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, 2001   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.

         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,  2001,
$13,495,550

         As of December 31, 2001 there were  9,909,232  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..............................................9
     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...........................34
     Item 8A   Controls and Procedures.......................................36

Part III       ..............................................................37
     Item 9    Directors, executive Officers, Promoters and Control
               Persons; Compliance with Section 16(a) of the Exchange Act....37
     Item 10   Executive Compensation........................................39
     Item 11   Security Ownership of Certain Beneficial Owners and
               Management and Related Stockholder Matters ...................40
     Item 12   Certain Relationships and Related Transactions................41
     Item 13   Exhibits......................................................41
     Item 14   Principal Accountant Fees and Services........................42




                                       2
<PAGE>

                                     PART I


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

The Company
American Utilicraft  Corporation,  located in the  Atlanta-Metropolitan  area on
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 FF-1080 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.  Additionally,  on
October  30,  2001,  American  Utilicraft  received a patent  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 workload 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 Company filed an SB-2 registration with the SEC that was accepted on May 11,
2001. The approved  equity-line/pipe-line  financing  arrangement in that filing
has been greatly  affected by the  repercussions  of the events of September 11,
2001.  There is insufficient  information  available to determine when or if the
conditions  of the  marketplace  will allow the Company to access funds from the
equity-line.

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 workload and
assures that the FF-1080 is operated  with the highest fuel  efficiency,  saving
the fleet operator millions of dollars on an annual basis.


                                       3
<PAGE>

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
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,


                                       4
<PAGE>

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
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 pursue
this matter 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
The recent events in our nation have affected the capital markets as well as the
aviation industry.  As such, the two major requirements for the program (funding
and orders)  have been  jeopardized.  The Company is  confident  of the eventual
recovery in the capital markets and in the aviation industry.

The  Company's  business plan has been  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.

The Company has been  successful in arranging such funding until impacted by the
fall in the stock  market for  technology  products  in 2000 and 2001.  This was
greatly  exacerbated by the recent terrorist  action,  creating  conditions that
make it extremely  difficult to rely on our existing  financing  arrangement  or
outside investment at the levels required.

To continue  forward  with the program in the  current  climate,  the Company is
currently  researching  a strategy of  acquiring  an  operating  company for the
purposes of increasing company value and of obtaining the ability to finance the
program through more  conventional  banking methods.  There are no guarantees at
this  time  that  the  Company  will  find a  suitable  acquisition  or that the
acquisition of an operating company will secure enough financing for the FF-1080
program.

The Market
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.

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  as in
already  developed  Western markets.  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  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.


                                       7
<PAGE>

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.  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  will  consist  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 will
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  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 $4,334.  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.

We have been working with the architectural  firm of R.W.  Armstrong on building
design for our corporate  headquarters,  product completions  facility and final
assembly facility.  We plan to locate our headquarters and completions  facility
at the Gwinnett  County Airport in  Lawrenceville,  Georgia.  As of December 31,
2001, we were still in negotiations with the airport and county  authorities for
a land  lease of 11 acres on which to locate  our  headquarters  and  completion
facilities.

Our goal is to locate  the final  assembly  facility  at the Port of  Huntsville
International  Inter Modal Airport in Huntsville,  Alabama.  We are discussing a
50-acre  building  site for  location of the final  assembly  facility  with the
airport authority in Huntsville. Because of the events of September 11 and their
aftermath,  the Company cannot guarantee that the current  properties  expansion
plans will continue.


                                       8
<PAGE>

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

We are not a party to any material legal proceedings.  However, on September 15,
2000, we notified a company that we believe may be  infringing,  or may be about
to infringe,  our design patent for the FF-1080-200  aircraft,  of its potential
infringement.  We have  subsequently  learned that this company has entered into
Chapter 11 bankruptcy  proceedings.  We monitored  the  situation  through 2001,
ready to file a formal  complaint  against  the  company if required in order to
protect our  intellectual  property  rights.  The  company in question  has been
dissolved now and its assets sold.

We settled a claim for deferred compensation in the aggregate amount of $315,850
allegedly  owed to Mr.  Chester D. Taylor,  a former  director and consultant of
American Utilicraft. Pursuant to this settlement, we issued Mr. Taylor a warrant
to purchase  50,000 shares of our common stock at an exercise price of $3.00 per
share. This item was disclosed in the SB-2 registration as well.

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 common stock, par value $.00001 per share, is listed and traded on
the OTC-BB under the symbol AMUC.  It has been listed since May 11, 2001, in the
middle of the 2nd Quarter, when the SEC declared the Company's SB-2 registration
effective. 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

The  number of  shareholders  of record  for the  Company's  common  stock as of
December  31,  2001 was 75, and the  number of common  stock  shares  issued and
outstanding was 9,909,232.


                                       9
<PAGE>

Recent Sales of Unregistered/Restricted Securities

Since its SB-2 registration, the Company has obtained investment capital, or the
relief   of  debt  and   accounts   payable   through   the   private   sale  of
unregistered/restricted common shares.

All of these sales were made in the 4th  Quarter,  after the events of September
11 and their initial impact on the economic environment.

The sale of shares was to an existing  accredited  investor for 50,000 shares of
common stock at $0.50/share.

The Company  sold  Warrants  to  Patricia  Parsons,  a  beneficial  owner of the
Company.  A warrant for 500,000  shares  exercisable at $1 per share and another
for $500,000  exercisable for $10 were sold for the total investment of $500,000
in cash and the  surrender  and  cancellation  of a warrant for  102,300  shares
exercisable at $3 per share.  The sale agreement  contains an equity  percentage
protection  clause that will result in the issuance of shares to Ms.  Parsons in
the future with no additional capital investment.

Use of Proceeds from the SB-2 Registration

The total amount of funds  raised  pursuant to the SB-2  registration  statement
that was  declared  effective by the SEC on May 14, 2001,  was  $1,917,680.  All
funds were  raised from direct  sales prior to the events of  September  11. The
ramifications  of the events of September  11 included a depressed  stock market
wherein  the  registered  price of $4 per  share  was no  longer  viable  in the
marketplace.

Funds from the sale of  registered  stock  pursuant to the SB-2 were used to pay
for the legal expenses of the SB-2  registration,  accounting and legal expenses
of being a public company, marketing efforts, and the G&A and working capital of
the  Company.  The  marketing  efforts  costs were  mainly  accrued  through the
Company's preparation for the 2001 NBAA (National Business Aviation Association)
Convention in New Orleans. The Company had prepared the full-scale mockup of the
FF-1080 aircraft for the show, had secured a large exhibit area in the center of
the show and had moved the mockup,  other  associated  displays and personnel to
the  Convention  Center where the mockup was in  reassembled on September 10 and
11.  Ramifications  of the events of  September  11 led to  cancellation  of the
convention.   Some  costs  incurred,   such  as  the  display  area  cost,  were
recoverable;  all other costs such as preparation  costs,  marketing  materials,
transportation   costs,   labor,  and  travel  expenses  were  not  recoverable.

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

The Company has sustained a major  set-back in its financing  efforts due to the
effects of the  September  11 attacks.  The future of the  equity-line/pipe-line
financing  program,  which was in development  since early 2000, is uncertain at
this  time  as  it  is  only  viable  in a  stronger  marketplace  and  economic
environment.

The market price of our stock at the end of this year was $1.75. The end-of-year
trend of the volume of trading saw many  consecutive  days with no trades in the
stock and very low volumes when trades were present.  The stock  registered  for
sale by the Company was registered at a price of $4.00.  As the Company can 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.

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


                                       10
<PAGE>

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,  2001  and  2000,  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, 2001.  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, 2001 and 2000, 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,  2001,  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                                      HALT, BUZAS & POWELL, LTD




                                       12
<PAGE>
<TABLE>
<CAPTION>

                         American Utilicraft Corporation
                                  Balance Sheet
                                  Accrual Basis
                             As of December 31, 2001


                                     ASSETS
                                                                       2001            2000
                                                                   ------------    ------------
<S>                                                                <C>             <C>
Current assets:
    Cash                                                           $    177,764    $     83,701
    Prepaid rent                                                         10,688          14,739
    Other assets                                                          8,520          13,316
                                                                   ------------    ------------

         Total current assets                                           196,972         111,756

Prepaid rent, noncurrent                                                 18,354          28,842
Property and equipment, net of accumulated depreciation                 293,867         258,056
Patents, intellectual property and designs, net of accumulated
    amortization                                                        969,285       1,137,857
Deferred offering costs                                                    --           702,250
                                                                   ------------    ------------

Total assets                                                       $  1,478,478    $  2,238,761
                                                                   ============    ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable and accrued expenses                          $    671,399    $    106,567
    Due to stockholders                                                    --            74,500
                                                                   ------------    ------------
         Total current liabilities                                      671,399         181,067

Deferred compensation                                                   334,648         113,000
Lease payable - long term                                                17,012            --
                                                                   ------------    ------------

         Total liabilities                                            1,023,059         294,067
                                                                   ------------    ------------

Commitments and contingencies                                              --
Stockholders' 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; 9,909,232 and 8,941,855 shares issued
        and outstanding, respectively                                        98              89
    Additional paid in capital                                       11,320,407       9,198,487
    Deficit accumulated during the development stage                (10,865,106)     (7,253,902)
                                                                   ------------    ------------

         Total stockholders' equity                                     455,419       1,944,694
                                                                   ------------    ------------

Total liabilities and stockholders' equity
                                                                   $  1,478,478    $  2,238,761
                                                                   ============    ============
</TABLE>



                                       13
<PAGE>
<TABLE>
<CAPTION>

                         American Utilicraft Corporation
                             Statement of operations

                          January through December 2001



                                                                                 For the period
                                                 For the          For the         July 17, 1990
                                               period ended     period ended     (inception) to
                                               Dec. 31, 2001    Dec. 31, 2000     Dec. 31, 2001
                                              --------------   --------------    --------------
<S>                                           <C>              <C>               <C>
Expenses:

    Research and development                  $    1,667,993   $      908,844    $    4,590,440
    General and administration                     1,336,426          609,704         3,937,175
    Marketing                                        663,179          326,501         2,164,274
                                              --------------   --------------    --------------

    Loss from operations                           3,667,598        1,845,049        10,691,889
                                              --------------   --------------    --------------

Other income and expense:

    Interest income                                   27,871           20,551            94,244
    Interest expense                                   1,807          144,838           655,975
    Other Income                                       5,000             --               5,000
                                              --------------   --------------    --------------

      Total other income and expense                  31,064         (124,287)          556,731
                                              --------------   --------------    --------------


Net loss before extraordinary item                 3,636,534        1,969,336        11,248,620
Extraordinary item: gains on extinguishment
    of debt                                           25,330          358,189           383,519
                                              --------------   --------------    --------------
Net loss                                      $    3,611,204   $    1,611,147    $   10,865,101
                                              ==============   ==============    ==============


Basic and diluted loss per common share
    before extraordinary item                 $         0.38   $         0.21    $         1.69
Extraordinary item: gains on extinguishment
    of debt                                   $         --     $         0.04    $         0.06
                                              --------------   --------------    --------------
Basic and diluted loss per common share       $         0.38   $         0.17    $         1.63
                                              ==============   ==============    ==============

Weighted average number of common shares
    outstanding                               $    9,520,051   $    9,557,825    $    6,669,132
                                              ==============   ==============    ==============
</TABLE>

                                       14
<PAGE>
<TABLE>
<CAPTION>

                         American Utilicraft Corporation
                         (A Development Stage Company)
                  Statement of changes in Stockholders' Equity
                 For the years ended December 31, 2001 and 2000


                                        Preferred Stock                 Common Stock
                                     Issued and       Price                       Issued and        Price
                                    Outstanding        Per          $0.00001     Outstanding         Per          $0.00001
                                       Shares         Share        Par Value        Shares          Share        Par Value
                                    ----------------------------------------------------------------------------------------
<S>                                 <C>            <C>            <C>            <C>             <C>            <C>
Balance, December 31, 1999                  --             --             --        9,021,851            --               90

Sales of common stock
Febuary 22, 2000                            --             --             --           61,733               2              1
Febuary 22, 2000                            --             --             --           49,385               3              1
Febuary 25, 2000                            --             --             --           24,692               1           --
Febuary 25, 2000                            --             --             --          180,850               2              2
Febuary 29, 2000                            --             --             --           49,385               2           --
Various dates                               --             --             --           29,530               2           --
October 25, 2000                            --             --             --        1,000,000               1             10
Various dates                               --             --             --          495,216            --                5

Issuance of common stock for loan
interest                                    --             --             --             --              --             --

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

Collection of stock subscription
receivable                                  --             --             --             --              --             --

Conversion of common stock to
preferred stock                        1,970,787           --               20     (1,970,787)           --              (20)

Net Loss                                    --             --             --             --              --             --
                                    ----------------------------------------------------------------------------------------

Balance, December 31,2000              1,970,787           --     $         20      8,941,855            --               89

Sales of common stock
November 11, 2001                           --             --             --           50,000               1              1
Various dates                               --             --             --          328,707               2              3
Various dates                            461,170              4              5      1,844,670            --        1,844,675

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            --               98
                                    ========================================================================================





<PAGE>

                         American Utilicraft Corporation
                          (A Development Stage Company)
            Statement of changes in Stockholders' Equity (continued)
                 For the years ended December 31, 2001 and 2000


                                                      Deficit
                                                     Accumulated
                                     Additional        Stock         During the
                                      Paid-In       Subscription    Developmental
                                      Capital        Receivable        Stage            Total
                                    ------------------------------------------------------------
Balance, December 31, 1999          $  3,941,448    $   (300,000)   $ (5,642,755)   $ (2,001,217)

Sales of common stock
Febuary 22, 2000                         124,999            --              --           125,000
Febuary 22, 2000                         124,999            --              --           125,000
Febuary 25, 2000                          25,000            --              --            25,000
Febuary 25, 2000                         306,248            --              --           306,250
Febuary 29, 2000                         100,000            --              --           100,000
Various dates                             50,000            --              --            50,000
October 25, 2000                         999,990            --              --         1,000,000
Various dates                               --              --              --                 5

Issuance of common stock for loan
interest                                  64,680            --              --            64,680

Issuance of stock warrants             3,461,123            --              --         3,461,123

Collection of stock subscription
receivable                                  --           300,000            --           300,000

Conversion of common stock to
preferred stock                             --              --              --              --

Net Loss                                    --              --        (1,611,147)     (1,611,147)
                                    ------------------------------------------------------------

Balance, December 31,2000              9,198,487            --        (7,253,902)      1,944,694

Sales of common stock
November 11, 2001                         49,999            --              --            50,000
Various dates                            657,410            --              --           657,413
Various dates

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          $ 11,320,407    $       --      $(10,865,106)   $    455,419
                                    ============================================================


</TABLE>




                                       15
<PAGE>
<TABLE>
<CAPTION>

                         American Utilicraft Corporation
                            Statements of Cash Flows
                          January through December 2001

                                                                                       For the period
                                                       For the           For the        July 17,1990
                                                    period ended      period ended     (inception) to
                                                    Dec. 31, 2001     Dec. 31, 2000     Dec. 31, 2001
                                                   --------------    --------------    --------------
<S>                                                <C>               <C>               <C>
Cash flows from operating activities:
    Net loss                                       $   (3,611,204)   $   (1,611,147)   $  (10,865,101)
                                                   --------------    --------------    --------------
    Adjustments to reconcile net loss to
        net cash used in operating activities:

         Gain on extinguishment of debt                   (25,330)         (358,189)         (383,519)
         Common stock issued for loan interest             74,500            64,680           648,510
         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            80,000
         Common stock warrants issued for
             compensation expense                            --                --           1,120,812
         Depreciation and amortization                    263,904           112,218           459,955
         Loss on disposalof assets                           --                --              29,878
         Bad debt provision, loans to officers            114,397            66,051           414,589

         (Increase) decrease in assets:
             Prepaid rent                                  14,539            (4,259)             (200)
             Other assets                                   4,798            (8,525)           (8,518)
         Increase(decrease) in liabilities:
             Accounts payable                             564,832           (72,695)          671,399
             Deferred compensation                        221,648           113,000           334,648
                                                   --------------    --------------    --------------
         Total adjustments                              1,378,488            (7,719)        3,664,803
                                                   --------------    --------------    --------------
         Net cash used in operating activities         (2,232,716)       (1,618,866)       (7,200,298)
                                                   --------------    --------------    --------------

Cash flows from investing activities:
    Decrease (increase) of prepaid rent                      --              10,496           (28,842)
    Increase in deferred offering costs                  (432,279)         (267,250)         (699,529)
    Purchases of property and equipment                  (113,354)          (95,006)         (555,196)
    Loans to officers                                    (114,397)          (66,051)         (414,589)
                                                   --------------    --------------    --------------

         Net cash used in investing activities           (660,030)         (417,811)       (1,698,156)
                                                   --------------    --------------    --------------




                                       16
<PAGE>

Cash flows from financing activities:
    Payments of lease principal                              (785)             --                (785)
    Proceeds from issuance of capital stock             2,487,594         2,031,255         7,499,003
    Proceeds from issuance of common
        stock warrants                                    500,000              --           1,578,000
                                                   --------------    --------------    --------------

Net cash provided by
    financing activities                                2,986,809         2,031,255         9,076,218
                                                   --------------    --------------    --------------

Net increase (decrease) increase in cash                   94,063            (5,422)          177,764

Cash, beginning of year                                    83,701            89,123              --
                                                   --------------    --------------    --------------
Cash, end of year                                  $      177,764    $       83,701    $      177,764

Supplemental disclosures of noncash information:

Common stock issued for loan interest              $      574,010    $         --      $      574,010
Common stock issued for current and future
    rent expense                                   $      152,049    $         --      $      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
</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  eleven 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-1080-200  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.




                                       17
<PAGE>

          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-1080-200  aircraft  and can be deployed in other
     aircraft and trucks.

          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-1080-200  is
     operating with the highest fuel efficiency.

          The  Company's  current  business  plan is designed  to  expedite  the
     certification  and production of the  FF-1080-200,  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.



                                       18
<PAGE>

     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
     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
     years ended December 31, 2001 and 2000 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  straight-line and accelerated methods 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 3 to 10 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 7 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 $1,667,993  and $908,844 in 2001 and 2000,  respectively,  and has
     expensed $4,590,440 from inception through December 31, 2001.



                                       19
<PAGE>

     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.

     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  amen 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.

          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.



                                       20
<PAGE>

     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.

     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.

     Deferred offering costs
     -----------------------

          Direct,  incremental  costs  incurred with the  Company's  offering of
     common stock are  deferred  and  included as a reduction to the  respective
     capital  accounts.  If the offering is not completed or the offering  terms
     are  substantially  revised,  the deferred offering costs will be expensed.
     Indirect  costs  related  to  the  offering  are  expensed  when  incurred.
     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  five  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.



                                       21
<PAGE>

     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, 2001 and 2000 were  $334,648 and
     $113,000, 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.

     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 $3,611,204 and $1,611,147 in
     2001 and 2000,  respectively,  and has  incurred  losses  since  formation,
     resulting in  accumulated  deficits of  $10,865,106  and  $7,253,902  as of
     December 31, 2001 and 2000, respectively.  For the years ended December 31,
     2001 and 2000, respectively,  the Company also generated negative cash flow
     from operations of $2,232,716 and $1,618,866. 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.



                                       22
<PAGE>

          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.

5.   Property and equipment


     The following summarizes property and equipment as of December 31:


                                               2001          2000
                                            -----------   -----------

     Computer equipment                         277,765       208,101
     Equipment                                  135,693        81,742
     Furniture                                   40,038        32,510
     Leasehold improvements                      89,611        89,611
                                            -----------   -----------

     Total cost                                 543,107       411,964

     Accumulated depreciation
         and amortization                       249,240       153,908
                                            -----------   -----------

     Net property and equipment             $   293,867   $   258,056
                                            ===========   ===========



         Depreciation  and  amortization  expense of property and equipment for
     the years  ended  December  31,  2001 and 2000 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 $388,404 through December 31, 2001.
     Interest,  imputed  at an  annual  rate of 8%,  has been  accrued  on these
     lendings,  such interest  income  amounting to $26,026 and $20,551 for 2001
     and 2000, respectively.

          The Company has advanced through December 31, 2001 amounts aggregating
     $26,186 to another officer of the Company.



                                       23
<PAGE>

          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 $414,590 and $300,192 as
     of December 31, 2001 and 2000, respectively.

          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 $414,590 and $300,192 as
     of December 31, 2001 and 2000, respectively.

7.   Due to stockholders

          Between the years 1992 and 1996,  the  Company  entered  into  various
     memorandums of understanding (MOU's) by which $1,078,000 in aggregate funds
     were  accepted in  exchange  for  written  promises to repay such  amounts.
     Either  explicitly or  constructively,  these MOU's bear  interest,  and an
     annual rate of 8% has been applied.  Concurrent  with signing of the MOU's,
     the Company  issued,  in the aggregated,  2,194,034  shares of common stock
     intended to represent the interest associated with these monies.

          In  October  2000 the  Company  proferred  common  stock  warrants  in
     settlements  of amounts  otherwise  due pursuant to these MOU's.  In total,
     these  warrants  provide the right for the  holders to  purchase  1,078,000
     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 as to half of the
     warrant  shares  after one  year,  with  vesting  in the  remaining  shares
     occurring after two years.  The warrants shall 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  volume in any 90 day period,  with  trading  volume
     measured as average weekly trading volume during the four weeks immediately
     prior to such sales.

          As of December 31, 2000 warrants for 1,003,500 shares had been issued.
     A $366,520 gain on  extinguishment  of debt was recorded for the difference
     between  the fair value of the  warrants,  $711,480  at $.66 per  warranted
     share, and the value of $1,078,000 otherwise due to stockholders.

          In January 2001 warrants for the remaining  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.



                                       24
<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.

          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.

          The Company has authorized  1,970,787 shares of the Series A preferred
     stock.  On October 6, 2000 a plan of  recapitalization  was entered into by
     which  these  shares  were issued to the  Company's  President  and another
     officer in  exchange  for the return and  cancellation  of a like number of
     shares of common stock otherwise held by them.

9.   Conversion of convertible debenture


          In July 2000 a stockholder agreed to advance $1,000,000 to the Company
     in  exchange  for a  convertible  subordinated  debenture  and a warrant to
     purchase  150,000 shares of the Company's common stock. In October 2000 the
     stockholders  converted the debenture to 1,000,000  shares of the Company's
     common stock.



                                       25
<PAGE>

          The  warrant  to  purchase   150,000  shares  of  common  stock  vests
     immediately  and expires  after three years.  The exercise  price is $5 per
     share, which may be later adjusted pursuant to an antidilution  clause, and
     which may also be beneficially  adjusted for otherwise reductions in market
     value of the stock.  In the event that the warrant is  partially  or wholly
     exercised,  the  stockholders  agree to restrict  sales of the 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.

          The  warrant  to  purchase   150,000  shares  of  common  stock  vests
     immediately  and expires  after three years.  The exercise  price is $5 per
     share, which may be later adjusted pursuant to an antidilution  clause, and
     which may also be beneficially  adjusted for otherwise reductions in market
     value of the stock.  In the event that the warrant is  partially  or wholly
     exercised,  the  stockholders  agree to restrict  sales of the 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.


          Consistent with Accounting Principles Board Opinion No. 14, Accounting
     for  Convertible  Debt and Debt Issued with Stock  Purchase  Warrants,  the
     value of the warrant to purchase  150,000  shares of common stock ($.59 per
     warranted  share) has been  recognized  at its fair value  pro-rata  to the
     combined  fair value of the  debenture,  with a resulting  value of $80,000
     assigned to the  debenture,  which  amount was charged to interest  expense
     upon the conversion of the debenture in October.

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.


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


                        For fiscal years ending in,


                        2002           $     50,508
                        2003                 51,492
                                       ------------

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

          Rent  expense  for the period  ended  December  31,  2001 and 2000 was
     $50,930 and $49,208, respectively.



                                       26
<PAGE>

     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  agree  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.

          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.



                                       27
<PAGE>

          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.

     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 $334,648
     have accrued as of December 31, 2001.

          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.



                                       28
<PAGE>

     Due to former officer
     ---------------------

          On August 28, 2000 a stockholder, and former officer, asserted a claim
     of $315,850 for deferred  compensation due. Company management  believed no
     more than  $50,000  was  owed,  as  reflected  in the  Company's  financial
     records.


          Subsequently,  the  stockholder  agreed to accept a stock  warrant for
     50,000  shares of the  Company's  common stock as full  settlement  for all
     amounts due.

          The  warrant  provides  for and  exercise  price of $3 per share.  The
     holder's  right to exercise the warrant vests as to half 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.

          A $17,000 gain on  extinguishment  of debt was recorded as of December
     31, 2000 for the difference between the fair value of the warrant,  $33,000
     at $.66 per warranted share, and the value of $50,000  otherwise due to the
     former officer. Stock warrants

          In August 2000 the employment  agreement with the Company's  President
     was  amended  so as to  delete  the  provision  previously  providing  that
     intellectual property assigned by the President to the Company would revert
     to the president if the president were  terminated or if the Company ceased
     doing  business.  In  exchange  for the  president  giving up this right of
     reversion,  the Company in October provided the president with a warrant to
     purchase  2,000,000 shares of the Company's common stock, and a right to 3%
     royalties  on the gross  proceeds of the first  2,000  aircraft  sold.  The
     warrant has been assigned a value of $1,180,000  based on the fair value at
     the date of grant of $.59 per warranted share. That value has been assigned
     to the intellectual property assigned by the President to the Company.

          The  warrant  provides  for an  exercise  price of $5 per  share.  The
     exercise price may be later adjusted  pursuant to an  antidilution  clause.
     The  holder's  right  to  exercise  the  warrant  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.

          Also in October 2000 the Company issued to certain of its stockholders
     common  stock  warrants  providing  the right for the  holders to  purchase
     1,353,520  shares of the Company's  common stock at exercise prices ranging
     from $3 to $5 per share, with exercise price adjustment provision,  vesting
     provisions  and sales  restrictions  identical  to the  warrants  described
     above.


                                       29
<PAGE>
<TABLE>
<CAPTION>

                  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, with exercise price adjustment provisions, vesting
         provisions and sales restrictions identical to the warrants described
         above.

          As of December 31, 2001, 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
                                                                                           ----------
                           Total common stock warrants outstanding                          7,408,132
                                                                                           ==========
</TABLE>


          In May 1998 the Company entered into a lease agreement with one of its
     stockholders for use of a plane. The agreement was  substantially  modified
     in October  1999.  The lease  agreement  runs  through  October  2004,  and
     requires  monthly  payments  of $1,187  through  August  2000,  and  $2,160
     thereafter.  In addition to these agreed-upon  monthly payments,  the lease
     agreement of May 1998 also required the Company to provide the stockholders
     with 57,912 shares of common stock.  Based on sales of common stock sold to
     third  parties  during the period just  preceding the stock  issuance,  the
     57,912 shares of common stock have been valued at $99,609.  That amount was
     partially  expensed in 1998 as additional rent expense,  with the remainder
     expensed  in 1999  concurrent  with  the  early  termination  of the  lease
     agreement of May 1998.



                                       30
<PAGE>

          The lease  agreement of October  1999  required the Company to provide
     the stockholders  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:

                  2002                                    36,408
                  2003                                    36,408
                  2004                                    30,340
                                                     -----------

                  Total                              $   103,156
                                                     ===========

          Plane rental expense for the year ended December 31, 2001 and 2000 was
     $36,669 and $28,624, respectively.

     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 $200,000,  or
     $250,000  upon the  Company  having  become a reporting  Company  under the
     Exchange Act of 1934.



                                       31
<PAGE>

          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 $200,000,  or
     $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
     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 $100,000 (or
     $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.



                                       32
<PAGE>

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, 2001 and 2000 are summarized as follows:

                                             2001           2000
                                         -----------    -----------

     Research and development costs      $ 1,303,117    $   993,632
     Start-up and organizational costs     1,280,188        976,149
     Accrued compensation expense            499,769        381,076
     Accrued interest expense                262,700        199,852
                                         -----------    -----------

          Total deferred tax assets        3,345,774      2,550,709
     Less: valuation allowance            (3,345,774)    (2,550,709)
                                         -----------    -----------

          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.

          A lease for six 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:



                                       33
<PAGE>

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




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

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

Change to J.H. Cohn LLP

On November 19, 2001, and effective on such date, American Utilicraft determined
to change the independent accountants of the Company from Halt, Thrasher & Buzas
LLP to J.H. Cohn LLP. The Board of Directors of the Company  approved the change
of accountants to J.H. Cohn LLP. There were no disagreements with Halt, Thrasher
& Buzas LLP on any  matter of  accounting  principles  or  practices,  financial
statement disclosure or auditing scope or procedure,  as was reported in the 8-K
filing of November 19, 2001.

During the Company's two most recently completed fiscal years and the subsequent
interim period preceding the determination to change accountants,  there were no
disagreements  with  Halt,  Thrasher  & Buzas LLP on any  matter  of  accounting
principles or practices,  financial  statement  disclosure or auditing  scope or
procedure,  which, if not resolved to the satisfaction of Halt, Thrasher & Buzas
LLP,  would  have  caused  it to make  reference  to the  subject  matter of the



                                       34
<PAGE>

disagreement in connection with its reports on the financial statements for such
years. Halt, Thrasher & Buzas LLP reports on the Company's financial  statements
for the past two years did not  contain an adverse  opinion or a  disclaimer  of
opinion,  nor were they qualified or modified as to uncertainty,  audit scope or
accounting principles,  except that the reports contained explanatory paragraphs
describing the Company's going concern  contingencies.  During the Company's two
most recently completed fiscal years and the subsequent interim period preceding
the decision to change accountants, the Company does not believe that there were
any reportable events as defined in Regulation S-K Item  304(a)(1)(v).  Internal
accounting  records are maintained by the same outside  accounting  firm, By the
Numbers  of  Herndon,  Virginia,  that the  Company  has used since  1993.  This
continuity   balanced  with  in-house  staff  records  and  having  the  records
periodically  audited by an independent  CPA firm ensures control over financial
reporting.

The Company engaged J.H. Cohn LLP as the Company's new  independent  accountants
effective as of November 19, 2001.  During the  Company's two most recent fiscal
years and the subsequent interim period prior to engaging J.H. Cohn LLP, neither
the  Company nor anyone on its behalf  consulted  with J.H.  Cohn LLP  regarding
either (i) the application of accounting  principles to a specific  transaction,
either  completed  or  proposed,  or the type of  audit  opinion  that  might be
rendered on the Company's financial statements, and neither a written report nor
oral advice was  provided to the Company by J.H.  Cohn LLP that was an important
factor  considered  by the Company in reaching a decision as to any  accounting,
auditing or financial  reporting  issue;  or (ii) any matter that was either the
subject of a  disagreement,  as that term is defined  in Item  304(a)(1)(iv)  of
Regulation S-K and the related  instructions to Item 304 of Regulation S-K, or a
reportable  event,  as that term is defined in Item  304(a)(1)(v)  of Regulation
S-K.


Return to Halt, Buzas & Powell LLP (f/k/a Halt, Thrasher & Buzas LLP)
With the submission of American Utilicraft's  unaudited financials to the SEC on
April 29, 2004, it was noted that the independent  accountant  relationship with
J.H.  Cohn LLP,  announced  in the 8-K filing of November  19,  2001,  was never
consummated.  After brief discussions with J.H. Cohn LLP, it was determined that
the relationship would not be consummated at this time.

Effective as of May 3, 2004, the  independent  accountants of the Company are no
longer J.H. Cohn LLP. The Company's Board of Directors approved the interviewing
process for new independent accountants.  During the full period while J.H. Cohn
LLP were the independent accountants of record, they were not engaged to conduct
any new accounting for the Company.  As such, there were no  disagreements  with
J.H.  Cohn LLP on any matter of accounting  principles  or practices,  financial
statement  disclosure or auditing  scope or procedure.  The Company's  unaudited
financial  statements  during that time did not contain an adverse  opinion or a
disclaimer of opinion,  nor were they  qualified or modified as to  uncertainty,
audit  scope  or  accounting  principles,  because  of the  Company's  financial
inability  during that time to engage J.H. Cohn LLP. Since its initial review of
the  Company's  records  audited  by Halt,  Thrasher  & Buzas  LLP in 2001,  and
subsequent  acceptance  of the Company as a client,  J.H.  Cohn was not involved
with the Company's  records in any form,  because of the Company's lack of funds
due to the financial repercussions of the September 11, 2001.

The principal  accountant's had no report on the financial statements for either
of the past two years, pursuant to Item 304(a)(ii) of Regulation S-K. Because of
this, there was no adverse opinion or disclaimer of opinion,  or modification as
to uncertainty, audit scope, or accounting principles.



                                       35
<PAGE>

J.H. Cohn LLP was not fully engaged,  there were no  disagreements  with them on
any  matter  of  accounting   principles  or  practices,   financial   statement
disclosure, or auditing scope or procedure, which, if not resolved to the former
accountant's satisfaction, would have caused it to make reference to the subject
matter of the  disagreement(s)  in connection with its report,  pursuant to Item
304(a)(iv)(A) of Regulation S-K. Because the Company had insufficient funding to
fully engage the J.H. Cohn LLP, the accountants had no opportunity to review any
of the Company's records since the November 19, 2001 8-K filing.

In connection  with the Company's 8K filed with the  Commission on may 14, 2004,
the Company requested J.H. Cohn LLP to furnish it with a letter addressed to the
Securities  and Exchange  Commission  stating  whether or not it agrees with the
above  statements.  The  Company  intends  to file that  letter  within  two (2)
business days of its receipt.

As a  result  of  interviewing  process  for new  independent  accountants,  the
accounting firm of Halt, Buzas & Powell,  LTD. (formerly Halt, Thrasher & Buzas)
was re-engaged as the Company's independent accountants as of June 28, 2004. The
company's Board of Directors approved the engagement.

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 assesses the
accuracy and effectiveness of the financial reporting.











                                       36
<PAGE>

                                    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               54           President, Chief Executive Officer,
                                          Director
James S. Carey               49           Executive Vice President; Vice
                                          President of Marketing; Secretary;
                                          Director
R. Darby Boland              50           Vice President, General Manager,
                                          Director
Edward F. Eaton              51           General Counsel, Director
Thomas A. Dapogny            39           Vice President of Operations
M. Karen Shoemaker           44           Principal Accounting Officer


Term of Office
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 2002 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.

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.



                                       37
<PAGE>

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.

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.



                                       38
<PAGE>

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, as amended,  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.
<TABLE>
<CAPTION>

Summary Compensation Table for 2001
---------------------------------------- ------- ---------------------------------------
                                                        Annual Compensation
---------------------------------------- ------- ---------------------------------------
Name and Principal Position              Fiscal  Salary*    Actual Amount  Other Annual
                                         Year               Paid           Compensation
---------------------------------------- ------- ---------- -------------- -------------
<S>                                      <C>     <C>        <C>            <C>
John J. Dupont (1)                       2001    $232,692*  $ 110,488      $   0
  President and Chief Executive Officer
---------------------------------------- ------- ---------- -------------- -------------
James S. Carey (2)                       2001    $116,345*  $ 63,732       $   0
   Executive Vice President; Vice
   President of Marketing
---------------------------------------- ------- ---------- -------------- -------------
Thomas Dapogny (3)                       2001    $116,345*  $ 59,395       $   0
   Vice President of Operations
---------------------------------------- ------- ---------- -------------- -------------
R. Darby Boland (4)                      2001    $ 80,000*  $50,465        $   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 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 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 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.


                                       39
<PAGE>

     (4)  Mr. Boland elected to defer a portion of his  compensation for 2001 in
          the amount of $29,535.


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.

<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        1,308,222                    2,391,222            15.45%
R. Darby Boland                     887,787          130,750                    1,018,537             6.58%
James S. Carey                                       352,346      155,040         507,386             3.28%
Edward Eaton                                          55,000      101,232         156,232             1.01%
Thomas Dapogny                                       109,548       94,356         203,904             1.32%
Douglas E. Smith (4)                                 175,000    1,515,607       1,690,607            10.92%
Karen Morgison (5)                                   252,658    1,083,000       1,335,658             8.63%
Patricia D. Parsons                                        0      912,000         912,000             5.89%
Harlyn Hubbs                                         120,830      779,076         899,906             5.81%
Swartz Private Equity, LLC                           390,000      110,000         500,000             3.23%
LeRoy Svendsen                                       101,300      478,800         580,100             3.75%
All executive officers and
directors as a group (6)          1,970,787        1,955,866      350,628       4,277,281            27.64%
</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  15,476,638  shares of common stock issued based
          upon: (a) 9,909,232  shares of common stock issued and  outstanding as
          of December 31, 2001;  (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 3,596,619  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  25,000  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  126,329 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.
--------------------------------------------------------

The Company  sold  Warrants  to  Patricia  Parsons,  a  beneficial  owner of the
Company.  A warrant for 500,000  shares  exercisable at $1 per share and another
for $500,000  exercisable for $10 were sold for the total investment of $500,000
in cash and the  surrender  and  cancellation  of a warrant for  102,300  shares
exercisable at $3 per share.


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.
------- -----------------------------------------------------------------   ----


                                       40
<PAGE>

------- -----------------------------------------------------------------   ----
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.
------- -----------------------------------------------------------------   ----
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.


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





                                       41
<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