UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB/A-1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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: (780) 998-3400
The following items from the Company's annual report on Form 10-KSB for
the year ended December 31, 1998, are hereby amended as follows:
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of the Company was quoted on the OTC Electronic Bulletin
Board through approximately July 23, 1996, and from March 27, 1997 until
present. There is currently no established public trading market for the
Common Stock. The table below sets forth for the periods indicated the high
and low bid quotations as reported by the OTC Bulletin Board. These
quotations reflect inter-dealer prices, without retail mark-up, mark-down, or
commission and may not necessarily represent actual transactions.
Quarter High Low
FISCAL YEAR ENDED
DECEMBER 31, 1996 First $0.50 $0.25
Second $0.9375 $0.4375
Third $0.75 $0.25
Fourth -- --
FISCAL YEAR ENDED
DECEMBER 31, 1997 First $0.25 $0.25
Second $1.125 $0.25
Third $0.812 $0.25
Fourth $0.6875 $0.28125
FISCAL YEAR ENDING
DECEMBER 31, 1998 First $0.6875 $0.3125
None of the shares of Common Stock is subject to outstanding options or
warrants to purchase, or securities convertible into, the Common Stock of the
Company. As of April 13, 1998, the Company had 4,203,601 shares of its Common
Stock, or approximately 50.75% of the total outstanding shares, which were
control shares as defined in Rule 144 promulgated by the U.S. Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended. None
of the shares of Common Stock is being, nor have any shares been proposed to
be, publicly offered by the Company.
As of April 13, 1999, there were approximately 368 holders of record of
the Common Stock as reported to the Company by its transfer agent.
No cash dividends have been declared or paid as yet on the Common Stock
and the Board of Directors has not established a dividend policy.
During the quarter ended December 31, 1998, the Company sold the
following shares of common stock of the Company without registration under the
Securities Act of 1933:
a.On November 18, 1998, the Company issued 20,000 shares of its common
stock to McNeal & Associates for consulting services rendered to the Company
by Mr. Wayne McNeal.
b.Also on November 18, 1998, the Company issued 150,000 shares of its
common stock to Richard Shrieves for consulting services rendered to the
Company by Mr. Schrieves.
c.Also on November 18, 1998, the Company issued 40,000 shares of common
stock to James Parkes for consulting services rendered to the Company by Mr.
Parkes.
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 7. FINANCIAL STATEMENTS
Amended financial statements of the Company are attached to this amended
report.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information furnished by current
management concerning the ownership of common stock of the Company as of April
1, 1999, of (i) each person who is known to the Company to be the beneficial
owner of more than 5 percent of the Common Stock; (ii) all directors and
executive officers; and (iii) directors and executive officers of the Company
as a group:
Amount and Nature
Name and Address of Beneficial
of Beneficial Owner Ownership(1) Percent of Class
Phillip Johnston 1,834,450(2) 9.34%
PMB7 Hibiscus Square Pond St.
Grand Turk
Turks and Caicos Island, BWI
Patricia Jarvis 1,037,410 5.28%
P.O. Box 1056
Renton, WA 98057
Blaine Haug 650,000 3.31%
Royle Smith 966,000 4.92%
John Eberhard 415,340(3) 2.11%
Gregory Duffy 375,000 1.90%
Officers and Directors
as a Group (4 persons) 2,406,340 12.25%
___________
(1)Unless otherwise indicated, this column reflects amounts as to which
the beneficial owner has sole voting power and sole investment power.
(2)Of these shares, 140,000 are held directly of record by
Confederation Capital Corporation Ltd., 1,170,625 are held directly of record
by Dolphin Trading Ltd., and 523,825 are held directly of record by TRD
Investments Ltd. See "Item 12. Certain Relationships and Related
Transactions."
(3)Of theses shares, 10,000 are beneficially owned directly and of
record by Mr. Eberhard's wife, and 205,340 are held in a brokerage account
controlled by Mr. Eberhard.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 1998, the Company borrowed $106,500
from TRD Investments Ltd. ("TRD"), a company believed to be controlled by
Phillip Johnston, owning in excess or 5% of the outstanding Common Stock of
the Company. (See "Item 11. Security Ownership of Certain Beneficial Owners
and Management.") During the first quarter of 1999 the Company and TRD
converted $92,000 of such debt into Common Stock of the Company and the
Company issued to TRD 423,200 shares of Common Stock. The remaining balance
of $14,500 is due and payable by the Company immediately upon receiving
funding to commence operations, or payable upon demand at any time after July
31, 1999. No interest is payable upon such outstanding balance. During the
first quarter of 1999 the Company borrowed $27,900 from TRD and $17,500 from
Dolphin Trading Ltd. ("Dolphin"), another company believed to be controlled by
Mr. Johnston. Of the funds borrowed from TRD during the first quarter of
1999, $17,500 has been converted into 100,625 shares of Common Stock of the
Company. All of the funds borrowed from Dolphin during the first quarter of
1999 have been converted into 100,625 shares of Common Stock of the Company.
The Company has no specific arrangements with TRD concerning the repayment of
the remaining balance of $10,400.
Pursuant to the terms of the employment agreement between the Company and
Blaine Haug, an officer and a director of the Company, the Company issued
200,000 shares of common stock of the company to Mr. Haug for services
rendered during the year ended December 31, 1996, and 200,000 shares for
services rendered during the year ended December 31, 1997.
Pursuant to the terms of the employment agreement between the Company and
Royle Smith, an officer and a director of such entity, the Company issued
200,000 shares of common stock of the company to Mr. Smith for services
rendered during the year ended December 31, 1996, and 200,000 shares for
services rendered during the year ended December 31, 1997. In addition, Mr.
Smith was issued 100,000 shares on January 9, 1996, for accepting the office
of Executive Vice-President, and 300,000 shares were issued to him on January
9, 1996, for consulting services. Also, 25,000 shares were issued to Welcome
Ford Sales Ltd., a company controlled by Mr. Smith for administration fees.
On or about January 3, 1996, the Company issued 370,336 shares of common
stock to Confederation Capital Corporation Ltd., a company controlled by Mr.
Phillip Johnston, a shareholder owning in excess of 5% of the outstanding
stock, for previous money loaned to the company. In addition, the Company
issued 94,800 shares to such entity on April 3, 1997, for repayment of
advances of $25,583 made by such entity to the Company.
The Company entered into a consulting contract (the "Consulting
Agreement") on June 10, 1996, with Silverthorn Investments, Ltd. (the
"Consultant") in which the Company agreed to retain the services of the
Consultant through June 1, 2000, unless earlier terminated as provided in the
Consulting Agreement. Pursuant to the terms of the Consulting Agreement, the
Consultant is required to be available for a minimum of 60 business days per
year to provide consulting and assistance as may be necessary to assist in
facilitating the full operations of the Company's business. In return, the
Company has agreed to pay the Consultant $100 per hour for such services. At
the option of the Company 75% of the amount due may be paid to the Consultant
in the form of common stock of the Company, based upon the average of the last
three months closing bid prices for the common shares. The Consultant is
controlled by Matthew Smith who is also the assistant secretary of the
Company.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this amended report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PRIME AIR, INC.
Date: May 14, 1999 By /s/ Blaine Haug, President
Date: May 14, 1999 By /s/ Gregory Duffy, Director
and Chief Financial Officer
<PAGE>
PRIME AIR, INC.
(A Development Stage Company)
(A Nevada Corporation)
Consolidated Financial Statements
December 31, 1998 and 1997
Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Shareholders' Equity and Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
AUDITORS' REPORT
To the Shareholders of
Prime Air, Inc. (A Nevada Corporation)
We have audited the consolidated balance sheets of Prime Air, Inc. (A
Development Stage Company) as at December 31, 1998 and 1997 and the
consolidated statements of operations, shareholders' equity and deficit and
cash flows for the years then ended. These financial statements are the
responsibility of the company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We have conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at December 31, 1998 and
1997 and the results of its operations and cash flows for the years then ended
in accordance with generally accepted accounting principles.
As reported in Note 1 to these financial statements, the results of
operations and cash flows for the period from the date of inception of this
organization as a development stage company on March 10, 1989 to December 31,
1998 have been compiled 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 that these statements
may not be appropriate for their purposes.
Richmond, Canada
April 15, 1999 Chartered
Accountants
Comments by Auditor for U.S. Readers
on Canada-U.S. Reporting Difference
In the United States, reporting standards for auditors require the
addition of an explanatory paragraph (following the opinion paragraph) when
the financial statements are affected by conditions and events that cast
substantial doubt on the company's ability to continue as a going concern,
such as those described in Note 2 to the financial statements. Our report to
the shareholders dated April 15, 1999 is expressed in accordance with
Canadian reporting standards which do not permit a reference to such events
and conditions in the auditors' report when these are adequately disclosed in
the financial statements.
Richmond, Canada
April 15, 1999 Chartered Accountants
<PAGE>
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(all figures in US dollars)
December 31 December 31
1998 1997
ASSETS
Current Assets
Cash and short-term deposits $ 7,433 $ 11,388
Prepaid expenses 3,091 -
GST recoverable 5,116 1,587
15,640 12,975
Capital Assets (Note 4) 592,843 613,516
$ 608,483 $ 626,491
LIABILITIES
Current Liabilities
Accounts payable and accruals $ 79,405 $ 83,655
Notes and advances payable
(Note 5) 109,754 3,495
Advances from related parties
(Note 6) - 5,400
189,159 92,550
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: 7,140,213) 18,013 7,140
Share subscription receivable - (20)
Capital in excess of par value 1,381,498 1,355,740
1,399,511 1,362,860
Accumulated Deficit During
Development Stage (980,187) (828,919)
419,324 533,941
$ 608,483 $ 626,491
Approved on Behalf of the Board:
Director
Director
See Accompanying Notes To Financial Statements
<PAGE>
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(all figures in US dollars)
Year Ended Year Ended
December 31 December 31
1998 1997
Administrative And General Expenses
Audit and accounting $ 27,685 $ 23,826
Advertising 3,949 -
Amortization 20,673 21,603
Bad debts 1,933 -
Consulting 9,862 24,583
Insurance 5,043 9,240
Interest and service charges 1,041 1,769
Legal costs 9,840 34,192
Office and general 8,737 10,176
Repairs and maintenance 5,047 -
Rent - airport facility (Note 8) 67 279
Telephone and utilities 15,280 18,039
Transfer agent, listing and
filing fees 13,825 13,636
Travel, promotion and
entertainment 29,823 26,175
152,805 183,518
Other Income (Expense)
Gain (loss) on foreign exchange
conversion 286 (10,199)
Interest income 1,251 4,020
1,537 (6,179)
Net Loss For Year $ (151,268) $ (189,697)
Net Loss Per Common Share $ (0.0089) $ (0.0138)
Weighted Average Common Shares
Outstanding 16,943,937 13,792,450
(Giving effect to 2:1 share split)
See Accompanying Notes To Financial Statements
<PAGE>
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(all figures in US dollars)
Year ended Year ended
December 31 December 31
1998 1997
NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES:
OPERATING
Net loss $ (151,268) $ (189,697)
Non-cash charge - amortization 20,673 21,603
(130,595) (168,094)
Change in non-cash working capital
balances relating to operations (10,870) (12,306)
(141,465) (180,400)
FINANCING
Notes and advances payable 106,259 (5,572)
Advances from related parties (5,400) (20,122)
Issue of capital stock 36,651 131,079
137,510 105,385
INVESTING
Acquisition of capital assets - (14,911)
NET CASH INFLOW (OUTFLOW) (3,955) (89,926)
CASH, BEGINNING OF YEAR 11,388 101,314
CASH, END OF YEAR $ 7,433 $ 11,388
See Accompanying Notes To Financial Statements
<PAGE>
PRIME AIR, INC.
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity and Deficit
(all figures in US dollars)
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)
See Accompanying Notes To Financial Statements
<PAGE>
PRIME AIR INC.
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity and Deficit
(all figures in US dollars)
Capital in Accumulated
Excess of Share Deficit During
Common Shares (Less than) Subscriptions Development
Shares Amount Par Value Receivable Stage
Balance Forward 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
year 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
period 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
period ended
December 31, 1996 - - - - (238,416)
Balance,
December 31,
1996 6,556,781 $ 6,557 $1,225,244 $ (20) $ (639,222)
See Accompanying Notes To Financial Statements
<PAGE>
PRIME AIR INC.
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity and Deficit
(all figures in US dollars)
Capital in Accumulated
Excess of Share Deficit During
Common Shares (Less than) Subscriptions Development
Shares Amount Par Value Receivable Stage
Balance Forward 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
settlement:
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)
See Accompanying Notes To Financial Statements
<PAGE>
<PAGE>
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
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.
The results of operations and cash flows for the period from the date of
inception of this organization as a development stage company on March 10,
1989 to December 31, 1998 are presented herein for information purposes only.
These amounts are unaudited and accordingly no audit opinion has been
expressed thereon.
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 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.
<PAGE>
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
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 $
1.5368 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:
$ 1.4831 CDN / $1.00 U.S. (1997: $1.3844 CDN / $1.00 U.S.).
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", 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.
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
3. Significant Accounting Policies (continued)
Income Taxes
The Company has adopted Statement of Financial Accounting Standards No. 109,
"Accounting For Income Taxes", in the fiscal year ended December 31, 1998 and
has applied the provisions of that statement on a retroactive basis to the
previous fiscal year which resulted in no significant adjustment.
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, 1998 and earlier years and
accordingly, no deferred tax liabilities have been recognized for all years.
The Company has cumulative net operating loss carryforwards of approximately
$ 980,000 at December 31, 1998 and $ 830,000 at December 31, 1997. No effect
has been shown in the financial statements for these carryforwards as the
likelihood of future tax benefit from such is not presently determinable. The
potential income tax benefits of the net operating loss carryforwards of
approximately $ 230,000 at December 31, 1997 and $195,000 at December 31,
1997 (based upon current income tax rates) have been offset by valuation
reserves of the same amount. The net operating losses began to expire as of
December 31, 1997.
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
4. Capital Assets
Capital assets consist of the following at December 31, 1998 and December 31,
1997:
December 31, 1998
Accumulated Net Book
Cost Amortization Value
Air terminal construction costs $ 652,083 $ 62,076 $ 590,007
Furniture and equipment 5,154 2,318 2,836
$ 657,237 $ 64,394 $ 592,843
December 31, 1997
Accumulated Net Book
Cost Amortization Value
Air terminal construction costs $ 652,083 $ 42,058 $ 610,025
Furniture and equipment 5,154 1,663 3,491
$ 657,237 $ 43,721 $ 613,516
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
$106,500 which has been advanced to the Company by a shareholder and/or a
corporation controlled by that shareholder who is the beneficial owner of
1,310,625 shares of common stock of the Company, that holding representing
7.28% of the issued and outstanding capital of the Company.
6. Related Party Transactions
During the years ended December 31, 1998 and 1997, no cash remuneration was
paid to any director or officer of the Company. However, 2,000,000
(post-split) restricted common shares of capital stock were issued to
directors and officers during the year ended December 31, 1998 (1997: 650,000
shares) for services rendered. These shares have been attributed a nominal
value of $ .001 per share.
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
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
<PAGE>
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
7. Capital Stock (continued)
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.
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. The lease commitment amounts for
1999 through 2003 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.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 7,433
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
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<CURRENT-ASSETS> 608,483
<PP&E> 0
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