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, 1999
[ ] TRANSACTION 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 filing 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 August 17, 1999, there
were 19,647,560 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 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, 1998.
<PAGE>
PRIME AIR INC.
(A Development Stage Company)
(A Nevada Corporation)
Consolidated Financial Statements
September 30, 1999 and 1998 and December 31, 1998
(Unaudited - See Notice to Reader)
Notice to Reader
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
<PAGE>
Koch & Associates
_________________________________________
Ste 601 - 938 Howe Street, Vancouver, B.C. V6Z 1N9 Tel (604)684-5700 Fax
(604)684-7211
NOTICE TO READER
We have compiled the consolidated balance sheets of Prime Air Inc., a
Nevada company, as at September 30, 1999 and consolidated statements of
operations, shareholders' equity and deficit and cash flows for the six month
period then ended from information provided by management. We 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.
"Koch & Associates"
October 22, 1999 Certified Management Accountants
Vancouver, B.C.
<PAGE>
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(all figures in US dollars)
(UNAUDITED - SEE NOTICE TO READER)
September 30 1999
(Unaudited)
ASSETS
Current Assets
Cash and short-term deposits $ 1,681
Prepaid expenses and deposit -
GST recoverable 3,164
4,845
Capital Assets (Note 4) 577,338
$ 582,183
LIABILITIES
Current Liabilities
Accounts payable and accruals $ 159,021
Notes and advances payable (Note 5) 23,644
Notes and advances from related
parties (Note 6) -
182,665
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:
19,647,560 common shares 19,648
(Sept 30, 1998 18,013,110;
December 31, 1998 18,013,110)
Share subscriptions receivable -
Capital in excess of par value 1,507,873
1,527,521
Accumulated Deficit During
Development Stage (1,128,003)
399,518
$ 582,183
Approved on Behalf of the Board:
Director
Director
See Accompanying Notes
(0)
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(all figures in US dollars)
(UNAUDITED - SEE NOTICE TO READER)
Period from
Three Nine Three Nine Date of Inception
Months Months Months Months on March 10, 1989
Ended Ended Ended Ended to September
September September September September 30, 1999
30 30 30 30
1999 1999 1998 1998
(Unaudited)(Unaudited)(Unaudited)(Unaudited) (Unaudited)
(Note 1)
Direct Costs
Flight operations $ - $ - $ - $ - $ 114,720
Administrative and
General
Audit and accounting - 506 1,064 2,575 78,390
Advertising - - - - 13,043
Amortization 5,168 15,505 3,327 13,285 79,896
Automotive 1,243 1,243 (71) 1,813 20,407
Bad debts - - - - 1,933
Consulting fees 1,015 25,835 901 7,393 130,065
Insurance 2,270 5,472 1,651 3,509 26,097
Interest and
service charges (44) 7 30 337 10,613
Legal 13,140 71,817 11,860 17,661 141,459
Management remuneration - - - - 77,287
Office and general 4,641 5,200 4,723 14,066 164,957
Rent - airport facility - - - - 34,670
Repair and maintenance 8,193 8,193 - - 13,240
Telephone and utilities 1,115 7,934 2,381 13,994 78,775
Transfer agent and
filing fees 588 4,852 4,417 17,964 43,542
Travel, promotion and
entertainment 3,022 3,022 6,235 19,977 110,728
40,351 149,586 36,518 112,574 1,025,102
Other Income (Expense)
Gain (loss) on foreign
exchange conversion - (1,769) (5,553) 26,804 4,189
Interest income - - (7) 180 7,630
- (1,769) (5,560) 26,984 11,819
Net Loss $(40,351) $(147,817) $(42,078) $(85,590) $(1,128,003)
Net Loss Per Common
Share $(0.0021) $(0.0077) $(0.0025) $(0.0051)
Weighted Average
Common Shares
Outstanding 19,102,743 19,102,743 16,904,380 16,904,380
(Giving effect to
2:1 share split)
See Accompanying Notes
<PAGE>
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(all figures in US dollars)
(UNAUDITED - SEE NOTICE TO READER)
Period from
Nine Months Nine Months Date of Inception
Ended Ended on March 10, 1989
September 30 September 30 to September 30
1999 1998 1999
(Unaudited) (Unaudited) (Unaudited)
(Note 1)
NET INFLOW (OUTFLOW) OF CASH
RELATED TO THE FOLLOWING
ACTIVITIES:
OPERATING
Net loss $ (147,817) $ (85,590) $ (1,128,003)
Non-cash charge -
amortization 15,505 13,285 79,896
(132,312) (72,305) (1,048,107)
Change in non-cash
working capital
balances relating to
operations 84,660 (26,501) 155,857
(47,652) (98,806) (892,250)
FINANCING
Notes and advances
payable (86,110) 95,691 23,644
Notes and advances
from related parties - 328 -
Issue of capital stock 128,010 5,366 1,527,521
41,900 101,385 1,551,165
INVESTING
Acquisition of capital
assets - - (657,234)
Exchange variance of capital
assets - (102) -
- (102) (657,234)
NET CASH INFLOW (OUTFLOW) (5,752) 2,477 1,681
CASH, BEGINNING OF PERIOD 7,433 11,388 -
CASH, END OF PERIOD $ 1,681 $ 13,865 $ 1,681
See Accompanying Notes
PRIME AIR INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
(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 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 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.
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
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, 1999
(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 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 posted by the Internal Revenue
Service of the United States as follows:
1999: $ 0.6811 U.S. / $1. CDN 1998: $ 0.6743 U.S. / $1. CDN
4. Capital Assets September 30 September 30
1999 1998
Accumulated Net Book Net Book
Cost Amortization Value Value
Air terminal
construction costs $ 652,083 $ 77,089 $ 574,994 $ 599,226
Furniture and equipment 5,154 2,810 2,344 1,005
$ 657,237 $ 79,899 $ 577,338 $ 600,231
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 nine months ended September 30, 1999, the Company issued 800,000
restricted common shares to an officer and a director at nominal value
pursuant to a management contract. Also, during the year ended December 31,
1998, the company borrowed $106,500 from a shareholder. During the first
quarter of 1999 the Company converted $92,000 of such debt to 423,200 shares
of Common Stock of the Company. The remaining balance of $ 14,150 is due and
payable by the Company immediately upon receiving funding to commence
operations or upon demand at any time after July 31, 1999.
PRIME AIR INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
(Unaudited - See Notice to Reader)
7. Capital Stock
Authorized:
50,000,000 common shares with a par value of $ .001/share
3,000,000 preferred cumulative convertible shares a stated par
value of $ .001/share
Common Shares Issued:
Number of Shares Consideration
Balance, September 30, 1999 19,647,650 $ 1,527,521
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:
$100 per annum for the initial six (6) years (1993 through 1998); 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.
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 in the
year 2000.
During the last four 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. No debt was
converted during 1998. In the nine months ended September 30, 1999, the
Company converted debt of $128,010 into common stock of the Company.
The Company has realized a cumulative loss of $1,028,003 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 $90,000 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 $100 CAD per
annum to the Village of Pemberton under the terms of its Airport Lease and
Operating Agreement.
The Company proposes to raise a minimum of $3,000,000 and a maximum of
$6,000,000 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.
An agreement dated October 30, 1998, was signed between the Company and
Chanen Painter & Company Limited, Investment Bankers to attempt to raise
capital on behalf of the Company.
Should operations commence, the Company anticipates hiring approximately
six full-time employees during the next 12 months.
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: October 31, 1999 By /s/ Blaine Haug, President
October 31, 1999 By /s/ Greg Duffy, Principal Financial
And Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,681
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,845
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 582,183
<CURRENT-LIABILITIES> 182,665
<BONDS> 0
0
0
<COMMON> 19,648
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 40,351
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (40,351)
<EPS-BASIC> 0
<EPS-DILUTED> 0
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