U. S. Securities and Exchange Commission
                            Washington, D. C.  20549


                                   FORM 10-QSB


[X]     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934

        For the quarterly period ended March 31, 2004

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

         For the transition period from                to
                                        --------------    ------------------

                       Commission file number: 333-118862


                             PEGASUS AIR GROUP, INC.
              -----------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                         NEVADA                      20-0575642
             -------------------------------     -------------------
             (State or other jurisdiction of       (IRS Employer
              Incorporation or Organization)      Identification No.)


                 7475 Skillman, Suite C-102 Dallas, Texas  75231
         ---------------------------------------------------------------
                    (Address of Principal Executive offices)

                                 (214) 979-0100
                                 --------------
                           (Issuer's telephone number)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:


           Class                                 Outstanding at April 19, 2005
           -----                                 -----------------------------

Common Stock, $0.001 par value                         27,000,000



<PAGE>

Transitional Small Business Disclosure Form (check one):

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


                             PEGASUS AIR GROUP, INC.


                                TABLE OF CONTENTS
                                   FORM 10-QSB

                                     PART I
                              FINANCIAL INFORMATION

Item 1.    Financial Statements..........................................3

           Balance Sheet
              for the period ended March 31, 2005 (unaudited)
              and the period ended December 31, 2004 (audited)...........3

           Statement of Operations (unaudited)
              for the three months ending March 31, 2005,
              for the three months ending March 31, 2004
              and the period from December 19, 2003 (inception)
              through March 31, 2005.....................................4

           Statement of Cash Flow (unaudited)
              for the three months ending March 31, 2005,
              for the three months ending March 31, 2004
              and the period from December 19, 2003 (inception)
              through March 31, 2005.....................................5

           Notes to Financial Statements (unaudited).....................7

Item 2.    Management's Discussion and Analysis or
              Plan of Operation.........................................10

Item 3.    Controls and Procedures......................................15

                                     PART II
                                OTHER INFORMATION

Item 1.    Legal Proceedings............................................15

Item 2.    Changes in Securities and Use of Proceeds....................15

Item 3.    Defaults Upon Senior Securities..............................15

Item 4.    Submission of Matters to a Vote of Security Holders..........15

Item 5.    Other Information............................................15

Item 6.    Exhibits and Reports on Form 8-K.............................16

           Signatures...................................................16


                                        2
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

<TABLE>
<CAPTION>
                             PEGASUS AIR GROUP, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET

                                                                    March 31,        December 31,
                                                                       2005              2004
                                                                   (unaudited)        (audited)
                                                                   -----------        -----------
ASSETS
<S>                                                                <C>               <C>
CURRENT ASSETS                                                     $         -       $         -
                                                                   -----------       -----------

      TOTAL ASSETS                                                 $         -       $         -
                                                                   ===========       ===========


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                                 $     4,500       $     4,500
                                                                   -----------       -----------

         TOTAL LIABILITIES                                               4,500             4,500
                                                                   -----------       -----------

STOCKHOLDERS' EQUITY
  Preferred stock, $.001 par value, 20,000,000 shares
    authorized, 0 shares issued and outstanding                              -                 -

  Common stock, $.001 par value, 50,000,000 shares
    authorized, 27,000,000 shares issued and outstanding                27,000            27,000

  Additional paid in capital                                            14,481            11,631

  Deficit accumulated during the development stage                     (45,981)          (43,131)
                                                                   -----------       -----------

    Total stockholders' equity                                          (4,500)           (4,500)
                                                                   -----------       -----------

      LIABILITIES AND STOCKHOLDERS' EQUITY                         $         -       $         -
                                                                   ===========       ===========
</TABLE>





                                        3
<PAGE>

<TABLE>
<CAPTION>
                             PEGASUS AIR GROUP, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS
                                   (UNAUDITED)


                                                                           Cumulative
                                            3-months         3-months        During
                                             Ended            Ended        Development
                                            3/31/05          3/31/04          Stage
                                          ------------     ------------    ------------
<S>                                       <C>              <C>              <C>

REVENUE                                   $         -      $         -      $        -

OPERATING EXPENSES
  Professional and consulting fees                  -                -          29,000
  Accounting fees                                   -                -           2,500
  Salary expense                                2,400            1,400          12,168
  Rent                                            450              450           2,313
                                          ------------     ------------    ------------
  TOTAL OPERATING EXPENSES                      2,850            2,850          45,981
                                          ------------     ------------    ------------

LOSS FROM OPERATIONS                           (2,850)          (2,850)        (45,981)
                                          ------------     ------------    ------------

NET LOSS                                  $    (2,850)     $    (2,850)     $  (45,981)
                                          ============     ============     ============

EARNINGS PER COMMON SHARE
  Basic                                   $    NIL         $    NIL         $    NIL
                                          ============     ============     ============

  Fully diluted                           $    NIL         $    NIL         $    NIL
                                          ============     ============     ============

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING
  Basic                                    27,000,000       27,000,000
                                          ============     ============

  Fully diluted                            27,000,000       27,000,000
                                          ============     ============
</TABLE>




                                        4
<PAGE>

<TABLE>
<CAPTION>
                             PEGASUS AIR GROUP, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF CASH FLOWS
                                   (UNAUDITED)


                                                                                                    Cumulative
                                                                     3-months         3-months        During
                                                                      Ended            Ended        Development
                                                                     3/31/05          3/31/04          Stage
                                                                  ------------     ------------    ------------

<S>                                                                  <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                           $  (2,850)      $   (2,850)     $   (45,981)
  Adjustments to reconcile net loss to cash provided by (used) in
    operating activities:
    Donated expense and services                                         2,850            2,850           41,481
    Increase in accounts payable                                             -                -            4,500
                                                                  -------------    -------------    -------------
    Total adjustments                                                    2,850            2,850           45,981
                                                                  -------------    -------------    -------------
    Net cash provided by (used) in operating activities                      -                -                -
                                                                  -------------    -------------    -------------


  NET INCREASE IN CASH                                                       -                -                -

  CASH, BEGINNING OF PERIOD                                                  -                -                -
                                                                  -------------    -------------    -------------

  CASH, END OF PERIOD                                             $          -                -                -
                                                                  =============    =============    =============
</TABLE>




                                        5
<PAGE>

<TABLE>
<CAPTION>

                                            PEGASUS AIR GROUP, INC.
                                        (A DEVELOPMENT STAGE COMPANY)
                                      STATEMENT OF STOCKHOLDERS' EQUITY
                             DECEMBER 19, 2003 (INCEPTION) TO MARCH 31, 2005


                                                                     DEFICIT
                                                                   ACCUMULATED
                                                                   DURING THE
                                         COMMON STOCK    PAID-IN   DEVELOPMENT
                                     SHARES     AMOUNT   CAPITAL      STAGE        TOTAL
                                   ----------  --------  -------  ------------  ----------
<S>                                <C>         <C>       <C>       <C>           <C>
BALANCE, DECEMBER 19, 2003
 (INCEPTION)                               -   $      -  $      -  $          -  $       -

 Issuance of common stock
   to directors for services         700,000        700         -             -        700

  Issuance of common stock to
   entities and individuals
   for services                   26,300,000     26,300         -             -     26,300

  Donated expense and services             -          -       231             -        231

  Net loss during period                   -          -         -       (29,731)   (29,731)
                                -------------------------  --------  ------------  --------

BALANCE, DECEMBER 31, 2003        27,000,000    $27,000  $    231     $ (29,731)  $ (2,500)
(AUDITED)                         ==========  =========  =========  =============  =========

  Donated expense and services             -          -    11,400             -     11,400

  Net loss during period                   -          -         -       (13,400)   (13,400)
                                -------------------------  --------  ------------  --------

BALANCE, DECEMBER 31, 2004        27,000,000    $27,000  $ 11,631     $ (43,131)  $ (4,500)
(AUDITED)                         ==========  =========  =========  =============  =========

  Donated expense and services             -          -     2,850             -      2,850

  Net loss during period                   -          -         -        (2,850)    (2,850)
                                -------------------------  --------  ------------  --------

BALANCE, MARCH 31, 2005           27,000,000    $27,000  $ 14,481     $ (45,981)  $ (4,500)
(UNAUDITED)

</TABLE>

There were no issuances of preferred stock from inception to December 31, 2004.


                                        6
<PAGE>

                              PEGASUS AIR GROUP, INC.
                           (A DEVELOPMENT STAGE COMPANY)
                           NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2005


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations
--------------------

Pegasus Air Group, Inc., ("Pegasus") a Nevada corporation organized on December
19, 2003, is a development stage company, and as such has devoted most of its
efforts since inception to developing its business plan, issuing common stock,
raising capital, establishing its accounting systems and other administrative
functions.

Pegasus' strategy is to be involved in the operation of aircraft charter and
management, aircraft maintenance and servicing, and aircraft acquisitions and
sales.

Interim  Unaudited  Financial  Statements
-----------------------------------------

The interim financial statements are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim periods.  The results of operations for the
three-months ended March 31, 2005 are not necessarily indicative of the
results for the entire fiscal year.  The financial statements included herein
are presented in accordance with the requirements of Form 10-QSB and
consequently do not include all of the disclosures normally made in the
registrant's annual Form 10-KSB filing.  These financial statements should be
read in conjunction the with audited financial statements and notes thereto
contained in the Company's Annual Report for the fiscal year ended on December
31, 2004 filed on Form 10-KSB on April 7, 2005.

Going Concern
-------------

The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business.  The Company has incurred losses from its inception on December 19,
2003 through March 31, 2005.  The Company does not have an established source of
revenue sufficient to cover its operating costs and, accordingly, there is
substantial doubt about its ability to continue as a going concern.

In order to develop an established source of revenues, and achieve a profitable
level of operations, we will need, among other things, additional capital
resources.  Management has formulated a plan to raise additional funding though
the private sales of our securities, providing consulting services, acquiring
existing and profitable businesses within the realm of our business plan, and
continued contributions from the executive officers and members of the Board of
Directors.  All together these events should allow the Company to meet its
forecasted working capital and capital expenditures for the next 12 months of
operations.  However, Management cannot provide any assurances that the Company
will be successful in accomplishing any of its plans.


                                        7
<PAGE>

The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plan described in the preceding paragraph
and eventually attain profitable operations.  The accompanying financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.

Revenue Recognition
-------------------

Pegasus records revenue on the accrual basis of accounting. The accrual basis of
accounting provides for matching of revenues with expenses.

Use of Estimates
----------------

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

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

Pegasus records its federal and state tax liability in accordance with Financial
Accounting Standards Board Statement No. 109 "Accounting for Income Taxes".  The
deferred taxes payable are recorded for temporary differences between the
recognition of income and expenses for tax and financial reporting purposes,
using current tax rates.

Deferred assets and liabilities represent the future tax consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled.

Since its inception, Pegasus has an accumulated loss of $45,981 for income tax
purposes, which can be used to offset future taxable income through 2024. The
potential tax benefit of this loss is estimated as follows:

               Future tax benefit       $6,897
               Valuation allowance      (6,897)
               Net tax benefit          $    0

At March 31, 2005, no deferred tax assets or liabilities are recorded in the
accompanying financial statements.

Earnings per Share
------------------

On March 3, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128, "Earnings Per Share", which provides for
the calculation of Basic and Diluted earnings per share.  Basic earnings per
share includes no dilution and is computed by dividing income or loss available
to common stockholders by the weighted average number of common shares
outstanding for the period.  Diluted earnings per share reflects the potential
dilution of securities that could share in the earnings of the entity.


                                        8
<PAGE>

Advertising Costs
-----------------

Pegasus expenses the production costs of advertising the first time the
advertising takes place.

Cash Equivalents
----------------

For purposes of the statement of cash flows, the Company considers all highly
liquid investments purchased with a maturity of three months or less to be cash
equivalents.

NOTE B - STOCK ISSUANCE

Pegasus records accounting for stock based compensation in accordance with
Financial Accounting Standards Board Statement No. 123 "Accounting for Stock
Based Compensation". The value placed upon the stock-based compensation is the
fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable.

A study was done by Pegasus to determine what services (i.e. general consulting,
financial consulting, public company filings, etc) would be needed by the
Company in order for it to file the Form SB-2 with the Securities and Exchange
Commission. The Company estimated that the total cash outlay to have these
services rendered would be approximately $25,000. The dollar amount of these
services was then compared to the fair value of the equity instruments issued of
$26,300.  As the estimated cash outlay is in fact only an estimate, the Company
felt that since the cash outlay as compared to the equity instruments issued was
comparable it opted to use the par value of the common shares because the value
is fixed and not an estimate.

On December 20, 2003, 27,000,000 shares of Pegasus's $.001 par value voting
common stock were issued to directors and several unrelated entities and
individuals for professional and consulting services provided to Pegasus in
conjunction with its formation. The stock was issued under the provisions of
Rule 144 of the Securities Act of 1933, as amended.

NOTE C - RELATED PARTY TRANSACTIONS

Pegasus utilizes a portion of a shareholder's corporate office as its primary
office. The value of the office space on a monthly basis is $150.  The donated
value of this service was recorded as contributed capital.

The president and secretary of Pegasus performed services on behalf of Pegasus
that had a fair value of $800 on a monthly basis.  The donated value of these
services was recorded as contributed capital.

NOTE D - GOING CONCERN

Pegasus's financial statements are prepared using generally accepted accounting
principles applicable to a going concern, which contemplates the realization of
assets and liquidation of liabilities in the normal course of business.  Pegasus
has incurred losses from its inception on December 19, 2003 through March 31,
2005.  The Company does not have an established source of revenues sufficient to
cover its operating costs and, accordingly, there is substantial doubt about its
ability to continue as a going concern.

In order to develop an established source of revenues, and achieve a profitable
level of operations, Pegasus will need, among other things, additional capital
resources. Management is currently seeking outside funding through various
sources, including through debt and/or the sale of equity in Pegasus.  However,
there is no guarantee that management will be successful in procuring any


                                        9
<PAGE>

outside funding, or if such funding does become available, that such funding
will be on terms acceptable to us.

Until such funding is secured, Pegasus will need to rely on contributions from
the executive officers and members of the Board of Directors to maintain
compliance with its various state and federal filing requirements, including
those with the Securities and Exchange Commission. Management, however, cannot
provide any assurances that it will be successful in securing the necessary
funding to properly execute the Company's business plan.


Item 2.   Management's Discussion and Analysis or Plan of Operation

     You should read the following discussion and analysis of our financial
condition and results of operations together with our financial statements and
related notes appearing elsewhere in this Annual Report.  This discussion and
analysis contains forward-looking statements that involve risks, uncertainties
and assumptions.  The actual results may differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including, but not limited to, those presented under "Risk Factors" and
elsewhere in this Annual Report.

Overview

     We are a holding company involved in the operation of aircraft charter and
management, aircraft maintenance and servicing, and aircraft acquisitions and
sales.  Since our inception on December 19, 2003, we have operated as a
development stage company.

Results of Operations

     For the ease of reference, we refer to the three months ended March 31,
2005 as the three months ended March 31, 2005 and the three months ended March
31, 2004 as the three months ended March 31, 2004.  Our current fiscal year,
also referenced as fiscal 2005, ends on December 31, 2005.

Revenues

     We have not generated any revenue since our inception on December 19, 2003.
Furthermore, we do not anticipate generating any material revenue during the
remainder of fiscal 2005.

Expenses

     Operating Expenses.  Our operating expenses consisted primarily of
personnel expenses and rent, and totaled $2,850 for the three months ended March
31, 2005 which was flat compared to $2,850 for the three months ended March 31,
2004.  All of these operating expenses were paid for through the issuance of our
common stock and/or were donated by our officers, directors and affiliates.

Net Loss

     We experienced a net loss of ($2,850), or NIL per share, for the three
months ended March 31, 2005 which was flat compared to a net loss of ($2,850),
or NIL per share, for the three months ended March 31, 2004.


                                       10
<PAGE>

Liquidity and Capital Resources

     Since our inception on December 19, 2003, we have financed our operating
activities through private offerings of our equity securities and the personal
contributions of our executive officers.

     As of March 31, 2005, we had no cash or cash equivalents.

     As of March 31, 2005, we had financial obligations totaling $4,500,
consisting of accounts payable of $4,500.  Furthermore, we do not anticipate
taking on any material financial obligations or commitments for the remainder of
fiscal 2005.  We also expect to experience continued net losses for the
remainder of fiscal 2005 and possibly into subsequent fiscal years.


Plan of Operation

General Overview

     We are in the process of registering a unit offering of our securities,
including our common stock and warrants to purchase additional shares of our
common stock, with the Securities and Exchange Commission.  Upon the successful
completion of this offering, coupled with any additional funding or donated
services from our officers, directors and affiliates, we intend to commence
operations.

     During the first three months of commencing operations we intend to focus
on preparing the required Standard Operating Procedures (SOPs) manuals and
obtaining a Federal Aviation Administration (FAA) Part 135 Certificate.

     Because our business is highly regulated by the FAA it is a requirement
that we obtain FAA 135 certification prior to commencing any type of flight
operations.  The FAA grants 135 certification after reviewing a charter
operator's SOPs and other assorted operating documentation to make sure our
planned flight operations adhere to FAA rules and regulations.  The SOPs
required for 135 certification are quite detailed in nature.  Thus, we intend to
retain an outside consultant who has worked with the FAA previously to expedite
this process as much as possible because without the certification we will not
be able to execute our business plan.  We estimate it will cost us up to $10,000
for completing this objective and obtaining the necessary charter certification.

     Concurrently with obtaining our FAA 135 certification, we shall retain a
web design specialist to create a corporate website that will act as an
advertising medium for our business as well as provide our clients with the
ability to view listings of aircraft that we may have access to that are
available for charter and/or sale.  A significant portion of our website shall
contain a database of aircraft available for charter and sale throughout the
United States.  We project that it will cost us approximately $5,000 to
construct our website and database.

     One of the key points we intend to develop into our website is the ability
to identify "dead head" flight legs on previously chartered aircraft.  In
aircraft charters, as well as in other segments of the transportation industry,
oftentimes a client only requires a quick flight from one point to another
without needing to return to the point of origin.  The cornerstone of the
charter industry is to provide the client with this fast and direct mode of
transportation but it leaves the problem of getting the plane back to the point
of origin.  In such an instance the plane returns to the point of origin without
a paying client onboard which means no revenue is generated.  Hence, the term
"dead head".  The original charter should have generated enough revenue to make
a profit for the charter itself.  However, if a different client could be
enticed with a below market charter price to fly on the dead head leg, then the
charter would be that much more profitable to the operator.  Thus, by


                                       11
<PAGE>

identifying dead head flight legs we should be able to offer our clients
discounted one-way aircraft charters on those dead head legs.  Pegasus
anticipates generating a 5% commission for brokering third-party aircraft
charters through its website.

     Once our FAA 135 certification and website/database is in place we intend
to begin proactively advertising our business.  Over the nine-month period after
our FAA 135 certification is approved and our website/database is operational we
intend to spend between $10,000 and $20,000 on marketing and advertising our
business.  The exact amount will depend on how much we are able to raise through
this offering.

     Our marketing efforts will be aimed at (i) bringing Internet traffic to our
website/database ($500), (ii) purchasing an advertisement in the local yellow
pages ($2,000), (iii) conduct a direct mailing to targeted individuals and
corporations in the Dallas/Ft. Worth Metroplex ($7,500), and, if the budget
allows for it, (iv) retain a sales representative to telemarket our charter
services to corporate travel agents ($3,500/month).

     After we have successfully started to develop a client base for brokered
aircraft charters and the purchase and sale of used aircraft, we intend to focus
on developing flight operations using our own aircraft.

     Starting in our second year of operation we intend to lease one to three
light jets for charter operations.  Light jets such as the Lear 35A or Citation
III are the most economical choice for short to mid-range trips.  They have an
average cruising speed of approximately 500 mph and an average non-stop range of
about 1,500 - 2,000 miles.  One of the benefits to charter clients using light
jets is not only are they economical as far as aircraft charters are concerned,
they do not require a large airfield to land or takeoff from, which allows for
them to operate out of remote airfields not accessible by larger private jets
and larger commercial aircraft.

     In all likelihood we will need to raise additional funds prior to obtaining
our first light jet.  We estimate it will cost us between $20,000 - 30,000 a
month to least just one light jet in addition to retaining flight crews, fuel,
maintenance and other operating expenditures.  As such, we anticipate seeking up
to $1 million in additional funding, either debt and/or equity, after our first
year of operations.

     Upon obtaining our first light jet Pegasus intends to lease hanger space at
Dallas Love Field.  This hanger space shall become Pegasus's primary Fixed Base
Operation (FBO) for flight operations, maintenance, fuel, flight plan filing,
etc.  As its business grows and develops, Pegasus's projects opening additional
FBOs in major metropolitan areas, including Los Angeles, Miami, New York,
Chicago and Washington, D.C.

     These FBOs will not only provide a "home" for Pegasus's internal flight
operations thereby allowing us to minimize the direct costs to our own flight
operations, it will offer us a secondary source of revenue from other charter
operators who wish to use our facilities and maintenance services for their own
aircraft.

Future Operations

     Because we remain a start-up development company with limited capital
resources we are relying on our executive officers and directors to either
advance us funds or to accrue expenses until such time we can obtain outside
investment capital.  Any cash funds advanced to us by our officers and directors
will be in the form of promissory notes bearing no interest or through private
sales of restricted common stock.  Management intends to hold expenses to a
minimum and to obtain services, if possible, on a contingency basis or through
the issuance of our common stock.  Furthermore, none of our officers or
directors shall receive any compensation, cash or otherwise, until we are
successful in raising sufficient funds to properly execute our business plan.


                                       12
<PAGE>

     Over the next 12-months we intend to spend our time and resources on the
following activities:

-     Raise Capital.  In January 2005 the Securities and Exchange Commission
declared a registration statement filed on Form SB-2 for the sale of units of
Pegasus "effective".  We are in the process of selling the units registered in
that offering on a "best efforts" basis through our officers and directors.
While we cannot offer any assurances that we will be successful at selling any
of the offering, we estimate this phase will take between three and six months
to complete.

-     Obtain a Federal Aviation Administration (FAA) Part 135 Certificate.  We
estimate that it will cost us up to $10,000 for obtaining an FAA Part 135
Certificate.  This process is expected to take approximately three months to
complete.

-     Develop website.  We intend to retain a web design specialist to create a
corporate website that will act as an advertising medium for our business as
well as provide our clients with the ability to view listings of aircraft that
we may have access to that are available for charter and/or sale.  A significant
portion of our website shall contain a database of aircraft available for
charter and sale throughout the United States.  We project that it will cost us
approximately $5,000 to construct our website and database.  We anticipate it
will take approximately three months to get the website and integrated database
fully functional.

-     Initiate marketing efforts and commence operations.  Upon obtaining our
FAA Part 135 Certificate enabling us to engage in charter operations and have
our website and integrated database operational we will begin to market our
business to prospective clients.  Depending on our level of success at selling
the offering, we intend to spend up to $20,000 marketing our business during our
first year.

Cash Requirements and Need For Additional Capital

     In order to successfully execute the above first year business objectives
and commence minimal operations we will need to either sell at least $62,500 of
the offering or raise this minimal operating capital from other outside sources.
If we are successful at raising these funds we intend to spend them as follows:

     Obtaining FAA Part 135 Certificate        $10,000
     Develop website and database                5,000
     Marketing and advertising                  10,000
     Salaries                                   25,000
     Working capital reserve                    12,500
     -------------------------------------------------
                                               $62,500

     Until we raise sufficient capital from outside sources to commence
operations we anticipate our executive officers and directors will cover any
basic cash requirements required to keep us in compliance with all existing
corporate filing requirements, including with the Nevada Secretary of State, the
Internal Revenue Service and the Securities and Exchange Commission.  In the
event we cannot sell this offering or secure any sources of secondary funding,
our basic cash requirements required to prevent insolvency are expected to be no
more than $10,000 over the course of the next twelve months.  Our present
monthly cash burn rate is approximately $375 a month.  Our monthly burn rate is
expected to increase substantially once we begin executing our business plan.
Our current officers and director, Andrew Jones and Eric Boyer, have agreed to


                                       13
<PAGE>

cover any cash shortfalls that cannot be deferred or paid for through the
issuance of common stock through the end of the fiscal year ending December 31,
2005.  It is important to note that none of our officers or directors are under
any obligation to provide advances, now or in the future, for Pegasus's ongoing
cash needs, and that we cannot give any assurances they will continue providing
for Pegasus's ongoing cash needs.

     One exception to the aforementioned is our independent auditor must be paid
in cash.  If our executive officers and directors do not cover the cash cost of
our auditing requirements we would most likely fail to meet our future filing
requirements with the SEC.  Failure to retain our status as a reporting company
could further limit our abilities to raise outside investment capital which
could cause our business to ultimately fail.

     In addition to our first year cash requirements, we estimate that we will
need to raise an addition $1 million from outside sources prior to obtaining our
first light jet.  We anticipate we will attempt to raise these funds through
either a private or public offering of our common stock during our second fiscal
year of operation.  We cannot offer any assurances that we will ever be
successful at raising these funds or the funds necessary for us to even commence
initial business operations.

Employees

     We presently do not have any plans to add any additional employees to our
staff.  We may expand (or decrease) the size of our Board of Directors.
However, none of the members of our Board of Directors receives a salary or
benefits in any form, nor do we have any plans to begin paying salaries, cash or
otherwise, or offering any form of benefits to our Board of Directors.

     We believe that the current efforts from our existing executive officers,
supported by our Board of Directors, will prove satisfactory in enabling us to
raise the necessary capital to properly execute our business plan.  Should our
executive officers and members of our Board of Directors fail to raise the
necessary capital to execute our business plan, there will be inadequate
resources to hire new personnel to assist with the execution of our business
plan.

Property and Equipment

     We do not foresee any immediate needs to purchase or lease any new or
additional facilities, property or equipment.  We anticipate that any new
property or equipment requirements will be commensurate with new funding and
subsequent business developments.

Factors That May Affect Future Results

     The majority of our efforts to date have centered around developing our
business plan and preparing a registration statement of our securities with the
Securities and Exchange Commission.  None of these activities are revenue
generating.

     Although we believe that our pending securities offering presently in the
registration process will allow us to commence operations, we can offer no
assurance that any of the securities being offered will ever be sold or that we
will ever have enough capital to commence operations.

     Beyond the ongoing offering of our securities, we have not conducted any
talks - preliminary or otherwise - with any prospective investors,
broker/dealers, banks or other sources of funds.  Nor do we have any specific
plans on how we will raise capital should our securities offering fail.
However, such methods may include public or private sales of our equity,
borrowings from institutions or individuals, venture capital, investments from
possible angel investors, and other methods and/or sources that may become
available to us.


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<PAGE>

     Until we can successfully raise sufficient capital we will remain dependent
on our officers and directors to support our business operations and provide us
with adequate capital for our ongoing capital needs.  None of our officers or
directors have entered into any agreements requiring them to provide for our
capital needs.  We can give no assurances that they will continue providing for
our capital needs or that we will be able to raise sufficient capital to
commence operations.

     Furthermore, our ability to raise capital by selling securities, equity
and/or debt, and hence our liquidity, could be materially adversely affected by
the general unease in the equities market, the limited availability of venture
capital financing sources, and current worldwide general economic woes.

     If we fail to raise the necessary capital to commence operations, we may be
forced into insolvency.  Management intends to prevent accruing unnecessary
expenses until sufficient funding has been procured to prevent such a situation
from ever developing.

Item 3. Controls and Procedures

     Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Principal Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Securities Exchange Act Rule 13a-14.  Based upon that
evaluation, our Chief Executive Officer and Principal Financial Officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information relating to us required to be included in
our periodic SEC filings.  There have been no significant changes in our
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

     We are not currently party to any legal proceedings, nor are we aware of
any other pending or threatened actions against us.

Item 2.  Changes in Securities and Use of Proceeds

None

Item 3.  Defaults Upon Senior Securities

None

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

None

Item 5.  Other Information.

None


                                       15
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

(A)     Exhibits
        --------

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

99.2    Certification by Treasurer and Secretary pursuant to 18 U.S.C. Section
        1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
        of 2002.


(B)     Reports on Form 8-K
        -------------------

        None



SIGNATURES

     In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                   Pegasus Air Group, Inc.
                                   (Registrant)


Dated: April 25, 2005               By: /s/ Andrew L. Jones
                                        --------------------
                                        Andrew L. Jones
                                        President and CEO


                PRINCIPAL EXECUTIVE OFFICER CERTIFICATION

I, Andrew L. Jones, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB of Pegasus Air Group,
Inc.;

2.   Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statement made, in light of the circumstances under which 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 quarterly 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 quarterly 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 we 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 quarterly report is being
prepared;


                                       16
<PAGE>

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
quarterly 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 registrant's board of directors (or persons performing the
equivalent function):

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
quarterly 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: April 25, 2005          /s/ Andrew L. Jones
                              -------------------------------------------
                              Andrew L. Jones
                              President and Chief Executive Officer
                              Pegasus Air Group, Inc.




             PRINCIPAL FINANCIAL OFFICER CERTIFICATION

I, Eric R. Boyer, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB of Pegasus Air Group,
Inc.;

2.   Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statement made, in light of the circumstances under which 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 quarterly 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 quarterly 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 we have:


                                       17
<PAGE>

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 quarterly 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
quarterly 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 registrant's board of directors (or persons performing the
equivalent function):

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
quarterly 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: April 25, 2005          /s/ Eric R. Boyer
                              -------------------------------------------
                              Eric R. Boyer
                              Treasurer, Secretary and Director
                              Pegasus Air Group, Inc.





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