### IN FORMAT ION REQUEST

HARRI S AIRCRAFT SERVI CES, 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. T hese would normall y include

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

a dvertising, aircraft, equipment, faci lity d eposits and rent, and training and salaries earned prior to the startup of yo ur operation.

Harris Air Pre

- Operating/Startup C osts l ist ing is included. Items are also included in the Harris Aircraft
Services, Inc. financial statements , actual and fore casted

.

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. Howe ver, please separate this and also advertising, a/c repair and maintenance expenses and

any o ther e xpenses that have been combined. It m ay h elp you to know that w e use the following

formula in our financial review:

Pre operating/startup expenses + 1⁄4 of estimated f irst

- 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 leas ing business. W e were told by o ur attorney

a nd

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

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 repay ment for the Harang loan?

Interest onl y until aircraft is operational, then note is 6.5% per annum for 9 ye ars. c) Where is this loan reflected in the Forecast Income Statement? If it is not reflected, please provide a revised Forecast I ncome 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