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

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

                                   FORM 10-QSB

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

                For the quarterly period ended September 30, 1999

                                       or

  [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
                       For the transition period from to

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

                        Commission file number: 333-70437

                             Cardinal Airlines, Inc.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

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

                 Delaware                     59-3492127
          (State of incorporation) (I.R.S. Employer Identification No.)

                            1380 Sarno Road, Suite B
                               Melbourne, FL 32935
                    (Address of principal executive offices)

                   Registrant's telephone number: 407-757-7388

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

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

The number of shares of the registrant's common stock, par value $0.01 per
share, outstanding as of November 12, 1999 was 2,033,900.

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



<PAGE>


2

                             Cardinal Airlines, Inc.
                               Index to Form 10QSB


Part I - Financial Information                                             Page
                                                                           ----

Item 1.  Financial Statements (unaudited)

   Condensed Balance Sheet - September 30, 1999...............................2

   Condensed Statements of Operations - Three Months
   and Six Months Ended September 30, 1999 and 1998
   and for the period February 10, 1997 (Date of
   Inception) through September 30, 1999......................................3

   Condensed Statements of Cash Flows - Six Months Ended
   September 30, 1999 and 1998 and for the period
   February 10, 1997 (Date of Inception) through September 30, 1999...........5

   Notes to Condensed Financial Statements....................................6

Item 2.  Management's Discussion and Analysis or Plan of Operations...........8

Part II - Other Information

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

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

Item 5.  Other Information...................................................16

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

Signatures...................................................................17

Exhibit Index................................................................17


<PAGE>


3

Part I   Financial Information
Item 1.  Financial Statements



                             CARDINAL AIRLINES, INC.
                          (A Development Stage Company)
                                 BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                   For the three months ended
                                                                           September 30
                                                                   1999                  1998
                                                                ------------         ------------
<S>                                                         <C>                   <C>

 CURRENT ASSETS
 Cash                                                          $       1,034        $       14,169
 Interest Receivable                                                  10,096                 2,220
                                                               -------------        --------------
     TOTAL CURRENT ASSETS                                             11,130                16,389

 PROPERTY AND EQUIPMENT, net                                           7,078                 9,133

 DEPOSITS                                                              4,200                 3,640
                                                               -------------        --------------
     TOTAL ASSETS                                              $      22,408        $       29,337
                                                               =============        ==============

 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 CURRENT LIABILITIES
 Accounts payable                                              $      60,881        $            -
 Due to related parties                                               24,840                     -
                                                               -------------        --------------
     TOTAL LIABILITIES                                         $      85,721                     -

 COMMITMENTS
 Note Payable                                                  $       5,000        $            -
                                                               -------------        --------------
             TOTAL LIABILITIES AND COMMITMENTS                 $      90,721        $            -
                                                               =============        ==============

 TOTAL STOCKHOLDERS' EQUITY, (DEFICIT)
 including deficit accumulated during the
 development stage of $333,705                                       (68,313)               29,337
                                                               -------------        --------------

      TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY (DEFICIT)                                         $      22,408        $       29,337
                                                               =============        ==============
</TABLE>







   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      - 1 -


<PAGE>






                             CARDINAL AIRLINES, INC.
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                         FEBRUARY 10, 1997           FOR THE THREE MONTHS ENDED
                                           (INCEPTION) TO                   SEPTEMBER 30
                                           SEPTEMBER 30, 1999        1999                   1998
<S>                                     <C>                   <C>                   <C>
                                          --------------       ----------------      ------------------
 REVENUES                                 $          -         $             -       $              -
                                          --------------       ----------------      ------------------
 EXPENSES

     Consulting Fees                           190,269                  36,484                 19,700
     Professional Fees                         156,237                  34,351                 12,380
     Rent                                       32,595                   4,770                  2,310
     Supplies                                   20,098                   5,185                    810
     Utilities                                  13,831                   2,053                  1,433
     Depreciation and amortization               4,578                     513                    508
     Miscellaneous                              10,105                   2,206                    894
     Taxes                                         241                       -                      -
                                          --------------       ----------------      -----------------
                                               427,963                  85,562                 38,035
 OTHER INCOME
     Interest Income                            10,096                   1,350                  2,220
                                          --------------       ----------------      -----------------
 NET (LOSS) before provision for
 income taxes                             $   (417,867)        $       (84,212)      $       (35,815)

 Provision for Income Taxes                          -                       -                     -
                                          --------------       ----------------      -----------------

 NET (LOSS)                               $   (417,867)        $       (84,212)      $       (35,815)
                                          ==============       ================      =================

  Net loss per share                      $      (0.21)        $         (0.04)      $         (0.03)
                                          ==============       ================      =================

 Shares used in computing net
 loss per share                              2,033,900               2,033,900             1,301,400
                                          ==============       ================      =================
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      - 2 -


<PAGE>



                             CARDINAL AIRLINES, INC.
                          (A Development Stage Company)
                             STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>

                                        FEBRUARY 10, 1997     FOR THE THREE MONTHS ENDED
                                         (INCEPTION) TO               SEPTEMBER 30
                                        SEPTEMBER 30, 1999        1999               1998
                                     --------------------  -----------------   ----------------

CASH FLOWS FROM
OPERATING ACTIVITIES:
<S>                                <C>                      <C>                 <C>

Cash paid for operating expenses       $     (417,867)      $     (84,212)     $      (35,815)
                                        ---------------     ---------------    ----------------

     NET CASH USED IN OPERATING
     ACTIVITIES:                             (417,867)            (84,212)            (35,815)
                                        ---------------     ---------------    ----------------

CASH FLOWS FROM INVESTING
ACTIVITIES:

Purchase of property and equipment            (11,664)                   -             (1,042)
Increase in security deposits                  (4,200)                   -             (1,900)
                                        ---------------     ---------------    ----------------
     NET CASH USED IN INVESTING
     ACTIVITIES                               (15,864)                   -             (2,942)
                                        ---------------     ---------------    ----------------

CASH FLOWS FROM FINANCING
ACTIVITIES:

Issuance of common stock                      314,539              27,000              45,700
Increase in notes receivable -
     related parties                           54,115                 762               7,401
Payments on notes receivable -
     related parties                           61,111              47,111                   -
Promissory note payable -
     Related parties                            5,000               5,000                   -
                                        ---------------     ---------------    ----------------

     NET CASH PROVIDED BY FINANCING
     ACTIVITIES                               434,765              79,873              53,101
                                        ---------------     ---------------    ----------------

NET INCREASE (DECREASE) IN CASH                 1,034              (4,339)             14,344
     CASH AT BEGINNING OF PERIOD                    -               5,373                   -
                                        ---------------     ---------------    ----------------
CASH AT END OF PERIOD                   $       1,034       $       1,034      $       14,344
                                        ===============     ===============    ================
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      - 3 -


<PAGE>





                             CARDINAL AIRLINES, INC.
                          (A Development Stage Company)
                             STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>

                                       FEBRUARY 10, 1997       FOR THE THREE MONTHS ENDED
                                        (INCEPTION) TO                SEPTEMBER 30
                                       SEPTEMBER 30, 1999          1999              1998
                                      --------------------  ----------------- -----------------


RECONCILIATION OF NET LOSS TO NET
CASH USED IN OPERATING ACTIVITIES:
<S>                                <C>                 <C>                  <C>

Net loss                                $    (417,867)      $     (84,212)     $      (35,815)

Adjustments to reconcile net loss
to net cash used in operating
activities:

   Depreciation and amortization                4,587                 513                 508
   Increase in receivables                    (10,096)             (1,350)                  -
   Increase in accounts payable                60,881               9,879                   -
   Increase in due to related parties          24,840              (6,144)                  -
                                        ---------------     ---------------    ----------------


       NET CASH USED IN
       OPERATING ACTIVITIES             $    (337,655)      $      (81,314)    $      (35,307)
                                        ===============     ===============    ================

</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                      - 4 -


<PAGE>




                                CARDINAL AIRLINES
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                  SEPTEMBER 30, 1999

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       A)   NATURE OF OPERATIONS

              The planned principal business activity of Cardinal Airlines, Inc.
              ("Company") is to provide commercial airline service to and from
              major airports throughout the eastern United States with
              operations based in Melbourne, Florida.

       B)   CASH AND CASH EQUIVALENTS

              For purposes of the statements of cash flows, the Company
              considers all highly liquid debt instruments purchased with an
              original maturity of three months or less to be cash and/or cash
              equivalents.

       C)   PROPERTY AND EQUIPMENT

              Property and equipment are stated at cost. Depreciation computed
              using the straight-line method over the assets' expected useful
              lives. Leasehold improvements are amortized over the lessor of the
              term of the lease or the assets' expected useful lives.

       D)   MANAGEMENT ESTIMATES

              The preparation of financial statements in conformity with
              generally accepted accounting principles requires management to
              make estimates and assumptions that affect the reported assets and
              liabilities. Actual results could differ from these estimates.

       E)   INCOME TAXES

              Deferred income taxes arise from the expected tax consequence of
              temporary differences between the carrying amounts and the tax
              basis of certain assets and liabilities. The differences result
              primarily from different depreciation methods on property and
              equipment.

       F)   ORGANIZATION COSTS

              Organization costs consist of expenses related to the start-up of
              the Company. These costs are expensed as incurred in accordance
              with Statement of Position 98-5, "Reporting on the Costs of
              Start-Up Activities" (SOP 98-5).

                                      - 5 -


<PAGE>



                                CARDINAL AIRLINES
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                  SEPTEMBER 30, 1999

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT.

       G)   EARNINGS PER SHARE

              The Company adopted Statement of Financial Accounting Standards
              (SFAS) No. 128, "Earnings Per Share" (SFAS 128) effective February
              10, 1997 (Inception). As such, net loss per share is computed
              using the weighted average number of common shares outstanding
              during the period. Pursuant to the Securities and Exchange
              Commission Staff Accounting Bulletins and Staff Policy, such
              computations include all common and equivalent shares issued as if
              they were outstanding for all periods presented. Common equivalent
              shares consist of the incremental common shares issuable upon the
              conversion of the convertible preferred stock (using the if
              converted method).

              The Series A Preferred Stock issued has no preferences other than
              voting rights over the common stock and no dividend payment
              arrangements. The preferred stock has no effect in arriving at
              income available to common shareholders in computing earnings per
              share.

       H)   NEW ACCOUNTING STANDARDS

              There have been no new significant accounting pronouncements
              issued for the three month period ended Sept 30, 1999 that would
              have a direct material effect on the financial statements, except
              for Statement of Position 98-5, "Reporting on the Costs of
              Start-Up Activities" (SOP 98-5) which is addressed in NOTE 1F.

NOTE 2 - DEVELOPMENT STAGE OPERATIONS

              The Company was formed February 10, 1997, and began operations
              April 1, 1997. Through September 30, 1999, operations have been
              devoted primarily to raising capital, negotiating leasing of
              airplanes, related equipment, and related facilities as well as
              the performance of general administrative functions. As of
              September 30, 1999, the Company has Sixty-Two Stockholders.

                                      - 6 -


<PAGE>




                                CARDINAL AIRLINES
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                  SEPTEMBER 30, 1999

NOTE 3 - PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                              Feburary 10, 1997
                                                                (inception) to

                                                    September 30, 1999   September 30,1998

                                                     ---------------      ---------------
<S>                                               <C>                 <C>

          Computers and equipment                    $       9,955        $       9,955
          Furniture and fixtures                               159                  159
          Leasehold Improvements                             1,550                1,550
                                                     ---------------      ---------------
                                                            11,664               11,664
          Less accumulated depreciation
          and amortization                                  (4,586)              (2,531)
                                                     ---------------      ---------------
                                                     $       7,078        $       9,133
                                                     ===============      ===============
</TABLE>

              Depreciation and amortization expense was $513 for the three month
              period ended Sept 30, 1999; and $2,531 for the period from
              February 10, 1997 (Inception) to September 30, 1998.

NOTE 4 - RELATED PARTIES

              The Company has made loans to four of its stockholders in exchange
              for issuance of shares of common stock and preferred stock (NOTE
              7). As of June 30, 1999, these four stockholders own 56% of the
              outstanding common shares of stock.

              The loans are unsecured, are due June 30, 2003 and bear interest
              at 8% annually. Notes receivable due from related parties were
              $109,321 as of June 30, 1999, and $96,671 as of June 30, 1998. A
              summary of Notes receivable due from related parties is as
              follows:
<TABLE>
<CAPTION>
<S>                 <C>                                                    <C>


                    Common stock issued during the year ended June 30, 1998     $      92,179

                    Common stock issued from March 1, 1997 to June 30, 1997             4,492

                    Preferred stock issued during the year ended June 30, 1999          1,000

                    Conversion of stock subscriptions to notes receivable
                    during the year ended  June 30, 1999 (NOTE 7)                      25,650

                    Repayment of notes receivable through Sept 30, 1999               (61,111)
                                                                                --------------

                                                                                $      62,210

                                                                                ==============
</TABLE>


                                      - 7 -


<PAGE>




                                CARDINAL AIRLINES
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

NOTE 4 - RELATED PARTIES CONT.

              The Notes receivable due from related parties are reported as a
              reduction in stockholders' equity (deficit).

              In addition, as of September 30, 1999, the Company had accrued
              $24,840 in consulting fees payable to stockholders of the Company
              for management and professional services rendered.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

              The Company leases its facilities from an unrelated third party
              under an operating lease expiring July, 2000. Rent expense was
              $4,770 and $2,310 for the three month period ended September 30,
              1999 and 1998 respectively.

              Future minimum lease payments are as follows:

                Year ending June 30,

                      2000                  $ 19,080
                      2001                     1,590
                                               -----

                                            $ 20,670

              During the period January through March, 1999, the company issued
              shares of stock to raise capital to fund its operations.  The
              sales may be in violation of Section 5 of the Securities Act of
              1933 and accordingly, those who purchased may have the right to
              rescind their shares. The potential liability to the company is
              $253,100 plus interst.


NOTE 6 - INCOME TAXES

              The Company's effective tax rate differs from the expected federal
              income tax rate as follows:

                                           Year Ended           Year Ended
                                          June 30, 1999        June 30, 1998
                                         ----------------     ----------------
  Income tax benefit at statutory Rate   $     (113,460)      $       (8,068)
  Increase in valuation Allowance               113,460                8,068
                                         ----------------     ----------------
  Actual income taxes                    $            -       $            -
                                         ================     ================


                                     - 8 -


<PAGE>




                                CARDINAL AIRLINES
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

NOTE 6 - INCOME TAXES CONT.

              The components of the deferred tax assets and liabilities are as
              follows:

                                           June 30, 1999        June 30, 1998
                                          ----------------     ----------------

   Deferred tax assets:

   Net operating loss carryforwards       $      113,460       $        8,068
                                          ----------------     ----------------
   Total deferred tax assets                     113,460                8,068

   Less valuation allowance                     (113,460)              (8,068)

   Deferred tax assets, net of
   valuation allowance                                 -                    -

   Deferred tax liabilities                            -                    -
                                          ----------------     ----------------
   Net deferred tax asset (liability)     $            -       $            -
                                          ================     ================

         A summary of the net operating loss carryforwards is as follows:

                  Generated June 30, 1997    $  3,168  Expires June 30, 2012
                  Generated June 30, 1998      20,561  Expires June 30, 2013
                  Generated June 30, 1999     309,976  Expires June 30, 2014
                                              ------------------------------

                                             $333,705

             As of September 30, 1999, the Company is still in development
             stage. As such, all income and deductions for tax purposes are
             deferred until the Company's planned principal operations have
             commenced.

NOTE 7 - STOCKHOLDERS' EQUITY

              A summary of issuance of common stock involving non-cash
              consideration is as follows:

                   On April 1, 1997, the Company issued 449,200 shares of stock
                   in consideration for notes receivable due from related
                   parties (NOTE 4) of $4,492. The shares were sold at $.01 par
                   value per share.

                                     - 9 -


<PAGE>




                                CARDINAL AIRLINES
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

NOTE 7 - STOCKHOLDERS' EQUITY CONT.

                    On July 1, 1997, the Company issued 184,358 shares of stock
                    in consideration for notes receivable due from related
                    parties (NOTE 4) of $92,179. The shares were sold at $.01
                    par value per share, with $.50 per share consideration.
                    Through Sept 30, 1999, $14,000 was received in payment of
                    these notes (NOTE 4).

                    During the year ended June 30,1999, the Company issued
                    83,300 shares of stock in consideration for stock
                    subscriptions of $41,650. The shares were sold at $.01 par
                    value per share, with $.50 per share consideration. These
                    subscriptions were converted to a note receivable (NOTE 4).

              As of June 30, 1997, the Company's common stock had a par value
              $.01 per share with 50,000,000 shares authorized and 940,000
              shares issued and outstanding.

              As of Sept 30, 1998, the Company's common stock had a par value
              $.01 per share with 50,000,000 shares authorized and 1,301,400
              shares issued and outstanding.

              As of Sept 30, 1999, the Company's common stock had a par value
              $.01 per share with 50,000,000 shares authorized and 2,033,900
              shares issued and outstanding.

              A summary of issuance of preferred stock involving non-cash
              consideration is as follows:

                    On October 16, 1998, the Company issued 100,000 shares of
                    $.01 par value "Series A" preferred stock in consideration
                    for notes receivable due from related parties (NOTE 4) of
                    $1,000.

              As of Sept 30, 1999, the Company's preferred stock had a par value
              $.01 per share with 1,000,000 shares authorized. There are 100,000
              shares issued and outstanding as "Series A" preferred stock. The
              900,000 unissued shares have not been designated.

              The shares of "Series A" preferred stock have super voting rights
              at the multiple of 100 votes per share. In the event of
              liquidation, the preferred stock has preference over the common
              stock. The shares are not convertible into common stock and do not
              have any other rights or preferences.

                                     - 10 -


<PAGE>



                                CARDINAL AIRLINES
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

NOTE 8 - OFFERING

              On July 21, 1999, the Company issued its initial S-1 filing with
              the Securities and Exchanges Commission. This is an initial public
              offering of 2,000,000 shares of common stock for $10 per share.

                                     - 11 -



<PAGE>





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

            Results of Operations

            Cardinal is a development stage, airline company. Cardinal is
            considered to be in the development stage because we have devoted
            substantially all of our efforts to establishing the business plan,
            organization and raising capital.

            Since inception in February 1997 our efforts have principally been
            devoted to organization, development and raising capital. Cardinal
            has not received any revenues from flight services, and does not
            expect any of its flights to be commercially available until one
            month after 600,000 units are sold. From inception through
            September 30, 1999, we have sustained cumulative losses of $427,963
            of which $190,269 was for consulting fees, $156,237 was for
            professional fees, $32,595 for rent, $20,098 for supplies, $13,831
            for utilities, $4,587 in depreciation, $10,105 for miscellaneous
            expenses, and $241 in taxes. For the three months ended September
            30, 1999, we sustained a cumulative loss of $84,212 of which
            $36,484 was for consulting fees, $34,351 was for professional fees,
            $4,770 for rent, $5,185 for supplies, $2,053 for utilities, $513 in
            depreciation, $2,206 for miscellaneous expenses, and $0 in taxes.
            These losses have resulted primarily from expenditures incurred in
            connection with general and administrative activities, organization
            and development, trademark registration and offering costs.

            Between June 10, 1998,  and March 23, 1999,  Cardinal sold 506,200
            common shares for $0.50 per share to 34  purchasers  in a private
            placement.  We received a total of $253,100 in the private
            placement.

            We expect to incur substantial costs in the future resulting from
            the acquisition of aircraft, equipment, agreements with airport
            service providers such as baggage handling, and fuel service.
            Additional expenses will include airport facilities, maintenance
            costs, and marketing. There can be no assurance that Cardinal will
            ever achieve profitable operations.

            To date, Cardinal has not marketed or generated revenues from the
            commercialization of any service. Our current planned flights will
            not begin until at least one month after 600,000 units of this
            offering are sold. During this period following the sale of 600,000
            units, we expect to hire additional personnel. Depending on how
            rapidly units are sold, we may also be finalizing arrangements for
            aircraft which could increase the time in which scheduled operations
            would begin.

            Cardinal has only a limited operating history upon which an
            evaluation of its prospects can be based. The risks, expenses and
            difficulties encountered by companies at an early stage of
            development must be considered when evaluating Cardinal's prospects.
            To address these risks, Cardinal must, among other things,
            successfully develop and commercialize its services, secure all
            necessary proprietary rights, respond to competitive developments
            and continued government regulation, and continue to attract, retain
            and motivate qualified persons. There can be no assurance that we
            will be successful in addressing these risks. See "Risk Factors-
            Cardinal Has Not Begun Operations And There Is No Guarantee We Will
            Ever Operate As An Airline" for additional discussion of how the
            limited offering history may affect investment in Cardinal.

            Our operating expenses will depend on several factors, including the
            level of aircraft maintenance and repair expenses. Development of
            Cardinal's planned flights will depend upon economic factors which
            we cannot predict. Management may, in some cases, be able to control
            the timing of developmental expenses, in part, by controlling
            growth. As a result of these factors, we believe that
            period-to-period comparisons are not necessarily meaningful and
            should not be relied upon as an indicator of future performance. Due
            to all of the foregoing factors, it is possible that our operating
            results will be below the expectations of market

                                       12
<PAGE>

            analysts, if any, and investors. In such event, the prevailing
            market price, if any, of the common stock would likely be
            materially adversely affected.

            Cardinal entered into negotiations with Capstone Partners, Inc.,
            for selling agent and investment banking services.  Cardinal has
            signed an agreement with Capstone which will provide for the
            formation of a selling group and will solicite subscriptions on a
            best efforts bases. Under that Agreement, Capstone shall receive 10%
            compensation equal to 10% commissions on sales.

            Liquidity and Capital Resources

            Until such time that Cardinal receives the proceeds of this public
            offering or other financing, it will continue to operate on a
            limited basis. Our approximate monthly expenditures during this
            interim development period are approximately $17,000 per month.
            Without additional funding, Cardinal can maintain its present
            operating level through the end of December, 1999.

            Cardinal can delay the majority of the expenditures which are
            necessary to carry out its business plan until adequate funds are on
            hand or appear to be available. Put another way, Cardinal will delay
            incurring significantly greater costs than its present expenditures
            of $17,000 per month, such as additional personnel and the purchase
            or lease of aircraft, until funds are available from its public
            offering. The bulk of FAA certification expenses will be incurred
            when sufficient funds are available.

            Cardinal has incurred negative cash flows from operations since its
            inception. We have expended and expect to continue to expend in the
            future, substantial funds to complete our planned service
            development efforts. Our future capital requirements and the
            adequacy of available funds will depend on numerous factors
            including:

            o the successful commercialization of planned flights
            o obtaining sufficient funding to acquire aircraft and equipment
            o fuel price and availability
            o hiring qualified personnel
            o keeping pace with government regulation
            o obtaining adequate insurance
            o the development of contractual agreements with airports
            o the use of airport service providers

            Expenditures relating to aircraft and certification will be made
            prior to crew and maintenance salaries being incurred. If Cardinal
            determines that the offering is not likely to raise at least $5.35
            million, it will defer flight-related and certification expenses to
            seek additional financing or revise its business plan to provide for
            the use of less expensive aircraft.

            At such time as Cardinal sells 600,000 units, the proceeds of the
            offering would be used to commence operations by purchasing one MD
            80 Aircraft. $540,000 would be used for aircraft deposit. Over a
            period of three to nine months from the date of commencement,
            $1,037,902 would be used to staff operations at both Melbourne
            International Airport and Baltimore Washington International
            Airport. Approximately $1,140,459 would be used to finance flight
            operations beginning in the fifth month of operations. Fuel and
            maintenance expense totaling approximately $846,204 for the six
            month period would begin in the fifth month of operations. Beginning
            in the third month of operations, Cardinal would expend a total of
            $702,417 for advertising and initial promotions. During this period,
            Cardinal anticipates expending approximately $659,018 on general and
            administrative expenses, $50,000 for computer leases and software
            and $24,000 for key man insurance. FAA and DOT certification
            expenses are expected to be approximately $350,000 during the period
            of three to six months following commencement of operations.

            In the event our plans change or our assumptions change or prove to
            be inaccurate or the proceeds of our public offering prove to be
            insufficient to fund operations, we could be required to seek
            additional financing. The terms and prices of any additional
            financing may be significantly more favorable than those of the
            units sold in our public offering. Cardinal does not have any
            material committed sources of additional financing, and there can
            be no assurance that additional funding, if necessary, will be
            available on acceptable terms, if at all. If adequate funds are not
            available, we may be required to delay, scale back, or eliminate
            certain aspects of our operations. If adequate additional funds are
            not available, Cardinal's business, financial condition, and
            results of operations will be materially and adversely affected

                                       13

<PAGE>


            Cardinal may receive additional funding under the provisions
            pertaining to the exercise of the warrants which are part of the
            units offered herein. See "Warrants" for the terms of warrant
            exercise and pricing information.

       Currently, we have no plans to sell or issue any additional preferred
stock.

            The net proceeds from the sale of 600,000 units in our public
            offering is estimated to be the minimum amount necessary to begin
            operations. If fewer than 600,000 units are sold, then we would use
            the proceeds to pay the offering expenses and possibly commissions.
            Any remaining proceeds would be used to secure additional funding
            to implement Cardinal's business plan or to amend the plan and
            operate with less expensive aircraft or contract services.

            If less than 600,000 units are sold, as an alternative until we are
            able to receive our own certificate, Cardinal could contract its
            flight services to another company which holds a FAA Operators
            Certificate. If this occurs, Cardinal may be required to make
            certain deposits and bonds and would contract actual flight
            operations. The usual cost per aircraft operating hour is $3,000 to
            $5,000. Assuming average operating hours of 240 per month, the
            estimated monthly cost of using contracted flight services would
            range from approximately $720,000 to $ 1,200,000 per month. Costs
            vary widely depending on operating requirements, including the time
            of day and time of year. Contract flight service fees typically
            include flight crew, fuel, insurance and maintenance. This option
            could be accomplished with substantially fewer capital resources
            than required to begin independent flight operations with our own
            operating certificate.


       Year 2000

        Defective date programming in computer hardware and software might cause
        problems in the year 2000. Date errors may impact computer applications
        and also production resources, and the procedures of outside suppliers
        and independent contractors. Importantly, it is not always known where
        such date information is used.

               If all computer systems and imbedded computers on which we relied
        failed as a result of the Year 2000, the Company would be forced to
        cancel flights. In order to avoid this, Cardinal has entered into a
        letter of intent for its ticketing system and has received written
        assurance that this system is year 2000 compliant. Melbourne
        International Airport, Baltimore Washington International Airport and
        First Union Bank have also stated that they are Year 2000 compliant.
        The MD-80 series aircraft and the EQUALS Airline Computer Software
        system, are year 2000 compliant. We will continue to request written
        assurances of year 2000 compliance from all software, hardware and
        information technology vendors.

               Cardinal plans to conduct regular back-ups of ticket sales
        throughout 1999 and immediately prior to the year 2000 to preserve
        previously received reservations. We will not make significant changes
        in operation, such as adding destinations or flights, during the period
        immediately before and after December 31, 1999. As a contingency we
        will prepare to adjust flight schedules just as the FAA has stated it
        would reduce air traffic capacity before compromising the safety of the
        National Airspace System. The FAA has adopted the U.S. Government
        Accounting Office's recommended five-phase repair process to address
        the Year 2000 issue, the final phase is scheduled to be complete on
        June 30, 1999. Cardinal has complied with the FAA's Year 2000 5-Phase
        Repair Approach. The 5 phases are:

     1  Awareness
     2  Assessment
     3  Renovation
     4  Validation
     5  Implementation
                                       14
<PAGE>


Part II - Other Information

Item 6.  Exhibits and Reports on Form 8-K

            (a)     Exhibits

Exhibit                 Description                                        Page

(2)         Plan of Acquisition, Reorganization, Arrangement,
            Liquidation or Succession                                      None

(3)         Articles and By-Laws                                           None

(4)         Instruments defining the Rights of Security Holders            None

(10)        Material Contracts                                             None

(11)*       Statement re: Computation of Per Share Earnings           Note 1(G)
                                                                   to Financial
                                                                     Statements

(15)        Letter re: Unaudited Interim Financial Information             None

(18)        Letter re: Change in Accounting Principles                     None

(19)        Report Furnished to Security Holders                           None

(22)        Published Report re: Matters Submitted to Vote of
            Security Holders                                               None

(23)        Consents of Experts and Counsel                                None

(24)        Power of Attorney                                              None

(27)*       Financial Data Schedule

(99)        Additional Exhibits                                            None

   *Filed herewith
----------

                                   SIGNATURES

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

CARDINAL AIRLINES, INC.

SIGNATURE                                        TITLE               DATE


  /S/ Lawrence A. Watson
_________________________  President, Chairman of the Board   November 12, 1999
LAWRENCE A. WATSON         Chief Executive Officer




 /S/ H. Lawrence Mason
________________________   Secretary Treasurer,               November 12, 1999
H. LAWRENCE MASON          Chief Financial Officer

            Exhibit Index

Exhibit                 Description                                        Page

(2)     Plan of Acquisition, Reorganization, Arrangement,
        Liquidation or Succession                                          None

(3.5)   Articles and By-Laws

(4)     Instruments defining the Rights of Security Holders                None

(10)    Material Contracts                                                 None

(11)*   Statement re: Computation of Per Share Earnings               Note 1(G)
                                                                   to Financial
                                                                     Statements

(15)    Letter re: Unaudited Interim Financial Information                 None

(18)    Letter re: Change in Accounting Principles                         None

(19)    Report Furnished to Security Holders                               None

(23)    Published Report re: Matters Submitted to Vote of
        Security Holders                                                   None

(23)    Consents of Experts and Counsel                                    None

(24)    Power of Attorney                                                  None

(27)*   Financial Data Schedule

(99)    Additional Exhibits                                                None

   *Filed herewith