events or factors.

Our stock historically has been thinly traded.

Therefore,  shareholders may not be able to sell their shares freely. The volume
of trading in our common stock  historically  has been low and a limited  market
presently exists for the shares.  We have no analyst coverage of our securities.
The lack of analyst  reports about our stock may make it difficult for potential
investors to make decisions  about whether to purchase our stock and may make it
less likely that  investors  will purchase our stock.  We cannot assure you that
our trading volume will increase,  or that our historically light trading volume
or any trading volume whatsoever will be sustained in the future.  Therefore, we
cannot assure you that our shareholders will be able to sell their shares of our
common stock at the time or at the price that they desire, or at all.

Shares of our common stock being  offered for sale by selling  shareholders  are
highly speculative and involve a high degree of risk.

Only those persons able to lose their entire  investment  should  purchase these
shares. Before purchasing any of these shares, you should carefully consider the
following  factors  relating  to our  business  and  prospects.  You should also
understand that this annual report contains  "forward-looking  statements."  See
"FORWARD LOOKING STATEMENTS " section for more information.

Our common  stock is subject  to  regulations  of the  Securities  and  Exchange
Commission  (the  "Commission")   relating  to  the  market  for  penny  stocks.


Generally, "penny stock" as defined by the Penny Stock Reform Act, is any equity
security  not traded on a national  securities  exchange or on NASDAQ that has a
market price of less than $5.00 per share. The penny stock regulations generally
require that a  disclosure  schedule  explaining  the penny stock market and the
risks associated therewith be delivered to purchasers of penny stocks and impose
various sales practice requirements on broker-dealers who sell penny stocks. The
broker-dealer  must make a  suitability  determination  for each  purchaser  and
receive the purchaser's  written  agreement prior to the sale. In addition,  the
broker-dealer must make certain mandated disclosures,  including the actual sale
or purchase price and actual bid offer  quotations,  as well as the compensation
to be received by the broker-dealer.  The regulations applicable to penny stocks
may severely  affect the market  liquidity  for our common stock and could limit
your ability to sell the securities.

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<PAGE>

The sale of material amounts of our common stock by selling  shareholders  could
reduce  the price of our common  stock and  encourage  short  sales.

Sales of a  significant  number  of  shares of our  common  stock in the  public
market,  or the  perception  that such sales could occur,  could harm the market
price of the common stock.

The exercise of  outstanding  warrants may adversely  affect our stock price and
shareholders'  percentage ownership.

There are outstanding  warrants exercisable for the purchase of up to 19,132,052
shares of our  common  stock.  It should be noted that we will be  obligated  to
issue 3,252,960  shares upon execution of a valid Notice of Exercise of warrants
issued to  PacifiCorp  for funds  transferred  for exercise of warrants.  Though
technically  unissued as of the date of this annual report, the warrants for the
aforementioned  3,252,960  shares are  considered  exercised for purposes of the
numbers in this risk  disclosure.  In the future,  we may grant more warrants or
options  under stock option plans or  otherwise.  The exercise of stock  options
authorized in the future or warrants that are  presently  outstanding  or may be
issued  in the  future  will  dilute  the  percentage  ownership  of  our  other
stockholders.

Our  Board of  Directors  has the  right to issue  up to  25,000,000  shares  of
preferred stock and to determine the rights,  prices,  preferences,  privileges,
and restrictions,  including voting rights, of these shares without the approval
of our  stockholders.

Any issuance of  preferred  shares  could be used by our current  management  to
delay,  defer or  prevent a change in  management,  which may not be in the best
interests of the holders of our common stock.

The price at which our common  stock may trade is likely to be highly  volatile.

The  price  may  fluctuate  substantially  due to  factors  such as:  actual  or
anticipated fluctuations in our results of operations;  changes in or failure by
us to meet securities  analysts'  expectations;  announcements  of technological
innovations; introduction of new products by us or our competitors; the terms of
new financing arrangements which may be dilutive; and general market conditions.

ITEM 2. DESCRIPTION OF PROPERTY

Freight  Feeder  Aircraft  Corporation  is currently  providing the Company with
office space, free of charge,  at its office facilities  located at the Plaza II
Executive  Center,  Inc.  located at 125 Lincoln Avenue,  Suite 400, 125 Lincoln
Plaza, Santa Fe, New Mexico.


ITEM 3. LEGAL PROCEEDINGS

We are currently not a party to any material pending legal proceeding.

The Company did not make  adequate  provisions  for  withholding  FICA and other
taxes from employee compensation during 2005, 2006 and 2007, and anticipates the
total under-funded obligation, including estimated interest and penalties, to be
approximately  $520,000.  These  liabilities  were  assumed  by  Freight  Feeder
Aircraft Corporation as part of its Asset Purchase Agreement with the Company as
discussed  in this  filing on page 2.  There  are  possible  civil and  criminal
penalties that may be assessed  against the Company and its officers unless this
shortfall is promptly funded.


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

NONE.










                                        5

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<PAGE>
                                     PART II


ITEM 5.  MARKET FOR  COMMON  EQUITY,  RELATED  STOCKHOLDERS  MATTERS,  AND SMALL
     BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

Our common  stock is traded on the OTC Bulletin  Board under the symbol  "UITA."
The following  table sets forth the high and low bid  information  of our common
stock on the OTC  Bulletin  Board for each  quarter  during  the last two fiscal
years and the subsequent  interim period, as reported by the OTC Bulletin Board.
This information reflects inter-dealer prices, without retail mark-up, mark-down
or commission and may not represent actual transactions.

Year           Period                         High Bid          Low Bid
2005           First Quarter                    0.00              0.00
               Second Quarter                   0.00              0.00
               Third Quarter                    0.00              0.00
               Fourth Quarter                   0.00              0.00

2006           First Quarter                    0.00              0.00
               Second Quarter                   0.00              0.00
               Third Quarter                    0.00              0.00
               Fourth Quarter                   1.10              0.82

2007           First Quarter                    1.00              0.25
               Second Quarter                   0.53              0.20
               Third Quarter                    0.31              0.10
               Fourth Quarter                   0.22              0.06


As of December 31, 2007, we had approximately 666 active  stockholders of record
of our common stock pursuant to the records of our transfer agent. The number of
record  holders was  determined  from the records of our transfer agent and does
not include beneficial owners of common stock whose shares are held in the names
of various security brokers,  dealers,  and registered  clearing  agencies.  The
transfer agent of our common stock is Signature Stock Transfer, Inc.


DIVIDEND POLICY

We do not  currently  pay any  dividends on our common  stock,  and we currently
intend to  retain  any  future  earnings  for use in our  business.  Any  future
determination  as to the payment of dividends on our common stock will be at the
discretion of our Board of Directors and will depend on our earnings,  operating
and financial condition,  capital requirements and other factors deemed relevant
by our Board of Directors  including the General Corporation Law of the State of
Nevada,  which provides that dividends are only payable out of retained earnings
or if  certain  minimum  ratios of  assets to  liabilities  are  satisfied.  The
declaration  of  dividends  on our common  stock also may be  restricted  by the
provisions of credit agreements that we may enter into from time to time.

RECENT SALES OF UNREGISTERED SECURITIES

In the period ended December 31, 2007, the Company has received  $1,010,100 from
PacifiCorp  for the exercise of Warrants in 2007.  The Company,  upon receipt of
notice of from  PacifiCorp,  will  issue a total of  3,252,960  shares of common
stock to PacifiCorp for the 2006 and 2007 purchase of warrants.

In June of 2007, the Company issued 250,000 shares of restricted common stock to
its Vice President and Chief  Financial  Officer as stipulated in his employment
agreement and valued the shares at $0.15 per share.

In June of 2007, the Company issued 500,000 shares of restricted common stock to
a consulting  firm for advisory and investment  banking  services and valued the
shares at $0.15 per share.

In June of 2007, the Company  issued  100,000 shares of restricted  common stock
which were subscribed for at the price of $0.25 per share.

These  securities  that  have  been and will be issued  above  were  issued in a
private  transaction  pursuant to Section 4(2) of the Securities Act of 1933, as
amended,  (the "Securities  Act").  These convertible  securities are considered
restricted  securities  and may not be publicly  resold  unless  registered  for
resale  with  appropriate  governmental  agencies  or  unless  exempt  from  any
applicable registration requirements.

                                        6

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<PAGE>

INVESTMENT AGREEMENT WITH EUROPEAN EQUITY GROUP

The  Company  entered  into  a  Master  Financing  Agreement  (the  "Agreement")
effective   September  12,  2005  with   PacifiCorp   Funding   Partners   Trust
("PacifiCorp")  to provide equity  financing of a minimum of  $40,000,000  and a
maximum of  $80,000,000  through the exercise of warrants for the purchase of up
to 60,000,000 shares. On December 6, 2007, the Board of Directors of the Company
terminated  this  Master  Financing  Agreement  with  PacifiCorp  due to lack of
performance  as allowed  by the  Agreement  and  clawed-back  49,223,003  of the
Company's  60,584,260  shares of common stock previously issued to PacifiCorp by
the Company as part of the  Agreement.  The  49,223,003  has  subsequently  been
reduced to 40,185,397 through conversions into PacifiCorp shares by stockholders
who had outstanding loans to the Company - See Note 9 - Subsequent Events to the
financial  statements  included in this filing for a discussion  of  stockholder
advances  converted  to  stock  through  an  agreement  to  participate  in  the
PacifiCorp  Agreement.  Executive officers who contributed  19,415,740 shares to
the original  Agreement total of 80,000,000 shares received back their shares as
part of the termination of the Master  Financing  Agreement.  The 60,584,260 new
PacifiCorp  Shares issued by the Company were not valued under the provisions of
SFAS 123R  since  there is no  performance  commitment  other than to return the
shares.  The value of the above  warrants was  determined  by  management  to be
insignificant and, accordingly, no value was assigned to the warrants.

During the year ended December 31, 2007,  PacifiCorp  transferred funds totaling
$160,000  to the Company for  exercise of warrants  for the  purchase of 320,000
shares  at an  exercise  price of $.50 per  share.  The  Company  is also in the
process of  issuing  PacifiCorp  430,000  shares for  exercises  in 2006.  As of
December 31, 2007  PacifiCorp  has  acquired a total of 5,918,960  shares by the
exercise  of  3,252,960  warrants  and the  sale of  2,999,333  its  shares  for
$850,100, which shares were issued to PacifiCorp under this funding agreement as
set forth above.  PacifiCorp  made the decision to have the $850,100 come to the
Company for  production  of the  Performance  Flight Test Aircraft and since the
shares  were not  originally  valued  the  $850,100  was added to the  Company's
additional capital as these shares relate to the funding commitment.


Securities Authorized For Issuance Under Equity Compensation Plans.

At December 31, 2007, the Company does not have any Equity Compensation Plans.















                                        7

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<PAGE>

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

The following  discussion  should be read in conjunction  with our  consolidated
financial  statements  provided in this annual  report on Form  10-KSB.  Certain
statements contained herein may constitute forward-looking statements within the
meaning  of  the  Private  Securities  Litigation  Reform  Act  of  1995.  These
statements involve a number of risks, uncertainties and other factors that could
cause actual results to differ materially, as discussed more fully herein.

The  forward-looking  information  set forth in this annual  report is as of the
date of this filing,  and we undertake no duty to update this information.  More
information about potential factors that could affect our business and financial
results is  included  in the  section  entitled  "Risk  Factors"  of this annual
report.

Overview

We are a  company  with no  product  to sell,  no  revenue  stream,  significant
operating  losses  and  negative  cash flow from  operations.  The  Company  has
incurred net losses from  operations of $8,692,000 for the period from inception
to December 31, 2007.  Our ability to continue as a going  concern is subject to
continued  support of our  shareholders  and sales of stock, the vagaries of the
market for our stock and various other  factors.  There is no assurance  that we
can continue as a going concern.

Our current business plan is to focus look for potential  acquisitions or merger
partners,  strategic  partners for development of aerospace products and to wait
on the maturity of the common stock and  royalties  received by the Company from
Freight  Feeder  Aircraft  Corporation  in  conjunction  with the Asset Purchase
Agreement executed with Freight Feeder Aircraft Corporation on December 12, 2007
as discussed on page 2 and Note 6 - to the financial statements included in this
filing.

Critical Accounting Policies and Estimates

     Use of Estimates

The discussion and analysis of the financial condition and results of operations
are based on the  financial  statements,  which have been prepared in accordance
with accounting  principles  generally accepted in the United States of America.
Note 1 of the Notes describes the significant  accounting  policies essential to
the financial statements. The preparation of these financial statements requires
management to make estimates and assumptions that affect the amounts reported in
the  financial  statements  and  accompanying  notes,  some of which may require
revision in future  periods.  Actual results could differ  materially from those
estimates.

We believe the following to be critical accounting policies and estimates.  That
is,  they  are  both  important  to the  portrayal  of the  Company's  financial
condition  and results,  and they require  significant  management  judgment and
estimates about matters that are inherently  uncertain.  As a result of inherent
uncertainty,  there is a likelihood that materially  different  amounts would be
reported under different conditions or using different assumptions.  Although we
believe  that our  judgments  and  estimates  are  reasonable,  appropriate  and
correct, actual future results may differ materially from our estimates.

     Stock Based Compensation

The Company  accounts for equity  instruments  issued to employees  for services
 based on the fair  value of the equity  instruments  issued  and  accounts  for
 equity  instruments  issued to other than employees  based on the fair value of
 the  consideration  received  or the  fair  value  of the  equity  instruments,
 whichever is more reliably measurable. The determined value is recognized as an
 expense in the accompanying statements of operations.

     Contingencies

In the normal course of business,  the Company is subject to certain  claims and
legal  proceedings.  The Company records an accrued  liability for these matters
when an adverse outcome is probable and the amount of the potential liability is
reasonably estimable.  The Company does not believe that the resolution of these
matters will have a material  effect upon its  financial  condition,  results of
operations or cash flows for an interim or annual period.

     Recently Issued Accounting Pronouncements

Recently issued accounting  pronouncements  and their effect on us are discussed
in the notes to the  financial  statements  in our  December  31,  2007  audited
financial statements.

                                        8

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<PAGE>

Liquidity and Future Capital Requirements

Since  inception  we have been  primarily  funded  from  proceeds  from  private
placements.

John  Dupont has  personally  loaned the  Company or paid  Company  expenses  to
maintain   Company   operations.   See   "CERTAIN   RELATIONSHIPS   AND  RELATED
TRANSACTIONS" section below..

We do not believe that  inflation  has had a material  impact on our business or
operations.

Off-Balance Sheet Arrangements

We are not a party to any off-balance  sheet  arrangements  and do not engage in
trading activities involving non-exchange traded contracts. In addition, we have
no financial  guarantees,  debt or lease agreements or other  arrangements  that
could trigger a requirement  for an early payment or that could change the value
of our assets.

DESCRIPTION OF PROPERTY

The Company is currently being provided office space, free of charge, by Freight
Feeder  Aircraft  Corporation  at its Plaza II Executive  Center,  Inc.  offices
located at 125  Lincoln  Avenue,  Suite 400,  125 Lincoln  Plaza,  Santa Fe, New
Mexico 87121.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We believe  that all of the  transactions  set forth below were made on terms no
less  favorable  to us than could have been  obtained  from  unaffiliated  third
parties. However, it should be noted that the Company only has one director that
would be considered an  "Independent  Director" as defined by the North American
Securities  Administrators  Association,  Inc.  ("NASAA")  Statement  of  Policy
Regarding Corporate Securities Definitions,  as amended. As such, at the time of
the  following  transactions,   the  Company  lacked  sufficient   disinterested
independent  directors to ratify the  transactions as required by guidelines set
forth in the NASAA  Statement  of  Policy  Regarding  Loans  and Other  Material
Affiliated Transactions, as amended.

The  Company was formed to effect a  reorganization  (the  "Reorganization")  of
American  Utilicraft  Corporation  ("AMUC").  Upon formation,  the Company:  (1)
obtained  from John Dupont,  assignments  of patent rights for the design of the
FF-1080-300  aircraft,  the method  patent  for the  Express  Turn-Around  (ETA)
electronic  freight  tracking  system  and for the  Automated  Flat Rate  System
(AFRS); (2) entered into separate employment  agreements with John Dupont, Darby
Boland,  Thomas Dapogny and Karen  Shoemaker;  (3) entered into lease agreements
for facilities for use in its business  operations,  including a  now-terminated
sublease from AMUC of facilities  located at 554 Briscoe  Blvd.,  Lawrenceville,
Georgia (formerly AMUC  headquarters);  and (4) recognized and resolved to honor
deferred  compensation  obligations  of  AMUC  to its  officers  and  employees.
Pursuant to the terms of the  Reorganization  Agreement  the Company also issued
warrants (the "UAI Warrants")  exercisable for the purchase of 17,287,664 shares
of our common stock to holders of AMUC issued warrants (the "AMUC Warrants") for
the purchase of 17,287,664 shares of AMUC common stock.

We anticipate that all ongoing and future  affiliated  transactions will be made
or entered  into on terms that are no less  favorable  to the Company than those
that can be obtained from unaffiliated third parties.  Moreover, all ongoing and
future affiliated  transactions and any forgiveness of loans must be approved by
a majority of the independent,  disinterested  members of the Company's Board of
Directors. Edward F. Eaton is the only independent director currently serving on
our board of directors and all of the foregoing  transactions have been approved
or ratified by Mr. Eaton.

Our  working  capital  deficit  at  December  31,  2007,  was  $2,971,340.   Our
independent  auditors'  report  includes an  explanatory  paragraph  relating to
substantial  doubt as to our ability to continue as a going concern,  due to our
working capital deficit at December 31, 2007.

Historically,  we have  financed  operations  through  private  debt and  equity
financings.  In recent years, financial institutions have been unwilling to lend
to us and the  cost  of  obtaining  working  capital  from  investors  has  been
expensive.  We  principally  expect to raise funds through the sale of equity or
debt  securities.  During the year ended December 31, 2007, the Company received
net proceeds of approximately $1,010,100 from the sale of equity securities. The
Company actively  continues to pursue additional equity or debt financings,  but
cannot provide any assurance that it will be successful. If we are unable to pay
our  debt  as it  becomes  due and are  unable  to  obtain  financing  on  terms
acceptable to us, or at all, we will not be able to accomplish any or all of our
initiatives  and will be forced to consider  steps that would protect our assets
against our creditors.







                                        9

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<PAGE>

ITEM 7. FINANCIAL STATEMENTS

The Financial  Statements  and Financial  Statement  Schedule filed as a part of
This  Annual  Report  on Form  10-KSB  are  listed  on the  Index  to  Financial
Statements on page 22.


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

None.


ITEM 8A.  CONTROLS AND PROCEDURES

As required by the  Securities  Exchange Act of 1934 (the  "Exchange  Act"),  we
carried out an  evaluation of the  effectiveness  of the design and operation of
our disclosure  controls and procedures as of December 31, 2007,  being the date
of our most recently  completed fiscal year end. This evaluation was carried out
under the supervision and with the  participation of our Chief Executive Officer
and Chief Financial  Officer.  Based upon that  evaluation,  our Chief Executive
Officer and Chief Financial Officer  concluded that our disclosure  controls and
procedures are effective to ensure that the information required to be disclosed
by us in the reports  that we file or submit under the Exchange Act is recorded,
processed,  summarized  and reported  within the time  periods  specified by the
rules and forms of the Securities and Exchange Commission.

Disclosure  controls and procedures are controls and other  procedures  that are
designed to ensure that  information  required to be disclosed our reports filed
or  submitted  under the Exchange Act is  recorded,  processed,  summarized  and
reported,  within the time  periods  specified  in the  Securities  and Exchange
Commission's  rules and  forms.  Disclosure  controls  and  procedures  include,
without limitation,  controls and procedures designed to ensure that information
required  to be  disclosed  in our  reports  filed  under  the  Exchange  Act is
accumulated  and  communicated  to  management,  including  our Chief  Executive
Officer  and  Chief  Financial  Officer,  to allow  timely  decisions  regarding
required disclosure.

This  annual  report does not include an  attestation  report of our  registered
public  accounting  firm regarding  internal  control over financial  reporting.
Management's  report was not subject to  attestation  by our  registered  public
accounting  firm,  pursuant to temporary  rules of the  Securities  and Exchange
Commission  that permit us to provide  only  management's  report in this annual
report.

During our most  recently  completed  fiscal year ended  December 31, 2007,  the
Company made the following  changes (1) hired a Chief Financial  Officer who has
SEC reporting  experience,  (2) instituted  use of SEC disclosure  checklist for
each  financial  report,  and (3) completed the  centralizing  of its accounting
records in its New Mexico offices.

The term  "internal  control over  financial  reporting" is defined as a process
designed by, or under the supervision of, the registrant's  principal  executive
and principal financial officers,  or persons performing similar functions,  and
effected by the registrant's board of directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial  statements for external purposes in accordance
with generally  accepted  accounting  principles and includes those policies and
procedures that:

      (1)   Pertain to the  maintenance  of records  that in  reasonable  detail
            accurately and fairly reflect the  transactions  and dispositions of
            the assets of the registrant;

      (2)   Provide  reasonable  assurance  that  transactions  are  recorded as
            necessary  to  permit   preparation   of  financial   statements  in
            accordance with generally accepted accounting  principles,  and that
            receipts and  expenditures  of the registrant are being made only in
            accordance  with  authorizations  of management and directors of the
            registrant; and

      (3)   Provide  reasonable   assurance   regarding   prevention  or  timely
            detection of  unauthorized  acquisition,  use or  disposition of the
            registrant's  assets  that  could  have  a  material  effect  on the
            financial statements.







                                       10

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<PAGE>

Our  management,  including  our Chief  Executive  Officer  and Chief  Financial
Officer,  does not expect that our disclosure  controls or our internal controls
will  prevent  all error and all  fraud.  A control  system,  no matter how well
conceived and operated,  can provide only  reasonable,  not absolute,  assurance
that the  objectives  of the control  system are met.  Further,  the design of a
control  system must reflect the fact that there are resource  constraints,  and
the benefits of controls must be considered relative to their costs.  Because of
the inherent  limitations in all control systems,  no evaluation of controls can
provide  absolute  assurance that all control issues and instances of fraud,  if
any, within our company have been detected.  These inherent  limitations include
the  realities  that  judgments  in  decision-making  can  be  faulty  and  that
breakdowns  can occur  because  of  simple  errors  or  mistakes.  Additionally,
controls  can be  circumvented  by the  individual  acts  of  some  persons,  by
collusion of two or more people or by  management  override of the control.  The
design of any system of controls also is partially based on certain  assumptions
about the likelihood of future events,  and we cannot assure you that any design
will  succeed  in  achieving  its  stated  goals  under  all  potential   future
conditions.  Over time,  controls  may become  inadequate  because of changes in
conditions,  or the degree of  compliance  with the policies or  procedures  may
deteriorate.  Because of the inherent  limitations in a  cost-effective  control
system, misstatements due to error or fraud may occur and not be detected.



ITEM 8B. OTHER INFORMATION

None.


                                                               PART III

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

The following table sets forth information  concerning our directors,  executive
officers,  and certain of our  significant  employees  as of March 1, 2008.  Our
Board of Directors consists of a total of three members who serve terms of three
years and hold office until death,  resignation  or until removed from office in
accordance with our Bylaws. Our officers are appointed by our Board of Directors
and hold office until their  successors  are chosen and  qualified or removed by
our Board of Directors.
--------------------------------------------------------------------------------
                                                                     Term as
Name                 Age      Position                               Director
                                                                     Expires
--------------------------------------------------------------------------------
John Dupont          60      Chief Executive Officer,                 2008
                             President, and Director
--------------------------------------------------------------------------------
R. Darby Boland      55      Vice President, General Manger           2008
                             and Director
--------------------------------------------------------------------------------
Edward F. Eaton      58      Director                                 2008
--------------------------------------------------------------------------------
Randy Moseley        60      Vice President, Chief Financial          2008
                             Officer, Director
--------------------------------------------------------------------------------
Scott Jacox          47      Vice President of Marketing               N/A
--------------------------------------------------------------------------------

All directors hold office until the next annual meeting of our  shareholders and
until their  successors  have been elected and qualified.  Officers serve at the
pleasure of the board of directors.  There are no family relationships among any
of our  directors,  executive  officers,  or persons  nominated or chosen as our
directors or executive officers.
Business Experience

John Dupont has been a director and President and Chief Executive Officer of our
Company  since  inception,  and  also  served  American  Utilicraft  Corporation
("AMUC")  as a director  and  President  and Chief  Executive  Officer  from its
inception  in 1990 to March 7,  2006.  From  1984 to 1989,  Mr.  Dupont  was the
President  and  CEO of  Skytrader  Corporation,  an  aeronautical  research  and
development firm which he founded in 1984, and where he designed the UV-23 Scout
STOL  (Skytrader).  From 1989 through  July 1990,  Mr.  Dupont was  President of
Advanced Lift  Research,  Inc.  where he completed a design  feasibility  study,
market review and operational  competitive analysis of a new 17,000 lb. aircraft
design, the UC-219, specifically for the worldwide combination passenger/freight
market.

R. Darby Boland has been a director,  the Vice President and General  Manager of
our Company since inception,  and also currently serves AMUC as a director,  and
Vice President.  From 1975 to 1978, he was a Design and Logistics  Engineer with
McDonnell  Douglas  Corporation in connection  with the F-4,  F-15,  Harpoon and
Cruise Missile  programs.  From 1978 to 1989, he was the Executive  Manager with
Southwestern  Bell  Corporation,  where  he  was  responsible  for  the  design,
implementation  and marketing  technical support of fiber-optic  network systems
for long distance and cellular service providing  companies.  From 1989 to 1992,
he  was  the  Director  of  Corporate  Development  of  Restore  Industries,   a
telecommunications  service equipment provider.  In 1988, Mr. Boland founded B&H
Machine,  Inc., a design  manufacturer  of metal cutting die products,  where he
served as President and Chief  Executive  Officer,  and financed the sale of the
company in 1996.  After 1996, Mr. Boland  assisted AMUC with the  development of
their program until his recent  appointment to Vice  President,  General Manager
and Director of AMUC.  Mr. Boland is a graduate of St. Louis  University  with a
B.S. degree in Aeronautical Engineering Management.

                                       11

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<PAGE>

Edward F. Eaton has been a director of the  Company  since  inception,  and also
currently  serves AMUC as a director.  He is an attorney  with  Connolly,  Bove,
Lodge & Hutz,  LLP of  Wilmington,  Delaware,  where he has been a partner since
1991.  He practices in the areas of  litigation,  criminal law, real estate law,
and business and commercial law, and has been employed with Connolly, Bove since
1986.  Mr. Eaton  received his J.D. from Temple  University  and his  Bachelor's
degree from Cornell University.

Randy  Moseley  was  employed  by the Company on March 16, 2007 to serve as Vice
President  and  Chief  Financial  Officer  and in June 2007 was  elected  to the
Company's  Board of Directors.  Mr.  Moseley is also a director,  Executive Vice
President and Chief Financial Officer of Urban Television Network Corp. (OTC BB:
UATV),  a  network  of  independent  broadcast  television  stations  and  cable
operators;  he has served Urban  Television in various offices and as a director
since 2001. In 2005 and 2006, Mr. Moseley served as Executive Vice President and
the Chief  Financial  Officer for The Furia  Organization,  Inc. (OTC BB: FURA).
From 1999 to 2001,  Mr.  Moseley  served as Executive  Vice  President and Chief
Financial  Officer for Tensor  Information  Systems,  Inc., a private Fort Worth
company in the business of developing custom software applications.  From1993 to
1999, Mr. Moseley served in the same capacity for American  Independent  Network
Corporation, a Fort Worth based public company that provided generic programming
to independent  television stations across the country. Mr. Moseley, a Certified
Public Accountant, earned a BBA degree from Southern Methodist University. He is
a member of the Texas Society of CPAs and the AICPA.

Scott  Jacox  was  employed  by the  Company  on August 1, 2005 to serve as Vice
President  of  Marketing.  Mr.  Jacox  received a  Bachelors  of Arts  degree in
Management  Information Systems and a Minor in Accounting from the University of
Utah in 1985.  From 1986 to 1987 Mr.  Jacox  worked as a charter and cargo pilot
for Sunwest  Aviation.  In 1987 he began working as a freight delivery pilot for
Alpine Air Express.  In 1990, Mr. Jacox worked as an overnight and express cargo
delivery  Pilot for Corporate Air. In 1992 he worked as a Captain for Alpine Air
Express where he logged over 15,000 flight hours and personally  carried over 20
million pounds of cargo in the overnight  freight delivery system  contracted to
Federal Express,  UPS,  Airborne  Express,  and the USPS. In 1998 he served as a
Check Airmen and instructor pilot responsible for the evaluation and instruction
for all  Alpine  Air  Captains  and First  Officers  in the  BE-99  and  BE-1900
aircraft. In 1999 he served as a Chief Pilot for Alpine Air Express where he was
instrumental  in the  implementation  of an  innovative  palm  pilot  weight and
balance system for all Alpine  Aircraft.  In 2003 Mr. Jacox acted as Senior Vice
President at Alpine Air Express where he was  responsible for the acquisition of
new  contracts as well as the bidding and  successful  awarding of a $50,000,000
contract  for the  Hawaiian  Islands for the USPS.  As Senior Vice  President at
Alpine Air Express he was also responsible for the start up, safe and profitable
operations for the Honolulu based 14 aircraft operation.

COMMITTEES

Audit Committee Financial Expert

The Securities and Exchange  Commission has adopted rules  implementing  Section
407 of the  Sarbanes-Oxley  Act of 2002 requiring  public  companies to disclose
information  about "audit committee  financial  experts." As of the date of this
Annual report,  we do not have a standing Audit Committee.  The functions of the
Audit  Committee  are  currently   assumed  by  our  full  Board  of  Directors.
Additionally,  we do not have a member of our Board of Directors  that qualifies
as an "audit  committee  financial  expert." For that reason,  we do not have an
audit committee financial expert.

CODE OF ETHICS

We have  adopted a Code of Business  Conduct and Ethics which is designed to set
the  standards of business  conduct and ethics and help  directors and employees
resolve  ethical  issues.  The Code  applies  to all  directors  and  employees,
including  the Chief  Executive  Officer and Chief  Financial  Officer and other
persons performing similar functions.  The Code covers topics including, but not
limited to, conflicts of interest,  confidentiality of information, fair dealing
with customers,  supplies and competitors,  and compliance with applicable laws,
rules and  regulations.  The  purpose  of the Code is to ensure to the  greatest
possible  extent that our  business is  conducted  in a  consistently  legal and
ethical manner.  Upon written request to the Company,  we will provide a copy of
the Code free of charge.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires our
executive  officers and directors,  and persons who own more than ten percent of
our common stock,  to file with the Securities and Exchange  Commission  initial
reports of ownership,  and reports of changes in ownership,  of our common stock
and other equity securities of ours.  Executive officers,  directors and greater
than ten percent shareholders are required by SEC regulations to furnish us with
copies of all Section  16(a)  reports that they file.  To our  knowledge,  based
solely  on a  review  of  the  copies  of  the  reports  furnished  to  us,  and
representations  from our executive officers and directors that no other reports
were  required  during the fiscal year ended  December 31, 2007,  we believe our
executive officers,  directors and greater than ten percent  shareholders of our
common stock, complied with all Section 16(a) filing requirements  applicable to
them.


                                       12

--------------------------------------------------------------------------------


<PAGE>
<TABLE>
<CAPTION>

ITEM 10.   EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

The  following   Summary   Compensation   Table  sets  forth  the  total  annual
compensation  paid or accrued by us to or for the account of the Chief Executive
Officer and each other executive officer whose total cash  compensation  exceeds
$100,000:

                                                      SUMMARY COMPENSATION TABLE
                                            Annual Compensation                         Long-Term Compensation
                                                                                         Awards
Name and Principal     Year     Salary($)         Bonus($)      Other        Restricted     Securities    Payout(s)       All Other
 Position                                                       Annual          Stock       Underlying       LTIP       Compensation
                                                             Compensation     Award(s)       Options/       Payouts          ($)
                                                                  ($)            ($)         SARs (#)         ($)
<S>                     <C>       <C>                           <C>                          <C>                          <C>

John Dupont,            2005      200,000(1)        0            0              0              0             0         1,085,678(2)
President and CEO       2006      200,000(3)        0            0              0              0             0                 0
                        2007      300,000(4)        0            0              0              0             0                 0

R. Darby Boland,        2005      150,000(5)        0            0              0              0             0           879,668(6)
Vice President,         2006      150,000(7)        0            0              0              0             0                 0
   GM,
Secretary               2007      150,000(8)        0            0              0              0             0                 0

Randy Moseley, VP
CFO                     2007      138,542(9)        0            0              0              0             0            37,500(10)

Thomas A. Dapogny,      2005      150,000(11)       0            0              0              0             0           208,442(12)
VP Operations (20)      2006      150,000(13)       0            0              0              0             0                 0
                        2007       75,000(14)       0            0              0              0             0                 0

Karen Shoemaker,        2005      125,000(15)       0            0              0              0             0           393,814(16)
Controller (20)         2006      125,000(17)       0            0              0              0             0                 0
                        2007       37,500(18)       0            0              0              0             0                 0

Scott Jacox,            2005       15,385           0            0              0              0             0                 0
VP, Marketing           2006      100,000           0            0              0              0             0                 0
                        2007      100,000(19)       0            0              0              0             0                 0

</TABLE>

--------------------------------------------------------------------------------



(1)  This amount includes $113,846 paid and $86,154 accrued by UAI but unpaid.

(2)  This amount includes $385,678 of AMUC deferred compensation assumed by UAI,
     and $700,000 in value for issuance of 10,000,000 shares of our common stock
     to Mr. Dupont.

(3)  This amount includes $184,615 paid and $15,385 accrued but unpaid.

(4)  This amount includes $190,283 paid and $109,717 accrued but unpaid.

(5)  This amount includes $103,500 paid and $46,500 accrued by UAI but unpaid.

(6)  This amount includes $179,668 of AMUC deferred compensation assumed by UAI,
     and $700,000 in value for issuance of 10,000,000 shares of our common stock
     to Mr. Boland.

(7)  This amount includes $129,808 paid and $20,192 accrued but unpaid.

(8)  This amount includes $52,692 paid and $97,308 accrued but unpaid.

(9)  This amount includes $57,115 paid and $81,427 accrued but unpaid.

(10) Represents  250,000  shares of  restricted  common stock valued at $.15 per
     share.

(11) This amount includes $78,769 paid and $71,231 accrued by UAI but unpaid.

(12) This reflects $208,442 of AMUC deferred compensation assumed by UAI.

(13) This amount includes $122,885 paid and $27,115 accrued but unpaid.

(14) This amount includes $13,847 paid and $61,153 accrued but unpaid.



                                       13

--------------------------------------------------------------------------------





<PAGE>

(15) This amount includes $7,488 paid and $117,513 accrued by UAI but unpaid.

(16) This reflects $393,814 of AMUC deferred compensation assumed by UAI.

(17) This amount includes $93,750 paid and $31,250 accrued but unpaid.

(18) This amount includes $37,500 accrued but unpaid.

(19) This amount includes $58,462 paid and $41,538 accrued but unpaid.

(20) No longer employed by the Company at December 31, 2007.

Option/SAR Grants in Last Fiscal Year

No Options/SARs were granted in the last fiscal year to any executive officers.

Compensation of Directors

Our Bylaws authorize our Board of Directors to fix the compensation of directors
for their services and allow the  reimbursement  of actual expenses of directors
for their  attendance  at each  meeting  of our Board of  Directors.  10,000,000
shares of our common stock was issued to John Dupont for  services  rendered and
his agreement to serve on the Board of Directors,  and 10,000,000  shares of our
common stock was issued to Darby Boland for services  rendered and his agreement
to serve on the Board of Directors.  No other  compensation has been paid to our
directors since inception of the company for any services  provided as director,
committee participation or special assignments.

Employment Agreements

The  following  descriptions  summarize  some of  material  terms of the current
employment  agreements  between  the Company and our  executive  officers  named
above,  all of which  have  been  filed in their  entirety  as  exhibits  to our
registration statement, and are qualified by reference to such agreements.  As a
result  of  the  December  12,  2007  agreement  with  Freight  Feeder  Aircraft
Corporation  for the purchase of the Company's  assets and assumption of certain
liabilities,  including the deferred  compensation,  future  salaries and future
royalty  agreements  of certain of the  Company's  officers and  employees,  the
following  officers have agreed that the base salary portion of their employment
agreements with the Company will be suspended.

John Dupont
-----------

We entered into an Employment Agreement - John Dupont (referred to herein as the
"Dupont Employment  Agreement") with Mr. Dupont on December 10, 2004 to serve as
our President and Chief Executive Officer.  The Dupont Employment  Agreement was
amended by a First Amendment to Employment  Agreement -- John J. Dupont pursuant
to  which a  provision  providing  for a loan to Mr.  Dupont  was  deleted.  The
agreement  is for five (5) years,  with a base  salary of two  hundred  thousand
dollars  ($200,000)  per annum,  which shall be  adjusted  to two hundred  fifty
thousand  dollars  ($250,000)  per annum in 2006 and to three  hundred  thousand
dollars  ($300,000) per annum in 2007 (See disclosure  about  suspension of base
salary  above).  We have also agreed to pay r. Dupont a bonus  amounting to four
percent (4%) of the net profits of the Company each fiscal year and  commissions
equaling  four percent  (4%) of the gross sale price of aircraft  and  equipment
sold by the Company.  After the Company obtains major start-up financing,  it is
obligated to pay Mr. Dupont's legal  representatives  $5,000 in the event of his
death during the term of the  agreement.  Mr.  Dupont is not obligated to devote
his full time and  efforts  to the  Company  until  such time as major  start-up
financing is obtained.  The employment  agreement  requires Mr. Dupont to assign
and grant the Company,  subject to certain limitations,  all rights necessary to
manufacture the FF-1080-300 aircraft and the ETA aircraft freight feeder system.
In the event the employment  agreement expires without renewal or is terminated,
the  Company  shall be  obligated  to pay Mr.  Dupont  royalties  equal to three
percent  (3%) of the gross sales on the  aircraft  and/or  systems  delivered to
purchasers    after    the    termination    date.    If   the    aforementioned
termination/non-renewal  royalty provisions are triggered,  such royalties would
be payable in addition to three  percent (3%)  royalties  due on the first 2000,
aircraft sold by UAI, as provided for in our separate Royalty Agreement with Mr.
Dupont.  The  employment  agreement  contains   non-disclosure   provisions  and
prohibits Mr. Dupont from engaging in business  competitive with the Company for
a period of 3 years  after  termination  of the  agreement.  Mr.  Dupont and the
Company have the right to terminate the agreement upon 180 days notice, however,
if the Company exercises its right, it must pay Mr. Dupont in lump sum, ten (10)
times the  average  amount  of annual  salary  payable,  and ten (10)  times the
average  amount of bonus payments  payable prior to the date of termination  (or
projected).  In the event of a change in control, if Mr. Dupont is terminated he
will be  entitled  to a lump sum  payment of ten (10) times the amount of annual
salary  payable  prior to the change in control,  and ten (10) times the average
amount of bonus payments  payable (or projected),  allowance of surrender of all
outstanding stock options and employee benefits for a period of two (2) years.




                                       14
--------------------------------------------------------------------------------






<PAGE>

R. Darby Boland
---------------

We entered into an  Employment  Agreement - R. Darby  Boland with Mr.  Boland on
December  10,  2004 to serve as our Vice  President,  and General  Manager.  The
agreement  is for a term of three (3) years,  with a base  salary of one hundred
fifty thousand dollars ($150,000) per annum. Per the employment  agreement,  Mr.
Boland's base salary is to be increased upon achievement of FAA certification to
two hundred  thousand  dollars  ($200,000)  per annum,  and to two hundred fifty
thousand  dollars  ($250,000)  per annum  once the  Company  has  delivered  its
twenty-fourth production aircraft (See above disclosure about suspension of base
salary). The foregoing salary is not payable by the Company until major start-up
financing (approximately  $20,000,000) has been achieved. We have also agreed to
pay Mr.  Boland a bonus  amounting  to .125% of sales of certain  aircraft,  the
responsibility  for which has been  assigned to Mr.  Boland by the President and
CEO. After the Company obtains major start-up financing,  it is obligated to pay
Mr. Boland's legal  representatives  $5,000 in the event of his death during the
term  of  the  agreement.   The  employment  agreement  contains   nondisclosure
provisions and prohibits Mr. Boland from engaging in business  competitive  with
the Company for a period of 3 years after  termination of the  agreement.  After
major  financing has been achieved,  Mr. Boland or the Company have the right to
terminate the agreement upon 180 days notice,  however, if the Company exercises
its right  without  cause,  we must pay Mr. Boland in lump sum two (2) times his
average  annual  salary.  In the event of a change in control,  if Mr. Boland is
terminated  he will be  entitled  to a lump sum  payment  of ten (10)  times the
amount of  annual  salary,  allowance  of  surrender  of all  outstanding  stock
options, and employee benefits for a period of two (2) years.

Randy Moseley
-------------

We entered into an  Employment  Agreement -- Randy  Moseley with Mr.  Moseley on
March 16, 2007 to serve as our Vice President,  and Chief Financial Officer. The
agreement  is for a term of five (5) years,  with a base  salary of one  hundred
seventy  five  thousand  dollars   ($175,000)  per  annum.  Per  the  employment
agreement,  Mr. Moseley's base salary is to be increased upon achievement of FAA
certification to two hundred  thousand dollars  ($200,000) per annum, and to two
hundred  fifty  thousand  dollars  ($250,000)  per annum  once the  Company  has
delivered  its  thirty-sixth  production  aircraft (See above  disclosure  about
suspension  of base  salary).  We have also  agreed  to pay Mr.  Moseley a bonus
amounting to .25% of sales of aircraft  sales.  After the Company  obtains major
start-up  financing,  it is obligated to pay Mr. Boland's legal  representatives
$5,000  in the  event  of his  death  during  the  term  of the  agreement.  The
employment agreement contains nondisclosure provisions and prohibits Mr. Moseley
from engaging in business  competitive  with the Company for a period of 3 years
after termination of the agreement. After major financing has been achieved, Mr.
Moseley or the Company have the right to terminate the  agreement  upon 180 days
notice,  however,  if the Company exercises its right without cause, we must pay
Mr. Moseley in lump sum two (2) times his average annual salary. In the event of
a change in control,  if Mr. Moseley is terminated he will be entitled to a lump
sum  payment  of ten (10)  times  the  amount  of annual  salary,  allowance  of
surrender of all outstanding  stock options,  and employee benefits for a period
of two (2) years.

Scott Jacox
-----------

We entered into an Employment  Agreement -- Scott Jacox with Mr. Jacox on August
1, 2005 to serve as our Vice  President of Marketing.  The agreement  expires on
December 10, 2007 and provides for a base salary of one hundred thousand dollars
($100,000)  per  annum.  Mr.  Jacox's  base  salary  is  to  be  increased  upon
achievement of FAA  certification  to one hundred  twenty five thousand  dollars
($125,000) per annum, and to one hundred fifty thousand  dollars  ($150,000) per
annum once the Company has delivered its twenty-fourth  production aircraft (See
above disclosure  about  suspension of base salary).  We have also agreed to pay
Mr.  Jacox a bonus  amounting  to  .125%  of  sales  of  certain  aircraft,  the
responsibility  for which has been  assigned to Mr. Jacox by the  President  and
CEO. After the Company obtains major start-up financing,  it is obligated to pay
Mr.  Jacox's legal  representatives  $5,000 in the event of his death during the
term of the agreement.  The employment agreement contains provisions prohibiting
disclosure of proprietary  information  and prohibits Mr. Jacox from engaging in
business  competitive with the company for a period of 3 years after termination
of the  agreement.  After major  financing has been  achieved,  Mr. Jacox or the
Company have the right to terminate the agreement upon 180 days notice, however,
if the Company  exercises its right without cause, we must pay Mr. Jacox in lump
sum two (2)  times  his  average  annual  salary.  In the  event of a change  in
control, if Mr. Jacox is terminated he will be entitled to a lump sum payment of
ten (10)  times the  amount of annual  salary,  allowance  of  surrender  of all
outstanding stock options, and employee benefits for a period of two (2) years.





                                       15

--------------------------------------------------------------------------------




<PAGE>
<TABLE>
<CAPTION>

ITEM 11.  SECURITIES  OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

The following table sets forth information as of March 17, 2008, relating to the
ownership of our common and preferred  stock,  by (i) each person known by us to
be the beneficial  owner of more than five percent of the outstanding  shares of
each class of our capital stock, (ii) each of our directors and nominees,  (iii)
each of our named executive  officers and (iv) all of our executive officers and
directors as a group.  Except as may be indicated in the  footnotes to the table
and subject to  applicable  community  property  laws,  each person has the sole
voting and investment power with respect to the shares owned.
---------------------------------------------------------------------------------------------------------------------
                             Name and Address of                    Amount and Nature of
    Title of Class            Beneficial Owner                      Beneficial Owner(1)          Percent of Class(2)
---------------------------------------------------------------------------------------------------------------------
<S>                        <C>                                      <C>                          <C>
Common Stock As a Group   Officers and Directors                          53,329,564                      29.7%
                          7339 Paseo Del Volcan
                          Albuquerque, New Mexico 87121
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
As Individuals            John Dupont                                     30,010,048(3)                   16.7%
                          7339 Paseo Del Volcan
                          Albuquerque, New Mexico 87121
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
                          R. Darby Boland                                 22,110,790(4)                   12.3%
                          7339 Paseo Del Volcan
                          Albuquerque, New Mexico 87121
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
                          Edward F. Eaton                                    958,726(5)                    0.5%
                          7339 Paseo Del Volcan
                          Albuquerque, New Mexico 87121
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
                          Scott Jacox                                              0                         0%
                           7339 Paseo Del Volcan
                           Albuquerque, New Mexico 87121
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
                          Randy Moseley                                      250,000                        .1%
                          7339 Paseo Del Volcan
                          Albuquerque, New Mexico  87121
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
                          Patricia Parsons                                10,348,169(6)                    5.8%
                          2820 Sugarloaf Club Drive
                          Duluth, Georgia 30097
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
                          Douglas E Smith                                 15,933,516(7)                    8.9%
                          46 Delegal
                          Savannah, Georgia 31411
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
                          Richard Trolard                                 12,128,970(8)                    6.8%
                          6 Emerald Terrace #1
                          Swansea, Illinois 62226
-------------------------------------------------------------------------------------------------------------------
</TABLE>


(1)  Under Rule 13d-3 under the Exchange Act, certain shares may be deemed to be
     beneficially owned by more than one person (if, for example,  persons share
     the power to vote or the power to  dispose  of the  shares).  In  addition,
     shares  are deemed to be  beneficially  owned by a person if the person has
     the right to acquire the shares (for  example,  upon exercise of an option)
     within  60 days of the date as of which the  information  is  provided.  In
     computing  the  percentage  ownership  of any person,  the amount of shares
     outstanding is deemed to include the amount of shares beneficially owned by
     that person (and only that person) by reason of these  acquisition  rights.
     As a result, the percentage of outstanding shares of any person as shown in
     this table does not necessarily  reflect the person's actual ownership with
     respect to the number of shares of our common stock actually outstanding at
     December 31,  2007.  As of December 31,  2007,  we had  179,493,552  common
     shares, $.0001 par value, outstanding.



                                       16

--------------------------------------------------------------------------------


<PAGE>

(2)  The percentage is based on 179,493,552  shares of common stock  outstanding
     as of December 31, 2007.

(3)  Includes  exercisable  warrants  for the  purchase of  5,906,312  shares of
     common stock.

(4)  Includes  exercisable warrants for the purchase of 735,000 shares of common
     stock.

(5)  Includes  exercisable warrants for the purchase of 756,462 shares of common
     stock.

(6)  Includes  exercisable  warrants  for the  purchase of  1,200,000  shares of
     common stock.

(7)  Includes  exercisable  warrants  for the  purchase of  3,726,000  shares of
     common  stock.  28,042  shares are held in the name of "Smith Family Trust,
     Douglas E. Smith, TTEE."

(8)  Includes  exercisable warrants for the purchase of 250,000 shares of common
     stock.

There are no  arrangements  the  operation  of which would result in a change in
control of Utilicraft Aerospace Industries, Inc.


CHANGE IN CONTROL

We are not aware of any arrangement  that might result in a change in control in
the future.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There were no transactions with related persons,  promoters,  or control persons
that required disclosure during the period covered by this report.










                                       17

--------------------------------------------------------------------------------




<PAGE>

ITEM 13. EXHIBITS, LISTS and REPORTS on FORM 8-K

  (a)  EXHIBITS
Exhibit No.                 Description of Document
------------   -----------------------------------------------------------------

2.1            Reorganization Agreement

3.1            Articles of Incorporation of the Company filed December 10, 2004.

3.2            Certificate of Amendment to Articles of Incorporation  for Nevada
               Profit Corporations filed July 1, 2005

3.3            Bylaws of the Company adopted December 9, 2004.

4.1            $2,000,000  Private  Placement  Memorandum of  Understanding  and
               Subscription Agreement dated January 19, 2005

4.2            Private  Placement Loan December 2004 Memorandum of Understanding
               (John Scott) dated December 16, 2004

4.3            Private  Placement Loan December 2004 Memorandum of Understanding
               (Marion Nicastro) dated December 15, 2004

4.4            Private  Placement Loan December 2004 Memorandum of Understanding
               (James P McGowen) dated December 14, 2004

4.5            Private  Placement Loan December 2004 Memorandum of Understanding
               (Nathan L. Graves) dated December 14, 2004

5.1            Opinion on Legality dated October 30, 2006

10.1           Employment Agreement -- John J. Dupont dated December 10, 2004

10.2           Employment Agreement -- R. Darby Boland dated December 10, 2004

10.3           Employment Agreement --Thomas A. Dapogny dated December 10, 2004

10.4           Employment Agreement -- Karen Shoemaker dated December 10, 2004

10.5           Employment Agreement -- Scott Jacox dated August 1, 2005

10.6           Employment Agreement -- Ruben Fragoso dated August 1, 2005

10.7           Assignment dated December 10, 2004

10.8           Assignment 1 dated December 10, 2004

10.9           Assignment 2 dated December 10, 2004

10.10          Royalty Agreement dated December 10, 2004

10.11          Purchase Agreement Dated March 18, 2005, An Aircraft Sub-Assembly
               Manufacturing  Agreement Between Utilicraft Aerospace Industries,
               Inc. and Metalcraft Technologies, Inc.

10.12          Double  Eagle  II  Airport  Ground  Lease,  Utilicraft  Aerospace
               Industries, Inc.

10.13          Double  Eagle  II  Airport  Hangar  Lease,  Utilicraft  Aerospace
               Industries, Inc.



                                       18



<PAGE>

10.14          Sublease  Agreement  between  American   Utilicraft   Corporation
               (lessor) and Utilicraft Aerospace Industries, Inc. (lessee) dated
               March 28, 2005.

10.15          Aircraft Lease Agreement dated July 1, 2005

10.16          Utilicraft   Aerospace   Industries,   Inc.  Purchase  Order  No.
               AMI-03-05-SOW-2 dated March 25, 2005

10.17          Master Financing  Agreement Between  PacifiCorp  Funding Partners
               Trust and Utilicraft Aerospace  Industries,  Inc. dated effective
               as of May 6, 2005

10.18          Amended Master Financing  Agreement  Between  PacifiCorp  Funding
               Partners Trust and Utilicraft  Aerospace  Industries,  Inc. dated
               effective as of September 12, 2005

10.19          Lease Agreement between Utilicraft Aerospace Industries, Inc. and
               Plaza II Executive Center, Inc. dated July 25, 2005

10.20          First  Amendment to Employment  Agreement -- John J. Dupont dated
               February 22, 2006

10.21          Utilicraft   Aerospace   Industries,   Inc.  Purchase  Order  No.
               D3-07-05-SOW-1 dated July 25. 2005

10.22          Letter  of  Intent  to  Purchase  100  (One-Hundred)  FF-1080-300
               Aircraft  between  Benin  Airlines  SA and  Utilicraft  Aerospace
               Industries, Inc. dated December 2, 2005

10.24          First  Amendment  to the Double  Eagle II Airport  Hangar  Lease,
               Utilicraft Aerospace Industries, Inc.

10.25          Loan Agreement dated January 15, 2006

10.26          Loan Memorandum dated March 31, 2006

10.27          Amendment to Lease Agreement between Plaza II Executive Center as
               Lessor and Utilicraft Aerospace Industries,  Inc. as Lessee dated
               August 1, 2006

10.28          Employment Agreement -- Randy Moseley dated March 16, 2007

10.29          Agreement with Freight Feeder  Aircraft  Corporation for purchase
               of Utilicraft assets.

31.1           Certification by Chief Executive  Officer pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002 *

31.2           Certification by Chief Financial  Officer pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002 *

32.1           Certification  by Chief Executive  Officer  pursuant to 18 U.S.C.
               Section  1350,  as  adopted   pursuant  to  Section  906  of  the
               Sarbanes-Oxley Act of 2002 *

32.2           Certification  by Chief Financial  Officer  pursuant to 18 U.S.C.
               Section  1350,  as  adopted   pursuant  to  Section  906  of  the
               Sarbanes-Oxley Act of 2002 *

--------------------------------------------------------------------------------


*     Filed herewith

         (b)  Reports on Form 8-K.

         On November 12, 2007, we filed a Form 8-K  announcing  the entry into a
         material definitive agreement with CapNet Securities, Inc.

         On December 2, 2007, we filed a Form 8-K announcing the  termination of
         a material definitive agreement with PacifiCorp Partners Trust

         On December 12, 2007,  we filed a Form 8-K  announcing  the sale of the
         Company's assets to Freight Feeder Aircraft Corporation.

         On February 29, 2008, we filed a Form 8-K/A setting forth the pro-forma
         information  relating  to the sale of the  Company's  assets to Freight
         Feeder  Aircraft  Corporation  announced  in the December 12, 2007 Form
         8-K.


                                       19




<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES

The Board of Directors  approved the  engagement of The Hall Group,  CPAs as our
independent auditors for the year ended December 31, 2007.

AUDIT FEES

The  aggregate  fees billed by The Hall Group,  CPAs for the audit and review of
our annual  financial  statements and services that are normally  provided by an
accountant in connection  with statutory and  regulatory  filings or engagements
for the fiscal years ended December 31, 2007 were approximately $14,000.

The  aggregate  fees  billed by Turner,  Stone & Company,  LLP for the audit and
review  of our  annual  financial  statements  and  services  that are  normally
provided by an accountant in connection with statutory and regulatory filings or
engagements  for the fiscal  years ended  December  31, 2006 were  approximately
$22,000.

AUDIT-RELATED FEES

The  aggregate  fees billed by The Hall Group,  CPAs for  assurance  and related
services  rendered by The Hall Group,  CPAs that are  reasonably  related to the
performance  of the audit or review of our financial  statements  for the fiscal
years ended December 31, 2007 were approximately $9,000.

The  aggregate  fees billed by Turner,  Stone & Company,  LLP for  assurance and
related services  rendered by Turner,  Stone & Company,  LLP that are reasonably
related to the  performance  of the audit or review of our financial  statements
for the fiscal years ended December 31, 2006 were approximately $34,425.

TAX FEES

The  aggregate  fees billed by The Hall Group,  CPAs for  professional  services
rendered  for tax  compliance,  tax advice and tax planning for the fiscal years
ended December 31, 2007 were $ -0-.

The  aggregate  fees  billed by Turner,  Stone & Company,  LLP for  professional
services rendered for tax compliance, tax advice and tax planning for the fiscal
years ended December 31, 2006 were approximately $9,450.

ALL OTHER FEES

No other fees were  billed by The Hall  Group,  CPAs for the fiscal  years ended
December 31, 2007.

No other fees were billed by Turner,  Stone & Company,  LLP for the fiscal years
ended December 31, 2006.


                                                              SIGNATURES

In accordance  with Section 13 or 15(d) of the Securities  Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


April 15, 2008                    Utilicraft Aerospace Industries, Inc.











                                By: /s/ John Dupont
                                -------------------
                                John Dupont, President, Chief Executive Officer,
                                and Chairman of the Board of Directors








                                       20

--------------------------------------------------------------------------------






<PAGE>

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE  PRESENTS,  that each person whose  signature  appears
below constitutes and appoints John Dupont, his attorney-in-fact,  each with the
power of substitution,  for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Annual Report on Form 10-KSB,
and to file the same, with all exhibits  thereto and all documents in connection
therewith,  with the  Securities  and Exchange  Commission,  granting  unto said
attorney-in-fact and agents, full power and authority to do and perform each and
every  act and  thing  requisite  and  necessary  to be done  in and  about  the
premises,  as  fully  to all  intents  and  purposes  as he might or could do in
person,  hereby ratifying and confirming said attorney-in-fact and agents or any
of them, or his or their substitute or substitutes,  may lawfully do or cause to
be done by virtue hereof.

In accordance  with the  Securities  Exchange Act of 1934,  this report has been
signed below by the  following  persons on behalf of the  registrant  and in the
capacities and on the dates indicated.


Date: April 15, 2008                      /s/ John Dupont
                                          John Dupont
                                          President, Chief Executive Officer,
                                          and Chairman of the Board of Directors


Date: April 15, 2008                      /s/ Robert Darby Boland
                                          Robert Darby Boland
                                          Executive Vice President
                                          and Director


Date: April 15, 2008                      /s/ Randy Moseley
                                          Randy Moseley
                                          Chief Financial Officer and Director


Date: April 15, 2008                      /s/ Edward F. Eaton
                                          Edward F. Eaton
                                          Director











                                       21

--------------------------------------------------------------------------------












<PAGE>

                              FINANCIAL STATEMENTS

Our  financial  statements  are stated in United  States  Dollars  (US$) and are
prepared in conformity  with  generally  accepted  accounting  principles of the
United States of America.

The  following   financial   statements   pertaining  to  Utilicraft   Aerospace
Industries, Inc. are filed as part of this 10-KSB:

                                                                            Page

Report of Independent Registered Public Accounting Firm                      F-1

Balance Sheet as of December 31, 2007                                        F-2

Statements of Operations for the Years Ended December 31, 2007 and 2006      F-3

Statements of Stockholders' Equity (Deficit) for the Years Ended
    December 31, 2007 and 2006                                               F-4

Statements of Cash Flows for the Years Ended December 31, 2007 and 2006      F-5

Notes to Financial Statements                                                F-6



                                       22

--------------------------------------------------------------------------------





<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the Board of Directors and Stockholders of
Utilicraft Aerospace Industries, Inc.


We  have  audited  the  accompanying   balance  sheet  of  Utilicraft  Aerospace
Industries,  Inc.  (the  Company)  as of  December  31,  2007  and  the  related
statements of operations,  stockholders' equity (deficit) and cash flows for the
year ended December 31, 2007. These financial  statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these financial  statements based on our audit. The financial  statements of the
Company as of December 31, 2006,  were audited by other  auditors,  whose report
dated April 23, 2007, expressed an unqualified opinion on those statements.

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

We were not engaged to examine management's assertion about the effectiveness of
Utilicraft  Aerospace   Industries,   Inc.'s  internal  control  over  financial
reporting as of December 31, 2007 and, accordingly, we do not express on opinion
thereon.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,   the  financial   position  of  Utilicraft   Aerospace
Industries,  Inc. as of December 31, 2007 and the results of its  operations and
cash flows for the  periods  set forth  above,  in  conformity  with  accounting
principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in Note 10 to the
financial   statements,   the  Company  has  incurred  substantial  losses  from
operations of  approximately  $8,800,000  since its inception,  has  experienced
negative  cash  flows  from  operations  since its  inception  and has a working
capital  deficiency of  approximately  $2,971,000  at December 31, 2007,  all of
which raise  substantial doubt about its ability to continue as a going concern.
Management's  plans in regard to these matters are also described in Note 1. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.



/s/ The Hall Group, CPAs
------------------------
The Hall Group, CPAs
Dallas, Texas

March 28,  2008


                                       F-1

--------------------------------------------------------------------------------




<PAGE>




                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                                  Balance Sheet
                                December 31, 2007



                                     Assets
Current Assets:
   Cash                                                             $     1,025
     Accounts Receivable                                                 11,000
                                                                    -----------
      Total Current Assets                                               12,025
                                                                    -----------

     Other Assets - Investment in Common Stock                            1,000
                                                                    -----------

      Total Assets                                                  $    13,025
                                                                    ===========

                 Liabilities and Stockholders' Equity (Deficit)





Current Liabilities:
   Accounts Payable                                                 $   424,170
   Accrued Expenses                                                      28,281
   Deferred Compensation                                              2,146,414
   Advances from Stockholders                                           384,500
                                                                    -----------
      Total Current Liabilities                                       2,983,365
                                                                    -----------


Stockholders' Equity (deficit):
   Preferred Stock, $.0001 par value, 25,000,000 shares authorized,
      no shares issued or outstanding
                                                                              0
   Common Stock, $.0001 par value, 475,000,000 shares authorized,
      179,493,552 shares issued and outstanding
                                                                         17,949

   Additional Paid-in Capital
                                                                      5,799,659

   Accumulated Deficit                                               (8,787,948)
                                                                    -----------

      Total Stockholders' Equity (Deficit)                           (2,970,340)
                                                                    -----------


      Total Liabilities and Stockholders' Equity (Deficit)          $    13,025
                                                                    ===========



                 The accompanying notes are an integral part of
                          these financial statements.

                                       F-2

--------------------------------------------------------------------------------






<PAGE>
<TABLE>
<CAPTION>

                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                            Statements of Operations
                 For the Years Ended December 31, 2007 and 2006





                                                                       2007             2006
                                                                   -------------    -------------
<S>                                                                <C>              <C>


Revenues                                                           $           0    $           0
                                                                   -------------    -------------

Operating Expenses:


     Compensation and Related Costs                                    1,152,455        1,006,384
   General and Administrative                                            502,318          505,604
   Engineering, Research and Development                                  71,661          174,445

                                                                   -------------    -------------
        Total Operating Expenses                                       1,726,434        1,686,433
                                                                   -------------    -------------

   Other Income (Expense)
     Gain From Asset Sale                                              1,600,746                0
     Interest Expense                                                    (54,185)         (30,393)
                                                                   -------------    -------------
         Total Other Income (Expense)                                  1,546,561          (30,393)
                                                                   -------------    -------------

Loss Before Provision for Income Taxes                                  (179,873)      (1,716,826)

Provision for Income Taxes                                                     0                0
                                                                   -------------    -------------

Net (Loss)                                                         $    (179,873)   $  (1,716,826)
                                                                   =============    =============

Basic Net Loss Per Share Based on Weighted Average Common Shares   $       (0.01)   $       (0.01)
                                                                   =============    =============

Weighted Average Number of Common Shares Outstanding                 179,066,552      155,516,257

</TABLE>



                 The accompanying notes are an integral part of
                          these financial statements.

                                       F-3

--------------------------------------------------------------------------------















<PAGE>
<TABLE>
<CAPTION>

                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                  Statements of Stockholders' Equity (Deficit)
            For the Period January 1, 2006 through December 31, 2007


                                                                           Additional
                                                  Common Stock              Paid-In       Accumulated
                                             Shares          Amount         Capital         Deficit          Total
                                          ------------    ------------    ------------   ------------    ------------
<S>                                       <C>             <C>             <C>            <C>             <C>
Balance at January 1, 2006                 212,323,029    $     21,232    $  3,378,768   $ (6,891,249)   $ (3,491,249)


Issuance of common stock for exercise
 of warrants, net of $271,000 financing
 costs                                       2,502,960             250       1,195,189              0       1,195,439

Accrued interest converted to warrants               0               0           3,378              0           3,378

Net loss for year ended
 December 31, 2006                                   0               0               0     (1,716,826)     (1,716,826)
                                          ------------    ------------    ------------   ------------    ------------

Balance at December 31, 2006               214,825,989          21,482       4,577,335     (8,608,075)     (4,009,258)

Cancelation of PacifiCorp shares           (37,132,437)         (3,713)          3,713              0               0


Issuance of common stock for exercise
   of warrants                               1,050,000             105       1,009,995              0       1,010,100


Issuance of common stock for services          750,000              75         112,425              0         112,500


Warrants issued for services                         0               0          96,191              0          96,191

Net loss for year ended
  December 31, 2007                                  0               0               0       (179,873)       (179,873)
                                          ------------    ------------    ------------   ------------    ------------

Balance at December 31, 2007               179,493,552    $     17,949    $  5,799,659   $ (8,787,948)   $ (2,970,340)
                                          ============    ============    ============   ============    ============

</TABLE>



                 The accompanying notes are an integral part of
                          these financial statements.

                                       F-4

--------------------------------------------------------------------------------













<PAGE>
<TABLE>
<CAPTION>

                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                            Statements of Cash Flows
                 For the Years Ended December 31, 2007 and 2006


                                                                     2007            2006
                                                                  -----------    -----------
<S>                                                               <C>            <C>
Cash Flows from Operating Activities:

Net Loss                                                          $  (179,873)   $(1,716,826)

Adjustments to Reconcile Net Loss to Net Cash Used in Operating
   Activities:
   Depreciation                                                         6,537          6,829
   Warrants Issued for Services                                        96,191              0
   Common Stock Issued for Services                                   112,500              0
   Deferred Compensation                                             (566,123)       287,332
   Expenses Paid by Related Party                                           0        101,697
   Deferred Rent                                                      (66,000)        18,000
Changes in Operating Assets and Liabilities:
   Decrease in Prepaid Expenses                                             0         26,400
   Decrease in Lease Security Deposits and Other Assets                23,250         17,870
   Decrease Deferred Financing Costs                                        0        176,172
   (Increase) in Accounts Receivable                                  (11,000)             0
   Decrease/(Increase) in Accounts Payable Expenses                   (36,860)        87,508
   Increase/(Decrease) in Payroll Taxes Payable                      (353,697)       170,227
   Increase/(Decrease) in Accrued Interest, Related Party             (48,874)        26,046
   (Decrease) in Rent Payable, Related Party                         (114,000)             0
   Increase/(Decrease) in Accrued Aircraft Rent, Related Party        (45,000)        30,000
                                                                  -----------    -----------
Net Cash Used in Operating Activities                              (1,205,922)      (768,745)
                                                                  -----------    -----------

Cash Flows from Investing Activities:
   Amounts Paid to Contractors for Prototype                         (592,928)             0
   Sale of Aircraft Prototype and Mockup                              905,732        (79,729)
   Investment in Common Stock                                          (1,000)             0
   Purchase of Computers                                              (11,272)             0
   Sale of Computers                                                   24,956        (27,050)
                                                                  -----------    -----------
Net Cash Used in Investing Activities                                 325,488       (106,779)
                                                                  -----------    -----------

Cash Flows from Financing Activities:
   Proceeds from Issuance of Common Stock                           1,010,015      1,466,439
   Financing Cost Associated with Common Stock                              0       (271,000)
   Advances from Related Party                                       (407,269)         3,378
   Repayment of Advances from Related Party                          (141,587)      (288,000)
     Advances from Stockholders                                       384,500              0
                                                                  -----------    -----------
Net Cash Provided by Financing Activities                             845,659        910,817
                                                                  -----------    -----------
Net increase (decrease) in Cash                                       (34,775)        35,293
Cash at Beginning of Period                                            35,800            507
                                                                  -----------    -----------
Cash at End of Period                                             $     1,025    $    35,800
                                                                  -----------    -----------
Supplemental Disclosures:
Cash Paid During the Year for Interest Expense                    $         0    $         0
                                                                  -----------    -----------
Common Stock Issued for Services                                  $   112,500    $         0
                                                                  -----------    -----------
</TABLE>


                 The accompanying notes are an integral part of
                          these financial statements.

                                       F-5

--------------------------------------------------------------------------------




<PAGE>

                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007



NOTE 1  - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Activities, History and Organization:
-----------------------------------------------

Utilicraft Aerospace  Industries,  Inc., (the "Company") was incorporated in the
State of Nevada on December 9, 2004 and uses a December 31 year end. The Company
was formed to conceive  and  implement  a solution  to the problem of  declining
capacity in the short haul (or feeder)  route  segments of the air cargo hub and
spoke system. The research and development efforts were focused on the design of
a  system  for  moving  freight,  centered  around a new  aircraft  specifically
designed for feeder route  segments,  the  FF-1080-300  Freight Feeder  aircraft
(FF-1080).  The Company also was engaged in the  development of related  systems
for fuel management and electronic freight tracking (Note 2).

On December  12,  2007,  the  Company,  with  approval by majority  shareholders
consent  of  15  shareholders  owning  approximately  62.53%  of  the  Company's
outstanding common stock and by approval of its Board of Directors, entered into
an Asset Purchase Agreement with Freight Feeder Aircraft Corporation ("FFAC") to
sell all of its assets as discussed in Note 6.

The Company is now focusing its  business-plan  development  efforts to actively
seeking new strategic aerospace products for development,  particularly  related
to the  enhancement  of the Freight  Feeder  aircraft in the  air-cargo  markets
worldwide,  to continue to build the asset base, to develop cash-flow,  all with
the goal of building shareholder value.

Basis of Presentation:
----------------------

The  Company  prepares  its  financial   statements  on  the  accrual  basis  of
accounting.


Management Estimates:
---------------------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles 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 dates of the financial  statements and
the reported amounts of operating expenses during the reporting periods.  Actual
results could differ from these estimates.

Cash and Cash Flows:
--------------------

For purposes of the statements of cash flows,  cash includes demand deposits and
time deposits with  maturities of less than three months.  None of the Company's
cash is restricted.

The Company  maintains  cash  accounts,  which could  exceed  federally  insured
limits.  The  Company  has not  experienced  any losses  from  maintaining  cash
accounts in excess of federally  insured  limits.  Management  believes that the
Company does not have significant credit risk related to its cash accounts.

Fair Value of Financial Instruments:
------------------------------------

In accordance with the reporting requirements of SFAS No. 107, Disclosures About
Fair Value of Financial  Instruments,  the Company  calculates the fair value of
its assets and  liabilities  which qualify as financial  instruments  under this
statement and includes this additional information in the notes to the financial
statements  when the fair value is different  than the  carrying  value of those
financial instruments.  The estimated fair value of the loans from related party
approximate   their  carrying  amounts  due  to  the  short  maturity  of  these
instruments.  At December 31, 2007, the Company did not have any other financial
instruments.


                                       F-6

--------------------------------------------------------------------------------




<PAGE>

                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007


NOTE 1  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  - (CONTINUED)


Stock Based Compensation:
-------------------------

Prior to December 31,  2005,  we accounted  for stock based  compensation  under
Statement of Financial  Accounting  Standards No. 123 Accounting for Stock-Based
Compensation  (123).  As permitted  under this standard,  compensation  cost was
recognized using the intrinsic value method  described in Accounting  Principles
Board  Opinion  No.  25,  Accounting  for Stock  Issued to  Employees  (APB 25).
Effective  December  15,  2005,  the  Company  adopted  Statement  of  Financial
Accounting Standards No. 123 (Revised 2004),  Share-Based Payment (FAS 123R) and
applied  the  provisions  of  the  Securities  and  Exchange   Commission  Staff
Accounting  Bulletin No. 107 using the  modified-prospective  transition method.
The Company had not issued any options to employees in the prior  periods  thus;
there was no impact of adopting the new standard.

The Company accounts for stock-based compensation arrangements for non-employees
under Emerging Issues Task Force No. 96-18,  "Accounting for Equity  Instruments
That Are Issued to Other Than  Employees for Acquiring,  or in Conjunction  with
Selling,  Goods or  Services"  (EITF  96-18) and SFAS No. 123,  "Accounting  for
Stock-Based  Compensation"  (SFAS 123). As such, those transactions are measured
on the grant date at either the fair value of the equity  instruments  issued or
the consideration received, whichever is more reliably measurable.


Recent Accounting Pronouncements:
---------------------------------

In June 2003, the Securities and Exchange Commission ("SEC") adopted final rules
under Section 404 of the  Sarbanes-Oxley Act of 2002 ("Section 404"), as amended
by SEC Release No. 33-8760 on December 15, 2006.  Commencing  with the Company's
Annual Report for the year ending  December 30, 2008, the Company is required to
include a report of management on the Company's  internal control over financial
reporting.  The internal control report must include a statement of management's
responsibility  for establishing and maintaining  adequate internal control over
financial  reporting  for  the  Company;  of  management's   assessment  of  the
effectiveness of the Company's  internal control over financial  reporting as of
year-end and of the framework  used by management to evaluate the  effectiveness
of the Company's internal control over financial  reporting.  Furthermore in the
following  year  the  Company's  independent  accounting  firm  has to  issue an
attestation  report separately on the Company's  internal control over financial
reporting  on  whether it  believes  that the  Company  has  maintained,  in all
material respects, effective internal control over financial reporting.

In July  2006,  the FASB  issued  FASB  Interpretation  No. 48,  Accounting  for
Uncertainty in Income Taxes (FIN 48). FIN 48 clarifies the accounting for income
taxes by  prescribing a minimum  probability  threshold that a tax position must
meet before a financial  statement benefit is recognized.  The minimum threshold
is  defined  in FIN 48 as a tax  position  that is more  likely  than  not to be
sustained  upon  examination  by  the  applicable  taxing  authority,  including
resolution  of  any  related  appeals  or  litigation  processes,  based  on the
technical  merits of the position.  The tax benefit to be recognized is measured
as the largest  amount of benefit that is greater than fifty  percent  likely of
being realized upon ultimate settlement.  FIN 48 must be applied to all existing
tax positions upon initial adoption. The cumulative effect of applying FIN 48 at
adoption,  if any,  is to be  reported  as an  adjustment  to  opening  retained
earnings  for the  year  of  adoption.  FIN 48 is  effective  for the  Company's
year-end 2007, but is not expected to have a material impact on our consolidated
financial  statements,  with  the  possible  exception  of  certain  disclosures
relative  to our  net  operating  loss  carryovers  and  the  related  valuation
allowance.

In 2006, the Financial Accounting Standards Board issued the following:

-    SFAS No. 155: Accounting for Certain Hybrid Financial Instruments

-    SFAS No. 156: Accounting for Servicing of Financial Assets

-    SFAS No. 157: Fair Value Measurements

-    SFAS No. 158:  Employers'  Accounting for Defined Benefit Pension and Other
     Postretirement Plans

In 2007, the Financial Accounting Standards Board issued the following:

-    SFAS No. 159:  The Fair Value  Option for  Financial  Assets and  Financial
     Liabilities; Including an amendment of FASB Statement No. 115

                                       F-7

--------------------------------------------------------------------------------



<PAGE>
<TABLE>
<CAPTION>
                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007




NOTE 1   -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  - (CONTINUED)

-    SFAS No. 141: (Revised 2007), Business Combinations

-    SFAS No. 160: Noncontrolling Interest in Consolidated Financial Statements

Management  has reviewed  these new  standards  and  believes  that they have no
impact on the financial statements of the Company.

Income taxes:
-------------

The Company  employs the asset and  liability  method in  accounting  for income
taxes  pursuant to Statement of Financial  Accounting  Standards  (SFAS) No. 109
"Accounting  for Income  Taxes."  Under  this  method,  deferred  tax assets and
liabilities are determined based on temporary  differences between the financial
reporting  and tax  bases of  assets  and  liabilities  and net  operating  loss
carryforwards,  and are  measured  using  enacted  tax  rates  and laws that are
expected to be in effect when the differences are reversed.

Net loss per share:
-------------------

Basic net loss per share is computed  based upon the weighted  average number of
common  shares  outstanding  during  the  periods,   adjusted  for  contingently
returnable  shares  (see Note 7) and is  computed  by  dividing  net loss by the
adjusted weighted average number of shares during the periods.  Diluted net loss
per share is based upon the weighted average number of common shares outstanding
during the periods, adjusted for contingently returnable shares, plus the number
of incremental shares of common stock contingently issuable upon the exercise of
the  outstanding  warrants,  (Note 4). No effect has been given to the potential
exercise of the warrants because their effect would be anti-dilutive. The number
of potentially  dilutive securities that were not included in the computation of
diluted EPS because to do so would have been  antidilutive was 19,132,052 common
stock potentially issuable under outstanding options/warrants.

Basic net loss per share has been computed as follows:
                                                                           Year               Year
                                                                          Ended              Ended
                                                                   December 31, 2007   December 31, 2006
                                                                     -------------       -------------
<S>                                                                  <C>                 <C>

Net loss                                                             $    (179,873)      $  (1,716,826)
                                                                     -------------       -------------

Weighted average common shares outstanding                             179,066,552         213,879,386
Less - weighted average contingently returnable shares                           0         (58,363,129)
                                                                     -------------       -------------
Adjusted weighted average for basic net loss per share computation     179,066,552         155,516,257
                                                                     -------------       -------------
Basic net loss per share                                             $       (0.01)      $       (0.01)

</TABLE>

Engineering, research and development:

The Company  expenses  engineering,  research and development  costs as they are
incurred.  For the years ended  December 31, 2007 and 2006,  respectively,  such
costs were $71,661 and $174,445,  respectively. These amounts relate to research
and  development  of the Company's new aircraft  design,  which was purchased by
Freight Feeder Aircraft Corporation on December 12, 2007 as discussed in Note 6.

Patents:

In December  2004,  the Company  obtained the assignment of rights to three U.S.
patents from its President pursuant to the terms of his "Employment  Agreement."
One patent is for the design of the FF-1080 aircraft. Another is a method patent
that incorporates the design in an integrated air cargo  information  system for
an electronic  freight  tracking  system.  The third patent is for a system that
computes the most economical route segment based on the change in aircraft gross
weight on each segment  resulting in better fuel efficiency.  These patents were
purchased  by Freight  Feeder  Aircraft  Corporation  on  December  12,  2007 as
discussed in Note 6.



                                       F-8

--------------------------------------------------------------------------------



<PAGE>

                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007




 NOTE 2 - ACCOUNTS RECEIVABLE

Accounts  receivable  consists  of  amount  due  from  Freight  Feeder  Aircraft
Corporation  towards the  accrued  2007 audit fees.  The  Company  assesses  the
collectibility of its accounts receivable  regularly.  Based on this assessment,
an  allowance  for  doubtful  accounts  is  recorded.  At  December  31, 2007 an
allowance for doubtful accounts was not considered necessary.

NOTE 3 - INVESTMENT IN COMMON STOCK

The investment in common stock  represents the nominal amount of $1,000 assigned
to the 15,250,000 shares of Freight Feeder Aircraft Corporation (Freight Feeder)
common  stock  received by the  Company in the asset  disposition  described  in
Footnote 6. The nominal  amount of $1,000 was recorded for the Freight  Feeder's
common stock as it does not have a market value or  determinable  positive  book
value at December 31, 2007.


NOTE 4 -  CAPITAL STRUCTURE DISCLOSURES

The  Company's  capital  structure is not complex.  The Company is authorized to
issue 25,000,000 shares of preferred stock with a par value of $.0001 per share.
The Company is authorized to issue 475,000,000 shares of common stock with a par
value of $.0001 per share.

Preferred stock:
----------------

No shares of preferred stock have been issued as of December 31, 2007.

Common stock:
-------------

Each common  stock share has one voting  right and the right to dividends if and
when declared by the Board of Directors.

Stock options, warrants and other rights:
-----------------------------------------

As of December 31, 2007,  the Company has not adopted any employee  stock option
plans.

Valuation of stock issued for services:
---------------------------------------

In June of 2007, the Company issued 250,000 shares of restricted common stock to
its Vice President and Chief  Financial  Officer as stipulated in his employment
agreement and valued the shares at $0.15 per share.

In June of 2007, the Company issued 500,000 shares of restricted common stock to
a consulting  firm for advisory and investment  banking  services and valued the
shares at $0.15 per share.

Warrants:
---------

In 2007, the Company  granted  warrants to purchase  250,000 shares to the Chief
Technology  Officer  an  exercise  price  equal to  $0.50.  The  options  vested
immediately  and expire on March 16, 2010.  We estimated the fair value of these
options using the Black Scholes method with assumptions including: (1) term of 3
years; (2) a computed  volatility 127% (3) a discount rate of 4.51% and (4) zero
dividends.  The fair value of these  options was  estimated to be $56,787 and is
included in compensation expenses for the year ended December 31, 2007.

In 2007, the Company granted  warrants to purchase a total 510,000 shares to the
Vice President - Marketing,  a Director and accounting  assistant at an exercise
price equal to $3.00. The options vested  immediately and expire on November 30,
2010.  We  estimated  the fair value of these  options  using the Black  Scholes
method  with  assumptions  including:  (1)  term  of 3  years;  (2)  a  computed
volatility  170% (3) a discount rate of 3.09% and (4) zero  dividends.  The fair
value of these  options was  estimated  to be $39,404 and is included in general
and administrative expenses for the year ended December 31, 2007.




                                       F-9

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<PAGE>
<TABLE>
<CAPTION>

                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007



NOTE 4  - CAPITAL STRUCTURE DISCLOSURES  - (CONTINUED)

A summary of all the  Company's  warrants  outstanding  at December 31, 2007 and
2006,  respectively  and the changes during the years then ended is presented in
the following table.

                                                 AMUC                        Related
                                             Stockholders   PacifiCorp        Party         Total
<S>                                          <C>            <C>             <C>           <C>

Warrants outstanding, December 31, 2006       17,287,664    57,497,040      1,084,388    75,869,092

     Issued                                                                   760,000       760,000


     Exercised                                              (1,050,000)                  (1,050,000)


     Cancelled                                             (56,447,040)                 (56,747,040)

                                             -----------   -----------    -----------   -----------

Warrants outstanding, December 31, 2007       17,287,664          --        1,844,388    19,132,052
                                             -----------   -----------    -----------   -----------
</TABLE>

As of December 31, 2006,  the Company has  outstanding  warrants  issued to AMUC
stockholders that are exercisable to purchase 17,287,664 shares of the Company's
common stock at prices  ranging from $.10 to $5.00 per share.  All such warrants
expire in January  2010.  See Note 7 for a  description  of  warrants  issued in
connection with a financing  agreement to purchase  60,000,000  shares of common
stock.  On December 6, 2007, the Board of Directors of the Company  terminated a
Master Financing  Agreement with PacifiCorp and canceled the 56,447,040 warrants
outstanding at the time of the cancellation.

In January and March 2006, the Company agreed to issue warrants to its President
to purchase 897,416 and 186,972, respectively, shares of common stock in lieu of
paying interest and for  consideration  of default risk on the additional  loans
made to the Company during 2005 and 2006 (Note 8). The warrants are  exercisable
at $1.00 per share over three years from January 2006 and March 2006.

In March of 2007,  the Company  issued its Vice  President  and Chief  Financial
Officer  250,000  warrants for the purchase of 250,000 shares of common stock as
part of his  employment  agreement.  The  warrants are  exercisable  at $.50 per
share.

In November of 2007, the Company  issued its Vice President - Marketing  200,000
warrants for the purchase of 200,000 shares of common stock at an exercise price
of $3.00 per share for a period of three years from the date of issuance.

In November of 2007, the Company issued to a director  200,000  warrants for the
purchase of 200,000  shares of common  stock at an  exercise  price of $3.00 per
share for a period of three years from the date of issuance.

In November of 2007, the Company issued to an employee  110,000 warrants for the
purchase of 110,000  shares of common  stock at an  exercise  price of $3.00 per
share for a period of three years from the date of issuance.







                                      F-10

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<PAGE>

                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007



NOTE 5    - INCOME TAXES

The Company accounts for corporate income taxes in accordance with SFAS No. 109,
Accounting  for  Income  Taxes.  Under  SFAS No.  109,  deferred  tax assets and
liabilities   are   recognized  for  the  estimated   future  tax   consequences
attributable to differences  between the financial statement carrying amounts of
existing  assets and  liabilities  and their  respective tax bases. In addition,
future tax benefits,  such as those from net operating loss carry forwards,  are
recognized to the extent that  realization  of such benefits is more likely than
not.  Deferred tax assets and  liabilities  are measured using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the period that
includes the enactment date.

At December  31, 2007 and December 31, 2006,  the  Company's  only  deferred tax
assets,  are  offset by a  valuation  allowance,  (there  were no  deferred  tax
liabilities) which totaled approximately $2,928,000 and $2,912,000, respectively
(using an anticipated effective tax rate of 34%) and was attributable to its net
operating tax loss  carryforwards  of  approximately  $6,871,000  incurred since
inception. These net operating losses expire from 2024 through 2026.

A reconciliation  of income tax expense at the statutory  federal rate of 34% to
income tax expense at the Company's effective tax rate is as follows:


                                               Year Ended       Year Ended
                                              December 31,     December 31,
                                                  2007             2006

Tax benefit computed at statutory rate        $  16,000         $ 562,000

Increase in valuation allowance                 (16,000)         (562,000)
                                              ---------         ---------

                                              $    --           $    --
                                              ---------         ---------



NOTE 6   - ASSET DISPOSITION

On December 12, 2007, the Company sold all of its assets freight feeder aircraft
technology to Freight Feeder Aircraft  Corporation ("FFAC") for a purchase price
consisting of the following;

     (a) Common stock.  Fifteen Million Two Hundred Fifty Thousand  (15,250,000)
restricted   shares  (the   "Shares")   of  FFAC  common   stock   (representing
approximately 25% of FFAC's initial capitalization),

     (b) Warrants.  Warrants for 30,500,000  restricted  shares of FFAC's Common
Stock,  with a strike price of US$1.00 per share of common stock and with a term
of 5 (five) years from first-flight.

     (c)  Royalty.  FFAC  agreed to pay the  Company a 1%  Royalty  of the Gross
Aircraft Sales recorded by FFAC in accordance with generally accepted accounting
principles,  less profit,  commissions,  royalties and mark-up on Freight Feeder
Aircraft number 51 to Aircraft number 2051 sold by FFAC.

     (d) Assumed  liabilities.  FFAC agreed to assume liabilities of the Company
which after allowing for  stockholder  advances of $384,500  being  converted to
equity as part of the PacifiCorp funding, amounted to $2,553,684.



                                      F-11

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<PAGE>



                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007



NOTE 6  -  ASSET DISPOSITION - (CONTINUED)


     (e) Public Company  Assistance.  FFAC agreed to assist the Company with its
public company filing  requirements  (including  audit and legal  expenses),  to
provide for the Company's  continued reporting under the Securities and Exchange
Act of 1934 until the later of first flight of the Freight Feeder  Aircraft,  or
two years from the date of the Purchase Agreement.

The following  table  summarizes  the gain on the asset sale recorded year ended
December 31, 2007:

              Liabilities assumed by FFAC     $ 2,553,684
              Value assigned to FFAC shares         1,000
              Net assets purchased by FFAC       (953,938)
                                              -----------
               Gain on asset disposition      $ 1,600,746
                                              ===========

NOTE 7  -  COMMITMENTS AND CONTINGENCIES

Funding commitment:
-------------------

The  Company  entered  into  a  Master  Financing  Agreement  (the  "Agreement")
effective   September  12,  2005  with   PacifiCorp   Funding   Partners   Trust
("PacifiCorp")  to provide equity  financing of a minimum of  $40,000,000  and a
maximum of  $80,000,000  through the exercise of warrants for the purchase of up
to 60,000,000 shares. On December 6, 2007, the Board of Directors of the Company
terminated  this  Master  Financing  Agreement  with  PacifiCorp  due to lack of
performance  as allowed  by the  Agreement  and  clawed-back  49,223,003  of the
Company's 60, 584,260 shares of common stock previously  issued to PacifiCorp by
the Company as part of the  Agreement.  The  49,223,003  has  subsequently  been
reduced to 40,185,397 through conversions into PacifiCorp shares by stockholders
who had outstanding  loans to the Company - See Note 9 - Subsequent Events for a
discussion of  stockholder  advances  converted to stock through an agreement to
participate in the PacifiCorp  Agreement.  Subsequent to the  termination of the
PacifiCorp Master Financing  Agreement,  executive  officers who had contributed
19,415,740 shares to the original  Agreement total of 80,000,000 shares received
back their shares as part of the termination of the Master Financing Agreement.

The 60,584,260 new PacifiCorp Shares issued by the Company were not valued under
the provisions of SFAS 123R since there was no performance commitment other than
to return  the  shares.  The  value of the  above  warrants  was  determined  by
management to be insignificant  and,  accordingly,  no value was assigned to the
warrants.

During the year ended December 31, 2007,  PacifiCorp  transferred funds totaling
$160,000  to the Company for  exercise of warrants  for the  purchase of 320,000
shares  at an  exercise  price of $.50 per  share.  The  Company  is also in the
process of  issuing  PacifiCorp  430,000  shares for  exercises  in 2006.  As of
December 31, 2007  PacifiCorp  has  acquired a total of 6,252,293  shares by the
exercise  of  3,252,960  warrants  and the  sale of  2,999,333  its  shares  for
$850,100,  which shares were issued to PacificCorp  under this funding agreement
as set forth above.  PacifiCorp  made the decision to have the $850,100  come to
the Company for production of the Performance Flight Test Aircraft and since the
shares  were not  originally  valued  the  $850,100  was added to the  Company's
additional capital as these shares relate to the funding  commitment.  Since the
Company  has not  retained  a security  interest  in the  PacifiCorp  Shares and
retains no right to demand  return of the shares from a third party in the event
PacifiCorp  defaults  on  its  minimum  funding  obligations,  the  Company  has
recognized  3,252,960  of  the  60,584,260   PacifiCorp  Shares  transferred  as
"earned."



                                      F-12

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<PAGE>

                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007



NOTE 7  -  COMMITMENTS AND CONTINGENCIES -  (CONTINUED)

Executive compensation:
-----------------------

Freight Feeder Aircraft  Corporation  (FFAC),  as discussed in Note 6, agreed to
assume the deferred  compensation,  future base salaries and royalty payments of
the Company's  four current  executive  officers.  The Company has  discontinued
accruing  their base  salaries.  The remaining  provisions  of their  employment
agreements  are to remain in effect until the  employment  agreements  expire in
accordance with their terms.

The employment  agreement for the President of the Company also provides that he
will  receive a bonus  equal to 4% of the "net  profits,"  as  defined,  in each
fiscal year.

If there is a change in control,  of the  Company,  as defined,  each officer is
subject to significant  severance benefits,  which provide,  among other things,
for ten times then current salary, allowance to surrender stock options, receive
health  benefits for two years and to pay legal expenses to defend the officer's
contract up to $250,000 each.


NOTE 8  - RELATED PARTY TRANSACTIONS

As of December 12, 2007,  loans and advances by J.D. Aero, LLC and the Company's
President, bearing interest at 4% totaling $407,268.92,  plus accrued and unpaid
interest of $63,250.39,  were assumed by Freight Feeder Aircraft  Corporation as
discussed  in Note 6. For the years ended  December 31, 2007 and 2006 , interest
expense  of  $14,376  and  $30,393 ,  respectively,  has been  reflected  in the
accompanying statements of operations.

The Company  leased an aircraft  from a company  wholly  owned by the  Company's
President.  The lease was  assigned  to and assumed by Freight  Feeder  Aircraft
Corporation as part of a Purchase  Agreement dated December 12, 2007as discussed
in Note 6. The lease was for a five year term with  monthly  payments of $2,500.
During the years ended  December 31, 2007 and 2006 , the Company  recorded  rent
expense under this lease of $30,000 and $30,000, respectively.

In April 2006, the Company paid $25,489 for  electronics  that were added to the
aircraft for testing purposes for the FF-1080.  Under terms of the lease,  these
additions remain the property of J.D. Aero, L.L.C.

In January and March 2006, the Company agreed to issue warrants to its President
to purchase 897,416 and 186,972, respectively, shares of common stock in lieu of
paying interest and for  consideration of default risk on the advance portion of
the loans,  which were $317,841 at the  conversion  date  (Note4).  Accordingly,
accrued  interest of $3,378 has been  included  in  additional  paid-in  capital
during the year ended December 31, 2006.  The warrants are  exercisable at $1.00
per share over three years from April 15, 2006 and March 31, 2006.

In March of 2007,  the Company  issued  warrants to its Vice President and Chief
Financial  Officer 250,000 warrants for the purchase of 250,000 shares of common
stock as part of his employment agreement.  The warrants are exercisable at $.50
per share.

In June of 2007, the Company issued 250,000 shares of restricted common stock to
its Vice President and Chief  Financial  Officer as stipulated in his employment
agreement and valued the shares at $0.15 per share.

In November of 2007, the Company  issued its Vice President - Marketing  200,000
warrants for the purchase of 200,000 shares of common stock at an exercise price
of $3.00 per share for a period of three years from the date of issuance.

In November of 2007, the Company issued to a director  200,000  warrants for the
purchase of 200,000  shares of common  stock at an  exercise  price of $3.00 per
share for a period of three years from the date of issuance.



                                      F-13

--------------------------------------------------------------------------------



<PAGE>

                      UTILICRAFT AEROSPACE INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2007



NOTE 9  -  SUBSEQUENT EVENT

In January of 2008,  stockholders  elected to convert their $384,500 in advances
to a previous  participation  agreement  with  PacifiCorp  and receive shares of
stock from the PacifiCorp  shares  previously issued by the Company as discussed
in Note 7. PacifiCorp  agreed to have the $384,500 come to the Company since the
shares received out of the PacifiCorp shares by the converting shareholders were
not  originally  valued and the $384,500 was added to the  Company's  additional
capital as these shares relate to the funding commitment. These shareholders are
also  due a total  of  10,716,666  warrants  consistent  with  the  terms of the
PacifiCorp  Agreement  as matching  warrants  for the shares  received for their
conversion of their advances to the Company.

In March of 2008,  Randy  Moseley,  CFO was issued  500,000 shares of restricted
common stock consistent with the terms of his employment agreement.


NOTE 10  - FINANCIAL CONDITION AND GOING CONCERN

The financial  statements  of the Company have been  prepared  assuming that the
Company will continue as a going concern.  However,  since inception the Company
has a  loss  from  operations  of  approximately  $8,800,000.  This  is  largely
attributable to the reorganization costs and the costs of sustaining a corporate
infrastructure  and  the  related  overhead  deemed  necessary  to  support  the
Company's  operations  while  raising  capital  to  develop a  prototype  of the
aircraft described above.  Although the Company has a working capital deficiency
of approximately  $2,984,000 at December 31, 2007,  approximately  $2,146,414 is
owed  under  employment  agreements  and  will be paid  when  and if  funds  are
available.

In light of the Company's  current  financial  position and the  uncertainty  of
raising  sufficient  capital to achieve its business plan,  there is substantial
doubt about the Company's  ability to continue as a going  concern.  The Company
will be dependent on its shareholders are private  placement  capital to provide
for its  operating  expenses  while the Company  seeks new  strategic  aerospace
products for development.  Despite these  activities,  there can be no assurance
that  management's  efforts  to  adequately   capitalize  the  Company  will  be
successful.  The financial statements do not include any adjustments relating to
the  recoverability  and  classification of asset carrying amounts or the amount
and  classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.



                                      F-14

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