**United
      States**


**Securities
      and Exchange Commission**


**Washington,
      D.C. 20549**




**FORM
      10-KSB**




**ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**




For
      the
      fiscal year ended January 31, 2008


***Commission
      File Number 333-137920***




**HALCYON
      JETS HOLDINGS, INC.**


(Name
      of
      small business issuer in its charter)





**Delaware**
            
            **20-3547389**(State
                or other jurisdiction
            
            (I.R.S.
                Employerof
                incorporation or organization)
            
            Identification
                No.)




**336
      West 37** **th** **Street, Suite 800**


**New
      York, NY 10019**


(Address
      & Zip code of principal executive offices)




**(212)
      616-5387**


(Issuer's
      telephone number)




**Securities
      registered under Section**


**12(g)
      of the Exchange Act:**




**Common
      Stock, par value $0.001 per share**


(Title
      of
      Class)




Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15
      (d) of the Exchange Act. o




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the preceding 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.




Yes
x    
      No o




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of registrant's knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB. o




Indicate
      by check mark whether the registrant is a shell company (as defined in rule
      12b-2 of the Exchange Act). Yes o     No x




The
      Company's revenues from its operations for the fiscal year ended January 31,
      2008 were $12,307,702.




As
      of May
      13, 2008, the aggregate market value of the voting stock held by non-affiliates
      of the registrant (based on The Over-the-Counter Electronic Bulletin Board's
      last sale price of $.45 on May 13, 2008) was approximately
      $3,870,000.




As
      of May
      13, 2008, there were 25,647,500 shares of the registrant's common stock
      outstanding.




**DOCUMENTS
      INCORPORATED BY REFERENCE**




None.




Transitional
      Small Business Disclosure Format (check one): Yes o No x









**HALCYON
      JETS HOLDINGS, INC.**


**FORM
      10-KSB**


**INDEX**




**PAGE**PART
                  IItem
                  1.
              Description
                  of Business
              
              1Item
                  2.
              Description
                  of Property
              
              15Item
                  3.
              Legal
                  Proceedings
              
              16Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              
              17PART
                  IIItem
                  5.
              Market
                  for Common Equity and Related Stockholder Matters
              
              17Item
                  6.
              Management's
                  Discussion and Analysis or Plan of Operation
              
              19Item
                  7.
              Financial
                  Statements
              
              25Item
                  8.
              Changes
                  in and Disagreements with Accountants on Accounting and Financial
                  Disclosure
              
              25Item 8A.
              Controls
                  and Procedures
              
              25Item 8B.
              Other
                  Information
              
              27PART
                  IIIItem
                  9.
              Directors,
                  Executive Officers, Promoters and Control Persons; Compliance with
                  Section
                  16(a) of the Exchange Act
              
              28Item
                  10.
              Executive
                  Compensation
              
              33Item
                  11.
              Security
                  Ownership of Certain Beneficial Owners and Management
              
              34Item
                  12.
              Certain
                  Relationships and Related Transactions
              
              36Item
                  13.
              Exhibits
              
              37Item
                  14.
              Principal
                  Accountant Fees And Services
              
              39EXHIBIT
                  INDEXSIGNATURES
              
              40









**PART
      I**




*As
      used in this Annual Report on Form 10-KSB, all references to the “Company,”
“we,” “our” and “us” for periods prior to the closing of the merger described
      below refer to Halcyon Jets, Inc., and for periods subsequent to the closing
      of
      the merger refer to Holdings and its wholly-owned subsidiary.*





**Item
              1.**
            **DESCRIPTION
                OF BUSINESS**




**Forward-looking
      Statements**




Statements
      in this annual report on Form 10-KSB that are not historical facts constitute
      forward-looking statements, which are made pursuant to the safe harbor
      provisions of Section 21E of the Securities Exchange Act of 1934. These
      statements relate to future events or our future financial performance and
      involve known and unknown risks, uncertainties and other factors that may cause
      our or our industry's actual results, levels of activity, performance or
      achievements to be materially different from any future results, levels of
      activity, performance or achievements expressed or implied by these
      forward-looking statements. Those factors include, among other things, those
      listed under ‘‘Risk Factors’’ and elsewhere in this annual report. In some
      cases, you can identify forward-looking statements by terminology such as
‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘expects,’’ ‘‘plans,’’ ‘‘anticipates,’’
‘‘believes,’’ ‘‘estimates,’’ ‘‘predicts,’’ ‘‘potential’’ or ‘‘continue’’ or the
      negative of these terms or other comparable terminology. These statements are
      only predictions. Actual events or results may differ materially. Moreover,
      neither we nor any other person assumes responsibility for the accuracy or
      completeness of these statements. We are under no duty to update any of the
      forward-looking statements after the date of this annual report to conform
      these
      statements to actual results.





**Merger**





**Background.** Prior
      to
      August 14, 2007, we operated as Greenleaf Forest Products, Inc., a Nevada
      corporation, which on that date was merged with and into Greenleaf Forest
      Products, Inc., a Delaware corporation, for the sole purpose of changing its
      state of incorporation to Delaware from Nevada pursuant to a Certificate of
      Ownership and Merger dated August 14, 2007. Under the terms of the Certificate
      of Ownership and Merger, each share of the Nevada corporation was exchanged
      for
      4.8295454 shares of the Delaware corporation.





**The
      Merger.** On
      August
      17, 2007, Greenleaf entered into an Agreement and Plan of Merger and
      Reorganization by and among Holdings, Halcyon Jets, Inc., a privately held
      Nevada corporation and Halcyon Jets Acquisition Corp., a newly formed,
      wholly-owned Delaware subsidiary of Holdings that we refer to as the Acquisition
      Sub. Upon closing of the merger transaction contemplated under the merger
      agreement, Acquisition Sub merged with and into Halcyon Jets, and Halcyon Jets,
      as the surviving corporation, became a wholly-owned subsidiary of Greenleaf.
      Pursuant to the merger agreement, Greenleaf’s name was changed to Halcyon Jets
      Holdings, Inc., which is referred to as Holdings.




1




Pursuant
      to the terms and conditions of the Merger Agreement:


·
              At
                  the closing of the merger, each share of Halcyon Jets’ common stock issued
                  and outstanding immediately prior to the closing of the Merger
                  was
                  converted into the right to receive one share of Holdings’ common
                  stock. An aggregate of 12,045,000 shares of Holdings’ common stock was
                  issued to the holders of Halcyon Jets’ common
                  stock.
 
 ·
              Immediately
                  following the closing of the merger, under the terms of an Agreement
                  of
                  Conveyance, Transfer and Assignment of Assets and Assumption of
                  Obligations, Holdings transferred all of its pre-merger assets
                  and
                  liabilities to its wholly-owned subsidiary, Greenleaf Forest Products
                  Holdings, Inc., a Delaware corporation (“SplitCo”). Thereafter pursuant to
                  a stock purchase agreement, Holdings transferred all of its outstanding
                  capital stock of SplitCo to a major stockholder of Holdings in
                  exchange
                  for cancellation of 39,795,454 shares of Holdings’ common stock held by
                  that stockholder (the “Split-Off”), which left 8,500,000 shares of
                  Holdings’ common stock held by existing stockholders of
                  Holdings.
 
 ·
              At
                  the time of the closing of the merger, Holdings issued 49.9 units in
                  a private placement (the “Private Placement”), consisting of an aggregate
                  of 4,990,000 shares of Holdings’ common stock and three-year
                  redeemable warrants to purchase an aggregate of 2,495,000 shares of
                  Holdings’ common stock at an exercise price of $1.00 per share at a
                  purchase price of $100,000 per unit. As part of the Private Placement,
                  holders of $1,500,000 of outstanding indebtedness of Halcyon Jets
                  converted their promissory notes at $1.00 per share into 15 units
                  in the
                  Private Placement.
 
 ·
              Upon
                  the closing of the Merger, Michelle Maresova resigned as the sole
                  officer
                  and director of Holdings, and simultaneously therewith a new board
                  of
                  directors and new officers were appointed for Holdings. The new
                  board of
                  directors consisted of the seven current members of the board of
                  directors
                  of Halcyon Jets, Jonathan Gilbert, Mitchell Blatt, Justin Fries,
                  Shelton
                  Lee, Shlomo Piontkowski, Craig Spitzer and Jeffrey Getzel. The
                  new
                  officers consist of the previous officers of
                  Halcyon.
 
 ·
              Each
                  of Holdings, Halcyon and Acquisition Sub provided customary
                  representations and warranties, pre-closing covenants and closing
                  conditions in the Merger
                  Agreement.




The
      foregoing description of the Merger Agreement does not purport to be complete
      and is qualified in its entirety by reference to the complete text of the Merger
      Agreement, which is filed as Exhibit 2.1 to our Current Report on Form 8-K
      filed with the Commission on August 23, 2008.




2




Following
      (i) the closing of the merger, (ii) the closing of the Private Placement for
      $4,990,000, and (iii) Holdings’ cancellation of 39,795,454 shares in the
      Split-Off, there were 25,535,000 shares of Holdings’ common stock issued
      and outstanding. Approximately 47.2% of such issued and outstanding shares
      were
      held by the former stockholders of Halcyon Jets, approximately 19.5% were held
      by the investors in the Private Placement and approximately 33.3% were held
      by
      the pre-merger stockholders of Holdings (Greenleaf).




Neither
      Holdings nor Halcyon Jets had any options or warrants to purchase shares of
      capital stock outstanding immediately prior to the closing of the merger.
      Holdings adopted an equity incentive plan and reserved 5,000,000 shares for
      issuance as incentive awards to officer, directors, employees and other
      qualified persons in the future. At the closing of the merger, Holdings granted
      options to purchase an aggregate of 5,000,000 shares of Holdings common stock
      under this plan.




The
      shares of Holdings’ common stock issued to former holders of Halcyon Jet’s
      capital stock in connection with the merger, and the shares of Holdings’ common
      stock and warrants issued in the Private Placement, were not registered under
      the Securities Act, in reliance upon the exemption from registration provided
      by
      Section 4(2) of the Securities Act and Regulation D promulgated under that
      section, which exempt transactions by an issuer not involving any public
      offering. These securities may not be offered or sold in the United States
      absent registration or an applicable exemption from the registration
      requirements. Certificates representing these shares contain a legend stating
      the same.




**Changes
      Resulting from the Merger.** Holdings
      carries on Halcyon Jets’ business as its sole line of business. Holdings
      relocated its executive offices to 336 West 37 th Street,
      Suite 800, New York, New York 10018 and its telephone number is (212)
      616-JETS.




**Changes
      to the Board of Directors and Executive Officers.** Upon
      closing of the merger, the then-current sole officer and director of Holdings
      resigned and was replaced by new officers and directors. Immediately following
      the closing of the merger, our board of directors was reconstituted to consist
      of Jonathan Gilbert, Mitchell Blatt, Justin Fries, Shelton Lee, Shlomo
      Piontkowski, Craig Spitzer and Jeffrey Getzel. Following the merger, our
      officers consisted of the officers of Halcyon immediately prior to the
      Merger.




All
      directors hold office for one-year terms until the election and qualification
      of
      their successors. Officers are elected by the board of directors and serve
      at
      the discretion of the board.




**Accounting
      Treatment.** The
      merger was accounted for as a reverse acquisition and recapitalization. Halcyon
      Jets is the acquirer for accounting purposes and Holdings is the issuer.
      Accordingly, Halcyon Jets’ historical financial statements for periods prior to
      the acquisition become those of the acquirer retroactively restated for the
      equivalent number of shares received in the merger. The accumulated deficit
      of
      Halcyon Jets is carried forward after the acquisition. Operations prior to
      the
      merger are those of Halcyon Jets. Earnings per share for the period prior to
      the
      merger are restated to reflect the equivalent number of shares
      outstanding.




3


Holdings
        continues to be a “small business issuer,” as defined under the Securities
        Exchange Act of 1934, as amended, following the merger.


**Tax
      Treatment.** The
      Split-Off resulted in taxable income to Holdings in an amount equal to the
      difference between the fair market value of the assets transferred and Holdings’
tax basis in the assets. Any gain recognized will be subject to federal income
      tax at regular corporate income tax rates.




**Description
      of Our Company**




Greenleaf
      was incorporated as a Nevada corporation on September 7, 2005, for the purpose
      of importing pine wood blocks from Brazil and Argentina that are used for civil
      architecture purposes, such as moldings, porch posts, door components, stair
      parts and packaging materials. Immediately following the merger, the existing
      assets and liabilities of Greenleaf were disposed of pursuant to the Split-Off,
      and we are no longer engaged in that business.




Halcyon
      Jets was formed in Nevada on February 1, 2007 for the purpose of acting as
      a
      broker for luxury private transport by connecting travelers with independently
      owned and operated executive aircraft.




**Overview**




Halcyon
      Jets, Inc. was formed on February 1, 2007 with a goal to become the preeminent
      broker for on-demand charter aircraft services. Halcyon Jets provides its
      customers with convenient, comfortable, luxurious, and safe private jet travel
      by matching customers’ flight requirements with Part 135 general aviation
      aircraft operators.




We
      believe a significant market exists for private jet service for successful,
      affluent individuals and business travelers, based on a combination of
      economics, post-September 11 inconveniences of modern air travel and the lack
      of
      amenities associated with commercial airlines.




We
      do not
      own any planes, but seek to “own” the customer relationship. The customer
      relationship is believed to provide the single most important factor for
      differentiation of Halcyon from other similar charter and aircraft brokerage
      businesses. We seek to build brand loyalty with customers and we leave the
      flying entirely to “Part 135” operators who specialize in air travel. These
      operators are compliant with the minimum requirements of Part 135 of the Federal
      Aviation Regulations for aircraft maintenance, aircrew training and aircraft
      operations.




We
      believe our customers appreciate the ability to choose their flight time, the
      size of the aircraft, and the benefits of no-hassle general aviation check-in,
      combined with 24-hour concierge service, gourmet meals, and all of the amenities
      offered from a sophisticated travel company. By offering these added services,
      we plan to build brand loyalty among its customers.




We
      are
      working to position ourselves in the market as a premium brand and avoid the
      tendency to commoditize customer service with travelers where “price” is not
      necessarily the leading deciding factor in travel decisions. Marketing and
      sales
      focus on travel amenities and superior customer service.




4




We
      believe we provide our clients with the following:




·
              a
                  highly efficient alternative for business
                  travel
 ·
              options
                  and flexibility, by using multiple
                  vendors
 ·
              “seamless
                  travel,” by bundling business productivity services with transportation
                  services and other valuable
                  amenities
 ·
              convenience,
                  by working with our customers to plan meetings, events and the
                  underlying
                  transportation
 ·
              attractive,
                  bulk, up front payment options and multi-year and annual
                  options




We
      do not
      own or operate the aircraft, manage pilots, or own supporting operator
      infrastructure, like operations and maintenance facilities. Our clients also
      do
      not hold title to the aircraft.




The
      Halcyon Jets model assumes that we will develop and build fundamental
      capabilities directed by a seasoned leadership team with operational and
      marketing know-how. Selection of our strategic partners is focused on
      structuring mutually beneficial programs and establishing collaborative
      alliance/supplier relationships.




**The
      Market**




As
      reported in Aviation International News, in a world characterized by continuing
      heightened concern over security, providers of charter air services are
      thriving. More business travelers shun the airlines and the impersonal passenger
      terminals they inhabit. Industry experts say increased demand for private air
      travel in the face of the relative insecurity and inconvenience of the airlines
      has created a self feeding growth mechanism. 1





General
      aviation aircraft growth projections produced by the Federal Aviation
      Administration (the “FAA”) provide further substantiation of the expected growth
      in business aviation and fractional ownership. Worldwide shipments of general
      aviation airplanes totaled 4,272 units in 2007. This is a 5.4% increase in
      shipments over the previous year’s total of 4,053 units and strongest year since
      1981.  The
      number of general aviation aircraft is forecast to grow to 252,775 by 2017.
      By
      2030, the number of general aviation aircraft is expected to grow to over
      294,000. 2





For
      the
      second year in a row, business jet shipments reached an all-time high. In 2007,
      the industry shipped a total of 1,138 units, up 28.4 percent over the previous
      year’s figure. With manufacturers’ backlogs at record levels and a strong
      worldwide market, General Aviation Manufacturing Association (“GAMA”) expects
      business jets to continue to fuel industry growth. 2




5




According
      to GAMA the use of general aviation airplanes for business continues to grow
      not
      only in the United States but around the world. Both the number of worldwide
      corporate operators and fractional share owners grew in 2007. The number of
      business operators grew to 170,993 from 17,178 while the number of fractional
      share owners reached 5,168 as compared to 4,863 in 2006. The worldwide corporate
      aircraft fleet also grew to 27,130 aircraft with the United States accounting
      for 17,125 of these. Similarly, the number of aircraft in fractional programs
      grew from 984 to 1,030 aircraft in 2007. 2




Halcyon Jets




Many
      experts believe that only a small portion of the potential fractional business
      has been developed. Rolls Royce predicts that fractional aircraft will account
      for 23% of its aircraft demand in 2012. 3




Highlights
      from a FAA long-range forecast illustrate the impact of general aviation and
      the
      fractional ownership segment, are as follows:


·
              Safety
                  and security concerns for senior executives and key corporate staff,
                  combined with increased processing times at some U.S. airports,
                  have made
                  fractional, corporate, and on-demand charter flights practical
                  alternatives to travel on commercial
                  flights.
 
 ·
              The
                  number of general aviation hours flown is projected to increase
                  by 3.2
                  percent yearly over the 12-year forecast period. Much of the increase
                  reflects increased flying by business and corporate aircraft as
                  well as
                  increased utilization rates for piston
                  aircraft.
 
 ·
              Large
                  increases in jet hours result from the introduction of very light
                  jets
                  (VLJ), as well as increases in the fractional ownership fleet and
                  its
                  activity levels. Fractional ownership aircraft fly about 1,200
                  hours
                  annually compared to only roughly 350 hours for all business jets
                  in all
                  applications. High utilization rates are the primary driver behind
                  the
                  forecast increase in total hours
                  flown.
  6
  ·
              The
                  data also shows that general aviation flying by fractional aircraft
                  has
                  continued to outpace the industry and the industry is counting
                  on growth
                  in fractional ownership companies and corporate flying to expand
                  the
                  market for jet aircraft.4




1
            “The
                Charter Market” by Charles Alcock and Meredith Saini found in Aviation
                International News, November 2006. available at
                www.ainolnine.com2
            2007
                General Aviation Statistical Databook & Industry
                Outlook3
            NBAA
                2004 Fact Book


4
            FAA
                Long-Range Aerospace Forecasts Fiscal Years 2020, 2025 and 2030 -
                August
                2006




**Competitive
      Factors**




The
      overall private aviation sector is crowded with a large and varied number of
      participants, including aircraft owner/operators, membership programs, charter
      providers and fractional programs. Many of our competitors are significantly
      better capitalized than we are and have been in business a greater period of
      time. We believe we compete on the basis of quality and consistency of service,
      and not on price.




We
      also
      compete with owner/operators, membership programs, charter providers and
      fractional programs for available aircraft. Our ability to secure available
      aircraft at favorable prices, or at all, is a significant competitive factor.
      We
      compete with many more well capitalized businesses for available aircraft many
      of which maintain long term relationships and have sources of available aircraft
      that may prevent us from securing aircraft when needed for our
      customers.





We
      offer
“Jet Card” programs. Marquis Jet and Blue Star, two of our well recognized
      competitors, as well as others in the industry, offer similar programs. Marquis
      Jet buys shares in fleet operator aircraft or through charter operators, and
      markets the hours in packaged cards. We package our Jet Cards by dollars or
      hours. To differentiate ourselves further, we seek to bundle the aircraft travel
      with varying levels of additional business and other services, such as
      hospitality (on the ground and in the air), ground transportation, catering
      and
      concierge services.




**Owner/Operator
      Standards**




Owners
      and operators of aircraft that are considered suitable travel providers for
      us
      are critical to providing our services. We have established several
      high-priorities for our portfolio of operators:


·
              Each
                  operator must have robust operational capabilities. They must demonstrate
                  that they have aircraft capacity, deliver high quality, own top
                  of the
                  line aircraft and have highly skilled pilots and best in class
                  operational
                  capabilities.
 
 ·
              We
                  will have ability to arrange flights on almost any type of aircraft
                  demanded by customers through our portfolio of
                  operators.
 
 ·
              Operators
                  are certified under Part 135 of the FAA regulations and offer highest
                  levels of pilot training and
                  credentials.
  7
  ·
              Ability
                  to reach thousands of airports, beyond large commercial
                  airports.




**Employees**




We
      currently have 54 employees, consisting of 4 in management, 44 in sales and
      6 in administration and finance. We currently believe that our employee
      relations are good.




**RISK
      FACTCRS**




*There
      are numerous and varied risks, known and unknown, that may prevent us from
      achieving our goals. If any of these risks actually occur, our business,
      financial condition or results of operation may be materially adversely
      affected. In such case, the trading price of our common stock could decline
      and
      investors could lose all or part of their investment.*




**Risks
      Relating to Our Business**




***Since
      we lack a meaningful operating history, it is difficult for potential investors
      to evaluate our business.***




Halcyon
      Jets, Inc. was formed in February 2007. Our limited operating history makes
      it
      difficult for potential investors to evaluate our business or prospective
      operations. As a startup, we are subject to all the risks inherent in the
      initial organization, financing, expenditures, complications and delays inherent
      in a new business. Investors should evaluate an investment in our Company in
      light of the uncertainties encountered by start-up companies in an intensely
      competitive industry. Our business is dependent upon the implementation of
      our
      business plan, as well as our ability to enter into agreements with third
      parties for, among other things, the provision of a sufficient number of
      aircraft, on commercially favorable terms. There can be no assurance that our
      efforts will be successful or that we will be able to attain
      profitability.




***Our
      independent registered public accounting firm has expressed doubt about our
      ability to continue as a going concern.***




Our
      independent registered public accounting firm has expressed doubt about our
      ability to continue as a going concern. This indicates that our auditors believe
      that substantial doubt exists regarding our ability to continue to remain in
      business. There can be no assurance that we will be able to achieve or sustain
      profitability or positive cash flow in the near future, or at all. If customers
      are slower to embrace our services than we expect, or we are unable to raise
      additional funds on favorable terms, we may not be able to continue operating
      our business.




8




***We
      will need additional financing to execute our business plan and fund operations,
      which additional financing may not be available.***




We
      have
      very limited funds and we may not be able to execute our current business plan
      and fund business operations long enough to achieve profitability. Our ultimate
      success may depend upon our ability to raise additional capital. There can
      be no
      assurance that additional funds will be available when needed from any source
      or, if available, will be available on terms that are acceptable to
      us.




We
      may be
      required to pursue sources of additional capital through various means,
      including joint venture projects and debt or equity financings. Future
      financings through equity investments are likely to be dilutive to existing
      stockholders. Also, the terms of securities we may issue in future capital
      transactions may be more favorable for our new investors. Newly issued
      securities may include preferences, superior voting rights, the issuance of
      warrants or other derivative securities, and the issuances of incentive awards
      under equity employee incentive plans, which may have additional dilutive
      effects. Further, we may incur substantial costs in pursuing future capital
      and/or financing, including investment banking fees, legal fees, accounting
      fees, printing and distribution expenses and other costs. We may also be
      required to recognize non-cash expenses in connection with certain securities
      we
      may issue, such as convertible notes and warrants, which will adversely impact
      our financial condition.




Our
      ability to obtain needed financing may be impaired by such factors as the
      capital markets, both generally and specifically in the aviation industry,
      and
      the fact that we are not profitable, which could impact the
      availability and cost of future financings. If the amount of capital we are
      able to raise from financing activities, together with our revenues from
      operations, is not sufficient to satisfy our capital needs, even to the extent
      that we reduce our operations accordingly, we may be required to cease
      operations.




***Our
      profitability depends on our ability to obtain suitable charter aircraft.***




Our
      growth strategy depends on our having an adequate supply of available charter
      aircraft for our customers, by partnering with operators of suitable charter
      aircraft. Any condition that would deny, limit or delay our ability to provide
      on-demand charter flights through our brokerage services, including a limited
      supply of available charter aircraft, will constrain our ability to grow. If
      we
      cannot partner with operators of private charter aircraft, we will not be able
      to achieve economies of scale and may never become profitable.




***We
      are dependent upon key personnel whose loss may adversely impact our business.***




We
      rely
      heavily on the expertise, experience and continued services of our senior
      management and personnel. The loss, or any inability to attract or retain key
      individuals, could materially adversely affect us. We seek to compensate and
      motivate our executives, as well as other employees, through competitive
      salaries and bonus plans, but there can be no assurance that these programs
      will
      allow us to retain key employees or hire new key employees. As a result, if
      key
      personnel were to leave or cease to be available or our ability to utilize
      their
      skills, contacts and other resources impeded, we could face substantial
      difficulty in hiring qualified successors and could experience a loss in
      productivity while any such successors obtain the necessary training and
      experience.




9




***The
      charter aircraft brokerage industry is extremely competitive.***




We
      compete with first class and business class services of national and regional
      airlines, fractional aircraft ownership operators, and other charter aircraft
      brokers and, particularly on shorter routes, ground transportation. Our
      competitors have been in business far longer than we have and they may have
      significantly greater financial stability, access to capital markets and name
      recognition. Unanticipated shortfalls in expected revenues due to price
      competition or inadequate supply of private charter flights would negatively
      impact our financial results and harm our business. There is no assurance that
      we will be able to successfully compete in this industry.




***We
      may not be able to effectively control and manage our
      growth.***




Our
      strategy envisions a period of potentially rapid growth. We currently maintain
      nominal administrative and personnel capacity due to the startup nature of
      our
      business, and our expected growth may impose a significant burden on our future
      planned administrative and operational resources. The growth of our business
      may
      require significant investments of capital and increased demands on our
      management, workforce and facilities. We will be required to substantially
      expand our administrative and operational resources and attract, train, manage
      and retain qualified management and other personnel. Failure to do so or satisfy
      such increased demands would interrupt or would have a material adverse effect
      on our business and results of operations.




***We
      may be negatively affected by changing economic conditions.***




The
      purchase of private charter jet flight time is likely considered a luxury item
      to consumers, especially compared to the costs associated with commercial air
      travel. As a result, a general downturn in economic, business and financial
      conditions, including recession, inflation and higher interest rates, could
      have
      an adverse effect on consumers’ spending habits and could cause them to travel
      less frequently and, to the extent they travel, to travel using commercial
      air
      carriers or other means considered to be more economical than via a privately
      chartered jet. Rising fuel costs could also impact the private aviation business
      adversely.




**Risks
      Relating to Our Industry**




***The
      commercial aircraft industry is subject to extensive government regulation,
      which can result in increased costs, delays, limits on its operating flexibility
      and competitive disadvantag*** ***es.***




While
      we
      do not own, operate or maintain any aircraft, commercial aircraft operators
      are
      subject to extensive regulatory requirements. Many of these requirements result
      in significant costs that may adversely affect our business and financial
      results. For example, the Federal Aviation Administration (FAA) from time to
      time issues directives and other regulations relating to the maintenance and
      operation of aircraft, and compliance with those requirements drives significant
      expenditures. If we are unable to pass those costs on to the customers, it
      would
      negatively impact our profit margin.




10




Moreover,
      additional laws, regulations, taxes and airport rates and charges have been
      enacted from time to time that have significantly increased the costs of
      commercial aircraft operations, reduced the demand for air travel or restricted
      the way operators can conduct their business. For example, the Aviation and
      Transportation Security Act, which became law in 2001, mandates the
      federalization of certain airport security procedures and imposes additional
      security requirements on airlines. Similar laws or regulations or other
      governmental actions in the future may similarly adversely affect our business
      and financial results.




Our
      results of operations may also be affected by changes in law and future actions
      taken by governmental agencies having jurisdiction over aircraft operators,
      including:


·
              changes
                  in the law which affect the services that can be offered by aircraft
                  operators in particular markets and at particular
                  airports;
 ·
              restrictions
                  on competitive practices (for example court orders, or agency regulations
                  or orders, that would curtail an aircraft operator’s ability to respond to
                  a competitor);
 ·
              the
                  adoption of regulations that impact customer service standards
                  (for
                  example, new passenger security standards);
                  or
 ·
              the
                  adoption of more restrictive locally-imposed noise
                  restrictions.




***Although
      we do not own or operate any of the aircraft we broker, we may still be sued
      by
      customers in the event of an accident, which could place a substantial financial
      burden upon us.***




Our
      business exposes us to potential liability risks that are inherent in the
      aviation business. Although we do not own or operate any of the aircraft that
      we
      provide to our customers, we can provide no assure that potential claims will
      not be asserted against us in the event of an accident involving such aircraft.
      A successful liability claim or series of claims brought against us could have
      a
      material adverse effect on our business, financial condition and results of
      operations.




Generally,
      we are covered by the insurance policies of the aircraft’s operator but there
      can be no assurance that such operator is sufficiently insured to satisfy all
      claims. There can be no assurance that we will be able to purchase adequate
      insurance on acceptable terms, if at all, or that any such insurance will
      provide adequate coverage against our potential liabilities. Claims or losses
      in
      excess of our insurance coverage could have a material adverse effect on our
      business, financial condition and results of operations.




***Current
      laws and regulations allow sales of private charter aircraft services to foreign
      customers and private charter flights to numerous foreign locations. If these
      laws and regulations are changed to restrict sales to foreign customers or
      flights to foreign locations, we may lose potential customers, which would
      limit
      our growth potential.***




Our
      revenue and profitability will be based in part on sales of private charter
      flight time to foreign customers and flights to foreign locations, which is
      allowed under current federal laws and regulations. Modification of such
      statutes and regulations could pose a significant risk to our business
      operations by reducing the pool of potential customers by regulating,
      restricting or prohibiting sales of private chartered flight time to foreign
      persons or by restricting or prohibiting flights to certain foreign locations.




11




**Risks
      Relating to Our Organization**





***We
      are subject to the reporting requirements of the federal securities laws, which
      can be expensive.***




We
      are a
      public reporting company and, accordingly, subject to the information and
      reporting requirements of the Exchange Act and other federal and state
      securities laws, including compliance with the Sarbanes-Oxley Act of 2002.
      The
      costs of preparing and filing annual and quarterly reports, proxy statements
      and
      other information with the SEC and furnishing audited reports to stockholders
      will cause our expenses to be higher than they would have been if we had
      remained privately-held and did not consummate the merger.




It
      may be
      time consuming, difficult and costly for us to develop and implement the
      internal controls and reporting procedures required by the Sarbanes-Oxley Act.
      We may need to hire additional financial reporting, internal controls and other
      finance personnel in order to develop and implement appropriate internal
      controls and reporting procedures. If we are unable to comply with the internal
      controls requirements of the Sarbanes-Oxley Act, we may not be able to obtain
      the independent accountant certifications required by that Act, if
      applicable.





***Failure
      to achieve and maintain effective disclosure controls or internal controls
      could
      have a material adverse effect on our ability to report our financial results
      timely and accurately.***





We
      retained the services of an independent consultant to assist management to
      analyze our system of internal accounting controls and accounting and financial
      reporting processes and to assist in the implementation of improvements in
      these
      processes. Through this process, we have identified four material weaknesses
      in
      our disclosure controls and internal controls. These are more specifically
      discussed in Item 8A of this Annual Report. As a result of these deficiencies,
      we must perform additional analysis and other post-closing procedures to insure
      that our financial statements are prepared in accordance with US generally
      accepted accounting principals. As a result, we will incur expenses and devote
      significant management resources to this review process. Furthermore, effective
      internal controls and procedures are necessary for us to continue to provide
      reliable financial reports. If we continue to have material weaknesses in our
      internal controls and procedures, we may not be able to provide reliable
      financial reports and our business and operating results could be harmed.




***Public
      company compliance requirements may make it more difficult to attract and retain
      officers and directors.***




The
      Sarbanes-Oxley Act and rules subsequently implemented by the SEC have required
      changes in corporate governance practices of public companies. Compliance with
      the new rules and regulations increases our operating costs and makes certain
      activities more time consuming and costly than if we were not a public company.
      As a public company, these new rules and regulations make it more difficult
      and
      expensive for us to obtain director and officer liability insurance. As a
      result, it may be more difficult for us to attract and retain qualified persons
      to serve on our Board of Directors or as executive officers.




12




***Because
      Halcyon Jets became public by means of a reverse merger, we may not be able
      to
      attract the attention of major brokerage firms.***




There
      may
      be risks associated with Halcyon Jets becoming public through a “reverse
      merger”. Securities analysts of major brokerage firms may not provide coverage
      of us since there is no incentive to brokerage firms to recommend the purchase
      of our common stock. No assurance can be given that brokerage firms will, in
      the
      future, want to conduct any secondary offerings on behalf of our post-merger
      company.





***Our
      largest stockholders can exert significant control over our business and affairs
      and have actual or potential interests that may depart from those of our other
      stockholders.***




Our
      largest stockholders, some of whom are key employees or consultants to Holdings,
      own a substantial number of shares of our common stock. Additionally, their
      holdings may be supplemented in the event that they exercise any of the warrants
      they may hold or in the future be granted, or exercise any conversion privilege
      under any convertible debt securities held or if they otherwise acquire
      additional shares of our common stock. The interests of such persons may differ
      from the interests of other stockholders. As a result, in addition to their
      positions with us, such persons will have significant influence over and control
      all corporate actions requiring stockholder approval, irrespective of how our
      other stockholders may vote, including the following actions:


·
              elect
                  or defeat the election of our
                  directors;
 ·
              amend
                  or prevent amendment of our Certificate of Incorporation or
                  By-laws;
 ·
              effect
                  or prevent a merger, sale of assets or other corporate transaction;
                  and
 ·
              control
                  the outcome of any other matter submitted to the shareholders for
                  vote.




In
      addition, such persons’ stock ownership may discourage a potential acquirer from
      making a tender offer or otherwise attempting to obtain control of us, which
      in
      turn could reduce our stock price or prevent our stockholders from realizing
      a
      premium over our stock price.




**Risks
      Relating to our Common Stock**




***Our
      stock price may be volatile.***




The
      market price of our common stock is likely to be highly volatile and could
      fluctuate widely in price in response to various factors, many of which are
      beyond our control, including the following:


·
              changes
                  in the aviation industry;
 ·
              competitive
                  pricing pressures;
  13
  ·
              our
                  ability to obtain working capital
                  financing;
 ·
              additions
                  or departures of key personnel;
 ·
              limited
                  “public float”, in the hands of a small number of persons whose sales or
                  lack of sales, could result in positive or negative pricing pressure
                  on
                  the market price for our common
                  stock;
 ·
              our
                  ability to execute our business
                  plan;
 ·
              operating
                  results that fall below
                  expectations;
 ·
              loss
                  of any strategic relationship;
 ·
              regulatory
                  developments;
 ·
              economic
                  and other external factors; and
 ·
              period-to-period
                  fluctuations in our financial
                  results.




In
      addition, the securities markets have from time to time experienced significant
      price and volume fluctuations that are unrelated to the operating performance
      of
      particular companies. These market fluctuations may also materially and
      adversely affect the market price of our common stock.




***We
      have not paid dividends in the past and do not expect to pay dividends in the
      future. Any return on investment may be limited to the value of our common
      stock.***




We
      have
      never paid cash dividends on our common stock and do not anticipate doing so
      in
      the foreseeable future. The payment of dividends on our common stock will depend
      on earnings, financial condition and other business and economic factors
      affecting us at such time as our board of directors may consider relevant.
      If we
      do not pay dividends, our common stock may be less valuable because a return
      on
      investment will only occur if our stock price appreciates.




***There
      is currently no liquid trading market for our common stock and we cannot ensure
      that one will ever develop or be sustained.***




To
      date
      there has been no liquid trading market for our common stock. We cannot predict
      how liquid the market for our common stock might become. We anticipate our
      common stock will be quoted on the automated quotation service of the NASD,
      known as the OTC Bulletin Board. Although we are not presently eligible, we
      intend to apply for listing of our common stock on either The Nasdaq Capital
      Market or other national securities exchanges if and when we meet the
      requirements for listing. We cannot ensure that we will be able to satisfy
      such
      listing standards or that our common stock will be accepted for listing on
      any of these exchanges. Should the Company fail to satisfy the initial
      listing standards of the exchanges, or our common stock is otherwise
      rejected for listing and remain listed on the OTC Bulletin Board or suspended
      from the OTC Bulletin Board, the trading price of our common stock could suffer
      and the trading market for our common stock may be less liquid and our common
      stock price may be subject to increased volatility.




14




***Our
      common stock is deemed a “penny stock”, which may make it more difficult for our
      investors to sell their shares.***




Our
      common stock is subject to the “penny stock” rules adopted under Section 15(g)
      of the Securities Exchange Act of 1934. The penny stock rules apply to companies
      whose common stock is not listed on a national securities exchange and trades
      at
      less than $5.00 per share or that have tangible net worth of less than
      $5,000,000 ($2,000,000 if the company has been operating for three or more
      years). These rules require, among other things, that brokers who trade penny
      stock to persons other than “established customers” complete certain
      documentation, make suitability inquiries of investors and provide investors
      with certain information concerning trading in the security, including a risk
      disclosure document and quote information under certain circumstances. Many
      brokers have decided not to trade penny stocks because of the requirements
      of
      the penny stock rules and, as a result, the number of broker-dealers willing
      to
      act as market makers in such securities is limited. If we remain subject to
      the
      penny stock rules for any significant period, it could have an adverse effect
      on
      the market, if any, for our securities. In as much as our securities are subject
      to the penny stock rules, investors will find it more difficult to dispose
      of
      our securities.




***Offers
      or availability for sale of a substantial number of shares of our common stock
      may cause the price of our common stock to decline.***




If
      our
      stockholders sell substantial amounts of our common stock in the public market,
      or upon the expiration of any holding period under Rule 144, or expiration
      of
      lock-up periods applicable to outstanding shares, or issued upon the exercise
      of
      outstanding options or warrants, it could create a circumstance commonly
      referred to as an “overhang” and in anticipation of which the market price of
      our common stock could fall. The existence of an overhang, whether or not sales
      have occurred or are occurring, also could make more difficult our ability
      to
      raise additional financing through the sale of equity or equity-related
      securities in the future at a time and price that we deem reasonable or
      appropriate. The shares of common stock issued to our officers, directors,
      and
      greater than 10% stockholders in the merger are subject to a lockup agreement
      prohibiting sales of such shares for a period of 18 months following the Private
      Placement. Following such date, all of those shares will become freely tradable,
      subject to securities laws and SEC regulations regarding sales by insiders.
      In
      addition, the shares of common stock sold in the Private Placement (including
      the shares underlying the Warrants sold therein) will be freely tradable upon
      the earlier of: (i) effectiveness of a registration statement covering such
      shares; and (ii) the date on which such shares may be sold without registration
      pursuant to Rule 144 under the Securities Act. Recent revisions to Rule 144
      shortened the holding period under Rule 144, as a result of which the overhang
      period arises earlier than would previously have been the
      case.





**ITEM
              2.**
            **PROPERTY**




We
      lease
      approximately 4,000 square feet of office space at 336 West 37th
      Street in New York City. The lease term expires on May 31, 2010. The monthly
      lease payments for the three years are approximately $11,745, $12,100 and
      $12,460, respectively. In addition, we lease approximately 2,340 square feet
      of
      office space at Peninsula Plaza, 2424 N. Federal Highway, Boca Raton, Florida,
      with initial monthly lease payments of approximately $6,531. The lease term
      expires on June 30, 2010. We also lease approximately 1,760 square feet of
      office space at 11620 Wilshire Boulevard Building, Beverly Hills, California,
      with initial monthly lease payments of approximately $5,100 with 4% annual
      increases. The lease term expires June 14, 2010.




15




We
      believe our current facilities are adequate for our immediate and near-term
      needs. Additional space may be required as we expand our activities, but we
      do
      not foresee any significant difficulties in obtaining any required additional
      facilities.




**ITEM
              3.**
            **LEGAL
                PROCEEDINGS**




On
      or
      about April 20, 2007, a lawsuit was commenced in the Supreme Court of the State
      of New York, County of New York, by Blue Star Jets, LLC, against Halcyon Jets,
      its President and two other employees, all of whom were former employees of
      Blue
      Star Jets. The following claims were asserted in the complaint: (i) breach
      of
      fiduciary duty against the individual defendants (ii) misappropriation of trade
      secrets against Halcyon Jets and the individual defendants; (iii) conversion
      against Halcyon Jets and the individual defendants; (iv) unfair competition
      against Halcyon Jets and two of the individual defendants; (v) violation of
      the
      Computer Fraud and Abuse Act against Halcyon Jets and two of the individual
      defendants; (vi) tortious interference with prospective business relations
      against Halcyon Jets and two of the individual defendants; (vii) civil
      conspiracy against Halcyon Jets and two of the individual defendants; and (viii)
      breach of contract against two of the individual defendants.




Blue
      Star
      Jets initially sought a temporary restraining order and preliminary injunction
      to, among other things, enjoin and restrain Halcyon Jets from: (i) utilizing
      certain information and materials which Blue Star Jets claimed was proprietary
      and confidential; and (ii) from soliciting or contacting Blue Star Jets' clients
      or employees. The Court initially entered a temporary restraining order but,
      by
      order dated May 14, 2007, the Court vacated the temporary restraining order
      due
      to Blue Star Jets' failure to post a bond required by the Court for such a
      restraint to remain in place. Blue Star Jets also withdrew its application
      for a
      preliminary injunction.




Thereafter,
      Halcyon Jets and the individual defendants, filed a motion to dismiss the case
      based on a procedural defect in Blue Star Jets' filing. In response, Blue Star
      Jets essentially conceded the defect with the complaint and chose to commence
      a
      new action with substantially similar allegations and claims against Halcyon
      Jets and the individual defendants. In the new action, Blue Star Jets sought
      monetary damages of approximately $7 million, plus an award for punitive
      damages, as well as injunctive relief seeking to enjoin Halcyon Jets from
      soliciting Blue Star Jets' clients and employees. Halcyon Jets and the
      individual defendants answered the complaint on August 24, 2007, and one
      individual defendant asserted counterclaims against Blue Star Jets relating
      to
      his employment with that company.




Pursuant
      to the terms of our President’s employment agreement with us (more fully
      described below), we agreed to indemnify him from, among other things, all
      liabilities that may arise by virtue of any alleged violation of any agreement
      he had with Blue Star Jets by virtue of his employment with us.




16




On
      July
      13, 2007, Halcyon Jets commenced an action against Blue Star Jets in the Supreme
      Court of the State of New York, County of New York, asserting claims, among
      others, for (i) unfair competition and deceptive business practices; (ii)
      violations of the Lanham Act; (iii) tortious interference; and (iv) conversion,
      as a result of, among other things, Blue Star Jets establishment of false and
      misleading web links. In this action, Halcyon Jets is also seeking injunctive
      relief to enjoin Blue Star Jets from utilizing misleading web links. On July
      31,
      2007, Halcyon Jets and Blue Star Jets entered into a stipulation whereunder
      each
      party agreed, among other things, not to use the other party's name "as metatag,
      header or search term information on any web page or in connection with any
      advertisement or sponsored link purchased from Google or any other search
      engine," and not to use "in connection with internet marketing/advertising
      any
      web link which displays the [the other party's name] or which is intended to
      deceive or misdirect [the other party's] customers, or which creates a
      likelihood of confusion as to the source of the services provided by either
      Halcyon or Blue Star." Blue Star Jets' answer to the complaint in this action
      was served on September 11, 2007.





On
      November 27, 2007, Halcyon Jets and Blue Star Jets voluntarily discontinued
      both
      of the lawsuits referred to above, without prejudice, and without either party
      reimbursing the legal fees of the other. Either party could reinstate the
      litigation but we have received no indication that Blue Star Jets intends to
      do
      so.




Except
      as
      set forth above, there are no pending or threatened legal proceedings against
      us.  In the opinion of management, on the advice of counsel, we have made
      adequate provision for potential liabilities, if any, arising from potential
      claims arising from litigation, governmental investigations, legal and
      administrative cases and proceedings.





**Item
              4.**
            **SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**




None.




**PART
      II**





**Item
              5.**
            **MARKET
                FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
                ISSUER
                PURCHASES OF EQUITY
                SECURITIES**




**Market
      for Securities**




There
      was
      no market for our common stock prior to the merger on August 17, 2007. Our
      common stock is quoted on the ‘‘Over the Counter Bulletin Board’’ since
      September 5, 2007 and currently trades under the symbol ‘‘HJHD.OB’’. The
      following table sets forth the high and low sale price of the common stock
      on a
      quarterly basis, as reported by NASDAQ:





**Quarter
                Ended:**
            
            **High***
            
            **Low***October
                1, 2007
            
            $
            2.55
            
            $
            .85January
                31, 2008
            
            
            1.00
            
            
            .36




17




The
        per
        share closing sales price of the common stock as reported by the Over the
        Counter Bulletin Board on May 13, 2008, was $.45. As of this date there were
        approximately 92 holders of record of common stock and 25,647,500 shares of
        common stock outstanding. We have not paid dividends on our common stock
        outstanding in the past. There are no restrictions that limit our ability
        to pay
        dividends in the future.




**Recent
      Issuances of Unregistered Securities.**




At
      the
      time of the closing of the merger, Holdings issued 49.9 units in a private
      placement (the “Private Placement”), consisting of an aggregate
      of 4,990,000 shares of Holdings’ common stock and three-year redeemable
      warrants to purchase an aggregate of 2,495,000 shares of Holdings’ common
      stock at an exercise price of $1.00 per share at a purchase price of $100,000
      per unit. As part of the Private Placement, holders of $1,500,000 of outstanding
      indebtedness of Halcyon converted their promissory notes at $1.00 per share
      into
      15 units in the Private Placement.




The
      issuances described in this Item 5 were made in reliance upon the exemption
      from
      registration set forth in Section 4(2) of the Securities Act relating to sales
      by an issuer not involving any public offering. None of these transactions
      involved a distribution or public offering.




**Equity
      Compensation Plan Information**





The
      following table sets forth information regarding our existing compensation
      plans
      and individual compensation arrangements pursuant to which our equity securities
      are authorized for issuance to employees or non-employees (such as directors,
      consultants and advisors) in exchange for consideration in the form of services:


**Plan Category**
              
              **Number of**
                **securities to be**
                **issued upon**
                **exercise of**
                **outstanding**
                **options, warrants**
                **and rights**
              
              **Weighted-average**
                **exercise price of**
                **outstanding**
                **options, warrants**
                **and rights**
              
              **Number of**
                **securities remaining**
                **available for future**
                **issuance under equity**
                **compensation plans**
                **(excluding securities**
                **reflected in**
                **column (a))****(a)**
              
              **(b)**
              
              **(c)**Equity
                  compensation plans approved by security holders
              
              
              4,935,000
              
              $
              1.00
              
              
              65,000Equity
                  compensation plans not approved by security holders
              
              
              500,000
              
              $
              50
              
              
              —Total
              
              
              5,435,000
              
              
              
              
              
              65,000




18


**Item
                6.**
              **MANAGEMENT'S
                  DISCUSSION AND ANALYSIS OR PLAN OF
                  OPERATION**




**INTRODUCTION
      AND CERTAIN CAUTIONARY STATEMENTS**




The
      following discussion of our financial condition and results of our operations
      should be read in conjunction with the Financial Statements and Notes thereto.
      Our fiscal year ends January 31. This document contains certain forward-looking
      statements including, among others, planned capital expenditure requirements,
      cash and working capital requirements, our expectations regarding the adequacy
      of current financing arrangements, fight demand and market growth, other
      statements regarding future plans and strategies, anticipated events or trends,
      and similar expressions concerning matters that are not historical facts. These
      forward-looking statements are based largely on our current expectations and
      are
      subject to a number of risks and uncertainties. Actual results could differ
      materially from these forward-looking statements. Important factors to consider
      in evaluating such forward-looking statements include (i) changes in external
      factors or in our internal budgeting process which might impact trends in our
      results of operations; (ii) unanticipated working capital or other cash
      requirements; (iii) changes in our business strategy or an inability to execute
      our strategy due to unanticipated changes in the industries in which we operate;
      and (iv) various competitive market factors that may prevent us from competing
      successfully in the marketplace.





*This
      discussion should be read in conjunction with the other sections of this Report,
      including “Risk Factors,” “Description of Business” and the Financial Statements
      attached hereto as Item 7 and the related exhibits. The various sections of
      this
      discussion contain a number of forward-looking statements, all of which are
      based on our current expectations and could be affected by the uncertainties
      and
      risk factors described throughout this Report. See “Forward-Looking Statements.”
Our actual results may differ materially.*




**Overview**




Our
      discussion and analysis of operations is based upon our consolidated financial
      statements, which have been prepared in accordance with generally accepted
      accounting principles in the United States. The preparation of these financial
      statements requires us to make estimates and judgments that affect the reported
      amounts of assets, liabilities, revenues and expenses, and related disclosure
      of
      contingent assets and liabilities. We base our estimates on historical
      experience and on various other assumptions that are believed to be reasonable
      under the circumstances, the results of which form the basis for making
      judgments about the carrying values of assets and liabilities that are not
      readily apparent from other sources. Actual results could differ materially
      from
      these estimates under different assumptions or conditions.




We
      have
      identified the policies below as critical to our business operations and the
      understanding of our financial results. The impact and any associated risks
      related to these policies on our business operations is discussed throughout
      management's discussion and analysis or plan of operations where such policies
      affect our reported and expected financial results. For a detailed discussion
      on
      the application of these and other accounting policies see Note 2 to the
      consolidated financial statements included elsewhere in this Annual
      Report.




19




We
      began
      our operations in late March 2007, and have not as yet attained a level of
      operations which allows us to meet our current overhead. We do not contemplate
      attaining profitable operations within our first few business operating cycles,
      nor is there any assurance that such an operating level can ever be achieved.
      We
      will be dependent upon obtaining additional financing in order to adequately
      fund working capital, infrastructure and significant marketing/investor related
      expenditures to gain market recognition, so that we can achieve a level of
      revenue adequate to support our cost structure, none of which can be assured.
      While we have funded our initial operations through private placements of equity
      and bridge loans, there can be no assurance that adequate financing will
      continue to be available to us and, if available, on terms that are favorable
      to
      us. These factors raise substantial doubt about our ability to continue as
      a
      going concern and the accompanying consolidated financial statements do not
      include any adjustments related to the recoverability or classification of
      asset
      carrying amounts or the amounts and classification of liabilities that may
      result should we be unable to continue as a going concern.




Passenger
      revenue is the gross amount charged to customers and is recognized when the
      charter services are provided. Other revenues such as catering or ground
      arrangements are also recognized when the services are provided based upon
      the
      gross amount billed to customers. We have evaluated the provisions of EITF
      99-19
      and have concluded that we should report revenues gross with a separate display
      of the cost of sales while acting as an agent or broker since we take on the
      credit risk associated with the receivable and are primarily obligated to
      the supplier.




We
      used
      the Black-Scholes option pricing model to determine the fair value of stock
      options in connection with stock based compensation charges. The determination
      of the fair value of stock-based payment awards on the date of grant using
      an
      option-pricing model is affected by our stock price as well as assumptions
      regarding a number of complex and subjective variables. These variables include
      our expected stock price volatility over the term of the awards, actual and
      projected employee stock option exercise behaviors, risk-free interest rate
      and
      expected dividends.




Due
      to
      our limited history as a public company, we have estimated expected volatility
      based on the historical volatility of certain companies as determined by
      management. The risk-free rate for the expected term of each option is based
      on
      the U.S. Treasury yield curve in effect at the time of grant. The dividend
      yield
      assumption is based on our intent not to issue a dividend as a dividend policy.
      Due to our limited operating history, management estimated the term
      to equal the contractual term.




If
      factors change and we employ different assumptions for estimating stock-based
      compensation expense in future periods or if we decide to use a different
      valuation model, the future periods may differ significantly from what we have
      recorded in the current period and could materially affect our operating income,
      net income and net income per share.




20




The
      Black-Scholes option-pricing model was developed for use in estimating the
      fair
      value of traded options that are fully transferable. In addition, option-pricing
      models require the input of highly subjective assumptions including the expected
      stock price volatility. Because the Company’s stock options have characteristics
      significantly different from those of traded options and because changes in
      the
      subjective input assumptions can materially affect the fair value estimate,
      in
      management’s opinion the existing models may not necessarily provide a reliable
      single measure of the fair value of its employee stock options.




**Results
      of Operations**





**FEBUARY
      1, 2007 (DATE OF INCEPTION) THROUGH JANUARY 31, 2008**




The
      following table sets forth our results of operations for the year ended January
      31, 2008 expressed as a percentage of total revenues:




Revenues
            
            
            100.0
            %Operating
                costs and expenses:Charter
                costs
            
            
            86.0Salaries,
                wages and benefits
            
            
            32.4Other
                operating costs
            
            
            22.3Depreciation
                and amortization
            
            
            .9Total
                operating costs and expenses
            
            
            141.6Operating
                loss
            
            
            (41.6
            )Other
                - net
            
            
            (3.5
            )Net
                Loss
            
            
            (45.1
            )%




Our
      operations began in the last week of March 2007 and, accordingly, since
      inception our operations consisted principally of developing a business plan;
      seeking capital; establishing headquarters in New York, as well as 2 additional
      offices in Boca Rotan, FL and Beverly Hills, CA; and recruiting staff. Revenues
      were the result of 481 trips. The operating margin reflects our start-up
      stage and the competitive methods it has taken to enter into this market.
      Compensation and benefits expense includes a non-cash charge of $1.7 million
      principally resulting from the issuance of stock options to employees and
      consultants in August 2007 which were fully vested. However, it is also
      anticipated that our operating costs and expenses will continue to increase
      to
      support a higher level of revenues. Increased costs will be attributable to
      increased head counts, principally sales personnel and support staff for our
      multi-office infrastructure and increased marketing expenditures to promote
      our
      services. In addition, as a public reporting entity, compliance with Securities
      and Exchange Commission regulations will increase general and administrative
      costs substantially.




21




**Off-Balance
      Sheet Arrangements**




We
      had no
      off-balance sheet arrangements for the fiscal year
      ended January 31, 2008.




**Liquidity
      and Capital Resources**




Our
      operations began in March 2007, and have not as yet attained a level of
      operations which allows us to meet our current overhead. We do not contemplate
      attaining profitable operations within our first operating cycle, nor is there
      any assurance that such an operating level can ever be achieved. We will be
      dependent upon obtaining additional financing in order to adequately fund
      working capital, infrastructure expenses and significant marketing/investor
      related expenditures to gain market recognition, so that we can achieve a level
      of revenue adequate to support our cost structure, none of which can be assured.
      While we have funded our initial operations with private placements of equity
      and bridge loans, there can be no assurance that adequate financing will
      continue to be available to us and, if available, on terms that are favorable
      to
      us. These factors raise substantial doubt about our ability to continue as
      a
      going concern and the accompanying consolidated financial statements do not
      include any adjustments related to the recoverability or classification of
      asset
      carrying amounts or the amounts and classification of liabilities that may
      result should we be unable to continue as a going concern.




As
      of
      January 31, 2008, our cash balance was $495,000. We began operations during
      the
      year ended January 31, 2008 with initial funding of $485,000, net of
      expenses, from investors in a private offering. In May 2007, we borrowed $1.5
      million, without interest, through the issuance of promissory notes. At the
      time, the lenders agreed that the indebtedness would convert into our common
      stock on the same terms as provided in a subsequent private placement. On August
      2, 2007 through August 14, 2007, we borrowed an additional $490,000, at 6%
      interest, to be paid out of the proceeds of the next financing. On August 17
      and
      22, 2007, we closed on a private placement of 49.9 units, in which we
      received net proceeds of $3.5 million, after placement agent and other fees
      and
      from which we repaid the $490,000 of loans. As part of the private placement,
      the $1.5 million loans mentioned above were converted into 1.5
      units.




*Cash
      Flow Used in Operating Activities* :
      During
      the period from February 1, 2007 (date of inception) through January 31, 2008,
      our operations resulted in negative cash outflows of $4.0 million, which was
      the
      result of a net loss of $3.4 million, after reduction for non-cash charges
      of
      $2.1 million and the buildup of net working capital items by $588,000, excluding
      cash .




*Cash
      Flow Used in Investing Activities:* In the
      period from February 1, 2007 (inception) to January 31, 2008, the Company used
      cash to acquire property and equipment of $550,000.




*Cash
      Flow from Financing Activities:* The
      Company’s initial funding was derived from equity investors ($485,000, net of
      expenses) and bridge loans of $2 million. In August 2007, we closed on a private
      placement of 49.9 units, consisting of 100,000 shares of our common stock
      and 50,000 warrants to buy our common stock at $1 per share, in which we
      received net proceeds of $3.0 million, after placement agent and other fees
      and
      from which we repaid the $490,000 of loans. As part of the private placement,
      the $1.5 million of the bridge loans were converted into 1.5 units.




22




**Commitments
      and Contingencies**




We
      entered into employment agreements with Christian Matteis to serve as President
      and Chief Operating Officer. The initial term of the agreement is three years,
      with automatic one-year renewals following this three-year period. Pursuant
      to
      the agreement, Mr. Matteis was to receive an annual base salary of $500,000,
      $525,000 and $550,000, respectively, for the first three years, and then an
      agreed upon salary (of not less than the amount of their third year’s salary)
      for all future years of employment. Pursuant to an amendment to his agreement
      in
      December, 2007, Mr. Matteis’ base salary was reduced to $300,000 per year. If
      his employment is terminated without cause or if either resigns for good reason,
      we will be obligated to pay him, as severance, his then current annual base
      salary and annual bonuses (as such is defined within the agreement) for one
      year
      (or for the remainder of the term, if longer than one year).





Shortly
      after our engagement of Mr. Matteis, Blue Star Jets, our competitor and Mr.
      Matteis’ former employer, filed a lawsuit against us. See Item 3 “Legal
      Proceedings” for a description of the current status of this litigation. Mr.
      Matteis’ employment agreement provides for advancement and indemnification of
      costs and expenses in connection with litigation related to his former
      employment.




Except
      as
      set forth Item 3 – Legal Proceedings, there are no pending or threatened legal
      proceedings against the Company.  In the opinion of management, on the
      advice of counsel, we have made adequate provision for potential liabilities,
      if
      any, arising from potential claims arising from litigation, governmental
      investigations, legal and administrative cases and proceedings.




We
      lease
      our headquarters and sales facilities in New York and additional sales offices
      in Boca Rotan, Florida and Beverly Hills, California. Minimum annual lease
      payments are approximately $294,000 for 2009 and $136,000 for 2010 (aggregating
      $430,000).




In
      February 2008, we retained a sales representative company under a five year
      arrangement. Compensation is based upon a percentage of the gross profits earned
      by us. The agreement provides for performance standards for the sales
      representative which if not achieved can result in early termination of the
      agreement. The sales representative was advanced $195,000, including $60,000
      paid prior to January 31, 2008. The advances are to be repaid from the
      representative’s earnings; however, if certain performance levels are achieved
      within the first fourteen months of the contract, a portion of the advance
      will
      be forgiven. In addition, if during the first fourteen months of the contract,
      the sales representative generates gross profits of $2 million the sales
      representative will be granted 300,000 options to purchase shares of the
      Company’s common stock and for each additional $1 million of gross profit (a
      maximum of $10,000,000) during the period the sales representative will receive
      100,000 options.




23




Except
      as
      set forth Item 3 – Legal Proceedings, there are no pending or threatened legal
      proceedings against the Company.  In the opinion of management, on the
      advice of counsel, we have made adequate provision for potential liabilities,
      if
      any, arising from potential claims arising from litigation, governmental
      investigations, legal and administrative cases and proceedings.




**Recently
      Issued Accounting Pronouncements**




**SAB
      108**




In
      September 2006, the SEC staff issued Staff Accounting Bulletin No. 108,
      Considering the Effects of Prior Year Misstatements when Quantifying
      Misstatements in Current Year Financial Statements (SAB 108). SAB 108 was
      issued in order to eliminate the diversity in practice surrounding how public
      companies quantify financial statement misstatements. SAB 108 requires that
      registrants quantify errors using both a balance sheet and income statement
      approach and evaluate whether either approach results in a misstated amount
      that, when all relevant quantitative and qualitative factors are considered,
      is
      material. We considered the impact of SAB 108 to be not material.





**SFAS
      157**




In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No. 157, Fair Value   Measurements (SFAS 157). SFAS 157 provides
      a common definition of fair value and establishes a framework to make the
      measurement of fair value in generally accepted accounting principles more
      consistent and comparable. SFAS 157 also requires expanded disclosures to
      provide information about the extent to which fair value is used to measure
      assets and liabilities, the methods and assumptions used to measure fair value,
      and the effect of fair value measures on earnings. SFAS 157 is effective
      for our yearend 2009, although early adoption is permitted. We are assessing
      the
      potential effect of SFAS 157 on our financial statements.





**FIN
      48**




We
      adopted the provisions of FASB Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109
      (‘‘FIN 48’’)”. FIN 48 clarifies the accounting for income taxes by
      prescribing a minimum probability threshold that a tax position must meet before
      a financial statement benefit is recognized. The minimum threshold is defined
      in
      FIN 48 as a tax position that is more likely than not to be sustained upon
      examination by the applicable taxing authority, including resolution of any
      related appeals or litigation processes, based on the technical merits of the
      position. The tax benefit to be recognized is measured as the largest amount
      of
      benefit that is greater than fifty percent likely of being realized upon
      ultimate settlement.




24




**ITEM
                7.**
              **FINANCIAL
                  STATEMENTS**




The
      financial statements required by Item 7 are submitted in a separate section
      of
      this report, beginning on Page F-1.




**ITEM
                8.**
              ****CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE****
  **ITEM
                  8A.**
                ****CONTROLS
                    AND
                    PROCEDURES****





**Evaluation
      of Disclosure Controls and Procedures**





The
      Company is in the process of implementing disclosure controls and procedures
      (as
      defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of
      1934 (the ‘‘Exchange Act’’), that are designed to ensure that information
      required to be disclosed in the Company’s Exchange Act reports are recorded,
      processed, summarized, and reported within the time periods specified in rules
      and forms of the Securities and Exchange Commission, and that such information
      is accumulated and communicated to our management, including our Chief Executive
      Officer and Chief Financial Officer, as appropriate, to allow timely decisions
      regarding required disclosure.





As
      of
      January 31, 2008, the management of the Company carried out an assessment,
      under
      the supervision of and with the participation of the Company’s Chief Executive
      Officer and the Chief Financial Officer, of the effectiveness of the design
      and operation of our disclosure controls and procedures pursuant to Exchange
      Act
      Rules 13a-15(b) and 15d-15(b). As of the date of this assessment, the Chief
      Executive Officer and the Chief Financial Officer concluded that the Company’s
      disclosure controls and procedures were not effective as of January 31, 2008,
      because of the material weakness described below.





The
      Company’s management performed additional accounting and financial analyses and
      other post-closing procedures including detailed validation work with regard
      to
      all the balance sheet account balances, additional analysis on income statement
      amounts and managerial review of all significant account balances and
      disclosures in the Annual Report on Form 10-KSB, to ensure that the Company’s
      Annual Report and the financial statements forming part thereof are in
      accordance with accounting principles generally accepted in the United States
      of
      America. Accordingly, management believes that the financial statements included
      in this Annual Report fairly present, in all material respects, the Company’s
      financial condition, results of operations, and cash flows for the periods
      presented.




25




**Management’s
      Report on Internal Control over Financial Reporting**





Management
      of the Company is responsible for establishing and maintaining adequate internal
      control over financial reporting, as such term is defined in
      Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s
      internal control over financial reporting is a process designed to provide
      reasonable assurance regarding the reliability of financial reporting and the
      preparation of financial statements for external reporting purposes in
      accordance with accounting principles generally accepted in the United States
      of
      America. Internal control over financial reporting includes those policies
      and
      procedures that (i) pertain to the maintenance of records that, in reasonable
      detail, accurately and fairly reflect the transactions and dispositions of
      the
      assets of the Company; (ii) provide reasonable assurance that transactions
      are recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that receipts
      and
      expenditures of the Company are being made only in accordance with
      authorizations of management and directors of the Company; and
      (iii) provide reasonable assurance regarding prevention or timely detection
      of unauthorized acquisition, use, or disposition of the Company’s assets that
      could have a material effect on the interim or annual financial statements.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with policies or procedures may deteriorate.





The
      Company’s management assessed the effectiveness of the Company’s internal
      control over financial reporting as of January 31, 2008. In performing its
      assessment of the effectiveness of the Company’s internal control over financial
      reporting, management applied the criteria described in the Internal
      Control-Integrated Framework issued by the Committee of Sponsoring Organizations
      of the Treadway Commission (‘‘COSO’’).





A
      material weakness is a deficiency, or a combination of deficiencies, in internal
      control over financial reporting, such that there is a reasonable possibility
      that a material misstatement of the Company’s annual or interim financial
      statements will not be prevented or detected on a timely basis.




The
      material weaknesses identified during management's assessment were (i)
      insufficient evidence of a robust corporate governance function; (ii) lack
      of
      sufficient resources with SEC, generally accepted accounting principals (GAAP)
      and tax accounting expertise; (iii) inadequate security over information
      technology and (iv) lack of evidence to document compliance with the operation
      of internal accounting controls in accordance with Company’s policies and
      procedures. These control deficiencies did not result in audit adjustments
      to
      the Company’s 2008 interim or annual financial statements. However, these
      control deficiencies could result in a material misstatement of significant
      accounts or disclosures that would result in a material misstatement to the
      Company’s interim or annual financial statements that would not be prevented or
      detected. Accordingly, management has determined that these control deficiencies
      constitute material weaknesses.




Because
      of these material weaknesses, management concluded that the Company did not
      maintain effective internal control over financial reporting as of January
      31,
      2008, based on the criteria in Internal Control-Integrated Framework issued
      by
      COSO. This report does not include an attestation report of our registered
      public accounting firm regarding our internal controls over financial reporting.
      The disclosure contained under this Item 8A was not subject to attestation
      by our registered public accounting firm pursuant to temporary rules of the
      SEC
      that permit us to provide only the disclosure under this Item 8A in this
      annual report.




26




**Changes
      in Internal Control over Financial Reporting**





The
      Company is in the process of correcting the internal control deficiencies
      through ongoing remediation efforts. However, these efforts individually and
      in
      the aggregate were insufficient to fully eliminate the weakness that have
      materially affected, or were reasonably likely to materially affect, our
      internal control over financial reporting.




**ITEM
                8B.**
              **OTHER
                  INFORMATION**




None.




27




**PART
      III**








**Item
                9.**
              **DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                  SECTION
                  16(A) OF THE EXCHANGE
                  ACT**




**Directors
      and Executive Officers**





The
      following persons except Mr. Cohen became our executive officers and
      directors on August 22, 2007, upon effectiveness of the merger, and hold the
      positions set forth opposite their respective names.




**Name**
            
            **Age**
            
            **Position**Jonathan
                Gilbert
            
            36
            
            Chief
                Executive Officer, Secretary and DirectorChristian
                Matteis
            
            34
            
            President
                and Chief Operating OfficerJan
                E. Chason
            
            62
            
            Chief
                Financial Officer and TreasurerAndrew
                Drykerman
            
            30
            
            Executive
                Vice PresidentMitchell
                Blatt
            
            55
            
            DirectorGregory
                D. Cohen
            
            39
            
            DirectorJustin
                Fries
            
            40
            
            DirectorJeffrey
                A. Getzel
            
            53
            
            DirectorShelton
                Lee
            
            50
            
            DirectorShlomo
                Piontkowski
            
            59
            
            DirectorCraig
                Spitzer
            
            43
            
            Director




Our
      directors hold office for one-year terms and until their successors have been
      elected and qualified. Our officers are elected annually by the board of
      directors and serve at the discretion of the board.




**Biographies**




*Jonathan
      Gilbert* has
      served as our Chief Executive Officer, Secretary and a member of our board
      of
      directors since the Merger. Mr. Gilbert is a founder of Halcyon and has served
      as its Chief Executive Officer, Secretary and a director since its inception
      in
      February 2007. From October 1998 to January 2007, Mr. Gilbert was the owner
      and
      President of Gilbert Capital Management Corp., an investment advisory firm
      based
      in New York. While with Gilbert Capital, Mr. Gilbert also served as the
      executive producer of several motion pictures. Mr. Gilbert holds a B.B.A. in
      finance from George Washington University.




*Christian
      Matteis* has
      served as our President and Chief Operating Officer since the Merger. Mr.
      Matteis has served as Halcyon’s President and Chief Operating Officer since late
      March 2007. Prior to joining us, Mr. Matteis was employed by Blue Star Jets,
      LLC, a private jet charter broker, from November 2002 to March 17, 2007. ****




28




*Jan
      E. Chason* has
      served as our Chief Financial Officer and Treasurer since the Merger. Mr. Chason
      has served as Halcyon’s Chief Financial Officer and Treasurer since April 2007.
      Since February 2006, he is also Ckrush Inc.’s Chief Financial Officer and
      Executive Vice President. From 1996 through February 2006, Mr. Chason was the
      Chief Financial Officer or served in as a senior financial officer for Triathlon
      Broadcasting Company, The Marquee Group, Inc., Artist Group International LLC,
      Clear Channel Communications Inc. and Majesco Entertainment Company. Mr. Chason
      was also a partner at Ernst & Young LLP. Mr. Chason is a Certified Public
      Accountant and has a B.B.A. from City College of New York.




*Gregory
        D. Cohen* became
        a
        member of the board of directors as of May 1, 2008. Mr. Cohen was
        the founding shareholder of Halcyon Jets. He is the Managing Partner of
        Philabele Consulting Corp. which provides executive, administrative and sales
        functions for the Company. Mr. Cohen also served as executive producer of
        several motion pictures. Mr. Cohen graduated George Washington University
        with a
        B.B.A. degree.




*Andrew
      Drykerman* has
      served as our Executive Vice President since the Merger. Mr. Drykerman has
      served as Halcyon’s Executive Vice President since April 2007. From January 2005
      to March 2007, Mr. Drykerman was the founder and owner of Relaxx Dry Cleaning,
      a
      pick-up and drop off dry cleaning service in San Diego. He currently maintains
      a
      minority interest in Relaxx Dry Cleaning. Mr. Drykerman purchased a franchise
      interest in WorldWide Express, a business to business company, in March 2002
      and
      currently maintains a minority interest in that company. From 1999 to February
      2002, Mr. Drykerman founded and operated Marathon Cleaning, a commercial and
      construction cleaning company in the Washington DC metropolitan area. Mr.
      Drykerman is a graduate of George Washington University.




*Mitchell
      Blatt* has
      served as a member of our board of directors since the Merger. Mr. Blatt has
      served as a director of Halcyon since April 2007. Mr. Blatt has been president
      and chief operating officer of Coinmach Holdings, LLC since March 2003, of
      Coinmach Laundry Corp. since April 1996, and of Coinmach Corp. since November
      1995. The Coinmach family of companies is the largest provider of outsourced
      coin/smart card laundry room services in the United States. He was a director
      of
      Coinmach Laundry Corp. and Coinmach Corp. from November 1995 to March 2003.
      Mr.
      Blatt was the president and chief operating officer of TCC from January 1995
      to
      November 1995. Mr. Blatt joined TCC as vice president-general manager in 1982
      and was its vice president and chief operating officer from 1988 to
      1994.





*Justin
      Fries* has
      served as a member of our board of directors since the Merger. Mr. Fries has
      served as a director of Halcyon since April 2007. Mr. Fries is a principal
      of
      Garber Atlas Fries & Associates Inc., a full service insurance agency
      located in Oceanside, New York, and currently serves as its Vice President.
      Mr.
      Fries has been in the insurance business since 1988. He has served as president
      of two local insurance trade organizations and is currently on the Board of
      Directors for several other insurance organizations. Mr. Fries is a graduate
      of
      Cornell University. Mr. Fries has obtained both his Certified Insurance
      Counselor designation as well as the prestigious Chartered Property Casualty
      Underwriter degree.




*Jeffrey
      A. Getzel* **** has
      served as a member of our board of directors since the Merger *.* For the
      past 18 years, Mr. Getzel has been the Managing Partner of Getzel Schiff &
Ross, LLP, an accounting firm. He heads the firm’s Forensic Auditing, Litigation
      Support and Tax Examination practice unit. He received a Bachelor of Business
      Administration degree in Accounting from Baruch College and a Masters of
      Business Administration in Taxation from Hofstra University. Mr. Getzel is
      a
      member of the New York State Society of Certified Public Accountants, the
      American Institute of Certified Public Accountants, the American College of
      Forensic Examiners and the Institute of Business Appraisers.




29




*Shelton
      “Spike” Lee* has
      served as a member of our board of directors since the Merger *.* Mr.
      Lee
      has served as a director of Halcyon since April 2007. Mr. Lee is an Academy
      Award- and Emmy Award- nominated writer-director, actor, producer, author and
      philanthropist. In addition to his film achievements, Mr. Lee has produced
      and
      directed numerous music videos for diverse artists, including Michael Jackson,
      Bruce Hornsby and Anita Baker. Mr. Lee has also collaborated on television
      commercial work with Michael Jordan, AT&T, Levi’s Button-fly 501, ESPN, Nike
      and American Express. Mr. Lee obtained his undergraduate degree from Morehouse
      College and his Master of Fine Arts in film production from New York
      University’s Tisch School of Arts.




*Shlomo
      Piontkowski, M.D.* has
      served as a member of our board of directors since the Merger *.* Dr.
      Piontkowski has served as a director of Halcyon since April 2007. Prior to
      retiring in 2006, Dr. Piontkowski was a privately practicing orthopedic surgeon
      in New York State. From 1998 to 2006, Dr. Piontkowski served as the Medical
      Director and owner of Patchogue Open MRI. From 1976 to 2006, Dr. Piontkowski
      served as the Medical Director and owner of Suffolk Sports Medicine and Therapy,
      a physical therapy and rehabilitation practice. From 1994 to 2000, Dr.
      Piontkowski served as the Medical Director and owner of Suffolk CAT Scan, a
      medical CAT scan practice. He also served as Medical Director for Brookhaven
      Compecare PPO, a New York State workmen’s compensation Preferred Provider
      Organization, chartered in 1998. Dr. Piontkowski’s professional memberships
      include the American Medical Association, American Academy of Orthopedic
      Surgeons, Suffolk County Medical Society, Arthroscopy Association of North
      America and the International Arthroscopy Association. Dr. Piontkowski received
      his degree in Medicine from Downstate Medical Center in 1972. He received his
      Bachelor’s degree in Mathematics and Physics from Hunter College in
      1968.




*Craig
      Spitzer* **** has
      served as a member of our board of directors since the Merger *.* ****** ** Mr.
      Spitzer has served as a director of Halcyon since March 2007. Since March 2007,
      Mr. Spitzer has been serving as the Managing Partner for A2C Consulting, an
      information technology consultant firm based in Pennsylvania. In June 2005,
      Mr.
      Spitzer founded and is currently a minority investor in Gateway Architectural
      Solutions, a building supplies company based in California. In January 2004,
      he
      co-founded a real estate development company in Arizona called Warner Spitzer
      Walsh Development. From December 2002 to January 2004, Mr. Spitzer was not
      working and was traveling. From March 1994 to November 2002, Mr. Spitzer founded
      and served as the Chairman and Chief Executive Officer of Alliance Consulting,
      an information technologies consulting firm based in New York and Massachusetts.
      Mr. Spitzer has been serving on the Board of Trustees of the Kiski School,
      a
      boarding school in Pennsylvania, since June 2005.




There
      are
      no family relationships among our directors and executive officers, except
      that
      Shlomo Piontkowski, one of our directors, is the father-in-law of Jonathan
      Gilbert, our Chief Executive Officer and Secretary.




30




**Employment
      Agreements**




We
      entered into an employment agreement with Christian Matteis to serve as our
      President and Chief Operating Officer. The initial term of the agreement is
      three years, with automatic one-year renewals following this three-year period.
      Pursuant to the agreement, Mr. Matteis is to receive an annual base salary
      of
      $500,000, $525,000 and $550,000, respectively, for the first three years, and
      then an agreed upon salary (of not less than $550,000) for all future years
      of
      employment. Pursuant to an amendment to his agreement in March 2007, Mr.
      Matteis’ annual base salary was reduced to $350,000 for the period of March 15,
      2008 through February 15, 2009. Under the terms of the agreement, Halcyon has
      granted to Mr. Matteis 850,000 restricted shares of its common stock. In
      addition, Mr. Matteis shall receive the same number of common stock purchase
      options as are granted to the Chief Executive Officer. If Mr. Matteis’
employment is terminated without cause or if he resigns for good reason, we
      will
      be obligated to pay him, as severance, his then current annual base salary
      and
      annual bonuses (as such is defined within the agreement) for one year (or for
      the remainder of the term, if longer than one year), payable in accordance
      with
      standard payroll procedures. In addition, Mr. Matteis will continue to be able
      to exercise his restricted shares and options pursuant to their original terms.
      Under the agreement, if Mr. Matteis is terminated with cause or if he
      voluntarily resigns (other than for good reason), he is prohibited from
      competing with us during the initial three-year term of employment and for
      one
      year after the termination of his employment (should this be greater than the
      initial three-year term). The agreement also provides that we will indemnify
      Mr.
      Matteis for various liabilities, including without limitation by reason of
      the
      fact that he allegedly is in violation of an agreement with his former employer,
      Blue Star, by virtue of his employment with us.




We
      also
      entered into an employment agreement with Jonathan Gilbert to serve as our
      Chief
      Executive Officer. The initial term of the agreement is three years, with
      automatic one-year renewals following this three-year period. Pursuant to the
      agreement, Mr. Gilbert is to receive an annual base salary of $235,000, $246,750
      and $259,000, respectively, for the first three years, and then an agreed upon
      salary (of not less than $259,000) for all future years of employment. His
      base
      salary was reduced to $50,000 annually effective January 1, 2008. In addition,
      Mr. Gilbert is eligible to receive a number of common stock purchase options
      as
      determined by the board of directors. If Mr. Gilbert’s employment is terminated
      without cause or if he resigns for good reason, we will be obligated to pay
      him,
      as severance, his then current annual base salary and annual bonuses (as such
      is
      defined within the agreement) for one year (or for the remainder of the term,
      if
      longer than one year), payable in accordance with standard payroll procedures.
      In addition, Mr. Gilbert will continue to be able to exercise his restricted
      shares and options pursuant to their original terms. Under the agreement, if
      Mr.
      Gilbert is terminated with cause or if he voluntarily resigns (other than for
      good reason), he is prohibited from competing with us during the initial
      three-year term of employment and for one year after the termination of his
      employment (should this be greater than the initial three-year
      term).




**Stock
      Incentive Plan**




We
      adopted a Stock Incentive Plan that provides for the grant of up to 5,000,000
      shares of common stock and/or options to purchase common stock to directors,
      employees and consultants. Immediately following the merger, we granted options
      to purchase an aggregate of 1,700,000, 415,000 and 2,885,000 shares of our
      common stock to our directors, employees and consultants, respectively. Prior
      to
      year end, 65,000 options were forfeited.




31




**Director
      Compensation**




Halcyon
      did not have compensation arrangements in place for members of their Board
      of
      Directors.




Prior
      to
      the merger, we did not compensate our directors for acting as such. Immediately
      following the merger, we granted the following number of options to our
      non-employee directors, pursuant to the Stock Incentive Plan:




Name
            
            Number of Underlying SharesMitchell
                Blatt
            
            
            575,000Shelton
                Lee
            
            
            575,000Jeffrey
                A. Getzel
            
            
            300,000Justin
                Fries
            
            
            50,000Shlomo
                Piontkowski
            
            
            50,000Craig
                Spitzer
            
            
            50,000




In
      addition, in the future we may determine to compensate our directors with cash
      and/or additional equity. We currently reimburse our directors for reasonable
      expenses incurred in connection with their services as directors.




**Directors’
      and Officers’ Liability Insurance**




We
      currently have directors’ and officers’ liability insurance insuring our
      directors and officers against liability for acts or omissions in their
      capacities as directors or officers, subject to certain exclusions. Such
      insurance also insures us against losses which we may incur in indemnifying
      our
      officers and directors. In addition, we have entered into indemnification
      agreements with key officers and directors and such persons shall also have
      indemnification rights under applicable laws, and our certificate of
      incorporation and bylaws.




**Code
      of Ethics**




We
      intend
      to adopt a code of ethics that applies to our officers, directors and employees,
      including our Chief Executive Officer and Chief Financial Officer, but have
      not
      done so to date due to our relatively small size.




**Board
      Committees**




The
      board
      of directors appointed an audit committee and compensation committee, and
      adopted charters relative to the audit committee. We appoint persons to
      committees of the board of directors who we believe meet the corporate
      governance requirements imposed by a national securities exchange, although
      we
      are not required to comply with such requirements until we elect to seek listing
      on a national securities exchange. Currently, Mr. Getzel qualifies as an “audit
      committee financial expert,” within the meaning of Item 407(d)(5) of Regulation
      S-B, as promulgated by the SEC.




32




**Item
                10.**
              **EXECUTIVE
                  COMPENSATION**




The
      following table sets forth certain information regarding compensation during
      each of the last three fiscal years to our Chief Executive Officer for each
      of
      those years and any officer who earned in excess of $100,000 in any of the
      last
      three fiscal years.


**Annual
                  Compensation**
              
              **Long-Term
                  Compensation****Awards**
              
              **Payouts****Name
                  and PrincipalPosition**
              
              **Year**
              
              **Salary**
              
              **Bonus**
              
              **Other
                  Annual**
                **Compensation**
              
              **RestrictedStock**
                **Awards**
              
              **Securities**
                **Underlying****Options/SAR's**
              
              **LTIP****Payouts**
              
              **All
                  Others**
                **Compensation**Jonathon
                  Gilbert
              
              
              2008
              $
              
              180,417
              
              $
              —
              
              $
              10,800
              
              
              —
              
              $
              34,000
              
              
              —
              
              
              —Chief
                  Executive OfficerChristian
                  Matteis
              
              
              2008
              $
              
              416,667
              
              $
              —
              
              
              —
              
              
              —
              
              $
              34,000
              
              
              —
              
              
              —PresidentJan
                  E. Chason
              
              
              2008
              $
              
              104,167
              
              $
              —
              
              
              —
              
              
              —
              
              $
              8,500
              
              
              —
              
              
              —Chief
                  Financial OfficerAndrew
                    Drykerman
              
              
              2008
              $
              
              104,167
              
              $
              —
              
              
              —
              
              
              —
              
              $
              17,000
              
              
              —
              
              
              —Executive
                  Vice PresidentMichelle
                  Maresova
              
              
              2007*
              $
              
              20,000
              
              $
              —
              
              
              —
              
              
              —
              
              $
              —
              
              
              —
              
              
              —President


Michelle
        Maresova served as the President of Greenleaf Forest Products, Inc.
        for the fiscal year ended June 30, 2007.




**Director
        Summary Compensation Table**
  The
        table
        below summarizes the compensation paid by the Company to non-employee Directors
        for the fiscal year ended January 31, 2008.
  ****
              
              **Fees
                  Earned or**
                **Paid
                  in Cash**
              
              **Stock**
                **Awards**
              
              **Option**
                **Awards**
              
              **Non-Equity**
                **Deferred**
                **Compensation**
                **Earnings**
              
              **All
                  Other**
                **Compensation**
              
              **Total****Name**
              
              **($)**
              
              **($)**
              
              **($)**
              
              **($)**
              
              **($)**
              
              **($)**Mitchell
                  Blatt
              
              
              —
              
              
              —
              
              
              195,500
              
              
              —
              
              
              
              
              
              195,500Justin
                  Fries
              
              
              —
              
              
              
              
              
              17,000
              
              
              —
              
              
              
              
              
              17,000Jeffrey
                  A. Getzel
              
              
              —
              
              
              
              
              
              102,000
              
              
              —
              
              
              
              
              
              102,000Shelton
                  Lee
              
              
              —
              
              
              
              
              
              195,500
              
              
              —
              
              
              
              
              
              195,500Schlorno
                  Piontkowski
              
              
              —
              
              
              
              
              
              17,000
              
              
              —
              
              
              
              
              
              17,000Craig
                  Spitzer
              
              
              —
              
              
              
              
              
              17,000
              
              
              —
              
              
              
              
              
              17,000




**Stock
      Option Grants and Exercises**




**Outstanding
                    Equity Awards at Fiscal Year Ended January 31, 2008**
                ********
                ****
                ****
                **Equity
                    Incentive Plan Awards:**
                ******Name**
                ****
                ****
                **Number
                    of**
                  **Securities**
                  **Underlying**
                  **Unexercised**
                  **Options
                    (#)**
                  **Exercisable**
                ****
                ****
                **Number
                    of**
                  **Securities**
                  **Underlying**
                  **Unexercised**
                  **Options
                    (#)**
                  **Unexercisable**
                ****
                ****
                **Number
                    of**
                  **Securities**
                  **Underlying**
                  **Unexercised**
                  **Unearned**
                  **Options
                    (#)**
                ****
                ****
                **Option**
                  **Exercise**
                  **Price($)**
                ****
                ****
                **Option**
                  **Expiration**
                  **Date**Jonathan
                    Gilbert
                
                
                100,000
                
                
                —
                
                
                —
                
                $
                1.00
                
                
                August
                    16. 2017Christian
                    Matteis
                
                
                100,000
                
                
                —
                
                
                —
                
                $
                1.00
                
                
                August
                    16, 2017Jan
                    E. Chason
                
                
                25,000
                
                
                —
                
                
                —
                
                $
                1.00
                
                
                August
                    16, 2017Andrew
                    Drykerman
                
                
                50,000
                
                
                —
                
                
                —
                
                $
                1.00
                
                
                August
                    16, 2017


**Aggregated
      Option Exercises in Last Fiscal Year and Fiscal Year-End Option
      Value**




During
      our last completed fiscal year, none of our executive officers exercised any
      options to acquire our capital stock.




Long-Term
      Incentive Plans–Awards
      in Last Fiscal Year




Neither
      we nor any of our subsidiaries maintain any long-term incentive plans, as
      defined in Item 402(a) (6) (iii) of Regulation S-B under the Securities
      Act.




33




**Item
                11.**
              **SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS****AND
                  MANAGEMENT**




The
        following tables set forth certain information as of May 13, 2008 regarding
        the
        beneficial ownership of our common stock, taking into account the consummation
        of the merger, the closing of the private placement and the consummation
        of the
        Split-Off, by (i) each person or entity who, to our knowledge, owns more
        than 5%
        of our common stock; (ii) each executive officer; (iii) each director; and
        (iv)
        all of our executive officers and directors as a group. Unless otherwise
        indicated in the footnotes to the following table, each of the stockholders
        named in the table has sole voting and investment power with respect to such
        shares of common stock. The address of each of the stockholders listed below
        except as noted is c/o Halcyon Jets, Inc., 336 West 37 th Street,
        Suite 800, New York, New York 10018.


Name of Beneficial Owner
                
                Number of
                  Shares
                  Beneficially
                  Owned (1)
                
                Percentage
                  Beneficially
                  Owned
                    (2)**5%
                    Owners:**2007
                    Airstream Trust
                
                
                2,065,000
                (3)
                
                8.05
                %James
                    Nigro
                  730 Picacho Lane,
                  Montecito, CA 93108
                
                
                1,500,000
                
                
                5.8Silverman
                    Partnership LPPO Box 9200
                  Jupiter, FL 33468
                
                
                1,500,000
                
                
                5.8**Executive
                    Officers and Directors:**Mitchell
                    Blatt
                
                
                1,575,000
                (3)
                
                6.14Gregory
                    D. Cohen (4)
                
                
                1,875,000
                (3)
                
                7.31Shelton
                    Lee
                
                
                1,075,000
                (3)
                
                4.19Jonathan
                    Gilbert
                
                
                950,000
                (6)
                
                3.70Christian
                    Matteis
                
                
                950,000
                (6)
                
                3.70Andrew
                    Drykerman
                
                
                300,000
                (7)
                
                1.17Craig
                    Spitzer
                
                
                150,000
                (7)
                
                *Jeffrey
                    Getzel
                
                
                150,000
                (8)
                
                *Jan
                    Chason
                
                
                125,000
                (9)
                
                *Justin
                    Fries
                
                
                85,000
                (10)
                
                *Shlomo
                    Piontkowski
                
                
                75,000
                (7)
                
                *All
                    executive officers and directors as a group (10 persons)
                
                
                7,310,000
                (11)
                
                28.50







*  Represents
        less than 1%
  (1)
              Unless
                  otherwise indicated, includes shares owned by a spouse, minor children,
                  and relatives sharing the same home, as well as entities owned
                  or
                  controlled by the named beneficial owner.
  (2)
              Based
                  on 25,647,500 shares of common stock
                  outstanding.
 
 (3)
                Includes
                    options to purchase 830,000 shares of our common stock that are
                    currently
                    exercisable held by an
                    affiliate.
  (4)
                Gregory
                    D. Cohen, as managing partner, has voting control over the shares
                    beneficially owned by Philabele Consulting
                    Corp.
  (5)
                Includes
                    options to purchase 575,000 shares of our common stock that are
                    currently
                    exercisable.
  (6)
                Includes
                    options to purchase 100,000 shares of our common stock that are
                    currently
                    exercisable.
  34
  (7)
                Includes
                    options to purchase 50,000 shares of our common stock that are
                    currently
                    exercisable.
  (8)
                Includes
                    options to purchase 150,000 shares of our common stock that are
                    currently
                    exercisable. Does not include options to purchase an additional
                    150,000
                    shares of our common stock that are not currently
                    exercisable.
  (9)
                Includes
                    options to purchase 25,000 shares of our common stock that are
                    currently
                    exercisable.
  (10)
                Includes
                    10,000 shares of common stock owned by Garber Atlas Fries and
                    Associates,
                    Inc., an entity of which Mr. Fries is a principal. Includes options
                    to
                    purchase 50,000 shares of our common stock that are currently
                    exercisable.
  (11)
                Includes
                    options to purchase an aggregate of 1,725,000 shares of our common
                    stock
                    that are currently
                    exercisable.
 
 35




**ITEM
                12.**
              **CERTAIN
                  RELATIONSHIPS AND RELATED
                  TRANSACTIONS**





Since
        April 2007, Philabelle Consulting Corp. and 2007 Airstream Trust and
        its affiliate, which beneficially own approximately 7.31% and 8.05% of our
        outstanding common stock, including options to purchase 830,000 shares of
        common
        stock, each, have provided consulting services to Halcyon. Halcyon paid
        Philabelle and Airstream fees of $208,333 and $218,833 during fiscal 2008.
        There
        is no written agreement memorializing these arrangement.




On
      March
      26, 2007, Garber Atlas Fries and Associates, Inc. an entity of which Justin
      Fries, a director of Halcyon, is a principal purchased 10,000 shares of Halcyon
      common stock for an aggregate purchase price of $5,000. In addition, the entity
      acts as the insurance broker for Halcyon and was paid standard commissions
      for
      these services.




The
      Company’s website was developed, maintained and hosted by Trisoft Media LLC, a
      subsidiary of Ckrush, Inc. Our Chief Financial Officer also serves as the Chief
      Financial Officer and Philabele also serves as a financial consultant for
      Ckrush, Inc. As of January 31, 2008, the Company incurred approximately $137,000
      with Trisoft for development of the website and other services.




36








**ITEM
                13.**
            **EXHIBITS**


**Exhibit****Number**
              
              **Description**2.1
                  *
              
              Agreement
                  of Merger and Plan of Reorganization, dated as of August 17, 2007,
                  by and
                  among Greenleaf Forest Products, Inc., Halcyon, Inc., and Halcyon
                  Jets
                  Acquisition Corp.2.2
                  *
              
              Certificate
                  of Merger, dated August 17, 2007, between Halcyon, Inc. and Halcyon
                  Jets
                  Acquisition Corp.3.1
              
              Certificate
                  of Incorporation (incorporated herein by reference to Exhibit 3.1
                  to the
                  Company’s Current Report on Form 8-K filed August 15,
                  2007)3.2
              
              By-laws
                  (incorporated herein by reference to Exhibit 3.2 to the Company’s Current
                  Report on Form 8-K filed August 15, 2007)3.3
                  *
              
              Certificate
                  of Amendment to Certificate of Incorporation, dated August 17,
                  200710.1
                  *
              
              Form
                  of Subscription Agreement10.2
                  *
              
              Form
                  of Warrant10.3
                  *
              
              Form
                  of Lockup Agreement10.4
                  *
              
              Form
                  of Directors and Officers Indemnification Agreement10.5
                  *
              
              2007
                  Equity Incentive Plan10.6
                  *
              
              Form
                  of 2007 Incentive Stock Option Agreement10.7
                  *
              
              Form
                  of 2007 Non-Qualified Stock Option Agreement10.8
                  *
              
              Employment
                  Agreement, dated March 23, 2007, between Halcyon, Inc. and Christian
                  Matteis10.9
                  *
              
              Employment
                  Agreement, dated April 1, 2007, between Halcyon, Inc. and Jonathan
                  Gilbert
  37
  10.10
                  *
              
              Agreement
                  of Conveyance, Transfer and Assignment of Assets and Assumption
                  of
                  Obligations, dated August 17, 2007, between Greenleaf Forest Products,
                  Inc. and SplitCo10.11
                  *
              
              Stock
                  Purchase Agreement, dated August 17, 2007, Greenleaf Forest Products,
                  Inc., Halcyon and Michelle Maresova10.12
              
              Amendment
                to Employment
                Agreement with Christian Matteis dated March 4, 2008.21
              
              Halcyon
                  Jets Holdings, Inc. subsidiaries31.1
              
              Certification
                  by Chief Executive Officer pursuant to Sarbanes-Oxley Section
                  302.31.2
              
              Certification
                  by Chief Financial Officer pursuant to Sarbanes-Oxley Section
                  302.32.1
              
              Certification
                  by Chief Executive Officer pursuant to 18 U.S.C. Section
                  135032.2
              
              Certification
                  by Chief Financial Officer pursuant to 18 U.S.C. Section
                  1350




*
            Incorporated by reference from the Company's Current Report on Form 8-K
            filed
            August 23, 2007.




38




**ITEM
                14.**
              **PRINCIPAL
                  ACCOUNTANT FEES AND
                  SERVICES**




The
      following sets forth the fees billed by our independent accountants for each
      of
      our last two fiscal years for the categories of services indicated.




**AUDIT
      FEES**




The
      aggregate fees billed in 2008 and 2007 for professional services rendered by
      the
      principal accountant for the audit of our annual financial statements and review
      of the financial statements included in our Form 10-KSB or services that are
      normally provided by the accountant in connection with statutory and regulatory
      filings or engagements for the fiscal year ended January 31, 2008
      were:




$37,380
              billed by Rosenberg,  Rich, Baker
              and Berman, P.C. for the audit of our annual financial statements for 2008
              and the review of our interim quarterly financial statements for the
              quarter
              ended October 31, 2007.
  $10,000
            billed by Li and Company, P.C. for the audit of Greenleaf Forest Products,
            Inc.,
            annual financial statements for the year ended June 30,
            2007.




**AUDIT-RELATED
      FEES**




During
      fiscal 2008, Rosenberg,Rich,Baker
      and Berman, P.C. billed $47,770 for due diligence services in connection
      with a proposed acquisition.




**TAX
      FEES**




The
      Company and Greenleaf Forest Products, Inc. were not billed for tax compliance
      during 2008 and 2007 fiscal year.




**ALL
      OTHER FEES**




Our
      principal accountants did not render any other services for the fiscal year
      ended January 31, 2008, nor for the fiscal year ended June 30,
      2007.




39




**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.




**HALCYON
              JETS HOLDINGS, INC.**Date:
                May 15, 2008
            /s/
              Jonathan Gilbert*Chief
              Executive Officer**(Principal
              Executive Officer)*Date:
                May 15, 2008
            /s/
              Jan E. Chason*Jan
              E. Chason**Chief
              Financial Officer and Treasurer**(Principal
              Financial and Accounting Officer)*Date:
                May 15, 2008
            /s/
              Mitchell Blatt*Mitchell
              Blatt**Director*Date:
                May 15, 2008
            /s/
              Gregory D. Cohen*Gregory
              D. Cohen**Director*Date:
                May 15, 2008
            /s/
              Justin Fries*Justin
              Fries**Director*Date:
                May 15, 2008
            /s/
              Jeffrey A. Getzel*Jeffrey
              A. Getzel**Director*Date:
                May 15, 2008
            /s/
              Shelton Lee*Shelton
              Lee**Director*Date:
                May 15, 2008
            /s/
              Shlomo Piontkowski*Shlomo
              Piontkowski*Date:
                May 15, 2008
            /s/
              Craig Spitzer*Craig
              Spitzer**Director*




40




**Halcyon
      Jets Holdings, Inc. and Subsidiary**





**Page****Reports
                of Independent Registered Public Accounting Firms**
            **F-2**Consolidated
                Balance Sheet - January 31, 2008
            **F-3**Consolidated
                Statement of Operations – for the period from February 1, 2007 (date of
                inception) to January 31, 2008
            **F-4**Consolidated
                Statements of Stockholders’ Deficiency – for the period from February 1,
                2007 (date of inception) to January 31, 2008
            **F-5**Consolidated
                Statements of Cash Flows – for the period from February 1, 2007 (date of
                inception) to January 31, 2008
            **F-6****Notes
                to Consolidated Financial Statements**
            **F-7**


F-1


**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**


To
        the
        Board of Directors and
 Stockholders
        of Halcyon Jets Holdings, Inc and Subsidiary
  We
        have
        audited the accompanying consolidated balance sheet of Halcyon Jets Holdings,
        Inc. as of January 31, 2008, and the related consolidated statements of income,
        stockholders' equity, and cash flows for the period February 1, 2007 (date
        of
        inception) through
        January 31, 2008. Halcyon Jets Holdings, Inc. and Subsidiary's management
        are responsible
        for these financial statements. Our responsibility is to express an opinion on these
        financial statements based on our audit.
  We
        conducted our audit in accordance with the standards of
        the
        Public Company Accounting
        Oversight Board (United States). Those standards require that we plan
        and perform
        the audit to obtain reasonable assurance about whether the financial statements are
        free
        of material misstatement. The company is not required to have, nor
        were
        we engaged
        to perform, an audit of its internal control over financial reporting. Our
        audit included
        consideration of internal control over financial reporting as a basis for
        designing audit
        procedures that are appropriate in the circumstances, but not for the purpose
        of expressing
        an opinion on the effectiveness of the company's
        internal control over financial
        reporting. Accordingly, we express no such opinion. An audit also includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the consolidated
        financial statements, assessing the accounting
        principles used and significant
        estimates made by management, as well as evaluating the overall consolidated financial
        statement presentation. We believe that our audit provide a reasonable basis for our
        opinion.
  In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all
        material respects, the financial position of Halcyon Jets Holdings, Inc.
        and
        Subsidiary as
        of
        January 31, 2008, and the results of its operations and its cash flows for
        the
        period February
        1, 2008 (date of inception) through January 31,
        2008
        in conformity with accounting
        principles generally accepted in the United States of America.
  The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 2 to the financial
        statements, the Company began its opinions in March 2007 and has not as yet
        attained a level of operations which allows it to meet its current overhead.
        In
        addition the Company does not contemplate attaining profitable operations
        within
        its first few operating cycles and is dependent upon obtaining additional
        financing adequate to fund working capital, infrastructure, and significant
        marketing/investor related expenditures to gain market recognition in order
        to
        achieve a level of revenue adequate to support its cost structure, These
        conditions raise substantial doubt about its ability to continue as a going
        concern. The financial statements do not include any adjustments that might
        result from the outcome of this uncertainty.
  **/s/
        Rosenberg Rich Baker Berman & Company**
  Bridgewater,
        New Jersey
 May
        5,
        2008


F-2




**HALCYON
      JETS HOLDINGS, INC**


**CONSOLIDATED
      BALANCE SHEET**


**January
      31, 2008**


**ASSETS**CURRENT
                  ASSETSCash
              
              $
              495,206Cash
                  - restricted
              
              
              1,091,081Accounts
                  receivable
              
              
              1,395,486Prepaid
                  expenses
              
              
              507,678Total
                  current assets
              
              
              3,489,451PROPERTY
                  AND EQUIPMENT - net
              
              
              449,220SECURITY
                  DEPOSITS
              
              
              78,698TOTAL
                  ASSETS
              
              $
              4,017,369**LIABILITIES
                  AND STOCKHOLDERS' DEFICIENCY**CURRENT
                  LIABILITIESAccounts
                  payable and accrued expenses
              
              $
              1,696,527Accrued
                  excise taxes
              
              
              102,793Deferred
                  revenues
              
              
              685,897Total
                  current liabilities
              
              
              2,485,217Commitments
                  and ContingenciesSTOCKHOLDERS'S
                  EQUITYPreferred
                  stock - $.001 par value, authorized 10,000,000; none issued and
                  outstandingCommon
                  stock - $.001 par value, authorized 300,000,000 shares; 25,647,500
                  shares
                  issued and outstanding
              
              
              25,648Additional
                  paid in capital
              
              
              7,608,877Deferred
                  compensation
              
              
              (557,600
              )Accumulated
                  deficit
              
              
              (5,544,773
              )Total
                  stockholders' equity
              
              
              1,532,152TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY
              
              $
              4,017,369




See
      notes
      to the consolidated financial statements.


F-3





**HALCYON
      JETS HOLDINGS, INC**


**CONSOLIDATED
      STATEMENT OF OPERATIONS**


**FROM
      FEBRUARY 1, 2007 (DATE OF INCEPTION) TO JANUARY 31, 2008**


**REVENUES**Passenger
              
              $
              12,128,654Other
              
              
              179,048Total
                  revenues
              
              
              12,307,702**OPERATING
                  COSTS AND EXPENSES**Charter
                  costs
              
              
              10,587,483Compensation
                  and benefits
              
              
              3,988,661Other
                  operating costs
              
              
              2,745,084Depreciation
                  and amortization
              
              
              101,659Total
                  operating costs
              
              
              17,422,887**Operating
                  loss**
              
              
              (5,115,185
              )Other
                  income/(expense)Interest
                  income
              
              
              45,765Merger
                  costs
              
              
              (100,353
              )Amortization
                  of loan discount
              
              
              (375,000
              )**Net
                  loss**
              
              $
              (5,544,773
              )**Net
                  loss per common share - basic and diluted**
              
              $
              (0.25
              )**Average
                  number of shares outstanding**
              
              
              22,448,146





See
      notes
      to the consolidated financial statements.


F-4





**HALCYON
      JETS HOLDINGS, INC.**


**CONSOLIDATED
      STATEMENT OF STOCKHOLDERS' EQUITY**




**Additional**
            
            
            
            
            
            **Total****Common
                Stock**
            
            **Paid
                in**
            
            **Deferred**
            
            **Accumulated**
            
            **Stockholders****Shares**
            
            **Amount**
            
            **Capital**
            
            **Compensation**
            
            **Deficit**
            
            **Equity**Issuance
                of common stock in connection with:Founders
            
            
            10,275,000
            
            $
            10,275
            
            
            
            
            
            
            
            
            
            
            $
            10,275Private
                  placement at $.50 per share, net of expenses of
                  $25,000
            
            
            1,020,000
            
            
            1,020
            
            $
            483,678
            
            
            
            
            
            
            
            
            484,698Financing
                fee
            
            
            750,000
            
            
            750
            
            
            374,187
            
            
            
            
            
            
            
            
            374,937Private
                  placement of 49.9 units of common stock and warrants at $100,000
                  per unit, net of expenses of $460,000
            
            
            4,990,000
            
            
            4,990
            
            
            4,525,125
            
            
            
            
            
            
            
            
            4,530,115Advertising
                representation agreement
            
            
            12,500
            
            
            13
            
            
            27,987
            
            
            
            
            
            
            
            
            28,000Investor
                relations consulting arrangement
            
            
            100,000
            
            
            100
            
            
            239,900
            
            
            
            
            
            
            
            
            240,000Effect
                of recapitalization - reverse merger
            
            
            8,500,000
            
            
            8,500
            
            
            (8,500
            )
            
            
            
            
            
            
            
            -Compensation
                expense - issuance of employee stock options
            
            
            
            
            
            
            
            
            1,232,000
            
            
            
            
            
            
            
            
            1,232,000Issuance
                of options and warrants in connection with services
                contracts
            
            
            
            
            
            
            
            
            734,500
            
            $
            (734,500
            )
            
            
            
            
            -Amortization
                of deferred compensation
            
            
            
            
            
            
            
            
            
            
            
            176,900
            
            
            
            
            
            176,900Net
                loss for the period
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            (5,544,773
            )
            
            (5,544,773
            )**Balance
                -January 31, 2008**
            
            
            **25,647,500**
            
            **$**
            **25,648**
            
            **$**
            **7,608,877**
            
            **$**
            **(557,600**
            **)**
            **$**
            **(5,544,773**
            **)**
            **$**
            **1,532,152**




See
      notes
      to the consolidated financial statements.




F-5


**HALCYON
        JETS HOLDINGS, INC**
 **STATEMENT
        OF CASH FLOWS**
 **FROM
        FEBRUARY 1, 2007 (DATE OF INCEPTION) TO JANUARY 31, 2008**
 **CASH
                    FLOWS USED IN OPERATING ACTIVITIES**Net
                    loss
                
                $
                (5,544,773
                )Adjustments
                    to rconcile net loss to net cash used in opeating
                    activities:Depreciation
                    and amortization
                
                
                100,353Amortization
                    of loan discount
                
                
                375,000Non-cash
                    compensation expense
                
                
                1,687,175(Increase)
                    in operating assets:(Increase)
                    in cash - restricted
                
                
                (1,091,081
                )(Increase)
                    in receivables
                
                
                (1,395,486
                )(Increase)
                    in prepaid expenses
                
                
                (507,678
                )(Increase)
                    in security deposits
                
                
                (78,698
                )Increase
                    in operating liabilites:Increase
                    in payables and accrued expenses
                
                
                1,696,527Increase
                    in accrued excise taxes
                
                
                102,793Increase
                    in deferred revenues
                
                
                685,897**NET
                    CASH USED IN OPERATING ACTIVITIES**
                
                
                **(3,969,971**
                **)****CASH
                    FLOWS FROM INVESTING ACTIVITIES**Purchases
                    of property and equipment
                
                
                (549,573
                )**NET
                    CASH USED IN INVESTING ACTIVITIES**
                
                
                **(549,573**
                **)****CASH
                    FLOWS FROM FINANCING ACTIVITIES**Proceeds
                    from bridge loans
                
                
                1,990,000Proceeds
                    from private placements - net
                
                
                3,514,750Repayment
                    of bridge loans
                
                
                (490,000
                )**NET
                    CASH PROVIDED FROM FINANCING ACTIVITIES**
                
                
                **5,014,750****NET
                    INCREASE IN CASH AND CASH AT END OF PERIOD**
                
                **$**
                **495,206****Supplemental
                    Disclosures:**Cash
                    paid during the period for interest
                
                $
                750Non-cash
                    investing and financing activitiesCommon
                    stock issued for:Services
                
                $
                268,000Financing
                    fees
                
                
                375,000Liquidation
                    of notes payable
                
                
                1,500,000Options
                    and warrants for services
                
                
                734,500
  See
        notes
        to the consolidated financial statements.
  F-6




**Halcyon
      Jets Holdings, Inc.**




**Notes
      to Consolidated Financial Statements - continued**




**Note
      1. Description of Business**




Halcyon
      Jets Holdings, Inc. (formerly Greenleaf Forest Products, Inc.) operating through
      its wholly-owned subsidiary Halcyon Jets, Inc. (“HJI”) (collectively the
“Company”) capitalizes on the growing demand for private executive travel and
      began operations in March 2007. HJI arranges luxury private transportation
      by
      connecting travelers with independently owned and operated executive aircraft
      that are compliant with the minimum requirements of Part 135 of the Federal
      Aviation Regulations for aircraft maintenance, aircrew training and aircraft
      operations.




On
      August
      17, 2007, Halcyon Jets Holdings, Inc. consummated a merger (the "Merger") with
      HJI. Pursuant to the Merger, HJI became a wholly-owned subsidiary of the
      Company. The operations of the Company are conducted principally through
      HJI.




As
      a
      result of the Merger, the former stockholders of HJI became the controlling
      stockholders of the Company. Additionally, subsequent to the Merger, the Company
      discontinued its former business. Accordingly, the transaction was treated
      for
      accounting purposes as a reverse acquisition of a public shell, and the
      transaction has been accounted for as a recapitalization of the Company, rather
      than a business combination. Therefore, the historical financial statements
      of
      HJI are the historical financial statements of the Company and historical
      stockholders' equity of HJI was restated to reflect the recapitalization. Pro
      forma information has not been presented since the transaction is not a business
      combination.




Costs
      incurred by HJI, principally professional fees in connection with the Merger,
      amounting to $100,000, were charged to operations in August
      2007.




**Note
      2. Basis of Preparation**




The
      accompanying consolidated financial statements have been prepared in conformity
      with generally accepted accounting principles, which contemplate the
      continuation of the Company as a going concern.  This basis of accounting
      contemplates the recovery of the Company’s assets and the satisfaction of
      liabilities in the normal course of business. The Company began its current
      operations in late March 2007 and has not as yet attained a level of operations
      which allows it to meet its current overhead.  The Company does not
      contemplate attaining profitable operations within its first few business
      operating cycles, nor is there any assurance that such an operating level can
      ever be achieved.  The Company is dependent upon obtaining additional
      financing adequate to fund working capital, infrastructure and significant
      marketing/investor related expenditures to gain market recognition in order
      to
      achieve a level of revenue adequate to support its cost structure, none of
      which
      can be assured. While the Company has funded its initial operations with private
      placements of equity, bridge loans and completed a reverse merger and became
      a
      publicly owned entity, there can be no assurance that adequate financing will
      continue to be available to the Company and, if available, on terms that are
      favorable to the Company.   The consolidated financial statements do
      not include any adjustments to reflect the possible future effects on the
      recoverability and classification of assets or the amounts and classification
      of
      liabilities that may result from the outcome of this
      uncertainty.


F-7




**Halcyon
        Jets Holdings, Inc.**
  **Notes
        to Consolidated Financial Statements - continued**


**Note
      3. Significant Accounting Policies**




**Revenue
      Recognition**




Passenger
      revenue is the gross amount charged to customers and is recognized when charter
      services are provided. Other revenues such as catering or ground arrangements
      are also recognized when the services are provided based upon the gross amount
      billed to customers. The Company has evaluated the provisions of EITF 99-19
      (“Reporting Revenues Gross as a Principal versus Net as an Agent”) and has
      concluded that it should report gross revenues with a separate display of the
      cost of sales while acting as an agent or broker since the Company takes on
      the
      credit risk associated with the receivable and is primarily obligated to the
      supplier.





The
      Company is required to charge certain taxes and fees in connection with charter
      services, principally U.S. federal transportation taxes. These taxes and fees
      are legal assessments on the customer. As the Company has a legal obligation
      to
      act as a collection agent for to these assessments, the Company does not include
      the related amounts in passenger revenues. The amounts required to be collected
      are recorded as a liability and the liability is relieved when the payments
      are
      made to the federal government.




**Cash
      and Cash Equivalents**




Cash
      and
      cash equivalents include cash and highly liquid debt investments with original
      maturities of ninety days or less when purchased, which are carried at the
      lower
      of cost and fair market value.





Cash
      and
      cash equivalents on deposit with financial institutions are insured for up
      to
      $100,000 by the FDIC. The Company’s balances in its accounts are in excess of
      the federally insured limit.




**Accounts
      Receivable**




Accounts
      receivable are non-interest-bearing obligations. Accounts receivable are stated
      at the amount billed. Generally, customers are required to allow the Company
      to
      put a hold on a credit card for the approximate amount of the flight cost and
      the hold is removed when payment is received or the charge is
      activated.




The
      carrying amount of accounts receivable is reduced by a valuation allowance
      that
      reflects the Company’s best estimate of the amounts that may not be collected.
      This estimate is based on management’s assessment of current credit worthiness
      to determine the portion, if any, of the balance that will not be
      collected.  As of January 31, 2008, the Company has provided a valuation
      allowance of $10,000.


F-8




**Halcyon
        Jets Holdings, Inc.**
  **Notes
        to Consolidated Financial Statements - continued**


**Property
      and Equipment**




Property
      and equipment consists of leasehold improvements and office equipment and is
      stated at cost less accumulated depreciation and amortization. Depreciation
      and
      amortization is determined by using the straight-line method over the estimated
      useful lives of the related assets, generally five to seven years.




**Advertising
      and Marketing Expenses**




The
      costs
      of advertising and marketing expenses are expensed as incurred. Advertising,
      promotion and marketing expenses were $739,000 for the period from February
      1,
      2007 (date of inception) through January 31, 2008.




**Stock
      Based Compensation**




The
      Company follows the provisions of Statement of Financial Accounting Standards
      No.123R, Share-Based Payment (SFAS 123R), which revised SFAS 123, Accounting
      for
      Stock-Based Compensation and supersedes Accounting Principles Board Opinion
      No. 25, Accounting for Stock Issued to Employees (APB 25). SFAS 123R
      requires that new, modified and unvested share-based payment transactions with
      employees, such as stock options and restricted stock, be recognized in the
      financial statements based on their fair value and recognized as compensation
      expense over the requisite service period.




**Income
      Taxes**





The
      Company accounts for income taxes under the asset and liability method using
      SFAS No. 109, ‘‘Accounting for Income Taxes.’’ Deferred tax assets and
      liabilities are recognized for the future tax consequences attributable to
      differences between the financial statement carrying amounts of existing assets
      and liabilities and their respective tax bases and operating loss and tax credit
      carry-forwards.





Deferred
      tax assets and liabilities are measured using enacted tax rates expected to
      apply to taxable income in the years in which those temporary differences are
      expected to be recovered or settled. The effect on deferred tax assets and
      liabilities of a change in tax rates is recognized in income in the period
      that
      includes the enactment date.




The
      tax
      effects of temporary differences that gave rise to the deferred tax assets
      and
      deferred tax liabilities at January 31. 2008 were primarily attributable to
      net
      operating loss carry-forwards. Since the Company has only recently begun its
      operations, a full valuation allowance has been established.


F-9




**Halcyon
        Jets Holdings, Inc.**
  **Notes
        to Consolidated Financial Statements - continued**




**Loss
      per share**




Loss
      per
      common share is based upon the weighted average number of common shares
      outstanding during the period. Diluted loss per common share is the same as
      basic loss per share, as the effect of potentially dilutive securities
      (options – 4,935,000 and warrants 3,165,000) are
      anti-dilutive.




**Use
      of Estimates**




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America 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 period. Actual results could differ from those
      estimates.




**Fair
      Value of Financial Instruments**




The
      carrying amounts reported in the consolidated balance sheets for cash, accounts
      receivable, accounts payable and accrued expenses approximate their fair values
      due to the short term maturities of these financial instruments.




**Recently
      Issued Accounting Pronouncements**




**SAB
      108**




In
      September 2006, the SEC staff issued Staff Accounting Bulletin No. 108,
      Considering the Effects of Prior Year Misstatements when Quantifying
      Misstatements in Current Year Financial Statements (SAB 108). SAB 108 was
      issued in order to eliminate the diversity in practice surrounding how public
      companies quantify financial statement misstatements. SAB 108 requires that
      registrants quantify errors using both a balance sheet and income statement
      approach and evaluate whether either approach results in a misstated amount
      that, when all relevant quantitative and qualitative factors are considered,
      is
      material. The Company has considered the SAB 108 to be not
      material.





**SFAS
      157**




In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No. 157, Fair Value   Measurements (SFAS 157). SFAS 157 provides
      a common definition of fair value and establishes a framework to make the
      measurement of fair value in generally accepted accounting principles more
      consistent and comparable. SFAS 157 also requires expanded disclosures to
      provide information about the extent to which fair value is used to measure
      assets and liabilities, the methods and assumptions used to measure fair value,
      and the effect of fair value measures on earnings. SFAS 157 is effective
      for the Company’s yearend 2009, although early adoption is permitted. The
      Company is assessing the potential effect of SFAS 157 on its financial
      statements.


F-10




**Halcyon
      Jets Holdings, Inc.**




**Notes
      to Consolidated Financial Statements - continued**




**FIN
      48**


The
      Company adopted the provisions of FASB Interpretation No. 48, “Accounting
      for Uncertainty in Income Taxes — An Interpretation of FASB Statement
      No. 109 (‘‘FIN 48’’)”. FIN 48 clarifies the accounting for income
      taxes by prescribing a minimum probability threshold that a tax position must
      meet before a financial statement benefit is recognized. The minimum threshold
      is defined in FIN 48 as a tax position that is more likely than not to be
      sustained upon examination by the applicable taxing authority, including
      resolution of any related appeals or litigation processes, based on the
      technical merits of the position. The tax benefit to be recognized is measured
      as the largest amount of benefit that is greater than fifty percent likely
      of
      being realized upon ultimate settlement.




**Note
      4. Property and Equipment**




Property
      and equipment consists of:




Furniture
                and fixtures
            
            $
            98,359Computer
                equipment
            
            
            152,651Leasehold
                improvements
            
            
            163,153Web
                development costs
            
            
            136,716550,879Accumulated
                depreciation
            
            
            101,659$
            449,220




**Note
      5. Bridge Loans**




In
      May
      2007, the Company borrowed $1.5 million, without interest, through the issuance
      of Bridge Notes. The lenders agreed that the outstanding indebtedness under
      the
      Bridge Notes were convertible into common stock on the same terms as provided
      in
      the   private placement described in Note 6. In consideration for the loan,
      the Company also issued an aggregate of 750,000 shares of common stock to the
      lenders and, accordingly for accounting purposes, the loan was recorded net
      of
      the value attributed to the consideration ($375,000). This discount was
      amortized as a finance cost over of the period the loan was outstanding. In
      addition, in August 2007, the Company borrowed $490,000 which was repaid out
      of
      the proceeds of the private placement with interest at 6%.




**Note
      6. Stockholders’ Equity**




**Common
      Stock**




In
      March
      2007, the Company issued 10,275,000 shares of common stock at par to Company
      founders.





F-11


**Halcyon
        Jets Holdings, Inc.**
  **Notes
        to Consolidated Financial Statements - continued**


Also
      in
      March and April 2007, the Company issued 1,020,000 shares of common stock at
      $.50 per share in connection with a private placement in which the Company
      received $485,000 of proceeds net of $25,000 of fees. In July 2007, in
      connection with the Bridge Loan in Note 5 above, the Company issued 750,000
      shares as consideration for the loan.




In
      connection with the Merger described in Note 1, the Company on August 17 and
      August 22, 2007 issued an aggregate of 49.9 units in a private placement
      consisting of an aggregate of 4,990,000 shares of common stock and three-year
      redeemable warrants to purchase 2,495,000 shares of common stock at an exercise
      price of $1.00 per share, at a purchase price of $100,000 per unit. As part
      of
      the private placement, holders of the $1.5 million of outstanding indebtedness
      of the Company converted the indebtedness to them into 15 units in the private
      placement. In addition, one of the placement agents received 170,000 warrants
      to
      purchase common shares at $1 per share, the value of which approximated $58,000
      utilizing the Black-Scholes option valuation model.




During
      the year ended January 31, 2008, the Company issued 12,500 and 100,000 shares
      of
      common stock to an advertising agency and investor relations firm, respectively
      for services rendered during the period. The fair value of the securities issued
      in connection with these arrangements ($268,000) was recorded as non cash
      compensation. As of January 31, 2008, the Company was obligated to issue 18,000
      and 15,000 shares of common stock to the above mentioned advertising agency
      and
      an employee as a signing bonus.





The
      liability amounting to $39,000 was included in accounts payable and accrued
      expenses in the accompanying consolidated balance sheet.




**Stock
      Options and Warrants**




In
      August
      2007, the Company adopted a Stock Incentive Plan that provides for the grant
      of
      up to 5,000,000 shares of common stock and/or options to purchase common stock
      to directors, employees and consultants. Immediately following the Merger,
      the
      Company granted options to purchase an aggregate of 1,700,000, 415,000 and
      2,885,000 shares of our common stock at a $1 per share to our directors,
      employees and consultants, respectively. In October 2007, the Company also
      granted a consultant a warrant to purchase 500,000 shares of common stock at
      $.50. The Company recorded non-cash compensation charges for the director and
      employee grants of $1.2 million as substantially all grants were immediately
      vested. In connection with the consultant option and warrant grants the Company
      recorded deferred compensation of $735,000 and non-cash charge of $177,000
      for
      amortization of the deferred compensation during this period.




The
      fair
      value of the options and warrants at the date of grant was calculated using
      the
      Black-Scholes option valuation model using the assumptions noted in the table
      below. Due to the Company’s limited history as a public company, the Company has
      estimated expected volatility based on the historical volatility of certain
      companies as determined by management. The risk-free rate for the expected
      term
      of each option is based on the U.S. Treasury yield curve in effect at the time
      of grant. The dividend yield assumption is based on the Company’s intent not to
      issue a dividend under its dividend policy. Due to the Company’s limited
      operating history, management estimated the term to approximate the
      contractual term.




F-12





**Halcyon
      Jets Holdings, Inc.**




**Notes
      to Consolidated Financial Statements - continued**




The
      fair
      value of option grants were estimated on the date of grant using the
      Black-Scholes option-pricing model with the following assumptions :





Expected
                volatility
            
            
            100
            %Expected
                dividends
            
            
            0
            %Expected
                term
            
            
            2
                and 5yearsRisk-free
                rate
            
            
            4.35
            %





The
      Black-Scholes option-pricing model was developed for use in estimating the
      fair
      value of traded options that are fully transferable. In addition, option-pricing
      models require the input of highly subjective assumptions including the expected
      stock price volatility. Because the Company’s stock options have characteristics
      significantly different from those of traded options and because changes in
      the
      subjective input assumptions can materially affect the fair value estimate,
      in
      management’s opinion the existing models may not necessarily provide a reliable
      single measure of the fair value of its employee stock options.





A
      summary
      of the status of the Company’s options as of January 31, 2008 and changes during
      the year then ended is presented below:


**Number
                        of**
                      **Shares**
                    
                    **Weighted**
                      **Average**
                      **Exercise
                        Price**Granted
                    
                    
                    5,000,000
                    
                    $
                    1.00Expired
                        - forfeitures
                    
                    
                    (65,000
                    )
                    
                    1.00Outstanding
                        at end of year
                    
                    
                    4,935,000
                    
                    
                    1.00Options
                        exercisable at year-end
                    
                    
                    4,134,583
                    
                    $
                    1.00Weighted-average
                        fair value of options granted during the year
                    
                    
                    
                    
                    $
                    .32





During
      the year ended January 31, 2008, the fair value of options granted and vested
      was $2.0 million and $1.4 million, respectfully. As of
      January 31, 2008, there was approximately $609,000 of unrecognized
      compensation cost related to 800, 417 non-vested stock option awards, which
      is
      expected to be recognized over a remaining weighted-average vesting period
      of
      years (2.75). **** The
      weighted average contractual term of exercisable option outstanding at January
      31, 2008 was 9.75 years.




F-13


**Halcyon
        Jets Holdings, Inc.**
  **Notes
        to Consolidated Financial Statements - continued**


During
      the year ended January 31, 2008, issued 3,165,000 warrants, with a weighted-
      average exercise price of $.92 and a weighted- average contractual life of
      2.75
      years.






**Note
      7. Litigation**




On
      or
      about April 20, 2007, a lawsuit was commenced in the Supreme Court of the State
      of New York, County of New York, by Blue Star Jets, LLC, against the Company,
      its President two other employees, all of whom were former employees of Blue
      Star Jets. The following claims were asserted in the Complaint: (i) breach
      of
      fiduciary duty against the individual defendants (ii) misappropriation of trade
      secrets against the Company and the individual defendants; (iii) conversion
      against the Company and the individual defendants; (iv) unfair competition
      against the Company and two of the individual defendants; (v) violation of
      the
      Computer Fraud and Abuse Act against the Company and two of the individual
      defendants; (vi) tortious interference with prospective business relations
      against the Company and two of the individual defendants; (vii) civil conspiracy
      against the Company and two of the individual defendants; and (viii) breach
      of
      contract against two of the individual defendants.





Blue
      Star
      Jets initially sought a temporary restraining order and preliminary injunction
      to, among other things, enjoin and restrain the Company from: (i) utilizing
      certain information and materials which Blue Star Jets claimed was proprietary
      and confidential; and (ii) from soliciting or contacting Blue Star Jets' clients
      or employees. The Court initially entered a temporary restraining order but,
      by
      order dated May 14, 2007, the Court vacated the temporary restraining order
      due
      to Blue Star Jets' failure to post a bond required by the Court for such a
      restraint to remain in place. Blue Star Jets also withdrew its application
      for a
      preliminary injunction.





Thereafter,
      the Company and the individual defendants filed a motion to dismiss the case
      based on a procedural defect in Blue Star Jets' filing. In response, Blue Star
      Jets essentially conceded the defect with the complaint and chose to commence
      a
      new action with substantially similar allegations and claims against the Company
      and the individual defendants. In the new action, Blue Star Jets sought monetary
      damages of approximately $7 million, plus an award for punitive damages, as
      well
      as injunctive relief seeking to enjoin the Company from soliciting Blue Star
      Jets' clients and employees. The Company and the individual defendants answered
      the complaint on August 24, 2007, and one individual defendant asserted
      counterclaims against Blue Star Jets relating to his employment with that
      company.




Pursuant
      to the terms of our President’s employment agreement with the Company, the
      Company agreed to indemnify him from, among other things, all liabilities that
      may arise by virtue of any alleged violation of any agreement he had with Blue
      Star Jets by virtue of his employment with the Company.




F-14


**Halcyon
        Jets Holdings, Inc.**
  **Notes
        to Consolidated Financial Statements - continued**


On
      July
      13, 2007, the Company commenced an action against Blue Star Jets in the Supreme
      Court of the State of New York, County of New York, asserting claims, among
      others, for (i) unfair competition and deceptive business practices; (ii)
      violations of the Lanham Act; (iii) tortious interference; and (iv) conversion,
      as a result of, among other things, Blue Star Jets establishment of false and
      misleading web links. In this action, the Company is also seeking injunctive
      relief to enjoin Blue Star Jets from utilizing misleading web links. On July
      31,
      2007, the Company and Blue Star Jets entered into a stipulation whereunder
      each
      party agreed, among other things, not to use the other party's name "as metatag,
      header or search term information on any web page or in connection with any
      advertisement or sponsored link purchased from Google or any other search
      engine," and not to use "in connection with internet marketing/advertising
      any
      web link which displays the [the other party's name] or which is intended to
      deceive or misdirect [the other party's] customers, or which creates a
      likelihood of confusion as to the source of the services provided by either
      the
      Company or Blue Star." Blue Star Jets' answer to the complaint in this action
      was served on September 11, 2007.





On
      November 27, 2007, the Company and Blue Star Jets voluntarily discontinued
      both
      of the lawsuits referred to above, without prejudice, and without either party
      reimbursing the legal fees of the other. Either party could reinstate the
      litigation but we have received no indication that Blue Star Jets intends to
      do
      so.




Except
      as
      set forth above, there are no pending or threatened legal proceedings against
      the Company. In
      the
      opinion of management, on the advice of counsel, we have made adequate provision
      for potential liabilities, if any, arising from potential claims arising from
      litigation, governmental investigations, legal and administrative cases and
      proceedings.





**Note
      8.    Income Taxes**





At
      January 31, 2008, the Company had net operating loss carryforwards for Federal
      tax purposes of approximately $4.0 million, which are available to offset future
      taxable income, if any, through 2028. Under Federal Tax Law IRC Section 382,
      certain significant changes in ownership of the Company, including the reverse
      merger transaction may restrict the future utilization of these tax loss
      carryforwards.




At
      January 31, 2008 the Company had a deferred tax asset of approximately
      $1.4 million representing the benefit of its net operating loss
      carryforwards ($877,000) and non-cash compensation ($496,000). The Company
      has
      not recognized the tax benefit because realization of the tax benefit is
      uncertain and thus a valuation allowance has been fully provided against the
      deferred tax asset. The difference between the Federal Statutory Rate of 34%
      and
      the Company’s effective tax rate of 0% is due to an increase in the valuation
      allowance of approximately $1.4 million.




F-15




**Halcyon
        Jets Holdings, Inc.**
  **Notes
        to Consolidated Financial Statements - continued**




**Note
      9. Commitments**




The
      Company leases headquarter and sales facilities in New York and additional
      sales
      offices in Boca Raton, Florida and Beverly Hills, California. Minimum annual
      lease payments are approximately $294,000 for 2009 and $136,000 for 2010
      (aggregating $430,000). Rent expense for the year ended January 31, 2008 was
      $192,000.




**Note
      10.**  **Restricted
      Cash**





The
      Company offers a membership card program for clients to purchase credits towards
      the cost of future air charters, catering and related services. The Company
      maintains the amounts received related to this program in segregated bank
      accounts. Amounts on deposit with the Company as of January 31, 2008 amounted
      to
      $407,000 was classified as Cash – restricted in the accompanying
      consolidated balance sheet and the liability related to the unused credits
      was
      included in deferred revenues.





In
      August
      2007, the Company entered into a credit card processing agreement. The agreement
      required the Company to provide a standby letter of credit in the amount of
      $150,000. To satisfy this obligation the Company opened a line of credit, with
      the merchant services as the beneficiary in case of default or failure to comply
      with the credit card processing requirements. In order to fund the line of
      credit, the Company was required to deposit a compensating balance of $150,000
      into a restricted money market account with the financial institution. This
      compensating balance for the line of credit is included in Cash - restricted
      on the
      balance sheet and will be restricted for the initial contract period of one
      year
      however it is the intention of the Company to continue the relationship and
      will
      maintain both the standby letter of credit and the security deposit, if
      required.





The
      Company also maintains a cash reserve with a credit card company to provide
      a
      credit line to secure future air charter services from vendors. The cash reserve
      is adjusted periodically based upon the dollar volume of our future
      requirements. As of January 31, 2008, the Company had on deposit with the credit
      card company $534,000 which was classified as Cash – restricted in the
      accompanying consolidated balance sheet.





**Note
      11. Related Parties**




Two
        of
        the Company’s significant shareholders (through a personally owned limited
        liability company or through an affiliate) are providing personnel to the
        Company to perform executive, administrative and sales functions. While there
        is
        no formal contract, it is the intention of the Company and the service providers
        to formalize the relationship. The Company paid $429,000 in aggregate to
        the two
        shareholders for the year ended January 31, 2008. In August 2007, the Company
        also issued to the shareholders an aggregate of 1,660,000 options at an exercise
        price of $1.00 per share which were immediately vested and charged operation
        in
        the amount of $564,000 representing the fair value of the options
        granted.




F-16





**Halcyon
      Jets Holdings, Inc.**




**Notes
      to Consolidated Financial Statements - continued**




The
      Company’s website was developed, maintained and hosted by a company for which
      our Chief Financial Officer also serves as the Chief Financial Officer and
      one
      of the shareholders’ above also serves as a financial consultant. As of January
      31, 2008, the Company incurred approximately $137,000 with the company for
      development of the Company’s website and other services.





One
      of
      the members of the Company’s Board of Directors is a principal of an insurance
      company that acts as the insurance broker for the Company.





**Note
      12. Subsequent Events**





In
      February 2008, the Company retained a sales representative company under a
      five
      year arrangement. Compensation is based upon a percentage of the gross profits
      earned by the Company. The agreement provides for performance standards for
      the
      sales representative which if not achieved can result in early termination
      of
      the agreement. The representative was advanced $195,000, including $60,000
      paid
      prior to January 31, 2008 and classified as Prepaid Expenses in the accompanying
      consolidated balance sheet. The advances are to be repaid from the
      representative’s earnings; however, if certain performance levels are achieved
      within the first fourteen months of the contract, a portion of the advance
      will
      be forgiven. In addition, if during the first fourteen months of the contract,
      the sales representative generates gross profits of $2 million the sales
      representative will be granted 300,000 options to purchase shares of the
      Company’s common stock and for each additional $1 million of gross profit (a
      maximum of $10,000,000) during the period the sales representative will receive
      100,000 options.




On
        April
        1, 2008, the Company’s Board of Directors authorized the Company to reduce the
        option exercise price from $1 to $.38 to officers, directors and key employees
        who hold 3,715,000 options.




F-17