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


                                  Form 10-KSB/A


(Mark One)

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

For the fiscal year ended: September 30, 2006

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

For the transition period from ______________ to________________


Commission file number: 033-09472-D



                          E'PRIME AEROSPACE CORPORATION
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)


              Colorado                                         59-2802081
----------------------------------------                ------------------------
(State or other jurisdiction of                         (I.R.S. Employer
   incorporation or organization)                         Identification No.)


7627 Leesburg Pike #200, Falls Church, VA                         22043
----------------------------------------                ------------------------
(Address of principal executive offices)                        (Zip Code)


Issuer's telephone number: (321) 269 - 0900



Securities registered under Section 12(b) of the Exchange Act: None


Securities registered under Section 12(g) of the Exchange Act: Common Stock - No
Par Value



<PAGE>



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 [_]



Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]



Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).   Yes [_] No [X]



The issuer had zero ($0.00) revenues for its most recent fiscal year.



The  aggregate   market  value  of  the   registrant's   voting  stock  held  by
non-affiliates  of the registrant as of September 30, 2006 (based on the average
of the high and low bid quotations on that date) was $3,835,099.



As of September 30, 2006, the registrant has  outstanding  41,329,770  shares of
common stock and 623,590 "B" Stock Purchase Warrants.



                       DOCUMENTS INCORPORATED BY REFERENCE

Form 8K filed 8/25/06 and 3/9/2007 to respectively  report the change of control
of voting stock,  the  resignation of Directors,  election of a new Chairman and
Directors and Officers and removal and replacement of Directors are incorporated
by reference into Part II of this Quarterly Report on Form 10 KSB.



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


<PAGE>



                 E'PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)

                     Index to Annual Report on Form 10KSB


                                                                           Page

Part I

    Item  1 - Business                                                         4
    Item  2 - Properties                                                       5
    Item  3 - Legal Proceedings                                                5
    Item  4 - Submission of Matters to a Vote of Security Holders              6

Part II

    Item  5 - Market for the Registrant's Common Equity and Related
              Stockholder Matters                                              6
    Item  6 - Management's Discussion and Analysis of Financial
              Condition and Results of Operations                              6
    Item  7 - Financial Statements and Supplementary Data                      7
    Item  8 - Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosure                              7
    Item 8A - Controls and Procedures                                          7
    Item 8B - Other Information.                                               8

Part III

    Item  9 - Directors and Executive Officers                                 8
    Item 10 - Executive Compensation                                           9
    Item 11 - Security Ownership of Certain Beneficial Owners
              and Management                                                   9
    Item 12 - Certain Relationships and Related Transactions                  10

Part IV

    Item 13 - Exhibits and Reports on Form 8-K                                10
    Item 14 - Principal Accountant Fees and Services                          11

Index to Financial Statements                                                F-1


Signatures                                                                    29

<PAGE>


                                     PART I


Item 1. Description of Business.

     E'Prime  Aerospace  Corporation and Subsidiaries  (EPAC or the Company) was
established  in  February,  1987,  to  capitalize  on the  worldwide  demand for
commercial satellite launching services.

     In October,  1987, an agreement was signed with the United States Air Force
(USAF) which provided EPAC the use of technology based on the Peacekeeper  solid
fuel missile system.  As a result of this agreement,  EPAC began the development
of the Eagle Series of launch  vehicles.  Eagle  launch  vehicles are based on a
modular design of solid  propellant  booster stages and a  bi-propellant  liquid
upper stage.

     In early  1990,  the  Peacekeeper  first  stage  motor was  included in the
Strategic Arms Reduction Treaty (START) which was signed by both the governments
of the United States and the former Soviet Union.  Accordingly,  pursuant to the
execution  of this  treaty,  the Company was  severely  restricted  in producing
EPAC's  first stage  motor.  For nine  years,  EPAC's  development  concentrated
towards the  preservation  of the technology  developed  during the  Peacekeeper
program.

     EPAC is currently working to meet with the START Compliance Review Group to
resolve this issue and believes it will be resolved soon.

     EPAC is marketing a range of launch vehicles with payload capabilities from
small  communications  satellites up to large multipurpose  satellites of 20,000
pounds  into a  geosynchronous  earth  orbit.  Light to medium  lift single core
vehicles  will be launched  from a launch tube which propels the rocket some 200
feet into the air before the first stage is ignited.  This "cold launch"  method
increases  the payload  capability  by  approximately  10% and  prevents  costly
refurbishment  to the launch  facility.  Flight  hardware  for the Eagle  Series
launch  vehicles  will be  produced  by many of the  same  companies  that  were
responsible for the manufacture and supply of materials for the Peacekeeper.  By
utilizing the  experience of these  suppliers,  the track record of  reliability
experienced  during  the  Peacekeeper  missile  system  program  will be carried
forward into a commercial application.

     EPAC is  continuing  in its  efforts  to  evolving  the  technology  of the
Peacekeeper  ICBM  into a  commercial  launch  vehicle.  Based  on  developments
completed  through  November,  2003,  EPAC is now  proceeding  with  finance and
contract  negotiations.  While substantial  additional capital is needed for the
construction  of  commercial  launch  facilities,  management  is  confident  in



                                       4
<PAGE>



achieving this financial objective. Although EPAC has met its vehicle objective,
a  time-frame  for the  Company to  establish  profitable  operations  cannot be
determined at this time.

     Over the past several  years,  other  companies  have  developed a range of
launch vehicles  corresponding to the demand for commercial launch services. The
Company  currently  considers  its  principal   competitors  to  be  Arianespace
(Ariane),   Lockheed  Martin  (Atlas,  LLV),  Boeing  (Delta),  Orbital  Science
(Taurus), China (Longmarch) and several Russian programs.

     As of  September  30,  2006 the  company  had 1 full time  employees  and 3
consultants.


Item 2. Description of Property.

     The company leases its corporate office of approximately  3,000 square feet
in  Titusville,  FL and occupies  approximately  12,000 square feet of warehouse
space in Memphis, TN.

     Substantially  all of the development of the Company's launch technology as
well as management of overall operations is based in the corporate offices.  The
space in Memphis is used primarily to warehouse EPAC launch hardware and support
equipment  and will  provide  support  during  testing of the  Company's  launch
vehicle.

     During the year ended  September 30, 1993,  the Company  purchased  certain
launch and support equipment from an agency of the United States government.  As
a result of this  purchase,  a  substantial  amount of  additional  and  related
equipment was  transferred  to EPAC.  These  acquisitions  represent  savings of
millions  of dollars of  non-recurring  start-up  costs.  Most of the  equipment
received,  which is located at various facilities in the United States, consists
of the following:

Missile system hardware

     Support equipment  including  computer  hardware,  electronic  consoles and
launch  vehicle   transportation  and  handling  equipment  Specialized  tooling
associated with missile system hardware

     Most of the  equipment  acquired was primarily  associated  with the United
States'  government  Peacekeeper  missile  system.  EPAC  has  incorporated  the
Peacekeeper  technology  into the research and development of its launch systems
as more fully discussed in Item 1 of this filing.


Item 3. Legal Proceedings.

     The Company has been  subject to legal  proceedings  and claims  which have
arisen in the ordinary  course of business.  While these claims have not and are
not expected to have a material effect on the financial position of the Company,
several of the claims  from  vendors  have  resulted in  judgements  against the
company. As of September 30, 2006 these judgements total $158,971.


                                       5
<PAGE>



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

     None



                                     PART II


Item 5.  Market for Common Equity and Related Stockholder Matters.

     The Company's common stock is traded on the over-the-counter market. Market
makers and other dealers  provided bid and ask quotations of the Company's stock
and listed such  quotations  in the  National  Quotation  Bureau,  Inc.'s  "Pink
Sheets".

     The table below  presents the range of high and low bid  quotations  of the
Company's securities. The quotations represent prices between dealers and do not
include retail markup,  markdown,  or commissions;  hence, they do not represent
actual transactions.

                                   Quarter Ended
          ------------------------------------------------------------
           March 31          June 30        September 30      December 31
         ------------      ------------     ------------     ------------
Year     High     Low      High    Low      High     Low     High     Low
----    -----    -----    -----   -----    -----    -----   -----    -----
2006    .0036    .0020    .0022   .0021    .0110    .0110   .0050    .0070
2005    .0055    .0051    .0053   .0050    .0080    .0065   .0038    .0036
2004    .0120    .0110    .0150   .0150    .0095    .0095   .0095    .0095

     The number of  shareholders  of the Company's  common stock as of September
30, 2006 was 2,663.


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

Liquidity and capital resources

     As  indicated  herein,  the Company has expended  substantial  funds in the
development  of its  business  over the past several  years.  Sources of capital
during this time have included stock sales and advances from shareholders. As of
September 30, 2006, the Company has a working capital deficit of $9,241,695.

     In order to complete its development and reach full operational  capability
and, in order to satisfy existing  liabilities,  the Company will need to obtain
substantial additional capital.  Management is currently engaged in negotiations
to  secure  the  necessary  funds  to  complete  implementation  of  its  launch
technology,  repay  existing  liabilities  and fund  facility  construction.  In
addition,  the Company is concluding the  development of its marketing  strategy
(www.eprimeaerospace.com) and establishing a launching schedule.



                                       6
<PAGE>



Results of Operations

     Since  its  inception,  the  Company  has  been in the  development  stage.
Accordingly,  the Company has not generated any revenues from operations and has
not projected  significant revenues until its development stage is completed and
financing can be obtained for its  operations.  Through the year ended September
30,  2006,  the Company  has  incurred an  accumulated  deficit of  $21,472,606.
Expenditures related to salaries and wages have been incurred principally in the
development of the Company's launch technology systems.


Item 7. Financial Statements.

     The Financial Statements are filed as page F-1 of this Form 10 KSB


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

     None


Item 8A.   Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

     Our management,  with the participation of our Chief Executive Officer, our
CEO, and Chief Financial  Officer,  our CFO,  evaluated the effectiveness of our
disclosure controls and procedures as defined by Items 307 of Regulation S-B (17
CFR 228.307) and 308 of Regulation S-B (17 CFR 228.308) under the Securities and
Exchange Act as of September 30, 2006. Based on its evaluation,  our CEO and CFO
concluded that, as of September 30, 2006, our disclosure controls and procedures
were (1)  designed to ensure that  material  information  relating to us is made
known to our CEO and CFO by others within the Company,  particularly  during the
period in which this report was being prepared and (2)  effective,  in that they
provide reasonable  assurance that information required to be disclosed by us in
reports  that we  file or  submit  under  the  Securities  and  Exchange  Act is
recorded, processed, summarized, and reported with in the time periods specified
in the Securities and Exchange Commission's rules and forms.

     On August 21, 2006, Doug Oldham was appointed Chairman, President and Chief
Executive  Officer  of  E'Prime  Aerospace  Corporation  while  Jean  Oldham was
appointed  as Director and interim  Secretary.  Effective  August 21, 2006,  Bob
Davis, then-Chairman , Chief Executive Officer and President, while remaining as
a  Director,resigned  as Chairman,  CEO and  President,  Betty Davis resigned as
Director,  Secretary and Treasurer and Richard Elrod resigned as Director.  As a
result,  our new Board of  Directors  appointed  Leslie  Shealey as Acting Chief
Financial  Officer and  principal  accounting.  On March 9, 2007,  Bob Davis was
removed as a Director.  Mr.  Nicklous  Harron was appointed as a Director in his
place.



                                       7
<PAGE>



     In June 2007,  June Nichols was appointed as an additional  Director and as
Secretary/Treasurer,  Leslie Shealy resigned as Acting CFO and Chief  Accounting
Officer and Barry McFarland was appointed as an additional Director and as Chief
Financial Officer.

Changes in Internal Controls

     No change in our internal controls over financial  reporting (as defined in
Items 307 of Regulation  S-B (17 CFR 228.307) and 308 of Regulation  S-B (17 CFR
228.308)  under the  Securities  and Exchange  Act)  occurred  during the period
covered by this report that  materially  affected,  or is  reasonably  likely to
materially affect, our internal controls over financial reporting.

Item 8B. Other Information.

     None



                                    PART III

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

     The directors and executive officers of the Company and certain information
regarding them are as follows :

Name                      Age           Office
------------------        ---      ---------------------------------
James D. Oldham III        54      CEO, President and Chairman
Jean Oldham                55      Director and Secretary
B. G. Davis                72      Director

     James D. Oldham  presently  serves as  Director  and  President  of E'Prime
Aerospace Corp., and has played an integral part in E'Prime  operations for more
than ten years.  Oldham is a versatile and highly motivated  business  executive
with  more  than  thirty  years in  organizing  and  directing  results-oriented
organizations.  He was  president  of Omega Space  Systems  before  assuming his
current position with E'Prime Aerospace Corp.

     Oldham is a proven leader in the development of new ventures;  guiding them
from  inception  and  startup  to  successful   industry   leaders,   delivering
significant  bottom  line  results.  His  experience  encompasses  an  expansive
background in  manufacturing,  construction  and process systems - as well as in
business and labor  negotiations.  He currently manages all aspects of E'Prime's
strategic  planning,  including the assembly of a competent  management  team of
business and technical personnel with aerospace backgrounds



                                       8
<PAGE>



Item 10. Executive Compensation.

                                                              Other
  Name                       Year    Salary $   Bonus $    Compensation
  ----------------------    ------   --------   -------    ------------
  Salary Paid
  -----------

  James D. Oldham III        2006           0         0               0
  President

  B. G. Davis                2006           0         0               0
  Director                   2005           0         0               0

  Salary Accrued
  --------------
  James D. Oldham III        2006       9,000         0               0

  B. G. Davis                2006     299,039         0               0
                             2005     300,000         0               0
                             2004     300,000         0               0

  Betty Davis                2006     187,500         0               0
                             2005     250,000         0               0
                             2004     250,000         0               0
 ----------------------------


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

     The  following  table sets forth  information  regarding  ownership  of the
Company's common stock as of September 30, 2006: (i) each person who is known by
the Company to own  beneficially  more than five percent  (5%) of the  Company's
common stock; (ii) each of the Company's  directors;  and (iii) by all directors
and officers of the Company as a group.




                [Balance of this page intentionally left blank.]




                                       9
<PAGE>



                           Amount and Nature of
Name and Address of        Beneficial Owners         Percent of
 Beneficial Owner               (Shares)                Class
------------------------   --------------------      ----------
James D. Oldham III            19,340,000             46.79 %
Chairman, President
Millington, TN 38053

B. G. Davis                     4,500,000             10.89 %
Director
Titusville, Fl 32782

Richard Elrod                      57,500             00.14 %
Director (through 8/06)
Houston, TX 77269

All Directors and Officers
As a Group                     23,897,500             57.82 %
                               ==========             =======


Item 12. Certain Relationships and Related Transactions.

     During the five year period ended  September  30, 2006,  the  president and
principal  stockholder and certain  employees have made advances to the Company.
The  advances are  non-interest  bearing and were made  principally  for working
capital  purposes.  These advances are included in due to related parties in the
accompanying consolidated balance sheet.

     Also included in due to related  parties were unpaid salaries and wages net
of advances  made to directors  (officers  and  principal  stockholders)  of the
Company.  Due to issues  identified as a subsequent  event,  the Company will be
contesting the validity of amounts claimed by Bob and Betty Davis.


Item 13. Exhibits.
     Certificate of Incorporation. Filed in the Company's Registration Statement
on Form S-18 (File No. 33-9472-D) and incorporated herein by reference.

     Restated  By-laws  of the  Company.  Filed  in the  Company's  Registration
Statement  on  Form  S-18  (File  No.  33-9472-D)  and  incorporated  herein  by
reference.

(a) Exhibits included herein:

31.1    Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2    Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.1    Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
32.2    Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.



                                       10
<PAGE>



(b) Reports on Form 8-K:

     Form 8K filed 8/25/06

     Form 8K filed 3/9/2007


Item 14. Principal Accountant Fees and Services.

     The  Company  paid or accrued the  following  fees in each of the prior two
fiscal years to its principal accountant,  Kempisty & Company,  Certified Public
Accountants, PC, New York, New York.

                                2006              2005
                              --------          --------
Audit Fees                    $ 23,000          $ 14,500
Tax Preparation Fees          $   0.00          $   0.00
                              --------          --------
Total                         $ 23,000          $ 14,500

     The Company has no formal  audit  committee.  However,  the entire Board of
Directors (the "Board") is the Company's defacto audit committee. In discharging
its oversight  responsibility  as to the audit process,  the Board obtained from
the independent auditors a formal written statement describing all relationships
between  the  auditors  and  the  Company  that  might  bear  on  the  auditors'
independence  as  required  by  Independence  Standards  Board  Standard  No. 1,
"Independence  Discussions with Audit  Committees." The Board discussed with the
auditors any  relationships  that may impact their objectivity and independence,
including fees for non-audit services,  and satisfied itself as to the auditors'
independence.  The Board also discussed with management,  the internal  auditors
and the independent  auditors the quality and adequacy of the Company's internal
controls.  The Board reviewed with the  independent  auditors  their  management
letter on internal controls.

     The Board discussed and reviewed with the independent  auditors all matters
required to be discussed by auditing standards  generally accepted in the United
States of America,  including those described in Statement on Auditing Standards
No. 61, as amended,  "Communication  with Audit Committees".  The Board reviewed
the audited  consolidated  financial statements of the Company as of and for the
year ended September 30, 2006,  with  management and the  independent  auditors.
Management has the responsibility for the preparation of the Company's financial
statements  and  the  independent  auditors  have  the  responsibility  for  the
examination  of  those  statements.  Based  on the  above-mentioned  review  and
discussions with the independent auditors and management, the Board of Directors
approved the Company's audited consolidated financial statements and recommended
that they be  included  in its  Annual  Report on Form 10 KSB for the year ended
September 30, 2006, for filing with the Securities and Exchange Commission.  The
Board also  approved the  appointment  of Kempisty & Company,  Certified  Public
Accountants, PC as independent auditors to conduct the 2006 audit.

     The Company's principal  accountant,  Kempisty & Company,  Certified Public
Accountants,  PC did not  engage  any  other  persons  or firms  other  than the
principal accountant's full-time, permanent employees.


                                       11
<PAGE>



                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)

                                  CONSOLIDATED
                              FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2006


                                      INDEX

                                                                            PAGE

   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                   F-2

   CONSOLIDATED BALANCE SHEET                                                F-3

   CONSOLIDATED STATEMENTS OF OPERATIONS                                     F-4

   CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY                F-5

   CONSOLIDATED STATEMENTS OF CASH FLOWS                                     F-9

   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                               F-11





                                      F-1
<PAGE>



            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
E' Prime Aerospace Corporation and Subsidiaries
(A Development Stage Company)

We  have  audited  the  accompanying  consolidated  balance  sheet  of E'  Prime
Aerospace  Corporation  and  Subsidiaries  (A  Development  Stage Company) as of
September  30,  2006  and the  related  statements  of  operations,  changes  in
stockholders'  (deficit)  and cash  flows  for each of the years in the two year
period ended September 30, 2006 and the period October 1, 2002 through September
30, 2006.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.  The cumulative  statements of operations,  cash
flows, and changes in stockholders' equity (deficit) for the period February 20,
1986  (inception)  to September  30, 2002 which were  audited by other  auditors
whose reports have been furnished to us, and our opinion,  insofar as it relates
to the  amounts  included  for the  period  February  20,  1986  (inception)  to
September 30, 2002 is based solely on the reports of the other auditors.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material  misstatement.  The Company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  and based on the reports of other  auditors,  the  consolidated
financial statements referred to above present fairly, in all material respects,
the financial  position of E' Prime Aerospace  Corporation  and  Subsidiaries (A
Development  Stage  Company)  at  September  30,  2006  and the  results  of its
operations  and cash  flows for each of the years in the two year  period  ended
September 30, 2006 and for the period February 20, 1986 (inception) to September
30, 2006 in conformity  with  accounting  principles  generally  accepted in the
United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial  statements,  the  Company  is a  development  stage  company  with no
significant revenues, and has incurred losses since inception.  These conditions
raise  substantial  doubt  about its  ability to  continue  as a going  concern.
Management's  plans  regarding  those matters are also  described in Note 1. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.

/s/ Kempisty & Company CPA's PC
Kempisty & Company

Certified Public Accountants PC
New York, New York
date 7/3/07

                                      F-2
<PAGE>



<TABLE>
<CAPTION>
                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2006

<S>                                                              <C>
                ASSETS
Property and equipment, net (Note 6)                             $          1,000
                                                                 ----------------
             Total Assets                                        $          1,000
                                                                 ================

             LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
        Notes payable (Note 4)                                   $        232,000
        Accounts payable                                                    1,656
        Judgement payable                                                 158,971
        Accrued salaries and payroll taxes                              1,967,909
        Accrued interest                                                  419,922
        Accrued rent (related party)                                      285,000
        Accrued officers' salaries                                      5,064,619
        Accrued consulting fees                                            32,308
        Due to related parties
                                                                        1,079,311
                                                                 ----------------
             Total Current Liabilities                                  9,241,695

   Commitments and contingencies (Note 7)

Stockholders' Deficit

   Common stock, no par value, 900,000,000 shares authorized
    41,329,770 shares issued and outstanding (Note 5)                  12,019,911
   Additional paid-in capital                                             212,000
   Deficit accumulated during the development stage                   (21,472,606)
                                                                 ----------------
             Total Stockholders' Deficit                               (9,240,695)
                                                                 ----------------

             Total Liabilities and Stockholders' Deficit         $          1,000
                                                                 ================
</TABLE>

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

                                      F-3
<PAGE>


<TABLE>
<CAPTION>
                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                 Cummulative for
                                                For the Year Ended               the period from
                                                    September 30,              February 20, 1986
                                           --------------------------------      (Inception) to
                                             2006              2005            September 30, 2006
                                           ---------------   --------------   -------------------
<S>                                        <C>               <C>              <C>

  Service revenues                         $             -   $            -   $             5,000
                                           ---------------   --------------   -------------------
    Total revenues                         $             -   $            -   $             5,000

  Expenses
  Officers Salaries                                495,539          550,000             6,815,725
   Depreciation                                          -                -               199,807
  Interest expense                                  41,089           40,245             1,931,809
  General and administrative                       149,872           57,224            11,592,873
  Impairment of fixed assets                             -          232,654               232,654
  Write off of receivable from affiliate                 -                -             1,495,523
  Debt forgiveness                                       -                -             (790,785)
                                           ---------------   --------------   -------------------
    Total expenses                         $       686,500   $      880,123   $        21,477,606
                                           ---------------   --------------   -------------------
      Net loss                             $      (686,500)  $     (880,123)  $       (21,472,606)
                                           ===============   ==============   ===================
  Basic earnings per share
    Net loss per common share              $         (0.02)  $        (0.02)
                                           ===============   ==============
    Weighted average shares outstanding         41,329,413       41,313,523
                                           ===============   ==============
</TABLE>

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

                                      F-4
<PAGE>


<TABLE>
<CAPTION>
                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
       CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
   FOR THE PERIOD FEBRUARY 20, 1986 (DATE OF INCEPTION) TO SEPTEMBER 30, 2006

                                                                                               Deficit
                                                                                             Accumulated
                                              Common Stock                 Additional        During the            Total
                                      -------------------------------        Paid-in          Development       Stockholders'
                                       Shares           Amount               Capital             Stage        Equity (Deficit)
                                      --------------  ---------------    ---------------   ---------------   ----------------
<S>                                   <C>             <C>                <C>               <C>               <C>
Balances at  February 20, 1986                        $             -   $              -   $             -   $              -
Sale of common stock                         885,000           14,500                  -                 -             14,500
Net loss                                           -                -                  -            (3,196)            (3,196)
                                      --------------  ---------------   ----------------  ----------------   ----------------
Balances at  September 30, 1986              885,000  $        14,500   $              -  $         (3,196)  $         11,304

Shares issued for reverse acquisition     24,840,000              667                  -                 -                667
Recapitalization adjustment                        -          (15,632)                 -            15,624                 (8)
Sale of common stock                         625,000          250,000                  -                 -            250,000
Cost of public offering                            -          (47,732)                 -                 -            (47,732)
Net loss                                           -                -                  -          (606,700)          (606,700)
                                      --------------  ---------------   ----------------  ----------------   ----------------
Balances at  September 30, 1987           26,350,000  $       201,803   $              -  $       (594,272)  $       (392,469)

Sale of common stock                          45,800           83,730                  -                 -             83,730
Shares issued for services                    31,250           12,500                  -                 -             12,500
Shares issued for letter of credit           137,500          550,000                  -                 -            550,000
Shares issued for conversion of notes
                                             133,350           80,000                  -                 -             80,000
Net loss                                           -                -                  -        (2,453,390)        (2,453,390)
                                      --------------  ---------------   ----------------  ----------------   ----------------
Balances at  September 30, 1988           26,697,900  $       928,033   $              -  $     (3,047,662)  $     (2,119,629)

Sale of common stock                          30,000           30,000                  -                 -             30,000
Shares issued for warrants exercised         280,681          340,765                  -                 -            340,765
Shares issued for services                   836,133          257,350                  -                 -            257,350
Shares issued for interest expense            98,767          395,070                  -                 -            395,070
Contribution of capital                            -                -            145,000                 -            145,000
Net loss                                           -                -                  -        (2,217,971)        (2,217,971)
                                      --------------  ---------------   ----------------  ----------------   ----------------
Balances at  September 30, 1989           27,943,482  $     1,951,218   $        145,000  $     (5,265,633)  $     (3,169,415)
Shares issued for services                    83,516           16,703                  -                 -             16,703
Shares issued for loan financing fee       3,000,000          600,000                  -                 -            600,000
Contribution of capital                            -                -             67,000                 -             67,000
Net loss                                           -                -                  -        (1,653,373)        (1,653,373)
                                      --------------  ---------------   ----------------  ----------------   ----------------
Balances at  September 30, 1990           31,026,998  $     2,567,921   $        212,000  $     (6,919,006)  $     (4,139,085)
</TABLE>

                                  (Continued)

                                      F-5
<PAGE>


<TABLE>
<CAPTION>
                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
       CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
   FOR THE PERIOD FEBRUARY 20, 1986 (DATE OF INCEPTION) TO SEPTEMBER 30, 2006

                                                                                               Deficit
                                                                                             Accumulated
                                              Common Stock                 Additional        During the            Total
                                      -------------------------------        Paid-in          Development       Stockholders'
                                       Shares           Amount               Capital             Stage        Equity (Deficit)
                                      --------------  ---------------    ---------------   ---------------   ----------------
<S>                                   <C>             <C>                <C>               <C>               <C>

Sale of common stock                          60,000           12,000                  -                 -             12,000
Net loss                                           -                -                  -          (583,416)          (583,416)
                                      --------------  ---------------   ----------------  ----------------   ----------------
Balances at  September 30, 1991           31,086,998  $     2,579,921   $        212,000  $     (7,502,422)  $     (4,710,501)

Sale of common stock                          67,000           23,650                  -                 -             23,650
Shares issued for services                    24,425            7,235                  -                 -              7,235
Net loss                                           -                -                  -          (581,794)          (581,794)
                                      --------------  ---------------   ----------------  ----------------   ----------------
Balances at  September 30, 1992           31,178,423  $     2,610,806   $        212,000  $     (8,084,216)  $     (5,261,410)

Sale of common stock                         472,702          675,859                  -                 -            675,859
Shares issued for services                    37,293           33,552                  -                 -             33,552
Shares issued for interest expense            30,000           35,000                  -                 -             35,000
Shares issued for settlement of
  litigation                                  37,500           75,000                  -                 -             75,000
Shares issued for loan financing  fee        750,000          150,000                  -                 -            150,000
Net loss                                           -                -                  -          (796,478)          (796,478)
                                      --------------  ---------------   ----------------  ----------------   ----------------
Balances at  September 30, 1993           32,505,918  $     3,580,217   $        212,000  $     (8,880,694)  $     (5,088,477)
Sale of common stock                         869,871        1,359,342                  -                 -          1,359,342
Shares issued for services                   252,248          482,323                  -                 -            482,323
Shares issued for loan financing fee           5,000           10,000                  -                 -             10,000
Net loss                                           -                -                  -        (1,488,390)        (1,488,390)
                                      --------------  ---------------    ---------------   ---------------   ----------------
Balances at  September 30, 1994           33,633,037  $     5,431,882    $       212,000   $   (10,369,084)  $     (4,725,202)

Sale of common stock                          93,396          141,100                  -                 -            141,100
Shares issued for services                    74,999          149,998                  -                 -            149,998
Shares issued for financing fee              105,000          208,000                  -                 -            208,000
Net loss                                           -                -                  -          (595,164)          (595,164)
                                      --------------  ---------------    ---------------   ---------------   ----------------
Balances at  September 30, 1995           33,906,432  $     5,930,980    $       212,000   $   (10,964,248)  $     (4,821,268)
</TABLE>

                                  (Continued)

                                      F-6
<PAGE>


<TABLE>
<CAPTION>
                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
       CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
   FOR THE PERIOD FEBRUARY 20, 1986 (DATE OF INCEPTION) TO SEPTEMBER 30, 2006

                                                                                               Deficit
                                                                                             Accumulated
                                              Common Stock                 Additional        During the            Total
                                      -------------------------------        Paid-in          Development       Stockholders'
                                       Shares           Amount               Capital             Stage        Equity (Deficit)
                                      --------------  ---------------    ---------------   ---------------   ----------------
<S>                                   <C>             <C>                <C>               <C>               <C>

Sale of common stock                          50,000           27,154                  -                 -             27,154
Shares issued for services                    89,477           77,477                  -                 -             77,477
Shares issued for repayment of debt          327,500          127,200                  -                 -            127,200
Net loss                                           -                -                  -          (802,181)          (802,181)
                                      --------------  ---------------    ---------------   ---------------   ----------------
Balances at  September 30, 1996           34,373,408  $     6,162,811    $       212,000   $   (11,766,429)  $     (5,391,618)

Shares issued for services                   276,849          350,717                  -                 -            350,717
Shares issued for repayment of debt           16,301           13,040                  -                 -             13,040
Net loss                                           -                -                  -          (901,002)          (901,002)
                                      --------------  ---------------    ---------------   ---------------   ----------------
Balances at  September 30, 1997           34,666,558  $     6,526,568    $       212,000   $    (12,667,431) $     (5,928,863)
Shares issued for services                   247,872          102,585                  -                 -            102,585
Shares issued for repayment of debt          206,667           78,600                  -                 -             78,600
Net loss                                           -                -                  -          (898,814)          (898,814)
                                      --------------  ---------------    ---------------   ---------------   ----------------
Balances at  September 30, 1998           35,121,096  $     6,707,753    $       212,000   $    (13,566,245) $     (6,646,492)
Shares issued for services                   158,810          128,608                  -                 -            128,608
Shares issued for repayment of debt        2,179,905          806,804                  -                 -            806,804
Net loss                                           -                -                  -        (1,454,072)        (1,454,072)
                                      --------------  ---------------    ---------------   ---------------   ----------------
Balances at  September 30, 1999           37,459,812  $     7,643,165    $       212,000   $   (15,020,317)  $     (7,165,152)

Shares issued for services                   563,650        1,510,855                  -                 -          1,510,855
Shares issued for settlement of
  litigation                                 550,000        1,040,023                  -                 -          1,040,023
Shares issued for repayment of debt          500,000          100,000                  -                 -            100,000
Net loss                                           -                -                  -        (2,579,591)        (2,579,591)
                                      --------------  ---------------    ---------------   ---------------   ----------------
Balances at  September 30, 2000           39,073,462  $    10,294,043    $       212,000   $   (17,599,908)  $     (7,093,865)
</TABLE>

                                  (Continued)

                                      F-7
<PAGE>


<TABLE>
<CAPTION>
                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
       CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
   FOR THE PERIOD FEBRUARY 20, 1986 (DATE OF INCEPTION) TO SEPTEMBER 30, 2006

                                                                                               Deficit
                                                                                             Accumulated
                                              Common Stock                 Additional        During the            Total
                                      -------------------------------        Paid-in          Development       Stockholders'
                                       Shares           Amount               Capital             Stage        Equity (Deficit)
                                      --------------  ---------------    ---------------   ---------------   ----------------
<S>                                   <C>             <C>                <C>               <C>               <C>

Shares issued for services                   129,136          107,740                  -                 -            107,740
Net loss                                           -                -                  -          (887,239)          (887,239)
                                      --------------  ---------------    ---------------   ---------------   ----------------
Balances at  September 30, 2001           39,202,599  $    10,401,783    $       212,000   $   (18,487,147)  $     (7,873,364)

Shares issued for services                   108,846           51,255                  -                 -             51,255
Sale of common stock                         101,263           51,758                  -                 -             51,758
Net loss                                           -                -                  -          (660,178)          (660,178)
                                      --------------  ---------------    ---------------   ---------------   ----------------
Balances at  September 30, 2002           39,412,708  $    10,504,796    $       212,000   $   (19,147,325)  $     (8,430,529)

Common stock issued for settlement
  of debt                                  1,699,254         1,426,922                 -                 -          1,426,922
Common stock issued for services              41,346            18,245                 -                 -             18,245
Sale of common stock                         146,462            65,548                 -                 -             65,548
Net loss                                           -                 -                 -           (58,095)           (58,095)
                                      --------------  ---------------    ---------------   ---------------   ----------------
Balances at  September 30, 2003           41,299,770  $    12,015,511    $       212,000   $   (19,205,420)  $     (6,977,909)

Common stock issued for services              10,000            2,400                  -                 -              2,400
Net loss                                           -                -                  -          (700,563)          (700,563)
                                      --------------  ---------------    ---------------   ---------------   ----------------
Balances at  September 30, 2004           41,309,770  $    12,017,911    $       212,000   $   (19,905,983)  $     (7,676,072)

Common stock issued for services              10,000            1,000                  -                 -              1,000
Net loss                                           -                -                  -          (880,123)          (880,123)
                                      --------------  ---------------    ---------------   ---------------   ----------------
Balances at  September 30, 2005           41,319,770  $    12,018,911    $       212,000   $   (20,786,106)  $     (8,555,195)

Common stock issued for services              10,000            1,000                  -                 -              1,000
Net loss                                           -                -                  -          (682,489)          (682,489)
                                      --------------  ---------------    ---------------   ---------------   ----------------
Balances at  September 30, 2006           41,329,770  $    12,019,911    $       212,000   $   (21,468,595)  $     (9,236,684)
                                      ==============  ===============    ===============   ===============   ================
</TABLE>

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

                                      F-8
<PAGE>


<TABLE>
<CAPTION>
                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                            Cummulative
                                                                                                        for the period from
                                                                 For the Year Ended September 30,       February 20, 1986
                                                           ---------------------------------------       (Inception) to
                                                                2006                 2005               September 30, 2006
                                                           ------------------   -------------------   ----------------------
<S>                                                        <C>                  <C>                   <C>
Operating Activities
       Net loss                                            $         (686,500)  $          (880,123)  $         (21,472,606)
Adjustments to reconcile net loss to net cash (used)
  by operating activities:

      Depreciation and amortization                                         -                     -                  199,807
      Loss on disposition of vehicles and equipment                         -                     -                   32,683
      Loss on sale of asset held for sale                                   -                     -                   14,000
      Write-off of amount due from affiliate                                -                     -                   39,021
      Write-off of Accrued expenses                                         -                     -                 (711,333)
      Impairment of fixed assets                                                            232,654                  232,654
      Debt forgiveness                                                      -                     -                 (825,785)
      Shares issued for services rendered                               1,000                 1,000                3,312,210
      Shares issued for interest and finance fee                            -                     -                1,948,070
      Shares issued for settlement of litigation                            -                     -                1,115,023
Changes in operating assets and liabilities:
      Accrued consulting fees                                               -                     -                  123,866
      Due to related parties                                            4,011                     -                3,817,481
      Accrued salaries-officers                                       495,539               550,000                2,225,554
      Accounts payable                                                 33,964                  (687)                 401,417
      Accrued salaries, wages and payroll taxes                        10,259               (24,432)               2,063,857
      Judgements payable                                                5,445                 5,445                   21,804
      Accrued interest payable                                         35,644                34,800                1,391,582
      Accrued expenses                                                      -                     -                  783,332
      Accrued rent                                                     36,000                36,000                  285,000
                                                           ------------------   -------------------   ----------------------
         Net cash (used) by operating activities                      (64,639)              (45,343)              (5,002,364)

Investing Activities:
      Equipment acquisitions                                                -                     -                 (493,908)
      Proceeds from disposition of vehicles                                 -                     -                   30,307
      Proceeds from sale of asset held for sale                             -                     -                   46,000
      Increase in asset held for sale                                       -                     -                  (60,000)
      Advances to affiliate                                                 -                     -                  (39,021)
      Organization costs                                                    -                     -                   (2,544)
                                                           ------------------   -------------------   ----------------------
        Net cash (used) by investing activities                             -                     -                 (519,166)

Financing Activities:
      Proceeds from issuance of notes payable                               -                     -                2,156,683
      Advances from shareholders and others                            64,639                45,343                1,347,092
      Repayment of notes payable                                            -                     -               (1,206,954)
      Proceeds from Exercise of Warrants                                    -                     -                  340,765
      Additional paid-in capital                                            -                     -                  212,000
      Proceeds from issuance of common stock                                -                     -                2,671,944
                                                           ------------------   -------------------   ----------------------
        Net cash provided by financing activities                      64,639                45,343                5,521,530
                                                           ------------------   -------------------   ----------------------
      (Decrease) in cash                                                    -                    -                         -
      Cash at beginning of period                                           -                    -                         -
                                                           ------------------   -------------------   ----------------------
      Cash at end of period                                $                -   $                 -   $                    -
                                                           ==================   ===================   ======================
</TABLE>

                                  (Continued)

                                      F-9
<PAGE>

<TABLE>
<CAPTION>
                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)



                                                                      For the Year Ended
                                                                         September 30,
                                                               -------------------------------
                                                                  2006             2005
                                                               --------------   --------------
<S>                                                            <C>              <C>
Supplemental Disclosures of Cash Flow Information

Cash paid during year for:

   Interest                                                    $            -   $            -
                                                               ==============   ==============
   Income taxes                                                $            -   $            -
                                                               ==============   ==============
</TABLE>



<TABLE>
<CAPTION>
                                                                                                                Cummulative
                                                                             For the Year Ended             for the period from
                                                                                September 30,                February 20, 1986
                                                       Number        -----------------------------------      (Inception) to
                                                      Of Shares         2006         2005        2004       September 30, 2006
                                                   --------------   ------------ ------------ ------------  --------------------
<S>                                                <C>              <C>          <C>          <C>           <C>

   Non-cash investing and
           financing activities:
Common stock issued for services                          10,000    $      1,000                            $              1,000
Common stock issued for services                          10,000                 $      1,000               $              1,000
Common stock issued for services                          10,000                              $      2,400  $              2,400
Common stock issued for services                       2,955,852                                            $          3,307,143
Repayment of debt                                      2,798,122                                            $          1,640,406
Conversion of notes                                      133,350                                            $             80,000
Settlement of litigation                                 587,500                                            $          1,115,023
Exercise of warrants                                     280,681                                            $            340,765
Payments to officers                                   2,131,504                                            $            912,160
Payment of interest and finance charges                4,126,267                                            $          1,948,070
Common stock merger issued for reverse                                                                      $                667
acquisition                                           24,840,000
                                                   --------------   ------------ ------------ ------------  --------------------

Total                                                 37,883,276    $      1,000 $      1,000 $      2,400  $          9,348,634
                                                   =============    ============ ============ ============  ====================
</TABLE>

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



                                      F-10
<PAGE>



                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2006


NOTE 1 - ORGANIZATION AND OPERATIONS

E'Prime Aerospace  Corporation (the Company or EPAC) has been in the development
stage since its  incorporation  in Florida on February 20, 1986.  The Company is
engaged in seeking to provide a reliable and comprehensive payload and satellite
launching service to industry and government, both domestic and foreign.

On October 12, 1987, the Company was acquired by E'Prime  Aerospace  Corporation
(Colorado),   formerly  known  as  Bangor  Investments,   Inc.,  in  a  business
combination  accounted  for  as  a  reverse  acquisition.  Technically,  E'Prime
Aerospace  Corporation  (Colorado) (E'Prime - Colorado) issued 24,840,000 of its
share  for the  Company.  Prior  to the  combination,  E'Prime  -  Colorado  had
30,200,000 shares  outstanding of which 17,700,000 shares had been issued to its
organizer  for  $14,500  and  12,500,000  shares  had  been  issued  in a public
offering. The proceeds of the public offering, net of cost of the offering, were
$202,267.  During the period,  E'Prime - Colorado was in existence  prior to the
reverse  acquisition,  its only  activity  was to raise  equity  capital for the
purpose of  acquiring  other  entities and it had incurred a deficit of $15,631.
Thus, at the date of the reverse acquisition,  E'Prime - Colorado had net assets
of $201,136. For accounting purposes, the reverse acquisition is reflected as if
the Company issued it nature and principally consisted of a loan to the Company.

On July 1, 1992, the Company formed E'Prime Aerospace  Corporation of Delaware a
non-operating subsidiary.

Going Concern

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of  liabilities  in the normal  course of  business.  The Company  has  suffered
recurring  losses from  operations,  has incurred  significant  acquisition  and
operating debt,  which is in default,  and has a net capital  deficiency,  which
raises substatial doubt about its ability to continue as a going concern.

Management intends to seek equity and/or debt financing in the form of a private
placement  or a public  offering  to provide  additional  equity  capital.  Such
additional financing may not be available to the Company, when and if needed, or
on acceptable terms if at all.

The ability of the Company to continue as a going  concern is  dependent  on the
success of these actions,  The consolidated  financial statements do not include
any adjustments  that might be necessary if the company is unable to continue as
a going concern.


                                      F-11
<PAGE>


                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2006


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated  financials  include the accounts of the Company and its wholly
owned subsidiaries.  All significant intercompany transactions and balances have
been eliminated in consolidation.

Depreciation

Depreciation of property and equipment is computed by the  straight-line  method
over the estimated useful lives of the assets.  The Company for 2006 has charged
$0 and $0 for 2005 and thereafter has ceased  depreciating  its equipment.  This
launching  equipment is being held in storage and will be  depreciated  over its
estimated useful life when put into use.

Long-Lived Assets

Long-lived  assets  are  evaluated  for  impairment  when  events or  changes in
circumstances  indicate  that  the  carrying  amount  of the  assets  may not be
recoverable through the estimated undiscounted future cash flows from the use of
these assets.  When any such impairment  exists,  the related assets are written
down to fair value.  During  fiscal  2005 the company  wrote down its launch and
support equipment based upon this evaluation (See Note 6).

Income Taxes

The Company uses the asset and liability  method of accounting for income taxes.
Under the asset and liability  method,  deferred tax assets and  liabilities are
recognized for the future tax consequences  attributable to differences  between
the financial statements carrying amounts of existing assets and liabilities and
their  respective tax bases.  Deferred tax assets and  liabilities  are measured
using  enacted  tax rates  expected  to apply to taxable  income in the years in
which those temporary  differences are expected to be recovered or settled.  The
effect  on  deferred  tax  assets  and  liabilities  of a change in tax rates is
recognized  in income in the  period  that  includes  the  enactment  date.  The
deferred tax assets  resulting  principally  from operating losses have not been
recognized.

Loss Per Share

Basic and diluted net loss per common shares has been calculated  based upon the
weighted average number of common shares  outstanding.  The B warrants described
in  Note  5  have  been   excluded  from  the   computation   because  they  are
anti-dilutive.


                                      F-12
<PAGE>


                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2006


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Accordingly, actual results could differ from those estimates.

Common Stock issued for Services or Payment of Debt

Common  stock  issued for  services  or in payment  of debt is  recorded  at the
estimated value of the stock at the dates of issuance based upon reported market
prices or the value of the services.

Recent Accounting Pronouncements

The adoption of recent accounting  pronouncements by the Company did not have an
impact on its  consolidated  results of operations,  financial  position or cash
flows.


NOTE 3 - RELATED PARTY TRANSACTIONS

The president and principal stockholder and certain employees have made advances
to the Company.  The advances are non-interest bearing and were made principally
for working  capital  purposes.  These  advances  are included in due to related
parties in the accompanying consolidated balance sheet.

Included in accrued  officers  salaries were unpaid  salaries and wages,  net of
advances made to directors, officers and principal stockholders of the Company.

Due to  information  revealed as a  subsequent  event,  the  Company  intends to
dispute the validity of amounts claimed by ceertain officers and directors.

During  the year ended  September  30,  2006 the  amount due to related  parties
increased by $68,650 for a total of $1,079,311.  The increase was from operating
expenses paid by an officer/stockholder.


                                      F-13
<PAGE>


                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2006


NOTE 4 - NOTES PAYABLE

Notes payable at September 30, 2006 and 2005 consist of:

Note payable at 15% interest, collateralized by fixed assets   $     142,500
Note payable at 15% interest, collateralized by fixed assets          52,500
Other notes payable at 15% interest                                   37,000
                                                               -------------
     Total Notes Payable                                       $     232,000
                                                               =============

All notes  payable are in default and are  classified  as current  assets on the
balance sheet.


Note 5 - COMMON STOCK

As a subsequent event on 3/21/07, the Company announcesd a 20:1 reverse split of
its outsanding  common shares.  All associated  stock  references in this report
have been adjusted for the impact of this reverse split.

The Company  issued  10,000  shares of common stock during fiscal 2006 and 2005,
valued at $1,000 and $1,000,  respectively,  for  consulting  services  rendered
during such years.

As of September  30, 2004,  the Company had  outstanding  Series B warrants that
entitle the holder to purchase  one share of common  stock at $0.20 per share on
or at any time  before  December  31,  2004.  On  December  6, 2004 the Board of
Directors  extended  the B warrant  expiration  date to December  31,  2005.  In
December 2006, the Board of Directors voted not to extend the B warrants.

The Company has the right to redeem the Series B warrants  upon 30 days  written
notice, at $0.0002 per warrant, during the respective periods which the warrants
are  exercisable.  As of September 30, 2006,  there were 623,590 shares reserved
for warrant exercise.





                                      F-14
<PAGE>


                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2006


NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

                                              September 30,
                                          2006           2005
                                       -----------  -----------
Launch and support equipment           $   233,654  $   233,654
Furniture and fixtures                      57,432       57,432
Computer equipment                          34,014       34,014
                                       -----------  -----------
                                           325,100      325,100
Less: Accumulated depreciation            (324,100)    (324,100)
                                       -----------  -----------
                                       $     1,000  $     1,000
                                       ===========  ===========

The Company has purchased certain launching and support equipment from an agency
of the  U.S.  Government  for  $233,654.  Most  of the  equipment  acquired  was
associated with the U.S. Government's discontinued  "Peacekeeper" missile system
and is located at various facilities in the United States.

Since the equipment is presently not being  utilized,  the Company has not begun
recording  depreciation  on these  assets.  However,  as a result of a review of
long-lived  assets during fiscal 2005, the Company recorded an impairment charge
of $232,654 on this  equipment.  Additionally,  this equipment is collateral for
two outstanding notes payable (See Note 4).


NOTE 7 - COMMITMENTS AND CONTINGENCIES

The Company maintains its principal offices in Titusville,  Florida.  Currently,
the office space is leased on a month to month basis.

Additionally,  the Company stores  equipment in a warehouse in Memphis,  TN at a
cost of $3,000 per month,  since  October,  1998. No rent has been paid to date.
The rent payable per the rental agreement at September 30, 2006 is $285,000.

Total  rental  expense  was $52,557  for the year ended  September  30, 2005 and
$45,213 for the year ended September 30, 2005.

As a subsequent  event,  in May 2007,  the Company  issued  4,320,000  shares of
Common  Stock to Oldham Crane & Rigging as payment for $216,000 of past due rent
expense.


                                      F-15
<PAGE>


                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2006


NOTE 8 - INCOME TAXES

Due to the  Company's net loss,  there was no provision  for income  taxes.  The
Company  has net  operating  loss carry  forwards  for income  tax  purposes  of
approximately  $9,100,000 at September 30, 2006.  These carry forward losses are
available to offset future taxable income,  if any, and expired  starting in the
year 2003.  The  Company's  utilization  of this carry  forward  against  future
taxable  income may become  subject to an annual  limitation due to a cumulative
change in ownership of the Company of more than 50 percent.

The components of the Company's tax provision were as follows:

                                                 September 30,
                                              2006           2005
                                          -----------   ------------
Current income tax (benefit) expense      $   201,000   $    259,000
Deferred income tax expense (benefit)        (201,000)      (259,000)
                                          -----------   ------------
                                          $         -   $          -
                                          ===========   ============

The reconciliation of the income tax computed at the U.S. Federal statutory rate
to income tax expense for the periods ended September 30, 2006 and 2005:

                                                           September 30,
                                                         2006       2005
                                                      ----------  ---------
Tax expense (benefit) at Federal rate (34%)               -34.0%     -34.0%
State and local income tax, net of Federal benefit         -6.0%      -6.0%
Change in valuation allowance                              40.0%      40.0%
                                                      ----------  ---------
     Net income tax (benefit) allowance                        -          -
                                                      ==========  =========

Deferred income taxes reflect the net income tax effect of temporary differences
between  the  carrying  amounts  of the  assets and  liabilities  for  financial
reporting  purposes and amounts used for income taxes.  The  Company's  deferred
income tax assets and liabilities consist of the following:

                                             September 30,
                                          2006           2005
                                      -------------  -------------
Deferred tax asset:
  Net operating loss carry forward    $   3,586,000  $   3,700,000
  Valuation allowance                    (3,586,000)    (3,700,000)
                                      -------------  -------------
          Net deferred tax assets     $           -  $           -
                                      =============  =============

                                      F-16
<PAGE>


                 E' PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2006


NOTE 8 - INCOME TAXES (Continued)

The Company has  recognized  no income tax benefit for the losses  generated for
the periods through September 30, 2006.

SFAS No. 109  requires  that a  valuation  allowance  be  provided if it is more
likely  than not that some  portion or all of a  deferred  tax asset will not be
realized. The Company's ability to realize the benefit of its deferred tax asset
will depend on the generation of future taxable income.  Because the Company has
yet to recognize  significant revenue from the sale of its products, it believes
that the full valuation  allowance should be provided.  The valuation  allowance
decreased  approximately  $114,000  in fiscal 2006 and  decreased  approximately
$100,000 in fiscal 2005.


NOTE 9 - SUBSEQUENT EVENTS

On March 9, 2007 the Board of  Directors  removed Bob Davis as a Director.  This
action  was  taken by the  Board as a result  of an  independent  review  of the
activities of certain  Officers and  Directors.  The  investigation  showed that
certain  Officers  and  Directors  claimed  ownership  and  control of  numerous
companies   including  USTM,  Inc.,  Space  Plane  Systems,   Inc.  and  E'Prime
Development Group, Inc. that were in direct competition with E'Prime. The report
further  revealed  that E'Prime  resources  and assets were  utilized to support
these ventures.  These actions were undertaken  without disclosure to either the
public or  E'Prime's  auditors and in  violation  of SEC  regulations  governing
actions of related parties.  As a result of these findings,  the company will be
contesting  certain  amounts  claimed as accrued salary and loans due to Bob and
Betty Davis.

On March 21, 2007 the  Company  announces a 20:1  reverse  split of  outstanding
Common  Stock.  This  reverse  took  effect on May 9,  2007.  All stock  related
calculations have been adjusted for this event.

As a subsequent  event,  in May 2007,  the Company  issued  4,320,000  shares of
Common  Stock to Oldham Crane & Rigging as payment for $216,000 of past due rent
expense (see note 7).





                                      F-17
<PAGE>



                                   SIGNATURES

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


                   E'Prime Aerospace Corporation (Registrant)

         By: /s/ James D Oldham III
             ------------------------------------------
                  James D Oldham III, CEO

         Date: July 17, 2007


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


                          E'Prime Aerospace Corporation
                                  (Registrant)

         By: /s/ James D Oldham III
             ------------------------------------------
              James D Oldham III, CEO

         Date: July 17, 2007


         By: /s/ Barry McFarland
             ------------------------------------------
              Barry McFarland, CFO

         Date: July 17, 2007



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