UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to __________
Commission File Number: 333-28249
PRIME AIR, INC.
(Exact name of Registrant as specified in charter)
NEVADA Applied For
State or other jurisdiction of I.R.S. Employer I.D. No.
incorporation or organization
Ste 601 - 938 Howe Street, Vancouver, British Columbia, CANADA V6Z 1N9
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (604) 684-5700
Check whether the Issuer (1) has 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 fling requirements for the past 90 days. (1) Yes
[X] No [ ] (2) Yes [X] No [ ]
State the number of shares outstanding of each of the Issuer's classes of
common equity as of the latest practicable date: At September 30, 2001, there
were 21,022,666 shares of the Registrant's Common Stock outstanding.
PART I
ITEM 1. FINANCIAL STATEMENTS
The financial statements attached hereto and included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or
omitted.
However, in the opinion of management, all adjustments (which include only
normal recurring accruals) necessary to present fairly the financial position
and results of operations for the periods presented have been made. The
results for interim periods are not necessarily indicative of trends or of
results to be expected for the full year. These financial statements should
be read in conjunction with the financial statements and notes thereto
included in the Company's annual report on Form 10-KSB for the year ended
December 31, 2000.
PRIME AIR INC.
(A Development Stage Company)
(A Nevada Corporation)
Consolidated Financial Statements
September 30, 2001 and 2000
(Unaudited - Prepared by Management)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Shareholders' Equity and Deficit
Consolidated Statements of Cash Flows
Consolidated Notes to Financial Statements
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(all figures in US dollars)
(UNAUDITED - SEE NOTICE TO READER)
September 30 September 30
2001 2000
(Unaudited) (Unaudited)
ASSETS
Current Assets
Cash and short-term deposits $ 5,211 $ 5,340
Prepaid expenses and deposit 2,501 1,953
GST recoverable 630 4,964
8,342 12,257
Capital Assets (Note 4) 528,298 546,666
$ 536,640 $ 558,923
LIABILITIES
Current Liabilities
Accounts payable and accruals $ 221,191 $ 182,031
Notes and advances payable (Note 5) 39,017 9,809
260,208 191,840
SHAREHOLDERS' EQUITY
Capital Stock (Note 6)
Authorized:
150,000,000 common shares with a
stated par value of $ .001/share
3,000,000 preferred cumulative convertible
shares with a stated par value of $ .001/share
Issued:
21,022,666 common shares 21,023 21,023
(September 30, 2000 19,647,560)
Capital in excess of par value 1,652,977 1,647,779
1,674,000 1,668,802
Accumulated Deficit During
Development Stage (1,397,568) (1,301,719)
276,432 367,083
$ 536,640 $ 558,923
Approved on Behalf of the Board:
"Blaine Haug"
"Wayne Koch"
See Accompanying Notes
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(all figures in US dollars)
(UNAUDITED - SEE NOTICE TO READER)
Nine Months Nine Months
Ended September 30 Ended September 30
2001 2000
(Unaudited) (Unaudited)
Administrative and General
Amortization $ 14,233 $ 15,107
Insurance 1,393 195
Interest and service charges 155 404
Legal 6,445 6,354
Office and general 9,860 736
Rent - airport facility 9,101 10,240
Repair and maintenance 66 3,180
Telephone and utilities 3,154 3,180
Transfer agent and filing fees 4,476 6,940
48,883 46,336
Other Income (Expense)
Gain (loss) on foreign exchange conversion 4,959 1,921
Net Loss (43,925) (44,415)
Net Loss Per Common Share $ 0.0021 $ (0.0023)
Weighted Average Common Shares Outstanding 21,022,666 19,396,106
(Giving effect to 2:1 share split)
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(all figures in US dollars)
(UNAUDITED - SEE NOTICE TO READER)
Nine Months Nine Months
Ended September 30 Ended September 30
2001 2000
(Unaudited) (Unaudited)
NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES:
OPERATING
Net loss $ (43,925) $ (44,415)
Deficit Quarter 4 - year 2000 (51,924) -
Non-cash charge - amortization 14,233 15,107
(81,616) (29,308)
Change in non-cash working capital
balances relating to operations 42,945 (61,954)
(38,671) (91,262)
FINANCING
Notes and advances payable 29,208 (29,352)
Issue of capital stock 5,198 122,231
34,406 92,879
INVESTING
Recovery on Capital Assets 4,135 3,251
NET CASH INFLOW (OUTFLOW) (129) 4,868
CASH, BEGINNING OF PERIOD 5,340 472
CASH, END OF PERIOD $ 5,211 $ 5,340
See Accompanying Notes
Consolidated Statements of Shareholders' Equity and Deficit
Capital in Accumulated
Excess of Share Deficit During
Common Shares (Less than) Subscriptions Development
Shares Amount Par Value Receivable Stage
Balance at Inception on
March 10, 1989 - $ - $ - $ - $ -
Issue of common shares for cash
at $ .001/share 630,237 630 - - -
Net loss for the year ended
March 31, 1990 - - - - (17,956)
Balance, March 31, 1990 630,237 630 - - (17,956)
Issue of common shares for cash
at $ .001/share 157,559 158 - - -
Net loss for the year ended
March 31, 1991 - - - - (49,419)
Balance, March 31, 1991 787,796 788 - - (67,375)
Net loss for the year ended
March 31, 1992 - - - - (10,990)
Balance, March 31, 1992 787,796 788 - - (78,365)
Issue of common shares for cash
at $ .277/share 132,088 132 36,499 - -
at $ .214/share 17,069 17 3,628 - -
Net loss for the year ended
March 31, 1993 - - - - (38,426)
Balance, March 31, 1993 936,953 937 40,127 - (116,791)
Issue of common shares for services
at nominal value 92,173 92 (92) - -
Issue of common shares for cash
at $ .001/share 300,000 300 - - -
at $ .109/share 3,340 3 361 - -
at $ .154/share 23,634 24 3,619 - -
at $ .280/share 19,401 19 5,400 - -
at $ .330/share 23,161 23 7,624 - -
at $ .463/share 87,445 88 40,330 - -
at $ .694/share 15,756 16 10,907 - -
at $ .925/share 7,878 8 7,274 - -
Net loss for the year ended
March 31, 1994 - - - - (36,272)
Balance, March 31, 1994 1,509,741 $ 1,510 $ 115,550 $ - $ (153,063)
Issue of common shares for services
at nominal value 937,478 937 (937) - -
Issue of common shares for cash
at $ .374/share 248,692 249 92,697 - -
at $ .463/share 304,089 304 140,286 - -
Net loss for the period ended
June 28, 1994 - - - - (40,947)
Balance, June 28, 1994 3,000,000 3,000 347,596 - (194,010)
Share subscription at $ .367/share - - (7,313) (20) -
Net loss for the period ended
December 31, 1994 - - - - (135,530)
Balance, December 31, 1994 3,000,000 3,000 340,283 (20) (329,540)
Issue of common shares for cash
and/or services at an average
of $ .234/share 562,550 563 131,192 - -
Net loss for the year ended
December 31, 1995 - - - - (71,266)
Balance, December 31, 1995 3,562,550 3,563 471,475 (20) (400,806)
Issue of common shares for cash
at $ .500/share 1,510,558 1,511 753,769 - -
Issue of common shares for services
at nominal value 1,483,673 1,483 - - -
Net loss for the year ended
December 31, 1996 - - - - (238,416)
Balance, December 31, 1996 6,556,781 $ 6,557 $ 1,225,244 $ (20) $ (639,222)
Issue of common shares for services
at nominal value 328,000 328 - - -
Issue of common shares for
debt settlements:
at $ .500/share 124,252 124 62,001 - -
at $ .504/share 36,380 36 18,303 - -
at $ .530/share 94,800 95 50,192 - -
Net loss for the year ended
December 31, 1997 - - - - (189,697)
Balance, December 31, 1997 7,140,213 7,140 1,355,740 (20) (828,919)
Issue of common shares for
debt settlements:
at $ .3935/share 10,000 10 3,863 - -
at $ .4006/share 18,215 18 7,279 - -
Issue of common shares for services
at nominal value 1,663,727 1,664 - - -
8,832,155 8,832 1,366,882 (20) (828,919)
Two for one stock split, May 18, 1998 8,832,155 8,832 (8,832) - -
17,664,310 17,664 1,358,050 (20) (828,919)
Issue of common shares for
debt settlements:
at $ .25/share 64,800 65 16,135 - -
Issue of common shares for services
at nominal value 290,000 290 - - -
Transfer Agent adjustment (6,000) (6) - - -
Write off of uncollectable share
subscription receivable - - 7,313 20 -
Net loss for the year ended
December 31, 1998 - - - - (151,268)
Balance, December 31, 1998 18,013,110 $ 18,013 $ 1,381,498 $ - $ (980,187)
Issue of common shares for
debt settlements:
at $ .20/share 201,250 202 40,048 - -
at $ .25/share 423,200 423 105,377 - -
Issue of common shares for services
at nominal value 1,010,000 1,010 - - -
Net loss for the year ended
December 31, 1999 - - - - (277,117)
Balance, December 31, 1999 19,647,560 19,648 1,526,923 - (1,257,304)
Issue of common shares for cash:
at $ .08/share 500,000 500 39,500 - -
Issue of common shares for
debt settlements:
at $ .08/share 4,100 4 324 - -
at $ .10/share 871,006 871 86,230 -
Net loss for the year ended
December 31, 2000 (96,336)
Net loss for nine months ended
September 30, 2001 - - - - (43,925)
Balance, September 30, 2001 21,022,666 $21,023 $1,652,977 $ - ($1,397,565)
See Accompanying Notes To Financial Statements
PRIME AIR INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001
(UNAUDITED - SEE NOTICE TO READER)
1. Incorporation and Principles of Consolidation
The Company was incorporated under the laws of the State of Delaware, USA on
April 15. 1997 and acquired all of the assets, liabilities and shareholders of
a previous Utah Corporation of the same name. The Utah Corporation was
reincorporated on August 30, 1993 as Astro Enterprises, Inc. On June 28,
1994, pursuant to appropriate shareholder agreements, Astro Enterprises, Inc.
acquired all outstanding shares of Prime Air Inc. (a Canadian Corporation) in
exchange for shares of its capital stock on a .787796 to 1 basis, thereby
providing the shareholders of Prime Air Inc. with 90% of the outstanding
capital stock of Astro Enterprises, Inc. Astro Enterprises, Inc. then changed
its name to Prime Air, Inc. Upon incorporation of the Delaware Company, the
Utah Corporation was dissolved on May 15, 1996.
On November 10, 1996, Prime Air Inc (a Nevada corporation) was formed, the
purpose of which will be to change the domicile of the Company to the State of
Nevada. Prime Air Inc (Nevada) is a wholly-owned subsidiary of Prime Air Inc
(Delaware); however, to September 30, 2001 it has engaged in no activities
except in relation to the organization of that entity.
These consolidated financial statements include the accounts of the Company
and its wholly-owned operating subsidiary, Prime Air Inc. (the Canadian
Corporation) and have been prepared in accordance with U.S. GAAP standards.
2. Nature of Operations / Going Concern Considerations
The Company is presently in its developmental stage and currently has minimal
sources of revenue to provide incoming cash flows to sustain future
operations. The Company's present activities relate to the construction and
ultimate exclusive operation of an international passenger and cargo air
terminal facility in the Village of Pemberton, British Columbia and the
operation of scheduled flight services between that facility and certain major
centers in Canada and the United States in conjunction with Voyageur Airways
Limited. Terminal building construction was substantially completed in May
1996. The future successful operation of the Company is dependent upon its
ability to obtain the financing required to complete the terminal construction
and commence operation thereof on an economically viable basis.
These consolidated financial statements have been prepared on a "going
concern" basis which assumes the company will be able to realize its assets,
obtain the required financing and discharge its liabilities and commitments in
the normal course of business.
PRIME AIR INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001
(UNAUDITED - PREPARED BY MANAGEMENT)
3. Significant Accounting Policies
Capital Assets
Air Terminal Construction Costs: Expenditures relating directly to the
construction of the air terminal facility and related engineering and design
have been recorded in the accounts of the Company at cost, net of amortization
thereof which is provided on a straight-line basis over the 30 year term of
the property lease.
Furniture and Equipment: Furniture and equipment are stated at cost, net of
amortization which is provided for at the rate of 20% per annum on the
declining balance basis.
Reporting Currency
All amounts in these consolidated financial statements are reported in U.S.
funds being converted from Canadian funds where applicable at the average
annual rate as follows:
2001: $ 0.6341 U.S. / $ 1. CDN
2000: $ 0.6667 U.S. / $ 1. CDN
4. Capital Assets
2001 2000
Accumulated Net Book Net Book
Cost Amortization Value Value
Air terminal construction costs $ 641,972 $115,569 $ 526,403 $544,677
Furniture and equipment 5,154 3,259 1,895 1,989
$ 647,126 $118,826 $ 528,298 $546,666
5. Notes and Advances Payable
The notes and advances payable are unsecured, non-interest bearing and are
without specific terms of repayment.
6. Related Party Transactions
During the quarter ended September 30, 2001, the Company paid no remuneration
to any director.
PRIME AIR INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001
(UNAUDITED - PREPARED BY MANAGEMENT)
7. Capital Stock
Authorized:
50,000,000 common shares with a stated par value of $ .001/share
3,000,000 preferred cumulative convertible shares with a stated
par value of $ .001/share
Common Shares Issued: Number of Shares Consideration
To August 31, 1993
- for cash 300,000 $ 300
Prime Air Inc. share exchange
- June 28, 1994 2,700,000 350,296
During year ended December 31, 1995
- for cash 562,550 131,756
Balance at December 31, 1995 3,562,550 482,352
During year ended December 31, 1996
- for cash 1,510,558 755,279
- consulting and related services 1,483,673 1,483
2,994,231 756,762
Balance, December 31, 1996 6,556,781 1,239,114
During the year ended December 31, 1997
- shares-for-debt settlements 255,432 130,751
- consulting and related services 328,000 328
583,432 131,079
Balance, December 31, 1997 7,140,213 1,370,193
During the year ended December 31, 1998
- shares-for-debt settlements 93,015 27,370
- consulting and related services 1,953,727 1,954
- Transfer Agent correction ( 6,000) ( 6)
2,040,742 29,318
9,180,955 1,399,511
- "Two for One" share split 8,832,155 ______-___
Balance, December 31, 1998 18,013,110 1,399,511
During the year ended December 31, 1999
- - shares-for-debt settlements 624,450 146,050
- - consulting and related services 1,010,000 1,010
1,634,450 147,060
Balance, December 31, 1999 19,647,560 1,546,571
During the year ended December 31, 2000
- - for-cash 500,000 40,000
- - shares-for-debt settlements 875,106 87,429
1,375,106 127,429
Balance, September 30, 2001 21,022,666 $ 1,674,000
PRIME AIR INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001
(UNAUDITED - PREPARED BY MANAGEMENT)
8. Lease Commitment
The Canadian subsidiary corporation has entered into an Airport Lease and
Operating Agreement with The Corporation of The Village of Pemberton in
British Columbia whereby it has been granted an exclusive and irrevocable
lease over the lands and airport facilities associated with the Pemberton
Airport. The term of the Lease and Operating Agreement, including extension
options relating thereto, is for a total of 30 years with Terminal Rent
payable as follows:
$67 (USD) per annum for the initial six (6) years (1993 through
1999); and thereafter municipal property taxes, ($ 7,356 - 1999)
5% of gross receipts per annum derived from the operation of the
terminal Facilities, excluding amounts received in connection with the sale of
airline tickets and other forms of transportation.
ITEM 2. MANAGEMENT'S PLAN OF OPERATION
The Company is a development stage company and conducts all operations
through its wholly owned subsidiary, Prime Air (BC). The Company has had no
material revenues in the past. Operations are expected to commence during
year 2002.
During the last five years, the operations of the Company have been
funded from equity participation of the owners. Total cash raised from equity
funding from March 1992 to December 31, 1994 was $349,808, $131,755 for 1995
and $756,763 for 1996. No funds were raised during 1997, but the Company did
convert $130,751 of debt into common stock of the Company, and $16,135 during
1998. In the year ended December 31, 1999, the Company converted debt of
$145,425 into common stock of the Company. During the three quarters ended
September 30, 2000, the company converted $85,614 of debt into common stock of
the company and sold restricted shares for $36,616.
The Company has realized a cumulative loss of $1,397,538 since March
1992, and anticipates similar losses until operations begin.
The Company presently has no cash on hand to allow operations to
commence. The Company expects to pay approximately $85,000 to cover legal,
insurance, and other essential expenses during the next 12 months whether
operations commence or not.
Prime Air (BC)'s sole fixed obligation is the payment of municipal
property taxes to the Village of Pemberton (paid $9,101 in 2001) [10,240 USD
in 2000]) under the terms of its Airport Lease and Operating Agreement.
The Company further proposes to raise $3,500,000 during the next year.
However, there is no assurance that the Company will be able to raise such
funds during the next year. This funding will provide sufficient cash to
start operations, make capital improvements to the Pemberton Airport and
terminal building, and sustain flight operations for some time.
Should operations commence during 2002, the Company anticipates hiring
approximately six full-time employees during the next 12 months.
