INFORMATION REQUEST

HARRIS AIRCRAFT SERVICES, INC.

FINANCIAL POSITION

1. With respect to the “Forecast at Commuter Operations” income statement:

Please provide a separate listing of pre-operating costs/startup costs. These would normally include 

costs to obtain necessary government approval (operations specifications, etc.) establishing stations, 

introductory advertising, aircraft, equipment, facility deposits and rent, and training and salaries earned 

prior to the startup of your operation.

Harris Air Pre-Operating/Startup Costs listing is included. Items are also included in the Harris Aircraft 

Services, Inc. financial statements, actual and forecasted.

You can find this information in 14 CFR §204.3 “Applicants for new certificate or commuter air carrier 

authority.”

For example, salaries for additional pilot and mechanic are included on page 2 of your forecast income 

statement. However, please separate this and also advertising, a/c repair and maintenance expenses and 

any other expenses that have been combined. It may help you to know that we use the following 

formula in our financial review:

Pre operating/startup expenses + 1⁄4 of estimated first-year expenses = funds necessary to meet our 

financial criteria

2. What is the main purpose of Sitka Aircraft & Support Services, LLC?

Sitka Aircraft & Support Services, LLC is an asset leasing business. We were told by our attorney and 

accountant to keep large assets out of Harris Air and lease them back via the LLC.

3. In regards to the purchase of the new aircraft:

a) Why doesn’t the Harang loan appear in the March 31, 2013 Balance Sheet?

Aircraft was purchased by Sitka Aircraft & Supports Services, LLC and will be leased to Harris 

Aircraft Services, Inc.

b) What are the terms of repayment for the Harang loan?

Interest only until aircraft is operational, then note is 6.5% per annum for 9 years.

c) Where is this loan reflected in the Forecast Income Statement?

If it is not reflected, please provide a revised Forecast Income Statement.

SASS LLC financials & forecasted financials are attached.
Pre-Operating/Startup Costs

Obtaining Gov't approval (operating specs, etc)

Obtain Commuter Operating Specs (obtained July 2012) 225 /one-time exp

Monthly Annual

Establishing Stations

Klawock (established 2011)

Harris Air owned facility -

Utilities 59

Juneau (established May 1, 2013)

Monthly Terminal space rent 266 1,865

Monthly Terminal aircraft parking 236 1,654

Utilities

Airport badges (5 pilots) 350 350

Petersburg (established 5/15/13)

Monthly Terminal space rent 575 3,735

Utilities 27 174

Future: Wrangell

Hoonah

Introductory Advertising ($-0- incr, just changed existing advertising) - -

Aircraft Lease w SASS LLC ($3000/mo) 3,000 36,000

Aircraft Repairs & Maintenance 1,659 19,914

Equip Fuel (assumes approx 450 flt hrs) 8,403 100,841

Insurance (began 8/1/13) 4,455 53,457

Training & Salaries for add'l pilot & mechanic

Pilot (hired 3/25/13) 6,500 78,000

Mechanic (hired 4/10/13) 4,784 57,408

Training -

353,397
SITKA AIRCRAFT & SUPPORT SERVICES, LLC

BALANCE SHEET

2010 2011 2012

Projected 

2013

Projected 

2014

Projected 

2015

ASSETS

Piper Navajo Chieftain (N200SJ) 253,795 253,795 253,795 253,795 253,795 253,795

23' Packman 69,610 69,610 69,610 69,610 69,610 69,610

Piper Navajo Chieftain (N38KC) - - 240,000 240,000 240,000 240,000

TOTAL ASSETS 323,405 323,405 563,405 563,405 563,405 563,405

ACCUMULATED DEPRECIATION (tax basis) (285,620) (305,633) (436,132) (475,406) (505,234) (525,210)

TOTAL NET ASSETS 37,785 17,772 127,273 87,999 58,171 38,195

LIABILITIES

NOTES PAYABLE

N200SJ Notes Payable (term March 2013) 105,077 75,609 44,180 10,631 - -

23' Packman Notes Payable (term May 2023) 60,049 56,845 53,428 49,782 45,882 41,709

N38KC Notes Payable (term Jan 2022) 240,000 218,919 196,412 172,406

TOTAL NOTES PAYABLE 165,126 132,453 337,608 279,333 242,294 214,114

CAPITAL

R. Scott Harris (61,560) (63,673) (57,341) (105,168) (95,667) (92,061)

Laura L. Kronsperger (61,556) (63,668) (57,340) (105,167) (95,667) (92,061)

Capital <Earnings>/Draws (380) (282) - 167 (24,498) (35,245)

Profit/<Loss> (3,845) 12,942 (95,654) 18,834 31,709 43,449

TOTAL CAPITAL (127,341) (114,681) (210,335) (191,334) (184,122) (175,919)

TOTAL LIABILITIES AND CAPITAL 37,785 17,772 127,273 87,999 58,171 38,195
INCOME STATEMENT

2010 2011 2012 2013 2014 2015

REVENUE

N200SJ Lease 35,432 35,432 35,432 36,000 36,000 36,000

23' Packman Lease 7,800 7,800 7,800 7,800 7,800 7,800

N38KC Lease - 675 36,000 36,000 36,000

TOTAL REVENUE 43,232 43,232 43,907 79,800 79,800 79,800

EXPENSES

Depreciation Expense (tax basis) 34,839 20,013 130,499 39,274 29,828 19,976

Interest Expense

N200SJ 7,814 5,964 4,388 1,883 126 -

23' Packman 4,158 3,950 3,738 3,509 3,254 2,982

N38KC - - - 14,919 13,493 11,994

Total Interest Expense 11,973 9,914 8,126 20,312 16,873 14,975

Professional Fees 265 263 273 280 290 300

Property Taxes - - 663 1,000 1,000 1,000

Taxes & Licenses - 100 100 100 100

TOTAL EXPENSES 47,077 30,290 139,561 60,966 48,091 36,351

ORDINARY BUSINESS INCOME (LOSS) (3,845) 12,942 (95,654) 18,834 31,709 43,449