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, 1998
[ ] 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
8598 112 STREET, FT. SASKATCHEWAN, ALBERTA, CANADA T8L 3V8
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (403) 998-3400
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 November 18, 1998, there
were 18,013,110 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 nave 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, 1997.
PRIME AIR INC.
(A Development Stage Company)
(A Nevada Corporation)
Consolidated Financial Statements
September 30, 1998 and 1997 and December 31, 1997
Notice to Reader
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Shareholders' Equity and Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Koch & Associates
__________________________________________
Ste 601 - 938 Howe Street, Vancouver, B.C. V6Z 1N9 Telephone (604)684-5700
Fax (604)684-7211
NOTICE TO READER
I have compiled the consolidated balance sheet of Prime Air Inc., a Nevada
company, as at September 30, 1998 and consolidated statements of operations
and cash flows for the nine month period then ended from information provided
by management. I have not audited, reviewed or otherwise attempted to verify
the accuracy or completeness of such information. Readers are cautioned
these statements may not be appropriate for their purposes.
October 20, 1998, Certified Management Accountant
Vancouver, B.C.
PRIME AIR INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997 and December 31, 1997
(Unaudited - See Notice to Reader)
1. Incorporation and Principles of Consolidation
On November 10, 1997, Prime Air Inc (a Nevada corporation) was formed, the
purpose of which was to change the domicile of the Company to the State of
Nevada and to acquire all of the assets and liabilities of the predecessor
Delaware company.
The predecessor Deleware company was incorporated under the laws of the State
of Delaware, USA 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 was reincorporated on August 30, 1993 as Astro Enterprises, Inc.
On September 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.
These consolidated financial statements include the accounts of the Company
and its wholly-owned operating subsidiary, Prime Air Inc.
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 1997. 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, 1998 and 1997 and December 31, 1997
(Unaudited - See Notice to Reader)
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 7provided 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 posted by the Internal Revenue Service of the United States
as follows:
1998: $ 0.6810 U.S. / $ 1. CDN
1997: $ 0.7334 U.S. / $ 1. CDN
1996: $ 0.7284 U.S. / $ 1. CDN
4. Capital Assets
Capital assets consist of the following at September 30, 1998, September 30,
1997 and December 31, 1996:
September 30, 1998
Accumulated Net Book
Cost Amortization Value
Air terminal construction costs $ 648,828 $ 49,602 $ 599,226
Furniture and equipment 4,708 3,703 1,005
$ 653,536 $ 53,305 $ 600,231
September 30, 1997
Accumulated Net Book
Cost Amortization Value
Air terminal construction costs $ 644,922 $ 26,148 618,774
Furniture and equipment 5,262 1,347 3,915
$ 650,184 $ 27,495 $ 622,689
December 31, 1997
Accumulated Net Book
Cost Amortization Value
Air terminal construction costs $ 652,083 $ 42,058 $ 610,625
Furniture and equipment 5,154 1,663 3,941
$ 657,237 $ 43,721 $ 613,516
PRIME AIR INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997 and December 31, 1997
(Unaudited - See Notice to Reader)
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
The notes and advances payable are unsecured, non-interest bearing and are
without specific terms of repayment.
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(all figures in US dollars)
(UNAUDITED - SEE NOTICE TO READER)
September 30 1998
ASSETS
Current Assets
Cash and short-term deposits $ 13,865
Prepaid expenses and deposit 5,161
GST recoverable 1,880.68
20,907
Capital Assets (Note 4) 600,231
$ 621,137.67
LIABILITIES
Current Liabilities
Accounts payable and accruals $ 62,508
Notes and advances payable (Note 5) 99,186
Notes and advances from related
parties (Note 6) 5,728
167,422
SHAREHOLDERS' EQUITY
Capital Stock (Note 7)
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:
18,013,110 common shares (1997: 14,280,426) 9,007
Share subscription receivable (20)
Capital in excess of par value 1,359,239
1,368,226
Accumulated Deficit During
Development Stage (914,510)
453,716
$ 621,138
Approved on Behalf of the Board:
Director
Director
See Accompanying Notes
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(all figures in US dollars)
(UNAUDITED - SEE NOTICE TO READER) Period from
Date of
Inception
Three Months Nine Months Three Months Nine Months on March 10,
Ended Ended Ended Ended 1989
September 30 September 30 September 30 September 30 to September 30
1998 1998 1997 1997 1998
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Note 1)
Direct
Costs
Flight
operations $ - $ - $ - $ - $ 114,720
Administrative
and General
Audit and
accounting 2,575 2,575 12,120 12,120 52,774
Advertising - - - 74 9,094
Amortization 13,285 13,285 16,779 16,779 57,003
Automotive 1,813 1,813 - - 20,977
Consulting
fees 7,393 7,393 6,841 6,841 101,761
Insurance 3,509 3,509 5,725 5,725 19,091
Interest and
service charges 337 337 318 318 9,902
Legal 17,661 17,661 25,609 25,609 77,463
Management
remuneration - - - - 77,287
Office and
general 14,066 14,066 10,657 10,657 99,319
Promotion and
entertainment 6,995 6,995 - 752 28,999
Rent - - - 296 34,603
Telephone and
utilities 13,994 13,994 - 7,299 69,555
Transfer agent
and filing
fees 17,964 17,964 10,217 10,217 42,829
Travel 12,982 12,982 18,690 18,690 68,862
112,574 112,574 106,956 115,377 769,519
Other Income
(Expense)
Gain (loss) on
foreign
exchange
conversion (5,553) 26,804 (4,164) (4,164) (41,694)
Interest income 180 180 4,326 4,326 -6,559
-5,373 26,984 162 162 -48,253
Net Loss Before
Non-recurring
Item (117,947) (85,590) (106,794) (115,215) (835,986)
Non-recurring
Expense
Consulting
costs to set
up US
corporation - - - - (78,524)
Net Loss
For Period $ -117,947 $ -85,590 $ -106,794 $ -115,215 $ -914,510
Net Loss
Per Common
Share $ (0.0070) $ (0.0051) $ (0.0157) $ (0.0169)
Weighted
Average
Common
Shares
Outstanding 16,904,380 16,904,380 6,823,028 6,823,028
See Accompanying Notes
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(all figures in US dollars)
(UNAUDITED - SEE NOTICE TO READER)
Period from
Date of
Inception
Nine Months Ended Nine Months Ended on March 10, 1989
September 30 September 30 to September 30
1998 1997 1998
(Unaudited) (Unaudited) (Unaudited)
(Note 1)
NET INFLOW (OUTFLOW) OF
CASH RELATED
TO THE FOLLOWING
ACTIVITIES:
OPERATING
Net loss $ (117,947) $ (106,794) $ (914,509)
Non-cash charge -
amortization 13,285 16,779 57,003
(104,662) (90,015) (857,506)
Change in non-cash working
capital balances relating
to operations (26,501) (25,968) 55,466
(131,163) (115,983) (802,040)
FINANCING
Notes and advances payable 95,691 (5,370) 99,186
Notes and advances from
related parties 328 (25,522) 5,728
Issue of capital stock 5,366 131,019 1,368,226
101,385 100,127 1,473,140
INVESTING
Exchange variance of capital
assets (102) (7,677) (657,235)
NET CASH INFLOW (OUTFLOW) (29,880) (23,533) 13,865
CASH, BEGINNING OF PERIOD 11,388 101,314 -
CASH, END OF PERIOD $ -18,492 $ 77,781 $ 13,865
See Accompanying Notes
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. During the year ended December 31, 1997, the
only income received was bank interest of $4,020.
During the last three 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.
The Company has realized a cumulative loss of $914,509 since March 1992,
and anticipates similar losses until operations begin, which is expected in
early 1999.
The Company has sufficient working capital to meet its immediate
obligations, but does not have any cash available to allow operations to
commence. The Company requires $1,500,000 million to commence flight
operations. The Company intends to raise a total of $3,000,000 by way of an
equity offering, the net proceeds of which will facilitate the operational
start-up and provide sufficient working capital to sustain operations for some
time. The only significant capital expenditures anticipated in the next year
are airport and runway lighting improvements which are expected to cost
approximately $350,000.
PART II OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the quarter ended September 30, 1998, the Company sold the following
shares of common stock of the Company without registration under the
Securities Act of 1933:
a.On July 7, 1998, the Company issued 10,000 shares of its common stock to Al
Leblanc for consulting services rendered by Mr. Leblanc.
b.Also on July 7, 1998, the Company issued 64,800 shares of common stock to
Silverthorn Investments, Ltd., a corporation controlled by Matthew L. Smith,
for consulting services rendered by Mr. Smith.
c.Also on July 7, 1998, the Company issued 80,000 shares of common stock to
Upmann Trading for consulting services rendered to the Company.
d.On August 11, 1998, the Company issued 200,000 shares of common stock to
Blaine Haug pursuant to the terms of his employment agreement.
All of the aforesaid securities set forth immediately above were issued
without registration under the Act by reason of the exemption from
registration afforded by the provisions of Section 4(2) thereof, as
transactions by an issuer not involving any public offering, each recipient of
securities having delivered appropriate investment representations to
Registrant with respect thereto and having consented to the imposition of
restrictive legends upon the certificates evidencing such securities. No
underwriting discounts or commissions were paid in connection with such
issuances.
ITEM 6. REPORTS ON FORM 8-K
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter
ended September 30, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PRIME AIR, INC.
Date: November 19, 1998 By /s/ Royle Smith, President
Date: November 19, 1998 By /s/ Greg Duffy, Principal
Financial and Accounting Officer
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