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 March 31, 2003
OR
[ ] 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
Suite 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
---------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
None N/A
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Check whether the Issuer (1) has filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act of 1934 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 [ ]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not 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-QSB or any amendment to
this Form 10-QSB. [N/A]
State issuer's revenues for its most recent fiscal year: -0-
(ii)
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days: The aggregate market value of the voting stock held by
non-affiliates of the Registrant (23,318,666 shares) computed by using the
closing sale price on April 9, 2002, was $1,831,893. However, trading through
market makers and through other electronic means has ceased pending
reinstatement of approval to market maker representation, therefore no value can
be stated as it would apply to normal trading activities until reinstatement
occurs.
State the number of shares outstanding of each of the Issuer's classes of common
equity as of the latest practicable date: At September 18, 2003, there were
25,518,666 shares of the Registrant's Common Stock outstanding.
TABLE OF CONTENTS PRIME AIR, INC. Index
- -------------------
PAGE NO.
PART I
ITEM 1 Description 3
General 3
ITEM 2 Description of Property 4
ITEM 3 Legal Proceedings 6
ITEM 4 Submission of Matters to a Vote of Security Holders 6
PART II
ITEM 5 Market for Common Equity and Related Stockholder Matters 6
ITEM 6 Management's Discussion and Analysis or Plan of Operation 7
ITEM 7 Financial Statements 9-24
PART III
ITEM 8 Exhibits and Reports on Form 8-K 25
Signatures 26
FORWARD-LOOKING STATEMENTS
Some of the information presented in or incorporated by reference into this
report constitutes "forward-looking statements." Although the Company believes
that its expectations are based upon reasonable assumptions within the bounds of
its knowledge of its proposed business and operations, it is possible that
actual results may differ materially from its expectations. Factors that could
cause actual results to differ from expectations include the inability of the
Company to raise the additional capital necessary to commence its principal
operations or the failure to consummate a definitive agreement with Voyageur
Airways Limited.
2
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
The following discussion should be read in conjunction with the audited
financial statements and notes thereto included in the Annual Report on form
10-KSB for the year ended December 31, 2002 as filed with the Securities and
Exchange Commission for the fiscal year as stated.
Prime Air, Inc. (the "Company") was incorporated in the State of Nevada on
November 10, 1996, for the purpose of changing the domicile of the Company from
the State of Delaware. The predecessor to the Company was incorporated in the
State of Delaware on April 4, 1995. The change of domicile was completed on
December 15, 1997.
The Company is the parent of a wholly owned subsidiary, Prime Air, Inc. ("Prime
Air (BC)"), a company originally incorporated under the laws of the Province of
British Columbia, Canada, on March 10, 1989, under the name "High Mountain
Airlines Inc." Prime Air (BC) has entered into a lease and operating agreement
with the Village of Pemberton, British Columbia, Canada, to plan, develop,
construct, manage, and operate a terminal facility at the Pemberton Airport.
Prime Air (BC) has constructed the basic terminal building and proposes to
facilitate regular, scheduled air service to Pemberton Airport to serve the
nearby resort community of Whistler.
Prior to incorporation in the State of Delaware, the Company was originally
incorporated pursuant to the laws of the State of Utah on August 30,1993, under
the name "Astro Enterprises, Inc." (referred to hereafter as "the Utah
Corporation"). The Utah corporation changed its name to "Prime Air, Inc." on
June 28, 1994. Such further description of the Utah Corporation and all
relevant information is included in the Annual Report on form 10-K/A for the
year ended December 31, 2001 and 10-K for the year ended December 31, 2002 and
all other previous material filed with the Securities and Exchange Commission.
The Company entered into a "Memorandum of Proposed Agreement" with 519222
Ontario Limited, a corporate entity associated with Voyageur Airways Limited,
which, subject to the final approval of Voyageur and the Company, will allow a
merger which combines 25% of the assets of Voyageur with 70% of the assets of
the Company. That engagement was not completed. Although no formal written
Agreement is in place with respect to obligations and responsibilities, Voyageur
remains materially supportive and continues to work with the Company for the
purpose of establishing an air service.
3
AIRPORT LEASE AND OPERATING AGREEMENT
On October 29, 1993, Prime Air (BC) entered into a Lease and Operating Agreement
(the "Airport Agreement") with the Corporation of the Village of Pemberton,
British Columbia, Canada (hereinafter the "Village of Pemberton"), in which
Prime Air (BC) agreed to undertake the planning, development, construction,
management, and operation of a terminal facility at the Pemberton Airport. In
return the Village of Pemberton granted to Prime Air (BC) an exclusive lease
involving certain lands located at the Pemberton Airport (registered under the
Land Title Act, KN056037 under Parcel Identification Number 002-606-801, being
that part of District Lot 4769, Lillooet District, Except Plan KAP 44479) to
enable Prime Air (BC) to undertake the planning, development, construction,
management, and operation of a terminal facility. Such further information with
respect to the Airport Lease and Operating Agreement is contained in material
previously filed and as stated above.
Subsequent to the reporting date of this document, a Memorandum of Understanding
has been completed between Prime Air, Inc., and Galvin Flying Service, Inc., of
Seattle Washington. A news release dated September 30, 2003 was prepared
announcing the foundation of this relationship. Further, two commercial tenants
have entered into month to month agreements with Prime Air, both tenants are in
aviation related businesses. Management continues to meet with individuals and
businesses with respect to developing the prospect of charter or scheduled air
service operations. No commitments, to the date of this reporting have been
received with respect to this item.
The Pemberton Airport is approximately 20 miles north of Whistler Resort on
Highway 99. Whistler Resort is a ski resort located at the base of Whistler
Mountain and Blackcomb Mountain approximately 75 miles north of Vancouver,
British Columbia, Canada. The resort has approximately 8,000 permanent residents
and attracts approximately 3,000,000 visitors annually. Currently only ground
transportation is available to the resort, except for private flights into
Pemberton Airport. The nearest airport facility to Whistler Resort is Pemberton
Airport. There is presently no regular air service into Pemberton Airport.
AIR SERVICE
Prime Air (BC) initially intends to establish scheduled and charter passenger
and cargo air service between Vancouver International Airport and Pemberton
Airport. Thereafter, Prime Air (BC) will seek to establish such services between
Pemberton Airport and other Canadian and United States destinations. Prime Air
(BC) has entered into a Memorandum of Agreement dated January 5, 1995 (the
"Voyageur Agreement"), with Voyageur Airways Limited, an Ontario corporation
("Voyageur") to provide the initial service by supplying, operating, and
maintaining DeHavilland Dash-7 aircraft to provide scheduled and charter
passenger and cargo service, from Vancouver International Airport, and
thereafter from other Canadian and United States locations, to the Pemberton
Airport. The Voyager Agreement provides that Prime Air (BC) will operate the
terminal facility at Pemberton Airport and the scheduled and charter passenger
and cargo service, and will market the air services. Voyageur will provide the
certifications, authorizations, expertise, facilities, personnel, and resources
4
necessary to operate, maintain and service the aircraft. The parties intend to
negotiate and enter into a definitive agreement prior to commencing operations.
GOVERNMENT REGULATION AND LICENSING
Any corporation conducting commercial air service operations in Canada must
possess a valid Operating Certificate and other licenses, permits,
accreditations and certificates that are issued and administered by Transport
Canada. All such authorities and approvals shall be the responsibility of
Voyageur Airways Limited
MARKETING
Prime Air (BC) intends to commence a marketing program and hire market personnel
as soon as sufficient funds are available.
COMPETITION
Prime Air (BC) will compete with other charter and airline companies based in
the Vancouver and Seattle area which currently service customers whose final
destination is Whistler Resort. To a limited degree Prime Air (BC) will compete
with buses chartered or owned by tour operators. Most of these entities are more
established companies having much greater financial resources, experience, and
personnel resources than Prime Air (BC).
EMPLOYEES
The Company, including Prime Air BC, had one employee as of March 31, 2003,
consisting of Mr. Haug, who was employed part-time.
ITEM 2. DESCRIPTION OF PROPERTY
The Pemberton Airport facility, and supporting Lease agreement is more
particularly described as follows:
"Terminal Lease" means the exclusive and irrevocable lease of the Terminal
Lands granted by Pemberton to Prime Air pursuant to the agreement;
"Terminal Facilities" means the airline terminal building and associated
facilities constructed on the Terminal Lands by Prime Air;
"Terminal Lands" means a portion of the Lands which portion shall be large
enough to locate the Terminal Facilities thereon and shall be configured and
located as necessary to accommodate the Terminal Facilities;
"Airline Business" means the scheduled and chartered commuter and cargo airline
service which Prime Air is engaged in planning, implementing and operating and
which it currently proposes will provide and chartered airline service to the
Airport from Seattle, Washington, Portland, Oregon, Vancouver, British
Columbia and other locations;
"Airport" means the Pemberton Airport located in Pemberton, British Columbia
as more particularly shown in the survey documents provided in the Lease;
5
"Airport Facilities" means, collectively, the Runway, Parking Apron, MLS, NDB,
('ME and all other buildings, structures, improvements and equipment located on
the Lands or owned by Pemberton and used in connection with the operation of the
Airport or the use thereof by any of aircraft.
Additionally, the Company maintains its principal executive offices at
facilities shared with the business of the President of the Company, which
facilities are furnished at no cost to the Company.
ITEM 3. LEGAL PROCEEDINGS
Neither the Company nor any of its properties is a party to any material pending
legal proceedings or government actions, including any material bankruptcy,
receivership, or similar proceedings. Management of the Company does not believe
that there are any material proceedings to which any director, officer or
affiliate of the Company, or its subsidiary, any owner of record of beneficially
of more than 5 percent of the Common Stock of the Company, or any associate of
any such director, officer, affiliate of the Company, or its subsidiary, or
security holder is a party adverse to the Company, or it subsidiary, or has a
material interest adverse to the Company, or it subsidiary.
Reference to legal proceedings in 1994 and prior years is described in material
previously filed and as stated in paragraph 1 of Item I above.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of the shareholders during the quarter ended
March 31, 2003.
PART I I
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days: The stock has not traded with a "bid" and "ask" for such
period, accordingly no aggregate market value of the voting stock held by
non-affiliates of the Registrant can be stated.
State the number of shares outstanding of each of the Issuer's classes of common
equity as of the latest practicable date: At September 18, 2003, there were
25,518,666 shares of the Registrant's Common Stock outstanding.
6
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- --------------------------------------------------------------------------------
OPERATION
- ---------
Some of the information presented in or incorporated by reference into this
report constitutes "forward-looking statements." Although the Company believes
that its expectations are based upon reasonable assumptions within the bounds of
its knowledge of its proposed business and operations, it is possible that
actual results may differ materially from its expectations. Factors that could
cause actual results to differ from expectations include the inability of the
Company to raise the additional capital necessary to commence its principal
operations or the failure to consummate a definitive agreement with Voyageur
Airways Limited.
To the present date, Prime Air (BC) has constructed the basic terminal building
and proposes to facilitate regular, scheduled air service to Pemberton Airport
to serve the nearby resort community of Whistler. Sufficient funding has not
been secured to provide for costs for completion of certain infrastructure items
including landing lights, airside and groundside related equipment, advance
marketing and working capital requirements. Management estimates the
requirement for a commitment of approximately $3,000,000 to provide a
satisfactory start up of the British Columbia operation. It is conceivable
that a considerably lesser amount to provide for "lead in lights" and basic
weather and ground handling equipment would allow charter operations to commence
on a limited basis. Management is attempting to raise sufficient capital to
allow a "start up" consisting of charter flights from Boeing Field in Seattle to
Pemberton.
The results of the operations for the quarter ended March 31, 2003 show costs at
approximately 62% greater than the same period of the previous year, before
"foreign exchange conversion", after which calculation, the quarterly expenses
show approximately 221% greater for this period. Foreign exchange differences
when calculated equate all values to US funds. The primary asset of the
subsidiary company is a capital asset (terminal building) owned by the
subsidiary company, such amounts are recorded initially in Canadian funds.
Operating costs are recorded at the "average" or "actual" conversion amounts;
value of capital assets are reported at the applicable period end conversion
rate. Because of the "development stage" nature of the company, those figures
may be representative of the continuing nature of the Company on a current
basis, but not representative of the company if it is successful at securing
funding for the Whistler, British Columbia component of its intended operation.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ----------------------------------------------------------------
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 future successful operation of the Company is dependent upon its ability to
obtain the financing required to complete and operate the terminal facility in
7
Pemberton, British Columbia and to commence air service operations to Pemberton,
British Columbia on an economically viable basis.
The financial statements of the Company have been prepared on a "going concern"
basis which assumes the Company will be able to realize its assets, obtain
financing as required and discharge its liabilities and commitments in the
normal course of business. Other than a commitment from management to provide
funds for minimal operational requirements, there is no present commitment for
funds adequate to provide for operational items necessary to complete the start
up of air service activities.
THE PAST QUARTER. Due to the Company's negative working capital, the year 2002
and the current operating quarter remain difficult. The Company has sought to
minimize operating costs. The overriding constraint has been cash flow.
RESULTS OF OPERATIONS
The Company has not yet initiated air operations.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2003, the Company's negative working capital was ($256,173).
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS
NO SALES REVENUES; UNCERTAIN PROFITABILITY; DEVELOPMENT STAGE COMPANY. Since its
inception, the Company has been principally engaged in developmental and
organizational activities. To date, the Company has not yet initiated activities
which would bring revenues to the air terminal facility and, consequently, has
had no sales revenues. No sales revenues are expected until, and only if, the
Company secures adequate funds to complete the infrastructure required to
commence either charter or scheduled commercial air service activities.
The Company is in the development stage, and its business is subject to all of
the risks inherent in the establishment of a new business enterprise. The
likelihood of success of the Company must be considered in light of the
problems, expenses, complications and delays frequently encountered in
connection with the formation of a new business, the development of new
products, the competitive and regulatory environment in which the Company is
operating and the possibility that its activities will not result in the
development of any commercially viable activities. There can be no assurance
that the Company's activities will ultimately result in the development of
commercial charter or scheduled air service.
NEED FOR FUTURE FINANCING. The Company will be required to raise additional
funds through public or private financing including grants that may be available
to complete the infrastructure requirements to allow air service operations.
There can be no assurance, however, that the Company will be able to obtain
additional financing on terms favorable to it, if at all. If adequate funds are
not available to satisfy short-term or long-term capital requirements. The
failure of the Company to obtain any other acceptable financing would have a
material adverse effect on the plans and operations of the Company. Without
additional financing, the Company would become unable to maintain its current
operations and would be unable to carry out its business plan. The Company has
no current understandings or commitments to obtain any additional financing from
the sale of its securities or otherwise. Additional financing from the sale of
8
its securities may result in dilution of the Company's then current
stockholders.
DEPENDENCE UPON A KEY OFFICER; ATTRACTION AND RETENTION OF KEY PERSONNEL. The
business of the Company is highly dependent upon the active participation of its
founder and Chief Executive Officer, Blaine Haug. The loss or unavailability to
the Company of Mr. Haug would have a material adverse effect on the Company's
business prospects and potential earning capacity. The recruitment of skilled
airline personnel is critical to the Company's success. There can be no
assurance that it will be able to attract and retain such personnel in the
future. There is no key man life insurance on Mr. Haug.
The process of obtaining required regulatory approvals required to commence air
service operations can be time-consuming and expensive and other regulatory
requirements can be burdensome. Moreover, there can be no assurance that the
required regulatory clearances will be obtained
ITEM 7. 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, 2002.
Consolidated Financial Statements
March 31, 2003 and 2002
(Unaudited - Prepared by Management)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Shareholders' Equity and Deficit
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
9
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(all figures in US dollars)
March 31 March 31 December 31
2003 2002 2002
(Unaudited) (Unaudited) (Audited)
------------ ------------ -------------
ASSETS
Current Assets
Cash and short-term deposits . . . . . . . . . . . . $ 1,230 $ 677 $ 512
Prepaid expenses . . . . . . . . . . . . . . . . . . 1,699 1,330 1,585
Goods and Services Tax recoverable . . . . . . . . . - 1,165 1,357
------------ ------------ -------------
2,929 3,172 3,454
Capital Assets (Note 4). . . . . . . . . . . . . . . . 500,508 520,191 505,261
------------ ------------ -------------
$ 503,437 $ 523,363 $ 508,715
============ ============ =============
LIABILITIES
Current Liabilities
Accounts payable and accruals. . . . . . . . . . . . $ 224,022 $ 196,156 $ 214,643
Notes and advances payable (Note 5) . . . . . . . . 35,080 28,989 32,139
------------ ------------ -------------
259,102 225,145 246,782
------------ ------------ -------------
SHAREHOLDERS' EQUITY
Capital Stock (Note 6)
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
Issued:
23,318,666 common shares (2001: 22,898,666) . . . . 23,319 22,899 23,319
Capital in excess of par value . . . . . . . . . . . 2,189,451 2,143,792 2,189,451
------------ ------------ -------------
2,212,770 2,166,691 2,212,770
Accumulated Deficit During
Development Stage. . . . . . . . . . . . . . . . . . (1,968,435) (1,868,473) (1,950,837)
------------ ------------
244,335 298,218 261,933
------------ ------------
$ 503,437 $ 523,363 $ 508,715
============ ============ =============
Approved on Behalf of the Board:
"Blaine Haug" Director
- --------------
"Wayne Koch" Director
- -------------
See Accompanying Notes to Financial Statements
10
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(all figures in US dollars)
- From Inception
Three months Three Months March 10,
ended ended 1989 to
March 31 March 31 March 31
2003 2002 2003
-------------- -------------- ---------------
(Unaudited) (Unaudited) (Unaudited)
Administrative And General Expenses
Flight operations . . . . . . . . . . . . . . . . . $ - $ - $ 114,720
Audit and accounting. . . . . . . . . . . . . . . . 955 - 112,889
Advertising . . . . . . . . . . . . . . . . . . . . - - 18,083
Amortization. . . . . . . . . . . . . . . . . . . . 4,753 3,087 147,861
Association membership fees . . . . . . . . . . . . - - 5,768
Automotive. . . . . . . . . . . . . . . . . . . . . 955 - 19,164
Bad debts . . . . . . . . . . . . . . . . . . . . . - - 1,933
Commissions and finders' fees . . . . . . . . . . . - - 22,311
Consulting (Note 7) . . . . . . . . . . . . . . . - 920 680,229
Insurance . . . . . . . . . . . . . . . . . . . . . 353 226 32,284
Interest and service charges. . . . . . . . . . . . 74 76 16,919
Legal costs . . . . . . . . . . . . . . . . . . . . - - 181,941
Management remuneration . . . . . . . . . . . . . . - - 77,287
Office and general. . . . . . . . . . . . . . . . . 40 - 165,676
Repairs and maintenance . . . . . . . . . . . . . . 576 93 11,083
Rent and property taxes - airport facility (Note 8) - - 70,651
Telephone and utilities (recovered) . . . . . . . . 12 (86) 90,671
Transfer agent, listing and filing fees . . . . . . 1,150 1,156 64,088
Travel, promotion and entertainment . . . . . . . . - - 115,583
-------------- -------------- ---------------
8,868 5,472 1,949,148
-------------- -------------- ---------------
Loss (gain) on foreign exchange conversion. . . . . 8,730 1 13,134
Interest income . . . . . . . . . . . . . . . . . . - - 6,153
-------------- -------------- ---------------
8,730 1 19,287
-------------- -------------- ---------------
Net Loss For The Period . . . . . . . . . . . . . . . $ 17,598 $ 5,473 $ 1,968,435
============== ============== ===============
Net Loss Per Common Share . . . . . . . . . . . . . . $ (0.0008) $ (0.0002)
============== ==============
Weighted Average Common Shares Outstanding. . . . . . 23,108,666 22,898,666
============== ==============
See Accompanying Notes To Financial Statements
11
PRIME AIR, INC.
( A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND DEFICIT
( all figures in US dollars )
Accumulated
Capital in Deficit During
Excess of Share Development
Common Shares (Less than) Subscriptions Stage
Shares Amount Par Value Receivable (Unaudited-Note 1)
----------- -------- ------------ --------------- -------------------
Balance at Inception on
March 10, 1989. . . . . . . . . . - $ - $ - $ - $ -
Issue of common shares for cash
at $.001/share. . . . . . . . . . 1,260,474 1,260 (630) - -
Net loss for the year ended
March 31, 1990. . . . . . . . . . - - - - (17,956)
----------- -------- ------------ --------------- -------------------
Balance, March 31, 1990. . . . . . . 1,260,474 1,260 (630) - (17,956)
Issue of common shares for cash
at $.001/share. . . . . . . . . . 315,118 315 (157) - -
Net loss for the year ended
March 31, 1991. . . . . . . . . . - - - - (49,419)
----------- -------- ------------ --------------- -------------------
Balance, March 31, 1991. . . . . . . 1,575,592 1,575 (787) - (67,375)
Net loss for the year ended
March 31, 1992. . . . . . . . . . - - - - (10,990)
----------- -------- ------------ --------------- -------------------
Balance, March 31, 1992. . . . . . . 1,575,592 1,575 (787) - (78,365)
Issue of common shares for cash
at $.277/share. . . . . . . . . . 264,176 264 36,367 - -
at $.214/share. . . . . . . . . . 34,138 34 3,611 - -
Net loss for the year ended
March 31, 1993. . . . . . . . . . - - - - (38,426)
----------- -------- ------------ --------------- -------------------
Balance, March 31, 1993. . . . . . . 1,873,906 1,873 39,191 - (116,791)
Issue of common shares for services
at nominal value. . . . . . . . . 184,346 184 (184) - -
Issue of common shares for cash
at $.001/share. . . . . . . . . . 600,000 600 (300) - -
at $.109/share. . . . . . . . . . 6,680 7 357 - -
at $.154/share. . . . . . . . . . 47,268 47 3,596 - -
at $.280/share. . . . . . . . . . 38,802 39 5,380 - -
at $.330/share. . . . . . . . . . 46,322 46 7,601 - -
at $.463/share. . . . . . . . . . 174,890 175 40,243 - -
at $.694/share. . . . . . . . . . 31,512 32 10,891 - -
at $.925/share. . . . . . . . . . 15,756 16 7,266 - -
Net loss for the year ended
March 31, 1994. . . . . . . . . . - - - - (36,272)
----------- -------- ------------ --------------- -------------------
Balance, March 31, 1994. . . . . . . 3,019,482 $ 3,019 $ 114,041 $ - $ (153,063)
See Accompanying Notes To Financial Statements
12
PRIME AIR, INC.
( A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND DEFICIT
( all figures in US dollars )
Accumulated
Capital in Deficit During
Excess of Share Development
Common Shares (Less than) Subscriptions Stage
Shares Amount Par Value Receivable (Unaudited-Note 1)
----------- -------- ------------ --------------- -------------------
Balance Forward. . . . . . . . . . . 3,019,482 $ 3,019 $ 114,041 $ - $ (153,063)
Issue of common shares for services
at nominal value. . . . . . . . . 1,874,956 1,875 (1,875) - -
Issue of common shares for cash
at $.374/share. . . . . . . . . . 497,384 498 92,448 - -
at $.463/share. . . . . . . . . . 608,178 608 139,982 - -
Net loss for the year ended
June 28, 1994 . . . . . . . . . . - - - - (40,947)
----------- -------- ------------ --------------- -------------------
Balance, June 28, 1994 . . . . . . . 6,000,000 6,000 344,596 - (194,010)
Share subscription at $.367/share. . - - (7,313) (20) -
Net loss for the year ended
December 31, 1994 . . . . . . . . - - - - (135,530)
----------- -------- ------------ --------------- -------------------
Balance, December 31, 1994 . . . . . 6,000,000 6,000 337,283 (20) (329,540)
Issue of common shares for cash
and/or services at an average
of $.234/share. . . . . . . . . . 1,125,100 1,125 130,630 - -
Net loss for the year ended
December 31, 1995 . . . . . . . . - - - - (71,266)
----------- -------- ------------ --------------- -------------------
Balance, December 31, 1995 . . . . . 7,125,100 7,125 467,913 (20) (400,806)
Issue of common shares for cash
at $.50/share . . . . . . . . . . 3,021,116 3,021 752,259 - -
Issue of common shares for services
at fair value . . . . . . . . . . 2,967,346 2,967 145,400 - -
Net loss for the year ended
December 31, 1996 . . . . . . . . - - - - (385,300)
----------- -------- ------------ --------------- -------------------
Balance, December 31, 1996 . . . . . 13,113,562 $13,113 $ 1,365,572 $ (20) $ (786,105)
----------- -------- ------------ --------------- -------------------
See Accompanying Notes To Financial Statements
13
PRIME AIR, INC.
( A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND DEFICIT
( all figures in US dollars )
Accumulated
Capital in Deficit During
Excess of Share Development
Common Shares (Less than) Subscriptions Stage
Shares Amount Par Value Receivable (Unaudited-Note 1)
----------- -------- ------------ --------------- -------------------
Balance Forward. . . . . . . . . . . 13,113,562 $13,113 $ 1,365,572 $ (20) $ (786,105)
Issue of common shares for services
at fair value . . . . . . . . . . 656,000 656 32,472 - -
Issue of common shares for
debt settlements:
at $.500/share. . . . . . . . . . 248,504 249 61,876 - -
at $.504/share. . . . . . . . . . 72,760 73 18,266 - -
at $.530/share. . . . . . . . . . 189,600 189 50,098 - -
Net loss for the year ended
December 31, 1997 . . . . . . . . - - - - (222,169)
----------- -------- ------------ --------------- -------------------
Balance, December 31, 1997 . . . . . 14,280,426 14,280 1,529,284 (20) (1,008,274)
----------- -------- ------------ --------------- -------------------
Issue of common shares for
debt settlements:
at $.3935/share . . . . . . . . . 20,000 20 3,853 - -
at $.4006/share . . . . . . . . . 36,430 37 7,260 - -
Issue of common shares for services
at fair value . . . . . . . . . . 3,327,454 3.327 163,046 - -
----------- -------- ------------ --------------- -------------------
Balance, May 17, 1998. . . . . . . . 17,664,310 17,664 1,702,115 (20) (1,008,274)
Issue of common shares for
debt settlements:
at $.25/share . . . . . . . . . . 64,800 65 16,135 - -
Issue of common shares for services
at fair value . . . . . . . . . . 290,000 290 14,210 - -
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 . . . . . . . . - - - - (330,188)
----------- -------- ------------ --------------- -------------------
Balance, December 31, 1998 . . . . . 18,013,110 $18,013 $ 1,739,773 $ - $ (1,338,462)
----------- -------- ------------ --------------- -------------------
See Accompanying Notes To Financial Statements
14
PRIME AIR, INC.
( A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND DEFICIT
( all figures in US dollars )
Accumulated
Capital in Deficit During
Excess of Share Development
Common Shares (Less than) Subscriptions Stage
Shares Amount Par Value Receivable (Unaudited-Note 1)
----------- -------- ------------ --------------- -------------------
Balance Forward. . . . . . . . . . . 18,013,110 $18,013 $ 1,739,773 $ - $ (1,338,462)
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 fair value . . . . . . . . . . 1,010,000 1,010 49,490 - -
Net loss for the year ended
December 31, 1999 . . . . . . . . - - - - (326,607)
----------- -------- ------------ --------------- -------------------
Balance, December 31, 1999 . . . . . 19,647,560 19,648 1,934,688 - (1,665,069)
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 . . . . . . . . - - - - (116,336)
----------- -------- ------------ --------------- -------------------
Balance, December 31, 2000 . . . . . 21,022,666 21,023 2,062,742 - (1,781,405)
Issue of common shares for cash
at $.08/share . . . . . . . . . . 300,000 300 23,700 - -
Issue of common shares for
debt settlement
at $.08/share (Note 7). . . . . . 250,000 250 19,750 - -
Issue of common shares for services
at fair value (Note 7). . . . . . 400,000 400 19,600 - -
Transfer Agent adjustment. . . . . . 6,000 6 - - -
Net loss for the year ended
December 31, 2001 . . . . . . . . - - - - (81,595)
----------- -------- ------------ --------------- -------------------
Balance, December 31, 2001 . . . . . 21,978,666 $21,979 $ 2,123,792 $ - $ (1,863,000)
=========== ======== ============ =============== ===================
See Accompanying Notes To Financial Statements
15
PRIME AIR, INC.
( A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND DEFICIT
( all figures in US dollars )
Accumulated
Capital in Deficit During
Excess of Share Development
Common Shares (Less than) Subscriptions Stage
Shares Amount Par Value Receivable (Unaudited-Note 1)
----------- -------- ------------ --------------- -------------------
Balance forward
21,978,666 $21,979 $ 2,123,792 $ - $ (1,863,000)
Issue of common shares for . . . . . 1,020,000 1,020 49,979 - -
services at fair value
Issue of common shares for . . . . . 320,000 320 15,680 - -
cash at $0.05/share
Net loss for the year ended
December 31, 2002 . . . . . . . . - - - - (87,837)
Balance, December 31, 2002 . . . . . 23,318,666 23,319 2,189,451 - (1,950,837)
----------- -------- ------------ --------------- -------------------
Net loss for the quarter ended
March 31, 2003. . . . . . . . . . - - - - (17,598)
----------- -------- ------------ --------------- -------------------
Balance, March 31, 2003. . . . . . . 23,318,666 $23,319 $ 2,189,451 $ - $ (1,968,435)
=========== ======== ============ =============== ===================
See Accompanying Notes To Financial Statements
16
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(all figures in US dollars)
From Inception
Three months ended Three months ended March 10, 1989
March 31 March 31 To March 31
2003 2002 2003
-------------------- -------------------- ---------------
(Unaudited) (Unaudited) (Unaudited)
NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES:
OPERATING
Net loss . . . . . . . . . . . . . . . . . . . . . . . . $ (17,598) $ (5,473) $ (1,968,435)
Non-cash charge - amortization . . . . . . . . . . . . . 4,753 3,087 147,861
-------------------- -------------------- ---------------
(12,845) (2,386) (1,820,574
Change in non-cash working capital
balances relating to operations
Prepaid expenses. . . . . . . . . . . . . . . . . . (114) 220 (1,699
Goods and Services tax recoverable. . . . . . . . . 1,357 (17) -
Accounts payable and accrued liabilities . . . . . . . . . 9,379 - 224,022
-------------------- -------------------- ---------------
10,622 203 222,323
-------------------- -------------------- ----------------
(2,223) (2,183) (1,598,251)
-------------------- -------------------- ---------------
FINANCING
Notes and advances payable . . . . . . . . . . . . . . . 2,941 (20,149) 35,080
Issue of capital stock . . . . . . . . . . . . . . . . . - 20,920 2,212,770
-------------------- -------------------- ---------------
2,941 771 2,247,850
-------------------- -------------------- ---------------
INVESTING
(Cost) Recovery of terminal facility construction costs. - - (648,369)
-------------------- -------------------- ---------------
NET CASH INFLOW (OUTFLOW). . . . . . . . . . . . . . . . . 718 (1,412) 1,230
CASH, BEGINNING OF YEAR. . . . . . . . . . . . . . . . . . 512 2,089 -
-------------------- -------------------- ---------------
CASH, END OF PERIOD. . . . . . . . . . . . . . . . . . . . $ 1,230 $ 677 $ 1,230
==================== ==================== ===============
17
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 and 2002
1. INCORPORATION, PRINCIPLES OF CONSOLIDATION AND ACCOUNTING PRESENTATION
The Company was incorporated under the laws of the State of Nevada, USA on
November 10, 1996, the purpose of which was to change the domicile of the
Company from the State of Delaware to the State of Nevada. This change was
approved by the shareholders of both corporations on November 26, 1997 and
effected through a "plan and agreement of merger" with the surviving corporation
being Prime Air, Inc. (Nevada). The articles of merger were filed with the
appropriate State authorities on December 15, 1997 which became the effective
date of the merger.
The Delaware corporation was incorporated on April 4, 1996 and acquired all of
the assets, liabilities and shareholders of a previous Utah corporation of the
same name. The Utah corporation had been reincorporated on August 30, 1993 as
Astro Enterprises, Inc. and on June 28, 1994, pursuant to appropriate
shareholder agreements, 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. Following incorporation of the
Delaware company, the Utah corporation was dissolved on May 15, 1996.
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 completion 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 and operationalize the terminal facility and to 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
financing as required and discharge its liabilities and commitments in the
normal course of business.
18
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 and 2002
3. SIGNIFICANT ACCOUNTING POLICIES
Reporting Currency
- -------------------
All amounts in these consolidated financial statements are reported in U.S.
funds. Monetary assets and liabilities have been converted from Canadian funds
where applicable utilizing the year-end closing exchange rate of $ 1.5906
CDN/$1.00 U.S. Transactions recorded throughout the year in the accounts of the
Canadian subsidiary have been converted to their U.S. equivalent at actual
amounts where available or by utilizing the average annual rate as posted by the
Internal Revenue Service of the United States as follows: $ 1.5704 CDN/$1.00
U.S. (2001: $1.5484 CDN/ $1.00 U.S.). Exchange rates at March 31, 2002 had not
materially changed from the December 31, 2002 stated rate.
Fair Value of Financial Instruments
- ---------------------------------------
In accordance with the requirements of Statement of Financial Accounting
Standards No. 107, "Disclosure About Fair Value Of Financial Instruments", the
carrying amounts reported on the balance sheets for cash and cash equivalents,
namely, "cash and short-term deposits", "prepaid expenses", "GST recoverable",
"accounts payable and accrued liabilities" and "notes and advances payable"
approximate their fair market value.
Receivables and Prepaid Expenses
- -----------------------------------
All amounts reported as receivables or prepaid expenses have been recorded at
their original values. There have been no amounts written off as bad debts or
provided for as an allowance against the recovery of these assets.
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
which is provided on a straight-line basis over the 30-year term of the property
lease.
Furniture and Equipment: Furniture and equipment is stated at cost, net of
- -------------------------
amortization which is provided for at the rate of 20% per annum on the declining
balance basis.
Use of Estimates in the Preparation of Financial Statements
- -------------------------------------------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principals 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 periods. In
these financial statements, assets, liabilities and results of operations
involve significant reliance on management estimates. Actual results could
differ from the use of those estimates.
19
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 and 2002
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
- -------------
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting For Income Taxes", during the fiscal year ended December 31, 1998
and applied the provisions of that statement on a retroactive basis to the
previous fiscal years, which resulted in no significant adjustments.
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes", requires an asset and liability approach for financial accounting and
reporting for income tax purposes. This statement recognizes (a) the amount of
taxes payable or refundable for the current year and (b) deferred tax
liabilities and assets for future tax consequences of events that have been
recognized in the financial statements or tax returns.
Deferred income taxes result from temporary differences in the recognition of
accounting transactions for income tax and financial reporting purposes. There
were no temporary differences at December 31, 2001 and earlier years and
accordingly, no deferred tax liabilities have been recognized for all years.
The operating subsidiary Company has cumulative net operating loss carry
forwards of approximately
$668,000 at December 31, 2001 and $ 790,000 at December 31, 2000. No effect has
been shown in the financial statements for these carry forwards as the
likelihood of future tax benefit from such is not presently determinable. The
potential income tax benefits of these net operating loss carry forwards of
approximately $ 118,000 at December 31, 2001 and $ 144,000 at December 31, 2000
(based upon current income tax rates) have been offset by valuation reserves of
the same amount. Net operating losses expire after seven (7) years. Operating
losses of the US parent corporation have not been determined.
20
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 and 2002
4. CAPITAL ASSETS
Capital assets consist of the following at March 31, 2003 and 2002 and December
31, 2002:
March 31, 2002
--------------------------------------
Accumulated Net Book
Cost Amortization Value
--------------------------------------
Air terminal construction costs $ 641,972 $ 143,478 $ 498,494
Computer equiptment 948 189 759
Furniture and equipment 5,154 3,899 1,255
--------------------------------------
$ 648,074 $ 147,566 $ 500,508
======================================
March 31, 2002
--------------------------------------
Accumulated Net Book
Cost Amortization Value
--------------------------------------
Air terminal construction costs $ 641,972 $ 123,302 $ 518,670
Furniture and equipment 5,154 3,633 1,521
--------------------------------------
$ 647,126 $ 126,935 $ 520,191
======================================
December 31, 2002
--------------------------------------
Accumulated Net Book
Cost Amortization Value
--------------------------------------
Air terminal construction costs $ 641,972 $ 138,836 $ 503,136
Computer equiptment 948 142 806
Furniture and equipment 5,154 3,835 1,319
--------------------------------------
$ 648,074 $ 142,813 $ 505,261
======================================
5. NOTES AND ADVANCES PAYABLE
The notes and advances payable are unsecured, non-interest bearing and are
without specific terms of repayment. Included therein is an amount of $35,080
which has been advanced to the Company by a shareholder and/or a corporation
controlled by that shareholder who is the beneficial owner of 2,245,226 shares
of common stock of the Company, that holding representing 10.22% of the issued
and outstanding capital of the Company.
21
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 and 2002
6. CAPITAL STOCK
Authorized:
150,000,000 common shares with a stated par value of $.001/share
5,000,000 preferred cumulative convertible shares with a stated par
value of $.001/share
Number of Shares Consideration
------------------ -------------
Common Shares Issued:
To August 31, 1993
- for cash. . . . . . . . . . . . . . 600,000 $ 300
Prime Air Inc. share exchange
- June 28, 1994 . . . . . . . . . . . 5,400,000 350,296
Share subscription. . . . . . . . . . . . . (7,313)
During year ended December 31, 1995
- for cash. . . . . . . . . . . . . . 1,125,100 131,755
------------------ -------------
Balance at December 31, 1995. . . . . . . . 7,125,100 475,038
------------------ -------------
During year ended December 31, 1996
- for cash. . . . . . . . . . . . . . 3,021,116 755,280
- for consulting and related services 2,967,346 148,367
------------------ -------------
5,988,462 903,647
------------------ -------------
Balance, December 31, 1996. . . . . . . . . 13,113,562 1,378,685
------------------ -------------
During the year ended December 31, 1997
- shares-for-debt settlements . . . . 510,864 130,751
- consulting and related services . . 656,000 32,800
------------------ -------------
1,166,864 163,551
------------------ -------------
Balance, December 31, 1997. . . . . . . . . 14,280,426 1,542,236
------------------ -------------
During the year ended December 31, 1998
- shares-for-debt settlements . . . . 93,015 27,370
- consulting and related services . . 3,617,454 180,873
- transfer agent correction . . . . . (6,000) (6)
- write off of uncollectible share. . 7,313
------------------ -------------
3,732,684 215,550
------------------ -------------
Balance, December 31, 1998. . . . . . . . . 18,013,110 1,757,786
------------------ -------------
During the year ended December 31, 1999
- shares-for-debt settlements . . . . 624,450 146,050
- consulting and related services . . 1,010,000 50,500
------------------ -------------
1,634,450 196,550
------------------ -------------
Balance, December 31, 1999. . . . . . . . . 19,647,560 1,954,336
------------------ -------------
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, December 31, 2000. . . . . . . . . 21,022,666 $2,081,765
------------------ -------------
22
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002 and 2001
6. CAPITAL STOCK (CONTINUED)
Number of Shares Consideration
------------------ -------------
Balance, December 31, 2000 . . . . . . 21,022,666 $ 2,081,765
------------------ -------------
During year ended December 31, 2001
- for cash. . . . . . . . . . . . . . 300,000 24,000
- shares-for-debt settlements . . . . 250,000 20,000
- consulting and related services . . 400,000 20,000
- Transfer Agent correction . . . . . 6,000 6
------------------ -------------
956,000 64,406
------------------ -------------
Balance, December 31, 2001 . . . . . . . . 21,978,666 2,145,771
------------------ -------------
- consulting and related services 920,000 20,920
Balance, March 31, 2003 22,898,666 $ 2,166,691
================== =============
In July, 1996, management of the Company voluntarily halted trading of its
common shares based upon the conclusion that information concerning the history
of the Company provided by former management may not have been complete.
Adequate information was subsequently provided to the public by management and
trading was recommenced on March 27, 1997. The Company prepared and filed a
registration statement in connection with the change of domicile (referred to in
Note 1) to register all of the outstanding common shares of capital stock in the
Company. This registration has been approved by the Securities and Exchange
Commission and the change of domicile became effective on December 15, 1997.
7. RELATED PARTY TRANSACTIONS
During the years ended December 31, 2001 and 2000, no cash remuneration was paid
to any director or officer of the Company. The Company has adopted the policy
of issuing "restricted" common shares to certain directors and officers for
services rendered. Specifically billed amounts have been settled by way of
"shares-for-debt" arrangements, the share value thereof being determined by
securities regulations. In addition, further shares have been issued to certain
directors and officers for services provided to the Company of a more general
nature, these shares being attributed a nominal value of $ 0.001 per share.
During the year ended December 31, 2001, an officer and director of the Company
received 250,000 common shares by way of a debt settlement covering an
obligation of $20,000 and another director and officer received 400,000 common
shares with an attributed value of $400 for general management and consulting
services. During the year ended December 31, 2000, shares issued to related
parties consisted of debt settlements only, such issuances being 871,006 common
shares covering obligations of $87,100.
On January 28, 2002, the Board of Directors authorized the issuance of 800,000
"restricted" common shares to directors and officers of the Company in
recognition of services provided thereto to December 31, 2001, and 120,000
"restricted" common shares in settlement of debts for services. These shares
were issued from Treasury on February 13, 2002. The attributed value of these
shares is $20,920.
23
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 and 2002
8. RENT, PROPERTY TAXES AND 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 US ($100 CDN) per annum for the initial six (6) years (1993
through 1999);
and thereafter
- 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. The lease
commitment amounts for 2001 through 2005 cannot be quantified as the
amount of gross receipts for those years cannot be determined and
active operation of the terminal facilities has not yet commenced.
No lease payments were made during the years ended December 31, 2001 or 2000 as
there were no gross receipts derived from operations in those years. The
Company, however, was obligated to pay property taxes imposed by municipal
authorities, such levies amounting to $8,426. for the year ended December 31,
2001 (2000: $9,294).
24
PART III
ITEM 8. EXHIBITS AND REPORTS ON FORM 8-K
(A) Reports on Form 8-K.
None
(B) Index to Exhibits.
The following is a list of all exhibits filed as part of this Report:
EXHIBIT DESCRIPTION OF
NUMBER DOCUMENT
------ --------
*1 Power of Attorney (included on signature page).
*Filed herewith.
25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Vancouver,
province of British Columbia, on the 20th day of October 2003.
Prime Air, Inc.
By: /s/ Blaine Haug
-----------------
Blaine Haug
Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Blaine Haug and Wayne Koch, and each of them
individually, his true and lawful attorney-in-fact, proxy and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to act on, sign any and all amendments to this
Quarterly Report on Form 10-QSB, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact, proxies and agents, and each
of them individually, full power and authority to do and perform each and every
act and thing necessary and appropriate to be done in and about the premises, as
fully as he might or could do in person, hereby approving, ratifying and
confirming all that said attorneys-in-fact, proxies and agents or any of his,
her or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated.
SIGNATURE(S) TITLE(S) DATE
------------ -------- ----
/s/ Blaine Haug Chairman of the Board and October 20, 2003
----------------- Chief Executive Officer
Blaine Haug
/s/ Wayne Koch Treasurer October 20, 2003
--------------
Wayne Koch
26