January 20, 2014 

Ms. Laura Remo 

Chief, Air Carrier Fitness Division 

Department of Transportation 

1200 New Jersey Ave., S.E. 

Washington, D.C. 20590 

Re: Fitness Review for Gem Air LLC 

(formerly Mountain Bird, Inc. d/b/a Salmon Air) 

Dear Ms. Remo: 

Gem Air LLC is applying for commuter authorization and submits the fol lowing information to update 

the information that is presently in your files under Mountain Bird Inc. d/b/a Salmon Air, as well as 

under Gem Air LLC d/b/a Salmon Air. Because we sold the Salmon Air d/b/a and local flying 

operations to McCall Aviation Inc in May 2009, we did not complete commuter authorization in 2008. 

Gem Air LLC currently holds a Part 135 certificate: number GAJA077E. 

Before sel ling, we flew the commuter route between Salmon and Boise, Idaho, but McCall Aviation 

Inc chose not to continue that service. Our non-compete agreement with McCall Aviation is up in May 

2014. The air service route from Salmon to Boise connects Salmon to the state capital and airline 

travel to the rest of the world, and we believe that tie is necessary for healthy economic growth. 

Therefore, we respectfully request your consideration of our commuter application. 

As you are aware, my husband, Dan Schroeder, and I have been in Part 135 operations in Idaho since 

1982. During that time, we served UPS for over 15 years, operated an EAS contract in Moab, Vernal, 

and Salt Lake City, Utah, and developed Salmon, McCall, and Boise commuter service. We believe 

that commuter service is necessary for continued business growth in Idaho, and by starting with the 

familiar route of Salmon to/from Boise, we can again establish a concrete customer base. 

When the non-compete agreement expires in May 2014, Gem Air will begin on-demand operations, 

focused primari ly on 5MB-BOI-SMN passenger service. Commuter authority will allow Gem Air to 

efficiently offer more frequent scheduled service which will greatly improve Gem Air's ability to 

service the traveling public. Please note, the commuter authority that Gem Air is pursuing will not 

significantly change operations, management, personnel, or ownership of the business, and as such we 

respectfully request expedited treatment of our commuter appl ication. 

If you have any questions, please do not hesitate to call or e-mail. Thank you for your time and 

consideration. 

Best thoughts, 

g//7 

r~ 

oAnn Wolters 

Manager 

Gem Air LLC 

208-993-0178 

woltersjo@gmail.com 
Application of 

Gem AirLLC 

BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

DOCKET 

for authority to conduct scheduled passenger operations as a 

commuter air carrier under 49 U.S.c. 41738 

APPLICATION OF 

Gem Air LLC 

Communications with respect to thjs document should be sent to: 

January 18, 2014 

Gem AirLLC 

JoAnn Wolters 

31 Hamner Drive 

Salmon, 1D 83467 

Phone: (208) 993-0178 

Email: woltersjo@gmail.com 
Application of 

GemAirLLC 

BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

for authority to conduct scheduled passenger operations as a 

commuter air carrier under 49 U.S.C. 41738 

APPLICATION OF 

GemAirLLC 

DOCKET 

Gem Air LLC, d/b/a! Gem Air, submits this application for authority to operate scheduled 

passenger service as a commuter air carrier under section 41738 of Title 49 of the United 

States Code ("the Statute"). 

In support of its application Gem Air states the following: 

Applicant is a partnership. JoAnn E. Wolters and Daniel L. Schroeder (wife and husband) 

are the two and only members of Gem Air LLC, organized in December of 2007 under 

the laws of the State ofIdaho. Its address, telephone and email are: 

31 Hamner Drive 

Salmon, ID 83467 

Telephone: (208) 993-0178 

Email: woltersjo@gmail.com 

Applicant is a citizen of the United States as defmed in section 40102(a)(IS) of the Statute. 

The carrier is owned by JoAnn E. Wolters and Daniel L. Schroeder (wife and 

husband), the two and only two members of Gem Air LLC d/b/a Gem Air. 

JoAnn is General Manager and Daniel is the Director of Operations and 

Chief Pilot. Their physical home address is 64 Miller Lane; Salmon, ID 83467. 

They are both US citizens. 

Applicant is currently under a "non-compete" agreement with McCall Aviation until May 

2014 and is engaged in on-demand contract flying for McCall Aviation. 
Applicant requests authority to engage in scheduled passenger operations as a commuter and 

proposes to operate: 

Scheduled service between Salmon, ID and Boise, ID. Service frequency will be 2 round trips 

6 days a week from June through August and 5 rounds trips 3 days a week September lhrough 

May. Service will be provided using a 9 passenger Quest Kodiak 100. 

Information in support of the applicant's fitness to conduct the proposed air transportation 

operations is contained in subsequent attachments and exhibits. 

Pursuant to title 18 United States Code section 1001 , I JoAnn E. Wolters, in my inclividual 

capacity and as the authorized representative of the applicant, have not in any manner 

knowingly and willfully falsified, concealed or covered up any material fact or made any 

false, fictitious, or fraudulent statement or knowingly used any documents which contain 

such statements in connection with the preparation, filing or prosecution of the 

application. I understand that an individual who is found to have violated the provisions of 

18 U .S.C. section 1001 shall be fined nor more than $10,000 or imprisoned not more than 

five years, or both. 

S.bm;tted by, _! 

U:-ifdb-' JoAnn E. Wolters 
204.3(d) 

State of Idaho 

CERTIFICATE OF EXISTENCE 

OF 

GEMAIR,LLC 

File Nwnber W-69723 

T, BEN YSURSA, Secretary of State of the State of Idaho, hereby certify that I am the 

custodian of the limited liability company records of this State. 

I FURTHER CERTIFY That the records of this office show that the above-named limited 

liability company filed articles of organization in Idaho on 12/2112007. 

I FURTHER CERTIFY That the limited liability company's articles of organization have 

not been dissolved. 

Dated: 1123120145:38 PM 

~~ SECRETARY OF STATE 

Authentic Access Idaho Document ( http://www.accessidaho.org!public!portal!authenticate.html ) 

Tag: bSaeS fSff8d 7 40878e07 e ld99ff267acf9fclS 1 faS26S933eb9db 703a 7 eOd9d02e92101860b227 c3 

204.3(e) Please see below the Affidavits of Citizenship for Daniel Schroeder and JoAnn 
Wolters 

AFFIDAVIT OF ClTIZENSUIP 

STATE OF _--="-Z-«:i""fi-u=.<o.",,,? __ 

COUNTY OF _--,-,L,,-,s-::::A7~A,--,-,-,__ 

first duly sworn, deposes and says: 

I. That hel~s duly elected, qualified, and serving as t114-lIItty,.\;q t1~"'111>F~/ (EU 

Of C <em d:c LAc and that he§iS authtnzed to and 

does make this affidavit for it. 

2. That ,~d ;; M /zt~ is a citizen of the United States 

within the meaning of 49 US.c. 40102(a)(1 5). 

Subscribed and sworn to before me this /:; 

(SEAL) 

KIM S HAMILTON 

Notlry Public 

Stlt. of Idaho 
AFFIDA VIT OF CITIZENSHIP 

STATE OF _-,~=-=u''-<A--,cr:-u&-<..,,--' __ 

COUNTYOF __ ~;(~~~~2~flfzACu-__ 

first duly sworn, deposes and says: 

I ThatGhhe is duly elected, qualified, and serving as 

Of (fAy!. 4,f L. L d.. and tha09ishe is authorized to and 

does make this affidavit for it 

is a citizen of the United States 

within Ule meaning of 49 USC 401 02(a)( 15) 

f(iI 

Subscribed and sworn to before me this,--,-/I'-.-' __ day of ZJf'('PJJ86f, 200{3' 

(SEAL) 

KIM S HAMILTON 

Notary Public 

State of Idaho 
204.3(t) Key Management Personnel 

JoAnn E. Wolters -

Gem Air LLC - CEO and General Manager 

• Current Address: 64 Miller Lane 

Salmon, ID 83467 

• DOB 09/23/45 -Chicago, Illinois 

• USA citizenship - Born in Chicago, IL 

• Graduated York High School -Elmhurst, Illinois-I %3 

• Attended The University of Wyoming for 2 years 

• Sportsland of Laramie, WY - OwnerlManager 1972-1978 

• Student at Emery School of Aviation, Greeley,CO -Jan., 1979-June, 1979 

• Instructor (Private through CFI) at Emery School of Aviation , Greeley, CO- June, 1979-

May, 1980 

• Commercial Pilot with CFI 

• Co-owned and managed Mountain Bird Inc d/bla! 

Salmon Ai as President from 1982 to 2005. 

• Built Mountain Bird from $150,000 yearly gross 

in 1982 to $3.8 million in 2004. 

• President/General Manager 1981-2005 Mountain 

Bird, Inc dba Salmon Air 

• 50"10 OvmerilManagerofGemAir LLC2007-Present 

• 50% OwnerlPresident of Spirit Air Inc 2000-Present 

• FAA Certificate # 348368108 

• Commercial , Instrument, CFI - 1979 

Daniel L. Schroeder -

Gem Air LLC - Director of Operations and Chief Pilot 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

Current Address: 64 Miller Lane 

Salmon, ID 83467 

USA citizenship - Born in Tacoma, WA 

Graduated Lennox High School in 1966 

Worked at Bob's Automotive while attending EI Camino Ir. College through 1967 

Central Office Equipment Man Telephone Co., Culver City, CA. from 1968-1 969 

Army operations & Intelligence 1969-1971 

Vietnam Honorable Discharge -E-5 

Central Office Equipment Man Telephone Co., Culver City, CA. from 1971-1973 

Angel FireCorp. Sawmill, EagleNest,NM 1 'J73- 1977 

Student -Emery School of Aviation, Greeley, CO. 1977-1978 

Instructor -Emery School of Aviation, Greeley, CO. 1978-1980 

1982-2005 - 50% owner of Mountain Bird Inc d/bla Salmon Air 

1982-2005 Salmon Air Director of Operations, Check Airman - All Checks 

2007-2008 Director of Operations, Check Airman All Checks GEM AIR LLC 

2009-2013 McCall Aviation - Pilot, Check Airman All Checks, Training Captain 

50% Share owner Gem Air LLC 2007-Present 
• Ratings: 

o A TP March 1997 

o Gold Seal Flight Instructor 

o CFI I 

o MEL, 

o Ground Instructor Instrument and Advanced 

• Flight Time: 

o IT - 21,690 

o PIC - 21 ,440 

o MEL -11 ,0000 

o SEL - 10,500 

o Night - 1,500 

o Instrument - 2, I 00 

o Hood - ISO 

o Simulator - ISO 

Russell W. Linn 

Gem Air LLC - Director of Maintenance 

• 

• 

• 

• 

• 

• 

• 

• 

• 

Current Address: 1111 Roosevelt Avenue 

Salmon, ID 83467 

US Citizenship 

1987-1988 Continental Airlines - Avionics Mechanic 

1988-1996 Trans World Airlines - Electro Mechanic 

1996-2007 Salmon Air - 2003-2006 Director of Maintenance and A&PIIA Mechanic 

2007-2008 Swift Transportation - Truck Driver 

2008-2009 Salmon Air - Line Pilot Part 135 

2010-Present Gem Air - Director of MaintenancelMechanic 

Technical Education 

o PT6A-21/27/34111 14 Heavy Maintenance Course, Standard Aero - Canada 

o Quest Kodiak 100 Factory Maintenance Course, Spokane, W A 

o Cessna Caravan Maintenance Course, Flight Safety - Wichita, KS 

o MD80 Avionics Initial, DC9-10/-30/-40 Avionics, Avionics Differences 

o B767 Electro Initial and LlOII Electrical Course - Trans World Airlines 

o B747 Electrical Avionics initial - Continental Airlines 

The positions of Director of Operations, Chief Pilot, and Director of Maintenance, filled by the 

above persons, meet the qualifications of their respective positions as set for tin sections 

119.69 and 119.71 of the Federal Aviation Regulations (14 CFR 119.69 & 119.71). Below is 

an Organizational Chart for Gem Air LLC. 
The positions of Director of Operations, Chief Pilot, and Director of Maintenance, filled by the 

above persons, meet the qualifications of their respective positions as set for tin sections 

119.69 and 119.71 of the Federal Aviation Regulations (14 CFR 119.69 & 119.71). Below is 

an Organizational Chart for Gem Air LLC. 

Gem Air LLC Organizational Chart 

GENERAL MANAGER 

DIRECTOR 

/~ OF OPERTIONS 

OPERATIONS MANGER 

/~ /~ CHIEF PILOT DIRECTOR OF CUSTOMER ADMINISTRATION 

MAINTENANCE SERVICES 

PILOTS MECHANICS 

AND LINE 
204.3(g) The foUowing is the complete list of owners of Gem Air LLC (applicant) 

Daniel Schroeder 50% ownership 

JoAnn Wolters - 50% ownership 

Daniel and JoAnn are husband and wife 

204.3(h) N/A 

204.3(i) NI A 

204.3(j) N/A 

204.3(k) See attached financial statements for Gem Air LLC and Spirit Air Inc 

Spirit Air Inc was fonned in 1999 as chapter S Idaho Corporation. Ownership is 50% JoAnn 

Wolters and 50% Daniel Schroeder (wife and husband). Spirit Air Inc. leascs aircraft to Gem 

Air LLC which is owned solely by JoAnn Wolters and Daniel Schroeder. Spirit Air and Gem 

Air are in strong financial positions and have always demonstrated excellent fiscal 

responsibility. 

204.3(1) NI A 

204.3(m) N/A 

204.3(n) Applicant's fleet of aircraft 

Re-stated from above: 

Spirit Air Inc was fonned in 1999 as chapter S Idaho Corporation. Ownership is 50% JoAnn 

Wolters and 50% Daniel Schroeder (wife and husband). Spirit Air Inc. leases aircraft to Gem 

Air LLC which is owned solely by JoAnn Wolters and Daniel Schroeder. 

Aircraft owned by Spirit Air Inc are: 

2007 - N838SA Kodiak 100 - Ser # - 002' 

1976 - N6561 B Britten Nonnan Islander BN2A-20 - Ser # 520 

1976 - N4438 Britten Norman Islander BN2A-20 - Ser # 766 

1975 - N80GV Piper Chieftain PA31-350 - Ser # 31 -7552003 

1974 - N31932 Piper Chieftain PA31 -350 - Ser # 31 -7405144 

1976 - N8514C Piper Seneca PA34-200T --- Ser # 34-767-147 

2000 - N376ME Cessna T206H -- Ser # T20608225 

1978 N7067Z Cessna T210G - Ser # 21062572 

1983 N9313D CessnaCI72RG Ser # 172RGll17 

1964 N7748U Cessna 172 - Ser # 17251748 

2007 N1527P Cessna 172S - Ser #172S1 0456 

2008 N 1315C Cessna 172S - Ser # 172S 10656 

Those aircraft owned by Spirit Air Inc that are currently Part 135 are N838SA (Kodiak), 

N80GV (Chieftain), N6561B (Islander), N4438 (Islander), N8514C (Seneca), N376ME 

(Cessna T206), and N7067Z (Cessna T21 0). Some of these are leased to McCall Aviation Inc 

and some to Gem Air LLC. Some are temporarily inactive because of slow season and 

maintenance though they are still on 0085. 

• 2007 Kodiak is the only aircraft that is financed. All other aircraft are owned free and clear. 
The turbine Kodiak 100 has been owned by Spirit Air since December 2006 and is the planned 

commuter aircraft. The chieftains and the Seneca will be considered for our commuter 

operations once they have completed the aging aircraft inspection as required for 135 

Commuter operations. There are no needed or planned aircraft acquisitions at this time. 

Please see below the Affidavit of Safety Compliance. 
AFFIDAVIT OF SAFETY COMPLIANCE 

STATE OF _-->" ..,t.7~c£(~+>~l=,f.wTJ<.<: __ 

COUNTY OF _~L=-=S:.</Jn:..!:.£.L:...L/;:L'7L'_'_ 

first duly sworn, deposes and says: 

I. That(j;}/she is duly elected, qualified, and serving as 

Of_---4,;6G;L.ZS2:Z4':l:'14'L-;&UL:!l;I?_-"'i"-'L~(2~ __ and tha@tshe is authorized to and 

does make this affidavit for it 

2. That all aircraft owned and leased by_----*c5:;.--".F-"';,mzn'--L!l~(.:L!/PL: _-,-L=-",L",-,CZ=-_~ 

have been certified by the Federal Aviation Administration and currently comply with 

all applicable Federal Aviation Administration safety standards under Parts [J 21] [135], 

as well as the noise standards of Part 36, of the Federal Aviation Regulations. 

K.tI.:.; 

Subscribed and sworn to before me this,-,-,II __ day of :JJ6{E/Yj 86f, 200! 

(SEAL) 

KIM S HAMILTON 

Notary Public 

Stale of Idaho 
204.3(0) N/ A 

204.3(p) N/A 

204.3(q) N/A 

204.3(r) 

Dan Schroeder and JoAnn Wolters are experienced commuter operators. They began 

commuter operations under Mountain Bird Inc d/b/a Salmon Air, in the early 2000's. After 

successfully growing the Salmon-Boise-Salmon route from 2 round trips per week to 8 times 

per week over a 3 year period, they bid on an EAS route for Moab and Vernal, Utah. The bid 

was awarded to them and began in 2004. Enplanements doubled in the first year of 

operation. Piper Chieftains were used for the route. In July 2005, they sold Mountain Bird 

Inc, d/b/a Salmon Air. 

Gem Air LLC was formed in Idaho by JoAnn Wolters and Daniel Schroeder (sole 

owners/members) in December 2007. At that time, JoAnn and Dan took back Mountain Bird 

Inc, dba Salmon Air, that they had sold in July 2005. Because of the bad credit Mountain Bird 

Inc's other owners created from July 2005 through December 2007, they had to change the 

name ofthe business which is why Gem Air was formed. All debts were taken on by JoAnn 

and Dan and negotiated to satisfaction of creditors. Gem Air LLC became the holder of the 

135 certificate which it still holds today. In May 2009, all business operations conducted under 

the d/b/a of Salmon Air were sold to McCall Aviation Inc. in McCall, Idaho. 

As a condition of the sale to McCall Aviation, Gem Air agreed to a 5 year non-compete clause 

prohibiting Gem Air from engaging in operations for hire within 500nm of Salmon, ID. When 

the non-compete clause expires May I, 2014, Gem Air will begin operating on-demand SMNBOI-SMN service and will begin operating commuter service between Salmon and Boise once 

conmlUter authority is granted. Previous to being granted commuter authority or 

beginning on demand operations, Gem Air will submit OST Form 4507, OST Form 6410 

and OST Form 4523. 

204.3(s) 

Gem Air LLC operates a FAA Part 135 business for 9 passenger seats or less under the 

Certificate Number GAJA077E granted in January 2008. Gem Air LLC has authority for single, 

multi-engine and turbine VFRlIFR operations. The local FSDO office is located at: 

3295 Elder St. Suite 350 

Boise, ID 83705. 

POI for Gem Air LLC is Patrick Darling and PM! is Craig Karel. The Quest Kodiak 100 aircraft 

will be added to the current certificate to conduct commuter operations. 

204.3(t) 

Gem Air will provide scheduled service between Salmon, ID and Boise, ID. Service frequency 

will be 2 round trips 6 days a week from June through August and 5 rounds trips 3 days a 

week from September through May. Service will be provided using a 9 passenger Quest 

Kodiak 100. 

Please see the below pro-forma fmancials for the first normal year of service. 
Gem Air LLC 

SMN-BOI-SMN Commuter 

2015 Pro-forma Profit and Loss 

1 Operating Aircraft: Quest Kodiak 100 9 seats 

1 st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 

Average Block Length (nm) 145 145 145 145 145 

Scheduled Departures 130 158 284 130 702 

Scheduled Block Hours 130 158 284 130 702 

Projected Completion Factor 99% 99% 99% 99% 99% 

Projected Completed Departures 129 156 281 129 695 

Projected Completed Block Hours 129 156 281 129 695 

Projected Completed Block Miles 18,662 22,681 40,768 18,662 100,772 

Projected Passengers 475 709 1513 505 3,201 

Passengers Per Departure 3.7 4.5 5.4 3.9 4.6 

Average Fare $199 $199 $199 $199 $199 

Revenue Passenger Miles 68,875 102,747 219,356 73,225 464,203 

Available Seat Miles 167,954 204,128 366,914 167,954 906,949 

Projected Load Factor 41 % 50% 60% 44% 51% 

Financial Projections 

Revenue $ 94,525 $ 141 ,011 $ 301 ,047 $ 100,495 $ 637,079 

Expenses 

Flight Operations $18,629 $ 22,642 $ 40,698 $18,629 $100,600 

Aircraft Ownership $20,271 $ 24,637 $ 44,284 $20,271 $ 109,464 

Fuel & Oil $24,903 $ 30,267 $ 54,404 $24,903 $ 134,479 

Sales & Marketing $ 5,555 $ 6,752 $ 12,136 $ 5,555 $ 30,000 

Traffic Servicing $ 3,333 $ 4,051 $ 7,282 $ 3,333 $ 18,000.00 

Insurance $ 7,500 $ 7,500 $ 7,500 $ 7,500 $ 30,000 

Maintenance $16,537 $ 20,099 $ 36,129 $16,537 $ 89,305 

Sub-Total - Direct $94,786 $115,202 $207,072 $94,786 $511,847 

Indirect $ 7,000 $ 7,000 $ 7,000 $ 7,000 $ 28,000 

Total Expenses $ 101 ,787 $ 122,202 $ 214,072 $ 101,787 $ 539,847 

Projected Operating ProfiU(Loss) $ (7,262) $ 18,809 $ 86,975 $ (1 ,292) $ 97,231 
Pre-operating/Start-up Cost 

Obtaining Operating Authority 

Establishing Stations 

Marketing 

Reservation and Pilot Training 

Total Pre-service startu costs 

Pro-Forma Statement prepared using 

the cash basis 

7,500 

7,500 

10,000 

3,000 

$ 28,000 

The above pro-forma data, including load factors, are based upon historical operating data and experience 

Daniel Schroeder and JoAnn Wolters collected when they operated the same commuter route from 2001-2005 

Initial service start-up will not require the hiring/training of additional 

personnel 

Operating costs are calculated based on the use of a single 2006 Quest Kodiak which has been owned by 

applicant since 2007. 

Hangar and office space in Salmon is owned free and clear by JoAnn Wolters and Daniel Schroeder and is 

personally contributed to the operation 

Scheduled frequency is 2 round trips a day 6 days a week from mid-June to mid-September and 5 rounds trips 

er week the rest of the ear 
Gem Air LLC 

SMN-BOI-SMN Commuter 

December 31 , 2013AND 2014 Pro-forma Balance Sheet 

2014 2013 

CURRENT ASSETS 

Cash $ 85,125 $ 8,796 

Inventory $ 67,565 $ 67,565 

Other current assets $ 5,509 $ 5,509 

Total current assets $ 158,199 $ 81,870 

PROPERTY AND EQUIPMENT 

Building and improvements $ 103,170 $ 103,170 

Equipment $ 202,141 $ 202,141 

Vehicles $ 28,058 $ 28,058 

$ 333,369 $ 333,369 

Less accumulated depreciation $ (308,572) $ (301,669) 

Property and equipment - net $ 24,797 $ 31,700 

TOTAL $ 182,996 $ 113,570 

LIABILITIES: 

Accrued liabilities $ 138 $ 138 

MEMBERS' EQUITY 

Partner's capital accounts $ 113,432 $ 123,322 

Contributions $ 22,000 $ 33,685 

Net gain (loss) $ 47,426 $ (43,575) 

Total members' equity $ 182,858 $ 113,432 

TOTAL $ 182,996 $ 113,570 
CERTIFICATE OF SERVICE 

I hereby certify that I have on this day served the foregoing application for commuter air 

carrier authority by first class mail, postage prepaid, upon the persons shown in the 

following service list. 

2/812014 

Boise Flight Standards District Office 

3295 Elder St. Suite 350 

Boise, ID 83705 

Lemhi County Airport 

PO Box 911 

Salmon, ID 83467 

Boise Airport Administration 

3201 Airport Way, Suite 1000 

Boise, ID 8370 

joAnn E. Wolters 

SERVICE LIST 
GEM AIR LLC 

FINANCIAL STATEMENTS -INCOME TAX BASIS 

FOR THE YEARS ENDED 

DECEMBER 31,2013 AND 2012 AND 

INDEPENDENT ACCOUNTANTS' COMPILATION REPORT 
GEM AIR LLC 

Table of Contents 

Independent Accountants' Compilation Report ............................................................... 1 

Financial Statements: 

Statements of Assets, Liabilities, and 

Members' Equity - Income Tax Basis .................................................................. 2 

Statements of Revenues and Expenses - Income Tax Basis ............................... 3 

Notes to Financial Statements ........................................................................................ 4 
Cooper Norman 

CPAs & BUSINESS ADVISORS 

1000 RIVERWALK D RIVE. SUITE 100 183402 

POST O FfiCE Box 51330 183405·1330 

IDAHO F ALLS, IOAHO 

208.523.08621208.525.8038 FAX 

www.coopernorman.com 

INDEPENDENT ACCOUNTANTS' COMPILATION REPORT 

Gem Air LLC: 

We have compiled the accompanying statements of assets, liability, and members' 

equity - income tax basis of Gem Air LLC as of December 31, 2013 and 2012 and the 

related statements of revenues and expenses - income tax basis for the years then 

ended. We have not audited or reviewed the accompanying financial statements and, 

accordingly, do not express an opinion or provide any assurance about whether the 

financial statements are in accordance with the income tax basis of accounting. 

Management is responsible for the preparation and fair presentation of the financial 

statements in accordance with income tax basis of accounting and for designing, 

implementing, and maintaining internal control relevant to the preparation and fair 

presentation of the financial statements. 

Our responsibility is to conduct the compilation in accordance with Statements on 

Standards for Accounting and Review Services issued by the American Institute of 

Certified Public Accountants. The objective of a compilation is to assist management in 

presenting financial information in the form of financial statements without undertaking 

to obtain or provide any assurance that there are no material modifications that should 

be made to the financial statements. 

Idaho Falls, Idaho 

February 3, 2014 

--------------------;ntegrity------- expenence trust 
GEM AIR LLC 

STATEMENTS OF ASSETS, LIABILITIES, AND MEMBERS' EQUITY 

INCOME TAX BASIS 

DECEMBER 31, 2013 AND 2012 

ASSETS 2013 2012 

CURRENT ASSETS: 

Cash (Note 1) $ 8,796 $ 7,876 

Inventory (Note 1) 67,565 67,565 

Other current assets 5,509 10,751 

Total current assets 81 ,870 86,1921 

PROPERTY AND EQUIPMENT (Note 1): 

Buildings and improvements 103,170 103,170 

Equipment 202,141 200,767 

Vehicles 28,058 28,058 

333,369 331 ,9951 

Less accumulated depreciation (301,669) (294,81 1 ) 

Property and equipment - net 31 ,700 37,184 1 

TOTAL 1$ 113,570 $ 123,376 1 

LIABILITIES AND MEMBERS' EQUITY 

LIABILITIES: 

Accrued liabilities 1$ 138 $ 55 1 

MEMBERS' EQUITY: 

Partne(s capital accounts 123,322 139,972 

Contributions 33,685 41,000 

Net loss (43,575) (57,651 ) 

Total members' equity 113,432 123,321 1 

TOTAL 1$ 113,570 $ 123,376 1 

See Independent Accountants' Compilation Report and Notes to the Financial Statements 

2 
GEM AIR LLC 

STATEMENTS OF REVENUES AND EXPENSES 

INCOME TAX BASIS 

DECEMBER 31, 2013 AND 2012 

2013 2012 

INCOME 1$ 5,612 $ 12,385 1 

COST OF SALES 10,169 10,778 

GROSS PROFIT (LOSS) (4557) 1,6071 

OPERATING EXPENSES: 

Repair and maintenance 13,136 35,991 

Depreciation 6,858 11,578 

Legal and professional fees 5,500 

Salaries 4,071 

Shop supplies 3,453 111 

Insurance expense 1,520 2,907 

Contract work 1,500 8,500 

Utilities 1,235 865 

Business travel 571 

Office supplies 428 

Meals and entertainment 345 

AdvertiSing 344 

Taxes 339 

Rent 160 

Total operating expenses 39,460 59,9521 

LOSS FROM OPERATIONS (44,017) (58,345>1 

OTHER INCOME (EXPENSE): 

Interest income 442 694 

Total other income (expense) 442 6941 

NET LOSS 1$ (43,575) $ (57,651 )1 

See Independent Accountants' Compilation Report and Notes to the Financial Statements 

3 
GEM AIR LLC 

NOTES TO FINANCIAL STATEMENTS 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Nature of Business 

The Company holds a Part 135 operating certificate from the Federal Aviation 

Administration giving it the ability to conduct air transportation for hire. Gem Air 

uses this certificate to offer charter services. 

Basis of Accounting 

The Company's policy is to prepare financial statements on the accounting basis 

used for income tax purposes. The Company uses the accrual basis of accounting 

for income tax purposes. 

Primary differences between the income tax basis of accounting and accounting 

principles generally accepted in the United States of America (GAAP) are the 

manner in which income and expenses are recorded. Differences exist in the 

fOllowing areas: 

1. Losses from uncollectible receivables. 

2. Methods used in calculating depreciation. 

For income tax purposes, uncollectible receivables are written off when accounts are 

determined to be uncollectible as compared to GAAP which provides a reserve for 

uncollectible accounts. 

Depreciation is computed using accelerated methods of depreciation over estimated 

useful lives provided by tax authorities. GAAP depreciates asset cost to an 

estimated salvage value using lives equal to the estimated useful life of the asset. 

Estimates 

The presentation of financial statements in conformity with income tax basis of 

accounting requires management to make estimates and assumptions that affect 

the reported amounts of 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 period. Actual results could differ from those 

estimates. 

-Continued4 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED 

Cash and cash equivalents 

The Company considers all short-term securities purchased with a maturity of three 

months or less to be cash equivalents. The carrying amount approximates fair value 

due to the relatively short period of these instruments. At times, such balances may 

exceed the FDIC insurance limit. As of November 9,2010, the FDIC issued a final 

rule that provides unlimited insurance on noninterest-bearing transaction accounts 

from December 31, 2010 through December 31, 2012. Effective January 1 SI, 2013, 

the insurance reverts back to the $250,000 limit previously in effect. 

Inventorv 

Inventory consists of plane parts and supplies. Inventory is valued at cost using the 

first-in, first-out method which is lower than market. 

Property and Equipment 

Property and equipment are stated at cost. For income tax purposes the Company 

uses accelerated methods of depreciation over estimated useful lives from 5 to 7 

years for equipment, and the straight-line method of depreciation over estimated 

useful lives from 20-39 years for the building and improvements. 

Income Taxes 

Gem Air, LLC is a pass through entity for income tax purposes. As such, the 

income is distributed for income tax purposes to the owners and any income taxes 

due are paid by the owners of the entity. Therefore, no provision for income taxes 

has been included in this financial statement. 

No interest or penalties related to income taxes have been recognized in the 

statement of revenues and expenses - income tax basis, or the statement of assets, 

liability, and members' equity - income tax basis. The Company uses a calendar 

year end for income tax reporting purposes, and tax years back to and including the 

tax year ended December 31, 2010 are subject to examination by major taxing 

jurisdictions. 

Subsequent Events 

Subsequent events were evaluated through February 3, 2014, which is the date the 

financial statements were available to be issued. 

5 
GEM AIR LLC 

FINANCIAL STATEMENTS -INCOME TAX BASIS 

FOR THE YEARS ENDED 

DECEMBER 31,2012, 2011, AND 2010 AND 

INDEPENDENT ACCOUNTANTS' COMPILATION REPORT 
GEM AIR LLC 

Table of Contents 

Independent Accountants' Compilation Report ............................................................... 1 

Financial Statements: 

Statement of Assets, Liabilities, and 

Members' Equity - Income Tax Basis ......... ... ...................................................... 2 

Statement of Revenues and Expenses - Income Tax Basis ................................. 3 

Notes to Financial Statements ........................................................................................ 4 
Cooper Norman 

CPAs & BUSINESS ADVISORS 

1000 R IVERWAlK DRIVE, SUITE 100 183402 

POST OFFICE Box 51330 I 83405-1330 

IDAHO FALLS, IDAHO 

208.523.0862 1208.5258038 FAX 

www.coopernorman .com 

INDEPENDENT ACCOUNTANTS' COMPILATION REPORT 

Gem Air LLC: 

We have compiled the accompanying statement of assets, liability, and members' equity 

- income tax basis of Gem Air LLC as of December 31, 2012, 2011 , and 2010 and the 

related statement of revenues and expenses - income tax basis for the years then 

ended. We have not audited or reviewed the accompanying financial statements and, 

accordingly, do not express an opinion or provide any assurance about whether the 

financial statements are in accordance with the income tax basis of accounting. 

Management is responsible for the preparation and fair presentation of the financial 

statements in accordance with income tax basis of accounting and for designing, 

implementing, and maintaining internal control relevant to the preparation and fair 

presentation of the financial statements. 

Our responsibility is to conduct the compilation in accordance with Statements on 

Standards for Accounting and Review Services issued by the American Institute of 

Certified Public Accountants. The objective of a compilation is to assist management in 

presenting financial information in the form of financial statements without undertaking 

to obtain or provide any assurance that there are no material modifications that should 

be made to the financial statements. 

Idaho Falls, Idaho 

December 16, 2013 

-----------------!ntegrity------

expenence trust 
GEM AIR LLC 

STATEMENT OF ASSETS, LIABILITIES, AND MEMBERS' EQUITY 

INCOME TAX BASIS 

DECEMBER 31,2012,2011 , AND 2010 

ASSETS 2012 2011 2010 

CURRENT ASSETS: 

Cash (Note 1) $ 7,876 $ 2,118 $ 9,815 

Accounts receivable 2,342 

Inventory (Note 1) 67,565 71,065 71,325 

Other current assets 10,751 15,739 2,000 

Total current assets 86, 192 91,264 83,140 1 

PROPERTY AND EQUIPMENT (Note 1): 

Buildings and improvements 103,170 103,170 103,170 

Equipment 200,767 200,767 200,767 

Vehicles 28,058 28,058 28,058 

331,995 331,995 331 ,9951 

Less accumulated depreciation (294,811 ) (283,233) (270,914) 

Property and equipment - net 37,184 48,762 61,081 1 

TOTAL 1$ 123,376 $ 140,026 $ 144,221 1 

LIABILITIES AND MEMBERS' EQUITY 

LIABILITIES: 

Acrued liabilities 1$ 55 $ 55 $ 

MEMBERS' EQUITY: 

Partner's capital accounts 139,972 144,222 187,703 

Contributions 41 ,000 46,748 50,000 

Distributions (3,000) 

Net loss (57,651 ) (50,999) (90,482) 

Total members' equity 123,321 139,971 144,221 1 

TOTAL 1$ 123,376 $ 140,026 $ 144,221 1 

See Independent Accountants' Compilation Report and Notes to the Financial Statements 

2 
GEM AIR LLC 

STATEMENT OF REVENUES AND EXPENSES 

INCOME TAX BASIS 

DECEMBER 31, 2012, 2011, AND 2010 

2012 2011 2010 

INCOME 1$ 12,385 $ 2,766 $ 30,817 1 

COST OF SALES 10,778 4,886 48,730 

GROSS PROFIT (LOSS) 1,607 (2,120) (17,913)1 

OPERATING EXPENSES: 

Repair and maintenance 35,991 14,607 13,534 

Depreciation 11 ,578 12,320 13,622 

Contract work 8,500 2,968 3,700 

Insurance expense 2,907 1,556 2,931 

Utilities 865 1,208 1,593 

Supplies 111 1,843 1,639 

Legal and professional fees 3,948 

Salaries 10,800 22,260 

Employee benefits expense 70 462 

Medicare expense 1,124 279 

Rent 1,302 870 

Dues and subscriptions 100 188 

Business travel 125 3,733 

Insurance - aircraft 1,912 1,578 

Taxes 770 

Fuel and oil 276 648 

Total operating expenses 59,952 50,981 70,9851 

LOSS FROM OPERATIONS (58,345) (53,101 ) (88,898)1 

OTHER INCOME (EXPENSE): 

Gain (loss) on sale of asset (1,584) 

Interest income 694 2,102 

Total other income (expense) 694 2,102 (1,584)1 

NET LOSS 1$ (57,651) $ (50,999) $ (90.482)1 

See Independent Accountants' Compilation Report and Notes to the Financial Statements 

3 
GEM AIR LLC 

NOTES TO FINANCIAL STATEMENTS 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Nature of Business 

The Company holds a Part 135 operating certificate from the Federal Aviation 

Administration giving it the ability to conduct air transportation for hire. Gem Air 

uses this certificate to offer charter services. 

Basis of Accounting 

The Company's policy is to prepare financial statements on the accounting basis 

used for income tax purposes. The Company uses the accrual basis of accounting 

for income tax purposes. 

Primary differences between the income tax basis of accounting and accounting 

principles generally accepted in the United States of America (GAAP) are the 

manner in which income and expenses are recorded. Differences exist in the 

following areas: 

1. Losses from uncollectible receivables. 

2. Methods used in calculating depreciation. 

For income tax purposes, uncollectible receivables are written off when accounts are 

determined to be uncollectible as compared to GAAP which provides a reserve for 

uncollectible accounts. 

Depreciation is computed using accelerated methods of depreciation over estimated 

useful lives provided by tax authorities. GAAP depreciates asset cost to an 

estimated salvage value using lives equal to the estimated useful life of the asset. 

Estimates 

The presentation of financial statements in conformity with income tax basis of 

accounting requires management to make estimates and assumptions that affect 

the reported amounts of 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 period. Actual results could differ from those 

estimates. 

4 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED 

Cash and cash equivalents 

The Company considers all short-term securities purchased with a maturity of three 

months or less to be cash equivalents. The carrying amount approximates fair value 

due to the relatively short period of these instruments. At times, such balances may 

exceed the FDIC insurance limit. As of November 9, 2010, the FDIC issued a final 

rule that provides unlimited insurance on noninterest-bearing transaction accounts 

from December 31, 2010 through December 31, 2012. Effective January 1 st, 2013, 

the insurance reverts back to the $250,000 limit previously in effect. 

Inventory 

Inventory consists of plane parts and supplies. Inventory is valued at cost using the 

first-in , first-out method which is lower than market. 

Property and Equipment 

Property and equipment are stated at cost. For income tax purposes the Company 

uses accelerated methods of depreciation over estimated useful lives from 5 to 7 

years for equipment, and the straight-line method of depreciation over estimated 

useful lives from 20-39 years for the building and improvements. 

Income Taxes 

Gem Air, LLC is a pass through entity for income tax purposes. As such, the 

income is distributed for income tax purposes to the owners and any income taxes 

due are paid by the owners of the entity. Therefore, no provision for income taxes 

has been included in this financial statement. 

No interest or penalties related to income taxes have been recognized in the 

statement of revenues and expenses - income tax basis, or the statement of assets, 

liability, and members' equity - income tax basis. The Company uses a calendar 

year end for income tax reporting purposes, and tax years back to and including the 

tax year ended December 31, 2009 are subject to examination by major taxing 

jurisdictions. 

Subsequent Events 

Subsequent events were evaluated through December 16, 2013, which is the date 

the financial statements were available to be issued. 

5 
SPIRIT AIR INC 

FINANCIAL STATEMENTS -INCOME TAX BASIS 

FOR THE YEARS ENDED 

DECEMBER 31,2013 AND 2012 AND 

INDEPENDENT ACCOUNTANTS' COMPILATION REPORT 
SPIRIT AIR. INC. 

Table of Contents 

Independent Accountants' Compilation Report ............................................................... 1 

Financial Statements: 

Statements of Assets, Liabilities, and 

Stockholders' Equity - Income Tax Basis ............................................................. 2 

Statements of Revenue and Expenses - Income Tax Basis ................................. 3 

Notes to Financial Statements ........................................................................................ 4 
Cooper Norman 

ePAs & BUSINESS ADVISORS 

1000 R tVERWALK DRIVE, SUITE 100183402 

POST O FFICE Box 51330 183405-1330 

IOAHO FALLS, IDAHO 

208.523.08621208.525.8038 FAX 

WWw.coopernorman.com 

INDEPENDENT ACCOUNTANTS' COMPILATION REPORT 

Spirit Air, Inc.: 

We have compiled the accompanying statements of assets, liability, and stockholders' 

equity - income tax basis of Spirit Air, Inc. as of December 31,2013 and 2012 and the 

related statements of revenues and expenses - income tax basis for the years then 

ended. We have not audited or reviewed the accompanying financial statements and, 

accordingly, do not express an opinion or provide any assurance about whether the 

financial statements are in accordance with the income tax basis of accounting. 

Management is responsible for the preparation and fair presentation of the financial 

statements in accordance with income tax basis of accounting and for designing, 

implementing, and maintaining internal control relevant to the preparation and fair 

presentation of the financial statements. 

Our responsibility is to conduct the compilation in accordance with Statements on 

Standards for Accounting and Review Services issued by the American Institute of 

Certified Public Accountants. The objective of a compilation is to assist management in 

presenting financial information in the form of financial statements without undertaking 

to obtain or provide any assurance that there are no material modifications that should 

be made to the financial statements. 

Idaho Falls, Idaho 

February 3, 2014 

-------------~---- tntegrity------

expenence trust 
SPIRIT AIR. INC. 

STATEMENTS OF ASSETS, LIABILITIES, AND STOCKHOLDERS' DEFICIT 

INCOME TAX BASIS 

DECEMBER 31,2013 AND 2012 

ASSETS 2013 2012 

CURRENT ASSETS: 

Cash (Note 1) $ 116,109 $ 122,020 

Loan to stockholders 120,426 165,010 

Other current assets 4,433 

Total current assets 240,968 287,030 1 

PROPERTY AND EQUIPMENT (Note 1): 

Vehicles 25,865 25,865 

Equipment 190,761 190,761 

Airplanes 2,568,564 2,756,547 

2,785,190 2,973,1731 

Less accumulated depreciation (2,540,110) (2,830,924 ) 

Property and equipment - net 245,080 142,2491 

TOTAL 1$ 486,048 $ 429,2791 

LIABILITIES AND STOCKHOLDERS' DEFICIT 

CURRENT LIABILITIES: 

Current portion of long term debt (Note 2) $ 58,029 55,594 

T alai liabilities 58,029 55,594 1 

LONG TERM DEBT (NOTE 2) 970,933 1,028,2231 

STOCKHOLDERS' DEFICIT: 

Common stock 100 100 

Retained deficit (654,638) (665,667) 

Net income 111,624 11,029 

Total stockholders' deficit (542,91 4) (654,538)1 

TOTAL 1$ 486.D48 $ 429,279 1 

See Independent Accountants' Compilation Report and Notes to the Financial Statements 

2 
SPIRIT AIR. INC. 

STATEMENTS OF REVENUES AND EXPENSES 

INCOME TAX BASIS 

DECEMBER 31, 2013 AND 2012 

2013 2012 

RENTAL INCOME: 1$ 145,908 $ 155,7451 

OPERATING EXPENSES: 

Interest expense 43,716 65,479 

Repairs and maintenance 24,134 30,026 

Depreciation (Note 1) 23,220 28,482 

Insurance 20,452 11 ,579 

Operating supplies 9,577 2,210 

Taxes - excise and other 4,763 1,603 

Travel 4,163 261 

Professional fees 3,860 10,833 

Utilities 2,772 1,789 

Aircraft fuel/maintenance 1,436 1,226 

Bank charges 1,364 2,387 

Dues and subscriptions 1,096 2,903 

Rent 710 

Auto expense 572 639 

Office supplies 360 634 

Freight 40 

Entertainment and meals 659 

License and permits 474 

Medical 180 

State taxes 20 20 

Total operating expenses 142,255 161,3841 

INCOME (LOSS) FROM OPERATIONS 3,653 (5,639)1 

OTHER INCOME (EXPENSE): 

Gain on sale of assets 107,927 

Other income 16,668 

Interest income 44 

Total other income (expense) 107,971 16,668 1 

NET INCOME 1$ 111,624 $ 11 ,029 1 

See Independent Accountants' Compilation Report and Notes to the Financial Statements 

3 
SPIRIT AIR. INC. 

NOTES TO FINANCIAL STATEMENTS 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Nature of Business 

The Company is engaged in the business of leasing aircraft outside of Salmon, 

Idaho. The Company began its operations on December 30, 1998. 

Basis of Accounting 

The Company's policy is to prepare financial statements on the accounting basis 

used for income tax purposes. The Company uses the cash basis of accounting for 

income tax purposes. 

Primary differences between the income tax basis of accounting and accounting 

principles generally accepted in the United States of America (GAAP) are the 

manner in which income and expenses are recorded. Differences exist in the 

following areas: 

1. Losses from uncollectible receivables. 

2. Methods used in calculating depreciation. 

3. Gains on exchanges of fixed assets. 

For income tax purposes, uncollectible receivables are written off when accounts are 

determined to be uncollectible as compared to GAAP which provides a reserve for 

uncollectible accounts. 

Depreciation is computed using accelerated methods of depreciation over estimated 

useful lives provided by tax authorities. GAAP depreciates asset cost to an 

estimated salvage value using lives equal to the estimated useful life of the asset. 

The Company has used tax deferred exchanges for most of its airplanes. The basis 

of these assets is refiected at cost net of deferred gain. GAAP requires that these 

assets be reported at cost and the gain reported in the year of the exchange. The 

result of this difference is that the statement of assets, liabilities, and stockholder's 

equity understates the value of these assets. 

Estimates 

The presentation of financial statements in conformity with income tax basis of 

accounting requires management to make estimates and assumptions that affect 

the reported amounts of 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 period. Actual results could differ from those 

estimates. 

-Continued4 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED 

Cash and cash equivalents 

The Company considers all short-term securities purchased with a maturity of three 

months or less to be cash equivalents. The carrying amount approximates fair value 

due to the relatively short period of these instruments. At times, such balances may 

exceed the FDIC insurance limit. Balances did not exceed the insurance limit in 

2012 and 2011, but did exceed the limit in 2010. As of November 9, 2010, the FDIC 

issued a final rule that provides unlimited insurance on non interest-bearing 

transaction accounts from December 31, 2010 through December 31 , 2012. 

Effective January 1s

', 2013, the insurance reverted back to the $250,000 limit 

previously in effect. 

Property and Equipment 

Property and equipment are stated at cost. For income tax purposes, the 

Company uses accelerated methods of depreciation over estimated useful lives from 

5 to 7 years for equipment, and the straight-line method of depreciation over an 

estimated useful life of 39 years for the hanger space. 

Income Taxes 

The Company elected to be treated as a small business corporation under the 

provisions of Subchapter "S" of the Internal Revenue Code effective January 1, 

1999. In general, these provisions permit taxation of corporate income directly to the 

stockholders. Accordingly, no provision for income taxes has been made in the 

accompanying financial statements. 

Subsequent Events 

Subsequent events were evaluated through February 3, 2014, which is the date the 

financial statements were available to be issued. 

5 
2. LONG TERM DEBT 

The note is payable to US Bank in monthly installments of $8,214 including interest 

at 4.06%. A 2006 Kodiak airplane costing $1 ,420,566 is pledged as collateral. 

Maturities of long term debt are as follows: 

Year Ending 

December 31 . 

2014 

2015 

2016 

2017 

2018 

Thereafter 

6 

Amount 

$ 58,029 

60,429 

62,929 

65,532 

68,243 

713.800 

$ 1,028962 
SPIRIT AIR, INC. 

===9 ====

FINANCIAL STATEMENTS -INCOME TAX BASIS 

FOR THE YEARS ENDED 

DECEMBER 31, 2012, 2011, AND 2010 AND 

INDEPENDENT ACCOUNTANTS' COMPILATION REPORT 
SPIRIT AIR. INC. 

Table of Contents 

Independent Accountants' Compilation Report ............................................................... 1 

Financial Statements: 

Statements of Assets, Liabilities, and 

Stockholders' Equity - Income Tax Basis .............................. ............................... 2 

Statements of Revenue and Expenses - Income Tax Basis ................................. 3 

Notes to Financial Statements ..................................................... __ ................................. 4 
Cooper Norman 

CPAs & BUSINESS ADVISORS 

1000 RrvERwALK DRIVE . SUITE 100 J 83402 

POST O FFICE Box 51330 183405-1330 

IOAHO F ALLS, IDAHO 

208.523.0862 I 208.525.8038 FAX 

WWw.coopernorman.com 

INDEPENDENT ACCOUNTANTS' COMPILATION REPORT 

Spirit Air, Inc.: 

We have compiled the accompanying statements of assets, liability, and stockholders' 

equity - income tax basis of Spirit Air, Inc. as of December 31,2012,2011, and 2010 

and the related statements of revenues and expenses - income tax basis for the years 

then ended. We have not audited or reviewed the accompanying financial statements 

and, accordingly, do not express an opinion or provide any assurance about whether 

the financial statements are in accordance with the income tax basis of accounting. 

Management is responsible for the preparation and fair presentation of the financial 

statements in accordance with income tax basis of accounting and for designing, 

implementing, and maintaining internal control relevant to the preparation and fair 

presentation of the financial statements. 

Our responsibility is to conduct the compilation in accordance with Statements on 

Standards for Accounting and Review Services issued by the American Institute of 

Certified Public Accountants. The objective of a compilation is to assist management in 

presenting financial information in the form of financial statements without undertaking 

to obtain or provide any assurance that there are no material modifications that should 

be made to the financial statements. 

Idaho Falls, Idaho 

December 16, 2013 

jntegrity------

expenence trust 
SPIRIT AIR. INC. 

STATEMENTS OF ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY 

INCOME TAX BASIS 

DECEMBER 31,2012,2011, AND 2010 

ASSETS 2012 2011 2010 

CURRENT ASSETS: 

Cash (Note 1) $ 122,020 $ 121,861 $ 356,762 

Loan to stockholders 165,010 310,563 

Other current assets 70,000 

Total current assets 287,030 432,424 426,762 1 

PROPERTY AND EQUIPMENT (Note 1): 

Vehicles 25,865 25,865 25,865 

Equipment 190,761 190,761 190,761 

Airplanes 2,756,547 2,756,547 2,756,547 

2,973,173 2,973,173 2,973,173 1 

Less accumulated depreCiation (2,830,924) (2,802,442) (2,770,011 ) 

Property and equipment - net 142,249 170,731 203,162 1 

TOTAL 1$ 429,279 $ 603,155 $ 629,924 1 

LIABILITIES AND STOCKHOLDERS' DEFICIT 

CURRENT LIABILITIES: 

Deposit $ 209,770 $ 233,240 

Loans from stockholders 56,832 

Current portion of long term debt (Note 2) $ 55,594 58,572 42,176 

Total liabilities 55,594 268,342 332,248 1 

LONG TERM DEBT (NOTE 2) 1,028,223 1,000,380 1,058,952 1 

STOCKHOLDERS' DEFICIT: 

Common stock 100 100 100 

Retained deficit (665,667) (761 ,376) (882,162) 

Net income 11 ,029 95,709 120,786 

Total stockholders' deficit (654,538) (665,567) (761,276)1 

TOTAL 1$ 429,279 $ 603,155 $ 629,9241 

See Independent Accountants' Compilation Report and Notes to the Financial Statements 

2 
SPIRIT AIR. INC. 

STATEMENT OF REVENUES AND EXPENSES 

INCOME TAX BASIS 

DECEMBER 31, 2012, 2011, AND 2010 

2012 2011 2010 

RENTAL INCOME: 1$ 155,745 $ 309,637 $ 412,7931 

OPERATING EXPENSES: 

Interest expense 65,479 84,535 86,456 

Repairs and maintenance 30,026 70,267 93,613 

Depreciation (Note 1) 28,482 32,431 86,444 

Insurance 11,579 2,082 12,347 

Professional fees 10,833 500 5,446 

Dues and subscriptions 2,903 523 2,749 

Bank charges 2,387 171 145 

OperatinQ supplies 2,210 1,037 71 

Utilities 1,789 1,682 1,725 

Taxes - excise and other 1,603 2,936 1,263 

Aircraft fuel/maintenance 1,226 2,256 

Entertainment and meals 659 118 888 

Auto expense 639 698 

Office supplies 634 1,124 29 

License and permits 474 473 428 

Travel 261 4,744 6,430 

Medical 180 5,688 

State taxes 20 20 

Freight 500 45 

Total operating expenses 161,384 211,765 298,0991 

INCOME (LOSS) FROM OPERATIONS (5,639) 97,872 114,694 1 

OTHER INCOME (EXPENSE): 

Other income 16,668 5,833 

Interest income 1,108 

Other expenses 2,163 849 

Total other income (expense) 16,668 (2,163) 6,0921 

NET INCOME 1$ 11,029 $ 95,709 $ 120,786 1 

See Independent Accountants' Compilation Report and Notes to the Financial Statements 

3 
SPIRIT AIR. INC. 

NOTES TO FINANCIAL STATEMENTS 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Nature of Business 

The Company is engaged in the business of leasing aircraft outside of Salmon, 

Idaho. The Company began its operations on December 30, 1998. 

Basis of Accounting 

The Company's policy is to prepare financial statements on the accounting basis 

used for income tax purposes. The Company uses the cash basis of accounting for 

income tax purposes. 

Primary differences between the income tax basis of accounting and accounting 

principles generally accepted in the United States of America (GAAP) are the 

manner in which income and expenses are recorded. Differences exist in the 

following areas: 

1. Losses from uncollectible receivables. 

2. Methods used in calculating depreciation. 

3. Gains on exchanges of fixed assets. 

For income tax purposes, uncollectible receivables are written off when accounts are 

determined to be uncollectible as compared to GAAP which provides a reserve for 

uncollectible accounts. 

Depreciation is computed using accelerated methods of depreciation over estimated 

useful lives provided by tax authorities. GAAP depreciates asset cost to an 

estimated salvage value using lives equal to the estimated useful life of the asset. 

The Company has used tax deferred exchanges for most of its airplanes. The basis 

of these assets is reflected at cost net of deferred gain. GAAP requires that these 

assets be reported at cost and the gain reported in the year of the exchange. The 

result of this difference is that the statement of assets, liabilities, and stockholder's 

equity understates the value of these assets. 

Estimates 

The presentation of financial statements in conformity with income tax basis of 

accounting requires management to make estimates and assumptions that affect 

the reported amounts of 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 period. Actual results could differ from those 

estimates. 

4 
2. LONG TERM DEBT 

The note is payable to US Bank in monthly installments of$8,214 including interest 

at 4.06%. A 2006 Kodiak airplane costing $1,420,566 is pledged as collateral. 

Maturities of long term debt are as follows: 

Year Ending 

December 31. 

2013 

2014 

2015 

2016 

2017 

Thereafter 

5 

Amount 

$ 55,594 

57,894 

60,288 

62,782 

65,379 

781.880 

$ 1083817