FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

For the fiscal year ended December 31, 1999

         [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

         For the transition period from ___________ to _______________

Commission File No. 33-55254-10
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                    SEAIR GROUP, INC. (Formerly Vicuna, Inc.)
                    -----------------------------------------
             (Exact name of registrant as specified in its charter)

       Nevada                                                     87-0438825
---------------------------                                 --------------------
State or other jurisdiction                                   (I.R.S. Employer
incorporation or organization                                Identification No.)

                     6831 Edgewater Commerce, Parkway #1110
                                Orlando, FL 32810
                      ------------------------------------
               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (407) 445-1035
                                                   ---------------

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None

         Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15 (d) of the Securities Exchange Act of 1934 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
                              -----       -----

         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]

State issuer's revenues for its most recent fiscal year: $ 297,109

<PAGE>

         The aggregate market value of the common voting stock held by
non-affiliates as of April 3, 2000: $6,264,540.

         Shares outstanding of the registrant's common stock as of April 3,
2000: 2,723,416 shares.

         Transitional Small Business Disclosure Format:

                           Yes          No  X
                              -----       -----

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                                     PART I

Item 1.  Description of Business.

         (a)      General Business Development

         Seair Group, Inc. (the "Company"), was incorporated under the laws of
the State of Nevada on July 9, 1986 under the name Vicuna, Inc. and has been a
development stage company since its inception. The Company was organized to
raise capital and then seek out, investigate and acquire any suitable asset,
property or other business potential. No specific business or industry was
originally contemplated. The Company was formed as a "blank check" company for
the purpose of seeking a business acquisition without regard to any specific
industry or business.

          On June 30, 1993, the Company's registration statement on Form SB-2
was declared effective by the Securities and Exchange Commission ("SEC").
Subsequently, the Company sought potential acquisition candidates but was
unsuccessful in its search. In May 1998 the Company located an acquisition
candidate and consummated a share exchange transaction.

         In connection with an Agreement and Plan of Reorganization dated May
22, 1998, the Company consummated a 2.1 for 1 forward split of its issued and
outstanding common stock and thereafter issued an aggregate of 6,025,000 shares
of restricted common stock to the stockholders of World Seair Corporation, a
private Florida corporation incorporated in June, 1997, in exchange for their
3,012,500 shares of World Seair Corporation common stock (hereafter referred to
as "WSC"). The 6,025,000 shares represented approximately 71.4% of the 8,125,000
shares of Common Stock of the Company issued and outstanding immediately
following the acquisition and resulted in a change of control of the Company.
All of the Company's officers and directors resigned upon the appointment of a
new Board of Directors and executive officers which were the existing executive
officers and directors of WSC. Upon consummation of the acquisition, all
previously issued shares of WSC were canceled and WSC issued 100 shares of its
common stock to the Company, thereby becoming a wholly-owned subsidiary of the
Company. WSC ceased operations and all operating activities were carried on by
the Company. A Current Report of a Form 8-K reporting the transaction was filed
with the Securities and Exchange Commission ("SEC") on May 28, 1998.

         As a part of the acquisition of WSC, the Company amended its Articles
of Incorporation to provide for a name change to Seair Group, Inc. on May 26,
1998. Since May 1998, the Company has continued to pursue the previous business
of its wholly-owned subsidiary, WSC, as described below.

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<PAGE>

         (b)      Business of the Company.

         General

         From May 1998 until approximately the third quarter of 1999, the
Company developed a proprietary ultra-light flying boat for the recreational
boating industry. The Company principally marketed its ultra-light flying boat
(the "Flying Boat") on the Internet through its website, magazines, television,
boat shows and air shows. As a result of material changes in the regulations
relating to the certification of operators of ultra-lights and structural
problems with the hulls of the Flying Boat, the Company ceased the manufacture,
marketing and sale of its Flying Boats. See "History" and "Marketing and
Distribution" below.

         History

         In connection with the Company's acquisition of WSC in May 1998, the
Company continued with the design and development of an ultra-light flying
inflatable boat known as the "Seair Flying Boat." The Flying Boat, which
consists of an ultra-light plane that floats, was manufactured by unaffiliated
third parties and assembled by the Company at its facility in Orlando,
Florida.

         In mid-1999, the United States Ultralight Association ("USUA"), the
governing body which regulates ultra-light craft through the Federal Aviation
Administration ("FAA"), amended the rules relating to the licensing of
ultra-light operators. Specifically, the USUA now required that operators
receive 100 hours of flight instruction as opposed to the ten (10) hours of
instruction which was previously required to be certified to operate ultra-light
craft. As a result of this significant policy change, management determined that
the market for its sole product, the "Flying Boat", would greatly diminish and
not provide the revenues previously anticipated over time.

         In addition, management became aware that the hulls of the boats it had
sold and was selling had potentially defective hulls and notified the hulls'
manufacturer of this potential problem. It thereafter ceased sales of its boats
and their manufacture by a third party and it sought to have the hull
manufacturer replace the hulls on those boats sold and in the manufacturing
stage. The Company attempted for a period of three months to repair the hulls on
its own but was not 100% successful in such repair efforts. Due to the
manufacturer's refusal to replace the hulls at no cost, and the inability of the
Company to properly repair the hull units on its own, management determined that
it was in the best interests of its shareholders to cease this business and
locate a potential purchaser to acquire the operating business, assets and
certain liabilities.

         In August 1999, management determined to sell the Company's operating
business, assets and certain liabilities to a third party private company owned
by an employee of the Company. A Memorandum of Understanding (the "MOU") was
executed with SeaGliders, LLC, a privately-held Florida limited liability
company ("SeaGliders") and the transaction was subsequently approved by the
holders of a majority of the Company's issued and outstanding shares of Common
Stock in November 1999. However, a definitive agreement has not been entered
into pending the repurchase

                                        4
<PAGE>

of the Flying Boats sold domestically by the Company to limit potential future
liability which may be attributable to the defective hulls. The repurchase of
such Flying Boats has been delayed until the second quarter of the current
fiscal year because of the time required to raise the necessary funding through
the sale of equity and to negotiate the repurchase terms with the existing
owners. To date, three (3) of the Flying Boats have been repurchased and it is
anticipated that the remaining nine (9) Flying Boats will be repurchased by the
Company in the second quarter of the current fiscal year. At such time it is
expected that the transaction with SeaGliders will be consummated on terms which
may vary from those in the MOU. See "Certain Relationships and Related
Transactions."

         Industry

         The ultra-light flying craft industry is a small section of the greater
aviation industry. The companies which compete with the Company build
ultra-lights to order. They are generally small companies with a relatively low
number of employees limited capital resources, no insurance or facilities. Some
of the Company's competitors manufacture their ultra-lights in a garage. As a
result of their lower overhead expenses, they are able to offer their products
to a greater number of potential purchasers as a result of the lower cost basis.
See "Competition" below.

         Manufacture

         The Flying Boat is comprised of a fiberglass hull and a rubber
inflatable raft which is used for flotation purposes. It also has a stainless
steel frame manufactured by an unaffiliated third party in Fort Lauderdale,
Florida, a 64 horsepower Rotex motor, and a 17 1/2 meter wing manufactured by
Northwing, a California wing manufacturer Once all of the parts are delivered to
the Company's Orlando, Florida facilities, they are assembled into a finished
product.

         Marketing and Distribution

         The Company has marketed its Flying Boat by a variety of means. The
Flying Boat has been marketed on the Internet through the Company's website,
"www.seair.com." It has also been marketed through advertising in several
magazines, including "Sport Fishing," Power Boat and Motor Yacht," "Trader-Ultra
Flight," "Celebrity Golf" and "Great Outdoors." The Company's Flying Boat has
also appeared on the national television shows "Baywatch" and "Action
Television" in March 1999 and February 2000, respectively, as well as local
Orlando-based television shows. The Flying Boat also was featured in a
children's full-length movie, "Critter Gitters" currently on video. Marketing of
the Flying Boat was very successful but as a result of the potential hull
defect, the Company ceased marketing efforts until the problem could be
corrected. The Company distributed the Flying Boat through three distributors in
the United States pursuant to one year agreements. These distributors were
located in 1) Washington - Oregon, 2) Maryland, and 3) Minnesota. In addition,
the Company also established distribution relationships in Brazil and Argentina.
All distribution agreements have since expired and there are no plans to
establish any new distributorships at the present time. See "Business - General"
herein.

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<PAGE>

         Competition

         The companies which compete with the Company build ultra-lights to
order. They are generally small companies with relatively low number of
employees, limited capital resources, no insurance or facilities. Some of the
Company's competitiors manufacture their ultra-lights in a garage. As a result
of their lower overhead expenses, they are able to offer their products to a
greater number of potential purchasers as a result of the lower cost basis. The
Company's competition is from other ultra-light manufacturers which sell less
expensive ultra-light models ranging in price from $15,000 to $35,000. The
Flying Boat retails for approximately $24,000. The Flying Boat is unique because
it has the ability to take off and land in the water. It is also easily
transported and assembled. The wing can be assembled, attached to the unit and
ready for flight in approximately 30 minutes.

         Patents and Proprietary Rights

         Currently, the Company has no patents, trademarks or copyrights on any
of its products. Management may seek patent, trademark and related legal
protection in the future where it deems the same to be beneficial to its
business. Notwithstanding the foregoing, the Company does not intend to be
solely dependent upon patent protection for any competitive advantage. The
Company expects to rely on its technological expertise and early entry into the
marketplace with respect to its products.

         Governmental Approvals and Regulations

         Management is not aware of and does not believe that there are any
specifically applicable compliance requirements under state or federal
environmental or related laws relating to the manufacture of the Flying Boat.
There are, however, USUA rules and regulations which govern the operation of the
Flying Boat. See "History" herein.

         Employees

         As of April 3, 2000 the Company had two (2) full-time employees located
at its office in Orlando, Florida, including Steven H. Kerr, president of the
Company, and one (1) part-time employee.

         None of the Company's employees are covered under a collective
bargaining agreement.

         Research and Development Costs

         The amount of funds expended by the Company in each of its last two
fiscal years (which are designated as having been expended on research and
development) is $0 for the year ended December 31, 1999 and approximately
$25,600 for the year ended December 31, 1998.

Item 2.  Properties.

         The Company presently has no significant properties.

                                        6
<PAGE>

         The Company's research and development facilities are located at its
executive offices which are located at 6831 Edgewater Commerce Parkway, #1110,
Orlando, Florida. The Company leases this space, consisting of approximately
6,000 square feet, from an unaffiliated third party for three (3) years at
$3,445.00 per month. The lease expires on July 31, 2001. The Company may
terminate the lease upon 30 days prior written notice. The Company believes its
present facilities are sufficient for its current needs.

Item 3.  Legal Proceedings.

         a)       The Patten Group, Inc. v. World Seair Corporation, Case No.
                  CL99-10544AJ in the Circuit Court in and for Palm Beach
                  County, Florida, filed November 3, 1999. The plaintiff,
                  manufacturer of the Company's Flying Boat, brought an action
                  against the Company's wholly-owned subsidiary, WSC, alleging
                  breach of contract as to oral agreements between the Company
                  and the plaintiff for services, costs, materials, labor and
                  goods, Goods Sold, Open Account and Quantum Meruit. The
                  plaintiff claimed that there was a failure to make payment of
                  $44,489.00 and sought judgment for such amount, together with
                  interest and costs including reasonable attorney's fees. In
                  April 2000, the parties reached a settlement and the Company
                  has agreed to pay plaintiff $11,000 in consideration for a
                  Dismissal of the action with Prejudice and mutual releases.

         b)       Boyce v. Steve H. Kerr and Seair Group, Inc., Case No.
                  DC-6676-99, Superior Court of Ocean County, New Jersey,
                  Special Civil Part, filed on August 23, 1999. The plaintiff
                  brought suit against the Company claiming that he purchased a
                  used Seair Flying Boat and that the Company was not honoring
                  its warranty. The plaintiff's claim was for damages in the sum
                  of $10,000.

         c)       Scipione v. Steve Kerr and Seair Group, Inc., Case No.
                  DC-6839-99, Superior Court of Ocean County, New Jersey,
                  Special Civil Part, filed on or about August 2, 1999. The
                  plaintiff alleged that the Company sold her a used rather than
                  new Seair 2000, the Company's Flying Boat, and sought damages
                  for $10,000.

                  The Boyce and Scipione matters (both b) and c) above) were
                  settled on or about March 30, 2000 for a total payment
                  of $18,500 by the Company and the execution of mutual releases
                  by all of the parties.

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

         In November 1999, the Company obtained the written consent of the
holders of a majority of the issued and outstanding voting securities of the
Company for a one for seven reverse split of the Company's issued and
outstanding common stock to be effective upon a date to be set in the future by
the Company's Board of Directors. On March 6, 2000, the Board of Directors set
the close of business on March 16, 2000 to be the effective date of the reverse
split.

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<PAGE>

         Such shareholders also approved, by written consent, the sale of the
Company's operating business, assets and certain liabilities to SeaGliders
subject to the terms of a definitive agreement between the Company and
SeaGliders. The transaction has not been consummated as of the date of this
report as the Company has been in the process of satisfying certain outstanding
liabilities prior to entering into a definitive agreement. See
"Business-History."

                                     PART II

Item 5.  Market for Common Equity and Related Stockholders Matters.

         The Common Stock of the Company is quoted on the NASD Electronic
Bulletin Board, under the symbol "SEIR." Previous to the one for seven reverse
split effected on March 16, 2000, the Company's common stock was quoted under
the symbol "UFLY."The following table sets forth the highest and lowest bid
prices for the Common Stock for each calendar quarter during the last two years
and subsequent interim periods as reported by the National Quotation Bureau. The
prices set forth below, which do not reflect such split, except for fiscal 2000
information, represent interdealer quotations, without retail markup, markdown
or commission and may not be reflective of actual transactions.

         Fiscal 1998                        High Bid              Low Bid
         -----------                        --------              -------

         First Quarter                         --                      --
         Second Quarter                       2.53                    1.76
         Third Quarter                        2.34                     .56
         Fourth Quarter                        .875                    .25

         Fiscal 1999
         -----------

         First Quarter                         .65                     .29
         Second Quarter                        .375                    .125
         Third Quarter                         .15                     .09
         Fourth Quarter                        .18                     .03

         Fiscal 2000
         -----------

         First Quarter                        5.00                    1.375
         April 1-10                           2.625                   2.375

         (b)      Holders.

         The approximate number of record holders of the Company's Common Stock
as of April 3, 2000 is 428.

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<PAGE>

         (c)      Dividends.

         The Company has not paid any cash dividends to date and does not
anticipate or contemplate paying dividends in the foreseeable future. It is the
present intention of management to utilize all available funds for the
development of the Company's business.

Item 6.   Management's Discussion and Analysis of Financial Condition and
          Results of Operation.

PLAN OF OPERATION

         Upon the anticipated consummation of the transaction with SeaGliders,
the Company will once again be considered a "blank check" company, having no
business or operations. Management intends to enter into a business combination
with a target company in exchange for its securities. As of the filing date of
this report, neither the Company's sole officer and director nor any affiliate
has engaged in any material discussions or negotiations with any representative
of any specific entity regarding the possibility of a business combination with
the Company.

         Management anticipates seeking out a target company through
solicitation. Such solicitation may include newspaper or magazine
advertisements, mailings and other distributions to law firms, accounting firms,
investment bankers, financial advisors and similar persons, the use of one or
more World Wide web sites and similar methods. No estimate can be made as to the
number of persons who will be contacted or solicited. Management may engage in
such solicitation directly or may employ one or more other entities to conduct
or assist in such solicitation. Management and its affiliates may pay referral
fees to consultants and others who refer target businesses for mergers into
public companies in which management and its affiliates have an interest.
Payments are made if a business combination occurs, and may consist of cash or a
portion of Company stock retained by management and its affiliates, or both.

         The Company currently has two (2) full time employees, one of whom is
the president and the other a principal of SeaGliders and one (1) part-time
employee. Upon the anticipated consummation of the SeaGliders transaction, the
Company's president has agreed to allocate a portion of his time to the
Company's activities, without compensation. The president anticipates that the
Company's business plan can be implemented by his devoting no more than
approximately 40 hours per month to the Company's business affairs and,
consequently, conflicts of interest may arise with respect to the limited time
commitment by such officer.

         The Company's Articles of Incorporation provide that it may indemnify
its officers and/or directors for its liabilities, which can include liabilities
arising under the securities laws. Therefore, the Company's assets could be used
or attached to satisfy any liabilities subject to such indemnification.

                                        9
<PAGE>

RESULTS OF OPERATIONS

Year ended December 31, 1999 compared to the year ended December 31, 1998

         During 1998, the Company continued the development started by its
wholly-owned subsidiary, WSC in 1997, of the prototype of the Flying Boat, an
ultra-light flying inflatable boat. Research and development costs were higher
in 1998 because the majority of the expenditures were for materials for the
actual construction of the prototype. With the completion of testing and
refinement of the prototype in 1998, the Company began selling the Flying Boat
in the fourth quarter of 1998, with total sales for 1998 being $68,000. The
Company had revenue from operations of $297,000 during 1999, an increase of
$229,000 or 337% from 1998.

         Cost of sales for the year ended 1999 were $254,000, compared to
$135,000 during 1998, an increase of $119,000 or 88%. This increase was
attributable to the purchase of raw materials required to produce the Flying
Boat. Selling, general and administrative costs for the year ended 1999 were
$560,000 as compared to $524,000 for 1998, an increase of $36,000 or 7%. This
increase was attributable to an increase in salaries and related expenses. See
"Liquidity and Capital Resources".

Liquidity and Capital Resources

         As of December 31, 1998, the Company expended $26,000 on direct
research and development of the prototype. During 1999, it was determined that
there were several structural defects in the hulls of the Flying Boats and the
Board of Directors determined that a full and complete recall of the Flying
Boats was necessary. The Company has reserved $190,000 as an expense for the
Flying Boat repurchase program and has raised approximately $200,000 through the
sale of its restricted Common Stock to several accredited investors in the first
quarter of fiscal 2000 to fund this program.

General Business Plan

         The Company's plan is to seek, investigate and, if such investigation
warrants, acquire an interest in a business entity which desires to seek the
perceived advantages of a corporation which has a class of securities registered
under the Securities Exchange Act of 1934 (the "Exchange Act"). Management does
not intend to restrict the search to any specific business, industry, or
geographical location and the Company may participate in a business venture of
virtually any kind or nature. Management anticipates that it will be able to
participate in only one potential business venture because the Company has
nominal assets and limited financial resources. This lack of diversification
should be considered a substantial risk to the Company's stockholders because it
will not permit the Company to offset potential losses from one venture against
gains from another.

         The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital to expand into new products or markets, to
develop a new product or service, or for other corporate purposes.

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<PAGE>

         It is anticipated that the selection of a business opportunity in which
to participate will be complex and extremely risky. Management believes (but has
not conducted any research to confirm) that there are business entities seeking
the perceived benefits of a publicly registered corporation. Such perceived
benefits may include facilitating or improving the terms on which additional
equity financing may be sought, providing liquidity for incentive stock options
or similar benefits to key employees, increasing the opportunity to use
securities for acquisitions, providing liquidity for stockholders and other
factors. Business opportunities may be available in many different industries
and at various stages of development, all of which will make the task of
comparative investigation and analysis of such business opportunities difficult
and complex.

         The Company has, and will continue to have, no capital with which to
provide the owners of business entities with any cash or other assets. However,
management believes the Company will be able to offer owners of acquisition
candidates the opportunity to acquire a controlling ownership interest in a
public company without incurring the cost and time required to conduct an
initial public offering. Management has not conducted market research and is not
aware of statistical data to support the perceived benefits of a business
combination for the owners of a target company.

         The analysis of new business opportunities will be undertaken by, or
under the supervision of, the Company's sole officer and director who is not a
professional business analyst. In analyzing prospective business opportunities,
management may consider such matters as the available technical, financial and
managerial resources; working capital and other financial requirements; history
of operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further research,
development, or exploration; specific risk factors not foreseeable now, but
which may be anticipated to impact the Company's proposed activities; the
potential for growth or expansion; the potential for profit; the perceived
public recognition or acceptance of products, services, or trades; name
identification; and other relevant factors. This discussion of the proposed
criteria is not meant to be restrictive of the Company's virtually unlimited
discretion to search for and enter into potential business opportunities.

         The Exchange Act requires that any merger or acquisition candidate
comply with certain reporting requirements, which include providing audited
financial statements to be included in the reporting filings made under the
Exchange Act. The Company will not acquire or merge with any company for which
audited financial statements cannot be obtained at or within the required period
of time after closing of the proposed transaction.

         The Company may enter into a business combination with a business
entity that desires to establish a public trading market for its shares. A
target company may attempt to avoid what it deems to be adverse consequences of
undertaking its own public offering by seeking a business combination with the
Company. Such consequences may include, but are not limited to, time delays of
the registration process, significant expenses to be incurred in such an
offering, loss of voting control to public stockholders or the inability to
obtain an underwriter or to obtain an underwriter on satisfactory terms.

                                       11
<PAGE>

         The Company does not intend to restrict its search for any specific
kind of business entities, but may acquire a venture, which is in its
preliminary or development stage, which is already in operation, or in
essentially any stage of its business life. It is impossible to predict at this
time the status of any business in which the Company may become engaged, in that
such business may need to seek additional capital, may desire to have its shares
publicly traded, or may seek other perceived advantages which the Company may
offer.

         Management, which in all likelihood will not be experienced in matters
relating to the business of a target company, will rely upon its own efforts in
accomplishing the Company's business purposes. Following a business combination
the Company may benefit from the services of others in regard to accounting,
legal services, underwriting and corporate public relations. If requested by a
target company, management may recommend one or more underwriters, financial
advisors, accountants, public relations firms or other consultants to provide
such services.

         A potential target company may have an agreement with a consultant or
advisor providing that services of the consultant or advisor be continued after
any business combination. Additionally, a target company may be presented to the
Company only on the condition that the services of a consultant or advisor are
continued after a merger or acquisition. Such preexisting agreements of target
companies for the continuation of the services of attorneys, accountants,
advisors or consultants could be a factor in the selection of a target company.

Acquisition of Opportunities

         In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. On the
consummation of a transaction, it is likely that the present management and the
Company's stockholders will no longer be in the Company's control. In addition,
it is likely that the Company's sole officer and director will, as part of the
terms of the acquisition transaction, resign and be replaced by one or more new
officers and directors.

         It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of the transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, it will be undertaken
by the surviving entity after the Company has entered into an agreement for a
business combination or has consummated a business combination and the Company
is no longer considered a "blank check" company. The issuance of additional
securities and their potential sale into any trading market which may develop in
the Company's securities may depress the market value of the such securities in
the future if such a market develops, of which there is no assurance.

         While the terms of a business transaction to which the Company may be a
party cannot be predicted, it is expected that the parties to the business
transaction will desire to avoid the creation of a taxable event and thereby
structure the acquisition in a tax-free reorganization under Sections 351 or 368
of the Internal Revenue Code of 1986, as amended.

                                       12
<PAGE>

         With respect to negotiations with a target company, management expects
to focus on the percentage of the Company which target company stockholders
would acquire in exchange for their stockholdings in the target company.
Depending upon, among other things, the target company's assets and liabilities,
the Company's stockholders will in all likelihood hold a substantially lesser
percentage ownership interest in the Company following any merger or
acquisition. The percentage of ownership may be subject to significant reduction
in the event the Company acquires a target company with substantial assets. Any
merger or acquisition effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held by the Company's
stockholders at such time.

         The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require certain
representations and warranties of the parties thereto, will specify certain
events of default, will detail the terms of closing and the conditions which
must be satisfied by the parties prior to and after such closing and will
include miscellaneous other terms.

         The Company will not enter into a business combination with any entity,
which cannot provide audited financial statements at or within the required
period of time after closing of the proposed transaction. The Company is subject
to all of the reporting requirements included in the Exchange Act. Included in
these requirements is the duty to file audited financial statements as part of
or within 60 days following the due date for filing a Current Report on Form 8-K
which is required to be filed with the SEC within 15 days following the
completion of the business combination. If such audited financial statements are
not available at closing, or within time parameters necessary to insure our
compliance with the requirements of the Exchange Act, or if the audited
financial statements provided do not conform to the representations made by the
target company, the closing documents may provide that the proposed transaction
will be void at the discretion of present management.

Undertakings and Understandings Required of Target Companies

         As part of a business combination agreement, the Company intends to
obtain certain representations and warranties from a target company as to its
conduct following the business combination. Such representations and warranties
may include (i) the agreement of the target company to make all necessary
filings and to take all other steps necessary to remain a reporting company
under the Exchange Act, (ii) imposing certain restrictions on the timing and
amount of the issuance of additional free-trading stock, including stock
registered on Form S-8 or issued pursuant to Regulation S, and (iii) giving
assurances of ongoing compliance with the Securities Act of 1933, as amended,
the Exchange Act, the General Rules and Regulations of the SEC, and other
applicable laws, rules and regulations.

         A prospective target company should be aware that the market price and
volume of its securities, when and if listed for secondary trading, may depend
in great measure upon the willingness and efforts of successor management to
encourage interest in the Company within the United States financial community.
The Company does not have the market support of an underwriter that would
normally follow a public offering of its securities. In addition, certain market

                                       13
<PAGE>

makers may take short positions in the Company's securities, which may result in
a significant pressure on the market price of such securities. Management may
consider the ability and commitment of a target company to actively encourage
interest in its securities following a business combination in deciding whether
to enter into a transaction with such company.

         A business combination with the Company separates the process of
becoming a public company from the raising of investment capital. As a result, a
business combination with the Company normally will not be a beneficial
transaction for a target company whose primary reason for becoming a public
company is the immediate infusion of capital. The Company may require assurances
from the target company that it has or that it has a reasonable belief that it
will have sufficient sources of capital to continue operations following the
business combination. However, it is possible that a target company may give
such assurances in error, or that the basis for such belief may change as a
result of circumstances beyond the control of the target company.

         Prior to completion of a business combination, management may generally
require that it be provided with written materials regarding the target company
containing such items as a description of products, services and company
history; management resumes; financial information; available projections, with
related assumptions upon which they are based; an explanation of proprietary
products and services; evidence of existing patents, trademarks, or service
marks, or rights thereto; present and proposed forms of compensation to
management; a description of transactions between

 such company and its affiliates during relevant periods; a description of
present and required facilities; an analysis of risks and competitive
conditions; a financial plan of operation and estimated capital requirements;
audited financial statements, or if they are not available, unaudited financial
statements, together with reasonable assurances that audited financial
statements would be able to be produced within a reasonable period of time not
to exceed 75 days following completion of a business combination; and other
information deemed relevant.

  Item 7.  Financial Statements.

         Audited consolidated balance sheets as of December 31, 1999 and 1998
and related statement of operations, stockholders' deficiency and cash flows for
the years then ended and for the period from July 9, 1986 (inception) to
December 31, 1999 are included after Item 12. herein.

Item 8.    Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure.

         Management is not aware, and has not been advised by any former
accountants, of any disagreement on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure.
Management has not consulted the accountants regarding either the application of
accounting principles to any specified transaction or any disagreement with any
former accountants.

         The Company filed a Form 8-K on February 23, 2000 reporting a change in
its accountants. The change in accountants was not the result of any
disagreements over accounting matters, financial

                                       14
<PAGE>

disclosures, or any other limitations on the scope or procedure of the
independent auditor in the course of performing professional services.

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.

                  (a) Identification of Directors.

         The current directors of the Company will serve until the next annual
(or special in lieu of annual) meeting of shareholders at which directors are
elected and qualified. Names, age, period served and positions held with the
Company are as follows:

                  Name             Age             Positions
                  ----             ---             with Company
                                                   ------------

         Steven H. Kerr            39              Chairman of the
                                                   Board, President, Secretary,
                                                   Principal Financial Officer
         *Anthony Goble

         *Steven G. Weismann

--------------------------------------------------------------------------------
* Mr. Goble resigned as a director of the Company in March, 1999. Mr. Weismann
resigned all positions with the Company on July 23, 1999.

         Steven H. Kerr. From May 1998 to the present, Mr. Kerr has been
President and a Director of the Company. Since March 1999, upon the resignation
of Anthony Goble, he has also been Chairman, and upon the resignation of Steven
Weismann in July 1999, Mr. Kerr has also been Secretary and Principal Financial
Officer of the Company. Prior to joining the Company, Mr, Kerr was director of
finance and sales at Cycle Sports Center, a Yamaha and Kawasaki dealer, located
in Orlando, Florida. From May 1991 to May 1998. From October 1989 to May 1991,
he was in sales and employee training at Mile High Honda and Acura in Denver,
Colorado. From May 1984 to August 1989, Mr. Kerr was manager of sales and
finance at Seminole Honda in Orlando, Florida.

                  (b) Directorships.

         The current director holds no other directorships in any Company with a
class of securities registered pursuant to Section 12 of the Exchange Act or
subject to the requirements of Section 15(d) of such Act or any Company
registered as an investment Company under the Investment Company Act of 1940,
except as disclosed herein.

                                       15
<PAGE>

         (c)      Identification of Certain Significant Employees.

                  None

         (d)      Family Relationships.

                  None.

Item 10. Executive Compensation.

<TABLE>
<CAPTION>
                                      SUMMARY COMPENSATION TABLE

                    Annual Compensation                                Long Term Compensation
                    -------------------                                ----------------------
                                                                               Awards     Payouts
Name             Fiscal                            Other                                  All
and              Year                              Annual      Restd.                     Other
Principal        Ended                             Compen-     Stock            LTIP      Compen-
Position         December 31    Salary   Bonus     sation      Awards  Options Payouts    sation
-----------------------------------------------------------------------------------------------------
<S>               <C>         <C>         <C>       <C>          <C>     <C>      <C>      <C>
Steven H. Kerr    1999        $  60,000   0.00      0            (1)     None     None     (1)
                  1998        $  45,000   0.00      0            None    None     None     None


Steven G.         1999        $  30,000   0.00      0            (2)     None     None     (2)
Weismann          1998             None   0.00      0            None    None     None     None
</TABLE>

-----------------------------
         (1) Mr. Kerr, Chairman of the Board of Directors, has served as
President since May 1998 and Chairman since March 1999, and Secretary and
Principal Financial Officer since July 1999. He received 1,825,000 shares of
Common Stock from the Company in exchange for his shares of WSC in May 1998. In
December 1998, he returned 500,000 shares to the Company's treasury pursuant to
an earlier agreement with the Company. In January 2000, the Board of Directors
approved the issuance of 200,000 pre-split shares of common stock (28,571
post-split shares) to Mr. Kerr for services rendered to the Company as President
in lieu of cash compensation of $20,000 in fiscal 1999. Such shares were issued
on or about April 11, 2000 to Mr. Kerr. See "Management."

         (2) Mr. Weismann became vice president, secretary, principal financial
officer and a director in November 1998. He served in such capacities until his
resignation in July 1999. Mr. Weismann received 100,000 shares of pre-split
common stock approved by the Board of Directors on or about February 24, 1999
for services rendered to the Company as a member of the Board of Directors in
the fourth quarter of 1998 and an additional 100,000 pre-split shares of common
stock approved by the Board of Directors on March 22, 1999 for services rendered
to the Company as a member of the Board of Directors in the first quarter of
1999.

 Option Grants in 1999

         There were no options granted in the fiscal year ended December 31,
1999.

         (d)      Aggregated Option/SAR Exercises and Fiscal

                                       16
<PAGE>

         Year End Option/SAR Value Table

                  None

         (e)  Long Term Incentive Plan ("LTIP") Awards Table

                  None

         (f)      Compensation of Directors.

                  None

         (g)      Employment Contracts and Termination of Employment and Change
                  in Control Arrangements

         (h)      Report on Repricing of Options/SARS

                  None

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

         (a)      Security Ownership of Certain Beneficial Owners.

         The following table sets forth, as of April 3, 2000 the ownership of
Common Stock by persons known to the Company to own beneficially more than 5% of
the outstanding shares of Common Stock after giving effect to the one for seven
reverse split of the Company's Common Stock of March 16, 2000:

<TABLE>
<CAPTION>
Title             Name and Address of                Amount and Nature of                        Percent
of Class          Beneficial Owner                   Beneficial Ownership(1)                     of Class
--------          ----------------                   -----------------------                     --------
<S>               <C>                                         <C>                                <C>
Common            Lighthouse Holdings, Inc.                   142,857                            5.25%
Stock             P.O. Box 127
                  Town Centre Mall
                  Providenciales, Turks & Caicos

Common            Shirley Trading Corp.                       142,857                            5.25%
Stock             c/o Caribbean Management Ltd.
                  West Wind Bldg., 3rd Floor
                  P.O. Box 1044GT
                  Grand Cayman
                  Cayman Islands, BWI
</TABLE>

                                       17
<PAGE>

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

         (1) All of these shares are shown of record as of April 3, 2000,
pursuant to the Company's stock transfer records and reflect the one for seven
reverse split of the common stock effective on March 16, 2000. These numbers do
not include shares shown to be held by clearing firms or broker-dealers.

         (b)      Security Ownership of Management.

         The following table sets forth, as of April 3, 2000 the beneficial
common stock ownership of all directors, executive officers, and of all
directors and officers as a group after giving effect to the one for seven
reverse split of the Company's Common Stock on March 16, 2000:

<TABLE>
<CAPTION>
Title             Name and Address of                Amount and Nature of                        Percent
of Class          Beneficial Owner                   Beneficial Ownership(1)                     of Class (1)
--------          ----------------                   --------------------                        --------
<S>               <C>                                <C>                                          <C>
Common            Steven H. Kerr                     85,715                                       3.2%
Stock             6831 Edgewater Commerce
                  Parkway #1110
                  Orlando, FL 32810


                  All Officers and Directors
                  as a group (1 person)              85,715                                       3.2%
</TABLE>

---------------------------------------------
(1) Does not include an additional 28,571 shares of post-split common stock
issued to Mr. Kerr on April 11, 2000 for services rendered to the Company in
lieu of cash compensation of approximately $20,000 in fiscal 1999.

         (c)      Changes in Control.

         Except as described in this report there are no arrangements, known to
the Company, including any pledge by any person of securities of the Company or
of any of its parents, the operation of which may at a subsequent date result in
a change in control of the Company.

Item 12. Certain Relationships and Related Transactions.

         The Company entered into a Memorandum of Understanding ("MOU") subject
to the execution of a definitive agreement with SeaGliders, a privately-held
Florida limited liability company, for SeaGliders to purchase the operating
business, assets and certain disclosed liabilities of the Company (the
"Business"). The purchase price for the Business is equal to the operating
assets of the Company less the operating liabilities listed on the Company's
balance sheet for the

                                       18
<PAGE>

period ending August 31, 1999 (the "Purchase Price"). The MOU provides that
SeaGliders will release the Company from certain liabilities which it would
assume in exchange for certain agreed upon compensation from the Company in the
aggregate amount of $121,000 to be applied to the total Purchase Price to be
paid by SeaGliders. In the event that the credit exceeds the Purchase Price,
SeaGliders will purchase a negotiated number of shares of the Company's Common
Stock at a discounted price from the 30 day trading market price. In addition,
the Company would hold a promissory note from SeaGliders for the Purchase Price
which would bear simple interest at 6% per annum commencing from the date of the
promissory note and payable annually commencing one year from the date of the
promissory note. The promissory note would be due and payable three (3) years
from the date of issuance. The terms of the proposed transaction were negotiated
at arms-length and management believes that the price to be paid for the
Business is reasonable in view of the fact that there were no other interested
parties at the time due to the Company's potential liabilities and that the
consideration to be paid is reasonably likely to be greater than the value of
the Property if otherwise disposed of on a liquidation basis.

Item 13.   Exhibits.

         (a)      The following exhibits are filed as a part of this report:

                  (2) Agreement and Plan of Reorganization dated May 22, 1998
                  filed as an exhibit and incorporated by reference to the
                  Company's Form 8-K filed on May 28, 1998.

                  (3) Amendment to Articles of Incorporation dated May 26, 1998
                  filed as an exhibit incorporated by reference to the Company's
                  Form 8-K filed on May 28, 1998.

                  (4) Promissory Note issued by the Company to Edward H. Vick
                  dated December 15, 1999.

                  (10.1) Memorandum of Understanding between the Company and
                  SeaGliders dated August 31, 1999.

                  (10.2) Lease Agreement between the Company and Browning
                  Development Sunshine Properties dated June 25, 1998.

                  (11)  Statement re: computation of per share earnings.

                  (16) Letter on change in certifying accountant filed as an
                  exhibit and incorporated by reference to the Company's Form
                  8-K filed on February 23, 2000.

                  (21)  Subsidiaries of the registrant.

                  (27)  Financial Data Schedule.

                                       19
<PAGE>


         (b)      Reports on Form 8-K.

                  (i) Form 8-K dated December 29, 1999, as filed with the
                  Securities and Exchange Commission on February 23, 2000.

                  (ii) Form 8-K dated March 6. 2000, as filed with the
                  Securities and Exchange Commission on March 15, 2000.

                                       20

<PAGE>

                                   SIGNATURES

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

                                         SEAIR GROUP, INC.


Date:  April 13, 2000                    By:  /s/ Steven H. Kerr
                                              --------------------
                                                 Steven H. Kerr,
                                                        President and Principal
                                                        Financial Officer

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

 /s/ Steven H. Kerr                                           April 13, 2000
------------------------                                      --------------
Steven H. Kerr                                                      Date
Chairman & Director
<PAGE>


                                SEAIR GROUP, INC.
                          (A Development Stage Company)

                              Financial Statements

                               For the Years Ended
                           December 31, 1999 and 1998




<PAGE>
<TABLE>
<CAPTION>


                                SEAIR GROUP, INC.
                          (A Development Stage Company)

                                Table of Contents


------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                              <C>
Report of Independent Certified Public Accountants                                                                       F - 1

Consolidated Balance Sheets                                                                                              F - 2

Consolidated Statements of Operations                                                                                    F - 3

Consolidated Statements of Stockholders' Deficit                                                                         F - 4

Consolidated Statements of Cash Flows                                                                                    F - 5

Notes to Consolidated Financial Statements                                                                     F - 6 to F - 12

</TABLE>

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
Seair Group, Inc.

We have audited the accompanying balance sheet of Seair Group, Inc., (a
development stage entity), as of December 31, 1999, and the related statements
of operations, stockholders' deficit and cash flows for the years ended December
31, 1999 and 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Seair Group, Inc. as of
December 31, 1999, and the results of its operations and its cash flows for the
years ended December 31, 1999 and 1998, in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 3 to the
financial statements, the Company has experienced significant operating losses,
an accumulated deficit and negative working capital at December 31, 1999. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.




Meeks, Dorman & Company, P.A.


Longwood, Florida
March 30, 2000


                                      F-1
<PAGE>
<TABLE>
<CAPTION>

                                    SEAIR GROUP, INC.
                              (A Development Stage Company)

                                      Balance Sheets

---------------------------------------------------------------------------------------------------------------------------
December 31,                                                                                                        1999
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                                 <C>
Assets

Current assets:
      Accounts receivable                                                                                        $    6,435
      Inventory, net                                                                                                 40,992
      Prepaid expenses                                                                                                1,667
---------------------------------------------------------------------------------------------------------------------------
          Total current assets                                                                                       49,094
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
Property and equipment, net                                                                                           7,551
---------------------------------------------------------------------------------------------------------------------------

Other assets:
      Deposits                                                                                                        5,140
---------------------------------------------------------------------------------------------------------------------------
                                                                                                                 $   61,785
===========================================================================================================================

Liabilities and Stockholders' Deficit

Current liabilities:
      Bank overdraft                                                                                             $    2,418
      Note payable                                                                                                   15,000
      Accounts payable                                                                                               21,149
      Accrued payroll and related taxes                                                                              59,129
      Accrued other                                                                                                  11,000
      Customer deposits                                                                                               2,500
      Deposits on unissued stock                                                                                     24,000
      Due to stockholder                                                                                              5,541
      Reserve for repurchase of boats                                                                               190,000
---------------------------------------------------------------------------------------------------------------------------
          Total current liabilities                                                                                 330,737
---------------------------------------------------------------------------------------------------------------------------

Stockholders' deficit:
      Common stock, par value $.001, 25,000,000 shares authorized,
          9,961,242 shares issued and outstanding                                                                     9,961
      Additional paid-in capital                                                                                  1,273,221
      Deficit accumulated during the development stage                                                           (1,552,134)
---------------------------------------------------------------------------------------------------------------------------
          Total stockholders' deficit                                                                              (268,952)
---------------------------------------------------------------------------------------------------------------------------
                                                                                                                 $   61,785
===========================================================================================================================
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                      F-2


<PAGE>
<TABLE>
<CAPTION>

                                SEAIR GROUP, INC.
                          (A Development Stage Company)

                            Statements of Operations

-----------------------------------------------------------------------------------------------------------------
                                                                                                June 9, 1997
                                                                                               (Inception) to
Year Ended December 31,                                         1999            1998         December 31, 1999
-----------------------------------------------------------------------------------------------------------------
<S>                                                            <C>              <C>                  <C>
Revenues:
     Boats                                                     $  270,220       $   35,408           $    305,628
     Engines & parts                                               19,525           32,691                 52,216
     Other                                                          7,364                -                  7,364
-----------------------------------------------------------------------------------------------------------------
        Total revenues                                            297,109           68,099                365,208
-----------------------------------------------------------------------------------------------------------------

Cost of sales:
     Boats                                                        188,182           28,240                216,422
     Engines & parts                                               17,381           32,167                 49,548
     Research and development                                           -           25,592                 25,592
     Other                                                         49,333           48,736                 98,069
-----------------------------------------------------------------------------------------------------------------
        Total cost of sales                                       254,896          134,735                389,631
-----------------------------------------------------------------------------------------------------------------

Gross profit (loss)                                                42,213          (66,636)               (24,423)
-----------------------------------------------------------------------------------------------------------------

Operating expenses                                                560,405          524,182              1,286,067
-----------------------------------------------------------------------------------------------------------------

Loss from operations                                             (518,192)        (590,818)            (1,310,490)
-----------------------------------------------------------------------------------------------------------------

Other income and (expense)
     Reserve for repurchase of boats                             (190,000)               -               (190,000)
     Obsolete inventory write-down                                      -          (23,144)               (23,144)
     Interest expense                                                   -          (85,000)               (85,000)
     Gain on sale of securities                                    31,500                -                 31,500
     Miscellaneous income                                          25,000                -                 25,000
-----------------------------------------------------------------------------------------------------------------
                                                                 (133,500)        (108,144)              (241,644)
-----------------------------------------------------------------------------------------------------------------

Net loss                                                         (651,692)        (698,962)            (1,552,134)
=================================================================================================================

Net loss per share                                             $    (0.08)      $    (0.08)          $          -
=================================================================================================================

Weighted average number of shares and share
     equivalents outstanding                                    8,647,618        9,233,412
=================================================================================================================
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                      F-3


<PAGE>
<TABLE>
<CAPTION>

                                SEAIR GROUP, INC.
                          (A Development Stage Company)

                       Statements of Stockholders' Equity

-----------------------------------------------------------------------------------------------------------------------
                                                                                            Deficit
                                                        Common Stock                      Accumulated
                                                    ---------------------   Additional     During the
                                                                              Paid-in     Development        Total
                                                    Shares      Par Value     Capital        Stage          Equity
-----------------------------------------------------------------------------------------------------------------------
<S>                                              <C>               <C>       <C>            <C>             <C>
Date of Inception, June 9, 1997                  $              -  $     -   $         -    $         -     $        -
      Shares issued to World Seair
          shareholders in reverse acquisition           6,025,000    6,025        (6,025)             -              -
      Shares issued to Vicuna
          shareholders in reverse acquisition           2,100,000    2,100        (2,100)             -              -
      Issuance of common stock                          3,012,500    3,013         1,987              -          5,000
      Conversion of World Seair shares
          into Seair Group, Inc. shares                (3,012,500)  (3,013)        3,013              -              -
      Net loss                                                           -             -       (201,480)      (201,480)
-----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997                              8,125,000    8,125        (3,125)      (201,480)      (196,480)
-----------------------------------------------------------------------------------------------------------------------

      Issuance of common stock for cash                 1,160,907    1,161       738,275              -        739,436
      Costs of raising capital                                  -        -      (536,389)             -       (536,389)
      Issuance of common stock for services               630,000      630       471,870              -        472,500
      Conversion of debt into common stock                208,333      208       199,794              -        200,002
      Issuance of common stock as interest
          on debt                                         133,335      133        99,867              -        100,000
      Net loss                                                  -        -             -       (698,962)      (698,962)
-----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998                             10,257,575   10,257       970,292       (900,442)        80,107
-----------------------------------------------------------------------------------------------------------------------

      Retirement of common shares                      (3,500,000)  (3,500)        3,500              -              -
      Issuance of common stock for cash                   666,667      667        97,766              -         98,433
      Issuance of common stock as
          compensation                                    437,000      437        78,863              -         79,300
      Conversion of debt into common stock              2,100,000    2,100       122,800              -        124,900
      Net loss                                                  -        -             -       (651,692)      (651,692)
-----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                       $      9,961,242  $ 9,961   $ 1,273,221    $(1,552,134)    $ (268,952)
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                      F-4



<PAGE>
<TABLE>
<CAPTION>

                                SEAIR GROUP, INC.
                          (A Development Stage Company)

                            Statements of Cash Flows

---------------------------------------------------------------------------------------------------------------------
                                                                                                    June 9, 1997
                                                                                                   (Inception) to
                                                                     1999              1998       December 31, 1999
---------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>            <C>               <C>
Cash flows from operating activities:
     Net loss                                                          $ (651,692)    $ (698,962)       $ (1,552,134)
     Adjustments to reconcile net cash
         used by operating activities:
             Depreciation and amortization                                  4,157          2,185               6,342
             Bad debt expense                                                   -         25,000              25,000
             Obsolete inventory write-downs                                     -         23,144              23,144
             Issuance of stock as interest                                      -        100,000             100,000
             Issuance of stock for services                                79,300              -              79,300
             Reserve for repurchase of boats                              190,000              -             190,000
             Changes in assets and liabilities:
                Accounts receivable, net                                     (369)        (6,066)             (6,435)
                Inventory                                                  44,135       (108,271)            (64,136)
                Prepaid expense                                            28,952        (30,619)             (1,667)
                Accounts payable                                           15,129          6,020              21,149
                Accrued liabilities                                        33,935         21,194              70,129
                Customer deposits                                         (45,000)        47,500               2,500
---------------------------------------------------------------------------------------------------------------------
Net cash used by operating activities                                    (301,453)      (618,875)         (1,106,808)
---------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
     Purchase of property and equipment                                    (2,420)       (11,473)            (13,893)
     Decrease (Increase) in notes receivable from stockholder              12,500        (50,000)            (37,500)
     Payments on notes receivable from stockholder                              -         12,500              12,500
     Increase in deposits                                                       -         (5,140)             (5,140)
---------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                      10,080        (54,113)            (44,033)
---------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
     Net proceeds from issuance of common stock                            98,433        675,549             778,982
     Proceeds from deposits on unissued common stock                       24,000              -              24,000
     Proceeds from the issuance of notes payable                          139,900        114,000             473,900
     Increase in due from stockholder                                       5,541                              5,541
     Payments on notes payable                                                  -       (134,000)           (134,000)
---------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                 267,874        655,549           1,148,423
---------------------------------------------------------------------------------------------------------------------

Net decrease in cash                                                      (23,499)       (17,439)             (2,418)
Cash, beginning of period                                                  21,081         38,520                   -
---------------------------------------------------------------------------------------------------------------------
Cash, end of period                                                    $   (2,418)    $   21,081        $     (2,418)
=====================================================================================================================
Supplemental disclosures:
     Interest paid during the period                                   $        -     $        -        $          -
     Conversion of debt to common stock                                $  124,900     $  200,000        $    324,900
=====================================================================================================================
</TABLE>

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

                                      F-5
<PAGE>
                                SEAIR GROUP, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements

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

NOTE 1 - NATURE OF OPERATIONS
-----------------------------

Nature of Operations - Seair Group, Inc. ("Seair" or the "Company"), formerly
known as Vicuna, Inc. ("Vicuna"), was incorporated on July 9, 1986, under the
laws of the state of Nevada and has been a development stage company since
inception. On May 22, 1998, World Seair Corporation ("WSC"), a Florida
corporation, entered into a reverse acquisition agreement with Seair to become a
publicly traded company (See Note 4). WSC has designed and developed the Seair
Ultralite Flying Inflatable Boat.

Liquidity - The Company has sustained losses and negative cash flows from
operations since its inception. The Company's ability to meet its obligations in
the ordinary course of business is dependent upon its ability to raise
additional financing through public or private equity financings, establishing
profitable operations, or securing other sources of financing to fund
operations. Subsequent to year end, the Company raised $235,000 through
additional private placements.

The Company has a limited operating history and is subject to the risks,
expenses and uncertainties frequently encountered by companies in the
development stage. In the event the Company does not successfully implement its
business plan, certain assets may not be recoverable. See Note 3 - Going Concern
for further discussions of management's plans for the Company.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

The accounting and reporting policies of the Company conform with generally
accepted accounting principles. The policies that materially affect the
financial position and results of operations are as follows:

Fair Value of Financial Instruments - The carrying value of cash, receivables,
notes payable, and accounts payable, approximate fair value due to the short
maturity of these instruments.

Inventory - Inventory is stated at the lower of cost or market on a first-in,
first-out (FIFO) basis. Inventory consists of raw materials.

Property and Equipment - Fixed assets are carried at cost and consist of
furniture and equipment. Depreciation is provided for financial reporting
purposes over the estimated useful lives of the assets, which are estimated to
range between five and seven years, using accelerated methods.

                                      F-6
<PAGE>

                                SEAIR GROUP, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------

Advertising costs - The Company places advertising in various boating and
aircraft magazines. It is the Company's policy to expense advertising costs as
incurred. Advertising expense for the years ended December 31, 1999 and 1998
amounted to $9,250 and $9,003, respectively.

Use of 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 date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents - The Company considers all highly liquid financial
instruments purchased with an initial maturity of three months or less to be
cash equivalents.

Income Taxes - The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109, which requires recognition of deferred
tax liabilities and assets for the expected future tax consequences of events
that have been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.

Concentration Risk - The Company experiences concentration risk from certain
suppliers of components of the Ultralite Flying Inflatable Boat. While the
Company feels that it can purchase its components from more than one supplier,
the termination of a relationship with a supplier could result in significant
downtime in the production of boats.

Long-Lived Assets - The Company has adopted the provisions of Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-lived Assets" ("SFAS No. 121). SFAS No. 121 requires that long-lived assets
and certain identifiable intangibles to be held and used or disposed of by an
entity be reviewed for impairment whenever events or circumstances indicate that
the carrying amount of an asset may not be recoverable. The Company has
determined that no impairment loss needs to be recognized for applicable assets.

                                      F-7
<PAGE>

                                SEAIR GROUP, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------

Stock-Based Compensation - The Company has adopted the provisions of Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," which encourages companies to record compensation cost for
stock-based employee compensation plans at fair value.

Earnings Per Share - The Company has adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share", which requires presentation of basic
earnings per share ("Basic EPS") and diluted earnings per share ("Diluted EPS").
The computation of Basic EPS is computed by dividing income available to common
stockholders by the weighted average number of outstanding common shares during
the period. Diluted EPS gives effect to all dilutive potential common shares
outstanding during the period. The computation of Diluted EPS does not assume
conversion, exercise or contingent exercise of securities that would have an
anti-dilutive effect on earnings.

The shares used in the computations are as follows:
<TABLE>
<CAPTION>
                          -----------------------------------------------------------------------
                          December 31,                                1999             1998
                          -----------------------------------------------------------------------
<S>                                                                 <C>             <C>
                          Basic EPS                                 8,647,618       9,233,412

                          Diluted EPS                               8,647,618       9,233,412
                          =======================================================================
</TABLE>

Capital Structure - The Company has adopted Statement of Financial Accounting
Standards No. 129, "Disclosure of Information about Capital Structure" ("SFAS
No. 129"), which is applicable to all companies. Capital structure disclosures
required by SFAS No. 129 including liquidation preferences of preferred stock,
information about the pertinent rights and privileges of the outstanding equity
securities, and the redemption amounts for all issues of capital stock that are
redeemable at fixed or determinable prices on fixed or determinable dates. The
Company has no items which would be affected by this disclosure requirement.

Comprehensive Income - The Company has adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income," which requires that changes
in amounts of certain items, including foreign currency translation adjustments
and gains and losses on certain securities be shown in the financial statements.
The Company has no items that represent comprehensive income, and therefore, has
not included a schedule of comprehensive income in the financial statements.


                                      F-8
<PAGE>

                                SEAIR GROUP, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------

Disclosures about Segments of an Enterprise and Related Information - The
Company has adopted Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS No.
131"). SFAS No. 131 changes the way public companies report information about
segments of their business in annual financial statements. It also requires
entity-wide disclosures about the products and services an entity provides, the
material countries in which it holds assets and reports revenues, and its major
customers. The Company has no significant segments that would require separate
disclosure.

New Accounting Pronouncements - In June 1998, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities," ("SFAS No. 133"). This
statement establishes accounting and reporting guidelines for derivatives and
requires an establishment to record all derivatives as assets or liabilities on
the balance sheet at fair value. Additionally, this statement establishes
accounting treatment for four types of hedges: hedges of changes in the fair
value of assets or liabilities, firm commitments, forecasted transactions and
hedges of foreign currency exposures of net investments in foreign operations.
Any derivative that qualifies as a hedge, depending upon the nature of that
hedge, will either be offset against the change in fair value of the hedged
assets, liabilities or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. SFAS No.
133 is effective for years beginning after June 15, 2000. The Company does not
currently participate in these types of financing activities and does not
anticipate that the adoption of this statement will have a material impact on
its consolidated balance sheets, statements of operations, or cash flows.

In December 1999, the SEC issued Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements" (SAB 101). The Company is required to adopt
SAB 101 no later than its quarter ended June 30, 2000. The Company does not
believe that the adoption of SAB 101 will have a material effect on its
financial position or results of operations.


NOTE 3 - GOING CONCERN
----------------------

As shown in the accompanying financial statements, the Company incurred net
losses since inception, with net losses of approximately $651,000 and $699,000
during the years ended December 31, 1999 and 1998, respectively. The Company's
current liabilities exceed its current assets by $282,000 as of December 31,
1999. These factors create substantial doubt about the Company's ability to
continue as a going concern.



                                      F-9
<PAGE>


                                SEAIR GROUP, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements

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

NOTE 3 - GOING CONCERN  (CONTINUED)
-----------------------------------

Subsequent to year-end, the Company raised an additional $235,000 in private
offerings. The Company is planning to spin off the assets of the business into
its wholly-owned subsidiary and sell the business. The Company has a signed
memorandum of understanding to sell its product line, assets and limited
liabilities to another company. A definitive agreement has not been signed as of
the date of these financial statements. The Company is also actively pursuing a
merger or business combination with another operating company, but no agreements
have been entered into as of the date of these financial statements.

NOTE 4 - ACQUISITION
------------------

On May 22, 1998, World Seair Corporation, a Florida corporation, entered into a
reverse acquisition agreement with Vicuna, Inc., a Nevada corporation, to become
a publicly traded company. In the acquisition, the shareholders of WSC received
two shares of Vicuna stock for each 1 share of WSC stock outstanding. This
resulted in the issuance of 6,025,000 shares of Vicuna stock to the shareholders
of WSC. In exchange, Vicuna received 100 shares of WSC stock, valued at zero,
and WSC became a wholly-owned subsidiary of Vicuna. Upon closing, Vicuna was
renamed Seair Group, Inc. WSC ceased operations, and all operating activities
were carried on by Seair Group, Inc.

For accounting purposes, the acquisition has been treated as a recapitalization
of WSC, with WSC as the acquirer. The historical financial statements presented
prior to the merger are those of WSC. The Nevada corporation is the surviving
legal entity, and the stock of WSC has been retroactively adjusted for a common
stock split reflecting Seair Group, Inc.'s stock balance as of the end of the
year.


NOTE 5 - PROPERTY AND EQUIPMENT
-------------------------------

Property and equipment consisted of the following:
<TABLE>
<CAPTION>

                          ============================================================
                                                                    December 31, 1999
                                                                    ------------------
<S>                                                              <C>
                          Furniture and equipment                $            13,893
                          Less - Accumulated depreciation                     (6,342)
                          ------------------------------------------------------------
                          Net property and equipment             $             7,551
                          ============================================================
</TABLE>

Depreciation expense for property and equipment was $4,157 and $2,185 for the
years ended December 31, 1999 and 1998, respectively.



                                      F-10
<PAGE>


                                SEAIR GROUP, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements

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

NOTE 6 - NOTE PAYABLE
---------------------

The note payable at December 31, 1999 is a promissory note for $15,000 due
January 15, 2000 with zero interest. The note is collateralized by a used Seair
boat.


NOTE 7 - RESERVE FOR REPURCHASE OF BOATS
----------------------------------------

The Company has reserved an estimated $190,000 for the repurchase of twelve
boats as of December 31, 1999. It is the Company's intent to repurchase all
domestically sold boats to remove the potential liability for potential defects
in the boat hulls used, and sell the said inventory as parts to a third party.


NOTE 8 - STOCKHOLDERS' EQUITY
-----------------------------

On January 7, 1999, the Company's two majority stockholders retired 3,500,000
shares of common stock for the purpose of decreasing total shares outstanding
and increasing the value per share to the remaining stockholders.

During the year ended December 31, 1999, the Company issued 437,000 shares of
its common stock to certain of its officers and employees in lieu of
compensation. The value of these shares of common stock was determined to range
from $.15 to $.20 per share, based on the market value on the date of issue, and
resulted in a $79,300 charge to the income statement.


NOTE 9 - INCOME TAXES
---------------------

The significant components of the net deferred tax assets consist of the
following:
<TABLE>
<CAPTION>
                           ====================================================================
                           December 31,                                          1999
                           --------------------------------------------------------------------
<S>                                                                       <C>
                           Deferred tax assets:
                             Net operating loss carryforwards             $           536,000
                             Allowances for bad debt and inventory                          -
                             Reserve for repurchase of boats                           75,000
                           --------------------------------------------------------------------
                             Gross deferred income tax assets                         611,000
                             Valuation allowance                                     (611,000)
                           --------------------------------------------------------------------
                           Total deferred income tax liabilities                            -
                           --------------------------------------------------------------------
                           Net deferred income tax assets                 $                 -
                           ====================================================================

</TABLE>


                                      F-11

<PAGE>


                                SEAIR GROUP, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements

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

NOTE 9 - INCOME TAXES - CONTINUED

The following summary reconciles differences from taxes at the statutory rates
with the effective rate:
<TABLE>
<CAPTION>
                        ===================================================================================
                        Year ended December 31,                                  1999             1998
                        -----------------------------------------------------------------------------------
<S>                                                                             <C>                <C>
                        Federal income taxes at statutory rates                 (34.0%)            (34.0%)
                        State taxes, net of federal benefit                      (5.5%)             (5.5%)
                        Losses without tax benefits                              39.5%              39.5%
                        -----------------------------------------------------------------------------------
                        Income taxes at effective rates                             0%                 0%
                        ===================================================================================
</TABLE>

Unused net operating losses for income tax purposes, expiring through 2019 of
approximately $1,357,000 are available at December 31, 1999 for carryforward
against future years' taxable income. During 1998, the Company experienced
changes in ownership as defined in Section 382 of the Internal Revenue Code. The
effect of these changes in ownership is to limit the utilization of certain
existing net operating loss carryforwards for income tax purposes. Operating
losses incurred after the ownership change are not limited. As a result,
approximately $1,155,000 of the net operating losses which occurred after the
ownership changes are not limited. The operating, losses incurred prior to the
ownership changes are limited to a specified dollar amount each year. The tax
benefit of these losses of approximately $536,000 has been offset by a valuation
allowance due to it being more likely than not that the deferred tax assets will
not be realized. The valuation allowance for deferred tax assets increased by
$438,000 during 1999.


NOTE 10 - COMMITMENTS AND CONTINGENCIES
---------------------------------------

Leases - The following is a schedule by years of future minimum rental payments
required under operating leases for automobiles and property on which the
offices are located:
<TABLE>
<CAPTION>

                                      =========================================================
                                                                                  Minimum
                                      Year ending December 31,                  Commitments
                                      ---------------------------------------------------------
<S>                                   <C>                                             <C>
                                      2000                                            50,880
                                      2001                                            31,800
                                      ---------------------------------------------------------
                                      Total minimum payments required           $     82,680
                                      =========================================================
</TABLE>

Lease expense amounted to $35,245 and $34,812 for the years ended December 31,
1999 and 1998, respectively.


NOTE 11 - SUBSEQUENT EVENTS
---------------------------

On March 16, 2000, the Company's previously approved one for seven reverse
common stock split took effect. The stock split has not been reflected in the
numbers presented in these financial statements.


                                      F-12
<PAGE>
                                 EXHIBIT INDEX
                                 -------------


                  (2) Agreement and Plan of Reorganization dated May 22, 1998
                  filed as an exhibit and incorporated by reference to the
                  Company's Form 8-K filed on May 28, 1998.

                  (3) Amendment to Articles of Incorporation dated May 26, 1998
                  filed as an exhibit incorporated by reference to the Company's
                  Form 8-K filed on May 28, 1998.

                  (4) Promissory Note issued by the Company to Edward H. Vick
                  dated December 15, 1999.

                  (10.1) Memorandum of Understanding between the Company and
                  SeaGliders dated August 31, 1999.

                  (10.2) Lease Agreement between the Company and Browning
                  Development Sunshine Properties dated June 25, 1998.

                  (11)  Statement re: computation of per share earnings.

                  (16) Letter on change in certifying accountant filed as an
                  exhibit and incorporated by reference to the Company's Form
                  8-K filed on February 23, 2000.

                  (21)  Subsidiaries of the registrant.

                  (27)  Financial Data Schedule.