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



                                   FORM 10-Q

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

                  For the quarterly period ended March 31, 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 March 31, 2000 was 2,033,900.






<PAGE>




                             Cardinal Airlines, Inc.
                               Index to Form 10-Q


Part I - Financial Information                                            Page


Item 1.  Financial Statements (unaudited)

   Condensed Balance Sheet - March 31, 2000...................................2

   Condensed Statements of Operations - Three Months
   Months Ended March 31, 2000 and 1999
   and for the period February 10, 1997 (Date of
   Inception) through March 31, 2000..........................................3

   Condensed Statements of Cash Flows - Three Months Ended
   March 31, 2000 and 1999 and for the period
   February 10, 1997 (Date of Inception) through March 31, 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



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


                                                 For the three months ended
                                                          March 31
                                                  2000                  1999
                                             ------------         ------------

 CURRENT ASSETS
 Cash                                      $       3,867        $       43,377
 Interest Receivable                              11,807                 5,808
                                           -------------        --------------
     TOTAL CURRENT ASSETS                         15,674                49,185

 PROPERTY AND EQUIPMENT, net                       6,055                 6,053

 DEPOSITS                                          4,200                 4,200
                                            -------------        --------------
     TOTAL ASSETS                          $      25,928        $       59,438
                                            =============        ==============

 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 CURRENT LIABILITIES
 Accounts payable                          $      37,429        $            -
                                                                             -
                                           -------------         --------------
     TOTAL LIABILITIES                     $      37,429                     -

 COMMITMENTS                                          0                     0

                                            -------------        --------------
 TOTAL LIABILITIES AND COMMITMENTS         $      37,429        $            -
                                            =============        ==============

 TOTAL STOCKHOLDERS' EQUITY, (DEFICIT)
 including deficit accumulated during the
 development stage of $333,705                   (11,500)               59,438
                                            -------------        --------------

      TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY (DEFICIT)                     $      25,929        $       59,438
                                           =============        ==============







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

                                      - 1 -
<PAGE>








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

<CAPTION>
                                         FEBRUARY 10, 1997           FOR THE THREE MONTHS ENDED
                                           (INCEPTION) TO                   MARCH 31
                                           MARCH 31, 2000           2000                   1999

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

 REVENUES                                 $          -         $             -       $              -

                                          --------------       ----------------      ------------------
 EXPENSES

     Consulting Fees                           205,119                  10,250                 37,300
     Professional Fees                         186,924                  14,286                 50,983
     Rent                                       42,135                   4,770                  3,975
     Supplies                                   21,728                   1,330                  3,857
     Utilities                                  19,610                   2,029                  2,089
     Depreciation and amortization               5,602                     512                  1,194
     Miscellaneous                              12,503                   1,565                  3,552
     Taxes                                         503                     137                      -
                                          --------------       ----------------      -----------------
                                               494,124                  34,879                102,950
 OTHER INCOME
     Interest Income                            11,807                     380                  1,936
                                          --------------       ----------------      -----------------
 NET (LOSS) before provision for
 income taxes                             $   (482,317)        $       (34,499)      $       (101,014)

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

 NET (LOSS)                                $  (482,317)        $       (34,499)      $       (101,014)
                                          ==============       ================      =================

  Net loss per share                      $      (0.24)        $         (0.02)      $          (0.05)
                                          ==============       ================      =================

 Shares used in computing net
 loss per share                              2,033,900               2,033,900              2,031,200
                                          ==============       ================      =================

</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
                                  (Unaudited)

<TABLE>
<CAPTION>

                                        FEBRUARY 10, 1997     FOR THE THREE MONTHS ENDED
                                         (INCEPTION) TO               MARCH 31
                                        MARCH 31, 2000             2000               1999
                                     --------------------  -----------------   ----------------

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

Cash paid for operating expenses       $     (482,317)      $     (34,499)     $     (101,014)
                                        ---------------     ---------------    ----------------

     NET CASH USED IN OPERATING
     ACTIVITIES:                             (482,317)            (34,499)           (101,014)
                                        ---------------     ---------------    ----------------

CASH FLOWS FROM INVESTING
ACTIVITIES:

Purchase of property and equipment            (11,664)                   0               0
Increase in security deposits                  (4,200)                   0               0
                                        ---------------     ---------------    ----------------
     NET CASH USED IN INVESTING
     ACTIVITIES                               (15,864)                   0                 0
                                        ---------------     ---------------    ----------------

CASH FLOWS FROM FINANCING
ACTIVITIES:

Issuance of common stock                      406,029                                  99,089
Increase in notes receivable -
     related parties                           37,077                                       -
Payments on notes receivable -
     related parties                           58,942              36,433                   -
                                        ---------------     ---------------    ----------------

     NET CASH PROVIDED BY FINANCING
     ACTIVITIES                               502,048              36,433              99,089
                                        ---------------     ---------------    ----------------

NET INCREASE (DECREASE) IN CASH                 3,867               1,934             (1,925)
     CASH AT BEGINNING OF PERIOD                    -               1,933              45,302
                                        ---------------     ---------------    ----------------
CASH AT END OF PERIOD                   $       3,867       $       3,867      $       43,377
                                        ===============     ===============    ================


</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
                                  (Unaudited)
<TABLE>
<CAPTION>


                                       FEBRUARY 10, 1997          FOR THE THREE MONTHS ENDED
                                        (INCEPTION) TO                     MARCH 31
                                       MARCH 31, 2000              2000                 1999
                                    -----------------------      --------------   -------------

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

Net loss                                $    (488,522)      $     (34,631)     $     (100,275)

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

   Depreciation and amortization                5,602                 512                1,197
   Increase in receivables                    (11,807)               (380)              (1,936)

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


       NET CASH USED IN
       OPERATING ACTIVITIES             $    (482,317)      $      (34,499)    $      (101,014)
                                        ===============     ===============    ================


</TABLE>


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

                                      - 4 -

<PAGE>






                                CARDINAL AIRLINES
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 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
                                 MARCH 31, 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 March 31, 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 March 31, 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
              March 31, 2000, the Company has Sixty-Two Stockholders.

                                      - 6 -



<PAGE>




                                CARDINAL AIRLINES
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2000

NOTE 3 - PROPERTY AND EQUIPMENT


                                                   February 10, 1997
                                                     (inception) to
                                          March 31, 2000          March 31,1999

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

     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                             (5,610)              (5,610)
                                            ------------         ------------
                                           $       6,055        $       6,055
                                            ============        =============

         Depreciation and amortization expense was $512 for the three month
         period ended March 31, 2000; and $5610 for the period from
                               February 10, 1997 (Inception) to March 31, 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:

        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 March 31, 2000         (115,400)
                                                                    ----------

                                                                   $    7,921

                                                                    ==========

                                      - 7 -


<PAGE>




                                CARDINAL AIRLINES
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2000

NOTE 4 - RELATED PARTIES CONT.

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


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 $3,975 for the three month period ended March 31,
              2000 and 1999 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 interest.


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
                                 MARCH 31, 2000

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 March 31, 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
                                 MARCH 31, 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.
                    Through Dec 31, 1999, $115,400 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 March 31, 1999, the Company's common stock had a par value
              $.01 per share with 50,000,000 shares authorized and 2,031,200
              shares issued and outstanding.

              As of March 31, 2000, 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 March 31, 2000,  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
                                 MARCH 31, 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 March 31, 2000, we have
          sustained cumulative losses of $482,317 of which $205,119 was for
          consulting fees, $186,924 was for professional fees, $42,135 for rent,
          $21,728 for supplies, $19,610 for utilities, $5,602 in depreciation,
          $12,503 for miscellaneous expenses, and $503 in taxes. For the three
          months ended March 31, 2000, we sustained a cumulative loss of $34,499
          of which $10,250 was for consulting fees, $14,286 was for professional
          fees, $4,770 for rent, $1,330 for supplies, $2,029 for utilities, $512
          in depreciation, $1,565 for miscellaneous expenses, and $137 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.

          As of March 31, 2000, we have sold 2,700 Units of the public offering
          for $27,000.00.

          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 July 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 within the next
          six months, we may be required to delay for up to a year or more,
          scale back, or eliminate certain aspects of our operations. If
          adequate additional funds are not available, aircraft other than MD-80
          may need to be used, and may need to be leased rather than purchased,
          in which case 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.

         Compensation

          On March 20, 2000, the Cardinal entered into an agreement with Mr.
          Bruce Nierenberg in which Mr. Nierenberg joined the Board of Directors
          of the company. According to the agreement, Mr. Nierenberg received
          150,000 shares of the common stock of Cardinal. At the beginning of
          the second consecutive year of his term as a member of the Board, he
          will also receive an option to purchase 20,000 shares of common stock
          at 80% of the IPO price or $8.00 per share. After his second
          consecutive year as a member of the Board, he will receive an option
          to purchase 20,000 shares of the common stock of Cardinal at 80% of
          the market price of the common stock at the beginning of the year for
          each year that he serves on the Board.


                                       14

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Part II - Other Information

Item 2.  Change in Securities and Use of Proceeds.

On February 23, 2000, Registrant agreed to issue 150,000 common shares to Bruce
Nierenberg in consideration of his agreeing to serve as a director. The Company
also agreed to issue an option to purchase 20,000 shares per year for each year
(beginning the second year) Mr. Nierenberg served as diretor at an exercise
prcie or $8.00 per share, exercisable for a period of two (2) years. The shares
will be issued in a private transaction which is exempt from registration
pursuant to the Securities Act of 1933.


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

(10.1)      Agreement with Bruce Nierenberg

(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

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                                   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  May 14, 2000
LAWRENCE A. WATSON         Chief Executive Officer

 /S/ H. Lawrence Mason
________________________   Secretary Treasurer, May 14, 2000
H. LAWRENCE MASON          Chief Financial Officer

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