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, 2000

                                       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 September 30, 2000 was 2,033,900.

<PAGE>

                             Cardinal Airlines, Inc.
                               Index to Form 10QSB


Part I - Financial Information                                            Page


Item 1.  Financial Statements (unaudited)

   Condensed Balance Sheet - September 30, 2000...............................2

   Condensed Statements of Operations - Three Months
   and Six Months Ended September 30, 2000 and 1998
   and for the period February 10, 1997 (Date of
   Inception) through September 30, 2000......................................3

   Condensed Statements of Cash Flows - Six Months Ended
   September 30, 2000 and 1998 and for the period
   February 10, 1997 (Date of Inception) through September 30, 2000...........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>
Part I   Financial Information
Item 1.  Financial Statements


<TABLE>

                             CARDINAL AIRLINES, INC.
                          (A Development Stage Company)
                                 BALANCE SHEETS


                                                                   For the three months ended
                                                                           September 30
                                                                   2000                  1999
                                                                ------------         ------------
                                                                            unaudited
 <S>                                                          <C>                  <C>
 CURRENT ASSETS
 Cash                                                          $       4,122        $        1,034
 Interest Receivable                                                       0                10,096
                                                               -------------        --------------
     TOTAL CURRENT ASSETS                                              4,122                11,130

  NOTE  RECEIVABLE                                                     3,500

 PROPERTY AND EQUIPMENT, net                                           5,023                 7,078

 DEPOSITS                                                              9,200                 4,200
                                                               -------------        --------------
     TOTAL ASSETS                                              $      21,845        $       22,408
                                                               =============        ==============

 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 CURRENT LIABILITIES
 Accounts payable                                              $      36,617        $       85,721
                                                                                                 -
                                                               -------------        --------------
     TOTAL LIABILITIES                                         $      36,617                85,721

 COMMITMENTS                                                          52,000                 5,000

                                                               -------------        --------------
             TOTAL LIABILITIES AND COMMITMENTS                 $      88,617        $       90,721
                                                               =============        ==============

 TOTAL STOCKHOLDERS' EQUITY, (DEFICIT)
 including deficit accumulated during the
 development stage of $333,705                                       (66,772)             (68,313)
                                                               -------------        --------------

      TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY (DEFICIT)                                         $      21,845        $       22,408
                                                               =============        ==============





</TABLE>


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

                                                       - 1 -
<PAGE>


<TABLE>

                             CARDINAL AIRLINES, INC.
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS


                                         FEBRUARY 10, 1997           FOR THE THREE MONTHS ENDED
                                           (INCEPTION) TO                   SEPTEMBER 30
                                           SEPTEMBER 30, 2000        2000                   1999
<S>                                       <C>                  <C>                   <C>
                                          --------------       ----------------      ------------------
 REVENUES                                 $          -         $             -       $              -
                                          --------------       ----------------      ------------------
 EXPENSES

     Consulting Fees                           205,856                  24,321                 36,484
     Professional Fees                         230,515                  51,575                 34,351
     Rent                                       51,675                   4,770                  4,770
     Supplies                                   23,669                   2,247                  5,185
     Utilities                                  22,919                   2,032                  2,053
     Depreciation and amortization               6,642                     514                    513
     Miscellaneous                              10,208                       0                  2,206
     Taxes                                         608                      50                      -
                                          --------------       ----------------      -----------------
                                               552,092                  85,509                 85,562
 OTHER INCOME
     Interest Income                            11,870                       0                  1,350
                                          --------------       ----------------      -----------------
 NET (LOSS) before provision for
 income taxes                             $   (540,222)        $       (85,509)      $       (84,212)

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

 NET (LOSS)                               $   (540,222)        $       (85,509)      $       (84,212)
                                          ==============       ================      =================

  Net loss per share                      $      (0.25)        $         (0.04)      $         (0.04)
                                          ==============       ================      =================

 Shares used in computing net
 loss per share                              2,189,700               2,189,700             2,033,900
                                          ==============       ================      =================

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

                                                       - 2 -
</TABLE>
<PAGE>


<TABLE>

                                              CARDINAL AIRLINES, INC.
                                           (A Development Stage Company)
                                              STATEMENT OF CASH FLOW


                                        FEBRUARY 10, 1997     FOR THE THREE MONTHS ENDED
                                         (INCEPTION) TO               SEPTEMBER 30
                                        SEPTEMBER 30, 2000        2000               1999
<S>                                  <C>                   <C>                 <C>
                                     --------------------  -----------------   ----------------

CASH FLOWS FROM
OPERATING ACTIVITIES:


Cash paid for operating expenses       $     (533,580)      $     (84,995)     $      (84,212)
 Increase in accounts payable                  36,617              10,866
                                        ---------------     ---------------    ----------------

     NET CASH USED IN OPERATING
     ACTIVITIES:                             (496,963)            (74,129)           (84,212)
                                        ---------------     ---------------    ----------------

CASH FLOWS FROM INVESTING
ACTIVITIES:

Purchase of property and equipment            (11,664)                   0                 0
Increase in security deposits                  (9,200)                   0                 0
                                        ---------------     ---------------    ----------------
     NET CASH USED IN INVESTING
     ACTIVITIES                               (20,864)                   0                 0
                                        ---------------     ---------------    ----------------

CASH FLOWS FROM FINANCING
ACTIVITIES:

Issuance of common stock                      473,450              -2,000              27,000
Increase in notes receivable -
     related parties                           (3,500)                                    762
Increase in Notes Payable                      52,000              50,000              47,111
Payments on notes receivable -
     related parties                                0                   0               5,000
                                        ---------------     ---------------    ----------------

     NET CASH PROVIDED BY FINANCING
     ACTIVITIES                               521,950              48,000              79,873
                                        ---------------     ---------------    ----------------

NET INCREASE (DECREASE) IN CASH                 4,122             (26,129)            (4,339)
     CASH AT BEGINNING OF PERIOD                    0              30,251              5,373
                                        ---------------     ---------------    ----------------
CASH AT END OF PERIOD                   $       4,122       $       4,122      $       1,034
                                        ===============     ===============    ================


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

                                                       - 3 -
</TABLE>
<PAGE>

<TABLE>

                                              CARDINAL AIRLINES, INC.
                                           (A Development Stage Company)
                                              STATEMENT OF CASH FLOW


                                       FEBRUARY 10, 1997    FOR THE THREE MONTHS
                                       (INCEPTION) TO         ENDED SEPTEMBER 30
                                       SEPTEMBER 30, 2000          2000              1999
<S>                                   <C>                   <C>               <C>
                                      --------------------  ----------------- -----------------


RECONCILIATION OF NET LOSS TO NET
CASH USED IN OPERATING ACTIVITIES:

Net loss                                $    (540,222)      $     (85,509)     $      (84,212)

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

   Depreciation and amortization                6,642                 514                513
   Increase in payables                        36,617              10,866             (1,350)
   Increase in receivables                                                             3,735
                                        ---------------     ---------------    ----------------


       NET CASH USED IN
       OPERATING ACTIVITIES             $    (496,963)      $      (74,129)    $      (81,314)
                                        ===============     ===============    ================


</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, 2000

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, 2000

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, 2000 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, 2000, 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, 2000, the Company has Sixty-Two Stockholders.

                                                       - 6 -


<PAGE>

<TABLE>

                                                 CARDINAL AIRLINES
                                           (A Development Stage Company)
                                           NOTES TO FINANCIAL STATEMENTS
                                                SEPTEMBER 30, 2000

NOTE 3 - PROPERTY AND EQUIPMENT


                                                              Feburary 10, 1997
                                                                (inception) to

                                                    September 30, 2000   September 30,1999
<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                                  (6,641)              (4,415)
                                                     ---------------      ---------------
                                                     $       5,023        $       7,249
                                                     ===============      ===============
</TABLE>

    Depreciation  and  amortization  expense was $514 for the three month period
   ended  Sept.  30,  2000;  and $6,641 for the period  from  February  10, 1997
   (Inception) to September 30, 2000.

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, 2000, 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
              $0.00 as of June 30, 2000.




                                                       - 7 -

<PAGE>




                                                 CARDINAL AIRLINES
                                           (A Development Stage Company)
                                           NOTES TO FINANCIAL STATEMENTS
                                                SEPTEMBER 30, 2000



NOTE 5 - COMMITMENTS AND CONTINGENCIES

              The Company leases its facilities from an unrelated third party
              under an operating lease expiring July, 2001. Rent expense was
              $4,770 and $2,915 for the three month period ended September 30,
              2000 and 1999 respectively.


         NOTE 6 - INCOME TAXES

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

                                          Year Ended           Year Ended
                                         June 30, 1999        June 30, 1998
<S>                                      <C>                 <C>
  Income tax benefit at statutory Rate   $    (113,460)      $       (8,068)
  Increase in valuation Allowance              113,460                8,068

  Actual income taxes                    $           -       $            -
</TABLE>



                                                       - 8 -
<PAGE>

<TABLE>

                                                 CARDINAL AIRLINES
                                           (A Development Stage Company)
                                           NOTES TO FINANCIAL STATEMENTS
                                                SEPTEMBER 30, 2000

NOTE 6 - INCOME TAXES CONT.

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

                                          June 30, 1999        June 30, 1998

<S>                                      <C>                 <C>
   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)    $            -       $            -

</TABLE>

         A summary of the net operating loss carry forwards 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, 2000, 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, 2000

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.


              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 Dec 31, 1998, the Company's common stock had a par value
              $.01 per share with 50,000,000 shares authorized and 1,712,400
              shares issued and outstanding.

              As of Dec 31, 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 Dec 31, 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, 2000

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, 2000, we have sustained  cumulative losses of
   $447,818  of  which  $194,869  was  for  consulting  fees,  $172,638  was for
   professional  fees,  $37,365  for rent,  $20,398  for  supplies,  $17,581 for
   utilities,  $5,090 in depreciation,  $10,938 for miscellaneous  expenses, and
   $366 in taxes.  For the three months ended September 30, 2000, we sustained a
   cumulative loss of $29,960 of which $4,600 was for consulting  fees,  $16,401
   was for  professional  fees,  $4,770 for rent, $300 for supplies,  $3,750 for
   utilities, $512 in depreciation, $833 for miscellaneous expenses, and $125 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
   solicit 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 April 1, 2000.

    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  September 30, 2000. 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
 <PAGE>
                                       14



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


<PAGE>
                                   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    February 14, 2000
LAWRENCE A. WATSON         Chief Executive Officer

 /S/ H. Lawrence Mason
________________________   Secretary Treasurer,                February 14, 2000
H. LAWRENCE MASON          Chief Financial Officer
<PAGE>

                                  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


 This schedule contains summary financial  information  extracted from Financial
Statements  for the three (3) months ended  September 30, 2000, and is qualified
in its  entirety by  reference  to such form 10-QSB for  quarterly  period ended
September 30, 2000.