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

                                   FORM 10-QSB

                                   (Mark One)

 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                      For the quarter ended March 31, 2003

                                       OR

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

              For the transition period from ________ to __________

                        Commission File Number: 333-28249

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

             NEVADA                                      Applied  For
----------------------------------               ---------------------------
State  or  other  jurisdiction  of               I.R.S.  Employer  I.D.  No.
incorporation  or  organization

     Suite 601 - 938 Howe Street,
  Vancouver, British Columbia, CANADA                          V6Z  1N9
----------------------------------------                     -----------
(Address of principal executive offices)                     (Zip  Code)

Issuer's  telephone  number,  including  area  code:  (604)  684-5700
                                                      ---------------

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
          Title of each class Name of each exchange on which registered

                                    None N/A

        SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

Check  whether  the  Issuer  (1)  has  filed all reports required to be filed by
section  13  or  15(d) of the Exchange Act 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 fling requirements for the past 90 days. (1)
Yes  [X]  No  [  ]  (2)  Yes  [X]  No  [  ]

Check  if  disclosure of delinquent filers in response to Item 405 of Regulation
S-B  is  not contained in this form, and no disclosure will be contained, to the
best  of  registrant's  knowledge, in definitive proxy or information statements
incorporated  by  reference  in Part III of this Form 10-QSB or any amendment to
this  Form  10-QSB.  [N/A]

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


                                      (ii)
<PAGE>

State  the  aggregate market value of the voting stock held by non-affiliates of
the  Registrant  computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the  past  60  days:  The  aggregate  market  value  of the voting stock held by
non-affiliates  of  the  Registrant  (23,318,666  shares)  computed by using the
closing  sale price on April 9, 2002, was $1,831,893.   However, trading through
market  makers  and  through  other  electronic  means  has  ceased  pending
reinstatement of approval to market maker representation, therefore no value can
be  stated  as  it  would apply to normal trading activities until reinstatement
occurs.

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

<TABLE>
<CAPTION>
TABLE  OF  CONTENTS               PRIME  AIR,  INC.                    Index
-------------------

                                                                             PAGE NO.
<S>               <C>                                                        <C>
                                     PART I
ITEM 1            Description                                                   3
                  General                                                       3
ITEM 2            Description of Property                                       4
ITEM 3            Legal Proceedings                                             6
ITEM 4            Submission of Matters to a Vote of Security Holders           6

                                    PART II
ITEM 5            Market for Common Equity and Related Stockholder Matters      6
ITEM 6            Management's Discussion and Analysis or Plan of Operation     7
ITEM 7            Financial Statements                                       9-24

                                    PART III
ITEM 8            Exhibits and Reports on Form 8-K                             25
                  Signatures                                                   26
</TABLE>


FORWARD-LOOKING  STATEMENTS

Some  of  the  information  presented  in or incorporated by reference into this
report  constitutes  "forward-looking statements." Although the Company believes
that its expectations are based upon reasonable assumptions within the bounds of
its  knowledge  of  its  proposed  business  and operations, it is possible that
actual  results  may differ materially from its expectations. Factors that could
cause  actual  results  to differ from expectations include the inability of the
Company  to  raise  the  additional  capital necessary to commence its principal
operations  or  the  failure  to consummate a definitive agreement with Voyageur
Airways  Limited.


                                        2
<PAGE>

                                     PART I

ITEM  1.     DESCRIPTION  OF  BUSINESS

GENERAL

The  following  discussion  should  be  read  in  conjunction  with  the audited
financial  statements  and  notes  thereto included in the Annual Report on form
10-KSB  for  the  year  ended December 31, 2002 as filed with the Securities and
Exchange  Commission  for  the  fiscal  year  as  stated.

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

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

Prior  to  incorporation  in  the  State of Delaware, the Company was originally
incorporated  pursuant to the laws of the State of Utah on August 30,1993, under
the  name  "Astro  Enterprises,  Inc."  (referred  to  hereafter  as  "the  Utah
Corporation").  The  Utah  corporation  changed its name to "Prime Air, Inc." on
June  28,  1994.  Such  further  description  of  the  Utah  Corporation and all
relevant  information  is  included  in the Annual Report on form 10-K/A for the
year  ended  December 31, 2001 and 10-K for the year ended December 31, 2002 and
all  other  previous material filed with the Securities and Exchange Commission.

The  Company  entered  into  a  "Memorandum  of  Proposed Agreement" with 519222
Ontario  Limited,  a  corporate entity associated with Voyageur Airways Limited,
which,  subject  to the final approval of Voyageur and the Company, will allow a
merger  which  combines  25% of the assets of Voyageur with 70% of the assets of
the  Company.  That  engagement  was not completed.   Although no formal written
Agreement is in place with respect to obligations and responsibilities, Voyageur
remains  materially  supportive  and  continues to work with the Company for the
purpose  of  establishing  an  air  service.


                                        3
<PAGE>

AIRPORT  LEASE  AND  OPERATING  AGREEMENT

On October 29, 1993, Prime Air (BC) entered into a Lease and Operating Agreement
(the  "Airport  Agreement")  with  the  Corporation of the Village of Pemberton,
British  Columbia,  Canada  (hereinafter  the  "Village of Pemberton"), in which
Prime  Air  (BC)  agreed  to  undertake the planning, development, construction,
management,  and  operation  of a terminal facility at the Pemberton Airport. In
return  the  Village  of  Pemberton granted to Prime Air (BC) an exclusive lease
involving  certain  lands located at the Pemberton Airport (registered under the
Land  Title  Act, KN056037 under Parcel Identification Number 002-606-801, being
that  part  of  District  Lot 4769, Lillooet District, Except Plan KAP 44479) to
enable  Prime  Air  (BC)  to  undertake the planning, development, construction,
management, and operation of a terminal facility.  Such further information with
respect  to  the  Airport Lease and Operating Agreement is contained in material
previously  filed  and  as  stated  above.

Subsequent to the reporting date of this document, a Memorandum of Understanding
has  been completed between Prime Air, Inc., and Galvin Flying Service, Inc., of
Seattle  Washington.  A  news  release  dated  September  30,  2003 was prepared
announcing the foundation of this relationship.  Further, two commercial tenants
have  entered into month to month agreements with Prime Air, both tenants are in
aviation  related businesses.  Management continues to meet with individuals and
businesses  with  respect to developing the prospect of charter or scheduled air
service  operations.  No  commitments,  to  the date of this reporting have been
received  with  respect  to  this  item.

The  Pemberton  Airport  is  approximately  20 miles north of Whistler Resort on
Highway  99.  Whistler  Resort  is  a ski resort located at the base of Whistler
Mountain  and  Blackcomb  Mountain  approximately  75  miles north of Vancouver,
British Columbia, Canada. The resort has approximately 8,000 permanent residents
and  attracts  approximately  3,000,000 visitors annually. Currently only ground
transportation  is  available  to  the  resort,  except for private flights into
Pemberton  Airport. The nearest airport facility to Whistler Resort is Pemberton
Airport.  There  is  presently  no  regular  air service into Pemberton Airport.

AIR  SERVICE

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


                                        4
<PAGE>

necessary  to  operate, maintain and service the aircraft. The parties intend to
negotiate  and enter into a definitive agreement prior to commencing operations.

GOVERNMENT  REGULATION  AND  LICENSING

Any  corporation  conducting  commercial  air  service operations in Canada must
possess  a  valid  Operating  Certificate  and  other  licenses,  permits,
accreditations  and  certificates  that are issued and administered by Transport
Canada.  All  such  authorities  and  approvals  shall  be the responsibility of
Voyageur  Airways  Limited

MARKETING

Prime Air (BC) intends to commence a marketing program and hire market personnel
as  soon  as  sufficient  funds  are  available.

COMPETITION

Prime  Air  (BC)  will compete with other charter and airline companies based in
the  Vancouver  and  Seattle  area which currently service customers whose final
destination  is Whistler Resort. To a limited degree Prime Air (BC) will compete
with buses chartered or owned by tour operators. Most of these entities are more
established  companies  having much greater financial resources, experience, and
personnel  resources  than  Prime  Air  (BC).

EMPLOYEES

The  Company,  including  Prime  Air  BC, had one employee as of March 31, 2003,
consisting  of  Mr.  Haug,  who  was  employed  part-time.

ITEM  2.     DESCRIPTION  OF  PROPERTY

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

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

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

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

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

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


                                        5
<PAGE>

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

     Additionally,  the  Company  maintains  its  principal executive offices at
facilities  shared  with  the  business  of  the President of the Company, which
facilities  are  furnished  at  no  cost  to  the  Company.

ITEM  3.     LEGAL  PROCEEDINGS

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

Reference  to legal proceedings in 1994 and prior years is described in material
previously  filed  and  as  stated  in  paragraph  1  of  Item  I  above.

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

No matters were submitted to a vote of the shareholders during the quarter ended
March  31,  2003.

     PART  I  I

ITEM  5.     MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS

State  the  aggregate market value of the voting stock held by non-affiliates of
the  Registrant  computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the  past  60  days:  The  stock  has not traded with a "bid" and "ask" for such
period,  accordingly  no  aggregate  market  value  of  the voting stock held by
non-affiliates  of  the  Registrant  can  be  stated.

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


                                        6
<PAGE>

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

GENERAL

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

Some  of  the  information  presented  in or incorporated by reference into this
report  constitutes  "forward-looking statements." Although the Company believes
that its expectations are based upon reasonable assumptions within the bounds of
its  knowledge  of  its  proposed  business  and operations, it is possible that
actual  results  may differ materially from its expectations. Factors that could
cause  actual  results  to differ from expectations include the inability of the
Company  to  raise  the  additional  capital necessary to commence its principal
operations  or  the  failure  to consummate a definitive agreement with Voyageur
Airways  Limited.

To  the present date, Prime Air (BC) has constructed the basic terminal building
and  proposes  to facilitate regular, scheduled air service to Pemberton Airport
to  serve  the  nearby resort community of Whistler.  Sufficient funding has not
been secured to provide for costs for completion of certain infrastructure items
including  landing  lights,  airside  and  groundside related equipment, advance
marketing  and  working  capital  requirements.  Management  estimates  the
requirement  for  a  commitment  of  approximately  $3,000,000  to  provide  a
satisfactory  start  up  of  the British Columbia operation.   It is conceivable
that  a  considerably  lesser  amount  to provide for "lead in lights" and basic
weather and ground handling equipment would allow charter operations to commence
on  a  limited  basis.  Management  is attempting to raise sufficient capital to
allow a "start up" consisting of charter flights from Boeing Field in Seattle to
Pemberton.

The results of the operations for the quarter ended March 31, 2003 show costs at
approximately  62%  greater  than  the  same period of the previous year, before
"foreign  exchange  conversion", after which calculation, the quarterly expenses
show  approximately  221% greater for this period.  Foreign exchange differences
when  calculated  equate  all  values  to  US  funds.  The  primary asset of the
subsidiary  company  is  a  capital  asset  (terminal  building)  owned  by  the
subsidiary  company,  such  amounts  are  recorded  initially in Canadian funds.
Operating  costs  are  recorded at the "average" or "actual" conversion amounts;
value  of  capital  assets  are reported at the applicable period end conversion
rate.  Because  of  the "development stage" nature of the company, those figures
may  be  representative  of  the  continuing  nature of the Company on a current
basis,  but  not  representative  of the company if it is successful at securing
funding  for the Whistler, British Columbia component of its intended operation.

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

The  Company  is  presently in its developmental stage and currently has minimal
sources  of revenue to provide incoming cash flows to sustain future operations.
The  future successful operation of the Company is dependent upon its ability to
obtain  the  financing required to complete and operate the terminal facility in


                                        7
<PAGE>

Pemberton, British Columbia and to commence air service operations to Pemberton,
British  Columbia  on  an  economically  viable  basis.

The  financial statements of the Company have been prepared on a "going concern"
basis  which  assumes  the  Company  will  be able to realize its assets, obtain
financing  as  required  and  discharge  its  liabilities and commitments in the
normal  course  of business.  Other than a commitment from management to provide
funds  for  minimal operational requirements, there is no present commitment for
funds  adequate to provide for operational items necessary to complete the start
up  of  air  service  activities.

THE PAST QUARTER.  Due to the Company's negative working capital,  the year 2002
and  the  current  operating quarter remain difficult. The Company has sought to
minimize  operating  costs.  The  overriding  constraint  has  been  cash  flow.

RESULTS  OF  OPERATIONS

The  Company  has  not  yet  initiated  air  operations.

LIQUIDITY  AND  CAPITAL  RESOURCES

As  of  March  31,  2003, the Company's negative working capital was ($256,173).

ADDITIONAL  FACTORS  THAT  MAY  AFFECT  FUTURE  RESULTS

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

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

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


                                        8
<PAGE>

its  securities  may  result  in  dilution  of  the  Company's  then  current
stockholders.

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

The  process of obtaining required regulatory approvals required to commence air
service  operations  can  be  time-consuming  and expensive and other regulatory
requirements  can  be  burdensome.  Moreover, there can be no assurance that the
required  regulatory  clearances  will  be  obtained

ITEM  7.     FINANCIAL  STATEMENTS
     The  financial  statements  attached  hereto  and included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the  Securities  and  Exchange  Commission.  Certain  information  and  footnote
disclosures  normally  included  in  financial statements prepared in accordance
with  generally  accepted  accounting principles have been condensed or omitted.


However,  in  the  opinion  of  management,  all adjustments (which include only
normal  recurring  accruals)  necessary to present fairly the financial position
and results of operations for the periods presented have been made.  The results
for interim periods are not necessarily indicative of trends or of results to be
expected  for  the  full  year.  These  financial  statements  should be read in
conjunction  with  the  financial  statements  and notes thereto included in the
Company's  annual  report  on  Form 10-KSB for the year ended December 31, 2002.


Consolidated  Financial  Statements
March  31,  2003  and  2002
(Unaudited  -  Prepared  by  Management)

Consolidated  Balance  Sheets

Consolidated  Statements  of  Operations

Consolidated  Statements  of  Shareholders'  Equity  and  Deficit

Consolidated  Statements  of  Cash  Flows

Notes  to  the  Consolidated  Financial  Statements


                                        9
<PAGE>

<TABLE>
<CAPTION>

                                        PRIME AIR, INC.
                                  (A Development Stage Company)

                                  CONSOLIDATED BALANCE SHEETS
                                  (all figures in US dollars)

                                                          March 31      March 31     December 31
                                                            2003          2002          2002
                                                        (Unaudited)   (Unaudited)    (Audited)
                                                        ------------  ------------  -------------
<S>                                                     <C>           <C>           <C>
                                     ASSETS
Current Assets
  Cash and short-term deposits . . . . . . . . . . . .  $     1,230   $       677   $        512
  Prepaid expenses . . . . . . . . . . . . . . . . . .        1,699         1,330          1,585
  Goods and Services Tax recoverable . . . . . . . . .            -         1,165          1,357
                                                        ------------  ------------  -------------
                                                              2,929         3,172          3,454

Capital Assets (Note 4). . . . . . . . . . . . . . . .      500,508       520,191        505,261
                                                        ------------  ------------  -------------

                                                        $   503,437   $   523,363   $    508,715
                                                        ============  ============  =============

                                  LIABILITIES

Current Liabilities
  Accounts payable and accruals. . . . . . . . . . . .  $   224,022   $   196,156   $    214,643
  Notes and advances payable  (Note 5) . . . . . . . .       35,080        28,989         32,139
                                                        ------------  ------------  -------------
                                                            259,102       225,145        246,782
                                                        ------------  ------------  -------------

                              SHAREHOLDERS' EQUITY

Capital Stock  (Note 6)
  Authorized: 50,000,000 common shares with
     a stated par value of $.001/share
      3,000,000 preferred cumulative convertible
        shares with a stated par value of $.001/share
  Issued:
   23,318,666 common shares (2001: 22,898,666) . . . .       23,319        22,899         23,319

  Capital in excess of par value . . . . . . . . . . .    2,189,451     2,143,792      2,189,451
                                                        ------------  ------------  -------------
                                                          2,212,770     2,166,691      2,212,770
Accumulated Deficit During
  Development Stage. . . . . . . . . . . . . . . . . .   (1,968,435)   (1,868,473)    (1,950,837)
                                                        ------------  ------------
                                                            244,335       298,218        261,933
                                                        ------------  ------------

                                                        $   503,437   $   523,363   $    508,715
                                                        ============  ============  =============
</TABLE>


Approved  on  Behalf  of  the  Board:

"Blaine  Haug"  Director
--------------
"Wayne  Koch"   Director
-------------

                        See Accompanying Notes to Financial Statements


                                       10
<PAGE>

<TABLE>
<CAPTION>


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



                                                                             -          From Inception
                                                        Three months    Three Months      March 10,
                                                           ended           ended          1989 to
                                                          March 31        March 31        March 31
                                                            2003            2002            2003
                                                       --------------  --------------  ---------------
                                                        (Unaudited)      (Unaudited)     (Unaudited)
<S>                                                    <C>             <C>             <C>
Administrative And General Expenses
  Flight operations . . . . . . . . . . . . . . . . .  $           -   $           -   $       114,720
  Audit and accounting. . . . . . . . . . . . . . . .            955               -           112,889
  Advertising . . . . . . . . . . . . . . . . . . . .              -               -            18,083
  Amortization. . . . . . . . . . . . . . . . . . . .          4,753           3,087           147,861
  Association membership fees . . . . . . . . . . . .              -               -             5,768
  Automotive. . . . . . . . . . . . . . . . . . . . .            955               -            19,164
  Bad debts . . . . . . . . . . . . . . . . . . . . .              -               -             1,933
  Commissions and finders' fees . . . . . . . . . . .              -               -            22,311
  Consulting   (Note 7) . . . . . . . . . . . . . . .              -             920           680,229
  Insurance . . . . . . . . . . . . . . . . . . . . .            353             226            32,284
  Interest and service charges. . . . . . . . . . . .             74              76            16,919
  Legal costs . . . . . . . . . . . . . . . . . . . .              -               -           181,941
  Management remuneration . . . . . . . . . . . . . .              -               -            77,287
  Office and general. . . . . . . . . . . . . . . . .             40               -           165,676
  Repairs and maintenance . . . . . . . . . . . . . .            576              93            11,083
  Rent and property taxes - airport facility (Note 8)              -               -            70,651
  Telephone and utilities (recovered) . . . . . . . .             12             (86)           90,671
  Transfer agent, listing and filing fees . . . . . .          1,150           1,156            64,088
  Travel, promotion and entertainment . . . . . . . .              -               -           115,583
                                                       --------------  --------------  ---------------
                                                               8,868           5,472         1,949,148
                                                       --------------  --------------  ---------------

  Loss (gain) on foreign exchange conversion. . . . .          8,730               1            13,134
  Interest income . . . . . . . . . . . . . . . . . .              -               -             6,153
                                                       --------------  --------------  ---------------
                                                               8,730               1            19,287
                                                       --------------  --------------  ---------------

Net Loss For The Period . . . . . . . . . . . . . . .  $      17,598   $       5,473   $     1,968,435
                                                       ==============  ==============  ===============


Net Loss Per Common Share . . . . . . . . . . . . . .  $     (0.0008)  $     (0.0002)
                                                       ==============  ==============


Weighted Average Common Shares Outstanding. . . . . .     23,108,666      22,898,666
                                                       ==============  ==============
</TABLE>
                          See Accompanying Notes To Financial Statements


                                       11
<PAGE>

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

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

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

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

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

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

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

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

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


                                       12
<PAGE>

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

                                                                                                Accumulated
                                                              Capital in                      Deficit During
                                                              Excess of         Share           Development
                                        Common      Shares   (Less than)    Subscriptions          Stage
                                        Shares      Amount    Par Value      Receivable     (Unaudited-Note 1)
                                      -----------  --------  ------------  ---------------  -------------------
<S>                                   <C>          <C>       <C>           <C>              <C>
Balance Forward. . . . . . . . . . .   3,019,482   $ 3,019   $   114,041   $            -   $         (153,063)

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

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

Balance, June 28, 1994 . . . . . . .   6,000,000     6,000       344,596                -             (194,010)

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

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

Balance, December 31, 1994 . . . . .   6,000,000     6,000       337,283              (20)            (329,540)

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

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

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

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

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

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

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


                                       13
<PAGE>

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

                                                                                                Accumulated
                                                              Capital in                      Deficit During
                                                              Excess of         Share           Development
                                        Common      Shares   (Less than)    Subscriptions          Stage
                                        Shares      Amount    Par Value      Receivable     (Unaudited-Note 1)
                                      -----------  --------  ------------  ---------------  -------------------
<S>                                   <C>          <C>       <C>           <C>              <C>
Balance Forward. . . . . . . . . . .  13,113,562   $13,113   $ 1,365,572   $          (20)  $         (786,105)

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

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

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

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

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

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

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

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

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

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

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


                                       14
<PAGE>

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

                                                                                                Accumulated
                                                              Capital in                      Deficit During
                                                              Excess of         Share           Development
                                        Common      Shares   (Less than)    Subscriptions          Stage
                                        Shares      Amount    Par Value      Receivable     (Unaudited-Note 1)
                                      -----------  --------  ------------  ---------------  -------------------
<S>                                   <C>          <C>       <C>           <C>              <C>
Balance Forward. . . . . . . . . . .  18,013,110   $18,013   $ 1,739,773   $            -   $       (1,338,462)
Issue of common shares for
   debt settlements:
   at $.20/share . . . . . . . . . .     201,250       202        40,048                -                    -
   at $.25/share . . . . . . . . . .     423,200       423       105,377                -                    -
Issue of common shares for services
   at fair value . . . . . . . . . .   1,010,000     1,010        49,490                -                    -
Net loss for the year ended
   December 31, 1999 . . . . . . . .           -         -             -                -             (326,607)
                                      -----------  --------  ------------  ---------------  -------------------
Balance, December 31, 1999 . . . . .  19,647,560    19,648     1,934,688                -           (1,665,069)

Issue of common shares for cash
   at $.08/share . . . . . . . . . .     500,000       500        39,500                -                    -

Issue of common shares for
   debt settlements:
   at $.08/share . . . . . . . . . .       4,100         4           324                -                    -
   at $.10/share . . . . . . . . . .     871,006       871        86,230                -                    -

Net loss for the year ended
   December 31, 2000 . . . . . . . .           -         -             -                -             (116,336)
                                      -----------  --------  ------------  ---------------  -------------------
Balance, December 31, 2000 . . . . .  21,022,666    21,023     2,062,742                -           (1,781,405)

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

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

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

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

Net loss for the year ended
   December 31, 2001 . . . . . . . .           -         -             -                -              (81,595)
                                      -----------  --------  ------------  ---------------  -------------------
Balance, December 31, 2001 . . . . .  21,978,666   $21,979   $ 2,123,792   $            -   $       (1,863,000)
                                      ===========  ========  ============  ===============  ===================
</TABLE>
                 See Accompanying Notes To Financial Statements


                                       15
<PAGE>

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

                                                                                                Accumulated
                                                              Capital in                      Deficit During
                                                              Excess of         Share           Development
                                        Common      Shares   (Less than)    Subscriptions          Stage
                                        Shares      Amount    Par Value      Receivable     (Unaudited-Note 1)
                                      -----------  --------  ------------  ---------------  -------------------
<S>                                   <C>          <C>       <C>           <C>              <C>
Balance forward
                                      21,978,666   $21,979   $ 2,123,792   $            -   $       (1,863,000)
Issue of common shares for . . . . .   1,020,000     1,020        49,979                -                    -
   services at fair value

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

Net loss for the year ended
   December 31, 2002 . . . . . . . .           -         -             -                -              (87,837)
Balance, December 31, 2002 . . . . .  23,318,666    23,319     2,189,451                -           (1,950,837)
                                      -----------  --------  ------------  ---------------  -------------------
Net loss for the quarter ended
   March 31, 2003. . . . . . . . . .           -         -             -                -              (17,598)
                                      -----------  --------  ------------  ---------------  -------------------
Balance, March 31, 2003. . . . . . .  23,318,666   $23,319   $ 2,189,451   $            -   $       (1,968,435)
                                      ===========  ========  ============  ===============  ===================
</TABLE>

                 See Accompanying Notes To Financial Statements


                                       16
<PAGE>

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

                                                                                                         From Inception
                                                             Three months ended    Three months ended    March 10, 1989
                                                                  March 31              March 31          To March 31
                                                                    2003                  2002                2003
                                                            --------------------  --------------------  ---------------
                                                               (Unaudited)             (Unaudited)        (Unaudited)
<S>                                                         <C>                   <C>                   <C>
NET INFLOW (OUTFLOW) OF CASH RELATED
  TO THE FOLLOWING ACTIVITIES:


OPERATING
  Net loss . . . . . . . . . . . . . . . . . . . . . . . .  $           (17,598)  $            (5,473)  $    (1,968,435)
  Non-cash charge - amortization . . . . . . . . . . . . .                4,753                 3,087           147,861
                                                            --------------------  --------------------  ---------------
                                                                        (12,845)               (2,386)       (1,820,574

  Change in non-cash working capital
      balances relating to operations
       Prepaid expenses. . . . . . . . . . . . . . . . . .                 (114)                  220            (1,699
       Goods and Services tax recoverable. . . . . . . . .                1,357                   (17)                -
Accounts payable and accrued liabilities . . . . . . . . .                9,379                     -           224,022
                                                            --------------------  --------------------  ---------------
                                                                         10,622                   203           222,323
                                                            --------------------  --------------------  ----------------
                                                                         (2,223)               (2,183)       (1,598,251)
                                                            --------------------  --------------------  ---------------

FINANCING
  Notes and advances payable . . . . . . . . . . . . . . .                2,941               (20,149)           35,080

  Issue of capital stock . . . . . . . . . . . . . . . . .                    -                20,920         2,212,770

                                                            --------------------  --------------------  ---------------
                                                                          2,941                   771         2,247,850
                                                            --------------------  --------------------  ---------------

INVESTING
  (Cost) Recovery of terminal facility construction costs.                    -                     -          (648,369)
                                                            --------------------  --------------------  ---------------

NET CASH INFLOW (OUTFLOW). . . . . . . . . . . . . . . . .                  718                (1,412)            1,230

CASH, BEGINNING OF YEAR. . . . . . . . . . . . . . . . . .                  512                 2,089                 -
                                                            --------------------  --------------------  ---------------

CASH, END OF PERIOD. . . . . . . . . . . . . . . . . . . .  $             1,230   $               677   $         1,230
                                                            ====================  ====================  ===============
</TABLE>


                                       17
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2003 and 2002


1.     INCORPORATION,  PRINCIPLES  OF  CONSOLIDATION AND ACCOUNTING PRESENTATION

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

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

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

2.     NATURE  OF  OPERATIONS  /  GOING  CONCERN  CONSIDERATIONS

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

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


                                       18
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2003 and 2002


3.     SIGNIFICANT  ACCOUNTING  POLICIES

Reporting  Currency
-------------------

All  amounts  in  these  consolidated  financial statements are reported in U.S.
funds.  Monetary  assets and liabilities have been converted from Canadian funds
where  applicable  utilizing  the  year-end  closing  exchange  rate of $ 1.5906
CDN/$1.00 U.S.  Transactions recorded throughout the year in the accounts of the
Canadian  subsidiary  have  been  converted  to  their U.S. equivalent at actual
amounts where available or by utilizing the average annual rate as posted by the
Internal  Revenue  Service  of  the United States as follows: $ 1.5704 CDN/$1.00
U.S.  (2001:  $1.5484 CDN/ $1.00 U.S.). Exchange rates at March 31, 2002 had not
materially  changed  from  the  December  31,  2002  stated  rate.

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

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

Receivables  and  Prepaid  Expenses
-----------------------------------

All  amounts  reported  as receivables or prepaid expenses have been recorded at
their  original  values.  There have been no amounts written off as bad debts or
provided  for  as  an  allowance  against  the  recovery  of  these  assets.

Capital  Assets
---------------

Air  Terminal  Construction  Costs:  Expenditures  relating  directly  to  the
----------------------------------
construction  of  the  air  terminal facility and related engineering and design
have  been  recorded in the accounts of the Company at cost, net of amortization
which is provided on a straight-line basis over the 30-year term of the property
lease.

Furniture  and  Equipment:  Furniture  and  equipment  is stated at cost, net of
-------------------------
amortization which is provided for at the rate of 20% per annum on the declining
balance  basis.

Use  of  Estimates  in  the  Preparation  of  Financial  Statements
-------------------------------------------------------------------

The  preparation  of  financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect  the  reported  amounts  of  assets  and  liabilities  and  disclosure of
contingent  assets  and  liabilities at the date of the financial statements and
the  reported amounts of revenues and expenses during the reporting periods.  In
these  financial  statements,  assets,  liabilities  and  results  of operations
involve  significant  reliance  on  management  estimates.  Actual results could
differ  from  the  use  of  those  estimates.


                                       19
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2003 and 2002




3.    SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Income  Taxes
-------------

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 109,
"Accounting  For  Income  Taxes", during the fiscal year ended December 31, 1998
and  applied  the  provisions  of  that  statement on a retroactive basis to the
previous  fiscal  years,  which  resulted  in  no  significant  adjustments.

Statement  of  Financial  Accounting  Standards  No. 109, "Accounting for Income
Taxes",  requires  an  asset and liability approach for financial accounting and
reporting  for income tax purposes.  This statement recognizes (a) the amount of
taxes  payable  or  refundable  for  the  current  year  and  (b)  deferred  tax
liabilities  and  assets  for  future  tax consequences of events that have been
recognized  in  the  financial  statements  or  tax  returns.

Deferred  income  taxes  result from temporary differences in the recognition of
accounting  transactions for income tax and financial reporting purposes.  There
were  no  temporary  differences  at  December  31,  2001  and earlier years and
accordingly,  no  deferred  tax  liabilities have been recognized for all years.

The  operating  subsidiary  Company  has  cumulative  net  operating  loss carry
forwards  of  approximately
$668,000 at December 31, 2001 and $ 790,000 at December 31, 2000.  No effect has
been  shown  in  the  financial  statements  for  these  carry  forwards  as the
likelihood  of  future tax benefit from such is not presently determinable.  The
potential  income  tax  benefits  of  these net operating loss carry forwards of
approximately  $ 118,000 at December 31, 2001 and $ 144,000 at December 31, 2000
(based  upon current income tax rates) have been offset by valuation reserves of
the  same amount.  Net operating losses expire after seven (7) years.  Operating
losses  of  the  US  parent  corporation  have  not  been  determined.


                                       20
<PAGE>

                                 PRIME AIR, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2003 and 2002


4.    CAPITAL  ASSETS

Capital  assets consist of the following at March 31, 2003 and 2002 and December
31,  2002:


                                                      March  31,  2002
                                          --------------------------------------
                                                       Accumulated     Net  Book
                                            Cost      Amortization       Value
                                          --------------------------------------
     Air  terminal  construction  costs   $  641,972   $  143,478     $  498,494
     Computer  equiptment                        948          189            759
     Furniture  and  equipment                 5,154        3,899          1,255
                                          --------------------------------------
                                          $  648,074   $  147,566     $ 500,508
                                          ======================================

                                                      March  31,  2002
                                          --------------------------------------
                                                       Accumulated     Net  Book
                                            Cost      Amortization       Value
                                          --------------------------------------
     Air  terminal  construction  costs   $  641,972   $ 123,302      $  518,670

     Furniture  and  equipment                 5,154       3,633           1,521
                                          --------------------------------------
                                          $  647,126   $ 126,935      $  520,191
                                          ======================================

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

5.    NOTES  AND  ADVANCES  PAYABLE

The  notes  and  advances  payable  are  unsecured, non-interest bearing and are
without  specific  terms of repayment.  Included therein is an amount of $35,080
which  has  been  advanced  to the Company by a shareholder and/or a corporation
controlled  by  that shareholder who is the beneficial owner of 2,245,226 shares
of  common  stock of the Company, that holding representing 10.22% of the issued
and  outstanding  capital  of  the  Company.


                                       21
<PAGE>

<TABLE>
<CAPTION>
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2003 and 2002

6.  CAPITAL  STOCK
    Authorized:
       150,000,000  common  shares  with  a  stated  par  value  of  $.001/share
         5,000,000  preferred  cumulative  convertible  shares with a stated par
           value  of  $.001/share
                                                       Number  of  Shares  Consideration
                                                       ------------------  -------------
<S>                                                  <C>                  <C>
Common Shares Issued:
       To August 31, 1993
              - for cash. . . . . . . . . . . . . .              600,000   $        300
        Prime Air Inc. share exchange
              - June 28, 1994 . . . . . . . . . . .            5,400,000        350,296
        Share subscription. . . . . . . . . . . . .                              (7,313)
        During year ended December 31, 1995
              - for cash. . . . . . . . . . . . . .            1,125,100        131,755
                                                       ------------------  -------------
        Balance at December 31, 1995. . . . . . . .            7,125,100        475,038
                                                       ------------------  -------------

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

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

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

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

        During the year ended December 31, 2000
              - for-cash. . . . . . . . . . . . . .              500,000         40,000
              - shares-for-debt settlements . . . .              875,106         87,429
                                                       ------------------  -------------
                                                               1,375,106        127,429
                                                       ------------------  -------------
        Balance, December 31, 2000. . . . . . . . .           21,022,666     $2,081,765
                                                       ------------------  -------------
</TABLE>


                                       22
<PAGE>

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

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2002 and 2001

6.    CAPITAL  STOCK  (CONTINUED)


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

         During year ended December 31, 2001
              - for cash. . . . . . . . . . . . . .              300,000         24,000
              - shares-for-debt settlements . . . .              250,000         20,000
              - consulting and related services . .              400,000         20,000
              - Transfer Agent correction . . . . .                6,000              6
                                                       ------------------  -------------
                                                                 956,000         64,406
                                                       ------------------  -------------
         Balance, December 31, 2001 . . . . . . . .           21,978,666      2,145,771
                                                       ------------------  -------------

              -  consulting  and  related  services             920,000          20,920

         Balance, March 31, 2003                             22,898,666   $   2,166,691
                                                       ==================  =============
</TABLE>

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

7.   RELATED  PARTY  TRANSACTIONS

During the years ended December 31, 2001 and 2000, no cash remuneration was paid
to  any  director or officer of the Company.  The Company has adopted the policy
of  issuing  "restricted"  common  shares  to certain directors and officers for
services  rendered.  Specifically  billed  amounts  have  been settled by way of
"shares-for-debt"  arrangements,  the  share  value  thereof being determined by
securities regulations.  In addition, further shares have been issued to certain
directors  and  officers  for services provided to the Company of a more general
nature,  these  shares  being  attributed  a nominal value of $ 0.001 per share.
During  the year ended December 31, 2001, an officer and director of the Company
received  250,000  common  shares  by  way  of  a  debt  settlement  covering an
obligation  of  $20,000 and another director and officer received 400,000 common
shares  with  an  attributed value of $400 for general management and consulting
services.  During  the  year  ended  December 31, 2000, shares issued to related
parties  consisted of debt settlements only, such issuances being 871,006 common
shares  covering  obligations  of  $87,100.

On  January 28, 2002, the Board of Directors authorized the issuance of  800,000
"restricted"  common  shares  to  directors  and  officers  of  the  Company  in
recognition  of  services  provided  thereto  to  December 31, 2001, and 120,000
"restricted"  common  shares  in settlement of debts for services.  These shares
were  issued  from Treasury on February 13, 2002.  The attributed value of these
shares  is  $20,920.


                                       23
<PAGE>

                                PRIME AIR, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2003 and 2002


8.    RENT,  PROPERTY  TAXES  AND  LEASE  COMMITMENT

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

     -    $  67  US  ($100  CDN)  per  annum for the initial six (6) years (1993
          through  1999);

       and  thereafter

     -    5%  of  gross  receipts  per  annum  derived from the operation of the
          terminal facilities, excluding amounts received in connection with the
          sale  of  airline tickets and other forms of transportation. The lease
          commitment  amounts  for 2001 through 2005 cannot be quantified as the
          amount  of  gross  receipts  for  those years cannot be determined and
          active  operation  of  the  terminal facilities has not yet commenced.

No  lease payments were made during the years ended December 31, 2001 or 2000 as
there  were  no  gross  receipts  derived  from  operations  in those years. The
Company,  however,  was  obligated  to  pay  property taxes imposed by municipal
authorities,  such  levies  amounting to $8,426. for the year ended December 31,
2001  (2000:  $9,294).


                                       24
<PAGE>

                                    PART III


ITEM  8.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

(A)     Reports  on  Form  8-K.

     None

(B)     Index  to  Exhibits.

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

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

     *1       Power  of  Attorney  (included  on  signature  page).

*Filed  herewith.


                                       25
<PAGE>

                                   SIGNATURES

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

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

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

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

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

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


                                       26
<PAGE>