U.S. SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549

                                     FORM 10-KSB

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                         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: 000-26051

                              BEAR AEROSPACE, INC.
          (Exact name of registrant as specified in its charter)

                 Nevada                                     88-0424430
     (State of incorporation)                          (I.R.S. Employer
                                                       Identification No.)

      23401 Park Sorrento, Suite 18, Calabasas, California        91302
            (Address of principal executive offices)            (Zip Code)

             Registrant's telephone number:  (818) 225-0077

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

     Securities registered pursuant to Section 12(g) of the Act: Common
                        Stock, $0.001 Par Value

     Indicate by check mark whether the Company (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Company was required to file such reports),
and (2) been subject to such filing requirements for the past 90
days. Yes   No X

     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Company'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 [  ].

     State the aggregate market value of the voting stock held by non-
affiliates 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. There is no established public
trading market for the issuer's common stock, and the issuer is
unaware of any transactions in its common stock within the past 60 days.

     The total number of issued and outstanding shares of the issuer's
common stock, par value $0.001, as of October 16, 2003, was
27,499,667.

                                   TABLE OF CONTENTS
                                                                       PAGE

PART I

ITEM 1.  Description of Business....................

ITEM 2.  Description of Property...................

ITEM 3.  Legal Proceedings.....................

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

PART II

ITEM 5.  Market for Common Equity and Other Shareholder Matters......

ITEM 6.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations................

ITEM 7.  Financial Statements....................

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

PART III

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

ITEM 10.  Executive Compensation..................

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

ITEM 12.  Certain Relationships and Related Transactions.........

ITEM 13.  Exhibits and Reports on Form 8-K...............

ITEM 14.  Controls and Procedures...................

Signatures.................................

PART I.

RISK FACTORS AND CAUTIONARY STATEMENTS

Forward-looking statements in this report are made pursuant to the
"safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. The Company wishes to advise readers that actual results
may differ substantially from such forward-looking statements.
Forward-looking statements include statements concerning underlying
assumptions and other statements that are other than statements of
historical facts. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied by the statements, including, but not
limited to, the following: the ability of the Company to provide for
its obligations, to provide working capital needs from operating
revenues, to obtain additional financing needed for any future
acquisitions, to meet competitive challenges and technological
changes, and other risks detailed in the Company's periodic report
filings with the Securities and Exchange Commission.

ITEM 1. BUSINESS.
INTRODUCTION

Bear Aerospace, Inc. was formed to manufacture certified aircraft
that fill very specific niches in the general aviation market place.
These niches include the newly developing light sport class of
aircraft and light jet class.  Moreover, Bear Aerospace is developing
an entirely new class of aircraft.  It is the ultra-long range light
business jet.  This class of aircraft is intended to bridge the light
business jet with the long-range heavy business jet.

Bear Aerospace, Inc. intends to accomplish the above tasks by forming
strategic partnerships with well established, internationally known
aerospace manufacturing firms from the US, Poland and China.  The
Polish firms are Polskie Zaklady Lotcicze Mielec, Sp.z o.o.,
Institute of Aviation, Scientific Institute Poland, Polskie Zaklady
Lotnicze Swidnik, Sp. z o.o.; the Chinese firms are Shenyang Aircraft
Corporation and Xian Aircraft Company; and the US firms are Lockheed
Martin corporation, Raytheon Missile systems, Pratt & Whitney and
Williams International.

The formation of these strategic relationships will allow the Company
to have both FAR and JAR certification capabilities; use of several
million square feet of manufacturing facilities; access to numerous
test facilities, dedicated support from specialized engineering
staffs; as well as an international marketing capability at its
disposal.

This capability is required to build three certified aircraft, as
follows:

Mewa/Seneca II, a Piper Seneca derivative with SMA aero diesel engines;
Bear Jet, a six-place single engine business jet; and
Mini-Widebody, a light twin engine long-range eight-place
business jet.

And one FAA approved aircraft, as follows:

Bear 360 sport and training aircraft.

Bear Aerospace's objective is to become a worldwide market leader in
the sale and manufacture of small business and training aircraft. To
achieve this objective, the Company intends to focus on the
performance, efficiency, safety, and product value of its proposed
aircraft.

The Company's strategy is to capitalize on the acknowledged current
shortage of low-priced, high-performance aircraft, both for general
and mission specific use. The Company believes that its ability to
offer an aircraft, which outperforms competitive aircraft at a
reduced cost, will enable the Company to penetrate the business,
private, and government aircraft markets. Additionally, the Company
intends to expend substantial resources on a worldwide sale and
marketing program to position itself with potential customers.

Bear Aerospace believes that aircraft sales are heavily dependent on
the quality, safety, and cost of their products. Accordingly, the
Company intends to maintain high quality and safety standards,
coupled with low cost, in all aspects of the design and manufacture
of its proposed aircraft. For example, the Company believes that
certain design features will allow future airline pilots to safely
train in a turbine aircraft without the inherent high risk issues
attendant with certain used aircraft (for example, Learjets), at a
cost of one-third to one-quarter currently incurred in the
marketplace.

Bear Aerospace believes that it will offer aircraft at a
comparatively low price by:

     - Containing costs of obtaining FAA certification and amendments
       to such certification,

     - Containing costs of manufacturing,

     - Using derivative designs from existing aircraft, thereby
       eliminating the high development costs attendant with new designs.

The Company believes that it will be able to obtain its
Type Certificate for the Bear Jet and Mini-Widebody aircraft at a
significantly lower cost than its competitors due to the Company's
unique overseas relationships, resulting in the Company's ability
to contain administrative costs and overhead expenses allocated to
the development and certification process.

Production Certificate for the Bear Jet and Mini-Widebody aircraft
and control manufacturing costs by producing most of the tooling,
jigs, dies and molds required for the manufacture of its aircraft
in-house. Also, because the Company will produce the airframe and
most of the associated components of its aircraft in Poland and
China, the costs will be one-third to one-quarter that expected
domestically.

Overview

The Company operates in the aircraft and aviation engine
manufacturing industries. The Company was formed to manufacture
certified aircraft that fill very specific niches in the general
aviation market place.  These niches include the newly developing
light sport class of aircraft and light jet class.  Moreover, the
Company is developing an entirely new class of aircraft.  It is the
ultra-long range light business jet.  This class of aircraft is
intended to bridge the light business jet with the long-range heavy
business jet.

Bear Aerospace, Inc. (formerly known as Bearcraft Aerosystems Corp.)
was formed on Oct 27, 1998.  In Dec 2000, Bear Aerospace, Inc and
Bearcraft Aviation LLC joined together and on Apr 1, 2001, did an
exchange agreement with Theinternetcorp.net, Inc. The surviving
corporation, after a name change back to Bear Aerospace, Inc., is now
Bear Aerospace, Inc., a Nevada Corporation.

     - Bear Aerospace, Inc. was formed to produce and market modified
       General Electric T-58 turbine engines, currently in use by two
       aircraft that were designed by the Company's engineers.  These
       aircraft, the Twin Jet and Viper Jet, are the only small class
       general aviation jets currently offered in the world.

Bearcraft Aviation LLC, established in 1997, produced metal aircraft
designed by Sergei Yakovlev of Yakovlev Aircraft in Russia, to US
Federal Aviation Regulation 23.  The first aircraft from this joint
effort was the Bear 360, a high performance two seat all metal low
wing monoplane reminiscent of classic WWII aircraft like the Bearcat,
Hellcat, and Skyraider.

Business
GENERAL
MARKET IN THE GENERAL AVIATION INDUSTRY

The general aviation industry comprises essentially all non-military
aviation activity other than scheduled and charter commercial
airlines licensed by the FAA and the Department of Transportation.
General aviation aircraft are frequently classified by their type and
number of engines and include aircraft with fewer than 20 seats.
There are three different types of engines: piston, propjet and
turbofan (jet). Piston aircraft use an internal combustion engine to
drive a propeller and there may be one or two engines and propellers.
Propjet aircraft combine a jet turbine powerplant with a propeller
geared to the main shaft of the turbine and there may be one or two
engines and propellers. Turbofan aircraft use pure jet propulsion to
power the aircraft. Although there are usually two engines on general
aviation turbofan aircraft, there may also be one or three.
Purchasers of general aviation aircraft include (i) corporations,
(ii) governments, (iii) the military, (iv) the general public and (v)
fractional interest entities. A corporation may purchase a general
aviation aircraft for transporting its employees and property. Many
companies use an aircraft in their line of business, including on-
demand air taxi services, air ambulance services and freight and
delivery services. Governments and military organizations may
purchase an aircraft for the transportation of personnel, freight and
equipment. Members of the general public may purchase an aircraft for
personal and/or business transportation and pleasure use. Fractional
interest entities purchase one or more aircraft and then sell
interests in each aircraft to several persons or entities. Each
entity pays for its share of maintenance and operating costs and its
access to and use of the aircraft. Increased corporate earnings may
encourage corporations to acquire an aircraft. An aircraft must
qualify under FAA regulations in order to be used for certain
purposes, and the ability of an aircraft to qualify will have a
material affect on the potential market for such aircraft.
Currently, there are fewer than ten major manufacturers of general
aviation aircraft based in the United States. Piston aircraft make up
the numerical majority of aircraft delivered by these manufacturers,
whereas propjets and jet aircraft account for the majority of
billings. Sales of general aviation aircraft are at a record-breaking
pace, as of late last year. Citing FAA statistics for the first nine
months of 2000, Airline Financial News reported, in April 2001, that
sales reached $6.3 billion, a 10-percent increase over the same
period in 1999. General aviation manufacturers' shipments were up 16
percent, to 2,000 units. Shipments of piston-powered aircraft more
than tripled between 1994 and 1999 (from 499 to 1,747) and were up 14
percent (1,336 units) during the first nine months of 2000. Jet sales
were also up for the eighth straight year, and turboprop production,
which had been on the decline, rose by more than a third. The number
of active pilots also grew for the third consecutive year, totaling
about 645,000, while instrument-rated pilots increased by about 6,000
to 315,000.

General aviation is divided into two separate areas, certified and
experimental. Essentially, the only difference between the certified
and non-certified (experimental) is that the certified can be used
for hire (i.e. giving passenger rides for pay, carrying cargo for
pay, etc.).  However, very recently, the FAA has now approved non-
certified (experimental) aircraft for pilot training.  Moreover,
within the next 6 months, new regulations will be released by the FAA
allowing a new class of experimental aircraft to be used for hire and
be sold pre-assembled after passing a self-certification program.
Historically, most experimental aircraft are sold as complete or
partial kits.

There are less than ten major general aviation manufacturers in the
certified class.

They are as follows:

     - Cessna - builds a line of certified aircraft ranging from
       single engine high-wing fixed gear to large corporate jets.  The
       approximate sales price range is from $200,000 to $12,000,000.

     - Raytheon (old Beechcraft) - builds a line of certified
       aircraft ranging from single engine low-wing retract gear to medium
       size corporate aircraft.  The approximate sales range is from
       $600,000 to $4,500,000.

     - New Piper Corporation - builds a line of certified aircraft
       ranging from single engine low-wing fixed gear to single engine
       turboprop 6 place corporate aircraft.  The approximate sales range is
       from $300,000 to $1,200,000.

     - Cirrus Corporation - builds the certified SR-20 low wing all
       composite 4 place fixed gear aircraft.  The sales price is
       approximately $225,000.

     - Lancair Company - builds the certified Columbia low wing all
       composite 4 place fixed gear aircraft.  In addition, they produce the
       Lancair 4, 4P, and 360 kits.  The Columbia sells for approximately
       $265,000, and the kits range from approximately $50,000 to $110,000.

     - Bombardier Aerospace - builds all Lear Jets and Challenger
       line business jets.  The sales price range from approximately
       $5,000,000 to $35,000,000 plus.

     - Gulfstream Aerospace - builds the Gulfstream 4 and 5 large
       business jets.  The sales price range is approximately $25,000,000 to
       $45,000,000.

There are approximately 400 experimental aircraft manufacturers,
however most of them are "cottage" type operations.  They produce
products from powered parachutes to jet aircraft.  The three major
manufacturers in this sector are:

     - Lancair Company - described above.

     - Zenith Aircraft Company - builds a line of all-metal low-wing
       fixed gear kit aircraft.  The sales price range is from approximately
       $30,000 to $50,000.

     - Van's Aircraft Company - builds a line of 2 and 4 place single
       engine all metal low wing kit aircraft.  The sales price range is
       from  $18,000 to $30,000.

Some of the smaller companies that produce competitive products are
as follows:

     - Maverick Twin Jet - They produce a 4-place twin-engine jet.

The kit sells for approximately $220,000 less engines.

     - Viper Jet - They produce a 2-place tandem single engine jet.

The kit sells for approximately $80,000 less engine.

     - Legend Aircraft - They produce a 2-place tandem single- engine
       turboprop.  The kit sells for approximately $80,000 less engine.

Currently, several products are in-development that could be
competitive products.

They are as follows:

     - Eclipse 500 - Twin-engine (Williams FJX) five-place jet;

     - Safire - Twin-engine (Agilis 800) six-place jet;

     - Century CA-100 - Twin-engine (Williams FJ-33) six-place jet;

     - Aerostar FJ-100 - Twin-engine (Williams FJ-33) six-place jet;

     - Vantage - Single engine (Pratt-Whitney JT-15) six-place jet.
       Of these development aircraft, only the Eclipse 500, the Company
       believes, has a legitimate chance of reaching market.   The Safire
       and Century are strictly paper designs and, currently, both are
       seeking financing, and have been doing so for several years.  The
       Vantage is a flying prototype that the Company believes is not
       certifiable.  Moreover, VisionAire, the developer of the Vantage has
       recently filed for Chapter 7 bankruptcy, and is now being liquidated.

     - Given the situation of not having a production facility or
       production line for the majority of the aircraft mentioned above, the
       marketing efforts for all five are remarkable.  Each has offered
       their product on a pre-production basis.  The aircraft can be secured
       with a refundable deposit paid in advance.

To date each manufacturer has the following sales totals:

     - Eclipse 500 - reported - 320 sales, $25,000 to $50,000 deposit,
       price - $837,500
       reported - 1000 sales to Nimbus Fractional Ownership Company

     - Safire - reported - in excess of 700 sales, $8,000 deposit, price -
       $800,000

     - Century CA-100 - reported - 125 sales, $10,000 deposit, price -
       $2,700.000

     - Aerostar FJ-100 - reported - 53 sales, $10,000 deposit, price -
       $1,950,000

     - Vantage - reported - 223 sales, $50,000 to $100,000 deposit -
       $2,195,000

The sales totals are irrevocable evidence there is an immense demand
for a light jet such as the Bear Jet.  Moreover, given that the
majority of the above projects will likely fail, there is a "ready
made" customer base with "check in-hand" that will purchase a Company
aircraft to satisfy their need for light high-speed transportation.
Bear Aerospace, Inc. gains a decided advantage (unfair advantage)
over all of the proposed competition listed above in certification
and production capability.  Every aircraft company listed above has a
common flaw, in that, without exception, none of these companies has
ever certified an aircraft, or has a production facility.

The Company believes it has a tremendous advantage over the listed
competition because of the Joint Venture with the Polish Aviation
Institute and PZL Mielec and PZL Swidnik.  By forming these Joint
Ventures, The Company is afforded the infrastructure to build
prototypes, FAR/JAR certify, and ultimately produce the aircraft
without the attendant costs associated with new program ramp-up.  The
Institute is the FAR/JAR certifying authority, therefore, the team
does not have to be created to perform the task.  PZL Mielec and PZL
Swidnik have a long history of producing certified aircraft,
therefore, the Production Certificate standards and procedures are
already in place.  As can be seen, this eliminates major development
costs that do not have to be amortized across the product cost.  The
advantages above are even further enhanced by the fact that the
Polish government is granting the Bear Jet program offset status.
Essentially, this means that if any foreign company sells military
goods, or such, into Poland, they are required to take a percentage
of that sale and re-invest in Poland.  The Company product, the Bear
Jet aircraft, will be the vehicle for the selling company to re-
invest in, as it has recently received Polish government approval,
thus giving the Company a decided advantage over its competition in
all respects.

Moreover, the Company, via China, has access to very low cost highly
qualified engineers, assembly personnel, and facilities.  This
equates to an approximate 60% to 70% saving over United States costs,
plus opens up the entire Asian market for sales of aircraft to this
region.  Xian Aircraft Company and Shenyang Aircraft Corporation, two
of the largest aircraft manufacturing facilities in China, are
presently building component FAR/JAR aircraft parts for Boeing and
Airbus aircraft, so will produce Company products to FAR/JAR
standards.

BEAR AEROSPACE's PRODUCT LINE

The current Bear Aerospace product line includes four flagship
aircraft, the Mewa/Seneca II production line, the Bear Jet, the Mini-
Widebody, and the Bear 360.   The majority of all airframe components
for the above listed aircraft will be produced in China.  Where
FAR/JAR certificates are required, final assembly will occur in
Poland.  Otherwise, final assembly will occur in Poland and China.
The Aircraft are as follows:

     - The Mewa/Seneca II is a certified executive type, 6 passenger,
       all-metal, piston-powered aircraft built in Poland with full licensed
       design rights from Piper Aircraft in the United States (Piper has
       manufactured this aircraft in the U.S. for more than 25 years).  PZL
       Mielec was the Polish manufacturer, but the Company recently
       completed purchase of this already designed, certified, and licensed
       Mewa/Seneca II aircraft production line for $488,000.  This $488,000
       purchase price also included 12 Mewa/Seneca II aircraft that are new
       manufactured, except for engines and avionics.

     - The Bear Jet is a 6-seat single-engine general aviation jet
       aircraft designed for the utility class with a range of approximately
       1200 nautical miles and cruise speeds in excess of 400 miles per
       hour.  In essence, the Bear Jet is designed to become the 21st
       century Beechcraft Bonanza but with twice the performance.

     - The Mini-Widebody is a very unique twin-engine 8 place light
       business jet with transatlantic 4,200 plus mile capability. The
       configuration is a very conventional body over wing airline
       configuration, with the engines pods mounted on the wing, enabling a
       large usable volume fraction as compared to the more conventional
       corporate aircraft aft-fuselage mounted engine configurations. This
       pod configuration is efficient both in volume and weigh and maximizes
       the aircraft for cargo or passenger utilization.

     - The Bear 360 is a high-performance, two seat all metal low
       wing monoplane reminiscent of classic WWII aircraft like the Bearcat,
       Hellcat, and Skyraider.   It has 220 knot cross country performance,
       exemplary acrobatic capability, and excellent formation handling
       characteristics.  The prototype Bear 360 has completed flight-testing
       at the Bear Aerospace Test Facility at California City Airport,
       California.

COMPANY FAR & JAR CERTIFIED AIRCRAFT

Mewa/Seneca II production

To expand and create an additional product line, the Company
purchased the already designed, certified, and licensed Seneca II
aircraft production line for $488,000. The Mielec factory had
manufactured and mass-produced the Mewa/Seneca II aircraft in Poland
in the recent past.

This $488,000 purchase price not only included two Mewa/Seneca II
production lines, but also included 12 Mewa/Seneca II aircraft that
are new manufactured, except for engines and avionics.

The Mewa/Seneca II is a certified aircraft built in Poland under
licensed design rights from Piper Aircraft in the United States.  It
is an executive type, 6 passenger all-metal, piston-powered aircraft.
Piper has been making this aircraft in the U.S. for more than 25
years, as it is still in high demand.  PZL Mielec was the Polish
manufacturer, but due to the breakup of the Soviet State, the
production line (made up of full documentation, construction
drawings, dies, jigs, and fixtures) ultimately fell into
receivership.

The Company has an opportunity to re-start this production line,
which has the Federal Aviation Administration (FAA) authorized Type
Certificate (TC) and Production Certificate (PC) intact.  With this
product, the Company has a highly sought after, certified, ready for
production aircraft.  This capability will absolutely bolster Bear
Aerospace, Inc. as a public company, as the Mewa/Seneca II aircraft
is a real product, a timely product, with in-hand orders for
scheduled delivery dates.

At present, there are 12 Mewa/Seneca II aircraft at PZL Mielec, in a
partially completed stage.  These 12 aircraft comprise the fuselages,
wings, all metal components, composite nose cones, plexiglass
windows, full documentation, full construction drawings, no landing
gears, no subsystems, without interiors or avionics, no engines, and
no propellers.  Production of these components into finished aircraft
ready for delivery will take 6 months for the first aircraft. Full
production will start immediately thereafter so as to have a
continuing supply of production aircraft to meet the anticipated US,
European, Asian and world market demands.

The Company purchased two complete Mewa/Seneca II production lines.
One line is installed in Mielec, and the other will be installed at
Xian in China.  Xian has committed $2 million to move, install, and
start production of the second line.  This production line will be
moved, installed, and production started under a 4rd quarter 2002
joint venture between Bear Asia and Xian.

Additionally, the Company will retrofit the aircraft with newly
developed diesel aero engines from SMA Engines, France and obtain the
appropriate supplemental type certificates, through Polish aviation
authorities.  This would significantly increase the value and demand
for the Mewa/Seneca II modified to a Mewa/Seneca D, for the following
reasons:

     - The new diesel engines yield a large 15% increase in
       horsepower and greater full power torque improvement in performance
       over the existing gas engines,

     - Diesel fuel is 1/3 the price of gas in Europe - a large
       reduction in operating costs.

     - Environmental issues are real issues in Europe, and diesel
       engines are environmentally clean and pass all of the new emission
       restrictions

     - Diesel engines have a longer service life than reciprocating
       gasoline engines.

     - Diesel engines have as many as 4000 hours of flight time
       before a "major" overhaul whereas gasoline driven engines require a
       major overhaul in 2000 or 3000 hours.

     - The SMA engine develops more horsepower for the given weight-
       size ration than a comparable gasoline engine, hence greater lift
       capacity and speed at reduced operating costs.

     - Increased take-off weight of 275 pounds (125 kilograms).

The Mewa/Seneca D aircraft is designed to address both existing and
new market segments. Existing segments include owner/pilots and
corporate flight departments. New market segments, expected to be
created as a result of the Mewa/Seneda D, include air limo services,
same-day freight, and flight training, small regional scheduled air
service.

The Mewa/Seneca D is expected, for a lower price, to offer
owner/pilots several key advantages:

     - It is faster. The Mewa/Seneca D is designed to be as fast as
       many similar piston aircraft models costing several times more.

     - It is safer. The Mewa/Seneca D is expected to be significantly
       safer to fly than any other aircraft in or near to its price range
       for several reasons: (i) The fundamental reliability of diesel
       engines combined with the redundancy of the twin-engine
       configuration; (ii) the breadth and scope of new high tech avionics
       systems and its monitoring and decision support capabilities; (iii)
       low stall speeds and benign handling characteristics.

     - It costs less. Compared to all but the smallest single piston
       aircraft, the Mewa/Seneca D should have similar or lower direct
       operating costs (DOC) per mile. For example, the Mewa/Seneca D is
       anticipated to have approximately 40% lower direct operating costs
       than the twin piston Raytheon Baron 58 and approximately 50% lower
       costs than the twin turboprop Raytheon King Air.

     - It is simple to fly. With its new avionics and flight
       management systems, the Mewa/Seneca D is designed to provide
       information to the pilot in logical and easy-to-use format, thereby
       reducing workloads and improving safety.

BEAR JET

As previously described, the Bear Jet is an all-composite, six place
single-engine general aviation jet aircraft.  It is designed to be a
utility class aircraft with an approximate 1400 nautical mile range.
Essentially, the Bear Jet is intended to be the twenty-first century
Beechcraft Bonanza with over 100% more performance.  The Bear Jet is
designed to meet US FAR-23 requirements allowing certification either
under the European Joint Aviation Regulations (JAR) process or the US
FAR processes.

The Bear Jet flight controls are totally mechanical, except for the
flaps. Reliable push rods and torque tubes provide precise handling
and low maintenance.  The flaps and landing gear are electro-
hydraulically operated.

The Bear Jet is powered by a Williams FJ-44 turbofan engine.   The
thrust availability is approximately 2300 pounds.  This allows a 400
plus knot cruise speed with a range of approximately 1400 nautical
miles.

The aircraft will be prototyped and certified in Poland under a newly
formed Joint Venture between Bear Aerospace, PZL, and the Polish
Aviation Institute.  By forming the Joint venture, Bear is afforded
the infrastructure to build the prototype, certify, and final
assemble the aircraft without the attendant costs associated with new
program ramp-up.  All sub-assemblies will be produced in China.  The
financing for the program will come from a joint funding effort
between the Company and Xian or Shenyang, Chinese companies, as well
as through off-set funding in Poland.

PZL and the Aviation Institute have a long history of certifying
aircraft, therefore the management systems and test facilities
requisite to perform such tasks are already in place.  Moreover, PZL
owns or controls several million square feet of manufacturing
facilities that will be at the disposal of the Joint Venture.

MINI -WIDEBODY

The Company, through Bear Asia, is completing a joint venture
agreement with Xian Aircraft, for the development of composite
aircraft such as the Mini-Widebody.  Xian is a major aerospace firm
in China that specialized in the development and manufacturing of
military aircraft.  The total value of the development and
certification program is approximately $25 million.  Like the Bear
Jet program, the funding for this program will be acquired through
private financing in China.

The basic contractual agreements are as follows:

     - Bearaerospace Poland provides the engineering, prototyping,
       and manufacturing/production capability;

     - Bear Asia provides the funding;

     - The prototype aircraft will be engineered, fabricated, tested
       and certified in Poland;

     - A production line will be established in Poland;

     - A duplicate production line will be established by Xian in China;

     - Bear Poland will assist in setting up the production line in
       China (supply prints of tooling etc. as well as supply training
       personnel under contract to Xian);

     - The Poland production line will service Europe and the
       Americas;

     - The China production line will service Asia, America and the
       Pacific Rim;

     -  Bear Poland will hold all marketing rights for Europe and Africa;

     - Bear US will hold the marketing rights to the Americas;

     - Bear Asia will hold all marketing rights to Asia, the Pacific

Rim, Australia, New Zealand, and Euro-Africa.

The Mini-Widebody is a very unique aircraft in that it is a
transatlantic small business jet.  The configuration is a very
conventional plan form as compared to current and past airliners.
But very unconventional when compared to all past and current
business jets.  The Mini-Widebody can be best described as being so
conventional in appearance that it is "unconventional."

Airliners look as they do, not because of some arbitrary reason, but
because the configuration is hugely efficient both in volume and
weight.  The business jets today look as they do for the most part,
simply because Lear set the style, along with Lockheed and the
JetStar.  But if you revisit style from a volume and weight
perspective, the conventional body over wing with mounted pod engines
is far more efficient.

By using the conventional body over wing configuration, with the
engines pod mounted on the wing, the usable volume fraction is very
large as compared to an aft-fuselage mounted engine configuration.
The fuselage, in the wing/pod arrangement, can be maximized in
configuration for cargo or passenger utilization.  Hence, a smaller
aircraft foot-print, as compared to an aft-mounted arrangement, is
created for aircraft of similar cargo and passenger carrying
capability.

By having a smaller foot-print, the weight is less, thus greater
useful load capability.  This translates into greater fuel carrying
capability, which results in greater range.  This is the driving
premise for the Mini-Widebody.

The Mini-Widebody has a gross take-off weight of 13,200 pounds, yet
it is only 35.5 feet long with 38 feet wing-span.  Its cabin volume
is greater than any other jet aircraft in its weight class.
Moreover, its fuel load is sufficient for ranges greater than 4,200
nautical miles, thus it has a trans-oceanic and trans-continental
capability.

The Mini-Widebody can comfortably seat 6 passengers plus a flight
crew of two.  Its cabin volume and length is greater than a Raytheon
Beechcraft King Air 200.  The Mini-Widebody can carry in excess of
1000 gallons of fuel, and is powered by two Williams FJ-44 engines
(same engine as the Bear Jet - this should give Bear-Poland greater
negotiating ability with Williams, the engine manufacturer).  The
cruise speed is in excess of Mach .75 resulting for an extremely
clean configuration.  As compared to the highest performing jet
aircraft in its class, the Mini-Wide body can carry more, fly
further, and match the best in speed.

The construction of the Mini-Widebody is conventional from a state-
of-the-art composite point-of-view.  The entire primary and secondary
structures are carbonfibre.  Much like the Raytheon Premier One, the
fuselage is filament wound (tubular cross-section fuselage).  Not
only does the process reduce weight, but improves strength,
especially under the severe conditions imposed during high altitude
pressurization.  A side benefit of filament winding is that the cabin
side-walls can be reduced in thickness, thereby maximizing the usable
cabin area.

The overall assembly concept is module.  There are four primary
modules.  These are the fuselage, wing, horizontal, and vertical.
The fuselage is mated to the top of the single piece wing assembly.
Not only does this ease the assembly process, but also the procedure
allows the pressure vessel to remain non-violated by the main wing
carry-through structure.  This also allows the total carry-through
structure to act as a fuel tank, thus giving the Mini-Widebody the
ability to carry significantly more fuel than other aircraft in its
category.

The overall concept in design, fabrication, and assembly processes
allows the Mini-Widebody aircraft to be designed, fabricated and
assembled for costs significantly less than more conventional
processes.  The current cost predictions forecast a sales price of
less than $5,000,000.  This price is comparable to the Cessna
Citation Jet, but the Mini-Widebody has almost twice the range.

THE COMPANY FAA APPROVED NON-CERTIFIED AIRCRAFT

The balance of the Company's product line is in the FAA experimental
category.  This category restricts the use of the aircraft for hire
except where exemptions have been authorized by the FAA.  These
exemptions will be described for each aircraft where they apply.

BEAR 360

The Bear 360 is a high performance, two seat, all metal, low wing
monoplane; fully engineered to meet FAR Part 23 requirements.
Additionally, the aircraft has been wind tunnel tested, has been load
tested to destruction, has completed extensive flight testing at the
Bear Aerospace facility in California City, California, and has been
issued FAA approval. The aircraft is currently featured in numerous
international aviation publications and the Company has begun taking
sales purchase orders.

The Bear 360 is a high performance two seat all metal low wing
monoplane reminiscent of classic WWII aircraft like the Bearcat,
Hellcat, and Skyraider with unexcelled 220 knot cross country
performance, exemplary acrobatic capability, and excellent formation
handling characteristics.  The company will start production in the
first quarter of 2003, and deliveries will begin in the fall of 2003.
Several additional aircraft designs have been completed and will be
launched at a later date.  These aircraft include the Turbo Bear (a
turbine powered version of the Bear 360) and the Badger (a turbine
powered high wing cargo aircraft for use by customers such as Federal
Express and United Parcel Service).

The Bear 360 aircraft was the first aircraft to come from the Joint
Venture between Yakovlev Aircraft Company, a private Russian company,
from the famous Yakovlev Design Bureau, and Bear Aerospace.  Sergei
Yakovlev, chief designer of the Yakovlev internationally renowned
design team, designed the Bear 360 to a unique set of standards.
These standards encompassed requirements for excellent takeoff,
landing, and in-flight handling characteristics, coupled with
outstanding acrobatic and formation handling capabilities (air show
and racing operations).  Additionally, the requirements also
specified having 220 knot cross country capability, and yet have low
ownership and low maintenance costs.  The task was accomplished and
verified in over 1000 hours of wind tunnel testing.

The initial production start-up in first quarter 2003 will either be
at the Xian Aircraft factory in China or at the Bear 360 prototype
factory in Orenburg, Russia.

Even though the Bear 360 will be offered in the fully assembled
format, the aircraft will be sold in the experimental category.  The
Bear 360 was designed for the FAA "sport" type aircraft category and
any use on a "for-hire" basis are not anticipated.  Therefore, the
high cost of certification is not warranted.

Currently, there are only two competitors in the FAA experimental
market place to the Bear 360.  They are as follows:

A.  Viper Jet - They produce a 2-place tandem single engine jet.  The
kit sells for approximately $80,000, without an engine.

B.  Legend Aircraft - They produce a 2-place tandem single engine
turboprop.  The kit sells for approximately $80,000, without an
engine.

Fully assembled and ready to fly, the above competitor aircraft cost
approximately $250,000 each. The Bear 360 is being sold for between
$125,000 to $175,000, depending on the options that may be selected.

Strategic Partnerships

Bear Aerospace, Inc., on Feb 26, 2002, formed a wholly-owned company
called Bearaerospace Poland sp. zo.o. in Poland.

     -  Bear Aerospace, on Oct 4, 2001, entered into a Joint Venture
        with the Polish Aviation Institute, a design and certification
        authority in Poland.  The Institute, founded in 1926 and analogous to
        both NASA and the FAA in the U.S., is responsible for; (a) research
        and development activity in aerodynamics, flight mechanics, and
        structural strength; (b) development work in basic fields connected
        with aviation; and (c) design, testing, and certificate approval of
        all aviation equipment for the Polish aviation industry.

     - Bear Aerospace, on Sep 27, 2001, also entered into a separate
       Letter of Intent with PZL Mielec in Poland to form a Joint Venture to
       build and certify aircraft.  PZL, a wholly-owned government company,
       is a major international aerospace firm that has been in existence
       since 1928. Over this period, approximately 17,000 new civil and
       military aircraft were built in this PZL Mielec production facility,
       and today, PZL Mielec is the largest Polish manufacturing and
       exporter of various types of aircraft.

     - The formation of these two Joint Ventures will afford the
       Company access to several million square feet of manufacturing
       facilities.  Moreover, with this association, the Company has
       FAR/JAR certification capability, as well as numerous test
       facilities, specialized engineering staffs and international
       marketing capability at its disposal.

     - The above stated capability is required to build three
       certified aircraft: the Bear Jet, a six-place single engine
       business jet; the Mewa, a Piper Seneca derivative with SMA
       aero diesel-engines; and the Mini-Widebody, a light twin
       engine long range eight-place business jet.

On Sep 26, 2002, Bear Aerospace Poland entered into a Memorandum of
Understanding with the Lockheed Martin corporation, KPMG Poland,
Raytheon Missile systems, and the Pratt and Whitney corporation to
develop the Bearjet  and  I-23 aircraft as part of the U.S.
industrial cooperation effort with Polish Aviation industries.

CHINA HISTORY / STRATEGIC PARTNERSHIPS

Bear Asia, a company in-formation in China, is in the aerospace
business of manufacturing general aviation aircraft in China. Bear
Asia is in the business of marketing and selling these aircraft (both
fixed wing and helicopters) into the immense and rapidly growing
Chinese market, plus the rest of the world.  Bear Asia, through Bear
Aerospace, Inc. USA has signed agreements with the two of the four
largest aerospace manufacturers in China.  They are as follows:

     - On Feb 4, 2002, a Memorandum of Understanding was signed
       between parties from Bear Aerospace, Inc. US, Polskie Zaklady
       Lotnicze Mielec,  Sp.z o.o., Institute of Aviation, Scientific
       Institute Poland, Polskie Zaklady Lotnicze Swidnik, Sp. z
       o.o., and Shenyang Aircraft Company mutual cooperation to
       assist each other in the development, certification,
       production and sale of aircraft and ancillary products between
       the US, Poland and China.

     - On August 8, 2002, Bear Aerospace signed an Agreement with the
       Xian city local government to produce the Chinese version of
       the Seneca, based on the Mewa license that was purchased this
       year from the PZL Mielec Syndyk. Bear Aerospace intends to
       manufacture this plane both in Poland and China to the Mewa
       diesel standard.

     - Bear Aerospace, Inc., on Aug 10, 2002, entered into a MOU with
       Shenyang Aerospace for the co-development of the Mini-Widebody
       aircraft between Poland and China, co-production of various
       Poland-China aircraft, as well as development of Shenyang only
       aircraft.

Xian Aircraft Company and Shenyang Aircraft Corporation, two of the
largest aircraft manufacturing facilities in China, are presently
building component FAR/JAR aircraft parts for Boeing and Airbus
aircraft, so will produce Company products to FAR/JAR standards.

     - The total value of the development and certification program
       is approximately $25 million for the Mini-Widebody program,
       $16 million for the Bear Jet program, and $10 million for
       other aircraft co-productions or development.

Additionally, as part of the Aug 8, 2002 Agreement, Bear Aerospace
signed a Letter of Intent with the Xian authority for the development
of future aircraft, one being a 12 -passenger three-engine commuter
derivative of the Mini-Widebody.  The new operating entity (new
company jointly owned by Bear and Xian) is being formed in China, and
formal approval from the Chinese for the formation of aforementioned
company is expected this year.

The State Council Office, who has the responsibility of implementing
Economic Systems for the PRC, on Aug 16, 2002, issued a Letter of
Support for the Company in its endeavor to establish General Aviation
Manufacturing in China. The State Council Office, through the
International Center for Restructuring the Economic Systems of the
PRC, further agreed to assist us in coordinating with the government,
as well as supporting the Company plan of establishing the first

General Aviation Manufacturing facility in China.

COMPANY STRATEGY
The formation of these strategic relationships will allow the Company
to have both FAR and  JAR certification capabilities; use of several
million square feet of manufacturing facilities; access to numerous
test facilities, dedicated support from specialized engineering
staffs; as well as an international marketing capability at its
disposal.

The above stated capability is required to build three certified
aircraft, as follows:

     - Mewa/Seneca II, a Piper Seneca derivative with SMA aero
       diesel-engines; and

     - Bear Jet, a six-place single engine business jet;

     - Mini-Widebody, a light twin engine long range eight-place
       business jet.

The Company believes that it will offer aircraft at a comparatively
low price by:

     - Containing costs of obtaining FAA certification and amendments
       to such certification,

     - Containing costs of manufacturing,

     - Using derivative designs from existing aircraft, thereby
       eliminating the high development costs attendant with new
       designs.

The Company believes that it will be able to obtain its Type
Certificate for the Bear Jet and Mini-Widebody aircraft at a
significantly lower cost than its competitors due to the Company's
unique overseas relationships, resulting in the Company's ability to
contain administrative costs and overhead expenses allocated to the
development and certification process.

The Company believes it will be able to obtain its Production
Certificate for the Bear Jet and Mini-Widebody aircraft and control
manufacturing costs by producing most of the tooling, jigs, dies and
molds required for the manufacture of its aircraft in-house. Also,
because the Company will produce the airframe and most of the
associated components of its aircraft in Poland and China, the costs
will be one-third to one-quarter that expected domestically.

Employees

As of December 31, 2002, the Company had two employees, who will
devote that amount of time necessary to properly fulfill their
duties.  The Company anticipates that the number of employees will
increase over the next twelve months. The Company does not have any
collective bargaining agreements covering any of its employees, has
not experienced any material labor disruption and is unaware of any
efforts or plans to organize its employees. The Company considers
relations with its employees to be good.

ITEM 2. PROPERTIES.

The Issuer rents office space at 23401 Park Sorrento, Suite 18,
Calabasas, California 91302 and rents airplane hangar space at Van
Nuys Airport and California City Hangar.  The combined total of space
from the office space and the two airports is 6200 square feet.  The
Issuer believes that the office and hangar space rented is adequate
for the issuer's needs in the near future.

ITEM 3. LEGAL PROCEEDINGS.

Other than as set forth below, the Company is not a party to any
material pending legal proceedings and, to the best of its knowledge,
no such action by or against the Company has been threatened.

The Company is subject to legal proceedings and claims that arise in
the ordinary course of its business.  Although occasional adverse
decisions or settlements may occur, the Company believes that the
final disposition of such matters will not have material adverse
effect on its financial position, results of operations or liquidity.

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

There were not any matters that were submitted during the fiscal year
2002 to a vote of the security holders other than those matters
discussed in any Form 8-K filings by the Company.

PART II.

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Information

There was no public trading market for the issuer's securities in
2001 or in 2002 to date. As of April 1, 2003, there were
approximately 44 holders of record of the Company's common stock. The
Company currently is in the process of having its common stock listed
on the OTC Bulletin Board maintained by members of the National
Association of Securities Dealers, Inc. ("NASD"), although no
assurances can be given that this listing will occur.
The ability of individual stockholders to trade their shares in a
particular state may be subject to various rules and regulations of
that state. A number of states require that an issuer's securities be
registered in their state or appropriately exempted from registration
before the securities are permitted to trade in that state.

Presently, the Company has no plans to register its securities in any
particular state. Further, most likely the Company's shares will be
subject to the provisions of Section 15(g) and Rule 15g-9 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
commonly referred to as the "penny stock" rule. Section 15(g) sets
forth certain requirements for transactions in penny stocks and Rule
15g-9(d)(1) incorporates the definition of penny stock as that used
in Rule 3a51-1 of the Exchange Act.

The Commission generally defines penny stock to be any equity
security that has a market price less than $5.00 per share, subject
to certain exceptions. Rule 3a51-1 provides that any equity security
is considered to be a penny stock unless that security is: registered
and traded on a national securities exchange meeting specified
criteria set by the Commission; authorized for quotation on The
NASDAQ Stock Market; issued by a registered investment company;
excluded from the definition on the basis of price (at least $5.00
per share) or the issuer's net tangible assets (at least $2 million);
or exempted from the definition by the Commission. If the Company's
shares are deemed to be a penny stock, trading in the shares will be
subject to additional sales practice requirements of broker-dealers
who sell penny stocks to persons other than established customers and
accredited investors, generally persons with assets in excess of
$1,000,000 or annual income exceeding $200,000, or $300,000 together
with their spouse.

For transactions covered by these rules, broker-dealers must make a
special suitability determination for the purchase of such securities
and must have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction
involving a penny stock, unless exempt, the rules require the
delivery, prior to the first transaction, of a risk disclosure
document relating to the penny stock market. A broker-dealer also
must disclose the commissions payable to both the broker-dealer and
the registered representative, and current quotations for the
securities. Finally, monthly statements must be sent disclosing
recent price information for the penny stocks held in the account and
information on the limited market in penny stocks. Consequently,
these rules may restrict the ability of broker-dealers to trade
and/or maintain a market in the Company's Common Stock and may affect
the ability of stockholders to sell their shares.

Dividend Information

The Company has not declared or paid cash dividends on its Common
Stock or made distributions in the past, and the Company does not
anticipate that it will pay cash dividends or make cash distributions
in the foreseeable future, other than non cash dividends described
below. The Company currently intends to retain and invest future
earnings, if any, to finance its operations.

Transfer Agent

Atlas Stock Transfer Corp., 5899 South State St., Salt Lake City,
Utah 84107 is the Company's transfer agent.

ITEM 6. PLAN OF OPERATION.

(a)  Twelve Month Plan of Operation.

In the year 2003, the Company will focus its attention on
acquiring the funds necessary to implement its business plan by
further developing its products lines, marketing development and
deployment of its airplanes.  The Company may focus on
infrastructure, as well as possibly seeking strategic partners.
The Company further intends to focus on the following:

(1) The Company is in the development stages, and is expected to
roll out its product this year. Although minor delays have occurred,
the Company is ready to move forward.  The Company intends to
position itself for a full-scale product launch. Further development
and testing of the production model will be ongoing.

(2) With the proper funding, the Company has already identified
key personnel to enhance the Company and ensure the continued
evolution and success of current products and to design and develop
new technology.

(3) The Company will seek out as to whether there is patent
applications in its products or mechanical applications.

(4) Where permissible, the Company intends to demonstrate its
products to media and shareholders of the Company throughout the
course of the year.

(5) Continue to build Company and product exposure through newly
formed alliances with Investor/public relations firm, industry
experts, media and other key professionals.

(6) The Company will attempt to secure additional funding
through a SB-2.

(7) The Company will seek alliances with original equipment
manufacturers; retrofit market and related enterprises for its
existing and future technology.

(8) The Company may need to relocate its offices to a more
spacious center that is able to house existing employees and
anticipated expansion if the Company grows larger than its current
operations.

New Accounting Pronouncements

In January 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities." Interpretation 46 changes the criteria
by which one company includes another entity in its consolidated
financial statements. Previously, the criteria were based on control
through voting interest. Interpretation 46 requires a variable
interest entity to be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable interest
entity's activities or entitled to receive a majority of the entity's
residual returns or both. A company that consolidates a variable
interest entity is called the primary beneficiary of that entity. The
consolidation requirements of Interpretation 46 apply immediately to
variable interest entities created after January 31, 2003. The
consolidation requirements apply to older entities in the first fiscal
year or interim period beginning after June 15, 2003. Certain of the
disclosure requirements apply in all financial statements issued after
January 31, 2003, regardless of when the variable interest entity was
established. The Company does not expect the adoption to have a
material impact to the Company's financial position or results of
operations.

In April 2003, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 149, AMENDMENT OF STATEMENT 133 ON DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. SFAS 149 amends SFAS No. 133 to
provide clarification on the financial accounting and reporting of
derivative instruments and hedging activities and requires that
contracts with similar characteristics be accounted for on a
comparable basis. The provisions of SFAS 149 are effective for
contracts entered into or modified after June 30, 2003, and for
hedging relationships designated after June 30, 2003. The adoption of
SFAS 149 will not have a material impact on the Company's results of
operations or financial position.

In May 2003, the FASB issued SFAS No. 150, ACCOUNTING FOR CERTAIN
FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND
EQUITY. SFAS 150 establishes standards on the classification and
measurement of certain financial instruments with characteristics of
both liabilities and equity. The provisions of SFAS 150 are effective
for financial instruments entered into or modified after May 31, 2003
and to all other instruments that exist as of the beginning of the
first interim financial reporting period beginning after June 15,
2003. The adoption of SFAS 150 will not have a material impact on the
Company's results of operations or financial position.

RISKS AND UNCERTAINTIES

The Company has sought to identify what it believes to be the most
significant risks to its business, but cannot predict whether or to
what extent any of such risks may be realized nor can there be any
assurances that the Company has identified all possible risks that
might arise. Investors should carefully consider all of such risk
factors before making an investment decision with respect to the
Company's stock.

Audit's Opinion Expresses Doubt About The Company's Ability To
Continue As a "Going Concern"

The independent auditor's report issued in connection with the
audited financial statements of the Company for the year ended
December 31, 2002, expresses "substantial doubt about its ability to
continue as a going concern," due to the Company's recurring losses
from operations. If the Company is unable to generate cash flow to
meet its obligations and sustain operations, the Company may have to
cease to exist, which would be detrimental to the value of the
Company's common stock. The Company can make no assurances that its
business operations will develop and provide the Company with
significant cash to continue operations.

LIMITED OPERATING HISTORY; ANTICIPATED LOSSES; UNCERTAINTY OF FUTURE
RESULTS.

The Company has only a limited operating history upon which an
evaluation of its operations and its prospects can be based. The
Company's prospects must be evaluated with a view to the risks
encountered by a company in an early stage of development,
particularly in light of the uncertainties relating to the new and
evolving manufacturing methods with which the Company intends to
operate and the acceptance of the Company's business model. The
Company will be incurring costs to develop, introduce and enhance its
products, to establish marketing relationships, to acquire and develop
product lines that will compliment each other and to build an
administrative organization. To the extent that such expenses are not
subsequently followed by commensurate revenues, the Company's
business, results of operations and financial condition will be
materially adversely affected. There can be no assurance that the
Company will be able to generate sufficient revenues from the sale of
their modular buildings and related products. The Company expects
negative cash flow from operations to continue for the next four (4)
quarters as it continues to develop and market its business. If cash
generated by operations is insufficient to satisfy the Company's
liquidity requirements, the Company may be required to sell additional
equity or debt securities. The sale of additional equity or
convertible debt securities would result in additional dilution to the
Company's stockholders.

POTENTIAL FLUCTUATIONS IN ANNUAL OPERATING RESULTS.

The Company's annual operating results may fluctuate significantly in
the future as a result of a variety of factors, most of which are
outside the Company's control, including: the demand for manufactured
modular buildings; seasonal trends; introduction of new government
regulations and building standards; local, state and federal
government procurement delays; general economic conditions, and
economic conditions specific to the modular building industry. The
Company's annual results may also be significantly impacted by the
impact of the accounting treatment of acquisitions, financing
transactions or other matters. Particularly at the Company's early
stage of development, such accounting treatment can have a material
impact on the results for any quarter. Due to the foregoing factors,
among others, it is likely that the Company's operating results will
fall below the expectations of the Company or investors in some future
quarter.

Risks associated with acquisitions

Although the Company does not presently intend to do so, as part of
its business strategy in the future, the Company could acquire assets
and businesses relating to or complementary to its operations.  Any
acquisitions by the Company would involve risks commonly encountered
in acquisitions of companies.  These risks would include, among other
things, the following:  the Company could be exposed to unknown
liabilities of the acquired companies; the Company could incur
acquisition costs and expenses higher than it anticipated;
fluctuations in the Company's quarterly and annual operating results
could occur due to the costs and expenses of acquiring and integrating
new businesses or technologies; the Company could experience
difficulties and expenses in assimilating the operations and personnel
of the acquired businesses; the Company's ongoing business could be
disrupted and its management's time and attention diverted; the
Company could be unable to integrate successfully.

ITEM 7. FINANCIAL STATEMENTS.

Financial statements as of and for the year ended December 31, 2002,
and for the year ended December 31, 2001 are presented in a separate
section of this report following Part IV.

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

Not Applicable

PART III.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS AND COMPLIANCE WITH SECTION

16(A) OF THE EXCHANGE ACT.

Officers and Directors.

The names, ages, and respective positions of the directors, executive
officers, and key employees of the Company are set forth below; there
are no other promoters or control persons of the Company. The
directors named below will serve until the next annual meeting of the
Company's stockholders or until their successors are duly elected and
have qualified. Directors are elected for a one-year term at the
annual stockholders' meeting. Officers will hold their positions at
the will of the board of directors, absent any employment agreement.
The directors and executive officers of the Company are not a party
to any material pending legal proceedings and, to the best of their
knowledge, no such action by or against them has been threatened.
Compensation of Directors

Directors currently do not receive a salary for their services and
are not paid a fee for their participation in meetings, although all
Directors are reimbursed for reasonable travel and other out-of-
pocket expenses incurred in attending meetings of the Board.  The
Company anticipates that the Directors will be compensated for
attending meetings in the future.

Skip James Holm, Director

Skip James Holm, age 59, is a Director and President of the Company
and Bear Aerospace, Inc.  From 1996 to 2000, he was president of both
Bearcraft Aviation LLC and Bear Aerospace, Inc.  From Oct. of 1966 to
Aug. 1978, he served in the United States Air Force.  He left the Air
Force as a Major and entered the reserves.  Mr. Holm retired from the
Reserves in Dec. 1990 as a Lt. Colonel.

Mr. Holm had a very distinguished career as a fighter combat/test
pilot while in service.  He currently holds the US record with over
1000 actual combat hours, and has received no less than 42 medals,
decorations, and awards.  These included three Distinguished Flying
Crosses and 25 Air Combat Medals.  From 1978 to 1994, Mr. Holm served
as an engineering test pilot for Lockheed Aircraft, "Skunk Works"
division.  During his employment with Lockheed, he was an engineering
test pilot team member for cockpit and system design reviews, aircraft
design reviews, flight test, production test, production acceptance,
and flight test reporting on F-22, F-117, U-2R, TR-1 programs and
numerous other classified fighter aircraft projects.

From 1999 to 2000, Mr. Holm served on the Board of Directors for
Platforms International Corporation, a publicly traded company.
During his involvement with Platforms, he acted as a contract Director
of Flight Operations for the company and its affiliates.

In September 2002, Mr. Holm won the prestigious Unlimited Reno Air
Races, which he also won in 1981, 1984 and 2000.  Mr. Holm has a BS in
aeronautical engineering from North Dakota State in 1966 and a MS in
aeronautical engineering/system management from University of Southern
California in 1976.

David J. Fawcett, Director

David J. Fawcett, age 52, is a Director and Executive Vice-President,
Secretary, Treasurer of the Company and Bear Aerospace, Inc.  From
1998 to 2002, he was vice-president of Bear Aerospace, Inc.  Bear
designs small general aviation jet aircraft and Mr. Fawcett has
general oversight on program development and day-to-day operations.

From 1995 to 2001, he was a partner in AirBoss Aerospace, a
partnership with offices in Reno, Nevada and Colorado Springs,
Colorado.   At AirBoss, Mr. Fawcett worked on 10 aircraft design
programs as an airframe configurator  and on 17 other programs as a
financial advisory, system designer, or flight-test consultant.
From 1979 to 1981, Mr. Fawcett owned an oil and gas drilling and
exploration company, Riverside Drilling Corp./Cambrian Resources
Corporation.  The company was sold in 1981. In 1981 to 1982, Mr.
Fawcett managed, as program manager, a multimillion-dollar
construction program in Lagos, Nigeria for a newspaper facility owned
by IBRU Corporation.

From 1975 to 1981, Mr. Fawcett founded a construction company
specializing in industrial/steel construction.    During that time
period, Mr. Fawcett invented, and put into production, an on-site
manufacturing process for metal building panels, which is still being
used today.  In 1982, he sold the construction and manufacturing
company.  From 1982 to 1988, Mr. Fawcett became affiliated with
Columbus Testing Inc., a research and test facility in Columbus,
Ohio, as an independent consultant.  He became a professional witness
in Washington D.C. on a structural building failure.  During this
period, he was a consultant to the US Naval Department and NRL (Naval
Research Lab) concerning a major steam-pipe installation failure on
the NRL facilities.

In 1989, Mr. Fawcett became affiliated, as a private contractor, with
the law firm of Pariser and Pariser, located in Columbus, Ohio that
specializes in investment/collection law.  Within the law firm, Mr.
Fawcett founded an investment organization, Professional Assets
Services, Inc., specializing in the financing of industrial product
development and aviation projects.  Through his involvement in these
investment efforts he became involved with Bede Aircraft Corporation
as a finance advisor.  While at Bede, Mr. Fawcett met Mr. Mark
Bettosini, and, together, formed AirBoss Aerospace.  Mr. Fawcett
received a Bachelor of Science degree in Bio-chemistry/physics from
Ohio State University.

Mark M. Bettosini

Mark M. Bettosini, age 39, is Vice-President of Engineering for Bear
Aerospace, Inc.  From 1995 to 2000, he was a partner and founder in
AirBoss Aerospace Corporation.  During his tenure with AirBoss
Aerospace, he worked as a design engineer for small general aviation
jet aircraft.  In 1991, Mr. Bettosini joined the US Marine Corp and
served as a helicopter crew chief, mechanic, and inspector.

During his service history, he received a Commanding General's Letter
of Commendation for outstanding efforts in effectuating an emergency
overseas helicopter deployment.  In 1992, Mr. Bettosini was employed
by Aircraft Designs, Inc. as an aeronautical engineer where he had
oversight in the development of two high performance aircraft.  In
1994, he was employed by Bede Aircraft Corporation as chief engineer
to identify and resolve engineering problems inherent in a new
aircraft design.

In 1995, Mr. Bettosini established AirBoss Aerospace where he
performed design services.  Mr. Bettosini has expertise, recognized
by the experimental aviation community, in structural design (FEA,
etc.), stability and control, flight control systems, and flutter
analysis.  He has authored two aerospace engineering books; Modern
Propeller and Duct Design, and Subsonic Aircraft Stability.  The
books were published by Aircraft Designs, Inc., Mr. Bettosini's ex-
employer.  Mr. Bettosini received a BS in aerospace engineering from
San Jose State in 1992.

(b)  Compliance with Section 16(a) of the Exchange Act.

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain officers and persons holding 10% or more
of the Company's common stock to file reports regarding their
ownership and regarding their acquisitions and dispositions of the
Company's common stock with the Securities and Exchange Commission.
Such persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.

Based solely on a review of the Forms 5 with respect to the fiscal
year ended December 31, 2002 and subsequently, the Company is unaware
that any required reports were not timely filed. The Company is
currently conducting an internal audit to ensure that the Company's
Officers and/or Directors, as well as persons holding more than 10% of
the Company's outstanding common stock, are in Compliance with Section
16(a) of the Securities and Exchange Act of 1934.

ITEM 10. EXECUTIVE COMPENSATION.

The following table sets forth certain information relating to the
compensation paid by the Company during the last three fiscal years
to the Company's Chief Executive Officer. No other executive officer
of the Company received total salary and bonus in excess of $100,000
during the fiscal year ended December 31, 2002 and prior.





<TABLE>
<CAPTION>
                                       Summary Compensation Table

                           Annual compensation                      Long-term Compensation
                                                                 Awards           Payouts
Name and                                  Other           Restricted   Securities
principal                                 annual            stock     underlying      LTIP    All other
position       Year     Salary   Bonus   compensation     award(s)    options/SARs    payouts compensation
                          ($)     ($)       ($)             ($)           (#)           ($)       ($)
  (a)           (b)       (c)     (d)       (e)             (f)           (g)           (h)       (i)
<S>            <C>      <C>       <C>     <C>             <C>         <C>             <C>       <C>

Skip Holm      2002       0        0       0               0           0               0         0
President      2001       0        0       0               0           0               0         0
               2000       0        0       0               0           0               0         0
</TABLE>



Executive Compensation

The Company has not paid any compensation to its officers and/or
directors since its inception, and the Company does not expect to pay
any compensation in any amount or of any kind to its executive
officers or directors until the funds are available to pay them
without inhibiting growth of the Company.  If and when the Company
has raised sufficient working capital, either through equity or
through revenues, the Company will commence paying salaries.

Additional benefits under the employment agreements include health,
major medical and dental benefits as well as a life insurance policy
with a death benefit of not less than $1,500,000.  In addition, the
Company will provide an automobile or monthly car allowance, such
benefit not to exceed $600 per month.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

The following table sets forth information regarding the beneficial
ownership of shares of the Company's common stock as of April 1, 2003
(issued and outstanding) by (i) all stockholders known to the Company
to be beneficial owners of more than ten percent of the outstanding
common stock; and (ii) all directors and executive officers of the
Company as a group:

Title of Class    Name and Address                    Amount         Percent of
                  of Beneficial Owner (1)          of Beneficial       Class
                                                  Ownership (2)

Common Stock      Skip James Holm                 12,465,709(3)         45.42%
                  23401 Park Sorrento
                  #18
                  Calabasas, CA 91302

Common Stock      David Fawcett,                   4,641,792            16.91%
                  23401 Park Sorrento
                  #18
                  Calabasas, CA 91302

Common Stock      Holms Family Trust               6,006,667(3)         21.89%
                  23401 Park Sorrento
                  #18
                  Calabasas, CA 91302

Common Stock      Shares of all directors and     23,114,168            84.22%
                  executive officers as a group (2
                  persons)

(1) Each person has sole voting power and sole dispositive power as
to all of the shares shown as beneficially owned by them.

(2) Other than as footnoted below, none of these security holders has
the right to acquire any amount of the shares within sixty days from
options, warrants, rights, conversion privilege, or similar
obligations. The amount owned is based on issued common stock, as
well as stock options that are currently exercisable.

(3) This family trust is administered by Skip Holm, who has sole
voting power for the shares owned by the trust.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

During the past two years, and as not otherwise disclosed of in any
other filing, there have not been any transaction that have occurred
between the Company and its officers, directors, and five percent or
greater shareholders, unless listed below.

Certain of the officers and directors of the Company are engaged in
other businesses, either individually or through partnerships and
corporations in which they have an interest, hold an office, or serve
on a board of directors. As a result, certain conflicts of interest
may arise between the Company and its officers and directors. The
Company will attempt to resolve such conflicts of interest in favor
of the Company. The officers and directors of the Company are
accountable to it and its shareholders as fiduciaries, which requires
that such officers and directors exercise good faith and integrity in
handling the Company's affairs. A shareholder may be able to
institute legal action on behalf of the Company or on behalf of
itself and other similarly situated shareholders to recover damages
or for other relief in cases of the resolution of conflicts is in any
manner prejudicial to the Company.

PART IV.

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

Exhibits.

Exhibits included or incorporated by reference in this document are
set forth in the Exhibit Index.

Reports on Form 8-K.

There were no reports on Form 8-K filed during the last quarter of
the fiscal year covered by this report.

ITEM 14.  CONTROLS AND PROCEDURES

The Company has established and maintains disclosure controls and
procedures that are designed to ensure that material information
required to be disclosed by the Company in the reports that it files
under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms, and that such
information is accumulated and communicated to the Company's
management, including the Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure.

Within the 90 days prior to the date of this annual report, under the
supervision and with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, the Company carried out
an evaluation of the effectiveness of the design and operation of
disclosure controls and procedures. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective as of the date of
such evaluation in timely alerting them to material information
relating to the Company (including its consolidated subsidiaries)
required to be included in the Company's periodic SEC filings.

There have been no significant changes to the Company's internal
controls or in other factors that could significantly affect internal
controls subsequent to the date the Company carried out its evaluation.

                                   CERTIFICATION

I, Skip Holm, certify that:

1.   I have reviewed this report on Form 10-KSB of Bear Aerospace;

2.   Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;

3.   Based on my knowledge, the financial statements and other
financial information included in this report, fairly present in all
material respects the financial condition, results of operations, and
cash flows of the registrant as of, and for the periods presented in
this report;

4.   The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14 for the registrant
and have:

     a)   designed  such  disclosure  controls  and  procedures  to
ensure  that material  information  relating  to  the  registrant,
including  its consolidated subsidiaries,  is made known to us by
others within those entities,  particularly  during  the  period in
which  this  report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions
about  the effectiveness  of the disclosure  controls and procedures
based on our evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of the registrant's board of directors (or persons
performing the equivalent functions);

     a)   all  significant  deficiencies  in the design or operation
of internal controls  which could  adversely  affect the  registrant's
ability to record,  process,  summarize,  and  report  financial  data
and  have identified for the  registrant's  auditors any material
weaknesses in internal controls; and

     b)   any fraud, whether or not material,  that involves
management or other employees who have a  significant  role in the
registrant's  internal controls; and

6.   The  registrant's  other  certifying  officers and I have
indicated in this report whether or not there were significant
changes in internal controls  or in other  factors  that could
significantly  affect  internal controls  subsequent to the date of
our most recent  evaluation,  including any  corrective  actions,
with  regard  to  significant  deficiencies  and material weaknesses.

Date:  October 16, 2003

 /s/ Skip Holm
Skip Holm, President and CEO


                               CERTIFICATION


I, David Fawcett, certify that:

1.   I have reviewed this report on Form 10-KSB of Bear Aerospace;

2.   Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;

3.   Based on my knowledge, the financial statements and other
financial information included in this report, fairly present in all
material respects the financial condition, results of operations, and
cash flows of the registrant as of, and for the periods presented in
this report;

4.   The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14 for the registrant
and have:

     a)   designed  such  disclosure  controls  and  procedures  to
ensure  that material  information  relating  to  the  registrant,
including  its consolidated subsidiaries,  is made known to us by
others within those entities,  particularly  during  the  period in
which  this  report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions
about  the effectiveness  of the disclosure  controls and procedures
based on our evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of the registrant's board of directors (or persons
performing the equivalent functions);

     a)   all  significant  deficiencies  in the design or operation
of internal controls  which could  adversely  affect the  registrant's
ability to record,  process,  summarize,  and  report  financial  data
and  have identified for the  registrant's  auditors any material
weaknesses in internal controls; and

     b)   any fraud, whether or not material,  that involves
management or other employees who have a  significant  role in the
registrant's  internal controls; and

6.   The  registrant's  other  certifying  officers and I have
indicated in this report whether or not there were significant
changes in internal controls  or in other  factors  that could
significantly  affect  internal controls  subsequent to the date of
our most recent  evaluation,  including any  corrective  actions,
with  regard  to  significant  deficiencies  and material weaknesses.

Date:  October 16, 2003

 /s/ David Fawcett
David Fawcett, Treasurer


                                  SIGNATURE

     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.

                                       Bear Aerospace, Inc.



Dated:  October 16, 2003               By: /s/  Skip Holm
                                       Skip Holm, President

     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 Company and in the capacities and on the date indicated:

Signature             Title                                   Date

/s/ Skip Holm         President/CEO/Director                October 16, 2003
Skip Holm

/s/ David Fawcett     Secretary/Treasurer/Director          October 16, 2003
David Fawcett

                           FINANCIAL STATEMENTS AND SCHEDULES
                                     DECEMBER 31, 2002
                             FORMING A PART OF ANNUAL REPORT
                     PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934
                                   BEAR AEROSPACE INC.
                              (A DEVELOPMENT STAGE COMPANY)

                           INDEX TO FINANCIAL STATEMENTS
                                                                   Page

Report of Independent Certified Public Accountants

Consolidated Balance sheet at December 31, 2002

Consolidated Statement of Losses for the years
ended December 31, 2002 and 2001 and for the
period October 27,1998 (date of inception) to
December 31, 2002

Consolidated Statement of Deficiency  in
Stockholders' Equity for the period October
27,1998 (date of inception) to December 31, 2002

Consolidated Statement of Cash flows for the
years ended December 31, 2002 and 2001 and for
the period October 27, 1998 (date of inception)
to December 31, 2002

Notes to Consolidated Financial Statements



RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
CERTIFIED PUBLIC ACCOUNTANTS

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Bear Aerospace, Inc.
Calabasas, California

We have audited the accompanying consolidated balance sheet of Bear
Aerospace, Inc. (a development stage company) as of December 31,
2002, and the related consolidated statements of losses, deficiency
in stockholders' equity, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits. The Company's financial
statements for the year ended December 31, 2001 and the period
October 27, 1998 (date of inception) through December 31, 2001 were
audited by another auditor whose report dated May 9,2002 on those
statements included an unqualified opinion.

We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit 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 audit
provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Bear Aerospace Inc (a development stage company) as of
December 31, 2002, and the results of its operations, stockholders'
equity and cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of
America. We express no opinion on the cumulative period from
inception through December 31, 2001.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note K to the financial statements, the Company has had
recurring operating losses for the past several years. These factors
raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also
described in Note K. The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.

                                 /s/ RUSSELL BEDFORD STEFANOU MIRCHADANI LLP
New York, New York               Russell Bedford Stefanou Mirchandani LLP
April 4, 2003

                                 BEAR AEROSPACE, INC.
                            (A DEVELOPMENT STAGE COMPANY)
                             CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2002

ASSETS

Current Assets:
        Cash                                                      $     11,317
  Total Current Assets                                                  11,317

Other Assets, net (Note C)                                             556,188

                                                                       567,505

                LIABILITIES AND DEFICIENCY STOCKHOLDERS' EQUITY

Current Liabilities:
    Due to shareholders and related parties                          1,086,027
   Total Current Liabilities                                         1,086,027

Commitments and Contingencies (Note I)
Deficiency in Stockholders' Equity:
Preferred stock, $0.001 par value,
authorized 10,000,000 shares; none
issued and outstanding                                                       -
Common Stock, $0.001 par value,
authorized 190,000,000 shares;
27,449,667 shares issued and
outstanding                                                             27,450
Additional Paid in Capital                                             465,980
Accumulated Deficit                                                 (1,011,952)
  Total Deficiency in Stockholders' Equity                            (518,522)

                                                                       567,505

                See accompanying notes to financial statements

                                  BEAR AEROSPACE, INC.
                              (A DEVELOPMENT STAGE COMPANY)
                             CONSOLIDATED STATEMENT OF LOSSES



<TABLE>
<CAPTION>
                                     For the year ended    For the year ended    For the period from
                                      December 31, 2002     December 31, 2001     October 27, 1998 (date
                                                            (as restated            of Inception)
                                                             - Note L)           To December 31,2002
<S>                                   <C>                    <C>                 <C>
Costs and Expenses:
Selling, general and administrative    $     457,126         $     124,277        $    784,747
Amortization and depreciation                 92,698                18,000             370,788
Total Operating Expenses                     549,824               142,277           1,155,535
Loss from Operations                        (549,824)             (142,277)        (1,155,535)
Other income                                  35,000                     -            143,344
Income (taxes) benefit                             -                     -                239
Net Loss                                    (514,824)             (142,277)        (1,011,952)

Prior period adjustment -correction
of error (Note L)                                                 (260,090)                 -

Net Loss                                    (514,824)             (402,367)        (1,011,952)
Net Loss per share (basic and assuming
dilution)                                      (0.02)                (0.01)
Weighted Average Common Shares
Outstanding                               27,430,708            27,416,667
</TABLE>


                       See accompanying notes to financial statements

                                  BEAR AEROSPACE, INC.
                             ( A DEVELOPMENT STAGE COMPANY )
                  CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
      FOR THE PERIOD OCTOBER 27, 1998 (DATE OF INCEPTION) TO DECEMBER 31, 2002



<TABLE>
<CAPTION>
                      Preferred     Preferred     Common      Common       Add'l       Deficit
                       Stock         Stock        Stock       Stock       Paid in     Accumulated
                       Shares        Amount       Shares      Amount       Capital     During
                                                                                         Dev
                                                                                         Stage     Total
<S>                   <C>           <C>           <C>         <C>         <C>         <C>          <C>

Shares issued in October
27, 1998 for cash at $
50 per share, net
                              -            -          750     $   2,278   $   35,168  $     -    $  37,446
Net (Loss) for the period     -            -            -             -            -   (11,872)    (11,872)
Balance at December 31,
1998                          -            -          750         2,278       35,168   (11,872)     25,174
Net Income for the
Period                        -            -            -             -            -     3,112       3,112
Balance at December 31,
1999                          -            -          750         2,278       35,168    (8,760)     28,686
Capital contributed by
Shareholders                  -            -            -             -       12,011         -      12,011
Net (Loss) for the
Period                        -            -            -             -            -   (86,001)   (86,011)
Balance at December 31,
2000                          -            -          750         2,278       47,179   (94,761)   (45,304)
Shares issued on April
1, 2001 in connection
with acquisition of Bear
Aviation LLC                  -            -          750             -      400,515         -    400,515
Common shares issued  in
connection with merger
of  Bear Aerospace, Inc.
and Theinternetcorp.net,
in April 2001 , as
restated                      -            -  24,126,667         24,127      (24,127)        -          -
Common shares issued in
April 2001  in
connection with
acquisition of
Theinternetcorp.net ,
Inc., as restated;
valued at $.001 per
share                         -            -   3,290,000          3,290            -         -      3,290
Retirement of Bear
Aerospace, Inc. shares
in connection with
merger with The
Internetcorp.net, Inc         -            -      (1,500)        (2,278)       2,278         -          -
Net (Loss) for the
Period                        -            -           -              -            -  (402,367)  (402,367)
Balance at December 31,
2001, as restated             -            -  27,416,667         27,417      425,845  (497,128)   (43,865)
Shares issued in April
2002 in exchange for
previously incurred debt
at $ 1 per share              -            -       5,000              5        4,995         -      5,000
Shares issued in August
2002 in exchange for
services rendered valued
at approximately $ 1 per
share                         -            -      28,000             28       27,940         -     27,968
Operating expenses
incurred by principal
shareholder (Notes E & I )
                              -            -           -              -        7,200         -      7,200
Net (loss) for the
period                        -            -           -              -            -  (514,824)  (514,824)
Balance at December 31,
2002                          -            -   27,449,667        27,450      465,980 (1,011,952) (518,522)
</TABLE>


See accompanying notes to financial statements

                                 BEAR AEROSPACE, INC.
                            ( A DEVELOPMENT STAGE COMPANY )
                         CONSOLIDATED STATEMENT OF CASHFLOWS





<TABLE>
<CAPTION>
                                     For the year ended    For the year ended    For the period from
                                      December 31, 2002     December 31, 2001     October 27, 1998 (date
                                                            (as restated            of Inception)
                                                             - Note L)           To December 31,2002
<S>                                   <C>                    <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)                       $    (514,824)        $    (402,367)       $      (1,011,952)
Adjustments to reconcile net income
(loss) to cash provided
by operating activities

Common stock issued in exchange for
services rendered                              27,968                     -                   27,968
Common stock issued in
exchange for previously
incurred debt                                   5,000                     -                    5,000
Expenses paid by principal shareholder          7,200                                          7,200
Loss on sale of Other assets                   25,000                                         25,000
Depreciation and amortization (as
restated -Note L)                              92,698               278,090                  370,788
Write off of Accounts Receivable              213,447                                        213,447
Increase  in Accounts receivable                    -              (213,447)                (213,447)
Net cash used in operating activities        (143,511)             (337,724)                (575,996)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Other assets                     (309,000)             (665,700)                (986,976)
Disposals of Other assets                      35,000                     -                   35,000
Net cash (used in) investing activities      (274,000)             (665,700)                (951,976)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advances from  related parties,
Net                                           425,370               596,787                1,086,027
Proceeds from sale of common stock, net         3,290               400,515                  453,262
Net cash provided by financing activities     428,660               997,302                1,539,289
Net increase ( decrease ) in cash              11,149                (6,122)                  11,317
Cash, Beginning of Period                         168                 6,290                        -
Cash, Ending of Period                         11,317                   168                   11,317

Supplemental Disclosures :
Cash paid for interest                              -                     -                        -
Cash paid for taxes                                 -                     -                        -

Non cash Disclosures :
Common stock issued for services               27,968                     -                   27,968
Common stock issued for debt                    5,000                     -                    5,000
Operating expenses incurred by principal
Shareholder                                     7,200                     -                    7,200
</TABLE>



See accompanying notes to financial statements

                              BEAR AEROSPACE, INC.
                         A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          DECEMBER 31, 2002 AND 2001

NOTE A-SUMMARY OF ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the
preparation of the accompanying consolidated financial statements
follows.

Business and Basis of Presentation

Bear Aerospace, Inc. (the "Company") , formerly Theinternetcorp.net,
Inc. , was formed on  October 27, 1998 under the laws of the State of
Nevada. The Company is in the development stage as defined under
Statement on Financial Accounting Standards No. 7, Development Stage
Enterprises (" SFAS No.7 " ) . The Company's efforts have been
principally devoted to developing an ultra-long range business jet.
To date the Company has generated no sales revenues, has incurred
expenses, and has sustained losses. Consequently, its operations are
subject to all risks inherent in the establishment of a new business
enterprise. For the period from inception through December 31, 2002,
the Company has accumulated losses of $ 1,011,952.

The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Bearaerospace  Poland sp zoo.
Significant intercompany transactions have been eliminated in consolidation.

Revenue Recognition

The Company follows a policy of recognizing revenues as services are
rendered or at the time the product is shipped to or picked up by customers.

Use of Estimates

The Company prepares its financial statements in conformity with
accounting principles generally accepted in the United States of
America that require management to make estimates and assumptions about
the carrying amounts of reported assets and liabilities and related
disclosures. Actual results could differ from those estimates.
Significant estimates used in these financial statements include, but
are not limited to, accounting for allowance for doubtful debts,
contingencies, amortization , depreciation and impairment of property
and equipment, deferred tax assets. Estimates are periodically reviewed
in light of changes in circumstances, facts and experience. The effects
of material revisions are reflected in the financial statements
prospectively from the date of the change in estimate.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash held in bank deposit
accounts and short term , highly liquid maturities of three months or
less at the date of the date of purchase. Cash equivalents are
carried at amortized cost, which approximate fair value.

Long-Lived Assets

The Company has adopted Statement of Financial Accounting Standards
No.144 ( SFAS 144 ). The Statement requires that long lived assets and
certain identifiable intangibles held and used by the Company be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Events relating to recoverability may include significant unfavorable
changes in business conditions, recurring losses or a forecasted
inability to achieve break even operating results over an extended
period. The Company evaluates the recoverability of long lived assets
based upon forecasted undercounted cash flows. Should an impairment in
value be indicated, the carrying value of intangible assets will be
adjusted, based on estimates of future discounted cash flows resulting
from the use and ultimate disposition of the asset. SFAS No.144 also
requires assets to be disposed of be reported at the lower of the
carrying amount or the fair value less costs to sell.

Property and Equipment/Other Assets

Property and equipments are recorded at cost. Minor additions and
renewals are expensed in the year incurred. Major additions and
renewals are capitalized and depreciated over their estimated useful
lives. Depreciation is calculated using the straight-line method over
the estimated useful lives.

Net Loss Per Share

The Company computes earnings per share under Financial Accounting
Standard No. 128, "Earnings Per Share" (SFAS 128). Net loss per common
share is computed by dividing net loss by the weighted average number
of shares of common stock and dilutive common stock equivalents
outstanding during the year. Dilutive common stock equivalents consist
of shares issuable upon conversion of convertible preferred shares and
the exercise of the Company's stock options and warrants (calculated
using the treasury stock method). During 2002 and 2001, common stock
equivalents are not considered in the calculation of the weighted
average number of common shares outstanding because they would be
anti-dilutive, thereby decreasing the net loss per common share.

Concentration of Credit Risk

Financial instruments and related items, which potentially subject
the Company to concentrations of credit risk, consist primarily of
cash, cash equivalents and related party receivables.  The Company
places its cash and temporary cash investments with credit quality
institutions.  At times, such investments may be in excess of the
FDIC insurance limit. The Company periodically reviews its trade
receivables in determining its allowance for doubtful accounts. .

Segment Information

Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information" ("SFAS 131")
establishes standards for reporting information regarding operating
segments in annual financial statements and requires selected
information for those segments to be presented in interim financial
reports issued to stockholders.  SFAS 131 also establishes standards
for related disclosures about products and services and geographic
areas. Operating segments are identified as components of an
enterprise about which separate discrete financial information is
available for evaluation by the chief operating decision maker, or
decision-making group, in making decisions how to allocate resources
and assess performance.  The information disclosed herein materially
represents all of the financial information related to the Company's
principal operating segment.

Income Taxes

The Company follows Statement of Financial Accounting Standard
No.109, Accounting for Income Taxes ( SFAS 109) for recording the
provision for income taxes. Deferred tax assets and liabilities are
computed based upon the difference between the financial statement
and income tax basis of assets and liabilities using the enacted
marginal tax rate applicable when the related asset or liability is
expected to be realized or settled. Deferred income tax expenses or
benefits are based on the changes in the asset or liability during
each period. If available Evidence suggests that it is more likely than not
that some portion or all of the deferred tax assets will not be realized, a
valuation allowance is required to reduce the deferred tax assets to the amount
that is more likely than not to be realized. Future changes in such
valuation allowance are included in the provision for deferred income
taxes in the period of change.

Deferred income taxes may arise from temporary differences resulting
from income and expense items reported for financial accounting and
tax purposes in different periods. Deferred taxes are classified as
current or non-current, depending on the classification of assets and
liabilities to which they relate. Deferred taxes arising from
temporary differences that are not related to an asset or liability
are classified as current or non current depending on the periods in
which the temporary differences are expected to reverse.

Comprehensive Income

Statement of Financial Accounting Standards No. 130 ("SFAS 130"),
"Reporting Comprehensive Income," establishes standards for reporting
and displaying of comprehensive income, its components and
accumulated balances.  Comprehensive income is defined to include all
changes in equity except those resulting from investments by owners
and distributions to owners.  Among other disclosures, SFAS 130
requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same
prominence as other financial statements.  The Company does not have
any items of comprehensive income in any of the periods presented.

Stock Based Compensation

In December 2002, the FASB issued Statement of Financial Accounting
Standards No.148 ( SFAS No.148 ), " Accounting for Stock-based
Compensation- Transition and Disclosure-an amendment of SFAS 123 ".
This statement amends SFAS No.123, " Accounting for stock based
Compensation " to provide alternative methods of transition for a
voluntary charge to the fair value based method of accounting for
stock based employee compensation. In addition, this statement amends
the disclosure requirements of SFAS No.123 to require prominent
disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The Company has chosen
to continue to account for stock based compensation using the
intrinsic value method prescribed in APB Opinion No.25 and related
interpretations. Accordingly, compensation expense for stock options
is measured as excess , if any, of the fair market value of the
Company's stock at the date of the grant over the exercise price of
the related option. The Company has adopted the annual disclosure
provisions of SFAS No.148 in its financial reports for the year ended
December 31, 2002.

The following table illustrate the effect on net loss and net loss
per share had the company accounted for stock options to employees
under the fair value recognition provisions of SFAS No.123.

                                                      Year Ended December 31
                                                      2002              2001
                                                                      (restated
                                                                       - see
                                                                       Note L)

Net loss as reported                                 $   (514,824)  $ (402,367)
Stock based employee compensation
included in reported net loss                                   -            -
Total stock-based employee
compensation expense determined under
fair value method for all awards                                -            -
Pro forma net loss                                       (514,824)    (402,367)

Basic and diluted net loss per share
As reported                                                 (0.02)       (0.01)
Proforma                                                    (0.02)       (0.01)

Advertising

The Company follows the policy of charging the costs of advertising
to expenses incurred. The Company incurred no advertising costs
during the years ended December 31, 2002 and 2001, and for the period
from November 3, 1999 (date of inception) to December 31, 2002.

Research and Development

The Company accounts for research and development costs in accordance
with the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 2 ("SFAS 2"), "Accounting for
Research and Development Costs.  Under SFAS 2, all research and
development costs must be charged to expense as incurred.
Accordingly, internal research and development costs are expensed as
incurred.  Third-party research and developments costs are expensed
when the contracted work has been performed or as milestone results
have been achieved.  Company-sponsored research and development costs
related to both present and future products are expensed in the
period incurred.

Liquidity

As shown in the accompanying financial statements, the Company has
incurred a net loss of $ 1,011,952 from its inception through
December 31, 2002. The Company's current liabilities exceeded its
current assets by $ 1,074,710 as of December 31, 2002.

Reclassifications

Certain reclassifications have been made in prior year's financial
statements to conform to classifications used in the current year.

Recent pronouncements

In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. Standards No. 142,
"Goodwill and Other Intangible Assets" (SFAS No. 142). The FASB also
issued Statement of Financial Accounting Standards No. 143,
"Accounting for Obligations Associated with the Retirement of Long-
Lived Assets" (SFAS No. 143), and Statement of Financial Accounting
Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS
No. 144) in August and October 2001, respectively.

Effective January 1, 2002, the Company adopted SFAS No. 142. Under the
new rules, the Company will no longer amortize goodwill and other
intangible assets with indefinite lives, but such assets will be
subject to periodic testing for impairment. On an annual basis, and
when there is reason to suspect that their values have been diminished
or impaired, these assets must be tested for impairment, and write-
downs to be included in results from operations may be necessary. SFAS
No. 142 also requires the Company to complete a transitional goodwill
impairment test six months from the date of adoption.

Any goodwill impairment loss recognized as a result of the
transitional goodwill impairment test will be recorded as a cumulative
effect of a change in accounting principle no later than the end of
fiscal year 2002. The adoption of SFAS No. 142 had no material impact
on the Company's consolidated financial statements

SFAS No. 143 establishes accounting standards for the recognition and
measurement of an asset retirement obligation and its associated asset
retirement cost. It also provides accounting guidance for legal
obligations associated with the retirement of tangible long-lived
assets. SFAS No. 143 is effective in fiscal years beginning after June
15, 2002, with early adoption permitted. The Company expects that the
provisions of SFAS No. 143 will not have a material impact on its
consolidated results of operations and financial position upon
adoption. The Company plans to adopt SFAS No. 143 effective January 1,
2003.

SFAS No. 144 establishes a single accounting model for the impairment
or disposal of long-lived assets, including discontinued operations.
SFAS No. 144 superseded Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" (SFAS No. 121), and APB Opinion
No. 30, "Reporting the Results of Operations - Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions". The Company adopted
SFAS No. 144 effective January 1, 2002. The adoption of SFAS No. 144
had no material impact on Company's consolidated financial statements.

In April 2002, the FASB issued Statement No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections." This Statement rescinds FASB Statement No. 4,
"Reporting Gains and Losses from Extinguishment of Debt", and an
amendment of that Statement, FASB
Statement No. 64, "Extinguishments of Debt Made to Satisfy Sinking-
Fund Requirements" and FASB Statement No. 44, "Accounting for
Intangible Assets of Motor Carriers". This Statement amends FASB
Statement No. 13, "Accounting for Leases", to eliminate an
inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-
leaseback transactions. The Company does not expect the adoption to
have a material impact to the Company's financial position or results
of operations.

In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This Statement addresses
financial accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force (EITF)
Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring)." The provisions of this
Statement are effective for exit or disposal activities that are
initiated after

December 31, 2002, with early application encouraged. The Company does
not expect the adoption to have a material impact to the Company's
financial position or results of operations.

In October 2002, the FASB issued Statement No. 147, "Acquisitions of
Certain Financial Institutions-an amendment of FASB Statements No. 72
and 144 and FASB Interpretation No. 9", which removes acquisitions of
financial institutions from the scope of both Statement 72 and
Interpretation 9 and requires that those transactions be accounted for
in accordance with Statements No. 141, Business Combinations, and No.
142, Goodwill and Other Intangible Assets. In addition, this Statement
amends SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, to include in its scope long-term customer
relationship intangible assets of financial institutions such as
depositor- and borrower-relationship intangible assets and credit
cardholder intangible assets. The requirements relating to
acquisitions of financial institutions is effective for acquisitions
for which the date of acquisition is on or after October 1, 2002. The
provisions related to accounting for the impairment or disposal of
certain long-term customer-relationship intangible assets are
effective on October 1, 2002. The adoption of this Statement did not
have a material impact to the Company's financial position or results
of operations as the Company has not engaged in either of these
activities.

In December 2002, the FASB issued Statement No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure", which amends FASB
Statement No. 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure
requirements of Statement 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method
used on reported results. The transition guidance and annual
disclosure provisions of Statement 148 are effective for fiscal years
ending after December 15, 2002, with earlier application permitted in
certain circumstances. The interim disclosure provisions are effective
for financial reports containing financial statements for interim
periods beginning after December 15, 2002. The adoption of this
statement did not have a material impact on the Company's financial
position or results of operations as the Company has not elected to
change to the fair value based method of accounting for stock-based
employee compensation.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities." Interpretation 46 changes the criteria
by which one company includes another entity in its consolidated
financial statements. Previously, the criteria were based on control
through voting interest. Interpretation 46 requires a variable
interest entity to be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable interest
entity's activities or entitled to receive a majority of the entity's
residual returns or both. A company that consolidates a variable
interest entity is called the primary beneficiary of that entity. The
consolidation requirements of Interpretation 46 apply immediately to
variable interest entities created after

January 31, 2003. The consolidation requirements apply to older
entities in the first fiscal year or interim period beginning after
June 15, 2003. Certain of the disclosure requirements apply in all
financial statements issued after January 31, 2003, regardless of when
the variable interest entity was established. The Company does not
expect the adoption to have a material impact to the Company's
financial position or results of operations.

In April 2003, the FASB issued Statement No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities", which
amends and clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in
other contracts ( collectively referred to as derivatives ) and for
hedging activities under FASB Statement No.133, Accounting for
Derivative Instruments and Hedging Activities. This statement is
effective for contracts entered into or modified after June 30, 2003.
The adoption of this Statement did not have a material impact to the
Company's financial position or results of operations as the Company
has not engaged in either of these activities.

In May 2003, the FASB issued Statement No.150, " Accounting for
Certain Financial Instruments with Characteristics of both Liabilities
and Equity," which establishes standards for how an issuer clarifies
and measures certain financial instruments with characteristics of
both liabilities and equity. The adoption of this Statement did not
have a material impact to the Company's financial position or results
of operations as the Company has not engaged in either of these
activities.

NOTE B- MERGER

On April 1, 2001, Bear Aerospace, Inc., a company formed under the
laws of the state of North Dakota ("Bear") completed an Agreement and
Plan of Reorganization ("Agreement") with Theinternetcorp.net, Inc.
("TICN") in a transaction accounted for using the purchase method of
accounting.  The total purchase price and carrying value of net
assets acquired of TICN was $1.  From TICN's inception, until the
date of the merger, TICN was an inactive corporation with no assets
and liabilities.  As a result of the acquisition, there was a change
in control of the public entity.  Subsequent to the date of the
merger, TICN changed its name to Bear Aerospace, Inc. ("Company"),
with Bear Aerospace, Inc.  becoming a wholly owned subsidiary of the
Company.

Effective with the Agreement, all previously outstanding common
stock, preferred stock, options and warrants owned by former Bear
Aerospace, Inc. stockholders were exchanged for an aggregate of
24,126,667 shares of TCIN 's common stock.  The value of the stock
that was issued was the historical cost of TCIN's net tangible
assets, which did not differ materially from their fair value.  The
results of operations subsequent to the date of acquisition are
included in the Company's consolidated statement of losses.  In
accordance with Accounting Principles Opinion No. 16,  Bear
Aerospace, Inc.  is the acquiring entity.

The total purchase price and carrying value of net assets acquired of
TICN was $1.  The net assets acquired were as follows:

                  Net Assets            $        1
                  Accumulated Deficit        1,000
                  Net Liabilities           (1,000)

                                                 1

In connection with the merger, TICN shareholders retained 3,290,000
shares of TICN common stock. The common shares were valued at $
3,290, or $ .001 per share, which approximated the fair value of the
shares retained and were expensed as organization costs during the
year ended December 31, 2002 in accordance with Statement of Position
98-5.

NOTE C- OTHER ASSETS

Other assets at December 31, 2002 consist of an aircraft and related
parts used primarily for demonstration and marketing purposes
consists of the following :

Manufacturing Equipment         $         489,000
Spare parts and tools                     437,976
Total                                     926,976
Less Accumulated depreciation             370,788
                                          556,188

The Company recognized deprecation expense of $ 92,698 and $ 18,000
during the years ended December 31, 2002 and 2001, respectively in
connection with these assets.

NOTE D- RELATED PARTY TRANSACTIONS

From the Company's inception in October 1998, the Company's officers
and principal shareholders have advanced funds to the Company for
working capital purposes. No formal repayment terms or arrangements
exist. The net amount of the advances due the Company's officers and
principal shareholders at December 31, 2002 were $ 1,086,027

NOTE E - COMMON STOCK

The Company has authorized 190,000,000 shares of common stock, with a
par value of $.001 per share. As of December 31, 2002, the Company
has 27,449,667 shares of common stock issued and outstanding.  The
Company has authorized 10,000,000 shares of preferred stock, with a
par value of $.001 per share. As of December 31, 2002, there are no
preferred shares issued and outstanding.

In October 1998 , the Company issued 750 shares of its common stock
in a private placement  to its founders and sophisticated investors ,
in exchange for $37,446, net of costs and fees.

On January 1, 2001, the Company completed a merger agreement with
Bearcraft Aviation LLC whereby it issued 750 shares of its common
stock for the assets and liabilities and member equity of Bearcraft
Aviation LLC.

In April 2001, the Company issued 27,417,667 shares of common stock
in conjunction with the merger of Theinternetcorp.net, Inc.  In
connection with the transaction, the Company retired 1,500 shares of
previously issued Bear Aerospace, Inc. common stock.

During the year ended December 31, 2002, the Company issued 5,000
shares of the Company's common stock in exchange for previously
incurred debt of $ 5,000.

The Company leases office space on a month to month basis in
Calabasas, California for its corporate offices at a rate of $ 600
per month. In accordance with Staff Accounting Bulletin Topic 5-T,
the Company accounted for the occupancy expense as a current rental
expenses and a corresponding capital contribution of $7,200.

During the year ended December 31, 2002, the Company issued 28,000
shares of the Company's common stock to consultants in exchange for
services provided to the Company.  The Company valued the shares
issued at $1.00 per share, which approximated the fair value of the
shares issued during the periods the services were rendered.  The
compensation costs of $ 27,968 were charged to income during the year
ended December 31, 2002.

In April 2002, the Company's Board of Directors approved a one (1)
share for four  (4) share reverse stock split. The accompanying
financial statements have been restated to give effect for the
reverse split.

Share amounts presented in the consolidated balance sheets and
consolidated statements of stockholders' equity reflect the actual
share amounts outstanding for each period presented.

NOTE F- ACQUISITION

In April 2001 the Company acquired Bear Aviation LLC, in exchange for
$ 400,515 consisting of 750 shares of the Company's common stock in a
transaction accounted for using the purchase method of accounting.
From its inception and up to its acquisition by the Company, Bear
Aviation LLC did not operate a business, and as such did not have any
revenue producing activities, employees, market distribution system,
sales force, customers, production techniques and or trade names.

The total purchase price and carrying value of the net assets
acquired of Bear Aviation LLC were as follows:

Accounts receivable, net           $     213,447
Other assets                             677,976
Accounts payable and accrued expenses,
principally to related parties          (496,632)
                                         400,515

The Company valued the 750 shares of common stock issued to Bear
Aviation LLC at $ 400,515, which approximated the fair value of the
Company's common stock at the date of acquisition.  The Company has
recorded the carryover basis of the net assets acquired, which did
not differ materially from their fair value and its operating results
have been included in the Company's consolidated financial statements
since the date of purchase.

NOTE G-   INCOME TAXES

The Company has adopted Financial Accounting Standards No. 109, which
requires the recognition of deferred tax liabilities and assets for
the expected future tax consequences of events that have been
included in the financial statement or tax returns.

Under this method, deferred tax liabilities and assets are determined
based on the difference between financial statements and tax bases of
assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse.  Temporary
differences between taxable income reported for financial reporting
purposes and income tax purposes are insignificant.  At December 31,
2002, the Company has available for federal income tax purposes a net
operating loss carry forward of approximately $ 1,050,000, expiring
in the year 2022, that may be used to offset future taxable income.
The Company has provided a valuation reserve against the full amount
of the net operating loss benefit, since in the opinion of management
based upon the earnings history of the company, it is more likely
than not that the benefits will not be realized.

Components of deferred tax assets as of December 31, 2002 are as
follows:

Non current:
Net operating loss carry forward   $      357,000
Valuation allowance                      (357,000)
Net deferred tax asset                          -

The realization of these net operating loss carry forwards is
dependent upon generating taxable income prior to the related year of
expiration. The amount of carry forward that may be utilized in any
future tax year may also be subject to certain limitations, including
limitations as a result of certain stockholder ownership changes in
which may be beyond the control of the Company.

NOTE H - LOSSES  PER SHARE

The following table presents the computation of basic and diluted
losses per share:

                                                       Year Ended December 31
                                                       2002              2001

Net income loss available to Common stockholders       $ (514,824)  $ (402,367)
Basic and diluted earning (loss) per share                  (0.02)       (0.01)
Weighted average common shares outstanding             27,430,708   27,416,667

Net loss per share is based upon the weighted average of shares of
common stock outstanding.  In April 2002, a one (1) for four (4)
reverse stock split of the Company's common stock was effected (See
Note D).  Accordingly, all historical weighted average share and per
share amounts have been restated to reflect the reverse stock split.

NOTE I - COMMITMENTS AND CONTINGENCIES

Lease Commitments

Beginning January 2002, the Company began leasing office space on a
month to month basis in Calabasas, California for its corporate
offices at a rate of $ 600 per month. In accordance with Staff
Accounting Bulletin Topic 5-T, the Company accounted for the
occupancy expense as a current expense and a corresponding capital
contribution. Rental expense charged to operations in 2002 was $
7,200 per year.

Consulting Agreements

The Company has consulting agreements with outside contractors,
certain of whom are also Company stockholders. directors and
officers.  The Agreements are generally for a term of 12 months from
inception and renewable automatically from year to year unless either
the Company or Consultant terminates such engagement by written
notice.

Litigation

The Company is subject to other legal proceedings and claims that
arise in the ordinary course of its business.  Although occasional
adverse decisions or settlements may occur, the Company believes that
the final disposition of such matters should not have a material
adverse effect on its financial position, results of operations or
liquidity.

NOTE J-SEGMENT INFORMATION

During 2001and 2000, the Registrant operated in one reportable
segment, the development of an ultra long range business jet.

The Company also segments its business through geographic locations.
Those geographic segments are:

     - United States

     - Poland

Segment operating income is total segment revenue reduced by
operating expenses identifiable with the business segment.  Corporate
includes general corporate administrative costs.

The Company evaluates performance and allocates resources based upon
operating income.  The accounting policies of the reportable segments
are the same as those described in the summary of accounting
policies.  There are no inter-segment sales.

     Segment Assets               December 31, 2002
     United States                $       11,317
     Poland                              556,188
Total Segment Assets                     567,505

NOTE K_- GOING CONCERN

The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.  As
shown in the accompanying financial statements during the period May
15, 1998  (date of inception) through December 31, 2002, the Company
has incurred losses of $1,011,952.  These factors among others may
indicate that the Company will be unable to continue as a going
concern for a reasonable period of time.

The Company's existence is dependent upon management's ability to
develop profitable operations.  Management is devoting substantially
all of its efforts to establishing its business and there can be no
assurance that Company's efforts will be successful.  However, the
planned principal operations have not fully commenced and no
assurance can be given that management's actions will result in
profitable operations or the resolution of its liquidity problems.
The accompanying statements do not include any adjustments that might
result should the Company be unable to continue as a going concern.

In order to improve the Company's liquidity, the Company is actively
pursuing additional equity financing through discussions with
investment bankers and private investors.  There can be no assurance
the Company will be successful in its efforts to secure additional
equity financing.

NOTE L - RESTATEMENT OF FINANCIAL STATEMENTS

The Company has restated its financial statements for the year ended
December 31, 2001 to correct the following errors in the financial
statements previously filed:

     - The Company erroneously recorded the depreciation  $ 18,000
       instead of $ 278,090 resulting in understatement of depreciation
       by $ 260,090.

     - The Company erroneously recorded $497,976 of  long-term assets
       as inventories available for sale

The net effect of the correction of these errors was to:

     - Increase  the Company's reported net loss for the year ended
       December 31, 2001 by $ 260,090 from $ (142,277) to $ (402,367).

     - Increase the deficiency accumulated during the development stage
       by $ 260,090 from $(237,038) to $(497,128).

Following are reconciliations of the Company's restatement of the
Consolidated Balance Sheet as of December 31, 2001 and Consolidated
Statement of Losses for the year ended 2001.

                             Bear Aerospace, Inc.
                          (A Development Stage Company)
                           Consolidated Balance Sheet
                                 December 31, 2001


<TABLE>
<CAPTION>
                                                          As Reported      Adjustment      Restated
<S>                                                       <C>              <C>             <C>
       ASSETS
 CURRENT ASSETS:
Cash and equivalents                                      $      168       $        -      $         168
Inventory                                                    497,976         (497,976)                 -
Accounts Receivable                                          213,447                             213,447
Total current assets                                         711,591                             213,615

PROPERTY AND EQUIPMENT:
Furniture and equipment, at cost                             180,000         (180,000)                 -
Less:  accumulated depreciation                              (18,000)          18,000                  -
                                                             162,000         (162,000)                 -
OTHER ASSETS:                                                      -          677,976            677,976
Less: accumulated depreciation                                     -          278,090            278,090
                                                                   -          399,886            399,886
                                                             873,591         (260,090)           613,501
LIABILITIES AND  STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
Accounts payable and accrued expenses                        660,657         (660,657)                 -
Due to Shareholders                                                -          660,657            660,657
Total current liabilities                                    660,657                             660,657
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value
$.0.001 per share; 27,416,667
shares authorized; 27,416,667
shares issued and outstanding
at December 31, 2001 ,  as restated                           27,417                              27,417
Additional paid-in-capital                                   425,845                             425,845
Accumulated deficit during development stage                (237,038)        (260,090)          (497,128)
Stockholders' equity (Deficit)                               212,934         (260,090)           (47,156)
                                                             873,591         (260,090)           613,501

Costs and Expenses:
Selling, General and Administrative                          124,277                -            124,277
Depreciation and Amortization                                 18,000          260,090            278,090
Total Operating Expense                                     (142,277)        (260,090)          (402,367)

Loss from Operations                                        (142,277)        (260,090)          (402,367)

Provision for Income Tax                                           -                                   -
Net Loss                                                    (142,277)        (260,090)          (402,367)

Loss per common share (basic and assuming dilution)            (0.01)                              (0.02)
Weighted average common shares outstanding                27,416,667                          27,416,667
</TABLE>


                             EXHIBIT INDEX

Exhibit                          Description


2      Exchange Agreement and Plan of Reorganization (incorporated
       by reference to in the Form 8-K filed on July 13, 2001).

3.1    Articles of Incorporation (incorporated by reference to Exhibit
       3.1 to the Registration Statement on Form 10-SB/A filed on May
       28, 1999).

3.2    Amendment to the Articles of Incorporation for
       Theinternetcorp.net, Inc. (incorporated by reference to in the
       Form 8-K filed on July 13, 2001).

3.3    Amendment to the Articles of Incorporation for
       Theinternetcorp.net, Inc. (incorporated by reference to in the
       Form 8-K filed on July 13, 2001).

(23)   Consent of CPA filed herein.

99.1   Certification pursuant of President to 18 U.S.C. Section 1350, as
       adopted to Section 906 of the Sarbanes Oxley Act of 2002.

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