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

                                  Form 10-KSB/A
  ANNUAL REPORT PURSUANT TO SECTION15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2002   Commission File Number: 333-57552
                           -----------------                           ---------


                         AMERICAN UTILICRAFT CORPORATION
                 (Name of small business issuer in its charter)

           Delaware                                       54-1577735
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

    300 Petty Road, N.E.
  Lawrenceville, Georgia                                 30043
------------------------------             -------------------------------------
  (Address of principal                                 (Zip Code)
   executive offices)

Issuer's telephone number: (678) 376-0898
                           --------------

Securities registered under Section 12(b) of the Exchange Act:

Title of each class                    Name of each exchange on which registered
----------------------------          ------------------------------------------
Common Stock                                            OTC-BB
(par value $.00001 per share)

         Check  whether the issuer (1) filed all reports  required 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 requirement for the past 90 days. Yes [_] No [X]

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

         State issuer's revenues for its most recent fiscal year. Zero
                                                                  ----

         State the aggregate  market value of the voting and  non-voting  common
equity held by  non-affiliates  computed by  reference to the price at which the
common  equity  was sold,  or the  average  bid and asked  price of such  common
equity,  as of a specified  date  within the past 60 days.  (See  definition  of
affiliate  in Rule  12b-2  of the  Exchange  Act.).  As of  December  31,  2002,
9,354,044

         As of December 31, 2002 there were  13,195,732  shares of common stock,
par value $.00001 per share,  and 1,970,787 shares of preferred stock, par value
$.00001 per share, of the registrant outstanding.

         If the following  documents  are  incorporated  by  reference,  briefly
describe them and identify the part of the Form 10-KSB  (e.g.,  Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders;  (2) any  proxy or  information  sheet;  and (3) any  prospectus  field
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").
The listed documents should be clearly  described for  identifications  purposes
(e.g.  annual  report to security  holders for fiscal  year ended  December  24,
1990).

   Transitional Small Business Disclosure Format (Check one): Yes [_] No [X]

<PAGE>

                                TABLE OF CONTENTS

Part I            .............................................................3
     Item 1       Description of Business......................................3
     Item 2       Description of Property......................................8
     Item 3       Legal Proceedings............................................8
     Item 4       Submission of Matters to a Vote of Security Holders..........9

Part II           .............................................................9
     Item 5       Market for Common Equity and Related Stockholder Matters.....9
     Item 6       Management's Discussion and Analysis or Plan of Operation...10
     Item 7       Financial Statements........................................11
     Item 8       Changes in and Disagreements with Accountants on Accounting
                  and Financial Disclosure....................................32
     Item 8A      Controls and Procedures.....................................32

Part III          ............................................................32
     Item 9       Directors, executive Officers, Promoters and Control
                  Persons; Compliance with Section 16(a) of the Exchange Act..35
     Item 10      Executive Compensation......................................35
     Item 11      Security Ownership of Certain Beneficial Owners and
                  Management and Related Stockholder Matters .................35
     Item 12      Certain Relationships and Related Transactions..............36
     Item 13      Exhibits....................................................37
     Item 14      Principal Accountant Fees and Services......................38










                                       2
<PAGE>

                                     PART I

Item 1. Description of Business.
--------------------------------

The Company

American Utilicraft Corporation,  located in the Atlanta-Metropolitan  area near
Gwinnett County airport,  was incorporated in the State of Delaware in August of
1990.  American Utilicraft was formed to conceive and implement solutions to the
problem of declining  capacity in the short haul (or feeder)  route  segments of
the air cargo hub and spoke system.

The result of the Company's  research and  development is a complete  system for
transporting  air  freight,  centered  around  a new  air  vehicle  specifically
designed for medium range route segments,  the FF-1080 Freight Feeder  aircraft.
The FF-1080 is capable of economically carrying standard industry air containers
on  short-to-medium  range/medium  density  routes from airports with runways as
short as 3,000 feet.

American Utilicraft holds three (3) U.S. patents. One patent is on the design of
the  aircraft.  Another is a Method  Patent that  incorporates  the design in an
integrated air cargo information system for the freight feed market, the Express
Turn-Around (ETA) electronic freight tracking system. The Company's third patent
is for the Company's Automated Flat Rate System (AFRS). The AFRS system computes
the most economical performance curve for each route segment based on the change
in aircraft gross weight on the segment. The AFRS system reduces pilot work-load
and assures that the FF-1080 is operated with the highest fuel efficiency.

In 1999, the Company concluded  initial  agreements with a number of experienced
companies  that provide  aviation  products  and services  needed to produce the
FF-1080. All of the agreements are Risk Sharing agreements that provide products
and/or services at no cost or at the manufacturer's lowest direct costs for both
the  Pre-Production   prototype  aircraft  and  the  Conformity  Aircraft.   The
willingness of these companies to share the risk to bring the FF-1080 to market,
indicates  their  belief in the  potential  of the  aircraft and their desire to
participate in the program. The understandings reached with these companies have
enhanced the technical  capability and operational value of the FF-1080, as well
as assured the success of the development and production program.


The Product
The FF-1080 is capable of economically carrying standard industry air containers
on short-to-medium range/medium-density routes from feeder airports with runways
as short as 3,000 feet,  opening up  thousands  of  additional  airports in this
growing market.

American  Utilicraft  has also  developed  an  integrated  air cargo  electronic
information  system for the freight feed market,  the Express  Turn-Around (ETA)
electronic freight tracking system. Additionally,  American Utilicraft developed
the  Automated  Flat Rate  System  (AFRS).  The AFRS  system  computes  the most
economical  performance  curve for each  route  segment  based on the  change in
aircraft gross weight on the segment.  The AFRS system  reduces pilot  work-load
and assures that the FF-1080 is operated with the highest fuel efficiency, which
can save the fleet operator millions of dollars on an annual basis.

The primary market niche for which the FF-1080 twin-engine turboprop aircraft is
targeted  is the  growing  distribution  requirement  for  more  shipments  with
in-transit visibility and containerization delivered as close as possible to its



                                       3
<PAGE>

end  destination.  This market niche includes the freight feed operations of the
overnight/two day express airlines, the airline freight feeder market, the world
postal  services,  manufacturing  just-in-time  inventory and  fulfillment,  the
combination   passenger/cargo   airlines,   and  the   international   airlines.
Specifically,  the  initial  client base that we are  targeting  consists of the
major  dedicated  freight  companies,  such as Federal  Express,  United  Parcel
Service and DHL, as well as the major U.S. passenger airlines,  such as American
Airlines,  Continental Airlines, Delta Airlines,  Northwest Airlines,  SouthWest
Airlines,  United Airlines and US Air, seeking to expand their freight services.
A secondary target is major  international  passenger airlines seeking to expand
freight  operations.  The cargo that we will carry will be standard industry air
containers  containing a variety of packages including commercial shipments from
e-commerce retailers and manufacturers directly to customers.

The  Company  believes  that the high  speed,  high  frequency,  and high volume
required by developing  distribution  system needs will be best  accomplished by
using the  FF-1080  aircraft.  The  FF-1080  is an  all-cargo  aircraft  that is
designed  specifically for hub-and-spoke  cargo operations.  We believe that the
FF-1080 will  contribute  to the  development  of regional  hub-and-spoke  cargo
operations in the same way that passenger  turboprop aircraft were used to build
the passenger  hub-and-spoke systems. The FF-1080 will be able to fly to smaller
cities and airports that are located closer to  origin/destination  points.  The
FF-1080 is designed to have lower  acquisition  and  operating  costs than older
generation turboprop aircraft,  such as the DeHavilland Dash 8, Aerospatiale ATR
42 and 72, the Saab 340,  the  Embraer EM 120 and the Dornier  328,  while still
providing the speed needed to create  high-performance,  fast-delivery shipping.
Our goal is to provide  airlines  the  critical  flexibility  needed to move air
cargo  to  more  cities,   more   frequently,   in  manageable   and  track-able
containerized units.


Competition
The companies that build small and intermediate-sized  aircraft, such as Spain's
CASA, Canada's  DeHavilland,  Sweden's Saab,  Germany's Dornier,  and the U.S.'s
Beechcraft  and Cessna  pose no  competitive  threat to the  FF-1080.  Aerospace
(France)  and  British  Aerospace,   which  build  larger  jet  aircraft,   also
manufacture  intermediate-sized  passenger aircraft that are often converted for
freight, but are too large to pose a threat to our targeted market segment.

Light Aircraft Under 20,000 Pounds
----------------------------------
Aircraft in this  category,  such as the Cessna Caravan 208 and the Dornier 228,
are small and cannot  accommodate  the air cargo industry  standard  containers.
These  planes  are more  suitable  for the  non-containerized,  overnight  small
package services in low volume markets. Federal Express has developed a fleet of
more than 250 Cessna 208  aircraft  since the early 1980s.  The other  overnight
express  operators also fly small fleets of the Cessna 208s, but the majority of
the aircraft used by these operators are older corporate  executive or passenger
commuter aircraft  converted into makeshift  freighters.  This class of aircraft
does not provide  enough  capacity  per  departure to meet  increasing  shipping
demand.

Intermediate Aircraft
---------------------
Intermediate-sized  aircraft such as the DeHavilland Dash 8, Aerospatiale  ATR42
and 72, Saab 340,  Embraer  EM120,  Dornier  328 and CASA 235 were  specifically
designed to haul passengers at high speeds to the major hub airports. Therefore,
their designs  cannot be modified to accommodate  the features  needed in a pure
freighter  aircraft,  such as a larger forward side cargo door,  high point-load
capable floors, cargo net attachments,  and a container roller system, and, as a
result, they pose no competitive threat to our market segment.  The new aircraft



                                       4
<PAGE>

in this  category,  the CASA 235, was designed for dual passenger and cargo use.
Although the CASA 235 has a rear ramp door,  its heavy aircraft empty weight and
slow  cruise  speed  causes  a  range/payload  deficiency  in both  freight  and
passenger  operations.  There is no cost-effective means to convert any of these
existing  aircraft  into  cargo  airplanes  which  is  why  FAA-compliant  cargo
modification  procedures for these planes have not been developed.  In addition,
all of these aircraft are unable to operate from airfields with runways of 3,000
feet or less  because  they were  designed  for  high-speed  takeoffs  from long
runways.  For these  reasons,  current  owners of fleets of these  aircraft  are
presently  exploring  placing  them in  Third-World  and  developing  nations as
passenger aircraft and parts (scavenged)  aircraft in order to gain some revenue
from their use.

Heavy/Large Aircraft
--------------------
Several freight carriers are using Boeing 727s, 737s, and McDonnell Douglas DC9s
for  feeder  operations.  These  aircraft  can  carry  containers,  but they are
unnecessarily sophisticated, too large and too costly to operate in a hub feeder
role.  These aircraft cannot be used to serve small feeder  airports  because of
landing/takeoff  requirements.  They are also not  economical  to operate on the
typical feeder stage length of 250 to 500 miles.

Used, Out-of-Production Aircraft
--------------------------------
The  backbone of the  utility/freight  feeder  fleet to date has been a group of
small piston and light turboprop aircraft.  In the mid-1990s,  product liability
litigation and passenger feeder market demand for much larger turboprop aircraft
resulted in the halt of production of most of the popular  aircraft used for air
cargo  operations.  The  out-of-production  aircraft  most commonly used are the
smaller Piper Cherokee Six, Piper Aztec,  Piper Navajo,  Cessna 400 series,  the
DeHavilland Dash 6 Twin Otter, the Beech 99, and Beech Baron. Larger aircraft in
this category are the Convair 580,  Convair 660, the Fairchild F27,  Shorts 330,
Shorts 360, CASA 212, and the DeHavilland Dash 7.

With every passing year,  fewer of these  aircraft are available for the utility
market due to the  increasing  fleet age and the difficulty of getting parts and
other product support. Even when spare parts are available, the older designs of
these  aircraft  make  them  unattractive  freight  haulers.   They  are  heavy,
fuel-intensive,  and prone to breakdowns,  grounding planes and stranding cargo.
These pose little real threat to the FF-1080 purely from an economic standpoint,
because  they are too small and too  expensive  to operate  with modern  freight
handling systems.

New Entrants
------------
There are currently no other  companies  with  programs  competing in this niche
market. We will continue to monitor the situation and we are ready to respond to
the fullest extent should circumstances so warrant. We have found no evidence of
new entrants in the airfreight  feeder  market,  and dialogue with our potential
suppliers and industrial partners confirm this observation. The potential market
size  can,  however,  support  more  than one or two  producers  of this type of
aircraft in the future in a similar way that passenger  aircraft demand supports
two primary aircraft manufacturers, Boeing and Airbus.

Design,  development,  and  production  of other new  designs  will  likely take
several years during which we should retain a first-mover  advantage  within the
freight feeder market.  Our patent  protection for our aircraft design,  the ETA
system,  and the AFRS system will also help the FF-1080  retain a leading market
position.




                                       5
<PAGE>

Intellectual Property
---------------------
Our  performance  and ability to compete  depend to a significant  degree on our
proprietary  knowledge.  In 1992, the U.S.  Patent and Trademark  Office ("PTO")
issued a method patent, which was assigned to us, for the method of transporting
cargo using freight feeder aircraft with an automated freight management system.
In 1993, PTO issued a design  patent,  which was assigned to us, for the FF-1080
aircraft,  which expires in 2007. We filed for an additional  patent in 2000 for
the  Automatic  Flat Rate Setting  System for Freight  Feeder  Aircraft that was
granted on October 30, 2001. We have  nondisclosure  agreements  with all of our
employees.


Governmental Regulations
------------------------
We are  subject to  regulations  promulgated  by the FAA with  respect to safety
requirements  for and  certification  of  aircraft.  The FF-1080  prototype is a
pre-certified,  non-production aircraft that will be built under the regulations
for  experimental  aircraft.  The  FF-1080  is a  simple  twin-engine,  standard
configuration,   aluminum  airframe  that  requires  a  low-risk,  low-tech  FAA
certification  process.  We believe  that  there are no systems on the  aircraft
(such as hydraulic,  retractable landing gear, assisted/boosted flight controls,
cargo  cabin  pressurization,   emergency  ejection  egress,   crash-worthy/fire
retardant  passenger  seats and passenger  environmental  control  systems) that
could cause scheduling and approval  difficulties with the FAA during the flight
test and static-test programs.

We are also subject to governmental regulations applicable to public companies.


FAA Type Certificate
--------------------
Type  certification  is the process that  conforms the FF-1080  engineering  and
flight  characteristics  to FAA  requirements.  The type  certification  process
legally  enables  a U.S.  manufacturer  to  mass-produce  its  aircraft  "type,"
insuring that each  delivered  FF-1080 meets  identical  safety and  performance
requirements.  The regulations governing an FAA Type Certificate for the FF-1080
are  contained  in Federal  Aviation  Rules (FAR) Part 25. The FARs  require the
manufacturer to provide drawings and engineering data for every component of the
aircraft. The engineering data must show precisely what stresses will be imposed
on the component during its operational life. Its capabilities must exceed these
stresses by a minimum of 50 percent.  The FF-1080 is designed  with even greater
margins of safety and uses as many proven  industry-standard and "off-the-shelf"
items as possible for safety, ease of certification and ease of maintenance. The
quality  of each  component  must  also be shown  to be  repeatable  during  the
manufacturing  process, and when AUC buys a part from another manufacturer,  the
part must also be  certified  by AUC,  or under a specific  "Technical  Standard
Order (TSO)" by the FAA.

We plan to execute FAA Part 25 Certification in two phases. Phase I will include
the  development  of  the  certification   plan,  filing  of  the  certification
application,  certification of the detailed production engineering, construction
of the static test  articles  and the  conformity  aircraft  subassemblies,  and
initial flight tests using the prototype  aircraft.  Phase II will include final
assembly of the  conformity  aircraft,  initiation of limited  production of the
aircraft,  certification  flight-testing  and  receipt of final Part 25 Aircraft
Type Certification.

We plan to begin the FAA  Certification  program upon completion of the detailed
engineering of the pre-production  prototype aircraft,  approximately six months
from the capitalization of the FF-1080 program.




                                       6
<PAGE>

Changes in the Marketplace
With  capital  markets  and the  aviation  industry  both  still  in a state  of
recovery, the two major requirements for the program (funding and orders) remain
hindered.  The Company remains confident of recovery in both the capital markets
and in the aviation industry.

The  Company's   business  plan  is  centered  upon  the   development  and  FAA
certification of its FF-1080 for commercial use. The commercial aircraft market,
with its  requirement  for  certification  and other high capital  outlays,  has
necessitated  that AUC rely  upon  substantial  external  funding.  Successfully
constructing,  assembling and flying the  pre-production  (uncertified)  FF-1080
aircraft is necessary before the Company can begin to obtain a revenue flow from
any commercial sales and possibly even obtain those orders.

To continue  forward  with the program in the  current  climate,  the Company is
currently  focused on a strategy of acquiring  solid orders for  aircraft.  This
strategy  includes  performing route analysis for potential  clients and working
with existing  operators to demonstrate  immediate cost and performance  benefit
with existing  aircraft,  and to demonstrate how much more beneficial use of the
FF-1080 would be to the customer's  operations.  There are no guarantees at this
time that the Company will find a suitable  customer or that the  customer  will
agree to secure the purchase of FF-1080's  for their own operation or through an
existing operator.


The Market
The past  decade's  explosive  growth in  production  facilities in the Far East
market is set only to increase over the next decade.  The  infrastructure in the
Far East does not allow for the same  inefficient  trucking  practices that have
developed in Western  markets and can be used to "force" cargo movement  through
the over-use of trucking  resources.  The Far East market favors the FF-1080 and
the type of  operations  that it lends itself to,  including  the  efficient and
traceable movement of containerized cargo, short take-of and landing capability,
and the potential use of more rugged landing fields in more isolated areas.

The air express cargo market has evolved into a highly competitive industry. Six
major dedicated freight companies (Federal Express, United Parcel Service, Emery
Worldwide,  Airborne  Express,  DHL,  and TNT)  dominate  the  industry  and are
building their systems into global freight networks.  One of the primary targets
for use of the FF-1080 aircraft are these express freight carriers.

The passenger airlines also compete for a share of the airfreight  market.  Some
U.S. passenger  airlines,  which lost once-large shares of the freight market by
concentrating  on  passenger  operations,  are now  planning to step-up  freight
operations and regain lost market share. We are targeting the FF-1080 to the top
tier  of the  U.S.  passenger  airlines  as a  primary  market  (i.e.,  American
Airlines,  Continental  Airlines,  Delta Airlines,  Northwest  Airlines,  United
Airlines and SouthWest  Airlines).  We believe that the passenger  airlines will
eventually  purchase FF-1080s because of the expanding market  opportunities for
same-day,  overnight,  and  international  cargo  services,  and to  keep  their
operations viable by removing freight from the scheduled  passenger airlines and
place such freight in an even more cost-effective  transport system. The FF-1080
is an  appropriately  sized freight feeder aircraft for both the hub feeder role
and the stand-alone regional express service.



                                       7
<PAGE>

The  international  passenger  airlines are considered to be a secondary  target
market for the FF-1080.  This group of airlines is  comprised  of carriers  from
around the world that provide inter-continental and inter-national air services.
For example, in addition to dedicated freight carriers, passenger carriers, such
as Lufthansa,  Japan Airlines and British Airways,  move  international  express
freight. The international airlines that are likely candidates for FF-1080 sales
include  British  Airways,  Lufthansa,  Japan Airlines,  Air France,  All Nippon
Airways, Alitalia and KLM Royal Dutch Airlines.

The Company's  sales and  marketing  efforts  primarily  consist of direct sales
initiatives with prospective  airline customers and large commercial  operations
that can  influence the sale of aircraft.  The direct sales  efforts  entail the
preparation of aircraft route and market analysis, and aircraft cost and benefit
analysis, in conjunction with customer airline planning teams. As customer sales
initiatives  approach the  decision-making  stage, the sales effort focus on the
development  of sales  contractual  agreements and aircraft  financing  support.
Secondarily,  the marketing and sales effort  consists of  participation  in air
cargo  industry  trade shows which will include the National  Business  Aircraft
Association  (NBAA) Annual Conference,  the Regional Airline  Association Annual
Meeting,  the National Defense Industry  Association (NDIA) symposia,  and other
U.S. and international trade shows. These presentations include a display of the
full-scale mockup of the FF-1080 and video and graphic  presentations of the key
features  and  operating  economics  of  the  FF-1080.  Upon  completion  of the
preproduction  prototype,  trade show  presentations  and customer sales efforts
will also  include  flight  demonstrations  of the  FF-1080  and the  aircraft's
systems.  Finally,  the marketing  effort will be supported by  advertising  and
promotional  campaigns  appearing in premier  worldwide  airline  industry trade
publications.  These  efforts  will  emphasize  the benefits and features of the
FF-1080 to air shippers and airline operators.

The FF-1080 is  particularly  well suited  performing a great many  military and
governmental  support missions far more effectively,  and at lower relative cost
than any  other  air or  ground  vehicle.  The  Company  is a member of the NDIA
(National  Defense  Industry  Association).  In  November  of 2001  the  Company
received  Certified  Government  Contractor  status and  submitted a proposal in
response to the  Pentagons'  request for U.S.  companies to submit  proposals to
combat the threat of terrorism in the U.S.  While the Company has long  standing
relationships with Government  agencies who are kept updated as to the program's
progress,  the  Company's  business plan does not rely on military or Government
sales for its success.


Item 2. Description of Property.
--------------------------------

Our  principal  executive  office is located  at 300 Petty  Road N.E.,  Suite B,
Lawrenceville,  Georgia 30043 in the Atlanta  Metropolitan  area,  near Gwinnett
County   Airport.   We  have  a  five-year   lease  for  9,903  square  feet  of
office/warehouse  space for a monthly rent of $4,169.  The rent will increase on
the first day of each year of the lease. Our lease expires on December 31, 2003.
We intend to continue to use these  facilities for our  management,  engineering
supervision, and marketing efforts until additional facilities are completed.


Item 3. Legal Proceedings.
--------------------------

We are not a party to any material legal proceedings.




                                       8
<PAGE>

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

While  there have been no  matters  submitted  to  security  holders  during the
current fiscal year,  the public may read and copy any materials  filed with the
SEC at the SEC's Public  Reference Room at 450 Fifth Street,  N.W.,  Washington,
D.C.  20549.  The public may obtain  information  on the operation of the Public
Reference  Room by  calling  the SEC at  1-800-SEC-0330.  The SEC  maintains  an
Internet site that contains reports, proxy and information statements, and other
information   regarding  issuers  that  file  electronically  with  the  SEC  at
www.sec.gov.  Press  releases and other  Company  information  are  available at
www.utilicraft.com.



                                     PART II


Item 5. Market for Common Equity and Related Security Holder Matters.
---------------------------------------------------------------------

The  Company's  stock,  par  value  $.00001  per  share,  is listed  and  traded
Over-the-Counter  on the Pink Sheets exchange under the symbol AMUC. It has been
listed on the Pink Sheets since May 14, 2002.  The Company  chose to move to the
Pink Sheets after the negative  effects on its  financing  strategy were felt in
the  economic  impact  of the 2001  attacks  on the  U.S.,  saving  the  Company
additional expenses estimated in excess of $1 Million per year.

No cash dividends have been paid for the past four quarters.

Quarterly Common Stock Sale Price Ranges (Calendar Year)


Year         Quarter         High          Low
----         -------         ----          ---

2001         1st             N/A           N/A
             2nd             7.50          4.00
             3rd             4.15          1.95
             4th             3.75          1.45

2002         1st             2.15          1.30
             2nd             2.00          0.55
             3rd             1.80          0.75
             4th             1.05          0.73


The  number of  shareholders  of record  for the  Company's  common  stock as of
December  31, 2002 was 117,  and the number of common  stock  shares  issued and
outstanding was 13,195,732.



                                       9
<PAGE>

Recent Sales of Unregistered/Restricted Securities
The Company has obtained investment capital,  loans, extensions on loans, or the
relief   of  debt  and   accounts   payable   through   the   private   sale  of
unregistered/restricted  common shares. As a  development-stage  company,  these
transactions represent the Company's only income.

From  January 1, 2002  through  July 25, 2002 the Company sold shares to various
existing  shareholders,  their  friends and family for an  aggregate  of 563,000
shares of common  stock at $1.00 per share.  In  addition to common  stock,  the
investors  were granted  warrants for common stock shares at the rate of 1 share
per dollar invested. Each warrant share is exercisable at $1 per share. Warrants
vest 50% on one year from issuance and 100% on the second year from issuance.

From July 31, 2002 through  September  25, 2002 the Company sold an aggregate of
559,278  shares of common  stock to  existing  shareholders,  their  friends and
family for $0.50 per share.

On October 20,  2002 the  Company  sold  100,000  shares of common  stock to Ms.
Patricia Parsons, a beneficial owner of the Company,  for a $0.50 per share. The
$50,000  purchase also included a warrant for 100,000  shares of common stock at
an exercise price of $0.50 per share.

On October 25,  2002 the  Company  issued  50,000  shares of common  stock to an
existing shareholder for a short-term loan of $50,000.

On November 6, 2002 the Company  issued and aggregate of 30,000 shares of common
stock to  existing  shareholders,  their  friends  and family  for an  aggregate
short-term  loan of  $15,000.  On  December  31,  2002  the  Company  issued  an
additional  15,000  shares  of common  stock to  significantly  extend  the loan
duration.

On November  18, 2002 the Company  issued  1,121,500  shares of common stock and
warrants for 1,121,500 shares of common stock  exercisable at $4.00 per share to
Mr. Douglas Smith in exchange for his purchase of and lease agreement  regarding
a fleet of five (5) Cessna  404  aircraft  to be used in the effort of  building
customers for the FF-1080 aircraft.

On  December  2, 2002 the  Company  issued  757,000  shares of common  stock and
warrants to purchase  378,500  shares of common stock  exercisable  at $4.00 per
share to Mr.  Douglas  Smith in  exchange  for a loan of  $378,500.  The Company
agrees to repay the loan within one calendar year.


Item 6. Management's Discussion and Analysis or Plan of Operations.
-------------------------------------------------------------------

The Company financing efforts remain adversely  affected by the current economic
environment.

The market  price of our stock at the end of this year was $0.85.  The volume of
trading was very low and sporadic  throughout  the year.  The price of the stock
was susceptible to dramatic fluctuations even with low-volume trading.

As the Company can currently  only survive  through  capital  investment,  it is
likely  that  the  Company  will  have to sell  unregistered  stock  until a new
financing program is enacted that provides sufficient funding.




                                       10
<PAGE>

The Company is currently researching  alternative financing plans that will work
in the new economic environment.


Item 7. Financial Statements.
-----------------------------

Financial statements are audited and included herein.

The following financial statements and schedules are filed as part of this
report:

Independent Auditors Report dated August 11, 2004
Balance Sheet
Statements of Operations
Statement of Changes in Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
























                                       11
<PAGE>

                          Independent Auditors' Report
                          ----------------------------


Board of Directors
American Utilicraft Corporation
Lawrenceville, GA



         We have audited the accompanying  balance sheets of American Utilicraft
Corporation  (Company)  as of  December  31,  2002  and  2001,  and the  related
statements of operations,  changes in stockholders  deficit,  and cash flows for
the  years  then  ended,   including  cumulative  amounts  from  July  17,  1990
(inception)  through  December  31, 2002.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

         We conducted our audits in accordance with 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  audits  provide  a
reasonable basis for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material respects,  the financial position of American Utilicraft
Corporation  as of December 31, 2002 and 2001, and the results of its operations
and its cash flows for the years then ended,  including  cumulative amounts from
July 17,  1990  (inception)  through  December  31,  2002,  in  conformity  with
accounting principals generally accepted in the United States of America.

         The accompanying  financial  statements have been prepared assuming the
Company will continue as a going concern.  The Company has incurred  significant
operating  losses and negative  cash flows since  formation.  In  addition,  the
Company expects to fund development  expenditures  and incur  additional  losses
until its  operations  are able to  generate  sufficient  revenues to cover such
expenditures  and losses.  The Company does not currently have  sufficient  cash
reserves to fund such anticipated expenditures and working capital requirements,
necessitating additional equity or debt financing. These factors, in addition to
other factors discussed in Note 4 to the financial statements, raise substantial
doubt about the Company's  ability to continue as a going concern.  Management's
plans regarding these matters are discussed in Note 4. The financial  statements
do not  include  any  adjustments  that might  result  from the  outcome of this
uncertainty.



August 11, 2004
Alexandria, VA                                         HALT, BUZAS & POWELL, LTD






                                       12
<PAGE>
<TABLE>
<CAPTION>

================================================================================

                         American Utilicraft Corporation
                                  Balance Sheet
                                  Accrual Basis
                             As of December 31, 2002

                                     ASSETS
                                                                        2002            2001
                                                                    ------------    ------------
<S>                                                                 <C>             <C>
Current assets:
    Cash                                                            $     38,344    $    177,764
    Prepaid rent                                                          10,488          10,688
    Other assets                                                           9,518           8,520
                                                                    ------------    ------------

         Total current assets                                             58,350         196,972

Prepaid rent, noncurrent                                                 568,616          18,354
Property and equipment, net of accumulated depreciation                  187,497         293,867
Patents, intellectual property and designs, net of accumulated
    amortization                                                         800,713         969,285
                                                                    ------------    ------------

Total assets                                                        $  1,615,176    $  1,478,478
                                                                    ============    ============


                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
    Accounts payable and accrued expenses                           $  1,158,864    $    671,399
    Notes Payable - current                                              321,042            --
    Deferred compensation                                                649,686         334,648

Lease payable - long term                                                 14,266          17,012
                                                                    ------------    ------------

         Total liabilities                                             2,143,858       1,023,059

Commitments and contingencies                                               --
Stockholders' (deficit) equity:
    Preferred stock, par value $.00001 per share; 7,500,000
    shares authorized; 1,970,787 shares of Series A preferred
        stock issued and outstanding                                          20              20
    Common stock, par value $.00001 per share; 35,000,000
        shares authorized; 13,195,732 and 9,909,232 shares issued
        and outstanding, respectively                                        131              98
    Additional paid in capital                                        12,871,169      11,320,407
    Deficit accumulated during the development stage                 (13,400,002)    (10,865,106)
                                                                    ------------    ------------

         Total stockholders' (deficit) equity                           (528,682)        455,419
                                                                    ------------    ------------

Total liabilities and stockholders' (deficit) equity                $  1,615,176    $  1,478,478
                                                                    ============    ============
</TABLE>




                                       13
<PAGE>
<TABLE>
<CAPTION>

================================================================================

                         American Utilicraft Corporation
                             Statement of Operations
                          January through December 2002

                                                                                  For the period
                                                  For the           For the        July 17, 1990
                                               period ended      period ended     (inception) to
                                               Dec. 31, 2002     Dec. 31, 2001     Dec. 31, 2002
                                              --------------    --------------    --------------
<S>                                           <C>               <C>               <C>

Expenses:

    Research and development                  $      682,725    $    1,667,993    $    5,273,165
    General and administration                     1,145,145         1,336,426         5,082,320
    Marketing                                        531,194           663,179         2,695,468
                                              --------------    --------------    --------------

    Loss from operations                           2,359,064         3,667,598        13,050,953
                                              --------------    --------------    --------------

Other income and expense:

    Interest income                                   36,350            27,866           130,590
    Interest expense                                 212,182             1,807           868,157
    Other Income                                        --               5,000             5,000
                                              --------------    --------------    --------------

      Total other (income) expense                  (175,832)          (31,059)          732,567
                                              --------------    --------------    --------------


Net loss before extraordinary item                 2,534,896         3,636,539        13,783,520
Extraordinary item: gains on extinguishment
    of debt                                             --              25,330           383,519
                                              --------------    --------------    --------------
Net loss                                      $    2,534,896    $    3,611,209    $   13,400,001
                                              ==============    ==============    ==============


Basic and diluted loss per common share
    before extraordinary item                 $         0.23    $         0.38    $         1.97
Extraordinary item: gains on extinguishment
    of debt                                   $         --      $         --      $         0.05
                                              --------------    --------------    --------------
Basic and diluted loss per common share       $         0.23    $         0.38    $         1.91
                                              ==============    ==============    ==============

Weighted average number of common shares
    outstanding                               $   10,852,231    $    9,520,051    $    7,012,473
                                              ==============    ==============    ==============
</TABLE>




                                       14
<PAGE>
<TABLE>
<CAPTION>

                         American Utilicraft Corporation
                          (A Development Stage Company)
                  Statement of Changes in Stockholders' Equity
                 For the years ended December 31, 2002 and 2001

                                                    Preferred Stock                              Common Stock
                                                Issued and       Price                       Issued and     Price
                                               Outstanding        Per          $0.00001     Outstanding       Per
                                                 Shares          Share        Par Value       Shares         Share
                                              ------------   ------------   ------------   ------------   ------------
<S>                                           <C>            <C>            <C>            <C>            <C>
Balance, December 31,2000                        1,970,787           --     $         20      8,941,855           --

Sales of common stock
November 11, 2001                                     --             --             --           50,000              1
Various dates                                         --             --             --          328,707              2
Various dates                                         --                            --             --          461,170

Exercise of stock warrants                            --             --             --          110,000              1

Issuance of stock warrants                            --             --             --             --             --

Issuance of stock for non-cash compensation           --             --             --           10,000           2.02
Issuance of stock for non-cash compensation           --             --             --            7,500           3.33

Offering costs                                        --             --             --             --             --

Net Loss                                              --             --             --             --             --
                                              ------------   ------------   ------------   ------------   ------------
Balance, December 31, 2001                       1,970,787           --     $         20      9,909,232           --

Sales of common stock
Various dates                                         --             --             --          593,000              1
Various dates                                         --             --             --          660,000           0.50

Issuance of stock for interest on loans               --             --             --          912,000           0.17
Issuance of stock for aircraft lease                  --             --             --        1,121,500           0.50

Offering costs                                        --             --             --             --             --

Net loss                                              --             --             --             --             --
                                              ------------   ------------   ------------   ------------   ------------
Balance, December 31, 2002                       1,970,787           --     $         20     13,195,732           --
                                              ============   ============   ============   ============   ============

                                                                                Deficit
                                                                              Accumulated
                                                              Additional       During the
                                                $0.00001       Paid-In       Developmental
                                                Par Value      Capital           Stage        Total
                                              ------------   ------------    ------------    ------------
Balance, December 31,2000                               89      9,198,487      (7,253,902)      1,944,694

Sales of common stock
November 11, 2001                                        1         49,999            --            50,000
Various dates                                            3        657,410            --           657,413
Various dates                                            4              5       1,844,670       1,844,675

Exercise of stock warrants                            --          110,000            --           110,000

Issuance of stock warrants                            --          549,170            --           549,170

Issuance of stock for non-cash compensation           --           20,200            --            20,200
Issuance of stock for non-cash compensation           --           25,000            --            25,000

Offering costs                                        --       (1,134,529)           --        (1,134,529)
                                                                                             ------------
Net Loss                                              --             --        (3,611,204)     (3,611,204)
                                              ------------   ------------    ------------    ------------
Balance, December 31, 2001                              98   $ 11,320,407    $(10,865,106)   $    455,419

Sales of common stock
Various dates                                            6        592,994            --           593,000
Various dates                                            7        329,993            --           330,000

Issuance of stock for interest on loans                  9        154,681            --           154,690
Issuance of stock for aircraft lease                    11        560,739            --           560,750

Offering costs                                        --          (87,645)           --           (87,645)

Net loss                                              --             --        (2,534,896)     (2,534,896)
                                              ------------   ------------    ------------    ------------
Balance, December 31, 2002                             131     12,871,169     (13,400,002)       (528,682)
                                              ============   ============    ============    ============
</TABLE>

                                       15
<PAGE>
<TABLE>
<CAPTION>

================================================================================

                         American Utilicraft Corporation
                            Statements of Cash Flows
                          January through December 2002


                                                                                       For the period
                                                       For the           For the        July 17,1990
                                                    period ended      period ended     (inception) to
                                                    Dec. 31, 2002     Dec. 31, 2001     Dec. 31, 2002
                                                   --------------    --------------    --------------
<S>                                                <C>               <C>               <C>
Cash flows from operating activities:
    Net loss                                       $   (2,534,896)   $   (3,611,209)   $  (13,400,001)
                                                   --------------    --------------    --------------
    Adjustments to reconcile net loss to
        net cash used in operating activities:

         Gain on extinguishment of debt                      --             (25,330)         (383,519)
         Common stock issued for loan interest            154,690            74,500           803,200
         Common stock issued for rent expense                --                --             152,049
         Common stock issued for compensation
             expense                                         --             145,200           145,200
         Common stock warrants issued for
             interest expense                                --                --              80,000
         Common stock warrants issued for
             compensation expense                            --                --           1,120,812
         Depreciation and amortization                    294,511           263,904           754,466
         Loss on disposal of assets                          --                --              29,878
         Bad debt provision, loans to officers             85,036           114,397           499,625

         (Increase) decrease in assets:
             Prepaid rent                                  10,688            14,539            10,488
             Other assets                                  (1,000)            4,798            (9,518)
         Increase in liabilities:
             Accounts payable                             487,465           564,832         1,158,864
             Deferred compensation                        315,038           221,648           649,686
                                                   --------------    --------------    --------------

         Total adjustments                              1,346,428         1,378,488         5,011,231
                                                   --------------    --------------    --------------

         Net cash used in operating activities         (1,188,468)       (2,232,721)       (8,388,770)
                                                   --------------    --------------    --------------

Cash flows from investing activities:
    Increase in prepaid rent                                 --                --             (28,842)
    Increase in deferred offering costs                   (87,645)         (432,279)         (787,174)
    Purchases of property and equipment                   (19,567)         (113,354)         (574,763)
    Loans to officers                                     (85,035)         (114,397)         (499,624)
                                                   --------------    --------------    --------------

         Net cash used in investing activities           (192,247)         (660,030)       (1,890,403)
                                                   --------------    --------------    --------------

Cash flows from financing activities:
    Payments of lease principal                            (2,746)             (785)           (3,531)
    Proceeds from issuance of capital
        stock                                             922,999         2,487,599         8,422,006
Proceeds from notes payable                               321,042              --             321,042
    Proceeds from issuance of common
        stock warrants                                       --             500,000         1,578,000
                                                   --------------    --------------    --------------




                                       16
<PAGE>

Net cash provided by financing activities               1,241,295         2,986,814        10,317,517
                                                   --------------    --------------    --------------

Net (decrease) increase increase in cash                 (139,420)           94,063            38,344

Cash, beginning of year                                   177,764            83,701              --
                                                   --------------    --------------    --------------

Cash, end of year                                  $       38,344    $      177,764    $       38,344
                                                   ==============    ==============    ==============


Supplemental disclosures of noncash information:

Common stock issued for loan interest              $      154,690    $       64,680    $      728,700
Common stock issued for current and future
    rent expense                                   $         --      $         --      $      152,049
Common stock warrants issued for costs
    associated with proposed public offering       $         --      $      435,000    $      435,000
Common stock warrants issued in conjunction
    with convertible debenture                     $         --      $       80,000    $       80,000
Common stock warrants issued for deferred
    compensation                                   $         --      $    1,070,812    $    1,070,812
Common stock warrants issued for patents,
    intellectual property and designs              $         --      $    1,180,000    $    1,180,000
Common stock issued as settlement of
    compensation payable                           $         --      $       50,000    $       50,000
Common Stock warrants issued for due to
    stockholder                                    $         --      $       74,500    $       74,500
Purchase of equipment by issuance of debt          $         --      $       17,791    $       17,791
</TABLE>


================================================================================

                          Notes to Financial Statements

1.   Description of the Company


          American Utilicraft  Corporation (the Company) was incorporated in the
     State of Delaware in August of 1990. The Company was formed to conceive and
     implement a solution to the problem of declining capacity in the short haul
     (or feeder) route segment of the air cargo hub and spoke system.

          The Company's  twelve years of research and development  have resulted
     in the design of a system for moving  freight,  which is centered  around a
     new air  vehicle  specifically  designed  for feeder  route  segments.  The
     FF-1080  is  capable  of  economically   carrying  standards  industry  air
     containers  on  short-to-medium  range/medium  density  routes  from feeder
     airports with runways as short as 3,000 feet.

          Additionally,  the  Company  has  developed  an  integrated  air cargo
     information system for the freight feeder market,  the Express  Turn-Around
     (ETA)  electronic   freight  tracking  system.  The  ETA  system  is  fully
     integrated  within  the  FF-1080  aircraft  and can be  deployed  in  other
     aircraft and trucks.



                                       17
<PAGE>

          The Company has also  developed the Automated Flat Rate System (AFRS),
     a fully automated fuel efficiency  management system for the aircraft.  The
     AFRS system computes the most economical  performance  curve for each route
     segment  based on the change in aircraft  gross weight on the segment.  The
     AFRS  system  reduces  pilot  work-load  and  assures  that the  FF-1080 is
     operating with the highest fuel efficiency.

          The  Company's  current  business  plan is designed  to  expedite  the
     certification and production of the FF-1080, getting the aircraft to market
     within the next two years.  The Company  believes that this  expedited plan
     will   accelerate   sales  into  the   Company  and  move  the  Company  to
     profitability.

          Management believes that the Company operates in one business segment.

          The accompanying  financial statements include the financial position,
     results of  operations  and cash flows of the Company.  To this point,  the
     Company has not generated  revenue from its  operations,  and a majority of
     its  activities  have been devoted to  developing  its product and starting
     production.  Accordingly,  the Company's activities have been accounted for
     as those of a "development  stage  enterprise" as set forth in Statement of
     Financial  Accounting  Standards  (SFAS) No. 7 2.  Summary  of  significant
     accounting policies Method of accounting

          The Company maintains its books on the accrual basis of accounting for
     financial and income tax purposes.

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

          Deferred  income taxes are provided in  accordance  with SFAS No. 109,
     Accounting  for Income Taxes.  Accordingly,  deferred tax  liabilities  and
     assets  are  determined  based  on the  difference  between  the  financial
     statement and tax bases of assets and Liabilities,  using enacted tax rates
     in effect for the year in which the  differences  are  expected to reverse.
     Valuation allowances are provided where the likelihood of realizing the tax
     benefit of a deferred  tax asset cannot be  determined  as more likely than
     not.  Deferred  tax assets and  liabilities  are  classified  as current or
     noncurrent based on the  classification  on the related assets or liability
     for financial  reporting  purposes,  or based on the expected reversal date
     for deferred taxes that are not related to an asset or liability. There are



                                       18
<PAGE>

     no significant  timing  differences  between income  reported for financial
     statement purposes and that reported for income tax purposes.  Accordingly,
     there is no provision in these  financial  statements  for deferred  income
     taxes.  Business tax credits are accounted for as a reduction of income tax
     expense in the period the credits are used. Income tax expense for the year
     ended December 31, 2002 and 2001 was $0.

     Bad debts
     ---------

          The Company reserves against potentially uncollectible accounts in the
     period in which collection appears unlikely.

     Property and equipment
     ----------------------

          Property and equipment  are  reflected in the financial  statements at
     cost, net of accumulated  depreciation and  amortization.  Depreciation and
     amortization  are computed  using the  straight-line  method with leasehold
     improvements  being  depreciated  over the shorter of the remaining life of
     the  lease,   and  vehicles,   furniture,   software  and  equipment  being
     depreciated and amortized over three to ten years.

          Maintenance  and  repairs  are charged to  operations  when  incurred.
     Improvements  and repairs  which  extend the life or increase  the value of
     property and  equipment  are  capitalized.  When property and equipment are
     sold or otherwise disposed of, asset and related  accumulated  depreciation
     accounts  are  relieved,  and any gain or loss is included in other  income
     (expense) in the year the disposal occurs.

     Patents, intellectual property and designs
     ------------------------------------------

          Patents,  intellectual  property  and  designs  are  reflected  in the
     financial  statements at cost.  Amortization is computed on a straight-line
     basis over seven years, the estimated beneficial period of the asset.

     Research and development costs
     ------------------------------

          According  to SFAS No. 2,  Accounting  for  Research  and  Development
     costs,  including those in the development stage. The Company expensed such
     costs of $682,725 and  $1,667,993 in 2002 and 2001,  respectively,  and has
     expensed $5,273,165 from inception through December 31, 2002.

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

          Net loss per share is based on the weighted  average  number of shares
     of common stock outstanding during each period,  after giving effect to the
     recapitalization  and  stock  split  described  in  Note  8.  There  is  no
     difference between basic and diluted loss per share since the Company is in
     a loss position.



                                       19
<PAGE>

     Recent accounting pronouncements
     --------------------------------

          In June 2000 and in June 1999 the FASB issued, respectively,  SFAS No.
     138,  Accounting for Certain  Derivative  Instruments  and Certain  Hedging
     Activities-  an  amendment  of FASB  Statement  No. 133,  and SFAS No. 137,
     Accountings for Derivative  Instruments and Hedging Activities- Deferral of
     the Effective  Dated of FASB  Statement  No. 133. The  statement  amend and
     defer,  respectively,  the  provisions  of SFAS  No.  133,  Accounting  for
     Derivative Instruments and Hedging Activities, and are effective for fiscal
     years beginning after June 15, 2000.

          SFAS no. 133 requires  that an entity  recognize  all  derivatives  as
     ether assets or  liabilities  and measure those  instruments at fair market
     value. Under certain  circumstances,  a portion of the derivative's gain or
     loss is initially reported as a component of other comprehensive income and
     subsequently   reclassified  into  income  when  the  transaction   affects
     earnings. For a derivative not designated as a hedging instrument, the gain
     or loss is  recognized  in income in the period of change.  SFAS No. 133 is
     effective,  as amended by SFAS No.  137 for all fiscal  quarters  beginning
     after June 15, 2000 and request application  prospectively.  Presently, the
     Company does not use derivative instruments either in hedging activities or
     as investments. Accordingly, the Company believes that adoption of SFAS No.
     133 will have no impact on its  reported  financial  position or results of
     operation.

     Start-up activities
     -------------------

          The costs of start-up activities,  including  organization costs, have
     been expensed as incurred.

     Fair value of financial instruments
     -----------------------------------

          The carrying  values of cash and  accounts  payable  approximate  fair
     value  due to the  short-term  maturity  of  these  instruments.  Financial
     instruments also include  long-term debt. Based on current  borrowing terms
     available  to  the  Company,   estimated  fair  value  of  these  financial
     instruments approximates their recorded amounts.

     Asset impairment
     ----------------

          In  accordance  with SFAS no. 121,  Accounting  for the  impairment of
     Long-Lived  Assets and For Long-Lived Assets to be Disposed Of, the Company
     records  impairment  losses on  long-lived  assets used in  operation  when
     indicators  of  impairment  are  present  and the  undiscounted  cash flows
     estimated  to be  generated  by  those  assets  are less  than the  assets'
     carrying amount.  Impairment losses are measured as the amount by which the
     carrying amount of the asset exceeds the fair value of the assets. SFAS No.
     121 also addresses the accountings for long-lived  assets that are expected
     to be disposed of. Based on current estimates,  management does not believe
     impairment of long-lived assets is present.

     Stock-based compensation
     ------------------------

          The  Company  has  elected  to  use  the  intrinsic  value  method  of
     Accounting  Principles Board Opinion No. 25, Accounting for Stock Issued to
     Employees,  as  allocated  under SFAS No. 123,  Accounting  for Stock Based
     Compensation, to account for stock based compensation to employees.




                                       20
<PAGE>

     Comprehensive income
     --------------------

          The Company has adopted SFAS No. 130, Reporting  Comprehensive Income.
     Comprehensive income as defined includes all changes to equity except those
     resulting  from  investments  by owners and  distributions  to owners.  The
     Company has no items of comprehensive income to report.

     Accounting for extinguishment of debt
     -------------------------------------

          Gains  and  losses  from  extinguishment  of debt are  calculated  and
     reported  according  to the  provision  of SFAS No.  125,  Accountings  for
     Transfers  and  Servicing  of  Financial  Assets  and   Extinguishment   of
     Liabilities.  Such gains and losses are reported as extraordinary  items to
     net income.

     Employment agreements
     ---------------------

          The Company has employment agreements with six officers and employees.
     The agreements provide for base annual salaries aggregating $550,000. Also,
     the agreements  provide for certain bonuses,  the amounts and conditions of
     which  vary by  individual.  All  bonuses  are  based on gross  sales.  The
     agreements  are  effective  as of the  first  day of the month in which the
     major start-up financing (approximately $20,000,000) is obtained.

     Deferred compensation
     ---------------------

          Per  agreement  between the Company  and certain of the  officers  and
     employees,  payment for compensation for past services has been deferred to
     a  future  date.  Terms  and  conditions  of  repayment  are  undetermined.
     Principal  amounts due as of December  31, 2002 and 2001 were  $649,686 and
     $334,648, respectively.

     Reclassifications
     -----------------

          Certain  prior  year  reclassifications  have  been  made in  order to
     conform with the current year financial statement presentation.

3.   Development stage operations


          The Company is in the  development  stage.  The Company  commenced its
     current operations in 1990, and its activities have been primarily directed
     to  research  and  development  of  its  technologies  and   administrative
     activities.  The Company has  experienced in the past and may experience in
     the future many of the problems,  delays and expenses  encountered by early
     stage businesses, some of which are beyond the Company's control.



                                       21
<PAGE>

          These  inherent  risks  include,  but are not  limited  to,  delays in
     testing and development of its new products,  unexpected high manufacturing
     and marketing costs, uncertain market acceptance, limited capital and other
     unforeseen  difficulties.  The Company believes it has properly  identified
     the risks in the  environment  in which it operates  and plans to implement
     strategies to effectively reduce the financial impact of these risks.

4.   Going concern


          The financial  statements have been prepared assuming that the Company
     will continue as a going concern.  As shown in the  accompanying  financial
     statements, the Company incurred net losses of $2,534,896 and $3,611,209 in
     2002 and 2001,  respectively,  and has  incurred  losses  since  formation,
     resulting in  accumulated  deficits of  $13,400,002  and  $10,865,106 as of
     December 31, 2002 and 2001, respectively.  For the years ended December 31,
     2002 and 2001, respectively,  the Company also generated negative cash flow
     from operations of $1,188,468 and $2,232,721. Such losses and negative cash
     flow have resulted  primarily from  significant  costs  associated with the
     development of the Company's products and marketing of these products.  The
     Company expects to incur additional operating losses and negative cash flow
     in the future  unless and until it is able to  generate  operating  revenue
     sufficient to support expenditures. There is no assurance that sales of the
     Company's  products  will ever  generate  sufficient  revenues  to fund its
     continuing  operations,  that the Company will generate  positive cash flow
     from  operations  or that the Company  will attain and  thereafter  sustain
     profitability in any future period.

          According  to  the  Company's  long-term  business  plan,   management
     anticipates the Company's cash  requirements for the next twelve months may
     be satisfied  from the proceeds of the  Investment  Agreement (see Note 10-
     Investment Agreement). The Company anticipates its future cash requirements
     may  be  satisfied  by  product  sales,  the  sales  of  additional  equity
     securities,  debt financing  and/or the sale or licensing of certain of the
     Company's  technologies.  However,  the  Company  does not have any binding
     commitment with regard to additional  funds,  and there can be no assurance
     that any funds  required  would be generated  from  operations  or from the
     aforementioned  sources.  The lack of  additional  capital  could force the
     Company to  substantially  curtail or cease  operations and would therefore
     have a material adverse effect on the Company's  business.  Further,  there
     can be no assurance  that any such required  funds,  if available,  will be
     available  on  attractive  terms  or that  they  will  not a  significantly
     dilutive  effect on existing  shareholders  of the Company.  The  financial
     statements  do not  include  any  adjustments  that might  result  from the
     outcome of these uncertainties.




                                       22
<PAGE>

5.   Property and equipment


          The following summarizes property and equipment as of December 31:




                                         2002       2001
                                       --------   --------

     Computer equipment                 296,129    277,765
     Equipment                          135,693    135,693
     Furniture                           40,038     40,038
     Leasehold improvements              90,817     89,611
                                       --------   --------

     Total cost                         562,677    543,107

     Accumulated depreciation
         and amortization               375,180    249,240
                                       --------   --------

     Net property and equipment        $187,497   $293,867
                                       ========   ========


          Depreciation  and  amortization  expense of property and equipment for
     the years  ended  December  31,  2002 and 2001 was  $103,252  and  $77,995,
     respectively.


6.   Due from officers


          Since 1993 the Company has, from time to time,  advanced  funds to its
     President,  such amounts aggregating to $470,792 through December 31, 2002.
     Interest,  imputed  at an  annual  rate of 8%,  has been  accrued  on these
     lendings,  such interest  income  amounting to $34,191 and $26,026 for 2002
     and 2001, respectively.

          The Company has  advanced  to another  officer of the Company  amounts
     aggregating $28,833 through December 31, 2002.

          By verbal agreement  between the parties,  these amounts will be later
     repaid out of bonus  commissions  otherwise due on future  aircraft  sales.
     Because there is substantial  doubt about the Company's ability to generate
     such future sales,  all amounts due from officers have been fully reserved.
     Such amounts,  and the equal reserve amount,  were $499,625 and $414,589 as
     of December 31, 2002 and 2001, respectively.

7.   Due to stockholders


          In January 2001 warrants for 74,500 shares were issued. A $25,330 gain
     on extinguishment of debt was recorded for the difference  between the fair
     value of the warrants,  $38,379 at $.66 per warranted shares, and the value
     of $74,500 otherwise due to stockholders.



                                       23
<PAGE>

8.   Stock split and authorized shares


          On April 24, 2000 the Company  amended its corporate  charter so as to
     increase  the number of  authorized  shares of common  stock from 10,000 to
     20,000.  On May 24, 2000 the Company again amended its corporate charter to
     further  increase  the  number of  authorized  shares of common  stock from
     20,000 to  24,000,000.  Par value of the  common  stock  was  unchanged  at
     $.00001 per share.  On May 24, 2000 the Company also affected a 456:1 stock
     split.  The  financial  statements  reflect the stock split for all periods
     presented.

          In September  2000 the Company again amended its corporate  charter so
     as to  increase  the  number of  authorized  shares of  common  stock  from
     24,000,000   to   35,000,000,   with  par  value   unchanged   at  $.00001.
     Simultaneously, the Company authorized 7,500,000 shares of preferred stock,
     par value $.00001 per share,  with  preference to be determined at the time
     of issuance.  Such preferences  could include  dividend rights,  conversion
     right, voting rights, redemption rights, liquidation preferences or sinking
     fund terms.  The  preferred  stock may be issued in one or more series with
     number of shares  constituting  any series or the designation of any series
     to be determined.

          In  September  2000 the Company  authorized  the  issuance of Series A
     Preferred  Stock.  The Series A stock is  identified in all respects to the
     Company's common stock, except for associated voting rights, which are in a
     ratio of 10:1 versus the voting rights of common.  The  preferred  stock is
     convertible to common on a one-to-one  basis. In the event of certification
     of the Company's airplane by the Federal Aviation  Administration (FAA) the
     conversion will occur automatically.

9.   Notes Payable


          Two  stockholders of the Company loaned a total of $320,000 during the
     year ended  December 31, 2002. The loans mature between May and December of
     2003.  The loans  require  the  Company to issue  additional  shares of the
     Company's  stock as interest on the notes.  For the year ended December 31,
     2002,  the Company  issued  42,803 shares of stock in  satisfaction  of the
     interest.  The stock was valued at $.17 per share based on an interest rate
     of 16% per  annum.  The  balance  of the  notes at  December  31,  2002 was
     $320,000.


10.  Commitments and contingencies


     Operating leases
     ----------------

          The Company leases facilities for use in Lawrenceville,  Georgia for a
     current  monthly rent  payment of $4,334.  The lease  expires  December 31,
     2003.




                                       24
<PAGE>

          Aggregate  annual  minimum  lease  commitments  in future years are as
     follows:

                 For fiscal years ending in,


                 2003               $    50,508
                 2004                    51,492
                                    -----------

                 Total              $   102,000
                                    ===========

          Rent  expense  for the period  ended  December  31,  2002 and 2001 was
     $51,925 and $50,930, respectively.

     Stock offering
     --------------

          On May 14, 2001 the Company's  registration  with the SEC for the sale
     of up to  10,829,707  shares of the  Company's  common  stock in an initial
     public offering was declared effective. Of the 10,829,707 shares, 2,000,000
     are being offered for sale by the Company, 329,707 shares are being offered
     for sale by 13  stockholders  who purchased  stock  pursuant to the private
     placement  described  above,  1,000,000 shares are being offered by another
     stockholder  and up to  7,500,000  shares  may later be  offered  by Swartz
     Private  Equity,  LLC  (Swartz),  preconditioned  upon their owning as many
     shares  through  Company Puts  (contracts  issued at the Company's  option,
     requiring Swartz to purchase the securities described) and/or through their
     exercise of a commitment warrant.

     Investment agreement
     --------------------

          Pursuant  to  certain  agreement  made in May 2000,  and as amended on
     March 8, 2001,  between the  Company  and Swartz,  the Company may issue an
     undetermined number of shares of its common stock in exchange for up to $50
     million from Swartz. As an additional inducement to Swartz, the Company has
     also  provided  Swartz a warrant to  purchase  up to 500,000  shares of its
     common stock at an initial price of $1 per share (the commitment warrant).

          Shares of common stock will be issued to Swartz via Puts. No Puts will
     be  exercised  until  such  time  as the  SEC has  declared  effective  the
     Company's  registration  statement  with the SEC  (effective  date) and the
     Company's  common  stock has been  listed on and is  actively  trading on a
     national  exchange.  The Company shall have until March 8, 2002 to have its
     registration  statement declared  effective,  or this investment  agreement
     will  terminate.  No Puts  will be  exercised  after the date that is three
     years after the effective date.

          Each Put shall  specify  the  number of shares of common  stock  being
     offered and the sale price per share.  Although  the Puts will  specify the
     number of shares being offered  Swartz can opt to buy fewer shares if to do
     otherwise  would  result in Swartz  owning  more than  certain  agreed upon
     amounts (generally, 9.99% of total common stock outstanding,  computed on a
     fully diluted basis).  The parties agree that the sale price per share will
     generally be calculated  at 91% of market  price.  Should such sales occur,
     the  discount in sales price will be  accounted  for as deemed  dividend to
     Swartz.



                                       25
<PAGE>

          The  parties  further  agree that Puts with a least $1  million  total
     value  must be  offered  each  six  month  period,  or a  non-usage  fee of
     $100,000,  or less,  will be paid by the  Company.  Any such fees  incurred
     would be accounted for as reduction to the capital accounts.

          The  commitment  warrant is exercisable  for a five year period;  that
     five year period  began May 3, 2000 as to 400,000  shares,  and October 14,
     2000 for the remaining 100,000 shares. The initial exercise price of $1 per
     share may be  periodically  lowered  commensurate  with  declines in market
     price as set  forth in the  agreement.  The  fair  value of the  commitment
     warrant  ($435,000  at  $.87  per  warranted  share)  is  reflected  on the
     financial statements as a component of deferred offering costs.

          In addition to the commitment warrant described above, the Company may
     also provide additional  warrants to Swartz in order to ensure that the sum
     of the  number  of shares of common  stock  represented  by the  commitment
     warrant plus any additional  warrants shall  initially  equal at least four
     percent of the total common stock outstanding,  computed on a fully diluted
     basis. The additional  warrants will be initially issued, if necessary,  at
     the earlier of the first Put notice or April 14, 2001.  Additional warrants
     may be issued every six months  subsequent to that date,  if necessary,  in
     order to ensure that the number of shares of common  stock  represented  by
     the commitment  warrant plus any additional  warrants equal four percent of
     common stock outstanding as of the first six month  anniversary,  or lesser
     percentages at later six moth intervals,  such percentages declining by one
     half of one  percent at each  anniversary  date.  Any  additional  warrants
     issued  shall be  exercisable  for a five year  period,  and shall  have an
     initial exercise price of $1 per share,  which can be periodically  lowered
     commensurate with declines in market price.

          The Company has agreed to reserve, on a best efforts basis, 10 million
     of its  authorized 35 million shares of common stock for issuance to Swartz
     relative to the Put and commitment warrant agreements herein described, the
     Company has also agree to provide  Swartz a right of first  refusal for any
     common stock  otherwise  offered for sale  pursuant to any private  capital
     raising transactions. This right of first refusal shall exist from March 1,
     2001 until four years after the effective date.

          The Company believes that Swartz has defaulted on material  components
     of the  investment  agreement as restated and amended on March 8, 2001. The
     Company  considers Swartz in breach of the agreement and that Swartz has no
     rights  thereunder.  Furthermore,  the investment  agreement sets a minimum
     exercise price of $1.00 per share ($.50 split adjusted), such that exercise
     is unlikely based on current market pricing.  The Company has not, however,
     received a release  from the  investment  agreement  from  Swartz,  and the
     Company has not pursued  further legal actions to  definitively  cancel the
     investment agreement. At this time, the Company considers obligations under
     the investment agreement to be contingent upon future events.




                                       26
<PAGE>

     Deferred compensation
     ---------------------

      Per  agreements  between the Company and certain of its  officers  and
     employees,  payment for compensation for past services has been deferred to
     a future date.  Total amounts due as of December 31, 1999 were  $1,070,812;
     however,  these  amounts were  subsequently  liquidated in favor of certain
     stock warrants. Additional amounts, not subject to liquidation, of $649,686
     have accrued as of December 31, 2002.

          In October  2000 the  Company  issued to  certain of its  stockholders
     common stock  warrants in settlement  of amounts  otherwise due pursuant to
     deferred compensation agreements. In total, the warrants provided the right
     for the holders to purchase  1,070,812 shares of the Company's common stock
     at an  exercise  price of $3 per  share.  The  exercise  price may be later
     adjusted pursuant to an antidilution clause. The holders' right to exercise
     the warrants vest  immediately as to half of the warrant shares,  after one
     year  as to 25%  of the  warrant  shares  and  after  two  years  as to the
     remaining 25% of the warrant shares. The warrants expire after three years.
     In the event that the  warrants  are  partially  or wholly  exercised,  the
     holders agree to restrict  their sales of common stock thus received to 15%
     or less of  otherwise  trading  value in any 90 day  period,  with  trading
     volume  measured as average  weekly  trading  volume  during the four weeks
     immediately prior to such sales.

          A $364,076  gain on  extinguishment  of debt has been recorded for the
     difference  between  the fair value of the  warrants,  $706,736 at $.66 per
     warranted share, and the value of $1,070,812 otherwise due the officers and
     employees.

     Stock warrants
     --------------

          The warrant provides for an exercise price of $5 per share.

          In 2001,  the  Company  issued to certain of its  stockholders  common
     stock  warrants  providing  the right to purchase  1,350,300  shares of the
     Company's  common stock at exercise prices ranging from $3 to $5 per share.
     The  exercise  price  may be later  adjusted  pursuant  to an  antidilution
     clause.  The holder's  right to exercise the warrants vests as to a half of
     the warrant  shares after one year,  with vesting in the  remaining  shares
     occurring  after two years.  The warrant  expires after three years. In the
     event that the warrant is partially or wholly exercised,  the holder agrees
     to restrict sales of common stock thus received to 15% or less of otherwise
     trading  volume in any 90 day  period,  with  trading  volume  measured  as
     average weekly trading  volume during the four weeks  immediately  prior to
     such sales., with exercise price adjustment provisions,  vesting provisions
     and sales restrictions identical to the warrants described above.

          In 2002,  the  Company  issued to certain of its  stockholders  common
     stock  warrants  providing  the right to purchase  2,243,000  shares of the
     Company's  common stock at exercise  prices  ranging from $.50 to $4.00 per
     share, with exercise price adjustment  provisions,  vesting  provisions and
     sales restrictions identical to the warrants described above.



                                       27
<PAGE>
<TABLE>
<CAPTION>

                  As of December 31, 2002, stock warrants were outstanding as
follows:

       Holder             Issue Date         Vesting Date      Expiration Date      Warranted Shares      Exercise Price
       ------             ----------         ------------      ---------------      ----------------      --------------
<S>                       <C>                <C>               <C>                  <C>                   <C>
Swartz Private Equity    May 3, 2000         May 3, 2000         May 3, 2005                 390,000       $      1.00
Stockholder           September 13, 2000  September 13, 2000  September 13, 2003             150,000       $      5.00
Stockholders           October 5, 2000     October 5, 2001    September 30, 2003             521,750       $      3.00
Stockholders           October 5, 2000     October 5, 2002    September 30, 2003             521,750       $      3.00
Stockholders           October 5, 2000     October 5, 2000    September 30, 2003             535,406       $      3.00
Stockholders           October 5, 2000     October 5, 2001    September 30, 2003             267,703       $      3.00
Stockholders           October 5, 2000     October 5, 2002    September 30, 2003             267,703       $      3.00
President              October 5, 2000     October 5, 2001    September 30, 2003           1,000,000       $      5.00
President              October 5, 2000     October 5, 2002    September 30, 2003           1,000,000       $      5.00
Stockholders           October 5, 2000     October 5, 2001    September 30, 2003             410,000       $      3.00
Stockholders           October 5, 2000     October 5, 2002    September 30, 2003             410,000       $      3.00
Stockholders           October 5, 2000     October 5, 2001    September 30, 2003             266,760       $      3.00
Stockholders           October 5, 2000     October 5, 2002    September 30, 2003             266,760       $      3.00
Former officer         October 5, 2000     October 5, 2001    September 30, 2003              25,000       $      3.00
Former officer         October 5, 2000     October 5, 2002    September 30, 2003              25,000       $      3.00
Stockholders           January 14, 2001    January 14, 2003    January 14, 2003               74,500       $      3.00
Stockholder              July 9, 2001        July 9, 2003     September 30, 2003              10,000       $      3.00
Stockholder            August 28, 2001     August 28, 2003     January 30, 2007               25,000       $      2.00
Stockholders           August 28, 2001     August 28, 2003     January 30, 2007                7,500       $      2.00
Stockholder            August 28, 2001     August 28, 2003     August 28, 2004                 1,000       $      2.00
Stockholder           September 30, 2001  September 30, 2001  September 30, 2011              30,000       $      3.33
Stockholders           December 5, 2001      June 5, 2002      December 5, 2007              500,000       $       -
Stockholders           December 5, 2001    December 2, 2002    December 5, 2007              500,000       $      1.00
Stockholder            December 3, 2001    December 3, 2003    December 3, 2004              100,000       $      5.00
Stockholders           December 5, 2001    December 5, 2002    December 5, 2007              102,300       $      1.00
Stockholders          Feb. 1 to July 25,  Feb. 1 to July 25,    July 25, 2005                321,500       $      1.00
                             2002                2003
Stockholders          Feb.1 to July. 25,  Feb. 1 to July 25,    July 25, 2005                321,500       $      1.00
                             2002                2004
Stockholder            December 2, 2002    December 2, 2003    January 30, 2007              189,250       $      4.00
Stockholder            December 2, 2002    December 2, 2004    January 30, 2007              189,250       $      4.00
Stockholder            December 2, 2002    December 2, 2002   December 31, 2009            1,121,500       $      4.00
Stockholder           September 25, 2002  September 25, 2003  September 25, 2005              50,000       $      0.50
Stockholder           September 25, 2002  September 25, 2004  September 25, 2005              50,000       $      0.50
                                                                                 -------------------
                               Total common stock warrants outstanding                     9,651,132               -
                                                                                 ===================
</TABLE>


          The Company leases a plane from one of its stockholders. The agreement
     provided the  stockholder  with 45,600  additional  shares of common stock.
     That stock has been valued at $52,440, which amount is being amortized over
     the 60 month period of the lease as additional rent.

          Future annual minimum lease commitments are as follows:

                2003                                      36,408
                2004                                      30,340
                                                   -------------
                Total                              $      66,748
                                                   =============

          Plane rental expense for the year ended December 31, 2002 and 2001 was
     $36,402 and $36,669, respectively.




                                       28
<PAGE>

     Employment agreements
     ---------------------

          The Company has entered into employment agreements with various of its
     officers.  All  agreements  provide  that  salaries  will be paid on a best
     efforts basis only until such time as major financing (defined generally as
     the receipt of debt or equity funding of at least $20 million) is achieved.
     Such  salaries as are not being paid are recorded as deferred  compensation
     (see Note 10).  All  agreements  also provide for varying  commissions  for
     airplanes sales.

          One such agreement,  expiring February 28, 2005,  provides that in the
     event of  termination  by the Company,  for other than cause,  the employee
     shall be provided  with a lump-sum  payment of $480,000.  In the event of a
     significant  change in  control  of the  Company  (defined,  generally,  as
     ownership of 20% or more of outstanding common stock by a single person, or
     a majority of the board of directors  being  persons not on the board as of
     February  28,  1991) the same  lump-sum  payment  shall  also be due if the
     officer's position is downgraded and officer resigns rather than accept the
     downgraded  position.  The agreement  provides for annual salary amounts of
     $24,000, $38,000 or $48,000 dependent upon the Company's operational status
     with respect to airplane production (pre-FAA certification,  or achievement
     of FAA certification, or delivery of production aircraft number 24).

          In the event of a major  financing,  an employment  agreement with the
     Company's  President,  expiring  February  28, 2005,  specifies  that up to
     $500,000  of such  funds  shall be lent to the  President  in the form of a
     non-interest  bearing  loan to be  later  repaid  out of  bonus  commission
     otherwise due on future aircraft sales. In the event of a major  financing,
     the employment agreement also specifies that in the event of termination by
     the Company  for other than cause the  president  shall be provided  with a
     lump-sum  payment of $2,500,000,  plus ten times five years' worth of bonus
     commissions  prior earned, or projected to be earned, on aircraft sales. In
     the event of a significant change in control of the Company,  subsequent to
     a major  financing,  the same  lump-sum  payment  shall  also be due if the
     President's  position is downgraded  and the President  resigns rather than
     accept the  downgraded  position,  or if the President is terminated by the
     Company.  The agreement provides for annual salary amounts as $250,000 upon
     the Company  having  become a reporting  Company  under the Exchange Act of
     1934.

          Also in the event of a major financing,  the employment agreement with
     another officer,  expiring February 28, 2005, provides that in the event of
     termination  by the  Company  for other  than cause the  employee  shall be
     provided  with a  lump-sum  payment  ranging  from  $250,000  to  $350,000,
     dependent  upon the Company  having  become a reporting  Company  under the
     Exchange  Act of  1934 at the  point  of  termination.  In the  event  of a
     significant  change  in  control  of the  Company,  subsequent  to a  major
     financing,  the agreement  provides that in the event of termination by the
     Company  other than cause the lump-sum  payment  shall  instead  range from
     $1,250,000 to $1,750,000 upon the Company having become a reporting Company
     under the Exchange Act of 1934.

          On July 15, 2000  additional  employment  agreements were entered into
     with two additional officers.  One agreement was further amended on October
     4, 2000. Both agreements expire July 15, 2003. Both agreements provide that
     in the  event of major  financing  and in the event of  termination  by the
     Company for other than cause,  the employee shall be provided with lump-sum



                                       29
<PAGE>

     payment  ranging  from  $200,000 to  $250,000,  and  $160,000 to  $250,000,
     respectively,  dependent,  respectively,  upon the Company  having become a
     reporting  Company  under the  Exchange  Act of 1934 or upon the  Company's
     operational  status  with  respect to aircraft  production  at the point of
     termination.  Both  agreements  further  provide  that  in the  event  of a
     significant  change  in  control  of the  Company,  subsequent  to a  major
     financing,  lump-sum  payment of $1,000,000 to $1,250,000,  and $800,000 to
     $1,250,000, respectively,  dependent, respectively, upon the Company having
     become  a  reporting  Company  under  the  Exchange  Act of  1934  or  upon
     operational  status,  shall  be  provided  if the  employee's  position  is
     downgraded  and the  employee  resigns  rather than  accept the  downgraded
     position,  or if the employee is  terminated  by the Company for other than
     cause. The agreement provide for annual salary amounts of $125,000 upon the
     Company  having  become a reporting  Company under the Exchange Act of 1934
     and $80,000, $100,000, or $125,000 dependent upon the Company's operational
     status with respect to aircraft production, respectively.

11.  Income Taxes

          Until such time as the Company ceases to be in the  development  stage
     and becomes an active  business,  otherwise  deductible  expenses have been
     capitalized  pursuant  to certain  optional  and  required  elements of U.S
     income  tax  statutes.   The  tax  effect  of  these  and  other  temporary
     differences  that give rise to significant  portions of deferred tax assets
     at December 31, 2002 and 2001 are summarized as follows:

                                             2002           2001
                                         -----------    -----------

     Research and development costs      $ 1,792,876    $ 1,303,117
     Start-up and organizational costs     2,208,945      1,280,188
     Accrued compensation expense            381,076        499,769
     Accrued interest expense                262,700        262,700
                                         -----------    -----------

          Total deferred tax assets        4,645,597      3,345,774
     Less: valuation allowance            (4,645,597)    (3,345,774)
                                         -----------    -----------

          Net deferred tax assets        $      --      $      --
                                         ===========    ===========


12.  Subsequent Events


          On June 28, 2004 as a result of shareholder  approval,  the authorized
     common shares of the Company were increased from 35,000,000 to 200,000,000,
     and a two-for-one  forward  stock split of all common and preferred  shares
     occurred for stockholders of record as of May 19, 2004. In addition, all of
     the  outstanding  preferred  shares,  1,970,787 will be converted to common
     shares within six months of May 19, 2004. This conversion  occurred on June
     3, 2004.

          Certain stock  warrants that were issued  between  September  2000 and
     December 2002 expired during 2003. On February 6, 2004 in accordance with a
     resolution  by the Board of Directors of the Company,  these  warrants were
     reissued and the  expiration  was  extended to January 30, 2007.  The total
     warrants the were extended to January 30, 2007 was 10,938,203.



                                       30
<PAGE>

          A lease for five  Cessna  aircraft  was signed with a  stockholder  on
     November 18, 2002.  The lease was effective  January 1, 2003 and expires on
     December 31, 2009. The lease requires  monthly rent payments of $15,000 and
     is subject to increase based on the prime rate. The lease also requires the
     Company to pay ten  million  dollars  from the net  proceeds of the freight
     airline  operation  to the  stockholder  over  the life of the  lease.  The
     proceeds of ten million  dollars can be converted to two million  shares of
     the Company's  common stock at any time during the first three years of the
     lease.  In  addition  to  the  monthly  lease  payments,   the  Company  is
     responsible for all insurance,  storage and maintenance of the aircraft. As
     an  inducement  to the  stockholder  for making the above lease the Company
     issued 1,121,500 shares of common stock and a warrant to purchase 1,121,500
     shares for $4.00 per share.  The future minimum lease commitment under this
     lease is as follows:

                  2003                                    1,180,000
                  2004                                    1,680,000
                  2005                                    1,680,000
                  2006                                    2,180,000
                  2007                                    2,180,000
                  Thereafter                              2,180,000
                                                     --------------

                  Total                              $   11,080,000
                                                     ==============

          The Company signed a lease agreement for facilities in  Lawrenceville,
     Georgia  effective May 1, 2003. The lease agreement expires on May 31, 2008
     and requires a monthly  rent  payment of $19,000.  In addition to the lease
     amount, the Company is responsible for utilities and taxes.

          Aggregate  annual  minimum  lease  commitments  in future years are as
     follows:

                           For fiscal years ending in,


                  2003                               $      152,000
                  2004                                      228,000
                  2005                                      228,000
                  2006                                      228,000
                  2007                                      228,000
                  2008                                       95,000
                                                     --------------

                  Total                              $    1,159,000
                                                     ==============





================================================================================




                                       31
<PAGE>

Item 8. Changes In and Disagreements with Accountants onAccounting and Financial
--------------------------------------------------------------------------------
Disclosure
----------

There have been no  substantive  changes or  disagreements  with accounts on the
accounting and financial disclosure.

Item 8A. Controls and Procedures.
---------------------------------

While we are a small  company with limited  resources,  we employ  effective and
reasonable  efforts to maintain  internal controls over disclosure and financial
reporting.  Management  assumes full  responsibility for assignment of duties to
personnel to assure timely and accurate  reporting of disclosures  and financial
information.

The Company uses multiple  resources,  internally and externally,  including but
not limited to management,  employees, outside accountants & auditors, and legal
counsels to maintain  adequate books and records and accurately report necessary
disclosures.  Disclosure  requirements are monitored by both outside  accounting
firm and outside auditors, and reported to management.

We  employ an  economically  effective  means of  dividing  tasks and  duties to
protect the fiduciary  integrity of the Company.  The Company  employs  multiple
levels of checks and  balances  with both  internal  and  external  resources to
assure  accurate  financial   reporting,   including  without  limitation,   the
structural  separation  of the  accounts  payable,  check  signing  and  account
reconciliation  functions.  Through  timely  reviews of  financial  reports  and
periodic reviews of processes and resources,  management  regularly accesses the
accuracy and effectiveness of the financial reporting.





                                    PART III

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

The following  persons are our  directors,  executive  officers and  significant
employees:

Name                         Age                     Position
----                         ---                     --------

John J. Dupont               55              President, Chief Executive Officer,
                                             Director
James S. Carey               50              Executive Vice President; Vice
                                             President of Marketing; Secretary;
                                             Director
R. Darby Boland              51              Vice President, General Manager,
                                             Director
Edward F. Eaton              52              General Counsel, Director
Thomas A. Dapogny            40              Vice President of Operations
M. Karen Shoemaker           45              Principal Accounting Officer


Term of Office
Upon this offering, we will have four directors.  In accordance with our amended
Bylaws, the terms of office of the members of our board of directors are divided
into three  classes:  Class I, whose term will expire in 2004,  Class II,  whose
term will expire at in 2005 and Class III,  whose term will expire in 2003.  Mr.
Carey  serves  as the  Class I  director,  Mr.  Boland  serves  as the  Class II
director, and Mr. Dupont and Mr. Eaton serve as the Class III directors.




                                       32
<PAGE>

Background of Directors and Officers

John J. Dupont - President and Chief Executive Officer; Director
Mr.  Dupont has been a director and  President  and Chief  Executive  Officer of
American  Utilicraft since 1990. From 1984 to 1989, Mr. Dupont was the President
and CEO of Skytrader Corporation,  an aeronautical research and development firm
which he founded in 1984,  and where he designed and  developed  the UV-23 Scout
STOL aircraft (see Jane's All the World's Aircraft 1989). From 1989 through July
1990,  Mr.  Dupont was  President  of  Advanced  Lift  Research,  Inc.  where he
completed a design feasibility study, market review and operational  competitive
analysis of a new 17,000 lb. aircraft design,  the UC-219,  specifically for the
worldwide combination passenger/freight market.

James S. Carey - Executive Vice President; Vice President of Marketing, Director
Mr. Carey has been the Executive  Vice  President of Marketing and a director of
American Utilicraft since 1991. From 1985 to 1991, Mr. Carey was the Senior Vice
President of Airline Economics, Inc. where he developed production processes for
Airline  Economics'  publications,  The Airline  Quarterly and Blue Chip Airline
Financial  Indicators.  He also supervised and/or performed all project research
for Airline Economics' consulting  activities,  airline traffic forecasts,  unit
cost  analysis,  airline  route and  profitability  analysis,  and airline asset
valuation.  Prior to that, Mr. Carey was the Director of Research and a Director
of  Avmark,  Inc.  where  he was  responsible  for  preparation  of its  airline
statistical  publications.  He conducted  aircraft values research and performed
aircraft  appraisals and financial  analyses for U.S. and foreign airlines.  Mr.
Carey has also  operated  his own  company,  Micro  Associates,  which  assisted
individuals and businesses in the introduction of  microcomputers,  developed an
aircraft leasing analysis system, provided assistance to Airline Economics, Inc.
in airline  statistical  publications,  and instituted several personal computer
training programs.  Mr. Carey has a Bachelor of Science degree from Northeastern
University in the fields of business administration and aviation technology.

R. Darby Boland - Vice President, General Manager, Director
Mr.  Boland  has  been  the Vice  President  and  General  Manager  of  American
Utilicraft  since 1999 and a director  since 2000.  From 1975 to 1978,  he was a
Design and Logistics  Engineer with McDonnell Douglas  Corporation in connection
with the F4, F15, Harpoon and Cruise Missile programs. From 1978 to 1989, he was
the  Executive  Manager  with  Southwestern  Bell  Corporation,   where  he  was
responsible for the design,  implementation  and marketing  technical support of
fiber-optic  network  systems for long distance and cellular  service  providing
companies.  From 1989 to 1992, he was the Director of Corporate  Development  of
Restore Industries,  a telecommunications  service equipment provider.  In 1988,
Mr. Boland founded B&H Machine, Inc., a design manufacturer of metal cutting die
products, where he served as President and Chief Executive Officer, and financed
the sale of the  company in 1996.  After  1996,  Mr.  Boland  assisted  American
Utilicraft  with  the  ongoing  development  of its  program  until  his  recent
appointment to Vice  President,  General  Manager and Director.  Mr. Boland is a
graduate of St. Louis University with a B.S. degree in Aeronautical  Engineering
Management.




                                       33
<PAGE>

Edward F. Eaton - General Counsel, Director
Mr.  Eaton has been a director  of  American  Utilicraft  since  1992.  He is an
attorney with Connolly, Bove, Lodge & Hutz of Wilmington, Delaware, where he has
been a partner  since 1991.  He practices in the areas of  litigation,  criminal
law,  real estate law, and business and  commercial  law, and has been  employed
with  Connolly,  Bove since  1986.  Mr.  Eaton  received  his J.D.  from  Temple
University and his Bachelor's degree from Cornell University.

Thomas Dapogny - Vice President of Operations
Mr.  Dapogny  has been with the  Company  since 1997 and the Vice  President  of
Operations  since 1998.  From 1986 to 1997,  he served as a Project  Manager and
consultant in IT/IS development for clients including Raytheon/E-Systems,  Ernst
& Young,  DynCorp,  CACI,  CSC,  TRW,  SAIC,  MCI and Sprint.  His project  work
included:  contract  proposal  development;  CASE tool management;  analysis and
design; rapid prototype design and production; user-group management; life-cycle
(technical,  management  and user)  documentation;  and  curriculum  design  and
training.

M. Karen Shoemaker - Principal Accounting Officer
Ms. Shoemaker has been the Principal  Accounting Officer of American  Utilicraft
since 2000. Ms. Shoemaker has over twenty-four years of finance,  accounting and
payroll experience.  From 1988 to 2001, Ms. Shoemaker served as the President of
By the Numbers,  Inc., an accounting  management  consulting firm. As President,
Ms.  Shoemaker  oversaw  the  management  of  automated   accounting   services,
controller  services and consulting  services including interface of payroll and
order  entry and other  exterior  programs  with  accounting  programs;  and the
selection and  implementation  of automated  accounting and payroll  systems for
over 35 companies.

Reporting Defaults and Corporate Governance Matters
As a result of  September  11, 2001,  the  Company's  business  plan and capital
raising  abilities were severely  handicapped.  The Company  quickly went into a
capital preservation mode, including  significantly  curtailing of outside legal
and accounting  expenses,  and defaulted in its reporting  obligations under the
Securities  Exchange  Act of 1934 (the  "Exchange  Act").  The  recent  economic
renaissance  and  fuel  prices  have  reinvigorated  the  Company's  ability  to
capitalize  on  its  intellectual   property,   including  the  development  and
exploitation of the FF-1080 aircraft.  As a result the Company is endeavoring to
cure its reporting defaults and submit periodic reports for the missing period.

An ancillary aspect of the Company's capital  preservation  efforts, is that the
Company  failed to  implement an Audit  Committee or a Code of Ethics,  as those
terms are defined in the Exchange Act. The Company intends to cure its reporting
deficiencies  by  November  5, 2004,  and adopt  adequate  corporate  governance
measures to comply with the Exchange Act by December 31, 2004.

In addition to the Company's reporting shortfalls,  the Company's  shareholder's
that may be subject to the reporting  requirement  of Section 16 of the Exchange
Act have not filed  their  form 4s and 5s for  2001,  2002,  2003 and 2004.  The
Company  is  undertaking  an effort to have  each of its  shareholders  that are
subject to Section 16 reporting  requirement  bring their filings  current as of
the end of fiscal 2004.


Item 10. Executive Compensation.
--------------------------------
The  following  table  sets  forth  the  compensation  earned  by the  full-time
Executive Staff and Officers of the Company.  Our bylaws  authorize our board of
directors to fix the  compensation  of directors  for services  related to their
membership  in board  committees  and allow the  reimbursement  of  expenses  of
directors for their attendance at each meeting of our board of directors.



                                       34
<PAGE>
<TABLE>
<CAPTION>

Summary Compensation Table for 2002
---------------------------------------- ------- ----------------------------------------------
                                                                      Annual Compensation
---------------------------------------- ------- ----------------------------------------------
Name and Principal Position              Fiscal  Salary*            Actual Amount  Other Annual
                                         Year                       Paid           Compensation
---------------------------------------- ------- ------------------ -------------- ------------
<S>                                      <C>     <C>                <C>            <C>
John J. Dupont (1)                       2002    $250,000*          $ 144,999.98   $      0
  President and Chief Executive Officer
---------------------------------------- ------- ------------------ -------------- ------------
James S. Carey (2)                       2002    $125,000*          $ 80,999.92    $      0
   Executive Vice President; Vice
President of Marketing
---------------------------------------- ------- ------------------ -------------- ------------
Thomas Dapogny (3)                       2002    $125,000*          $ 80,999.92    $      0
   Vice President of Operations
---------------------------------------- ------- ------------------ -------------- ------------
R. Darby Boland (4)                      2002    $ 80,000*          $61,511.35     $      0
  General Manager, Vice President
---------------------------------------- ------- ------------------ -------------- ------------
</TABLE>

*Salaries: While we must offer appropriate salaries in order to retain necessary
personnel,  the Company has not had the funding at this point in time to pay its
officers  their full  salary.  As such and to assist  the  Company  through  its
developmental  stages,  the  officers  may elect to defer  payment of their full
salary.
(1) Mr. Dupont  elected to defer a portion of his  compensation  for 2002 in the
amount of $50,000. Mr. Dupont elected to defer a portion of his compensation for
2001 in the amount of $122,204.  Mr. Dupont has been  deferring a portion of his
compensation each year since 1990. In October 2000 Mr. Dupont elected to convert
all  deferred  compensation  due him as of  December  31, 1999 into a warrant to
purchase  shares of our common stock.  For each dollar of deferred  compensation
owed to him, he received a warrant to purchase one share of our common stock for
a total of 410,962 shares. The warrants have an exercise price of $3.00,  expire
on September  30, 2003 and vest as follows:  50%  immediately,  25% on the first
anniversary of the date of the warrant and 25% on the second  anniversary of the
date of the warrant.
(2) Mr.  Carey  elected to defer a portion of his  compensation  for 2002 in the
amount of $44,000.  Mr. Carey elected to defer a portion of his compensation for
2001 in the amount of  $52,613.  Mr.  Carey has been  deferring a portion of his
compensation  each year since 1991. In October 2000 Mr. Carey elected to convert
all  deferred  compensation  due him as of  December  31, 1999 into a warrant to
purchase  shares of our common stock.  For each dollar of deferred  compensation
owed to him he received a warrant to purchase  one share of our common stock for
a total of 336,461 shares. The warrants have an exercise price of $3.00,  expire
on September  30, 2003 and vest as follows:  50%  immediately,  25% on the first
anniversary of the date of the warrant and 25% on the second  anniversary of the
date of the warrant.
(3) Mr. Dapogny elected to defer a portion of his  compensation  for 2002 in the
amount of $44,000.  Mr. Dapogny  elected to defer a portion of his  compensation
for 2001 in the amount of $56,950.  Mr.  Dapogny has been deferring a portion of
his  compensation  each year since 1998. In October 2000 Mr. Dapogny  elected to
convert all deferred compensation due him as of December 31, 1999 into a warrant
to purchase shares of our common stock. For each dollar of deferred compensation
owed to him he received a warrant to purchase  one share of our common stock for
a total of 70,731 shares.  The warrants have an exercise price of $3.00,  expire
on September  30, 2003 and vest as follows:  50%  immediately,  25% on the first
anniversary of the date of the warrant and 25% on the second  anniversary of the
date of the warrant.
(4) Mr. Boland  elected to defer a portion of his  compensation  for 2002 in the
amount of $18,488.65.  Mr. Boland elected to defer a portion of his compensation
for 2001 in the amount of $29,535.  Mr.  Boland has been  deferring a portion of
his compensation each year since 2001.


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

The following  table sets forth certain  information  as to shares of our voting
stock owned by (i) each person known to beneficially  own more than five percent
of our outstanding voting stock, (ii) each of our directors,  including nominees
for director, and each of our executive officers, and (iii) all of our executive
officers and directors as a group.  Unless otherwise  indicated,  the address of
each  named  beneficial  owner  is the same as that of our  principal  executive
offices located at 300 Petty Road N.E., Suite B, Lawrenceville, Georgia 30043.



                                       35
<PAGE>
<TABLE>
<CAPTION>

                                                                           Shares of       Percentage of
                                                                            Voting         Voting Stock
                                                                             Stock       (fully diluted)
                                 Series A      Options &      Common      Beneficially     Beneficially
Name of Beneficial Owner (1)     Preferred     Warrants        Stock        Owned (2)        Owned(3)
-------------------------        ---------     --------       ------      ------------   ---------------
<S>                              <C>           <C>            <C>         <C>            <C>
John J. Dupont                   1,083,000     2,410,962                    3,493,962         14.83%
R. Darby Boland                    887,787       261,500                    1,149,287          4.88%
James S. Carey                                   536,461      155,040         691,501          2.94%
Edward Eaton                                     110,000      101,232         211,232          0.90%
Thomas Dapogny                                   183,731       94,356         278,087          1.18%
Douglas E. Smith (4)                           1,321,500    1,515,607       2,837,107         12.05%
Karen Morgison (5)                               252,658    1,083,000       1,335,658          5.67%
Patricia D. Parsons                            1,102,300      912,000       2,014,300          8.55%
Harlyn Hubbs                                     241,660      779,076       1,020,736          4.33%
Swartz Private Equity, LLC                       390,000      110,000         500,000          2.12%
LeRoy Svendsen                                   202,600      478,800         681,400          2.89%
All executive officers and
directors as a group (6)         1,970,787     3,502,654      350,628       5,824,069         24.73%
</TABLE>
-----------
     (1)  Beneficial ownership has been determined in accordance with Rule 13d-3
          under the  Securities  Exchange Act of 1934.  Pursuant to the rules of
          the  Securities  and Exchange  Commission,  shares of our common stock
          that each named  person  and group has the right to acquire  within 60
          days  pursuant to options,  warrants,  conversion  privileges or other
          rights,  are deemed  outstanding  for  purposes  of  computing  shares
          beneficially owned by and the percentage ownership of each such person
          and  group.
     (2)  Unless  otherwise noted, all shares listed are owned of record and the
          record  owner  has  sole  voting  and  investment  power,  subject  to
          community property laws where applicable and the information contained
          in the footnotes to this table.
     (3)  Percentage  beneficial  ownership  is  calculated  on a fully  diluted
          basis,  which assumes  23,552,651  shares of common stock issued based
          upon: (a) 13,195,732  shares of common stock issued and outstanding as
          of December 31, 2002;  (b)  conversion of the Series A Preferred  into
          1,970,787 shares of common stock; and (c) the exercise of all warrants
          exercisable  within 60 days (i.e. the issuance of 8,386,132  shares of
          common stock appurtenant thereto).
     (4)  Includes  458,900 shares of our common stock owned by the Smith Family
          Trust of which Mr.  Smith is the  trustee,  and  50,000  shares of our
          common stock issuable upon exercise of a common stock purchase warrant
          that is  exercisable  by the Smith  Family  Trust at or within 60 days
          after the date hereof.
     (5)  Includes  252,658 shares of our common stock issuable upon exercise of
          a  common  stock  purchase  warrant  that  is  exercisable  by  Edward
          Morgison, the spouse of Karen Morgison, at or within 60 days after the
          date hereof.
     (6)  Includes Dupont, Boland, Carey, Eaton and Dapogny.


Item 12. Certain Relationships and Related Transactions
-------------------------------------------------------
On October 20,  2002 the  Company  sold  100,000  shares of common  stock to Ms.
Patricia Parsons, a beneficial owner of the Company,  for a $0.50 per share. The
$50,000  purchase also included a warrant for 100,000  shares of common stock at
an exercise price of $0.50 per share.

On November  18, 2002 the Company  issued  1,121,500  shares of common stock and
warrants for 1,121,500 shares of common stock  exercisable at $4.00 per share to
Mr.  Douglas  Smith,  a  beneficial  owner of the  Company,  in exchange for his
purchase  of and  lease  agreement  regarding  a fleet  of five (5)  Cessna  404
aircraft  to be  used in the  effort  of  building  customers  for  the  FF-1080
aircraft.

On  December  2, 2002 the  Company  issued  757,000  shares of common  stock and
warrants to purchase  378,500  shares of common stock  exercisable  at $4.00 per
share to Mr. Douglas Smith, a beneficial owner of the Company, in exchange for a
loan of $378,500. The Company agreed to repay the loan within one calendar year.



                                       36
<PAGE>

Item 13. Exhibits
-----------------

------- -----------------------------------------------------------------   ----
Exhibit
No       Description                                                        Note
------- -----------------------------------------------------------------   ----
3.1     Certificate of Incorporation of American  Utilicraft  Corporation    1.
        filed with the Delaware Secretary of State on August 9, 1990
------- -----------------------------------------------------------------   ----
3.2     Bylaws of American Utilicraft Corporation.                           1.
------- -----------------------------------------------------------------   ----
3.3     Certificate of Amendment of the Certificate of  Incorporation  of    1.
        American Utilicraft Corporation filed with the Delaware Secretary
        of State on April 24, 2000.
------- -----------------------------------------------------------------   ----
3.4     Certificate of Amendment of the Certificate of  Incorporation  of    1.
        American Utilicraft Corporation filed with the Delaware Secretary
        of State on May 24, 2000.
------- -----------------------------------------------------------------   ----
3.5     Certificate of Amendment of the Certificate of  Incorporation  of    1.
        American Utilicraft Corporation filed with the Delaware Secretary
        of State on October 5, 2000.
------- -----------------------------------------------------------------   ----
3.6     Certificate of Secretary of American Utilicraft Corporation dated    1.
        October 6, 2000 amending Bylaws.
------- -----------------------------------------------------------------   ----
3.7     Certificate of Determination of American  Utilicraft  Corporation    1.
        creating the Series A 1.  Convertible  Preferred Stock filed with
        the Delaware Secretary of State on October 5, 2000.
------- -----------------------------------------------------------------   ----
4.1     Specimen stock certificate of common stock of American Utilicraft    1.
        Corporation.
------- -----------------------------------------------------------------   ----
10.1    Amended and Restated Investment Agreement by and between American    1.
        Utilicraft Corporation and Swartz Private Equity, LLC dated March
        8, 2001.
------- -----------------------------------------------------------------   ----
10.2    Employment   Agreement   by  and  between   American   Utilicraft    1.
        Corporation and John Dupont dated February 28, 1991.
------- -----------------------------------------------------------------   ----
10.3    Employment   Agreement   by  and  between   American   Utilicraft    1.
        Corporation and James Carey dated August 15, 1991.
------- -----------------------------------------------------------------   ----
10.4    Amendment  Number  One to  Employment  Agreement  by and  between    1.
        American Utilicraft Corporation and John Dupont dated January 21,
        1993.
------- -----------------------------------------------------------------   ----
10.5    Amendment  Number  One to  Employment  Agreement  by and  between    1.
        American Utilicraft Corporation and James Carey dated January 21,
        1993.
------- -----------------------------------------------------------------   ----
10.6    Amendment  Number  Two to  Employment  Agreement  by and  between    1.
        American  Utilicraft  Corporation  and John Dupont dated April 6,
        1999.
------- -----------------------------------------------------------------   ----
10.7    Amendment  Number  Two to  Employment  Agreement  by and  between    1.
        American  Utilicraft  Corporation  and James Carey dated April 6,
        1999.
------- -----------------------------------------------------------------   ----
10.8    Employee Agreement by and between American Utilicraft Corporation    1.
        and Thomas Dapogny dated July 15, 2000.
------- -----------------------------------------------------------------   ----
10.9    Third Amendment to Employment  Agreement by and between  American    1.
        Utilicraft Corporation and John Dupont dated October 4, 2000.
------- -----------------------------------------------------------------   ----
10.10   Third Amendment to Employment  Agreement by and between  American    1.
        Utilicraft Corporation and James Carey dated October 4, 2000.
------- -----------------------------------------------------------------   ----
10.11   First Amendment to Employment  Agreement by and between  American    1.
        Utilicraft Corporation and Thomas Dapogny dated October 4, 2000.
------- -----------------------------------------------------------------   ----
10.12   Convertible Subordinated Promissory Note dated July 11, 2000 made    1.
        by American Utilicraft Corporation in favor of Douglas E. Smith.
------- -----------------------------------------------------------------   ----
10.13   Assignment  entered  into by John  Dupont  in favor  of  American    1.
        Utilicraft Corporation dated May 24, 2000.
------- -----------------------------------------------------------------   ----



                                       37
<PAGE>

------- -----------------------------------------------------------------   ----
10.14   Technical Services Purchase Agreement between American Utilicraft    1.
        Corporation and The Aerostructures Corporation, dated December 1,
        2000.
------- -----------------------------------------------------------------   ----
16.1    Letters of change in certifying  accountant from Halt, Thrasher &    2.
        Buzas, LLP to J.H. Cohn, LLP
------- -----------------------------------------------------------------   ----
16.2    Letters of change in certifying accountant from J.H. Cohn, LLP to    3.
        Halt, Buzas & Powell, LLP
------- -----------------------------------------------------------------   ----
23.1    Consent of Halt, Thrasher & Buzas, LLP, Chartered Accountants.
------- -----------------------------------------------------------------   ----
31.1    Principal Executive certification
------- -----------------------------------------------------------------   ----
31.2    Principal Financial Officer certification
------- -----------------------------------------------------------------   ----
32      Section 1350 Certifications
------- -----------------------------------------------------------------   ----


     (1)  Incorporated by reference from the Company's  Registration  Statement,
          File No. 333-57552, filed on March 23, 2001.
     (2)  Incorporated  by  reference  from  the  Company's   8-K/A,   File  No.
          000-32751, filed on February 21, 2002.
     (3)  The Company has  requested the letter from J.H. Cohn LLP and will file
          it with 2 business days of its receipt.



Item 14. Principal Accountant Fees and Services.
------------------------------------------------

The accountant firm of Halt,  Thrasher & Buzas,  LLP billed American  Utilicraft
$50,000  for the  preparation  of the  financial  statements  used in this  Form
10-KSB/A.  The auditors have not performed any tax or other work for the Company
at this time.


================================================================================
























                                       38
<PAGE>

                                   Signatures

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

                                                 American Utilicraft Corporation

Date:  October 28, 2004                           /s/ John J. Dupont
                                                 -------------------------------
                                                 John J. Dupont
                                                 President and CEO

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

Date:  October 28, 2004                           /s/   John  J.   Dupont
                                                 -------------------------------
                                                 John J. Dupont
                                                 President , CEO and Director


Date:  October 28, 2004                           /s/ M. Karen Shoemaker
                                                 -------------------------------
                                                 M. Karen Shoemaker
                                                 Principal Accounting Officer


Date:  October 28, 2004                           /s/ Darby Boland
                                                 -------------------------------
                                                 Darby Boland
                                                 Director


Date:  October 28, 2004                          /s/ Edward F. Eaton
                                                 -------------------------------
                                                 Edward F. Eaton
                                                 Director




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