• 

• 

• 

Application of 

BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

TWIN AIR CALYPSO LIMITED, Inc 

for authority to conduct scheduled passenger operations as a 

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

APPLICATION OF 

TWIN AIR CALYPSO LIMITED Inc 

Communications with respect to this document should be sent to: 

Clayton I. Gamber 

President I Director of Maintenance 

TWIN AIR CALYPSO LIMITED Inc. 

700 S.W. 34th Street Suite 100 

Ft. Lauderdale, Florida 33315 

Phone 954-359-8266 

Fax 954-862-8902 

E-Mail cgamber@f1ytwinair.com 

Date of Application July 20, 2011 

DOCKET 

j) ~ r-t1 5 r~ t 0 ( I ~ 0 I c.( 3 

Notice: Any person who wishes to support or oppose this application must file an answer 

by August 08, 2011 and serve that answer on all persons served with this filing . 
• 

• 

• 

Application of 

BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

TWIN AIR CALYPSO LIMITED, Inc 

for authority to conduct scheduled passenger operations as a 

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

APPLICATION OF 

TWIN AIR CALYPSO LIMITED Inc 

DOCKET 

Twin Air Calypso Limited, Inc. submits this application for authority to operate 

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

the United States Code. 

In support of its application Twin Air Calypso Limited, Inc. states the following: 

Applicant is a Florida corporation organized on August 15, 2010 under the laws of the 

state of Florida and is a subsidiary of A vstar Aviation Group Inc. a Colorado corporation, 

publicly traded in the OTC market. The company address, telephone, fax numbers and 

email address are; 

TWIN AIR CALYPSO LIMITED Inc. 

700 S.W. 34th Street Suite 100 

Ft. Lauderdale, Florida 33315 

Phone 954-359-8266 

Fax 954-862-8902 

E-Mail cgamber@f1ytwinair.com 
• 

• 

• 

Applicant is a citizen of the United States as defined in section 40102(a)(l5) of the 

statute. 

Twin Air Calypso Limited, Inc. is a wholly owned subsidiary of A vstar Aviation Group 

Inc. a Colorado Corporation listed on the OTC - BB. All voting stock resides with A vstar 

Aviation Group Inc. 

The following individuals are officers, directors and personnel of A vstar Aviation Group 

Inc.; 

Chief Executive officer and President Clayton I. Gamber 

Vice President and Treasurer Henry A. Schulle 

Twin Air Calypso Limited Inc. is a Florida Corporation 

The following individuals are officers, directors and personnel of Twin Air Calypso Inc.; 

President Clayton I. Gamber U.S. Citizen 

Director of Operations 

Chief Pilot 

Arthur L. Stevenson South African. Citizen 

Luciano Horna U.S. Citizen 

Director of Maintenance Clayton I. Gamber U.S. Citizen 

Clayton Gamber, Luciano Horna are United States citizens. Arthur L. Stevenson is a 

permanent resident of the United States since 04/01103. See Exhibits Q,R,S,T for 

additional information. 

Twin Air Calypso is currently operates as an on-demand air carrier. It is registered under 

298 of the Department's regulations and possesses an Air Carrier Certificate issued by 

the FAA under part 135. See Exhibit H. Twin Air Calypso offers four or less round trip 

flights per week to Treasure Cay with continuing service to Marsh Harbour. Twin Air 

also offers four round trips or less per week to North Eleuthera with continuing service to 

Governors Harbour and Rock Sound. 

Twin Air Calypso requests authority to engage in scheduled passenger operations as a 

commuter air carrier under the following proposal: 

Commencing in Decemberber, 2011, Twin Air Calypso will operate as follows, 

1. Seven weekly round trip flights between Fort Lauderdale and Treasure 

Cay with continuing service to Marsh Harbour, Bahamas. 

2. Seven weekly round trip flights between Fort Lauderdale and North 

Eleuthera. 

3. Seven weekly round trip flights between Fort Lauderdale and 

Governors Harbour with continuing service to Rock Sound, Bahamas 

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

transportation operation is contained in Section - A thru X 
• 

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• 

The contents of this application and the attached exhibits are true and correct to the best 

of my knowledge and belief. Pursuant to Title 18 United States Code Section 1001. I 

Clayton 1. Gamber who is the President and a major shareholder of A vstar Aviation 

Group Inc. and Twin Air Calypso Limited, Inc., in my individual capacity and as the 

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

willfully falsified, concealed or failed to disclose any material fact or made any false, 

fictitious, or fraudulent statement or knowingly use any documents which contain such 

statements in connection with the preparation, filing or prosecution of the application. I 

understand that an individual that has been found to have violated the provisions of 18 

U.S.C. section 1001 shall be fined or imprisoned not more than five years, or both. 

Submitted by, 

L..Jrt'k~~~~~~~~f-_.Date: July 20, 2011 

A vs Aviation Group Inc. / T in Air Calypso limited, Inc 

President and CEO / resident 

Attachments Certificate of Service, and Exhibits and information required under section 

204.3 
• 

• 

• 

Twin Air Calypso Limited, Inc. 

700 SW 34th Street, Suite 100 

Ft lauderdale, Florida 33315 

CERTIFICATE OF SERVICE 

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

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

service list. 

Date of service; J 1Ji.. Y 2 I, 20 l \ 

Federal Aviation Administration 

Mr. Sergio Lopez - Office manager 

SERVICE LIST 

South Florida Flight Standards District Office 19 

2895 SW 145th Avenue 

Miramar 

Florida 33027 

Broward County Aviation 

Mr. Kent George, Airport Director 

Ft Lauderdale-Hollywood International Airport 

100 Aviation Boulevard 

Fort Lauderdale 

Florida 33315 

------~---------~--

I 

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TWIN AIR CALYPSO LIMITED, INC 

700 S.W. 34th STREET, SUITE 100 

FT. LAUDERDALE, FLORIDA 33315 

RESPONSES TO FILING REQUIREMENTS FOR COMMUTER 

AUTHORITY FOR TWIN AIR CALYPSO LIMITED, INC 

Section 204.3 (a) 

TWIN AIR CALYPSO LIMITED, INC 

700 SW 34th Street, Suite 100 

Ft. Lauderdale, Florida 33315 

(P) 954-359-8989 

(F) 954-862-8902 

Clayton I. Gamber, President and CEO 

cgamber@f1ytwinair.com 

Section 204.3 (b), 

Twin Air Calypso Limited, Inc is a corporation 

Section 204.3 (c), 

Twin Air Calypso Limited, Inc is a corporation; incorporated under the laws of the state 

of Florida See Exhibit Section 0 

Section 204.3 (d), 

Statement from Secretary of State of Florida, certifying corporation in Good Standing is 

attached with this application See Exhibit - Section - P 
• 

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• 

STATE OF FLORIDA 

Twin Air Calypso Limited, Inc. 

700 SW 34th Street, Suite 100 

Ft Lauderdale, Florida 33315 

AFFIDA VIT OF CITIZENSHIP 

COUNTY OF BROW ARD 

Clayton I. Gamber being first duly sworn, deposes and says: 

1 That he is the duly elected, qualified, and serving as President of 

TWIN AIR CAL YPSO LIMITED Inc. and that he is authorized to and does make 

this affidavit for it. 

2. A VST AR AVIATION GROUP Inc. is a citizen of the United States within the 

meaning of 49 U.S.C. 40102 (a)(15) . 

3. TWIN AIR CALYPSO LIMITED Inc. is a citizen of the United States within the 

meaning of 49 U.S.C. 40102 (a)(15). 

Subscribed and sworn before me this 20th day of July, 2011. 
TWIN AIR CALYPSO LIMITED, INC 

700 S.W. 34th STREET, SUITE 100 

FT. LAUDERDALE, FLORIDA 33315 

• Section 204.3 (f) 

• 

• 

List of Key Personnel employed with the company. 

President, Chief Executive Officer and Director of Maintenance 

Clayton I. Gamber, , US Citizen 

5330 SW 87th Avenue, 

Apartment 112 

Miami, Florida 33178 

See Exhibit - Section - Q for duties, responsibilities, voting stock, employment 

summary and nationality. 

Director of Operations 

Arthur Stevenson 

1601 SW 22nd Avenue 

Fort Lauderdale, Florida 33312 

See Exhibit - Section - R for duties, responsibilities, voting stock, employment summary 

and nationality. 

Chief Pilot 

Luciano Roma, 

4411 SW 150th Ct 

Miami, Florida 33185 

See Exhibit - Section - S for duties, responsibilities, voting stock, employment summary 

and nationality. 

Director of Maintenance 

Clayton I. Gamber, 

5330 SW 87th Avenue, 

Apartment 112 

Miami, Florida 33178 

See Exhibit - Section - T for duties, responsibilities, voting stock, employment summary 

and nationality. 

Section 204.3 (f) (5) 

A v Star Aviation Group See Exhibit - Section - U is the holding company for Twin Air 

Calypso limited Inc. also has interests in other aeronautical entities. 

A vStar Aviation Group is the holding company of Twin Air Calypso Services Inc. an 

FAA Part 145 Repair Station located in Pembroke Pines, Florida. See Exhibit-Section-V 

Section 204.3 (g) 

All persons of substantial interest are identified in 204.3 (f) responses . 

See Exhibit - Section - W 
TWIN AIR CALYPSO LIMITED, INC 

700 S.W. 34th STREET, SUITE 100 

FT. LAUDERDALE, FLORIDA 33315 

• Section 204.3 (h) 

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• 

Twin Air Calypso Limited Inc. is a wholly owned subsidiary of A vStar Aviation Group a 

Colorado public company. There are no subsidiaries of Twin Air Calypso Limited Inc. 

Section 204.3 (i) 

Twin Air Calypso Limited Inc. owns no shares of stock in any company. (AvStar 

Aviation Group is also the parent company of Twin Air Services Inc. a FAA part 145 

repair station based at (HWO) North Perry Airport, Florida.) 

Section 204.3 (j) (1) 

See Exhibit - Section - X 

Section 204.3 (j) (2) 

See Exhibit - Section - X 

Section 204.3 (k) 

Not applicable 

Section 204.3 (1) 

Judgments of more than $5,000.00 - None 

Section 204.3 (m) 

Judgments of less than $5,000.00 - None 

Section 204.3 (n)(1,2) 

l. Aircraft Fleet 

a. PA-31-350 N350MJ 

b. PA-31-350 N146DC 

c. Cessna 402C N44LP 

d. Cessna 402C N767PA 

e. Cessna 402C N528FA 

1+9 Seating 

1+9 Seating 

1+9 Seating 

1+9 Seating 

1+9 Seating 

All aircraft are owned by Aircraft Charters, LLC (Kenneth Langston) and Fountainhead 

(BAH) LLC (Kenneth Farino) 

2. No additional aircraft or financing will be required for the authority 

anticipated with this application. 

Section 204.3 (n)(3) 

See Exhibit - Section - I 
TWIN AIR CALYPSO LIMITED, INC 

700 S.W. 34th STREET, SUITE lOO 

FT. LAUDERDALE, FLORIDA 33315 

• Section 204.3 (0) 

• 

• 

There is pending action from the FAA as regard a possible FAR part 135.299 checkride 

violation against Twin Air Calypso pilot Kenneth Kronheim. There is no pending action 

from the DOT on the applicant or any of the personnel employed by the applicant. 

Section 204.3 (P) 

There are no charges of unfair, deceptive, or anti competitive business practices against 

the applicant or any of its employees. 

Section 204.3 (q) 

There are no accidents or incidents within the last 12 months nor are there any such 

matters under investigations by the FAA or NTSB or by Twin Air Calypso Limited Inc. 

Section 204.3 (r) 

Twin Air Calypso Limited, Inc. 

History 

Twin Air was founded in 1978 as the aircraft operating arm of Red Aircraft Services in Ft 

Lauderdale, Florida. Red Aircraft was an aircraft services organization founded in 1954. 

Initially the main source of business was to lease aircraft to government units and avionics 

suppliers. The customer list included the Naval Shipyard in Connecticut, the United States Air 

Force, the city of Ft Lauderdale and RCA Avionics. The operation for the United States Navy, 

transported personnel and equipment to the Bahamas in support of Submarine warfare associated 

research. The United States Air Force contract moved high priority freight throughout the 

southeastern United States. The City of Ft Lauderdale leased two aircraft for surveillance work. 

The RCA Avionics leased an aircraft for avionics demonstration purposes. Aircraft operated for 

these contracts ranged from Cessna 172's to Douglas DC-3's. 

As our exposure to the Bahamas increased the nature of the business turned first to freight and 

then also to passenger operations. In the mid 1980's Twin Air began to operate a high priority 

freight service to the out islands of the Bahamas. Our main focus was to support the local 

businessmen, hoteliers, residents and vacation home owners. As the reputation and the reliability 

of our operation grew we were encouraged to introduce passenger service. Our business is now 

mainly passenger with freight supplementing unused capacity. Our aircraft fleet grew from one 

Piper Navajo Chieftain to six by the end of 2004 with flight hours approaching five thousand per 

year. 

In the fall of 2004 we began supplying service to another operator known as Calypso Air. 

Calypso's market was primarily the Abaco's while the Twin Air market was primarily the 

Eleuthera's. By early 2005 Twin Air was the main source oflift for Calypso and it was decided to 
• 

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TWIN AIR CALYPSO LIMITED, INC 

700 S.W. 34th STREET, SUITE 100 

FT. LAUDERDALE, FLORIDA 33315 

have Twin Air absorb the operation and aircraft of Calypso. By combining the operation of Twin 

Air and Calypso the fleet grew to nine aircraft and annual flight hours to approximately 8000 with 

revenues in excess of 3.5 million dollars. 

Calypso's only stockholder, Doctor Kenneth Langston, became a minority partner in the 

combined business which was now called Twin Air Calypso Limited, Inc. Clayton Gamber and 

his wife Robin Gamber were the majority shareholders. In early 20 lOA vStar Aviation Group, a 

public company previously in the fixed base operation and aircraft maintenance business were 

seeking business acquisitions. During this time and while planning for the sale of Twin Air 

Calypso all of the aircraft were placed in a separate entity owned entirely by Dr. Langston. This 

corporation was known as Aircraft Charters LLC. This "Sub-S" entity was formed solely for the 

ownership of the aircraft and to be the Lessor to Twin Air Calypso Limited, Inc. 

Business Marketing Philosophy 

A: Bahamas 

The business to the Bahamas is divided into two geographical sectors and two types of 

traveller. Geographically, there are two major destinations. The population centers of 

Nassau and Freeport and the remaining portion of the archipelago, known as the "Family 

Islands". The destination of Nassau and Freeport account for over 90 percent of the 

population of the country and are served well by the major airlines using traditional 

airline equipment. The "Family Islands" have small population centers supplemented by 

"boutique hotels", second homes for foreigners and marina infrastructure. 

Our philosophy from the inception is to cater to the "Family Island" market. In this 

particularly seasonal market, frequency with reliability is certainly more important than 

capacity. The smaller aircraft we utilize are the most efficient for these parameters. 

However, smaller aircraft makes the control of "load factor" imperative. Twin Air 

Calypso exercises control of load factors by supplementing freight for any unused 

capacity. 

In Summary Twin Air Calypso caters to the local Bahamians, businesses, second home 

owners and boaters to minimize the seasonal market fluctuations. Supplementing freight 

for passengers allows us to maintain the frequency and reliability the market requires 

while operating the aircraft efficiently .. 

B: Cuba 

Twin Air Calypso Limited. Inc. believes that person to person family contact is a basic 

human right. We believe the vast Cuban American population living within the United 

States who are eager to travel to Cuba for visits with family have limited options. The 

amount of charter flights available for smaller groups business people and families who 

wish to travel together is small. New United States government travel and business 

policies affecting travel and contact of persons travelling to and dealing with Cuba have 

further expanded the need for charter flights between the United States and Cuba. 
TWIN AIR CALYPSO LIMITED, INC 

700 S.W. 34th STREET, SUITE 100 

FT. LAUDERDALE, FLORIDA 33315 

• Management 

• 

• 

All key employees and managers have worked in the aircraft charter business serving the 

southern United States, the Bahamas and Cuba in excess of twelve years. 

Business Operating Philosophy 

While maintaining cost controls in all facets of the business is important, the variable aircraft 

operating costs are the most important. To control these variable costs a vertically integrated 

organization is necessary. Our sister company under the AvStar Aviation Group, Twin Air 

Calypso Services Inc. is a FAA approved FAR part 145 repair station which also has fuel service, 

based at North Perry Airport (HWO), Florida, five miles from our base at Ft Lauderdale 

International Airport (FLL), Florida. As a fully certified repair station and fuel vendor, we are 

also able to offer services to retail customers and other operators therefore reducing the allocation 

of overhead to Twin Air Calypso Limited, Inc. a significant cost advantage over the competition. 

Future Expansion for Destinations and Capacity 

Due to the downturn in the economy Twin Air Calypso has suffered a reduction in revenue. This 

reduction in income has attributed to the reduction of our flying fleet. A fleet refurbishment 

program is now underway as the economy recovers and service returns to a previous level. The 

return to service of existing aircraft will provide a 50% to 70% increase in capacity on the 

existing route structure 

Additional aircraft will be available for opening the West Palm Beach to Abaco market. This is a 

very active market due to the ocean shipping from the port of Palm Beach. There is significant 

passenger seats needed for individuals that carry out purchasing, maintain business relationships 

and utilize the shipping resources. A facility for our new presence in West Palm Beach has 

already been identified that will allow for both passengers and freight operations at the West 

Palm Beach Airport (PBI). 

The refurbishment also enables Twin Air Calypso Limited, Inc. to dedicate specific aircraft and 

personnel to freight, scheduled service and charter operations. The freight aircraft will allow the 

ability to offer scheduled freight service, a new revenue source for Twin Air Calypso Limited, 

Inc. The dedication of scheduled service and charter aircraft will increase customer appeal and 

acceptance for personal services. 

Twin Air Calypso Limited, Inc. a wholly owned subsidiary of AvStar Aviation Group will utilize 

the services of Twin Air Calypso Services, Inc. Twin Air Calypso Services, Inc. is our sister 

Company and a certified FAA repair station, Certificate number DN4R134M based at North 

Perry Airport (HWO) approximately 5 miles from Ft Lauderdale International Airport (FLL). The 

address of Twin Air Calypso Services, Inc. is 1620 SW 75th Avenue, Pembroke Pines, Florida 

33023. 

In the latter part of 1977 Twin Town Leasing Company d/b/a TWIN AIR was founded as 

the aircraft operation division of Red Aircraft Service, Inc a fixed base operation in south 
• 

• 

• 

TWIN AIR CALYPSO LIMITED, INC 

700 S.W. 34th STREET, SUITE 100 

FT. LAUDERDALE, FLORIDA 33315 

In the latter part of 1977 Twin Town Leasing Company d/b/a TWIN AIR was founded as 

the aircraft operation division of Red Aircraft Service, Inc a fixed base operation in south 

Florida. TWIN AIR has operated continuously as an on-demand FAA Part 135 carrier 

since that time. 

In the early 1980's we operated several aircraft including two DC-3's for the use of 

several hotels in the Bahamian "family islands". As our experience and exposure grew in 

the Bahamas we identified a need for small package service to the islands. In the late 

1980's we began a freight service catering principally to the island homeowners, 

businesses and local residents. This service grew considerably and the users asked us to 

begin offering passenger service. The passenger service has operated up to four times per 

week since that time to several destinations in the "family islands". Our fleet of aircraft 

has evolved into five Piper Navajo aircraft. 

Treasure Cay, Marsh Harbour, from both Ft Lauderdale and West Palm Beach. North 

Eleuthera, Governors Harbour and Rock Sound, including Harbour Island and Spanish 

Wells, is a major destination from Ft Lauderdale, for both freight and passengers. TWIN 

AIR CAL YPSO is now ready to add additional flights to that destination which is the 

reason for this filing. 

Section 204.3 (s) 

TWIN AIR CALYPSO LIMITED Inc. currently holds an FAA Part 135 Air Carrier 

Certificate with our local FAA office FSDO-19 in Miramar, Florida. See Exhibit -

Section- H 

James R. Piccoli 

William (Bill) Hanson 

Roger McGlen 

Section 204.3 (t) 

Principle Operation Inspector 

Principle Maintenance Inspector 

Principle Avionics Inspector 

TWIN AIR CAL YPSO LIMITED Inc. will offer once daily, seven days per week 

passenger/freight service between; 

1. Ft. Lauderdale-Hollywood Airport (FLL), Treasure Cay airport (TCB) and Marsh 

Harbour airport (MHH). 

2. Ft. Lauderdale-Hollywood Airport (FLL) and North Eleuthera airport (ELH). 

And once daily flights between, 

3. Ft. Lauderdale-Hollywood Airport (FLL), Governors Harbour (GHB) and Rock 

Sound airport (RSD). 

See attached financial information for forecasts See Exhibit - F, G 
• 

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Section 204.3 (u) 

See Exhibit - Section - E 

Section 204.3 (v) 

TWIN AIR CALYPSO LIMITED, INC 

700 S.W. 34th STREET, SUITE 100 

FT. LAUDERDALE, FLORIDA 33315 

Pursuant to title 18 United States Code section 1001, I Clayton 1. Gamber, President, in 

my individual capacity and as the authorized representative of the applicant, have not in 

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

or made any false, fictitious, or fraudulent statement or knowingly used any documents 

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

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

provisions of 18 U.S.C. section 1001 shall be fined no more than $10.000.00 

or imprisoned not more than five years or both. 

on I.. Gamber, Presi 
o 

.U.S. Department of Transportation 

Office of the Secretary of Transportation 

Docket OST 95-236 

AGREEMENT 

• 

The undersigned carriers (hereinafter referred to as "the Carriers") hereby agree as follows: 

1. Each of the Carriers shall, effective May 16, 1966, include the following in its conditions of carriage, including tariffs embodying 

conditions of carriage filed by it with any government: 

"The Carrier shall avail itself of the limitation of liability provided in the Convention for the Unification of Certain Rules 

Relating to International Carriage by Air signed at Warsaw October 12th, 1929, or provided in the said Convention as amended by 

the Protocol signed at The Hague September 28th, 1955. However, in accordance with Article 22( 1) of said Convention, or said 

Convention as amended by said Protocol, the Carrier agrees that, as to all international transportation by the Carrier as defined in 

the said Convention or said Convention as amended by said Protocol, which, according to the contract of Carriage, includes a 

pOint in the United States of America as a point of origin, point of destination, or agreed stopping place 

(1) The limit of liability for each passenger for death, wounding, or other bodily injury shall be the sum of US $75,000 

inclusive of legal fees and costs, except that, in case of a claim brought in a State where provision is made for separate 

award of legal fees and costs, the limit shall be the sum of US $58,000 exclusive of legal fees and costs. 

(2) The Carrier shall not, with respect to any claim arising out of the death, wounding, or other bodily injury of a passenger, 

avail itself of any defense under Article 20( 1) of said Convention or said Convention as amended by said Protocol. 

Nothing herein shall be deemed to affect the rights and liabilities of the Carrier with regard to any claim brought by, on behalf 

of, or in respect of any person who has willfully caused damage which resulted in death, wounding, or other bodily injury of a 

passenger." 

2. Each Carrier shall, at the time of delivery of the ticket, furnish to each passenger whose transportation is governed by the 

Convention, or the Convention as amended by the Hague Protocol, and by the special contract described in paragraph 1, the following 

notice, which shall be printed in type at least as large as 10 point modern type and in ink contrasting with the stock on (i) each ticket; (ii) 

a piece of paper either placed in the ticket envelope with the ticket or attached to the ticket; or (iii) on the ticket envelope: 

"ADVICE TO INTERNATIONAL PASSENGER ON LIMITATION OF LIABILITY 

Passengers on a journey involving an ultimate destination or a stop in a country other than the country of origin are advised 

that the provisions of a treaty known as the Warsaw Convention may be applicable to the entire journey, including any portion 

entirely within the country of origin or destination. For such passengers on a journey to, from, or with an agreed stopping place in 

the United States of America, the Convention and special contracts of carriage embodied in applicable tariffs provide that the 

liability of 

[certain ]* 

[(name of carrier) and certain other] carriers parties to such speCial contracts for death of or personal injury to passengers is 

limited in most cases to proven damages not to exceed US $75,000 per passenger, and that this liability up to such limit shall not 

depend on negligence on the part of the carrier. For such passengers traveling by a carrier not a party to such special contracts or 

on a journey not to, from, or having an agreed stopping place in the United States of America, liability of the carrier for death or 

personal injury to passengers is limited in most cases to approximately US $10,000 or US $20,000. 

The names of Carriers parties to such special contracts are available at all ticket offices of such carriers and may be 

examined on request. 

Additional protection can usually be obtained by purchasing insurance from a private company. Such insurance is not 

affected by any limitation of the carrier's liability under the Warsaw Convention or such special contracts of carriage. For further 

information please consult your airline or insurance company representative." 

3. [This Agreement was filed with the Civil Aeronautics Board of the United States. The Board approved it by Order E-23680, 

adopted May 13, 1966. The Agreement (Agreement 18900) became effective May 16, 1966. On January 1, 1985, this Agreement 

became the responsibility of the Department of Transportation (DOT) by operation of law.] 

4. This Agreement may be signed in any number of counterparts, all of which shall constitute one Agreement. Any Carrier may 

become a party to this Agreement by signing a counterpart hereof and depositing it with DOT. 

5. Any Carrier party hereto may withdraw from this Agreement by giving tw (12) months' thdrawal to DOT 

and the other Carriers parties to the Agreement. 

·Either altemative may be used. 

(Signature and Date,""-~~~:z....::::.......::L:>.....L=--=-":'--=;,A-______ --,~ 

(Printed Name and Title) 

(Name and Address of Carrier) _-"'::-'-''--_;::;.....;....::---'''-.>--=-_______ _ 

• 08T Form 4523 (Formerly CAB Form 263) 
• 

Cost of Operation 

• of 

Cessna 402C and Piper PA31-350 

Between 

Once daily, seven days per week round trip passenger/freight service between; 

1. Ft. Lauderdale-Hollywood Airport (FLL), Marsh Harbour (MHH) and Treasure Cay airport (TCB). 

2. Ft. Lauderdale-Hollywood Airport (FLL) and North Eleuthera airport (ELH). 

Once daily, seven days per week passenger/freight service between; 

1. Ft. Lauderdale-Hollywood Airport (FLL), Governors Harbour (GHB) and Rock Sound airport (RSD). 

also 

Three times per week Air Charter service to various destinations throughout our areas of operation . 

• 
• 

• 

• 

Cessna 402C Operating Cost Per Hour 

C-402 - Fuel cost per hour @ 40 gal per hour x $5.31 per gallon 

C-402 - Maintenance per hour 

C-402 - Engine reserve costs per hour plus interior & exterior 

C-402 - Insurance cost per month 

C-402 - Pilot cost per hour 

C-402 - Aircraft Lease cost per month 

Flight Fuel Maintenance Reserves Pilot cost Insurance Aircraft 

hours Cost cost per cost per per Hour cost per Lease cost 

per per Hour Hour Hour per Month 

Month Hour 

20 212.40 40.00 40.00 45.00 104.15 107.50 

25 212.40 40.00 40.00 45.00 83.32 86.00 

30 212.40 40.00 40.00 45.00 69.43 71.67 

35 212.40 40.00 40.00 45.00 59.52 61.43 

40 212.40 40.00 40.00 45.00 52.08 53.75 

45 212.40 40.00 40.00 45.00 46.29 47.78 

50 212.40 40.00 40.00 45.00 41.66 43.00 

55 212.40 40.00 40.00 45.00 37.88 39.09 

60 212.40 40.00 40.00 45.00 34.71 35.83 

65 212.40 40.00 40.00 45.00 32.05 33.08 

70 212.40 40.00 40.00 45.00 29.76 30.71 

75 212.40 40.00 40.00 45.00 27.78 28.67 

80 212.40 40.00 40.00 45.00 26.04 26.88 

$ 

$ 

$ 

212.40 

40.00 

40.00 

$ 2,083.00 

$ 45.00 

$ 2,150.00 

Total cost per 

Hour 

549.05 

506.72 

478.50 

458.40 

443.23 

431.47 

422.06 

. 414.37 

407.94 

402.53 

397.87 

393.85 

390.32 
• Trip Cost based on flying the Cessna 402C 80 hours per month 

Fort Lauderdale to Marsh Harbour, Treasure Cay returning to Ft lauderdale 

From To Flight Cost per Total Round FLL Landing Total 

Time Hour Hours Trip landing Fees Trip 

Fee Cost 

Ft Lauderdale - FLL MHH 1.2 390.32 1.2 468.38 

Marsh Harbour-MHH TCB .2 390.32 .2 78.06 

Treasure Cay - TCB FLL 1.1 390.32 1.1 429.35 

2.5 975.79 10.00 16.00 1001.79 

Break Even Price Analysis 

FLL- Round Round 2 pax 3 pax 4 pax 5 pax 6 pax 7 pax 8 pax 9 pax 

MHH- Trip cost Trip break break break break break break break break 

TeB- of Ticket even even even even even even even even 

FLL operation cost price price price price price price price price 

1001.79 284.00 500.90 333.93 250.45 200.36 166.97 143.11 125.22 111.31 

• Profit and Loss Breakdown 

Round 2 Pax 3 Pax 4 Pax 5 Pax 6 Pax 7 Pax 8 Pax 9 Pax 

Trip Revenue! Revenue! Revenue! Revenue! r,nue! Revenue! Revenue! Revenue! 

Revenue! Income Income Income Income lome Income Income Income 

Income 

Operational cost 1001.79 1001.79 1001.79 1001.79 1001.79 1001.79 1001.79 1001.79 1001.79 

per R/T flight 

Round Trip Ticket 284.00 568.00 852.00 1136.00 1420.00 1704.00 1988.00 2272.00 2556.00 

Price 

Profit / Loss -433.79 -149.79 134.21 418.21 702.21 986.21 1270.21 1554.21 

Breakdown 

• 
• Fort Lauderdale to North Eleuthera - Round Trip Flight 

From To Flight Cost per Total Round FLL MHH Total 

Time Hour Hours Trip landing Landing Trip 

Fee Fee Cost 

Ft Lauderdale - FLl ELH 1.3 390.32 2.6 1014.83 10.00 8.00 1032.83 

North 

Eleuthera 

Break Even Price Analysis 

FLL- Round Round 2 pax 3 pax 4 pax 5 pax 6 pax 7 pax 8 pax 9 pax 

ELH Trip cost Trip break break break break break break break break 

of Ticket even even even even even even even even 

operation cost price price price price price price price price 

1032.83 306.00 516.42 344.28 258.21 206.57 172.14 147.55 129.10 114.76 

• Profit and Loss Breakdown 

Round 2 Pax 3 Pax 4 Pax 5 Pax 6 Pax 7 Pax 8 Pax 9 Pax 

Trip Revenue! Revenue! Revenue! Revenue! Revenue! Revenue! Revenue! Revenue! 

Revenue! Income Income Income Income Income Income Income Income 

Income 

Operational cost 1032.83 1032.83 1032.83 1032.83 1032.83 1032.83 1032.83 1032.83 1032.83 

per flight 

Round Trip Ticket 306.00 612.00 918.00 1224.00 1530.00 1836.00 2142.00 2448.00 2754.00 

Price 

Profit / Loss -420.83 -114.83 191.17 497.17 803.17 1109.17 1415.17 1721.17 

Breakdown 

• 
• 

Fort Lauderdale to Governors Harbour, Rock Sound - returning to Ft lauderdale 

From To Flight Cost per Total Round FLL MHH Total 

TIme Hour Hours Trip landing Landing Trip 

Fee Fee Cost 

Ft Lauderdale - FLL GHB 1.4 390.32 1.4 546.45 10.00 16.00 1235.99 

Govrnrs Harbr - GHB RSD .2 390.32 .2 78.06 

Rock Sound- RSD FLL 1.4 390.32 1.5 585.48 

3.1 1209.99 

Break Even Price Analysis 

FLL- Round Round 2 pax 3 pax 4 pax 5 pax 6 pax 7 pax 8 pax 9 pax 

GHB Trip cost Trip break break break break break break break break 

RSD of Ticket even even even even even even even even 

FLL operation cost price price price price price price price price 

• 1235.99 355.00 618.00 412.00 309.00 247.20 206.00 176.57 154.50 137.34 

Profit and Loss Breakdown 

Round 2 Pax 3 Pax 4 Pax 5 Pax 6 Pax 7 Pax 8 Pax 9 Pax 

Trip Revenue/ Revenue/ Revenue/ Revenue/ Revenue/ Revenue/ Revenue/ Revenue/ 

Revenue/ Income Income Income Income Income Income Income Income 

Income 

Operational cost 1235.99 1235.99 1235.99 1235.99 1235.99 1235.99 1235.99 1235.99 1235.99 

per flight 

Round Trip Ticket 355.00 710.00 1065.00 1420.00 1775.00 1836.00 2485.00 2840.00 3195.00 

Price 

Profit I Loss -525.99 -170.66 184.01 539.01 600.01 1249.01 1340.01 1959.01 

Breakdown 

• 
• 

• 

• 

Piper PA31-350 Operating Cost Per Hour 

PA31-350 - Fuel cost per hour @ 40 gal per hour x $5.31 per gallon $ 238.95 

50.00 

40.00 

2,083.00 

45.00 

2,150.00 

PA31-350 - Maintenance per hour 

PA31-350 - Engine reserve costs per hour plus interior & exterior 

PA31-3S0 - Insurance cost per month 

PA31-350 - Pilot cost per hour 

PA31-350 - Aircraft Lease cost per month 

Flight Fuel Maintenance Reserves Pilot cost 

hours Cost cost per cost per per Hour 

per per Hour Hour 

Month Hour 

20 238.95 50.00 40.00 45.00 

25 238.95 50.00 40.00 45.00 

30 238.95 50.00 40.00 45.00 

35 238.95 50.00 40.00 45.00 

40 238.95 50.00 40.00 45.00 

45 238.95 50.00 40.00 45.00 

50 238.95 50.00 40.00 45.00 

55 238.95 50.00 40.00 45.00 

60 238.95 50.00 40.00 45.00 

65 238.95 50.00 40.00 45.00 

70 238.95 50.00 40.00 45.00 

75 238.95 50.00 40.00 45.00 

80 238.95 50.00 40.00 45.00 

Insurance Aircraft 

cost per Lease cost 

Hour per Month 

104.15 107.50 

83.32 86.00 

69.43 71.67 

59.52 61.43 

52.08 53.75 

46.29 47.78 

41.66 43.00 

37.88 39.09 

34.71 35.83 

32.05 33.08 

29.76 30.71 

27.78 28.67 

26.04 26.88 

$ 

$ 

$ 

$ 

$ 

Total cost per 

Hour 

585.60 

543.27 

515.05 

494.90 

479.78 

468.02 

458.61 

450.92 

444.49 

439.08 

434.42 

430.40 

426.87 
• Trip Cost based on flying the Piper PA31-3S0, 80 hours per month 

Fort Lauderdale to Marsh Harbour, Treasure Cay returning to Ft lauderdale 

From To Flight Cost per Total Round FLL Landing Total 

Time Hour Hours Trip landing Fees Trip 

Fee Cost 

Ft Lauderdale - FLL MHH 1.2 426.87 1.2 512.24 

Marsh Harbour-MHH TCB .2 426.87 .2 85.37 

Treasure Cay - TCB FLL 1.1 426.87 1.1 469.56 

2.5 1067.17 10.00 16.00 1093.17 

Break Even Price Analysis 

FLL- Round Round 2 pax 3 pax 4 pax 5 pax 6 pax 7 pax 8 pax 9 pax 

MHH- Trip cost Trip break break break break break break break break 

TeB- of Ticket even even even even even even even even 

FLL operation cost price price price price price price price price 

1093.17 284.00 546.59 364.39 273.29 218.63 182.20 156.17 136.65 121.46 

• Profit and Loss Breakdown 

Round 2 Pax 3 Pax 4 Pax 5 Pax 6 Pax 7 Pax 8 Pax 9 Pax 

Trip Revenue! Revenue! Revenue! Revenue! Revenue! Revenue! Revenue! Revenue! 

Revenue! Income Income Income Income Income Income Income Income 

Income 

Operational cost 1093.17 1093.17 1093.17 1093.17 1093.17 1093.17 1093.17 1093.17 1093.17 

per R/T flight 

Round Trip Ticket 284.00 568.00 852.00 1136.00 1420.00 1704.00 1988.00 2272.00 2556.00 

Price 

Profit / Loss -525.17 -241.17 42.83 326.83 610.83 894.83 1178.83 1462.83 

Breakdown 

• 
• Fort Lauderdale to North Eleuthera - Round Trip Flight 

From To Flight Cost per Total Round FLL MHH Total 

Time Hour Hours Trip landing Landing Trip 

Fee Fee Cost 

Ft Lauderdale - FLL ELH 1.3 426.87 2.6 1109.86 10.00 8.00 1127.86 

North 

Eleuthera 

Break Even Price Analysis 

FLL - Round Round 2 pax 3 pax 4 pax 5 pax 6 pax 7 pax 8 pax 9 pax 

ELH Trip cost Trip break break break break break break break break 

of Ticket even even even even even even even even 

operation cost price price price price price price price price 

1127.86 306.00 563.93 375.95 281.97 225.57 187.98 161.12 140.98 125.32 

Profit and Loss Breakdown 

• Round 2 Pax 3 Pax 4 Pax 5 Pax 6 Pax 7 Pax 8 Pax 9 Pax 

Trip Revenue! Revenue! Revenue! Revenue! Revenue! Revenue! Revenue! Revenue! 

Revenue! Income Income Income Income Income Income Income Income 

Income 

Operational cost 1127.86 1127.86 1127.86 1127.86 1127.86 1127.86 1127.86 1127.86 1127.86 

per flight 

Round Trip TIcket 306.00 612.00 918.00 1224.00 1530.00 1836.00 2142.00 2448.00 2754.00 

Price 

Profit I Loss -515.86 -209.86 96.14 402.14 708.14 1014.14 1320.14 1626.14 

Breakdown 

• 
• 

Fort Lauderdale to Governors Harbour, Rock Sound - returning to Ft lauderdale 

From To Flight Cost per Total Round FLL MHH Total 

Time Hour Hours Trip landing Landing Trip 

Fee Fee Cost 

Ft Lauderdale - FLL GHB 1.4 426.87 1.4 597.62 10.00 16.00 1349.30 

Govrnrs Harbr - GHB RSD .2 426.87 .2 85.37 

Rock Sound- RSD FLL 1.4 426.87 1.5 640.31 

3.1 1323.30 

Break Even Price Analysis 

FLL- Round Round 2 pax 3 pax 4 pax 5 pax 6 pax 7 pax 8 pax 9 pax 

GHB Trip cost Trip break break break break break break break break 

RSD of Ticket even even even even even even even even 

FLL operation cost price price price price price price price price 

• 1349.30 355.00 618.00 412.00 309.00 247.20 206.00 176.57 154.50 137.34 

Profit and Loss Breakdown 

Round 2 Pax 3 Pax 4 Pax 5 Pax 6 Pax 7 Pax 8 Pax 9 Pax 

Trip Revenue! Revenue! Revenue! Revenue! Revenue! Revenue! Revenue! Revenue! 

Revenue! Income Income Income Income Income Income Income Income 

Income 

Operational cost 1349.30 1349.30 1349.30 1349.30 1349.30 1349.30 1349.30 1349.30 1349.30 

per flight 

Round Trip TIcket 355.00 710.00 1065.00 1420.00 1775.00 2130.00 2485.00 2840.00 3195.00 

Price 

Profit I Loss -639.30 -284.30 70.70 425.70 780.70 1135.70 1490.70 1845.70 

Breakdown 

• 
• TWIN AIR CALYPSO LIMITED INC. 

General Expenses 12 month Projection 

Chief Pilot 25,000.00 

Administration Labor 75,000.00 

Casual Labor 25,000.00 

Advertising 20,000.00 

Automobile 5,000.00 

Bank Charges 75,000.00 

Dues/ Subs 20,000.00 

Equipment Rental 3,000.00 

Other Insurance 5,500.00 

Interest 4,000.00 

Licenses 3,000.00 

Printing Postage 4,000.00 

Office Supplies 4,000.00 

• Legal 3,000.00 

Rent 96,000.00 

Repairs 20,000.00 

Communications 30,000.00 

Travel! Entertainment 4,000.00 

Utilities 12,000.00 

Payroll Expenses 60,000.00 

Bahamas Agents and Counters 100,000.00 

Ft Lauderdale Ramp and Reservation Agents 144,000.00 

Other Aircraft 12,000.00 

Other 50,000.00 

TOTAL GENERAL EXPENSES OVERHEAD 820,500.00 

• 
• 

• 

TWIN AIR CALYPSO LIMITED INC. 

Aircraft Operation Income Projection 

QUARTERLY PROFIT / LOSS REPORT 

Twin Air Calypso projected Income Statement by quarter with estimated date of start being December 2011 

being from all commuter operations destinations, 100 pounds of cargo per flight @ a minimum of $1.00 per 

pound and 15 hours of charter per week @ a min of $800.00 per hour. 

Scheduled Service Income 

Quarter Daily No Daily Scheduled Freight Scheduled Freight Total Scheduled Per quarter 

number of of average passenger daily passenger Income per Scheduled flights cost Profit from 

Passengers Days aircraft daily Income quarterly quarter flights per quarter Scheduled 

per cost income income income passenger 

Qtr including flights 

freight per 

quarter 

1-12 thru 2 40 92 5547.80 6,140.00 500.00 510,324.00 46,000.00 556,324.00 510,324.00 46,000 

2-03 thru 05 70 92 5547.80 10,745.00 500.00 988,540.00 46,000.00 1,034,540.00 510,324.00 524,216.00 

3-06 thru 08 60 92 5547.80 8,916.00 500.00 820,272.00 46,000.00 866,272.00 510,324.00 355,948.00 

4-09 thru 11 50 92 5547.80 7,675.00 500.00 706,100.00 46,000.00 752,100.00 510,324.00 241,776.00 

Totals 3,025,236.00 184,000.00 3,209,236.00 2,041,296.00 1,167,940.00 

Charter Service Income 

Quarter Weekly 13 Number Average Average Average Total Average Average quarterly Per quarter Profit 

number weeks of hours of minimum charter charter aircraft charter aircraft cost from 

of per Charters charter hourly cost income per hourly Charter Flights 

Charters Qtr per cost of quarter cost 

charters 

TOTAL INCOME FOR FIRST NORMAL YEAR OF SCHEDULED OPERATIONS 3,209,236.00 

TOTAL INCOME FOR FIRST NORMAL YEAR OF CHARTER OPERATIONS 287,040.00 

TOTAL INCOME FOR FIRST NORMAL YEAR OF SCHEDULED & CHARTER OPERATIONS 3,496,276.00 

TOTAL D & I COST OF OPERATION FOR FIRST NORMAL YEAR OF AIRCRAFT OPERATION 2,187,904.68 

TOTAL PROFIT FROM FIRST NORMAL YEAR OF AIRCRAFT OPERATION 1,308,371.32 

GENERAL COST OF OPERATION OTHER THAN AIRCRAFT 920,500.00 

TOTAL NETI PROFIT FROM FIRST NORMAL YEAR OF OPERATION 387,871.32 

Note; 0 & I, notates Direct and Indirect. 
•

s Depanme~1 

f Transportation 

Federal Aviation 

Administration 

Air Carrier Certificate 

This certifies that 

TWIN AIR CAL VPSO LIMITED, INC. 

700 S.W. 34tb STREET, SUITE 100 

FORT LAUDERDALE, FLORIDA 33315 

has met the requirements of the Federal Aviation Act of 1958, as amended, and the rules, 

regulations, and standards prescribed thereunder for the issuance of this certificate and is 

hereby authorized to operate as an air carrier and conduct common carriage operations in 

accordance with said Act and the rules, regulations, and standards prescribed thereunder 

and the terms, conditions, and limitations contained in the approved operations specmcations . 

• This certificate is not transferable and, unless sooner surrendered, suspended, or revoked, 

shall continue in effect indefinitely. 

Certificate number: EYLA853M 

Effective Date: AUGUST 12.20 I 0 

RE·ISSUED: FEBRUARY 17.2011 

Issued at: _. SO FL ESDO-SO 19 

FAA F ()(m 8430·18 (6-$ 7) 

• 

By Direction of the ~strator 

! . 

~~ ! SERGIO I.OPEZ ~-.J (Signature) . __ . 

MANAGER 

(Title) 

SO FL LS..I2.O:SD19....._ 

(Region/Office) 
• 

• 

• 

THIS APPROVED REGISTRATION 

SUPERSEDES ALL OTHER 

REG:STRATiONS PREViOUSLY FILED. 

AGENCY DlSPAY OF ESTIMATED BURDEN 

Approved by OMB 

OMB No. 2120-0633 

Expires: 2128109 

The public reporting burden for the collection of information is estimated to aVerage 30 minutes per response. If you wish 

to comment on the accuracy of the estimate or make suggestions for reducing the burden. please direct your comments to the ~ 

Deoartment ofT!i!JJS!X!I'tati. Office QfAviation &:!i!~, x-~. ~ -,JJ Street S,W" washinaton D.~. 20590 

PAPER WORK REDUCTION ACT OF 1995 

Under the PapefWOfk Reduction Ad. of 1995. no persons are required to respond to a collection of inlbrmation unless it 

displays a valid OMB control number. The OMB control number is displayed in the u~ right-hand comer of this form. 

0 FOR USE BY DOT ONLY 

AIR TAXI OPERATOR REGISTRATION 

u.s.a..--aI 

T~ AND AMENDMENTS UNDER 

PART 298 OF THE REGULATIONS OF 0IIIce altha ~ THE DEPARTMENT OF TRANSPORTATION alT.........- -

0 Where to flle: Submit this form. In duplicate. along with a Certificate of Insurance (OST Form 6410) 

Federal 

evidencing 

Aviation 

required 

Administration 

liability insurance 

(FAA). 

cowrage 

Air Transportation 

for the &ira-aft 

Division. 

listed 

AF5-200, 

in Block 

Room 

6 of this 

831. 

registration. 

800 

to the I~ ~, Independence Avenue. S.W., washington, D.C. 20591. Exception' For air taxiS located in the ~ ~ t::J Alaska. submit this form and the OST Form 6410 to the Federal Aviation Administration (FAA), Alaskan 

Region Headquarters, ML-230, 222 West"" Avenue, Box 14, Anchorage, Alaska 99513. 

Fe.: The fee for the ~ registration of an air taxi is $8. There is no filing fee for amendments to 

registrations previously filed. EtrediW _ of regioItationIam 

OCT 13 2010 

1 a. Name (and DBA. if applicable) and Mailing Address of the Registering Carrier: la. FederaI ... _ Mnirisllation~-

7WIAJ /f1J(' eft-'f flS ~ "'--I M I T£'2),1 /4 C. , NJ...A?-g~D 31>. I\dchsa at local FAA aIIice: 

340b SW 9 ,I¥J. sov~ ~l,t)A.\\)j\ F~1)D-\ '1 

+T~ LA-lJh£12..1)A-L£; +1- 3~31S 29~S $w 145 A'I 

1b. Telephone No.9S'l1-3S<7-g 2-bb 9.sL/- gb2- 6902 '5'v /Te 12.0 

Fax No. 

M lI<PrMA-A, ~L "33021-

2a. Address of principal place of business (If ~: 

~O,\,\~13,,~ 3c.FAA9S~~'~", _ b/II tbfb " ... ,,:fI 

lQ 

:.J\ AFB-200;' 3d. FAA PrindpaI Operations Impedor: 

~ 'PICCO). I 

2b. Telephone No. c-) _.~. 

4. This filing is the carrier's: l ~ Air.....;. 

IFJ Inilial Reg~ 0,. rtQ~portQHmt ~~?YT II to reflect changes since previous filing (Complete item 9) 

TVISIOI) S 

If initial registration, give proposed d~ ~::'::'''''''''":'.=.!7. T 7 . ':' C"'P T ~ ~e ~ -:;? S I :l. 0 \.. 0 

5. Check type or types of service the carrier ~CUf1Ull commencement of operations, or, for amendments, setVice the carrier is a.urentIy 

perfonning: 

o Scheduled passenger- aOn-demand passenger o Air ambulance 

o Scheduled cargo S On-demand cargo o Seasonal 

o Mall under a U.S. Postal SeIVice contract o Other (Please specify)'" 

* Check only H service Is limited to less than five (5) round tripe per week on at least one route between two or mont points and Is 

operated pursuant to publlafled flight schedules which specify the times. days of the week. and places between which such flIgh1s are 

performed. Companies proposing or operating scheduled passenger services of five (5) or more round trips per week on at least one route 

between two or more points pursuant to published flight schedules which specify the times. days of the week, and places between which such 

flights are perbmed may not conduct such operations under this registration. Instead, such companies must be found "fit, willing. and able' to 

provide such services as a commuter air carrier. See 14 CFR 298, Subpart E. 

... For example, if the carrier performs other services such as fire fighting operations for the U.S. Forest Service, it should be indicIIted here. 

OST Form 4507 (Rev. 2-(6) 
/ 

amendments, 

Aircraft MaIre 8Ild Model 

P8SSenQ8f Seats 

InstaIfed* lQYES ONO 

1.L!~vA 02~ 9 1:l!!I!: ,.., air IiDi or C>lRIfnUIIor ~ under Part 21M! _ be 

a ciIizM of lie ~ Slates. 411 USC 40102(11)(15) ..... a U.S. 

~ 

~ _ (a) ... inIhidu8I who '- • U.S. dIimr (b) 8 

ofwt*:h eedllIIMIber i& 8 UA cmz.t; or (e) 8 

COfJlOf1IIion or MIOtieIian ~ undor !he _ of hi UniIed Slides or a _, \tie DiIIri<:I of Columbia, or a teniDry or 

po-. of !he URIed Staas. of which hi pn>Iident SId III _1MHI'rds of \tie _ of diNCIors SId oilier IIIIWJ8Qi1g 

2. Ce5$V/I- ljllU 

3. p,p[?/2. Ptf-"3I-'3S0 

4. ?IPef2 P,A--31 ~D IJ 3S0Jt.l.'3'" 

5. ________ _ 

(Add tJdcIttonaI sheets if nec8SSiIIY) 

• This a:- not include aeats occupied by the pilot or c:o-piIot unless the IaIter Is available b' 

passenger use. 

9 

oIIicars .. ~ of hi ~ S-, which is under lie __ CIlO'IIrtII of ciIianI of the U1iIIed $fales, MId in which at _75 pIOfCII1I of hi wting __ '- _ or oonII'oIIed by 

peI-.s!hat "'" __ of hi UriIIId $tiles. 

carried 

passengers in foreign air transportation, that is, 

between any point in the United States and any 

point outside thereof, during the past 12 

monIhs: 

ilYES DNO 

9. REPORT CHANGES OR AMENDMENTS TO INFORMATION PREVlOULSl Y FILED WITHIN 30 DAYS OF THE EFFECTlVE DATE: 

a. Cha1ge in Caniel's Nane and/or Address (Ptease specify): 

Former NtJIOO and Address: 

/tVIN -r~tVN Li?A-5/tJ4 4. 

cJ. , h(a.. 

-rw/tJ f11£ 

-r W jA.) Ih /2.. Cih'f JJS 2) 

b. Descri~ ~ ~ ~= ~ ~~ ~ or deletions of aIrr;raft, change in type ofoperatials, mgi$lJ'alion IIUIOOers, etc.}: 

I certify that the information contained in this application is complete and accurate to the best of my knowledge, The 

carrier subscribes to the lATA Intercarrier Agreement; the lATA Agreement on Measures to Implement the lATA 

Intercarrier Agreement. and the AT A Agreement on Provisions Implementing the lATA Intercarrier Agreement to be 

Included in Conditions of carriage and Tariffs (see OST Form 4523-A). and in accordance with those Agreements 

agrees under Article 22(1) of the Warsaw Convention or the Warsaw Convention as amended by the Hague Protocol 

that the liability limits for passenger injury or death in international transportation as defined in the Convention are 

waived in their entirety. 

PIIK:e: ...c,. L+vQ£a.)).A-l.E I +L. 

(City 8IId State) 

(Please type) 

T~ ___ P~~~~L~~_~~_\~ ____________ _ 

Note: Tm ~ must be signed by B responsible oIfictK; such as the PreSIidBnt. VICe PrMidant, Sacmtaty or T--. or parlneror owner of the canier, 

TO ENSURE PROPER PROCESSING OF THIS REGISTRATION, PlEASE COMPLETE THIS FORM IN ITS ENTIRETY. 
• 

• 

• 

Twin Air Calypso limited, Inc. 

700 SW 34th Street, Suite 100 

Ft Lauderdale, Florida 33315 

AFFIDAVIT OF AIRCRAFT CONFORMITY/COMPLIANCE 

STATE OF FLORIDA 

COUNTY OF BROWARD 

Clayton I. Gamber being first duly sworn, deposes and says: 

1. That he is duly elected, qualified and serving as President and Chief Executive Officer of the 

Avstar Aviation Group. 

2. That he is duly elected, qualified and serving as President and Chief Executive Officer of 

Twin Air Calypso Limited, Inc. 

3. That he is the Director of Maintenance for Twin Air Calypso Limited, Inc., a FAR part 135 

certificate holder. 

4. That the following aircraft; 

a. PA-31-350 N350MJ 1+9 Seating 

b. PA-31-350 N146DC 1+9 Seating 

c. Cessna 402C N44lP 1 +9 Seating 

d. Cessna 402C N767PA 1+9 Seating 

e. Cessna 402C N528FA 1+9 Seating 

Have been certified by the FAA and comply with all applicable FAA safety standards. 

Subscribed and Sworn before me this 20

fu 

day of J~I/..&tf 
• 

• 

• 

STATE OF FLORIDA 

COUNTY OF BROWARD 

Twin Air Calypso Limited, Inc. 

700 SW 34th Street, Suite 100 

Ft Lauderdale, Florida 33315 

AFFIDAVIT OF SAFETY COMPLIANCE 

Clayton Gamber being first duly sworn, deposes and says: 

1. That he is duly elected, qualified, and serving as President and Chief Executive Officer of 

Twin Air Calypso Limited Inc. and that he is authorized to and does make Affidavit for it. 

2. That all aircraft owned and leased by Twin Air Calypso Limited Inc. have been certified 

by the Federal Aviation Administration and currently comply with all Federal Aviation 

Administration safety standards under part 135 as well as the noise standards of part 

36, of the Federal Aviation regulations. 

Subscribed and sworn to before me this 20th day of July 2011. 
• 

• 

• 

Aircraft Maintenance 

Twin Air Calypso Limited, Inc. 

700 SW 34th Street, Suite 100 

Ft Lauderdale, Florida 33315 

Twin Air Calypso Limited, Inc. a wholly owned subsidiary of Avstar Aviation Group will utilize the services 

of Twin Air Calypso Services, Inc. Twin Air Calypso Services, Inc. is our sister Company and a certified FAA 

repair station, Certificate number DN4R134M based at North Perry Airport (HWO) approximately 5 miles 

from Ft Lauderdale International Airport (FLL). The address of Twin Air Calypso Services, Inc. is 1620 SW 

75th Avenue, Pembroke Pines, Florida 33023. 
• 

• 

• 

Twin Air Calypso Limited, Inc. 

History 

Twin Air Calypso limited, Inc. 

700 SW 34th Street, Suite 100 

Ft Lauderdale, Florida 33315 

Twin Air was founded in 1978 as the aircraft operating arm of Red Aircraft Services in Ft Lauderdale, 

Florida. Red Aircraft was an aircraft services organization founded in 1954. 

Initially the main source of business was to lease aircraft to government units and avionics suppliers. The 

customer list included the Naval Shipyard in Connecticut, the United States Air Force, the city of Ft 

lauderdale and RCA Avionics. The operation for the United States Navy, transported personnel and 

equipment to the Bahamas in support of Submarine warfare associated research. The United States Air 

Force contract moved high priority freight throughout the southeastern United States. The City of Ft 

Lauderdale leased two aircraft for surveillance work. The RCA Avionics leased an aircraft for avionics 

demonstration purposes. Aircraft operated for these contracts ranged from Cessna 172's to Douglas DC3's. 

As our exposure to the Bahamas increased the nature of the business turned first to freight and then 

also to passenger operations. In the mid 1980's Twin Air began to operate a high priority freight service 

to the out islands of the Bahamas. Our main focus was to support the local businessmen, hoteliers, 

residents and vacation home owners. As the reputation and the reliability of our operation grew we 

were encouraged to introduce passenger service. Our business is now mainly passenger with freight 

supplementing unused capacity. Our aircraft fleet grew from one Piper Navajo Chieftain to six by the 

end of 2004 with flight hours approaching five thousand per year. 

In the fall of 2004 we began supplying service to another operator known as Calypso Air. Calypso's 

market was primarily the Abaco's while the Twin Air market was primarily the Eleuthera's. By early 2005 

Twin Air was the main source of lift for Calypso and it was decided to have Twin Air absorb the 

operation and aircraft of Calypso. By combining the operation of Twin Air and Calypso the fleet grew to 

nine aircraft and annual flight hours to approximately 8000 with revenues in excess of 3.5 million 

dollars. 

Calypso's only stockholder, Doctor Kenneth Langston, became a minority partner in the combined 

business which was now called Twin Air Calypso Limited, Inc. Clayton Gamber and his wife Robin 

Gamber were the majority shareholders. In early 2010 Avstar Aviation Group, a public company 

previously in the fixed base operation and aircraft maintenance business were seeking business 

acquisitions. During this time and while planning for the sale of Twin Air Calypso all of the aircraft were 

placed in a separate entity owned entirely by Dr. langston. This corporation was known as Aircraft 

Charters llC. This "Sub-S" entity was formed solely for the ownership of the aircraft and to be the Lessor 

to Twin Air Calypso Limited, Inc. 
• 

• 

• 

Business Marketing Philosophy 

A: Bahamas 

Twin Air Calypso Limited, Inc. 

700 SW 34th Street, Suite 100 

Ft Lauderdale, Florida 33315 

The business to the Bahamas is divided into two geographical sectors and two types of traveller. 

Geographically, there are two major destinations. The population centers of Nassau and 

Freeport and the remaining portion of the archipelago, known as the "Family Islands". The 

destination of Nassau and Freeport account for over 90 percent of the population of the country 

and are served well by the major airlines using traditional airline equipment. The "Family 

Islands" have small population centers supplemented by "boutique hotels", second homes for 

foreigners and marina infrastructure. 

Our philosophy from the inception is to cater to the "Family Island" market. In this particularly 

seasonal market, frequency with reliability is certainly more important than capacity. The 

smaller aircraft we utilize are the most efficient for these parameters. However, smaller aircraft 

makes the control of "load factor" imperative. Twin Air Calypso exercises control of load factors 

by supplementing freight for any unused capacity. 

In Summary Twin Air Calypso caters to the local Bahamians, businesses, second home owners 

and boaters to minimize the seasonal market fluctuations. Supplementing freight for passengers 

allows us to maintain the frequencyand reliability the market requires while operating the 

aircraft efficiently. 

B: Cuba 

Twin Air Calypso Limited. Inc. believes that person to person family contact is a basic human 

right. We believe the vast Cuban American population living within the United States who are 

eager to travel to Cuba for visits with family have limited options. The amount of charter flights 

available for smaller groups business people and families who wish to travel together is small. 

New United States government travel and business policies affecting travel and contact of 

persons travelling to and dealing with Cuba have further expanded the need for charter flights 

between the United States and Cuba. 

Management 

All key employees and managers have worked in the aircraft charter business serving the 

Bahamas and Cuba in excess of twelve years . 
• 

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• 

Business Operating Philosophy 

Twin Air Calypso Limited, Inc. 

700 SW 34th Street, Suite 100 

Ft Lauderdale, Florida 33315 

While maintaining cost controls in all facets of the business is important, the variable aircraft operating 

costs are the most important. To control these variable costs a vertically integrated organization is 

necessary. Our sister company under the Avstar Aviation Group, Miami Air is an FAA approved FAR part 

145 repair station which also has fuel service, based at North Perry Airport (HWO), Florida, five miles 

from our base at Ft Lauderdale International Airport (FLL), Florida. As a fully certified repair station and 

fuel vendor, we are also able to offer services to retail customers and other operators therefore 

reducing the allocation of overhead ti Twin Air Calypso Limited, Inc. a significant cost advantage over the 

competition. 

Future Expansion for Destinations and Capacity 

Due to the downturn in the economy Twin Air Calypso has suffered a reduction in revenue. This 

reduction in income has attributed to the reduction of our flying fleet. A fleet refurbishment program is 

now underway as the economy recovers and service returns to a previous level. The return to service of 

existing aircraft will provide a 50% to 70% increase in capacity on the existing route structure 

Additional aircraft will be available for opening the West Palm Beach to Abaco market. This is a very 

active market due to the ocean shipping from the port of Palm Beach. There is significant passenger 

seats needed for individuals that carry out purchasing, maintain business relationships and utilize the 

shipping resources. A facility for our new presence in West Palm Beach has already been identified that 

will allow for both passengers and freight operations at the West Palm Beach Airport (PBI). 

The refurbishment also enables Twin Air Calypso Limited, Inc. to dedicate specific aircraft and personnel 

to freight, scheduled service and charter operations. The freight aircraft will allow the ability to offer 

scheduled freight service, a new revenue source for Twin Air Calypso Limited, Inc. The dedication of 

scheduled service and charter aircraft will increase customer appeal and acceptance for personal 

services. 

Twin Air Calypso Limited, Inc. a wholly owned subsidiary of Avstar Aviation Group will utilize the services 

of Twin Air Calypso Services, Inc. Twin Air Calypso Services, Inc. is our sister Company and a certified FAA 

repair station, Certificate number DN4R134M based at North Perry Airport (HWO) approximately 5 miles 

from Ft Lauderdale International Airport (FLL). The address of Twin Air Calypso Services, Inc. is 1620 SW 

75th Avenue, Pembroke Pines, Florida 33023. 
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This Section is NOT USED 

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This Section is NOT USED 

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TWIN AIR CALYPSO 

TICKET JACKET 

GENERAL INFORMATION AND REQUIREMENTS 

TIckets are non-refundable, valid for one year from date of 

purchase and may be transferred to another person. 

Connecting Flights; Allow a two hour window between 

connections for US Customs, Luggage and transfer to I from main 

terminal. 

Check-in; is required one hour prior to scheduled flight departure 

time. 

International Flights; proof of citizenship is required using a valid 

passport. For permanent U.S. residence a valid alien card and or 

passport with other valid State Department / INS documentation 

is required. 

Foreign passport; (other than U.S.) a valid visa is required. The 

passenger is responsible for knowing the requirements of the visa 

for travel to and from the United States. 

Baggage; Up to 35 pounds of baggage "Including carry-on" items, 

is allowed per passenger. All items above the 35 pound limit will 

be assessed at $1.00 per pound and travel on a space available 

basis. 

Animals: less than 50 pounds must travel in an approved kennel / 

dog I cat carrier. Dogs under 50 pounds will be charged at 50 

percent seat/ticket price. Larger dogs will be charged at full seat / 

ticket price and must be on a leash and controlled by the owner 

seated at rear of aircraft. 

Surfboards; travel on a space available basis unless prior 

arrangements are made and will be charged according to size. 

Open TIckets; are considered "space available" unless confirmed 

at least 24 hours prior to desired departure/travel time. 

Smoking; All flights are non-smoking flights. 

Hazardous Materials; federal regulations restrict the carriage of 

items classified as Hazardous Materials. Acid, matches, lighter 

fluid, explosives, flammable, solid/liquids, oxidizing materials, 

corrosive materials, compressed gasses, poisons, etiologic agents, 

radioactive materials, irritating or incapacitating sprays must not 

be carried in baggage. Checked baggage is subject to inspection 

and passengers are required to show identification. 

Firearms; Federal Regulations require that firearms can only be 

carried in checked baggage, be unloaded and declared. 

Electronic Devices; Federal Regulations prohibit the in-flight 

operation of electronic devices other than portable computers, 

portable dictation recorders, electronic calculators and games, 

electronic watches, hearing aids, heart pacemakers and electronic 

shavers. Other electronic devices (including AM and FM 

transmitters and receivers, portable telephones and remote 

controlled toys) may interfere with communications and 

navigation systems on the aircraft and are therefore prohibited. 

Advice to Passengers on limitations of Liability 

Refusal to Transport; Twin Air Calypso may refuse to transport 

and or remove any passenger for various reasons as set forth in its 

Contract for carriage. 

Liability of twin Air calypso Limited Inc.; Purchase of a ticket 

does not guarantee transportation. Twin Air calypso shall not be 

liable for any indirect, special or consequential damages resulting 

from its performance or delay in performance of, or failure to 

perform, transportation of passengers and or other services 

inCidental thereto (except baggage liability as provided below). 

Personal liability; The Warsaw convention and tariffs provisions 

in the case of travel to and from a foreign country may limit 

Airline Liability for death or personal injury. 

Baggage liability; liability for loss, delay or damage is limited as 

follows. (unless a higher value is declared and an extra charge is 

paid) 

1. International; for most international travel including 

domestic portions of international journeys, maximum 

liability is $9.07 or approximately $20.00 per kilo. 

2. Domestic; Maximum liability is $1,250.00 per 

passenger for most carriers. 

Under no circumstances is twin Air Calypso limited Inc. liable for 

loss or damage to valuables or electroniCS, currency, jewelry, 

documents, photographic, computer equipment, art objects, 

antiques, commercial effects, furs, precious metals, negotiable 

instruments, gold dust and silverware. No action shall be initiated 

for any loss, delay or damage to checked baggage unless a 

preliminary written notice is given to a Twin Air Calypso limited 

Inc. employee or representative before leaving the airport where 

the loss delay or damage is not obvious in nature and within 4S 

days in writing (21 days where any part of travel is international) 

after date of the incident and unless action is commenced within 

one year from date of trave. 

Baggage; Identify your baggage with your name and address both 

inside and outside. Lock your bags and always carry cash, jewelry 

cameras and antiques, negotiable instruments, medications, 

important papers, liquids or fragile articles in carry-on baggage 

(see note about carry on baggage) or on your person as Twin Air 

Calypso Limited Inc. assumes no liability for these items. Damage 

to or loss of baggage must be reported to Twin Air Calypso 

immediately upon termination of your flight. 

TWIN AIR CALYPSO 

NAME: ________________________ _ 

Date: ____ Flight # _____ Date: ____ _ 

Reliable Flight Service between Florida and the Bahamas 
• 

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• 

TWIN AIR CALYPSO 

Rear of Ticket 

NOTICE 

If the passengers journey involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention 

may be applicable and the Convention governs and in most cases limits the liability of the carriers for death or personal injury and in the 

respect of loss or damage to baggage. See also Advise to International Passengers on Limitation of Liability. 

CONDITIONS OF CONTRACT 

1. As used in this contract "ticket" means this passenger ticket and 

baggage check, of which these conditions of notice form part, 

"carriage" is equivalent to "transportation", "carrier" means all air 

carriers that carry or undertake to carry the passenger or his baggage 

hereunder or perform any other service incidental to such to such air 

carriage. "WARSAW CONVENTION" means the Convention for the 

Unification of Certain Rules Relating to International Carriage by Air, 

signed at Warsaw, 12th October 1929, or that Convention as amended 

at the Hague, 2Sth September 1955, whichever may be applicable. 

2. Carriage hereunder is subject to the rules and limitations 

relating to liability established by the Warsaw Convention unless such 

carriage Is not "international carriage" as defined by that convention. 

3. To the extent not in conflict with the foregoing carriage and 

other services performed by each carrier are subject to the (i) 

provisions contained in this ticket. (ii) applicable tariffs. (iii) carriers 

condition of carriage and related regulations which are made part 

hereof (and are available on application at officeyf carrier) except in 

transportation between a place in the United Sta'"tes or Canada and any 

place outside thereof to which tariffs in force in those countries apply. 

4. Carriers name may be abbreviated in the ticket, the full name 

and its abbreviation being set forth in Carriers tariffs, condition of 

carriage, regulation or timetables, carriers address shall be the airport 

of the departure shown opposite the first abbreviation of carriers name 

in the ticket, the agreed stopping places are those set forth in this 

ticket or as shown In carriers timetable as scheduled stopping places on 

the passenger's route; Carriage to be performed hereunder be several 

successful carriers is regarded as a single operation. 

5. Carrier Is not liable for any expenses incurred by passengers for 

Hotels, meals, ground transportation or any other expense due to 

cancellation of any flight for any reason, including tariffs and fees. 

6. Any exclusion or limitation or liability of carrier shall apply to and be for 

the benefit of agent, servants and representative's of carrier and any person 

whose aircraft is used by carrier for carriage and It's agents, servants and 

representatives. 

7. Checked baggage will be delivered to bearer of the baggage check. in 

case of damage to baggage moving in international transportation complaint 

must be made in writing to the carrier forthwith after discovery of damage and, 

at the latest within 7 days from receipt; In case of delay complaint must be 

made within 21 days from date the baggage was delivered. See tariffs or 

conditions of carrier regarding non-international transportation. 

S. This ticket is good for carriage for 1 year from date of issue, except as 

otherwise provided in this ticket, in carrier's tariffs, conditions of carriage, and 

related regulations. The fare for carriage hereunder is subject to change prior to 

commencement of carriage. Carrier may refuse transportation if the applicable 

fare has not been paid . 

9. Carrier undertakes to use best efforts to carry the passengers and 

baggage with reasonable dispatch. Times shown in timetable or elsewhere are 

not guaranteed and form no part of this contract. Carrier may without notice 

substitute alternate carrier or aircraft and may also alter or omit stopping 

places shown on the ticket in cases of necessity. Schedules are subject to 

change without notice. Carrier assumes no responsibility for making 

corrections. 

10. Passengers shall comply with government travel requirements, present 

exit, entry and other required documents and arrive at airports within the time 

fixed by carrier, or if no time is fixed, early enough to complete departure 

procedures. 

11. No Agent, servant or representative of carrier has authority to alter, 

modify or waiver a provision of this contract. 

S 

CARRIER RESERVES THE RIGHT TO REFUSE CARRIAGE TO ANY PERSON WHO HAS ACQUIRED A TICKET IN VIOLATION OF 

APPLICABLE LAW OR CARRIERS TARIFFS, RULES OR REGULATIONS. ISSUED BY Carrier whose name is in the "Issued By" section on the 

face of the Passenger Ticket and Baggage Check. Additional protection can usually be obtained by purchasing insurance from a private company. 

Such insurance is not affected by any limitation of the carrier's liability under the Warsaw Convention. For further information please consult your 

airline or insurance company representative . 
• 

• 

Electronic Articles of Incorporation 

For 

TWIN AIR CALYPSO LIMITED, INC. 

P09000092838 

FILED 

November 12, 2009 

Sec. Of State 

jshivers 

The undersigned incorporator, for the purpose offonning a Florida 

profit corporation, hereby adopts the following Articles of Incorporation: 

Article I 

The name of the corporation is: 

TWIN AIR CALYPSO LIMITED, INC. 

Article II 

The principal place of business address: 

3406 SW 9TH AVENUE 

FT LAUDERDALE, FL. 33315 

The mailing address of the corporation is: 

3406 SW 9TH AVENUE 

FT LAUDERDALE, FL. 33315 

Article III 

The purpose for which this corporation is organized is: 

ANY AND ALL LAWFUL BUSINESS. 

Article IV 

The number of shares the corporation is authorized to issue is: 

1000 

Article V 

The name and Florida street address of the registered agent is: 

• 

PLANE LAW, P.A. 

11199 69TH STREET NORTH 

LARGO, FL. 33773 
I certify that I am familiar with and accept the responsibilities of 

registered agent. 

• Registered Agent Signature: DOUGLAS 1. BARNARD 

Article VI 

The name and address of the incorporator is: 

DOUGLAS 1. BARNARD, ESQUIRE 

11199 69TH STREET NORTH 

LARGO, FLORIDA 33773 

Incorporator Signature: DOUGLAS J. BARNARD 

Article VII 

The initial officer(s) and/or director(s) of the corporation is/are: 

Title: PD 

CLA YTON I GAMBER 

9324 NW 50 DORAL CIRCLE N 

DORAL, FL. 33178 

Title: SD 

ROBIN V GAMBER 

9324 NW 50 DORAL CIRCLE N 

DORAL, FL. 33178 

Article VIII 

.The effective date for this corporation shall be: 

1111012009 

• 

P09000092838 

FILED 

Novem ber 12, 2009 

Sec. Of State 

jshivers 
State of Florida 

Department of State 

I certify from the records of this office that TWIN AIR CALYPSO 

LIMITED, INC. is a corporation organized under the laws of the State 

of Florida, filed on November 12, 2009, effective November 10,2009. 

The document number of this corporation is P09000092838. 

I further certify that said corporation has paid all fees due this office 

through December 31, 2011, that its most recent annual report was filed 

on February 7, 2011, and its status is active. 

I further certify that said corporation has not filed Articles of 

Dissolution. 

Given under my hand and the Great Seal of 

Florida, at Tallahassee, the Capital, this the 

Eighth day of July, 2011 

Secretary 

~C5 of State 

Authentication ID: 100209755031-070811-P09000092838 

To authenticate this certificate,visit the following site, enter this 

ID, and then follow the instructions displayed. 

https:llefile.sunbiz.orglcertauthver.html 
• 

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Twin Air Calypso Limited, Inc. 

FAR Part 135 Organizational Chart 

·PRE$IDENT .. . . . . 

.. CLAYTON·;). GAMBER 

DIRJ;CfOR OF:Q~EQAjIONS . 

. ARTHUR I..STEVENS0N 

···cAiEF:PILQl' .. 

[U¢14N(tHORNA 

Clayton I. Gamber is the President and CEO of AVSTAR Aviation Group, a public company and 

the parent company of Twin Air Calypso Limited, Inc. Mr. Gamber is a United States citizen and 

holds less than 10 percent of the AVSTAR Aviation Group stock and has no Twin Air Calypso 

stock. He holds the position of President and Director of Maintenance for Twin Air Calypso 

Limited, Inc. and has also served as Director of Operations since August 2010 till April 2011. 

Arthur L. Stevenson has been with Twin Air Calypso Limited, Inc since January of 2011 where he 

has served as a line pilot and the Director of Operations. Mr. Stevenson is a South African 

citizen. He does not hold any stock in AVSTAR Aviation Group nor Twin Air Calypso Limited Inc. 

Luciano Horna has been with Twin Air Calypso Limited, Inc. since February 2011 where has has 

served as a line pilot and Chief Pilot. Mr. Horna is a United States citizen. He does not hold any 

stock in AVSTAR Aviation Group nor Twin Air Calypso Limited Inc. 

Key Personnel Statement: Clayton Gamber, Arthur Stevenson and Luciano Horna meet the 

qualifications set forth in sections 119.65 and 119.67 of the Fedreral Aviation Regulations (14 

CFR 119.65 and 119.67. 
• 

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• 

TWIN AIR CALYPSO LIMITED, INC. 

AIR CARRIER OPERATIONS MANUAL 

SECTION FOUR 

PERSONNEL 

4.3 PRESIDENT-DUTIES AND RESPONSIBILITIES 

The President is responsible for the overall safety and efficiency of the company. 

The President is responsible for the selection and employment of all employees and subcontractors of the company. He is responsible for the appointment of staff that meets the 

qualifications of FAR Part 119 and 135. 

The President is responsible for maintaining the continuity of operational control for all of 

Twin Air Calypso Limited, Inc. operations. 

The President is responsible for operating the company in a manner that will not allow the 

operational control of flights to be transferred, or perceived to be transferred, to any other 

entity or person. 

The President is responsible for the company's compliance with FAA/DOT mandated 

drug and alcohol testing programs. 

The President must be knowledgeable of the entire content of the Twin Air Calypso 

Limited, Inc. "operations Manual", "Operations Specifications", and all applicable Federal 

Aviation Regulations. 

The President may delegate functions to properly trained and qualified personnel but will 

retain responsibility for their actions. 

REVISION: 2011-1 DATE:7/1/2011 

PAGE 4-4 
• PRESIDENT 

• 

• 

Clayton I. Gamber - BSc, Industrial Engineering and Operations Research - A TP - MEL - A&P 

Duties and Responsibilities 

The President is responsible for the overall safety and efficiency of the company. 

The President is responsible for the selection and employment of all employees and subcontractors of the company. He is responsible for the appointment of staff that meets the 

qualifications of FAR Part 119 and 135. 

The President is responsible for maintaining the continuity of operational control for all of Twin 

Air Calypso Limited, Inc. operations. 

The President is responsible for operating the company in a manner that will not allow the 

operational control of flights to be transferred, or perceived to be transferred, to any other entity 

or person. 

The President is responsible for the company's compliance with FAAJDOT mandated drug and 

alcohol testing programs. 

The President must be knowledgeable of the entire content of the Twin Air Calypso Limited, Inc. 

"operations Manual", "Operations Specifications", and all applicable Federal Aviation 

RegUlations. 

The President may delegate functions to properly trained and qualified personnel but will 

retain responsibility for their actions. 

Experience 1970-1996 Red Aircraft Service, Inc Ft Lauderdale, FI 

Director of Maintenance 

FAA Part 145 Repair Station 

1996-2001 Miami Aviation Corporation Miami, Florida 

President and Director of Maintenance 

FAA Part 145 Repair Station 

Accountable Manager 

European Aviation Safety Agency EASA-145 Repair Station 

2002-2007 Miami Aviation Maintenance Company 

Ft Lauderdale, Florida 

President Director of Maintenance 

FAA Part 145 Repair Station 
• 

Education 

• 

• 

Accountable Manager 

EASA-145 Repair Station 

European Aviation Safety Agency 

1978-2011 Twin Air Calypso Ft. Lauderdale, Florida 

President and Director of Operations 

FAA Part 135 Air Carrier 

1968-1971 Virginia Tech Blacksburg,VA 

Bachelor of Science Industrial Engineering and Operations Research 

FAA Airline Transport Pilot License 

Over 8000 flight hours 

DC-3 Type Rating 

FAA Airframe and Powerplant License 
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Stock Ownership 

Twin Air Calypso Limited Inc. is a wholly owned subsidiary of Avstar Aviation 

Group Inc. All Twin Air Calypso Inc. voting stock rests with Avstar Aviation Group 

Inc. 

Clayton Gamber has zero voting stock in Twin Air Calypso Limited Inc. 

Clayton Gamber has 4.2 percent voting stock in Avstar Aviation Group Inc. 

Clayton Gamber is a United States citizen . 
• 

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TWIN AIR CALYPSO LIMITED, INC. 

AIR CARRIER OPERATIONS MANUAL 

4.4 DIRECTOR OF OPERATIONS 

SECTION FOUR 

PERSONNEL 

The Director of Operations reports to the President and must be knowledgeable of the 

contents of the Operations Manual, Operations Specifications, and federal Aviation 

Regulations pertaining to the company's activities. 

The Director of Operations advises the Chief Pilot of any changes in Ops Specs or 

company policies that may effect his or other pilot's duties. 

Ensures that all flight operations are conducted safely and in compliance with all Federal 

Aviation regulations, Operations Specifications, and Company policies. 

Has the authority to act for Twin Air Calypso Limited, Inc., including the signing of FAA 

correspondence and operations specifications. 

Ensures that all aircraft are properly equipped for applicable operations. 

Prepares and maintains proficiency records and pilot files. 

Communicates with the FAA Flight Standards District Office and the National 

Transportation Safety Board. Files all required reports and documents. 

Devises revisions to this manual as needed, submits the proposed revisions to the 

FSDO, receives confirmation from the FSDO that the revisions are acceptable, and then 

distributes those revisions to all manual holders. 

Keeps the aircraft copies of this Operations Manual current. 

Coordinates with the director of Maintenance the timely correction of mechanical 

irregularities and discrepancies. 

Manages the MEL program, 

These duties and responsibilities may be delegated to other personnel, but the 

responsibility remains with the Director of Operations. 

REVISION: 2011-1 DATE:7/1/2011 

PAGE 4-5 
• 

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REfUME 

Arthur Stevenson 

1601 SW 2200 Avenue 

Ft Lauderdale, Florida 33312 

Phone:- 954-661-1518 

arthurglobaldo@yahoo.com 

Objective: Chief Pilot Director of Operations or line pilot for an innovative and service 

oriented company. Using my knowledge and skills to provide an on-time, 

safe and secure flight experience. 

Skills and Experience: 

• Airline Transport Pilot 11,070 hrs 142 aircraft types, 1st class physical 

and current part 135 IFR 135.293, 297, 299 line check, part135 

company ground and flight instructor, check airman. 

• Visionary, with ability to motivate, enthuse and see projects to 

completion. 

• Problem solver with more than 11 years experience as point of 

contact with FAA, overcoming bureaucratic roadblocks and 

developing solutions for flight operations and aircraft certification 

• Excellent interpersonal skills and customer relations expert 

• Above average writing skills, developed many operations, 

maintenance and crew training manuals. Book author. 

• Ground and flight planningllegal requirementslflight followinglflight 

conductlflight safety/crew debriefings 

• Maintenance coordination while developing and maintaining vendor 

relationships 

• Hiring and firing of flight, ground and office staff. 

• Annual operating budget projections / assessment of demands and 

acquisition of additional aircraft. 

• Director of Operations and Line Pilot, part 135 instructor and check 

airman, Gulfstream Connection Inc. 11/06 till present. 

• Director of Operations Global Sky Aircharter dba Trauma Star, 

developed only single pilot IFR part 135 helicopter EMS operation in 

Page 1 of 3 Arthur Stevenson Dir of Ops Resume 
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REfUME 

state of Florida for entire Florida Keys (Monroe County Sheriff Office) 

03/05 thru 06/07. Wrote operations, maintenance and first responder 

manuals. Arranged flight training program and certification of the 

latest HEMS/HEMES operation protocol. Check Airman (ground). 

Successfully managed flight staff consisting of former military, coast 

guard and law enforcement pilots into certification. 

Founder, Sky limo Aircharter Corporation 08-06-1999 thru 12-11-

2002. Developed company from a two aircraft single and Multiengine 

operation to a nine aircraft, piston and turboprop fleet. Supervised 

proving runs while adding a 19-passenger seat Sweringen Metro 

aircraft, also acquired ICAO call sign. Managed staff of 32. 

Founder Global Sky Aircharter Corporation Director of Operations and 

line pilot, 10-31-02 thru 07/07. Carried out name and certificate 

number change while adding additional aircrcraft, acquired ICAO call 

sign. 

Wings Air Charter - Chief Pilot - 3-03 thru Jan 04 Carried out Manual 

re-write. 

Island Air Charters - line Pilot, rewrote general operations manual 

and 135 compliance statement, acquired ICAO call sign, developed 

Bahamas security program. Extensive experience dealing and 

cooperating with the FAA has built up an excellent working and 

personal relationships allowing for expedited and personal service. 

18 years experience as US government Jaw enforcement contractor 

leading 52 overseas aviation and marine operations. 

Complete restoration and modification of Piper Vagabond. 

Management and Flight Experience 

Director of Operations, Gulfstream Connection Inc. 

Director of Operations Global Sky Aircharter dba Trauma Star. 

Two presidential flights, Uruguay and Haiti. 

Owned, operated and managed Global Sky Aircharter Corporation, 

a FAA part 135 air charter certificate. 

Initiated a start-up FAA part 135 air charter certificate Sky Limo 

Aircharter Corporation Founder of Start-up - developed and 

managed 9 aircraft fleet, including turbo prop and 10 or more SW-3 

Metro passenger aircraft, managed proving flights, also line pilot 

and general manager. 

Partnership purchase of Caribe Air Cargo FAA part 135 certificate. 

Page 2 of 3 Arthur Stevenson Dir of Ops Resume 
• 

Education 

Languages 

.. 

REfUME 

Directed name and certificate number change to Global Sky 

Aircharter Corporation expanding areas of operation while flying as 

line pilot and carrying out the duties of General Manager and 

Director of Operations. 

Wings Air Charter - Chief Pilot. World Jet Charters - Dir of 

Operations. 

Skybus Inc (FAA part 91) SIC Falcon Jet and British Aerospace 

HS125. 

Area of Operations ranges from the entire Continental United 

States, the Caribbean, Central and South America, including Cuba, 

Africa and Europe. Additional experience undertaking trans 

Atlantic Flight Operations to Europe, Central and South America, 

also extensive African operations. 

• Telecommunications Engineering 

• English, Afrikaans & knowledge of Spanish 

Page 3 of 3 Arthur Stevenson Dir of Ops Resume 
• 

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Stock Ownership 

Twin Air Calypso Limited Inc. is a wholly owned subsidiary of Avstar Aviation 

Group Inc. All Twin Air Calypso Inc. voting stock rests with Avstar Aviation Group 

Inc. 

Arthur Stevenson has zero voting stock in Twin Air Calypso Limited Inc. 

Arthur Stevenson has zero percent voting stock in Avstar Aviation Group Inc. 

Arthur Stevenson is a South African citizen and a legal United States resident. 
• 

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• 

TWIN AIR CAL VPSO LIMITED, INC. 

AIR CARRIER OPERATIONS MANUAL 

SECTION FOUR 

PERSONNEL 

-.----.--~----.----.---.. -

4.5 CHIEF PILOT 

The Chief Pilot reports to the Director of Operations and must be knowledgeable of the 

contents of the Operations Manual, Operations Specifications, and federal Aviation 

Regulations pertaining to the company's activities. 

The Chief Pilot supervises flight crew personnel and advises them of any changes in 

Ops Specs or company policies that may affect their duties. 

The Chief Pilot conducts or supervises all training activities of flight crew personnel and 

advises appropriate personnel of their status for flight operations 

Disseminates information to all crewmembers pertaining to routes, airports, NOTAMS, 

NAVAl OS, regulations, checklists, and aircraft manuals. 

Maintains proficiency as Pilot-In Command. 

Ensures that all flight crew personnel are certified and supervised according to the 

requirements specified in the Federal Aviation regulations. 

REVISION:2011-1 DATE:7/1/2011 

PAGE 4-6 
• 

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• 

RESUME 

Major Accomplishments: 

Luciano Horna 

February 2011 

As an Airline Transport Pilot, carrying out domestic and international scheduled and ad-hoc 

charter flights with passengers and cargo. Areas of operation include the Caribbean, Central and 

South America. Duties encompass supervising initial training and qualification, routine pilot 

proficiency checks and pilot evaluations. Total Flight Time 28,000 hours 

Professional Experience: 

Twin Air Calypso Limited Inc. - Jan 2011- present - Line Pilot, Chief Pilot 

Airborne Inc. 2010 Line Pilot, Chief Pilot Cessna 402C - Fort Lauderdale, Florida 

Florida Coastal Line Pilot Cessna 402C. - Fort Lauderdale, Florida 

Chardan Aero Corporation - Fort Lauderdale, Florida - June 2008 to February 2010 - Co-pilot 

Is operationally responsible to the Pilot in Command on all flights. Performs all flight duties as 

assigned by the PIC. 

Island Express Airlines - Fort Lauderdale, Florida - February 1999 thru June 2008 - Director of 

Operations, Chief Pilot, Cessna 402C. 

Responsible for the operation, training and record keeping of the flight department. 

Responsible for the safe operation of all aircraft operated by the company ensuring proper 

maintenance and record keeping. 

New World Aviation - Miami, Florida, Chief Pilot - 1988 thru 1998 

Responsible for adequately training flight crews to ensure pilots are available for all flight needs. 

Diverlandia, Aviones de Panama. Chiricana de Aviacion - Panama, Panama - 1975 thru 1985 

Chief Pilot and Flight School Chief Instructor 

Responsible for the scheduling and efficient utilization of the aircraft 

Total Flight Hours to date: Total Time: 29,850.0 hours 

MEL 21,000.0 hours 

SEL 8,850.0 hours 

Instrument 4.620.0 hours 
• 

• 

• 

Stock Ownership 

Twin Air Calypso Limited Inc. is a wholly owned subsidiary of Avstar Aviation 

Group Inc. All Twin Air Calypso Inc. voting stock rests with Avstar Aviation Group 

Inc. 

Luciano Horna has zero voting stock in Twin Air Calypso Limited Inc. 

Luciano Horna has zero percent voting stock in Avstar Aviation Group Inc. 

Luciano Horna is a United States citizen . 
• 

• 

• 

lWlN AIR CALYPSO LIMITED, INC. 

AIR CARRIER OPERATIONS MANUAL 

SECTION FOUR 

PERSONNEL 

DIRECTOR OF MAINTENANCE 

.~ .... _" .. _---

The Director of Maintenance must be knowledgeable on the aircraft's maintenance manual, 

inspection program, and airworthiness requirements. Additional he must be knowledgeable 

of applicable FAR's, the Twin Air Calypso Limited, Inc. Operations Manual, and the programs that 

Twin Air Calypso Limited, Inc. utilizes. The Director of Maintenance is responsible for 

communication with appropriate FAA personnel. 

Is responsible for selecting appropriate agencies or personnel for the performance of 

maintenance on Twin Air Calypso Limited, Inc. aircraft. Responsibilities for the selection include 

but are not limited to determining proper FAA certification for the work antiCipated, a DOT 

approved anti-drug plan is in effect, and scheduling availability. 

Reviews the reliability of Twin Air Calypso Limited, Inc. issued airworthiness directives and 

information to determine applicability to the Twin Air Calypso Limited, Inc. fleet of aircraft. 

Reviews the reliability of the Twin Air Calypso Limited, Inc. fleet and any new maintenance 

requirements that may be mandated by either the manufacturer of FAA and makes 

recommendations to the Director of Operations for further action. 

Incorporates required changes into any Twin Air Calypso Limited, Inc. AAIP . 

Reviews the records of Twin Air Calypso Limited, Inc. aircraft to forecast and schedule work to be 

performed, and informs the scheduling personnel of aircraft availability. 

Coordinates the progress of work while the maintenance activity is being performed and 

informs appropriated personnel of the current status and estimated down time of each 

aircraft. 

Reviews the documentation provided for the work performed, ascertains that it is appropriately 

entered into the aircraft permanent records, and the aircraft is returned to service. 

Maintains a listing by aircraft of all repetitive airworthiness directives and their compliance. 

Submit SDR form (on-line at FAA website) and MIS reports (form on page 8-12) as required. 

The Director of Maintenance may delegate functions to other personnel but retains the 

responsibility . 

------------_._._._---_ .. 

REVISION: ORIGINAL DATE: 11/20/2009 

PAGE 4-7 
• Clayton 1. Gamber - BSc, Industrial Engineering and Operations Resear h - A TP - MEL - A&P 

Duties and Responsibilities 

The President is responsible for the overall safety and efficiency fthe company. 

The President is responsible for the selection and employment 0 all employees and subcontractors of the company. He is responsible for the appointme of staff that meets the 

qualifications of FAR Part 119 and 135. , 

The President is responsible for maintaining the continuity of optrational control for all of Twin 

Air Calypso Limited, Inc. operations. i 

i 

The President is responsible for operating the company in a manfer that will not allow the 

operational control of flights to be transferred, or perceived to b4 transferred, to any other entity 

or person. I 

i 

The President is responsible for the company's compliance with rAAIDOT mandated drug and 

alcohol testing programs. 

The President must be knowledgeable of the entire content ofthl Twin Air Calypso Limited, Inc. 

"operations Manual", "Operations Specifications", and all appli~able Federal Aviation 

Regulations. I 

I 

The President may delegate functions to properly trained and ~ualified personnel but will 

retain responsibility for their actions. I 

I 

Experience 

I 

1970-1996 Red Aircraft Service, Inc Ft Lauder4ale, Fl 

Director of Maintenance 

FAA Part 145 Repair Station 

1996-2001 Miami Aviation Corporation 

President and Director of Maintenance 

FAA Part 145 Repair Station 

I 

I 

I 

I 

Miamij Florida 

! 

I 

Accountable Manager I 

European Aviation Safety Agency EASA-145 Re~' air Station 

2002-2007 Miami Aviation Maintenance Company 

Ft Lauderdale, Florida 

President Director of Maintenance 

FAA Part 145 Repair Station 
Education 

• 

Accountable Manager 

EASA-145 Repair Station 

European Aviation Safety Agency 

i 

1978-2011 Twin Air Calypso Ft. Lauderdale, FIOri~a 

President and Director of Operations 

FAA Part 135 Air Carrier 

1968-1971 Virginia Tech I Blacksburg,V A 

Bachelor of Science Industrial Engineering and ~rations Research 

FAA Airline Transport Pilot License 

Over 8000 flight hours 

DC-3 Type Rating 

FAA Airframe and Powerplant License 

I 

I 
• 

• 

• 

Stock Ownership 

Twin Air Calypso Limited fnc. is a wholly owned subsidiary of Avstar Aviation 

Group Inc. All Twin Air Calypso Inc. voting stock rests with Avstar Aviation Group 

Inc. 

Clayton Gamber has zero voting stock in Twin Air Calypso Limited Inc. 

Clayton Gamber has 4.2 percent voting stock in Avstar Aviation Group Inc. 

Clayton Gamber is a United States citizen . 
• 

• 

• 

OFFICE OF THE SECRETARY OF STATE 

OF THE STATE OF COLORADO 

CERTIFICATE 

I, Scott Gessler, as the Secretary of State of the State of Colorado, hereby certify that, according to the 

records of this office, 

A vStar Aviation Group, Inc. 

is a Corporation fonned or registered on 0311111997 under the law of Colorado, has complied with all 

applicable requirements of this office, and is in good standing with this office. This entity has been 

assigned entity identification number 19971037266. 

This certificate reflects facts established or disclosed by documents delivered to this office on paper 

through 07/19/2011 that have been posted, and by documents delivered to this office electronically 

through 07/20/2011 @ 12:22:55. 

I have affixed hereto the Great Seal of the State of Colorado and duly generated, executed, authenticated, 

issued, delivered and communicated this official certificate at Denver, Colorado on 0712012011 @ 

12:22:55 pursuant to and in accordance with applicable law. This certificate is assigned Confirmation 

Number 7998588 . 

Secretary of State of the State of Colorado 

*********************************************EndofCertificate******************************************** 

Notice: A certificate issued electronically from the Colorado Secretary orState 's Web site is fully and immediately valid and effective. However, 

as an option, the issuance and validity of a certificate obtained electronically may be established by visiting the Certificate Corifirmation Page of 

the Secretary of State's Web sile, hllp:llwww.sos.state.co.uslbizICertificateSearchCriteria.do entering the certificate's confirmation number 

displayed on the certificate, and following the instructions displayed. Confirming the issuance or a certificate is merely optional and is not 

necessary to the valid and effective issuance ora certificate. For more iriformation, visit our Web site, htlp:llwww.sos.state.co.us!c1ick Business 

Center and select "Frequently Asked Questions. " 

CERT_ GS _D Revised 0812012008 
• 

• 

• 

Document processing fee 

If document is filed on paper 

If document is filed electronically 

Fees & fonns/cover sheets 

are subject to change. 

To file electronically, access instructions 

for this form/cover sheet and other 

infonnation or print copies of filed 

documents, visit www.sos.state.co.us 

and select Business Center. 

$125.00 

$ 25.00 

Colorado Secretary of State 

Date and Time: 09/17/2009 09:05 AM 

ID Number: 19971037266 

Document number: 20091490943 

Amount Paid: $25.00 

Paper documents must be typewritten or machine printed. ABOVE SPACE FOR OFFICE USE ONl.. Y 

Amended and Restated Articles of Incorporation 

filed pursuant to §7-90-301, et seq. and §7-11O-107 and §7-90-304.5 of the Colorado Revised Statutes (C.R.S.) 

ID number: 19971037266 

1. Entity name: PANGEA PETROLEUM CORP. 

(If changing the name of the corporation, indicate name BEFORE the name change) 

2. New Entity name: 

(if applicable) 

3. Use of Restricted Words (ifanyofthese 

terms are contained in an entity name, true 

name of an entity, trade name or trademark 

stated in this document, mark the applicable 

box): 

4. If the corporation's period of duration 

as amended is less than perpetual, state 

the date on which the period of duration 

expires: 

OR 

AvStar Aviation Group, Inc. 

D "bank" or "trust" or any derivative thereof 

D "credit union" D "savings and loan" 

o "insurance", "casualty", "mutual", or "surety" 

(mm/ddlyyyy) 

If the corporation's period of duration as amended is perpetual, mark this box: [{] 

5. The amended and restated constituent filed document is attached. 

6. If the amendment provides for an exchange, reclassification or cancellation of issued shares, the attachment 

states the provisions for implementing the amendment. 

7. (Optional) Delayed effective date: 

Notice: 

09/21/200901 :00 AM 

(mm/dd/yyyy ) 

Causing this document to be delivered to the secretary of state for filing shall constitute the affinnation or 

acknowledgment of each individual causing such delivery, under penalties of perjury, that the document is the 

individual's act and deed, or that the individual in good faith believes the document is the act and deed of the 

person on whose behalf the individual is causing the document to be delivered for filing, taken in confonnity 

with the requirements of part 3 of article 90 of title 7, C.R.S., the constituent documents, and the organic 

statutes, and that the individual in good faith believes the facts stated in the document are true and the 

document complies with the requirements of that Part, the constituent documents, and the organic statutes. 

Page 10f2 Rev. 11116/2005 
• 

• 

• 

This perjury notice applies to each individual who causes this document to be delivered to the secretary of 

state, whether or not such individual is named in the document as one who has caused it to be delivered. 

8. Name(s) and addressees) of the 

individual(s) causing the document 

to be delivered for filing: Heinrich Randall Wayne -----~------- ---=-.-.--- (Lasl) (First) (Middle) (Suffix) 

8 Greenway Plaza, Suite 818 

(Street name and number or Post Office Box ir!formation) 

Houston TX 77046 

(City) (State) (Postal/Zip Code) 

Umted States 

(Province - if applicable) (Country- ifnot US) 

(The document need nol state the true name and address of more than one individual. However, if you wish to state the name and address 

of any additional individuals causing the documenlto be delivered for filing, mark this box 0 and include an attachment staling the 

name and address of such individuals.) 

Disclaimer: 

This form, and any related instructions, are not intended to provide legal, business or tax advice, and are 

offered as a public service without representation or warranty. While this form is believed to satisfy minimum 

legal requirements as of its revision date, compliance with applicable law, as the same may be amended from 

time to time, remains the responsibility of the user of this form. Questions should be addressed to the user's 

attorney . 

AMDRST]C Page 20f2 Rev. 11/16/2005 
• 

• 

• 

\"Ull-'Ul(lUVU~. 

ARTICLE III 

The total number of shares of stock that the Corporation shall have authority to issue is 

Five Hundred Ten Million (510,000,000) consisting of Five Hundred Million (500,000,000) 

shares of Common Stock, par value $0.001 per share ("Common Stock"), and Ten Million 

(10,000,000) shares of Preferred Stock, par value $0.001 per share ("Preferred Stock"). 

Shares of Preferred Stock of the Corporation may be issued from time to time in one or 

more series, each of which shall have such distinctive designation or title as shall be determined 

by the Board of Directors of the Corporation ("Board of Directors") prior to the issuance of any 

shares thereof. Preferred Stock shall have such voting powers, full or limited, or no voting 

powers, and such preferences and relative, p'articipating, optional or other special rights and such 

qualifications, limitations or restrictions thereof, as shall be stated in such resolution or 

resolutions providing for the issue of such class or series of Preferred Stock as maybe adopted 

from time to time by the Board of Directors prior to the issuance of any shares thereof. The 

number of authorized shares of Preferred Stock may be increased or decreased (but not below the 

number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of 

the voting power of all the then outstanding shares of the capital stock of the corporation entitled 

to vote generally in the election of the Directors (the "Voting Stock"), voting together as a single 
• 

• 

• 

In furtherance and not in limitation of the powers conferred by statute, the Board of 

Directors is expressly authorized: 

(a) To manage and govern the corporation by majority vote of members 

present at any regular or special meeting at which a quorum shall be 

present unless the act of a greater number is required by the laws of the 

state of incorporation, these Articles of Incorporation, or the Bylaws of the 

Corporation. 

(b) To make, alter, or amend the Bylaws of the corporation at any regular or 

special meeting. 

(c) To fix the amount to be reserved as working capital over and above its 

capital stock paid in. 

(d) To authorize and cause to be executed mortgages and liens upon the real 

and personal property of this corporation. 

(e) To designate one or more committees, each committee to consist oftwo or 

2 
• 

• 

• 

least a majority of the shares entitled to vote thereon at a meeting called for that purpose, or when 

authorized or ratified by the written consent of the shareholders. 

The corporation shall revoke voluntary dissolution proceedings upon the affirmative vote 

of the shareholders of at least a majority of the shares entitled to vote at a meeting called for that 

purpose, or when authorized or ratified by the written consent of the shareholders. 

ARTICLE VI 

The following provisions are inserted for the management of the business and for the 

conduct of the affairs of the corporation, and the same are in furtherance of and not in limitation 

of the powers conferred by law. 

No contract or other transactions of the corporation with any other person, firm or 

corporation, or in which this corporation is interested, shall be affected or invalidated by (a) the fact 

that anyone or more of the directors or officers of this corporation is interested in or is a director or 

officer of such other firm or corporation; or (b) the fact that any director or officer of this 

corporation, individually or jointly with others, may be a party to or may be interested in any such 

contract or transaction, so long as the contract or transaction is authorized, approved or ratified at a 

3 
• 

• 

• 

(a) The corporation shall indemnify any person who was or is a party, or is threatened to 

be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, 

criminal, administrative or investigative (other than an action by or in the right of the corporation), 

by reason of the fact that he, or she, is or was a director, officer, employee or agent of the 

corporation, or is or was serving at the request of the corporation as a director, officer, employee or 

agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses 

(including attorneys' fees), judgments, fines and amounts paid in settlement, actually and reasonably 

incurred by him, or her,in connection with such action, suit or proceeding, if he, or she, acted in 

good faith and in a manner he, or she, reasonably believed to be in, or not opposed to, the best 

interests of the corporation, and, with respect to any criminal action or proceeding, had no 

reasonable cause to believe his conduct was unlawful. The tennination of any action, suit or 

proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its 

equivalent, shall not of itself create a presumption that the person did not act in good faith and in a 

manner he reasonably believed to be in, or not opposed to, the best interests of the corporation and, 

with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct 

was unlawful. 

4 
• 

• 

• 

independent legal counsel in a written opinion, or (iii) by the affirmative vote of the holders of a 

majority of the shares of stock entitled to vote and represented at a meeting called for such purpose. 

(e) Expenses (including attorneys' fees) incurred in defending a civil or criminal action, 

suit or proceeding may be paid by the corporation in advance of the final disposition of such action, 

suit or proceeding, as authorized in Section (d) of this Article, upon receipt of an undertaking by or 

on behalf of the director, officer, employee or agent to repay such amount, unless it shall ultimately 

be determined that he is entitled to be indemnified by the corporation as authorized in this Article. 

(f) The Board of Directors may exercise the corporation's power to purchase and 

maintain insurance on behalf of any person who is or was a director, officer, employee or agent of 

the corporation, or is or was serving at the request of the corporation as a director, officer, employee 

or agent of another corporation, partnership, joint venture, trust or other enterprise, against any 

liability asserted against him and incurred by him in any such capacity, or arising out of his status as 

such, whether or not the corporation would have the power to indemnify him against such liability 

under this Article. 

(g) The indemnification provided by this Article shall not be deemed exclusive of any 

other rights to which those seeking indemnification may be entitled under these Articles of 

5 
• 

• 

• 

corporation, as a consequence of such compromise or arrangement, the said compromise or 

arrangement andlor the said reorganization shall, if sanctioned by the court to which the said 

application has been made, be binding upon all the creditors or class of creditors, andlor on all the 

shareholders or class of shareholders of said corporation, as the case may be, and also on said 

corporation. 

ARTICLE X 

No shareholder in the corporation shall have the preemptive right to subscribe to any or all 

additional issues of stock andlor other securities of any or all classes ofthis corporation or securities 

convertible into stock or carrying stock purchase warrants, options or privileges. 

ARTICLE XI 

Meetings of shareholders may be held at any time and place as the Bylaws shall provide. At 

all meetings of the shareholders, one-third of all shares entitled to vote shall constitute a quorum. 

6 
• 

• 

• 

damages for breach of fiduciary duty as a director, except for any matter in respect of which such 

director shall be liable under Section 7-5-114 of the Colorado Revised Statutes, or any amendment 

thereto or successor provision thereto and except for any matter in respect of which such director 

shall be liable by reason that he (i) has breached his duty of loyalty to the corporation or its 

shareholders, (ii) has not acted in good faith or, in failing to act, has not acted in good faith, (iii) has 

acted in a manner involving intentional misconduct or a knowing violation of law or, in failing to 

act, has acted in a manner involving intentional misconduct or a knowing violation of law, or (iv) 

has derived an improper personal benefit. Neither the amendment nor repeal of this Article XV, nor 

the adoption of any provision of the Articles of Incorporation inconsistent with this Article XV, 

shall eliminate or reduce the effect of this Article XV in respect of any matter occurring, or any 

cause of action, suit or claim that, but for this Article XV would accrue or arise prior to such 

amendment, repeal or adoption of an inconsistent Provisi/on) 

Signed on August 19, 2009 BY:_-tT--~_I/=--}-_~Jr--________ _ 

~ussell IvyrPresident 

7 
• 

UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

!Ylt:.1-~ a e44ued tp. 

TWIN AIR CALYPSO SERVICES, INC. 

~~~~M 

1620 SE 75th A,'enue 

Pembroke Pines, Florida 33023 

~n ;1'n~:,,? tkt t:~. ~~ ~, Ub d/ 1fe.YWC,(d 

aH.:th de 'MfUU?ce'WI.£dJ. ~ ute. :7;~4ta.1 ~~ ~.e:~y~j. 

M!~:n, ~ de ~ ~ ~ ~ ~, and t:d. 

• ~JCP.a!~cyu~o:#z..~ REPAIRSTATION 

• 

t:Q-t::d de ~~?,? ~., AIRFRAME 

RADIO (l1l06/1995) 

LIMITED POWERPLANT (03/1811976) 

LIMITED RADIO (1111912001) 

LIMITED INSTRUMENT (10101/2003) 

• 

37~ c€?t£~de" u-n/e.J4. c.a-?u..e-w. ~~ c.-1<. ~ 

~II c~t~:n.ae m. #<'£ I NDEFINITEL Y 

Re-issucd MA Y 03,2010 

~ Utffkatt.not ~lt. AND ANY MAJOR CHAHGE IN THE BASIC FACft.ITIES, OR IN 11ft! LOCATION llffRI:OF. 

SlW.L BE IMMEDIATE!. Y REPORTED TO THE APPROPRIATE REGlONAl. OFFICE OF THE FEOERAI. AVIATION ADMINISTRATION 

AJlY il/t.l'ralioll 0.( this ct!'rt~riclltt' is pUlIisllllb/c by Il fint' of noll'xcullillg 51,000, or imlm!iolltllrll' Iwt t'xcu,Ii"S J !fI'IIN, or //(1tll 

FAA Form 80004 (1-671 SUPERSEDES FAA FORM 390. 
• Twin Air Calypso limited Inc. 

All persons of substantial interest 

Name Date of Birth Citizenship Address 

1. Henry Shulle 03/08/1963 United States 13100 South Ridge Circle 

VIP - Secretary - Director Leander 

Texas, 78641 

2. Clayton Gamber Jr. 12/23/1949 United States 5330 SW 87th Avenue, 

President - Director Apartment 112 

Miami, 

Florida 33178 

• 

• 
EDGARbrume 

• 

AVSTAR AVIATION GROUP, INC. 

FORM 10-KlA 

(Amended Annual Report) 

• Filed 04/21/11 for the Period Ending 12/31/10 

• 

Address 

Telephone 

CIK 

Symbol 

SIC Code 

Industry 

Sector 

Fiscal Year 

3600 GESSNER 

STE 220 

HOUSTON, TX 77063 

2817107103 

0001077319 

AAVG 

4581 - Airports, Flying Fields, and Airport Terminal Services 

Misc. Transportation 

Transportation 

12/31 

P()werecl Bv EDGARbnIine 

http:/twww.edgar-online.com 

© Copyright 2011, EDGAR Online, Inc. All Rights Reserved. 

Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. 
• 

• 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549 

FORM to-KIA 

Amendment No.1 

(MARK ONE) 

IX] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE 

SECURITIES EXCHANGE ACT OF 1934 

For the fiscal year ended December 31, 2010 

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE 

SECURITIES EXCHANGE ACT OF 1934 

For the transition period from to 

Commission file number 0-30503 

A VST AR AVIATION GROUP, INC. 

(Exact name of registrant as specified in its charter) 

Colorado 76-0635938 

(State or other jurisdiction (I.R.S. Employer Identification No.) 

of incoroporation or organization) 

3600 Gessner, Suite 220, Houston, Texas 

(Address of principal executive offices) 

77063 

(Zip Code) 

Isuer's telephone number: (713) 965-7582 

Securities registered under Section 12(b) of the Exchange Act: NONE 

Securities registered under Section 12(g) of the Exchange Act: 

Common Stock. par value $.001 per share 

(Title of Class) 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [] No [X] 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [] No 

[X] 

• 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act 

of 1934 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 [ ] No [X] 

•

te by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data 

" quired to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or 

L .ilch shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ] 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained 

herein, and will not 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-K or any amendment to this Form 10-K. [] 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting 

company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange 

Act. 

Large accelerated filer [ ] Accelerated filer [ ] 

Nan-accelerated filer [ ] Smaller reporting company [X] 

(Do not check if smaller reporting company) 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes [] No [X] 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at 

which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the 

registrant's most recently computed second fiscal quarter: $385,781. 

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:208,270,834 as of 

April 14,2011 

• 1 ~e . 

DOCUMENTS INCORPORATED BY REFERENCE 

• 
EXPLANATORY NOTE 

This Amendment to Form 10-K is being filed solely to include (a) our auditor's letter for our 2010 fmancial statements that was inadvertently 

omitted from the Form 10-K, (b) revised fmancial statements to correct certain incorrect figures that were inadvertently included in the 

•

cial statements contained in the Form 10-K, and (c) revised footnotes to the financial statements to include additional footnote information 

as inadvertently omitted from the footnotes to the financial statements contained in the Form 10-K. Other than for the preceding, no other 

(,,_ Jges are being made to the Form 10-K. 

CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS 

This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as 

amended, and Section 2lE ofthe Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our 

current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, 

uncertainties and assumptions about us that may cause our 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 such forward-looking statements. In 

some cases, you can identifY forward-looking statements by terminology such as "may," "will," "should," "could," "would," "expect," "plan," 

"anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause or contribute 

to such a discrepancy include, but are not limited to, those described in this Annual Report on Form 1O-K and in our other Securities and 

Exchange Commission filings. 

PART I 

ITEM 1. BUSINESS. 

GENERAL DEVELOPMENT OF BUSINESS 

Our company, AvStar Aviation Group, Inc., is a Colorado corporation that was organized on March 11, 1997. For a number of years, we 

conducted business as an independent energy company focused on exploration and development of oil and natural gas reserves under the name 

"Pangea Petroleum Corp." For reasons given hereinafter, in early 2009 we adopted a significant change in our corporate direction. We decided 

to focus our efforts on acquiring aviation-related businesses and developing these businesses to their commercial potential. 

• INITIAL A VIA TION-RELATED BUSINESS 

On February 20,2009, we entered into our first aviation-related business when we acquired all of the outstanding common stock in San Diego 

Airmotive ("SDA"), which (through its predecessor entity) had been providing maintenance, repair and overhaul ("MRO") services in 

California since 1987. In connection with this acquisition, we issued to the prior owner of SDA 1.0 million shares of our newly-created series 

A preferred stock. These shares of preferred stock eventually converted into 50.0 million shares of our common stock, which constituted in the 

aggregate over 90% of outstanding shares of our common stock immediately after the conversion. Furthermore, in connection with the 

acquisition ofSDA, we expanded our Board of Directors and elected a new slate of officers. We eventually changed our corporate name from 

"Pangea Petroleum Corp." to "AvStar Aviation Group, Inc." to reflect our new business focus, and effected a one-for-I 00 reverse split of our 

common stock to improve our capital structure. 

On March 31, 2010, the Hangar Sublease dated May 1,2007 between SDA and French Valley Aviation, Inc. ("French Valley") terminated. The 

original term of this Hangar Sublease had already expired, and the parties had continued the sublease on a month-to-month basis. French 

Valley decided that it did not want to continue this arrangement beyond March 31, 2010, and accordingly this arrangement terminated on such 

date. We decided not to seek alternative space to continue SDA's services at French Valley Airport in Southern California, but continued such 

services in Florida, per the proposed transaction described immediately below. We intend to maintain in force and effect SDA's licenses and 

permits so that we can return to provide services in California in the future, if it elects to do so . 

• 
FORMATION OF MRO SUBSIDIARY 

On April 8, 2010, (a) Twin Air Calypso Services, Inc., a newly-formed, indirect wholly-owned Florida subsidiary (the IfMRO Subsidiarylf) of 

ours, and (b) Miami Aviation Maintenance Co. (lfMAMCOlf) executed a bill of sale whereby MAMCO assigned to the MRO Subsidiary certain 

o.assets used to provide aviation MRO services. At the time of this transaction, MAMCO was owned by Clayton I. Gamber, Kenneth W. 

J ·on and Robin V. Gamber. Mr. Gamber became a director and the President of the MRO Subsidiary after the completion of the 

t, J ction. The assigned assets included general shop equipment. No liabilities were assumed in connection with the transaction. These assets 

were assigned in consideration of 750,000 shares of our common stock, which had an aggregate market value of $20,250 based on the closing 

price of our common stock on the date of the transaction. In connection with the organization of the MRO Subsidiary, SDA had previously 

assigned all of its assets to the MRO Subsidiary in consideration of all of the shares of the common stock of the MRO Subsidiary to be 

outstanding for the foreseeable future. The MRO Subsidiary was formed to provide aviation MRO services, as well as airline support services. 

The services are offered out of North Perry Field in Pembroke Pines, Florida in Broward County. The impetus for the transaction was the then 

recent termination ofSDA's Hangar Sublease at French Valley Airport in Southern California and the perception that the continuation of the 

business historically conducted by SDA in Florida was advisable in view of the perceived greater strength of the local Florida economy relative 

to the local California market in which SDA had historically provided services. 

The consideration for the acquisition of the interests in the MAMCO assets (including the number of shares issued to MAMCO) was 

determined in arms-length negotiations between our management and MAMCO's management. The factors addressed by us in negotiating this 

consideration included our need to [md a location to continue the business historically conducted by SDA; the perceived greater strength of the 

local Florida economy relative to the local California market in which SDA has historically provided services; the future prospects for a 

business using the combined assets of MAMCO and SDA in Florida in terms of revenues and earnings; an assessment of the ability of a 

particular member ofMAMCO's management who would serve as the MRO Subsidiary's president to contribute to the management of the 

MRO Subsidiary's business; anticipated ability of our business to grow and take advantage of new business opportunities using the combined 

assets ofMAMCO and SDA in Florida; and the restricted nature of the stock consideration issued in connection with the acquisition. 

Prior to the consummation of the acquisition of the MAMCO assets, we had explored with the shareholders of MAMCO our acquisition of all 

of the outstanding stock in MAMCO and a brother-sister corporation. In this connection, we had entered into a stock purchase agreement with 

the shareholders ofMAMCO in 2007 to acquire the outstanding stock in MAMCO and the brother-sister corporation. This transaction did not 

close timely, and the stock purchase agreement expired . 

• 

• 
ACQUISITION OF FAA AIR CARRIER 

On August 19,2010, we completed a transaction in which we acquired all of the outstanding stock in Twin Air Calypso Limited, Inc. ("TAC 

Limited"). T AC Limited operates a charter air service from South Florida to the Bahamas with access to eight aircraft:s. We acquired TAC 

. ed in exchange for 18.0 million shares of our common stock and some cash payments in the approximate aggregate amount of $275,000 

aid in a small number of future installments in the fairly near future. Because of amounts previously paid, we were not required to make 

~ ,payment at closing. The 18.0 million shares of our common stock had an aggregate market value of $270,000 based on the closing price 

of our common stock on the date of the transaction. The stock in T AC Limited was acquired from Clayton 1. Gamber, Kenneth W. Langston 

and Robin V. Gamber. The acquired assets consisted primarily of the rights ofTAC Limited under an aircraft lease agreement covering seven 

aircraft and an FAA Certified Part 135 permit. The only liabilities in effect assumed in connection with the acquisition were the liabilities and 

obligations of the lessee under the preceding aircraft lease agreement. 

The agreement governing the acquisition ofTAC Limited (the "Stock Agreement") contained a non-competition agreement, prohibiting the 

stockholders of T AC Limited from competing with us. This non-competition agreement lasts for a period of five years commencing on the date 

of closing of the acquisition. The Stock Agreement also contained fairly customary representations, warranties and indemnifications, as well as 

other general terms and conditions typically governing stock sales and purchases. 

In connection with the acquisition of T AC Limited and in order to effectuate a verbal agreement and understanding that they had made some 

time ago, we and the stockholders ofTAC Limited entered into certain option agreements (the "Option Agreements"). The Option Agreements 

permit us to repurchase a portion of the 18.0 million shares of common stock issued in connection with the acquisition for an aggregate 

purchase price of $1. 75 million. The number of shares depends on the per-share "Market Value" of our common stock, which is basically the 

20-day trading average prior to the time of exercise. The portion of such 18.0 million shares that may be repurchased generally equals the 

quotient obtained by dividing $1.25 million by the Market Value; provided, however, that the stockholders ofTAC Limited may retain a 

maximum of7.353 million shares and a minimum of 625,000 shares. Moreover, the Option Agreements require us to repurchase the portion of 

shares determined in accordance with the preceding whenever we complete a private placement of our securities for an aggregate purchase 

price of at least $3.0 million. 

Prior to the consummation of the acquisition of T AC Limited, Clayton 1. Gamber, a stockholder in, and the chief executive officer of, TAC 

Limited, was also serving as a director and the President of the MRO Subsidiary. Other than for the foregoing, there were no material 

relationships between T AC Limited, and its former officers, directors, affiliates, associates or shareholders, and us, and our officers, directors, 

affiliates, associates or shareholders . 

• 

• 
The consideration for the acquisition of all of the outstanding stock in T AC Limited assets (including the number of shares issued to the 

stockholders ofTAC Limited) was detennined in anns-length negotiations between our management and TAC Limited's stockholders. The 

factors addressed by us in negotiating this consideration included the financial history of charter flights from South Florida to the Bahamas; the 

future prospects for the business ofTAC Limited in tenns of revenues and earnings; the synergies that might be realized between the 

businesses of TAC Limited and the MRO Subsidiary; an assessment of the ability of a particular member of T AC Limited's management who 

•

erve as our Chief Executive Officer and President to contribute to the management of our business; anticipated ability of our business 

\ and expand using TAC Limited as a base for future acquisitions; and the restricted nature of the stock consideration issued in 

connection with the acquisition . 

• 

• 
Our Business 

General 

•

Siness plan is to acquire, consolidate and grow businesses in the general aviation industry. Due to acquisitions, we are now in two 

r n sectors, the maintenance, repair and overhaul ("MRO") of aircraft providing products and services for the general aviation sector, and 

11,~ .;harter air service business. Weare primarily focusing on stabilizing our two existing businesses in view of the difficult economy over the 

past few years. Once these are stabilized, our business plan will be to acquire, consolidate and grow businesses in the general aviation industry, 

as capital is available to us. We have adjusted our future goals and will place our primary focus on the acquisition of a portfolio of fixed base 

operations ("FBOs") at airports that support light jet traffic along with turbine powered and piston engine aircraft. We believe that now is the 

time to invest in this sector. A combination of the economic trends, valuation levels, and technological innovations has impacted this sector, 

making our prospects of growing a portfolio of FBO businesses compelling. These facilities will be supported by our existing MRO business. 

We believe that after September 11,2001, both private air transportation and the number of aircraft owned by both individuals and business 

dramatically increased, although such increase has been tempered in recent years due to unfavorable economic conditions. Each of these 

sectors, in addition to routine maintenance, has mandated a number of inspections by the FAA that are commonly included in traditional MRO 

services. 

MAINTENANCE, REPAIR AND OVERHAUL BUSINESS 

Twin Air Calypso Services, Inc., our indirect, wholly-owned Florida subsidiary (the "MRO Subsidiary") conducts our business of providing 

maintenance, repair and overhaul ("MRO") products and services for aircraft in the general aviation sector. The MRO Subsidiary was the result 

of the consolidation on April 8, 20 I 0 of our subsidiary San Diego Airmotive ("SDA") and Miami Aviation Maintenance Co. ("MAMCO"). 

SDA (through its predecessor entity) had been conducting MRO services in California since 1987, while MAMCO commenced its operations 

in 2001 and continued them until the time of the consolidation, but for an approximately 18-month period during which MAMCO ceased 

providing services. The services are being offered out of North Perry Airport in Pembroke Pines, Florida in Broward County. 

The MRO Subsidiary has the following features and provides the following services: 

* FAA Certified Part 145 Repair Station including avionics 

* Major & Minor Airframe Repairs on all aircraft 12,500 pounds and less 

* Annual Inspections 

*euterized Aircraft Weight and Balance 

ne Maintenance, Repair & Overhaul including custom installations and refurbishment. 

* rtITcraft Modifications and STC kit installations 

* Routine Maintenancellnsurance and Accident Repairs 

* Composite Airframe Repairs 

* Pre-purchase Inspections/Log Book Analysis 

* Oxygen Service/Nitrogen Service 

* Service Parts 

* lanitrol/Southwind Heater Service/AD compliance inspections 

* DyelFluorescent Penetrant Inspection Service 

* Aircraft Exterior & Interior Detailing Services 

* ACES Dynamic propeller balancing service 

* Avionics installations and repairs 

* Minor paint repairs and detailing 

* Instrument Panel upgrades and Component installs 

* Engine Scanners and Monitor installation 

* EGT/CHT calibration 

• 
After the April move of our MRO business from southern California to the Florida market, we "jump started" our transition by establishing an 

exclusive maintenance, fueling and ground support contract with the Charter Air Subsidiary, a company discussed in the next section that we 

eventually acquired in August 2010. We are in the process of developing new customer relationships, and thus far we have had limited success . 

• 

RO Subsidiary recently commenced a focused, direct marketing program of its services and is starting to see an increased interest from 

·al customers. Moreover, the MRO Subsidiary currently has the only avionics shop at North Perry Field, providing services for the 

l . nic systems on aircraft that provide communications, navigation and guidance, display systems, flight management systems, sensors and 

indicators, weather radars, electrical systems, and various onboard computers. Finally, the MRO Subsidiary has recently entered into lease 

negotiations regarding a fuel truck, pursuant to which the MRO Subsidiary could offer to sell fuel to third parties. This truck will also provide 

fuel to the Charter Air Subsidiary (discussed immediately below) at discounted rates, enabling the other subsidiary to realize fuel cost savings. 

All training regarding the operation of the fuel truck and the fire inspector's inspection have been completed, and commencement of sales by 

this truck is contingent solely upon the completion of negotiations regarding its lease to the MRO Subsidiary. We have no assurance that we 

will be able to complete the lease of the fuel truck and commence sales of fuel with it. 

AIR CARRIER SERVICE BUSINESS 

Twin Air Calypso Limited, Inc., our wholly-owned Florida subsidiary (the "Air Carrier Subsidiary"), conducts our air carrier service business. 

We acquired the Air Carrier Subsidiary on August 19,2010. The Air Carrier Subsidiary operates a air carrier service from South Florida to the 

Bahamas with eight leased aircraft. It has regular flights of both passengers and cargo to two destinations on the island of Abaco and three 

destinations on the island of Eleuthera. The Air Carrier Subsidiary also flies to other destinations in the Bahamas on a chartered basis. 

Currently, only three of the Air Carrier Subsidiary'S leased aircraft are flying, as five of these aircraft are currently down for refurbishing. We 

expect that a fourth aircraft will be in the air by the end of April 2011. However, we will need to raise about $350,000 to complete the 

refurbishing of our remaining aircraft. Our goal is to raise this amount, and complete the refurbishing, so that all aircraft will be operational by 

the fall of 20 11. Although we are now seeking to raise this amount, we have no assurance that we will be able to do so. We are striving to get 

all eight aircraft operational in order to fill the voids in the market caused by the challenging economy in the market. This challenging market 

has caused some of our competitors to suspend or cease flying, creating a void in certain routes that we believe we can fill in a manner positive 

to our financial performance. The additional aircraft will allow the West Palm Beach market to be opened and new destination in the Bahamas 

started. 

We lease seven aircraft pursuant to an aircraft lease agreement (the "Lease Agreement") with Aircraft Charters, LLC, and entity controlled by 

Kenneth W. Langston, who was a equity owner ofMAMCO and TAC Limited. The start date on the Lease Agreement was February 2010, and 

_ ase Agreement has a term of five years, subject to earlier termination upon lessee default. Our monthly rental rate per aircraft is $2,150. 

craft are being leased on an "AS IS, WHERE IS" basis. The Lease Agreement contains customary representations and warranties on our 

1- ustomary affirmative and negative covenants on our part, and customary events of default that entitle the lessor to terminate the Lease 

Agreement. We are leasing our eighth aircraft for a one-year term that will end on June 30, 2011 if the term is not extended. Our monthly rental 

rate is $2,150, plus reserves of$35.00 per hour. We have an option to purchase this aircraft at a price of$315,000, with a credit of$I,OOO.OO 

per each month of lease payments made . 

• 
Since August 19,2010, a review of existing acquisition plans has been completed, a new "affiliate" program has been developed, and strategies 

for obtaining airframe and avionic dealerships have been implemented. Several companies have been identified as acquisition targets for the 

first quarter of 20 11. The "affiliate" program will expand our capabilities while decreasing operating costs for the Air Carrier Subsidiary. The c. Air Carrier Subsidiary recently moved to a new facility on the Ft Lauderdale-Hollywood International Airport that will lower rental and fuel 

while providing a more efficient operation and better amenities for the passengers. 

LOCATION 

The business of our MRO Subsidiary is located at North Perry Field in Hollywood, Florida in Broward County, Florida. The MRO operates 

from this facility pursuant to a written lease agreement for a renewable period of one year. The sub-leased hangar for the MRO business of our 

MRO Subsidiary is located on a lease of 10.3 acres and has parking area for over 80 aircraft. The floor space is approximately 5,000 square feet 

with an additional 350 square feet of avionic test benches and parts storage. The hangar is of concrete, block, and steel construction with a clear 

span opening of 100' by 20'. The aircraft population on North Perry Field is approximately 275. There are two other FAA Part 145 Certified 

Repair Stations on North Perry Field; one specializes in rotor-wing aircraft only, and the other is a factory-owned support facility for Socata 

Aircraft. We are the only FAA approved Part 145 airframe, engine, and avionics repair facility catering to the local and transient general 

aviation fixed-wing owners. Additionally, we can provide avionics installations for the manufacturers we currently represent, A VIDYNE, NAT 

Avionics, and PS Engineering. We expect to apply soon for additional dealerships, such as GARMIN. We will also be providing AVGAS 

fueling services for based and transient customers. There are approximately 20 aircraft currently based at our facility. With the availability of 

fuel the number of based aircraft should increase quickly and significantly. There is only one other full-service and one self-service fueling 

facility on North Perry Field. 

COMPETITION 

AIR CARRIER SERVICES 

The airline industry is highly competitive, primarily due to the effects of the Airline Deregulation Act of 1978. The Transportation Act 

substantially eliminated government authority to regulate domestic routes and fares, and has increased the ability of airlines to compete with 

respect to destination, flight frequencies and fares. Most of our competitors have a combination of larger customer bases, greater brand 

recognition in other airline markets and significantly greater fmancial and marketing resources than we do. Competition is generally based on 

price, schedule, quality of service and convenience. Either aggressive marketing tactics or a prolonged fare war initiated by these competitors 

could impact our limited fmancial resources and adversely affect our ability to compete in these markets. Vigorous price competition exists in 

_ ine industry, with competitors frequently offering reduced discount fares and other promotions to stimulate traffic during weaker travel 

! , generate cash flow or increase relative market share in selected markets. The introduction of widely available, deeply discounted fares 

b) ...ny significant airline could result in lower yields for the entire industry and could have a material adverse effect on our fmancial condition 

and operating results. The commencement of or increase in service on our routes by existing or new carriers could negatively impact our 

operating results. Where we seek to expand our service by adding routes or frequency, competing airlines may respond with intense price and 

schedule competition. In addition, when other airlines seek to establish a presence over new routes, they may engage in significant price 

discounting. Because of our size and financial resources relative to some of the major airlines, we are less able to absorb losses from these 

activities than many of our competitors. We cannot assure anyone that competitive pressures will not materially adversely affect our business, 

financial conditions or results of operations or that we will ever attain any competitive position within our market. 

MRO SERVICES 

The market for our MRO services is extremely competitive, and we face competition from a number of sources. Our competitors include 

aircraft service companies and other companies providing MRO services. We believe that our experienced staff, facility amenities, scope of 

services, availability of parts, and focus on customer service increase the competitiveness of the MRO Subsidiary. Most of our competitors, 

however, have substantially greater financial and other resources than are available to us. We cannot assure anyone that competitive pressures 

will not materially adversely affect our business, financial conditions or results of operations or that we will ever attain any competitive 

position within our market. 

• 
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GOVERNMENT REGULATION 

The Air Carrier Subsidiary is operating pursuant to a Federal Aviation Administration FAR Part 135 certificate. The MRO Subsidiary is 

providing services pursuant to a Federal Aviation Administration FAR Part 145 certificate. Although not now active from a business 

~.tive, our California subsidiary, SDA, holds a Federal Aviation Administration FAR Part 145 certificate, which we will maintain in the 

~e decide to re-enter the California market. 

The aviation industry in the United States is highly regulated by the Federal Aviation Administration (the "FAA") and the Department of 

Transportation (the "DOT"). Specifically, our charter air service business is heavily regulated by these agencies. Moreover, our operations must 

comply with numerous security and environmental laws, ordinances and regulations. We believe that our operations are in material compliance 

with all of these laws, rules and regulations. The remainder of this section briefly discusses some of the regulations to which we are subject. 

FAA REGULATION 

The FAA regulates aircraft safety and flight operations generally, including equipment, ground facilities, maintenance, repair, flight dispatch, 

training, communications, the carriage of hazardous materials and other matters affecting air safety. FAA regulations are designed to ensure 

that all aircraft and aircraft equipment are continuously maintained in proper condition to ensure safe operation of the aircraft. The FAA issues 

operating certificates and operations specifications to carriers that possess the technical competence to conduct air carrier operations. In 

addition, the FAA issues certificates of airworthiness to each aircraft that meets the requirements for aircraft design and maintenance. We 

believe the Air Carrier Subsidiary holds all airworthiness and other FAA certificates and authorities required for the conduct of its business and 

the operation of its aircraft, although the FAA has the power to suspend, modify or revoke such certificates for cause, or to impose civil 

penalties for any failure to comply with federal law and FAA regulations. 

In compliance with FAA regulations, the Air Carrier Subsidiary's aircraft are subject to various levels of scheduled maintenance or "checks" 

and periodically go through phased overhauls. All aircraft must be maintained under a continuous condition-monitoring program and must 

periodically undergo thorough inspection and maintenance. The inspection, maintenance and repair procedures for the various types of aircraft 

and aircraft equipment are prescribed by regulatory authorities and can be performed only by certified repair facilities using certified 

technicians. The FAA monitors closely our aircraft maintenance efforts. It also conducts safety checks on a regular basis. 

The FAA has the authority to issue maintenance directives and other mandatory orders relating to, among other things, the inspection and 

maintenance of aircraft and the replacement of aircraft structures, components and parts, based on the age of the aircraft and other factors. If the 

•

ere to determine that the aircraft structures or components are not adequate, it could order operators to take certain actions, including but 

1 ited to, grounding aircraft, reducing cargo loads, strengthening any structure or component shown to be inadequate, or making other 

modifications to the aircraft. New mandatory directives could also be issued requiring the Air Carrier Subsidiary to inspect and replace aircraft 

components based on their age or condition. In the future, the Air Carrier Subsidiary could be required to comply at considerable cost with new 

mandatory directives as part of its aircraft maintenance program . 

• 
DOT REGULATION 

The DOT maintains authority over certain aspects of domestic air transportation, such as requiring a minimum level of insurance and the 

requirement that a person be "fit" to hold a certificate to engage in air transportation. In addition, the DOT continues to regulate many aspects 

•

rnational aviation, including the award of international routes. In reliance on exemptions, we currently do not maintain any DOT 

'ates. However, we are in the process of applying for a Part 298 certificate for commuter air carrier operations, which will enable us to 

c, .tlct an unlimited number of weekly flights to specified locations. Prior to issuing such certificates, and periodically thereafter, the DOT 

examines a company's managerial competence, financial resources and plans, compliance, disposition and citizenship in order to determine 

whether the carrier is fit, willing and able to engage in the transportation services it has proposed to undertake. The DOT has the authority to 

impose civil penalties, or to modify, suspend or revoke for cause certificates issued by it, including failure to comply with federal law or DOT 

regulations. No certificate confers proprietary rights on the holder, and the DOT may impose conditions or restrictions on such certificates. We 

believe we possess all necessary DOT-issued certificates and authorities to conduct our current operations. 

SECURITY 

The Air Carrier Subsidiary is required to comply with various security procedures of FAA and TSA regulations and directives outlined in the 

federal Domestic Security Integration Program. The airline subsidiaries' customers are required to inform them in writing of the nature and 

composition of any freight which is classified as "Dangerous Goods" by the DOT. In addition, we conduct background checks on employees of 

the Air Carrier Subsidiary, restrict access to aircraft, inspect aircraft for suspicious persons or cargo, and inspect all dangerous goods. 

Notwithstanding these procedures, the Air Carrier Subsidiary could unknowingly transport contraband or undeclared hazardous materials for 

customers, which could result in fmes and penalties and possible damage to the aircraft. 

SAFETY AND ENVIRONMENTAL 

Our operations are also subject to a variety of worker and community safety laws. The Occupational Safety and Health Act ("OSHA") 

mandates general requirements for safe workplaces for all employees. Specific safety standards have been adopted for workplaces engaged in 

the treatment, disposal and storage of hazardous waste. We are also subject to various environmental laws. Under current federal, state and 

local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of 

removal or clean-up of hazardous or toxic substances on, under, or in such property. Such laws often impose liability whether or not the owner 

or operator knew of, or was responsible ,for, the presence of such hazardous or toxic substances. In addition, the presence of contamination 

from hazardous or toxic substances, or the failure to properly clean up such contaminated property, may adversely affect the ability of the 

~ of the property to use such property as collateral for a loan or to sell such property. Environmental laws also may impose restrictions on 

t~er in which a property may be used or transferred or in which businesses may be operated and may impose remediation or compliance 

c,-,_.,; . 

• 
OTHER REGULATIONS 

Various regulatory authorities have jurisdiction over significant aspects of our business, and new laws or regulations or changes in existing 

laws or regulations or the interpretations thereof could have a material adverse effect on our operations. In addition to the above, other laws and 

r.tions to which we are subject, and the agencies responsible for compliance with such laws and regulations, include the following: 

oj. '- .C). Customs and Border Protection inspects cargo imported from foreign countries; 

* We must comply with U.S. Citizenship and Immigration Services regulations regarding passengers and the citizenship of our employees; 

* We must comply with wage, work conditions and other regulations of the Department of Labor regarding our employees. 

PRODUCT LIABILITY 

Our MRO business exposes us to possible claims for personal injury or death that may result from the failure of an aircraft or an aircraft part 

repaired or maintained by us or from our negligence in the repair or maintenance of an aircraft or aircraft part. We do not now carry any 

product liability insurance on our MRO business, which we believe is a common practice among smaller shops with the level of third party 

business that we are now undertaking. We expect that, if the volume of our MRO business and funds are available therefor, we will explore the 

possibility of procuring product liability insurance on our MRO business. However, we have no assurance that we will be able to procure or 

maintain such insurance at an acceptable cost, or that such insurance will fully protect us from all claims. Any liability of this type that is not 

covered by adequate insurance could materially adversely affect our business and operations. 

EMPLOYEES 

As of April 14, 2011, we had eight full-time and four part-time employees. 

OUR HISTORICAL BUSINESS 

Our historical business involved the exploration and production of oil and gas. The importance of this segment of business to our business as a 

whole is greatly diminished. Management is currently exploring options for the future of this business, which may include a sale of it or a spinoff of it to shareholders, so that management can devote its entire attention to our business. 

I.IA. RISK FACTORS. 

An investment in shares of our common stock is highly speculative and involves a high degree of risk. You should carefully consider all of the 

risks discussed below, as well as the other information contained in this Annual Report. If any of the following risks develop into actual events, 

our business, financial condition or results of operations could be materially adversely affected and the trading price of our common stock 

could decline . 

• 
RISKS RELATING TO OUR COMPANY 

WE HAVE LIMITED HISTORY OF OPERA nONS AND WE CANNOT ASSURE YOU THAT OUR BUSINESS MODEL WILL BE 

SUCCESSFUL IN THE FUTURE OR THAT OUR OPERA nONS WILL BE PROFITABLE. 

,euged our business focus near the end of February 2009 when we acquired the operations of San Diego Airmotive (ltSDA"). Although 

Sur\. (through its predecessor entity) has been providing maintenance, repair and overhaul (ltMROlt) services in California since 1987, we are 

fairly new to this business. During 2010, we acquired two additional businesses, one offering MRO services and the other offering air carrier 

services. Investors have a limited history of operations upon which to evaluate our business. There can be no assurances whatsoever that we 

will be able to successfully implement our business model, identify and close acquisitions of operating companies, penetrate our target markets 

or attain a wide following for our services. We are subject to all the risks inherent in an early stage enterprise which has experienced rapid 

growth through acquisitions and our prospects must be considered in light of the numerous risks, expenses, delays, problems and difficulties 

frequently encountered in those businesses . 

• 

• 
WE HAVE HAD A HISTORY OF LOSSES, AND WE HAVE A WORKING CAPITAL DEFICIT AND AN ACCUMULATED 

DEFICIT. WE MAY NEVER REPORT PROFITABLE OPERATIONS. 

We have incurred net losses since our inception, and we had a working capital deficit of approximately $847,956, an accumulated deficit of 

a.imatelY $21,950,097, and our total liabilities exceeded our total assets by $1,140,772, all as of December 31, 2010. There can be no 

~ ce that we will become profitable. Our business has had a history of losses as well. Unless we are able to raise additional capital to fund 

o. J erating expenses, pay our obligations as they become due and implement our business model, we may not be able to continue as a going 

concern, and we could be forced to discontinue some or all of our operations if our capital resources become exhausted by losses or 

expenditures. 

WE MAYBE UNABLE TO OBTAIN ADDITIONAL CAPITAL WHEN NECESSARY OR ON TERMS THAT ARE ACCEPTABLE TO 

US, IF AT ALL. IF WE ARE SUCCESSFUL IN RAISING ADDITIONAL CAPITAL AS NECESSARY, THESE ADDITIONAL 

FINANCING TRANSACTIONS WILL BE DILUTIVE TO OUR SHAREHOLDERS AND COULD INCREASE OUR INTEREST 

EXPENSE. 

We expect that we will need significant additional cash resources to operate and expand our business in the future. Our future capital 

requirements will depend on many factors, including our ability to significantly increase our revenues, maintain or reduce our operating 

expenses and execute our business and strategic plans as currently conceived. If we raise additional funds through the issuance of equity or 

convertible debt securities, the percentage ownership of our company held by existing shareholders will be reduced and those shareholders may 

experience significant dilution. In addition, new securities may contain certain rights, preferences or privileges that are senior to those of our 

common stock. There can be no assurance that acceptable financing can be obtained on suitable terms, if at all. If we are unable to raise 

additional working capital as needed, our ability to continue our current business will be adversely affected and may be forced to curtail some 

or all of our operations. 

OUR AUDITOR HAS GIVEN TO US A "GOING CONCERN" QUALIFICATION, WHICH QUESTIONS OUR ABILITY TO 

CONTINUE AS A GOING CONCERN WITHOUT ADDITIONAL FINANCING. 

Our independent certified public accountant has added an emphasis paragraph to its report on our consolidated financial statements for the year 

ended December 31, 2010 regarding our ability to continue as a going concern. Key to this determination is our historical losses of $1,106,664 

in 2010 and $988,990 in 2009. Management plans to try to fund our company partially through the raising of capital through the sale of our 

equity instruments or issuance of debt, although there can be no assurance of success in this regard. Moreover, management plans on additional 

re.s from operations from our business as a source to finance our company, although there can be no assurance of that these revenues will 

J lize at the expected rates. There can be no assurance that we will be successful in achieving these objectives, becoming profitable or 

clJ ..... muing our business without either a temporary interruption or a permanent cessation . 

• 
THE GEOGRAPHICAL CONCENTRATION OF OUR MRO OPERATIONS AND OUR FLIGHTS COULD MATERIALLY 

HARM OUR BUSINESS. 

Our MRO services are provided from a single facility located in south Florida. If this facility was damaged or our access to it was limited (for 

_Ie, due to security concerns, severe weather or natural disaster), our operations and financial conditions could be adversely affected . 

• pect that the growth of our charter air services will focus on, adding flights to and from our primary base of operations in south Florida 

and the Bahamas. Our business would be harmed by any circumstances causing a reduction in air transportation to or from these two locations, 

such as adverse changes in local economic conditions, negative public perceptions of these destinations, a change in customer preferences in 

these areas or significant price increases linked to increases in airport access costs and fees imposed on passengers. 

THE PROFITABILITY OF OUR OPERATIONS IS INFLUENCED BY ECONOMIC CONDITIONS AS DEMAND FOR LEISURE 

TRA VEL DIMINISHES DURING ECONOMIC DOWNTURNS. 

The profitability of our operations is influenced by the condition of the United States. A substantial portion of our charter air business is leisure 

travel. Because leisure travel is discretionary, we expect to experience somewhat weaker financial results during economic downturns. 

OUR QUARTERLY RESULTS ARE SIGNIFICANTLY AFFECTED BY MANY FACTORS, AND OUR 

RESULTS OF OPERATIONS FOR ANY ONE QUARTER ARE NOT NECESSARILY INDICATIVE OF OUR ANNUAL RESULTS OF 

OPERATIONS. 

Our operations are subject to a variety of factors that frequently cause considerable volatility in our earnings, including: 

* Changes in fuel, security and insurance costs; 

* Seasonal variations in demand, affecting revenues earned; and 

* Increases in personnel, marketing and other operating expenses. 

In addition, seasonal variations in air traffic and expenditures affect our operating results from quarter to quarter. Historically, we have 

experienced reduced demand during the fourth quarter, as demand for leisure airline services during this period is lower relative to other times 

o.ear. Given our high proportion of fixed costs, seasonality can affect our profitability from quarter to quarter. Several of our areas of 

ons experience bad weather conditions in the winter, causing increased costs associated with deicing aircraft, canceled flights and 

accommodating displaced passengers. Due to the factors described above, our results of operations in anyone quarter are not necessarily 

indicative of our annual results of operations . 

• 
IF WE GROW OUR BUSINESS AS PLANNED, WE MAY NOT BE ABLE TO MANAGE PROPERLY OUR GROWTH, AND WE 

EXPECT OPERATING EXPENSES TO INCREASE, WHICH MAY IMPEDE OUR ABILITY TO ACHIEVE PROFITABILITY. 

Ifwe are successful in growing our business as we plan, our operations may expand rapidly and significantly. Any rapid growth could place a 

s.· cant strain on our management, operational and fmancial resources. In order to manage the growth of our operations, we will be required 

t ove and expand existing operations; to implement new operational, financial and inventory systems, procedures and controls, including 

i •. _ vement of our financial and other internal management systems; and to train, manage and expand our employee base. Ifwe are unable to 

manage growth effectively, our business, results of operations and financial condition will be materially adversely affected. In addition, if we 

are successful in growing our business as we plan, we expect operating expenses to increase, and as a result, we will need to generate increased 

quarterly revenue to achieve and maintain profitability. In particular, as we grow our business, we would incur additional costs and expenses 

related to: 

* The expansion of our sales force and distribution channels 

* The expansion of our product and services offerings 

* Development of relationships with strategic business partners 

* The expansion of management and infrastructure 

* Brand development, marketing and other promotional activities. 

These additional costs and expenses could delay our ability to achieve profitability. 

FUTURE ACQUISITIONS COULD EXPOSE US TO NUMEROUS RISKS. 

As part of our business strategy, we may acquire complementary companies, products, services or technologies. Any acquisition would be 

accompanied by the risks commonly encountered in a transaction. Such risks include the following: 

* Difficulty of assimilating the operations and personnel of the acquired companies 

* Potential disruption of our ongoing business 

* Inability of management to maximize our financial and strategic position through the successful incorporation of acquired businesses and 

technologies 

* Additional expenses associated with amortization of acquired intangible assets 

* Maintenance of uniform standards, controls, procedures and policies 

*.·rment of relationships with employees, customers, vendors and advertisers as a result of any integration of new management personnel 

- tial unknown liabilities associated with acquired businesses 

There can be no assurance that we would be successful in overcoming these risks or any other problems encountered in connection with such 

acquisitions. Due to all of the foregoing, any future acquisition may materially and adversely affect our business, results of operations, financial 

condition and cash flows. Although we do not expect to use cash for acquisitions, we may be required to obtain additional financing if we 

choose to use cash in the future. There can be no assurance that such fmancing will be available on acceptable terms. In addition, if we issue 

stock to complete any future acquisitions, existing stockholders will experience further ownership dilution. 

RISKS RELATING TO OUR INDUSTRY 

THE OPERA nON OF AIRCRAFT DEPENDS ON THE PRICE AND AVAILABILITY OF FUEL, AND CONTINUED PERIODS OF 

HISTORICALLY HIGH FUEL COSTS MAY MATERIALLY ADVERSELY AFFECT OUR OPERATING RESULTS. 

Fuel is a major expense for all aircraft. Historically, fuel costs have been subject to wide price fluctuations based on supply and demand, and 

geopolitical issues, such as political disruptions or wars involving oil-producing countries, changes in government policy, changes in fuel 

production capacity, environmental concerns and other unpredictable events may result in fuel supply shortages and additional fuel price 

increases in the future. Fuel availability is also subject to periods of market surplus and shortage and is affected by demand for both home 

heating oil and gasoline. Because of the effect of these events on the price and availability of fuel, we cannot predict the future cost and 

availability of fuel with any degree of certainty. In the event of a fuel supply shortage, higher fuel prices or the curtailment of operations could 

result. We cannot assure you that we would be able to offset any increases in the price of fuel by higher fares. We have not entered into any 

fuel hedging arrangements to reduce our exposure to fluctuations in fuel prices. As a result, we have significant exposure to the risk of 

increases in the price of fuel due to inadequate fuel supplies or otherwise, and any such increase could have a material adverse effect on our 

financial condition and results of operations . 

• 
OUR BUSINESS COULD BE ADVERSELY AFFECTED BY A FAILURE TO ATTRACT AND RETAIN QUALIFIED PILOTS 

AND OTHER OPERA nONS PERSONNEL. 

Our ability to attract and retain qualified pilots, mechanics, and other highly trained personnel will be an important factor in determining our 

nasuccess. The market for experienced and highly trained personnel is extremely competitive. Ifwe are unable to attract and retain such 

r~, flight operations may be disrupted, which could have a negative effect on our operating and financial results. 

AIRCRAFT OWNERSHIP AND OPERA nON IS VERY CAPITAL-INTENSIVE. 

The airline business is highly capital-intensive. Although we currently lease our aircraft, we expect that in the future we may need to make 

significant capital investments to acquire the aircraft, ground and cargo handling equipment, and an inventory of spare parts necessary for the 

operation of our business. Our aircraft are older and tend to require more maintenance than newer aircraft. Older aircraft tend to be subject to 

more Airworthiness Directives ("ADs") promulgated by the FAA than newer aircraft, and are required to undergo extensive structural 

inspections on an ongoing basis. An AD requiring significant modifications to our aircraft type could require us to invest significant additional 

funds in the aircraft or ground our fleet pending compliance with the AD. We cannot predict when and whether new ADs covering our aircraft 

will be promulgated, and there can be no assurance that compliance with ADs will not adversely affect tour business, fmancial condition or 

results of operations. 

WE COULD FACE SHORTAGES OF ADDITIONAL AIRCRAFT AND AIRCRAFT PARTS. 

Although we are currently focused on stabilizing our existing businesses, once we have successfully completed this task (if at all), our growth 

will depend in large part upon our ability to acquire additional aircraft to increase our lift capacity. Our strategy will most likely be the 

acquisition of used aircraft. The market for used aircraft can be affected by a number of factors, including increased demand from other 

carriers, which could limit the number of available aircraft and increase the acquisition cost thereof. Moreover, certain parts and components 

required for the operation of our existing aircraft may not be readily available in the marketplace when we require them, and our inability to 

obtain necessary components or parts in a timely manner could adversely affect our operations. 

OUR INDUSTRY IS HEA VIL Y REGULATED AND WE MAY FAIL TO COMPLY WITH ALL SUCH REGULATIONS. ANY FAILURE 

BY US COULD REQUIRE US TO INCUR SUBSTANTIAL COSTS IN COMPLYING WITH SUCH REGULATION, AND WE COULD 

BE FORCED TO CEASE OUR OPERATIONS. 

'. subject to a wide range of governmental regulation by U.S. Federal, state and foreign governmental agencies, including: 

* U.S. Department of Transportation; 

* U.S. Federal Aviation Administration (the "FAA"); 

* U.S. National Mediation Board, with respect to labor matters; 

* U.S. Federal Communications Commission, with respect to use of radio facilities; 

* U.S. Environmental Protection Agency and similar state and local authorities, primarily with respect to the use, discharge and disposal of 

hazardous materials at or from our maintenance and airport facilities; and 

* Similar authorities in foreign countries with respect to our international and charter operations . 

• 
Compliance with all applicable laws and regulations could result in significant costs. Although we believe that we are presently in material 

compliance with applicable laws and regulations, there is no assurance that we are correct or that our operations will be deemed to be in 

compliance in the future. Additional laws, regulations and charges have been proposed, from time to time, that could significantly increase the 

cost of our operations or reduce overall revenue. To the extent that new regulations are adopted, we will be required to conform our activities in 

o~to comply with such regulations. We may be required to incur substantial costs in order to comply. We cannot provide assurance that 

I regulations enacted in the future will not adversely affect our revenue and future profitability. Moreover, we may not be able to comply 

, ent laws and regulations, or any future laws and regulations. Our failure to comply with applicable laws and regulations could subject 

us to civil remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions which could have a material and 

adverse effect on our business operations and finances and we could be forced to cease our operations. 

WE ARE SUBJECT TO ENVIRONMENTAL LAWS THAT COULD IMPOSE SIGNIFICANT COSTS ON US AND THE FAILURE TO 

COMPLY WITH SUCH LAWS COULD SUBJECT US TO SANCTIONS AND MATERIAL FINES AND EXPENSES. 

We are subject to a variety of federal, state and local environmental laws and regulations, including those governing the discharge of pollutants 

into the air or water, the management and disposal of hazardous substances and wastes and the responsibility to investigate and clean-up 

contaminated sites that are or were owned, leased, operated or used by us or our predecessors. Some of these laws and regulations require us to 

obtain permits, which contain terms and conditions that impose limitations on our ability to emit and discharge hazardous materials into the 

environment and periodically may be subject to modification, renewal and revocation by issuing authorities. Fines and penalties may be 

imposed for non-compliance with applicable environmental laws and regulations and the failure to have or to comply with the terms and 

conditions of required permits. We intend to comply with these laws and regulations, however, from time to time, our operations may not be in 

full compliance with the terms and conditions of our permits. We periodically review our procedures and policies for compliance with 

environmental laws and requirements. We believe that our operations generally are in material compliance with applicable environmental laws, 

requirements and permits and that any lapses in compliance would not be expected to result in us incurring material liability or cost to achieve 

compliance. Historically, the costs of achieving and maintaining compliance with environmental laws, and requirements and permits have not 

been material; however, the operation our business entails risks in these areas, and a failure by us to comply with applicable environmental 

laws, regulations, or permits could result in civil or criminal fmes, penalties, enforcement actions, third party claims for property damage and 

personal injury, requirements to clean up property or to pay for the costs of cleanup, or regulatory or judicial orders enjoining or curtailing 

operations or requiring corrective measures. Moreover, if applicable environmental laws and regulations, or the interpretation or enforcement 

thereof, become more stringent in the future, we could incur capital or operating costs beyond those currently anticipated . 

• 

• 
THE SUSPENSION OR REVOCATION OF FAA CERTIFICATIONS COULD HAVE A MATERIAL ADVERSE EFFECT ON 

OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION. 

Our airline operations are subject to regulations of the FAA. The FAA can suspend or revoke the authority of air carriers or their licensed 

lie nnel for failure to comply with its regulations and can ground aircraft if questions arise concerning airworthiness. The FAA also has 

to suspend or revoke for cause the certificates it issues and to institute proceedings for imposition and collection of fines for violation of 

1. 1 aviation regulations. Our airline subsidiary operates under FAA certifications. The suspension or revocation of anyone of these 

certifications could have a material adverse effect on our business, results of operations and fmancial position. The suspension or revocation of 

all of these certifications would have a material adverse effect on our business, results of operations and financial position. 

OUR REPUTATION AND FINANCIAL RESULTS COULD BE HARMED IN THE EVENT OF AN ACCIDENT OR INCIDENT 

INVOLVING ONE OF OUR AIRCRAFT, OR AIRCRAFT OF THE SAME TYPE. 

We may incur substantial losses in the event of an aircraft accident. These losses may include the repair or replacement of a damaged aircraft, 

and the consequent temporary or permanent loss of the aircraft from service, as well as claims of injured passengers and other persons. 

Although we believe our insurance coverage for our charter air service is adequate, we cannot assure anyone that the amount of our insurance 

coverage will not be changed or that we will not be forced to bear substantial losses from accidents. Substantial claims resulting from an 

accident could have a material adverse effect on our business, operations and fmancial results. Moreover, any aircraft accident or incident, even 

iffully insured, could cause a public perception that we are less safe or reliable than other airlines, which would materially harm our business. 

In addition, any accident involving the type of aircraft that we operate, even if the aircraft involved is not operated by us, could also cause a 

public perception that our aircraft is less safe or reliable than other competitors, which would harm our business. We do not now carry any 

product liability insurance on our MRO business, which we believe is a common practice among smaller shops with the level of third party 

business that we are now undertaking. We expect that, if the volume of our MRO business and funds are available therefore, we will explore 

the possibility of procuring product liability insurance on our MRO business. However, we have no assurance that we will be able to procure 

such insurance, or that such insurance will fully protect us from all claims. 

WE MAY NOT HAVE SUFFICIENT INSURANCE COVERAGE TO PROTECT US FROM LIABILITY CLAIMS. 

In addition to the above, our business exposes us to possible claims for personal injury or death that may result if we were negligent in 

repairing an airplane. We cannot assure you that claims will not arise in the future or that our insurance coverage will be adequate to protect us 

in all circumstances. Additional, we cannot assure you that we will be able to maintain adequate insurance coverage in the future at an 

a.able cost. Any liability claim not covered by adequate insurance will adversely affect our business, financial condition and results of 

ons. 

OUR FINANCIAL PERFORMANCE MAYBE ADVERSELY AFFECTED BY COMPETITION. 

We expect our market to be intensely competitive. The majority of our anticipated competitors will be more established, benefit from greater 

market recognition and have substantially greater financial, marketing and other resources than we do. In addition, larger competitors may be 

able to absorb the burden of any changes in federal, state and local laws and regulations more easily than we can, which would adversely affect 

our competitive position. Moreover, some of our competitors have been operating in our core area for a long time and have demonstrated the 

ability to operate through industry cycles. Intense competition could materially adversely affect our business, results of operations and financial 

condition . 

• 
AIRLINES ARE OFTEN AFFECTED BY FACTORS BEYOND THEIR CONTROL, INCLUDING TRAFFIC CONGESTION AT 

AIRPORTS, WEATHER CONDITIONS AND INCREASED SECURITY MEASURES, ANY OF WHICH COULD HARM OUR 

OPERATING RESULTS AND FINANCIAL CONDITION. 

L.· other airlines, we are subject to delays caused by factors beyond our control, including air traffic congestion at airports, adverse weather 

C ·ons and increased security measures. Delays disservice passengers, reduce aircraft utilization and increase costs, all of which in turn 

a. _. profitability. During periods of fog, snow, rain, storms or other adverse weather conditions, traffic control problems could harm our 

operating results and financial condition. 

WE COULD BE LIABLE FOR OUR INADVERTENT TRANSPORTATION OF CONTRABANDS. 

Customers may not inform us, despite the requirement to do so, when their cargo includes hazardous materials. In addition, our own checks and 

searches for hazardous materials, weapons, explosive devices and illegal freight may not reveal the presence of such materials or substances in 

its customers' cargo. The transportation of unmanifested hazardous materials or of contraband could result in fmes, penalties, flight bans or 

possible damage to our aircraft. There can be no assurance we will not be subject to fmes, penalties or flight bans in the future, any of which 

could have a material adverse effect on our business, financial condition and results of operations. 

RISKS RELATING TO OUR MANAGEMENT 

WE HIGHLY DEPEND ON OUR CURRENT MANAGEMENT. THE LOSS OF ANY MEMBER OF OUR CURRENT 

MANAGEMENT COULD HARM OUR ABILITY TO EXECUTE OUR BUSINESS PLAN. 

Our success depends heavily upon the continued contributions of current management. The loss of the services of one or more of our members 

of management could materially adversely affect our business, operating results and fmancial condition. 

We cannot guarantee that we will be able to retain our key personnel. Moreover, we currently have no key person insurance on any members of 

management. 

OUR CURRENT MANAGEMENT RESOURCES MAY NOT BE SUFFICIENT FOR THE FUTURE, AND WE HAVE NO 

ASSURANCE THAT WE CAN ATTRACT ADDITIONAL QUALIFIED PERSONNEL. 

, .an be no assurance that the current level of management is sufficient to perform all responsibilities necessary or beneficial for 

mrulagement to perform. Our future success also depends on our continuing ability to attract, assimilate and retain highly qualified sales, 

technical and managerial personnel. Competition for these individuals is intense, and there can be no assurance that we can attract, assimilate or 

retain necessary personnel in the future. 

OUR MANAGEMENT OWNS A LARGE PERCENTAGE OF OUR VOTING STOCK, AND CUMULATIVE VOTING IS NOT 

A V AILABLE TO STOCKHOLDERS. 

Our management owns approximately 21.1 % of our outstanding voting stock. Cumulative voting in the election of Directors is not provided 

for. This fairly large percentage ownership interest could help our management maintain their positions on our Board of Directors . 

• 
WE WILL BE REQUIRED TO COMPLY WITH SECTION 404 OF THE SARBANES OXLEY ACT OF 

2002. 

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, in connection with this Annual Report and future Annual Reports, we are and will 

b.ired to furnish a report by management on our internal controls over financial reporting which will contain, among other matters, an 

I ent of the effectiveness of our internal control over financial reporting, including a statement as to whether or not our internal control 

{,. .. mancial reporting is effective. This assessment must include disclosure of any material weaknesses in our internal control over financial 

reporting identified by our management. During the evaluation and testing process, if we identify one or more material weaknesses in our 

internal control over financial reporting, we will be unable to assert that such internal control is effective. If we are unable to assert that our 

internal control over financial reporting is effective, we could lose investor confidence in the accuracy and completeness of our financial 

reports. Furthermore, we expect that our compliance with the regulatory requirements described herein will likely increase our professional 

expenses. 

RISKS RELATING TO OUR COMMON STOCK 

WE HAVE ENTERED INTO LOAN TRANSACTIONS INVOLVING CONVERTIBLE PROMISSORY NOTES, WHICH HAVE 

BEEN, AND MAY IN THE FUTURE BE, DILUTIVE. 

During 2010, we entered into a series of transactions in which we issued five convertible promissory notes (the "Notes"). This series of 

transactions is described in "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and 

Capital Resources - Convertible Debt." The Notes have a floating conversion price that entitles the holder to convert the Notes into a larger 

number of shares of our common stock as the trading price of our common stock goes down. As of April 1, 2011, part of the Notes have been 

converted into 49,871,292 shares of our common stock. Because of the floating conversion price and limitations on the holder's ability to 

convert the Notes, we are unable to determine at any time that number of shares into which the remainder of the Notes can be converted. Future 

issuance of additional shares upon conversion of the Notes would further dilute the percentage ownership in our company held by existing 

stockholders and could cause immediate and substantial dilution to the net tangible book value of those shares of common stock that are issued 

and outstanding immediately prior to such transaction. Any future decrease in the net tangible book value of such issued and outstanding shares 

could have a material effect on the market value of the shares. The terms on which we could obtain additional capital during the life ofthe 

Notes may be adversely affected because of such potential dilution. For more information about the Notes, see "Item 7 - Management's 

Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Convertible Debt." 

~ VE NOT VOLUNT ARIL Y IMPLEMENTED VARIOUS CORPORATE GOVERNANCE MEASURES, IN THE ABSENCE OF 

. ~, SHAREHOLDERS MA Y HAVE MORE LIMITED PROTECTIONS AGAINST INTERESTED DIRECTOR TRANSACTIONS, 

CV1"FLICTS OF INTEREST AND SIMILAR MATTERS. 

Recent Federal legislation, including the Sarbanes-Oxley Act of2002, has resulted in the adoption of various corporate governance measures 

designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in 

response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such 

as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required 

under the rules of national securities exchanges are those that address board of directors' independence, audit committee oversight, and the 

adoption of a code of ethics. Although we have adopted a Code of Ethics, we have not yet adopted any of these other corporate governance 

measures and, since our securities are not yet listed on a national securities exchange, we are not required to do so. We have not adopted 

corporate governance measures such as an audit or other independent committees of our board of directors as we presently do not have any 

independent directors. Ifwe expand our board membership in future periods to include additional independent directors, we may seek to 

establish an audit and other committees of our board of directors. It is possible that if we were to adopt some or all of these corporate 

governance measures, shareholders would benefit from somewhat greater assurances that internal corporate decisions were being made by 

disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating 

and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation 

packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the 

outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in 

formulating their investment decisions . 

• 
PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS MA Y DELAY OR PREVENT A TAKEOVER 

WHICH MAY NOT BE IN THE BEST INTERESTS OF OUR SHAREHOLDERS. 

Provisions of our certificate of incorporation and bylaws may be deemed to have anti-takeover effects, which include when and by whom 

•

. I meetings of our shareholders may be called, and may delay, defer or prevent a takeover attempt. In addition, certain provisions of 

o law also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain 

5J: ,led thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation's disinterested 

shareholders. 

In addition, our certificate of incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock with such rights and 

preferences, as may be determined by our board of directors. Of this authorized preferred stock, no shares are currently issued and outstanding. 

Our board of directors may, witlIout shareholder approval, issue up to 10,000,000 preferred stock with dividends, liquidation, conversion or 

voting rights that could adversely affect tlIe voting power or otlIer rights of our common shareholders. 

OUR COMMON STOCK HAS EXPERIENCED ONLY EXTREMELY LIMITED TRADING. 

During the prior fiscal year, our common stock was quoted and traded on the Pink Sheets under the symbol "AAVG." Frequently, the volume 

of trading in our common stock has been light, and the prices and volumes at which our common stock has traded have fluctuated fairly widely 

on a percentage basis. Until shares of our common stock become more broadly held and orderly markets develop and even thereafter, tlIe prices 

of our common stock may fluctuate significantly. Prices for our common stock will be determined in tlIe marketplace and may be influenced by 

many factors, including tlIe following: 

* The depth and liquidity of the markets for our common stock; 

* Investor perception of us and the industry in which we participate; 

* General economic and market conditions; 

* Responses to quarter-to-quarter variations in operating results; 

* Failure to meet securities analysts' estimates; 

* Changes in financial estimates by securities analysts; 

* Conditions, trends or announcements in our industry; 

* Announcements of significant acquisitions, strategic alliances, joint ventures or capital commitments by us or our competitors; 

* Additions or departures of key personnel; *. of our common stock; f unting pronouncements or changes in accounting rules that affect our financial statements; and 

,. ~ iller factors and events beyond our control. 

The market price of our common stock could experience significant fluctuations umelated to our operating performance. As a result, a 

stockholder (due to personal circumstances) may be required to sell such stockholder's shares of our common stock at a time when our stock 

price is depressed due to random fluctuations, possibly based on factors beyond our control. 

• 
THE TRADING PRICE OF OUR COMMON STOCK MAY ENTAIL ADDITIONAL REGULATORY REQUIREMENTS, WHICH 

MAY NEGA TIVEL Y AFFECT SUCH TRADING PRICE. 

The trading price of our common stock historically has been below $5.00 per share. As a result of this price level, trading in our common stock 

. s . ect to the requirements of certain rules promulgated under the Securities Exchange Act of 1934. These rules require additional disclosure 

er-dealers in connection with any trades generally involving any non-NASDAQ equity security that has a market price ofless than 

~. per share, subject to certain exceptions. Such rules require the delivery, before any penny stock transaction, of a disclosure schedule 

explaining the penny stock market and the risks associated therewith, and impose various sales practice requirements on broker-dealers who 

sell penny stocks to persons other than established customers and accredited investors (generally institutions). For these types of transactions, 

the broker-dealer must determine the suitability of the penny stock for the purchaser and receive the purchaser's written consent to the 

transaction before sale. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from 

effecting transactions in our common stock. As a consequence, the market liquidity of our common stock could be severely affected or limited 

by these regulatory requirements. 

STOCKHOLDERS HAVE NO GUARANTEE OF DIVIDENDS. 

The holders of our Common Stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally 

available therefore. To date, we have paid no cash dividends. The Board of Directors does not intend to declare any dividends in the 

foreseeable future, but instead intends to retain all earnings, if any, for use in our business operations. If we obtain additional financing, our 

ability to declare any dividends will probably be limited contractually. 

ITEM IB. UNRESOLVED STAFF COMMENTS. 

Not applicable. 

ITEM 2. PROPERTIES. 

Our principal executive offices are located in approximately 1,500 square feet of executive office space. Persons with whom our management 

has other business relationships are providing this space to us on a gratuitous, at-will basis. If this arrangement were to end, we would be 

required to start paying rent, or find alternative space, or both. 

F,-ormation about our operational facilities, see "Item I - Business - Location." 

1 ~ 3. LEGAL PROCEEDINGS. 

We are not presently a party to any pending legal proceeding . 

• 
PART II 

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER 

PURCHASES OF EQUITY SECURITIES. 

•

. the prior fiscal year, our common stock was quoted and traded on the Pink Sheets under the symbol "AA VG." The following table sets 

rtain information as to the high and low bid quotations quoted on the Pink Sheets for the fiscal years ended December 31, 2009 and 

L Jmber 31, 2010. Information with respect to over-the-counter bid quotations represents prices between dealers, does not include retail 

mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions. Prices in the table take into account the one-for100 reverse split of our common stock that occurred in the fall of 2009. 

COMMON STOCK 

------------ 2009 HIGH LOW 

First Quarter $0.14 $0.05 

Second Quarter $0.20 $0.06 

Third Quarter $0.12 $0.022 

Fourth Quarter $0.13 $0.0125 

COMMON STOCK 

------------ 2010 HIGH LOW 

First Quarter $.055 $.01 

Second Quarter $.055 $.0025 

Third Quarter $.021 $.0014 

Fourth Quarter $.014 $.0043 

As of April 13, 2011, we had approximately 384 common shareholders of record and 208,270,834 common shares outstanding. 

We have not paid any cash dividends on the common stock, and we do not intend to pay any dividends prior to the consummation ofa business 

combination . 

• 

• 
EQUITY COMPENSATION PLANS 

We currently do not have any equity compensation plans under which our equity securities are authorized for issuance. 1.6. SELECTED FINANCIAL DATA. 

Not applicable. 

ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 

GENERAL 

We have historically been an independent energy company focused on exploration and development of oil and natural gas reserves. With the 

level of oil prices and our production oil near the beginning of 2009, none of wells were producing sufficient to support our operations. To that 

end, in 2009 we adopted a significant change in our corporate direction. We then decided to focus our efforts on acquiring aviation related 

businesses and developing these businesses to their commercial potential. In this connection, we entered into a Share Exchange Agreement 

fully by and between AvStar Aviation Services, Inc. ("AvStar Services") and us, providing for our acquisition of all of the outstanding common 

stock in San Diego Airmotive ("SDA"), which (through its predecessor entity) has been providing maintenance, repair and overhaul ("MRO") 

services in California since 1987. 

Our current business plan is to acquire, consolidate and grow businesses in the general aviation industry. We placed our initial focus on MRO 

of aircraft providing products and services for the general aviation sector. We believe that since September 11, 2001, both private air 

transportation and the number of aircraft owned by both individuals and business have dramatically increased. Each of these sectors, in addition 

to routine maintenance, has mandated a number of inspections by the FAA that are commonly included in traditional MRO services. In 2010, 

we expanded our business through the acquisition a charter air service that operates from South Florida to the Bahamas. As capital is available 

to us, we intend to grow our business through the expansion of our existing MRO business as well as by acquisitions of existing MRO's, fixed 

base operations (FBO), charter operations and other operational aircraft related businesses. 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES 

•

cussion and analysis of its financial condition and results of operations as of December 31, 2010 are based upon its consolidated 

J al statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The 

pleparation of these fmancial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, 

revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates. We base the 

estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. These estimates 

and assumptions provide a basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from 

other sources. Actual results may differ from these estimates under different assumptions or conditions, and these differences may be material. 

We believe the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its 

consolidated financial statements . 

• 
Aviation Revenue Generation 

Thru Twin Air Calypso Limited, Inc. AvStar derives revenue from scheduled and charter passenger and freight air carrier services to 5 

destinations in the "Family Islands" of the Bahamas. The other islands of the Bahamas and destinations in the United States are provided on a 

•

r basis. At the present time all of these flights originate form Ft Lauderdale, Florida. Customers on the scheduled flights are charged on a 

t basis and charter customers are charged for the entire aircraft. Freight customers are charged on a per pound basis adjusted by 

',,,nsional weight", an industry wide accepted policy. Additional charges are levied for priority handling. Other income is derived form 

excess luggage, pets and special handling requests. 

Fluctuations in this revenue are principally caused by the seasonality of the vacation tourist. We have taken steps to minimize this effect by 

heavily promoting the business of the local resident, second homeowners and local businesses, 

Thru Twin Air Calypso Services, Inc. A vStar derives revenue by providing the labor and parts needed for the continued maintenance of general 

aviation aircraft. Labor is charged on a per-hour basis and parts are charged on a cost-plus basis. 

By providing maintenance services to Twin Air Calypso Limited, Inc. fluctuations in this revenue is minimized. We are marketing our services 

heavily to the retail general aviation community to supplement our income and thereby lowering the costs to our other operating divisions. 

Essentially all of our revenue is either on a COD basis or paid by credit card. Our risk of bad debt is minimal. 

Operating Expenses Overview 

Our consolidated cost of sales expenses consist primarily of aircraft leases, insurance, fuel, parts, repair labor, crew labor, ground logistic 

services, and labor for reservation agents. The general and administrative expenses consist primarily of property rentals, administrative labor, 

communication costs and employee associated costs. 

Due to the unpredictable nature of the energy industry the cost of fuel is the most variable of all the expenses. For this reason we have 

introduced fuel surcharges in an effort to mitigate the effect of these fluctuations on our profits. We have not experienced any difficulty in the 

supply or pricing of the needed parts for the continued airworthiness of our aircraft. While the market for aircraft insurance is limited there has 

not been any significant price changes for the past several years. We are presently receiving proposals for our upcoming insurance renewal. 

TiIIf"t"ent proposals are consistent with expiring terms. The availability of skilled and unskilled labor force in South Florida is adequate to 

r ~ stable labor costs. 

Estimates. Assumptions. and Judgments 

The operation of our business requires us to make estimates, assumption, and judgments that affect our assets, liabilities, revenues and 

expenses. On an on-going basis we evaluate our estimates, assumptions, and judgments and their applicability on our operations. We base our 

estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. We consider the 

following policies and their relation to our operating results to be most critical: 

* The availability of fuel and our ability to control its cost; 

* The continued support of the aircraft we operate by its respective manufacturer, 

* The policies of the Bahamian government regarding tourism, 

* The policies of the United States government regarding international travel, 

* The ability of management to identify the need to enter new markets and expand existing ones, 

* The ability of management to interrelate with the various government agencies which effect our operations. 

Oil and Gas Producing Activities 

We follow the "successful efforts" method of accounting for our oil and gas properties. Under this method of accounting, all property 

acquisition costs (cost to acquire mineral interests in oil and gas properties) and costs (to drill and equip) of exploratory and development wells 

are capitalized when incurred, pending determination of whether the well has found proved reserves. If an exploratory well has not found 

proved reserves in commercial quantities, the costs associated with the well are charged to expense. The costs of development wells are 

capitalized whether productive or nonproductive. Geological and geophysical costs and the costs of carrying and retaining undeveloped 

properties are expensed as incurred. Management estimates the future liability for plugging and abandonment of the related wells. 

ueed oil and gas properties that are individually significant are periodically assessed for impairment of value, and a loss is recognized at 

t! of impairment by providing an impairment allowance. Other unproved properties are amortized based on the average holding period. 

C"t',mlized costs of producing oil and gas properties after considering estimated dismantlement and abandonment costs and estimated salvage 

values are depreciated and depleted by the unit-of-production method. On the sale or retirement of a complete unit of a proved property, the 

cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss 

is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and 

amortization with a resulting gain or loss recognized in the statement of operations. 
On the sale of an entire interest in an unproved property for cash or cash equivalent, gain or loss on the sale is recognized, taking into 

consideration the amount of any recorded impairment if the property had been assessed individually. If a partial interest in an unproved 

property is sold, the amount received is treated as a reduction of the cost of the interest retained. 

• Oil and Gas Revenues 

01' dnd gas revenues are recorded under the sales method. We recognize oil and gas revenues as production occurs. As a result, we accrued 

revenue relating to production for which we have not received payment. 

RESULTS OF OPERATION 

Comparison of Year Ended December 31,2010 to Year Ended December 31,2009 

Financial results for the year ended December 31, 2010 are not directly comparable to financial results for the year ended December 31, 2009. 

During August 2010, we completed the acquisition of Twin Air Calypso Limited, Inc. ("TAC Limited"). TAC Limited operates an air carrier 

service. This acquisition appreciably affected the financial results for the year ended December 31, 2010 compared to the financial results for 

the year ended December 31, 2009. 

REVENUES. Revenues were $1,480,627 in 2010 consisting of $1,478,273 revenues from aviation operations and $2,354 from oil and gas 

operations compared to revenues of$666,196 in 2009 consisting of $660,947 in revenues from aviation operations from SDA and $5,249 in 

revenues from oil and gas operations. These revenues represent an increase from revenues from 2009 to 2010, largely due to to the acquisition 

ofTAC Limited during August 2010. The decrease in oil and gas revenues from 2009 to 2010 resulted from a decrease in production. 

• 

• 
EXPENSES. Costs and expenses increased to $2,964,736 in 2010 from $1,609,598 in 2009. This increase in costs and expenses reflects the 

following: 

* $1,172,565 in costs of goods sold in the 2010 from SDA's operation compared to $460,581 in costs of goods sold in 2009, with the 

_ tial increase in costs of goods resulting from the increase in activity due to the acquisition of TAC Limited 

9,330 in selling, general and administrative expenses in 2010 compared to $380,264 in these expenses in 2009, with the substantial 

i. e in SGA resulting from the increase in activity due to the acquisition of T AC Limited 

* $31,841 in depletion and depreciation in 2010 compared to $137,613 in these expenses in 2009, with the substantial decrease in depletion and 

depreciation resulting from a lower asset base, which had been written down in 2009 

LOSS FROM OPERATIONS. Because of the increase in activity due to the acquisition ofTAC Limited, the Company's loss from operations 

increased to $1,484,109 in 2010 from $943,402 in 2009. 

INTEREST EXPENSE. Interest expense declined slightly to $43,840 in 2010 compared to $45,588 in 2009. 

NET LOSS. After taking into account interest expense, the Company's net loss increased to $1,527,949 (or $0.013 per share) in 2010 from 

$988,990 in 2009 (or $0.042 per share) . 

• 

• 
KNOWN TRENDS 

From our fifty plus years of experience in the Bahamian and general aviation markets we have observed many trends and customs. The general 

downturn of the world economy in 2008 caused many real estate development ventures in the Bahamas to close operations. At the present time 

~fthese. developments are planning to resume operations in the near future. We will be offering both passenger and freight services to 

t wompanles. 

The Bahamas government is making the ownership of real estate and the building of homes easier and more secure for non-Bahamians than at 

any time in their history. This is of great importance to AvStar because it expands the non-seasonal portion of our market. 

The number and nature of competitors in our markets have changed in the past year. The difficult economic times of the past two years have 

eliminated several of our competitors and caused the larger air carriers to reduce their operations into the small population centers we serve. 

This gives A vStar a window of time to reinforce our position in the market. 

The price of fuel, our largest operational cost component, will continue to be volatile and require continual monitoring by management. 

We will be submitting our application to the DOT for commuter authority in early May with expected approval by the 2011 falI/winter season. 

With this approval our customer base and marketing exposure will significantly increase. 

The general aviation market will continue to be affected by fuel prices and other increased operating costs. We have positioned ourselves to 

offer fuel, labor and parts to the general aviation owner at reduced prices due to our overhead being shared between two entities. 

LIQUIDITY AND CAPITAL RESOURCES 

As of December 31,2010, we had a working capital deficiency of approximately $874,956. Currently, we have limited financial ability to 

pursue our new business plan. In addition to stabilizing our two existing businesses, our immediate fmancial goal is to raise approximately 

$350,000 to complete the scheduled maintenance and refurbishing of our remaining eight aircraft. Although we are now seeking to raise this 

amount, we have no assurance that we will be able to do so. We believe that, once these aircraft are flying again, our goal of stabilizing our 

existing business can be accomplished, and we can start considering the resumption of our original business plan of acquiring other businesses. 

Once the stabilization is accomplished (if at all), we begin trying to determine the scope of the business activities that we will pursue in the 

ii.able future. The amount of capital that we will need depends on the scope of the business activities that we ultimately decide to pursue. 

, ope is uncertain at this time. However, we know that we must obtain additional financing to pursue our business plan at any level that 

\h, .ire likely to pursue. We are currently searching for sources of financing, but we currently do not have any binding commitments for, or 

readily available sources of, fmancing. We cannot assure anyone that financing will be available to us when needed or, if available, that such 

financing can be obtained on commercially reasonably terms. Ifwe do not obtain financing we will be constrained to contract the scope of our 

business plan. Under certain circumstances, we may be constrained to attempt to sell some of our assets. However, we cannot assure anyone 

that we will be able to find interested buyers or that the funds received from any such sale would be adequate to fund our activities. Under 

certain circumstances, we could be forced to cease our operations and liquidate our remaining assets, if any. 

Our independent certified public accountant has added an emphasis paragraph to its report on our consolidated fmancial statements for the year 

ended December 31,2010 regarding our ability to continue as a going concern. Key to this determination is our historical losses of$I,016,664 

in 2010 and $988,990 in 2009. Management plans to try to fund our company partially through the raising of capital through the sale of our 

equity instruments or issuance of debt, although there can be no assurance of success in this regard. Moreover, management plans on additional 

revenues from operations from our business as a source to finance our company, although there can be no assurance of that these revenues will 

materialize at the expected rates. There can be no assurance that we will be successful in achieving these objectives, becoming profitable or 

continuing our business without either a temporary interruption or a permanent cessation . 

• 
Convertible Debt 

Commencing on April 19, 2010, we entered into a series of transactions in which we issued five convertible promissory notes (singly a "Note" 

and collectively the "Notes") to Asher Enterprises, Inc. ("Holder") in consideration of certain amounts loaned by Holder to us. The following 

•

ives the designations to which the Notes are referred hereinafter, the dates of the Notes, the original principal amounts of the Notes, and 

t eduled maturity dates of the Notes: 

DESIGNATION ISSUANCE ORIGINAL PRINCIPAL MATURITY 

OF NOTE DATE OF NOTE AMOUNT OF NOTE DATE OF NOTE 

------- ------------ -------------- ------------

First 4/19/2010 $50,000 1/21/2011 

Second 6/1/2010 $25,000 3/31/2011 

Third 8/31/2010 $40,000 6/2/2011 

Fourth 10/21/2010 $35,000 7/25/2011 

Fifth 12/20/2010 $45,000 9/22/2011 

TOTAL $195,000 

While the tenns of the Notes vary somewhat, these terms are generally the same from Note to Note. The following is a description of the terms 

of the Notes. 

Each of the Notes bears regular interest at a rate of8% per annum, with a default rate of22% per annum. The Notes are unsecured, and each of 

them is due and payable on or before their respective maturity dates. At any time prior to the payment in full of the entire balance of a Note, 

Holder has the option of converting all or any portion of the unpaid balance of the Note into shares of our common stock at a conversion price 

discussed hereafter. Nevertheless, Holder is not entitled to convert any portion of a Note to the extent that the shares to be issued in connection 

therewith would cause Holder's beneficial ownership of our common stock to exceed 4.99% of the outstanding shares of our common stock. 

Each conversion price for the Notes features a "variable" conversion price, and the First and Second Notes also feature a "fixed" conversion 

price of $.002, which will apply if it is less than the related variable conversion price. The variable conversion price is a percentage discount 

from an average of the three lowest closing bid prices of our common stock for the 10 most recent trading days preceding the date of exercise. 

The percentage discounts for the variable conversion prices provided for in the Notes range from 42% for the First Note, 50% for the Second, 

Third and Fourth Notes, and 55% for the Fifth Note. Because of the operation of the floating conversion price and the limitation on the ability 

of Holder to convert as described above, we are unable to determine at any time that number of shares into which Holder could convert one or 

more of the Notes. 

·.tes (and related documentation) contain customary representations and warranties, customary affirmative and negative covenants, 

c ... ~.omary anti-dilution provisions, and customary events of default that entitle Holder to accelerate the due date of the unpaid principal amount 

of, and all accrued and unpaid interest on, the Notes. A default on any of the Notes could lead to certain penalties, including an obligation to (a) 

pay all of the following, plus an additional 50% of (i) default interest, (ii) other monetary penalties, and 

(iii) the outstanding balance on the related Note, and (b) to issue shares of our common stock to satisfy the amount computed in accordance 

with (a) immediately preceding . 

• 
Commencing October 25,2010, Holder began converting some of the Notes. As of the date of the Report, Holder had converted an aggregate 

principal amount of the Notes equal to $87,000 into 49,871,292 shares of our common stock, leaving an aggregate outstanding principal 

amount of the Notes equal to $108,000 as of April 1, 2011. The First and Second Notes have been fully converted, while the Third Note has 

been partially converted. 

• Legacy Debt 

We have outstanding the following notes that became due and payable on December 1,2008. These notes have an aggregate principal amount 

totaling $624,771 plus aggregate accrued interest of$99,197 as of Aprill3, 2011. We are currently exploring ways to satisfy these amounts. 

(a) Note payable to Mary Pollock Merritt, daughter of our fonner chief executive officer. This note bears interest at rates of 12% per year and 

became due on December 31, 2008. This note is not collateralized. The current outstanding balance on this note as of April 13, 2011 was 

$111,691, plus accrued interest. 

(b) Note payable to Charles Pollock, our fonner chief executive officer and a significant stockholder of ours. This note bears interest of 12% 

per year and became due on December 31, 2008. This note is not collateralized. The current outstanding balance on this note as of April 13, 

2011 was $400,911, plus accrued interest. 

(c) Note payable to Mark Weller, our fonner president and a significant stockholder of ours. This note bears interest of 12% per year and 

became due on December 31, 2008. This note is not collateralized. The outstanding balance on this note as of April l3, 2011 was $112,169, 

plus accrued interest. 

Off-balance Sheet Arrangements 

During the year ended December 31, 2010, we had no off balance sheet arrangements. 

Oil and Gas Assets 

Management is currently exploring options for our remaining oil and gas assets, which may include a sale of it or a spin-off of them to 

shareholders, so that management can devote its entire attention to our current aviation business. 

• 

• 
ITEM 7 A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS 

Not applicable. 1.8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 

ru.;PORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

To the Board of Directors 

AvStar Aviation Group, Inc. 

Houston, Texas 

To the Board of Directors 

A vStar Aviation Group, Inc. 

Houston, Texas 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

I have audited the accompanying consolidated statements of fmancial position of A v Star Aviation Group, Inc. 

as of December 31, 20 lO and 2009, and the related consolidated statements of operations, consolidated statement of shareholders' deficit and 

consolidated statements of cash flows for the years then ended. These financial statements are the responsibility of the Company's management. 

My responsibility is to express an opinion on these financial statements based on my audit. 

I conducted my audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards 

require that I 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 was I engaged to perform, an audit of its internal control over fmancial reporting. My 

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, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 

financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as 

e.ing the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. 

In lny opinion, the financial statements referred to above present fairly, in all material respects, the consolidated fmancial position of AvStar 

Aviation Group, Inc. as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the year then ended 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 fmancial statements, the Company has suffered significant losses and will require additional capital to develop its business until the 

Company either (1) achieves a level of revenues adequate to generate sufficient cash flows from operations; or (2) obtains additional financing 

necessary to support its working capital requirements. These conditions raise substantial doubt about the Company's ability to continue as a 

going concern. Management's plans in regard to these matters are also described in Note 2. The fmancial statements do not include any 

adjustments that might result from the outcome of this uncertainty. 

Clay Thomas, P.e. 

www.claythomaspc.com 

Houston, Texas 

April 15, 2011 

• 

Clay Thomas, P.C. 
• 

• 

• 

A VSTAR A VIA TlON GROUP, INC. 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 

For the Years Ended December 31, 2010 and 2009 

Current Assets 

Cash 

ASSETS 

Accounts Receivable 

Parts and Inventory 

Prepaid Expenses 

Total Current Assets 

Property and Equipment 

Proven Oil and Gas Properties, Net of 

Accumulated Depletion of $303,794 and 

$299,766 in 2010 and 2009, respectively) 

Unproven Oil and Gas Properties 

Furniture and Equipment, Net of Accumulated 

Depreciation of $43,313 

Investment in subsidiary 

Total Other Assets 

Total Assets 

LIABILITIES AND STOCKHOLDERS' DEFICIT 

Current Liabilities 

Accounts Payable 

Accrued Interest Payable to Related Parties 

Notes Payable to Related Parties 

Accrued Liabilities 

Total Current Liabilities 

Long-Term Debt to Related Parties 

Asset Retirement Obligation 

Total Liabilities 

Stockholders' Deficit 

Common Stock at $.001 par value; 500,000,000 

shares authorized; and 176,899,542 and 

65,728,490 issued and outstanding in 2010 

and 2009, respectively 

Additional Paid in Capital 

Accumulated Deficit 

Total Stockholders' Deficit 

Total Liabilities and Stockholders' Deficit 

2010 

5,648 

146,826 

4,858 

11,008 

168,340 

5,280 

4,540 

781,841 

791,661 

959,999 

83,189 

99,197 

477,336 

383,574 

1,043,296 

1,057,477 

2,100,773 

176,900 

21,441,852 

(22,759,526) 

(1,140,774) 

959,999 

2009 

4,565 

23,950 

27,916 

8,301 

64,732 

37,121 

19,537 

56,658 

121,388 

163,389 

99,197 

11,900 

115,978 

390,464 

659,771 

1,050,235 

65,729 

20,237,001 

(21,231,577) 

(928,847) 

121,388 
• 

• 

• 

AVSTARAVIATION GROUP, INC. 

CONSOLIDA TED STATEMENTS OF OPERATIONS 

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 

Revenue From Aviation Operations 

Oil and Gas Revenue 

Costs and Expenses: 

Costs of Goods Sold 

Production Tax 

Selling, General and Administrative 

Depletion and Depreciation 

Stock Based Compensation 

Total Costs and Expenses 

Loss From Operations 

Other Income (and Expenses) 

Interest Expense 

Net Loss 

Weighted Average Common Shares Outstanding 

Basic and Diluted Net Loss Per Share 

2010 

1,478,273 

2,354 

1,480,627 

1,172,565 

1,129,330 

31,841 

631,000 

2,964,736 

(1,484,109) 

(43,840) 

(1,527,949) 

116,218,621 

(0.013) 

2009 

660,947 

5,249 

666,196 

460,581 

140 

380,264 

137,613 

631,000 

1,609,598 

(943,402) 

(45,588) 

(988,990) 

23,315,439 

(0.042) 
• 

Issuance of 

A VSTAR A VIA TION GROUP, INC. 

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT 

Balances as of 

December 31 2008 

Stock Issued For 

Services 

Common 

Preferred Stock 

Shares Shares Amount 

Additional 

Paid-in 

Capital 

Accumu- Total 

lated Stockholders' 

Deficit Deficit 

365,499,544365,50018,521,904 (19,522,753) (635,350) 

125,000,000 125,000 360,594 485,594 

Preferred Shares 1,000,000 

• 

Reverse Split 

100 for 1 

Stock Issued For 

Service Post-Split 

(485,594,446) (485,594) 

235 

Conversion of 

Preferred 

Shares (1,000,000) 50,000,000 50,000 

Stock issued 

for compensation 

Stock Issue for 

Repayment of loan HLS 

issue 12-04-09 

Imputed Interest 

Net Income (Loss) 

Balances as of 

10,100,000 10,100 

723,157 723 

709,907 (719,834) 

482,439 

136,676 

25,481 

(988,990) 

December 31 2009 65,728,490 65,729 20,237,001(21,231,577) 

Stock issued for 

Compensation 15,000,000 15,000 435,500 

Stock issued for 

Services 36,721,052 36,721 177,630 

Stock issued for 

Forbearance 1,600,000 1,600 37,340 

Stock issued for 

Reduction of Debt 14,000,000 14,000 21,000 

Stock issued for 

Debt Conversion 25,500,000 25,500 221,500 

Stock issued for 

Acquisition 18,350,000 18,350 271,040 

Imputed Interest 40,841 

Net Income (Loss) (1,527,949) 

Balances as of 

December 312010 -176,899,542176,90021,441,852 (22,759,526) (1,140,774) 

• 

(485,594) 

40,073 

492,439 

137,399 

25,481 

(988,990) 

(928,847) 

450,500 

214,351 

38,940 

35,000 

247,000 

289,390 

40,841 

(1,527,949) 
• 

• 

• 

A VST AR AVIATION GROUP, INC. 

CONSOLIDATED STATEMENT OF CASH FLOWS 

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 

Cash Flows From Operating Activities: 

Net Loss 

Adjustments to Reconcile Net Loss to Net Cash 

(used in) Operating Activities: 

Depletion and Depreciation Expense 

Impairment of Oil and Gas Properties 

Stock Based Compensation 

Accrued liabilities 

Accounts Receivable 

Accounts Payable and Accrued Liabilities 

Other 

Net Cash (used in ) Operating Activities 

Cash Flows (used in) Investing Activities: 

Investment in Subsidiary 

Capital and Exploratory Expenditures 

Net Cash (used in) Investing Activities 

Cash Flows From Financing Activities: 

Proceeds From Sale of Common Stock 

Proceeds From Notes Payable 

Net Cash Provided By (used in) Financing 

Activities 

Net Change in Cash and Cash Equivalents 

Cash and Cash Equivalents at Beginning of Year 

Cash and Cash Equivalents at End of Year 

2010 

(1,527,949) 

46,520 

780,524 

150,411 

(104,702) 

561,647 

(15,241) 

(108,790) 

(739,662) 

(4,540) 

(744,202) 

854,075 

854,075 

1,083 

4,565 

5,648 

2009 

(988,990) 

137,613 

655,741 

5,694 

141,746 

38,007 

(10,189) 

5,726 

5,726 

(4,463) 

9,028 

4,565 
A VST AR A VIA TION GROUP, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

I.ANIZATION AND SIGNIFICANT ACCOUNTING POLICIES 

ORGANIZATION 

AvStar Aviation Group, Inc. (the "Company") is a Colorado corporation that has historically engaged in oil and gas exploration and 

development. The Company was originally incorporated in 1997 as Zip Top, Inc. and subsequently adopted a name change to Pangea 

Petroleum Corporation. On April 26, 2000, the Company was recapitalized when the Company acquired the non-operating public shell, 

Segway II Corporation. Segway II Corporation had no significant assets or liabilities at the date of acquisition and, accordingly, the transaction 

was accounted for as a recapitalization. In February 2009, the Company adopted a significant change in its corporate direction by deciding to 

focus its efforts on acquiring aviation related businesses and developing these businesses to their commercial potential. The Company 

subsequently changed its name to AvStar Aviation Group, Inc. on September 21, 2009. 

Our company, AvStar Aviation Group, Inc., is a Colorado Corporation that was organized on March II, 1997. For a number of years, we 

conducted business as an independent energy company focused on exploration and development of oil and natural gas reserves. For reasons 

given hereinafter, in early 2009 we adopted a significant change in our corporate direction. We decided to focus our efforts on acquiring 

aviation related businesses and developing these businesses to their commercial potential. 

In connection with the change in our business focus, we undertook the following activities: 

We entered into a Share Exchange Agreement fully executed on February 20, 2009 (the "Exchange Agreement") by and between us and AvStar 

Aviation Services, Inc. ("AvStar Services"), providing for our acquisition of all of the outstanding common stock in San Diego Airmotive 

("SDA"), which (through its predecessor entity) has been providing maintenance, repair and overhaul ("MRO") services in California since 

1987. For more information about the business ofSDA, see "Our Business" below. In connection with this acquisition, we issued to AvStar 

Services, the prior owner of SDA, 1.0 million shares of our newly-created series A preferred stock ("Series A Preferred Stock"), which shares 

constituted in the aggregate over 90% of outstanding economic interest and voting power in us. 

qaril 8,2010, (a) Twin Air Calypso Services, Inc., a newly-formed, indirect wholly-owned Florida subsidiary (the "MRO Subsidiary") of 

~d (b) Miami Aviation Maintenance Co. ("MAMCO") executed a bill of sale whereby MAMCO assigned to the MRO Subsidiary certain 

o. lLS assets used to provide aviation MRO services. The assigned assets included general shop equipment. No liabilities were assumed in 

connection with the transaction. These assets were assigned in consideration of 750,000 shares of our common stock, which had an aggregate 

market value of $20,250 based on the closing price of our common stock on the date of the transaction. In connection with the organization of 

the MRO Subsidiary, SDA had previously assigned all of its assets to the MRO Subsidiary in consideration ofal! of the shares of the common 

stock of the MRO Subsidiary to be outstanding for the foreseeable future. The MRO Subsidiary was formed to provide aviation MRO services, 

as well as airline support services. The services have been offered out of North Perry Field in Pembroke Pines, Florida in Broward County. The 

impetus for the transaction was the then recent termination of SDA's Hangar Sublease at French Valley Airport in Southern California and the 

perception that the continuation of the business historically conducted by SDA in Florida was advisable in view of the perceived greater 

strength of the local Florida economy relative to the local California market in which SDA had historically provided services. 

On August 19,2010, we completed a transaction in which we acquired all of the outstanding stock in Twin Air Calypso Limited, Inc. ("TAC 

Limited"). TAC Limited operates an air carrier service from South Florida to the Bahamas with access to eight aircraft. We acquired TAC 

Limited in exchange for 18.0 million shares of our common stock and some cash payments in the approximate aggregate amount of $275,000 

to be paid in a small number of future installments over the near future. Because of amounts previously paid, we were not required to pay any 

cash at closing. The 18.0 million shares of our common stock had an aggregate market value of $270,000 based on the closing price of our 

common stock on the date of the transaction. The acquired assets consisted primarily of the rights ofTAC Limited under an aircraft lease 

agreement covering seven aircraft and an FAA Certified Part 135 permit. The only liabilities in effect assumed in connection with the 

acquisition were the liabilities and obligations of the lessee under the preceding aircraft lease agreement. 

The agreement governing the acquisition of T AC Limited (the "Stock Agreement") contained a non-competition agreement, prohibiting the 

stockholders ofTAC Limited from competing with us. This non-competition agreement lasts for a period commencing on the closing of the 

acquisition and ending on the later to occur of five years. The Stock Agreement also contained fairly customary representations, warranties and 

indemnifications, as well as other general terms and conditions typically governing stock sales and purchases. 

Prior to the consummation of the Exchange, there were no material relationships between us, and our former officers, directors, affiliates, 

a.tes or shareholders, and A vStar Services, and its officers, directors, affiliates, associates or shareholders. 

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS 

Effective January 1,2009, AvStar Aviation adopted the authoritative guidance for Derivative Values and Hedging. This guidance resolves 

issues addressed in Statement 133 Implementation Issue No. DI, "Application of Statement 133 to Beneficial Interests in Securitized Financial 

Assets". This Statement permits fair value re-measurement for any hybrid fmancial instrument that contains an embedded derivative that 
otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of 

Statement 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives 

or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in 

the form of subordination are not embedded derivatives, amends Statement 140 to eliminate the prohibition on a qualifying special-purpose 

_

nti from holding a derivative fmancial instrument that pertains to a beneficial interest other than another derivative fmancial instrument. This 

, ent is effective for fiscal years beginning after September 15,2006. Its adoption did not have a material impact on the Company's 

> ial condition or results of operations. 

Effective January 1,2009, AvStar Aviation adopted the authoritative guidance for Fair Value Measurements and Disclosures which establishes 

a formal framework for measuring fair value under GAAP. It defines and docifies the many defmitions of fair value included among various 

other authoritative literature, clarifies and, in some instances, expands on the guidance for implementing fair value measurements, and 

increases the level of disclosure required for fair value measurements. Although SF AS 157 applies to and amends the provisions of existing 

F ASB and AICP A pronouncements, it does not, of itself, require any new fair value measurements, nor does it establish valuation standards. 

SFAS 157 applies to all other accounting pronouncements requiring or permitting fair value measurements, except for SFAS No. 123 (F), 

share-based payment and related pronouncements, the practicability exceptions to fair value determinations allowed by various other 

authoritative pronouncements, and AICPA Statements of Position 97-2 and 98-9 that deal with software revenue recognition. This statement is 

effective for fmancial statements issued for fiscal years begirming after November 15,2007, and interim periods within those fiscal years. 

Management does not believe the adoption of SF AS 157 will have a material impact on the Company's financial condition or results of 

operations. 

Effective January 1,2009, AvStar Aviation adopted the authoritative guidance for Financial Instruments which is an elective, irrevocable 

election to measure eligible financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis. The 

election may only be applied at specified election dates and to instruments in their entirety rather than to portions of instruments. Upon initial 

election, the entity reports the difference between the instruments' carrying value and their fair value as a cumulative-effect adjustment to the 

opening balance of retained earnings. At each subsequent reporting date, an entity reports in earnings, unrealized gains and losses on items for 

which the fair value option has been elected. SF AS 159 is effective for financial statements issued for fiscal years begirming after November 

15,2007, and is applied on a prospective basis. Early adoption of SF AS 159 is permitted provided the entity also elects to adopt the provisions 

of SF AS 157 as of the early adoption date selected for SFAS 159. The Company has elected not to adopt the provisions of SF AS 159 at this 

time. 

Effective January 1,2009, AvStar Aviation adopted the authoritative guidance for Income Taxes which clarifies the accounting for uncertainty 

in income taxes recognized in financial statements in accordance with FASB 109, "Accounting for Income Taxes". FIN 48 prescribes a 

r.ition threshold and measurement attribute for the fmancial statement recognition and measurement of a tax position taken or expected to 

I n in a tax return. The provisions of FIN 48 are effective for fiscal years beginning after December 15,2006, with the cumulative effect 

of the change in accounting principle recorded as an adjustment to opening retained earnings. The adoptions of this pronouncement did not 

have a material effect on the financial position or results of operations of the Company. 

Effective January 1, 2009, A vStar Aviation adopted the authoritative guidance for Business Combinations to increase the relevance, 

representational faithfulness, and comparability of the information a reporting entity provides in its fmancial reports about a business 

combination and its effects. SFAS 141R replaces SFAS 141, "Business Combinations" but, retains the fundamental requirements of SF AS 

141 that the acquisition method of accounting be used and an acquirer be identified for all business combinations. SF AS 141 R expands the 

definition of a business and of a business combination and establishes how the acquirer is to: (1) recognize and measure in its financial 

statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquired company; (2) recognize and 

measure the goodwill acquired in the business combination or a gain from a bargain purchase; and (3) determine what information to disclose 

to enable users of the financial statements to evaluate the nature and fmancial effects of the business combination. SFAS 141R is applicable to 

business combinations for which the acquisition date is on or after the begirming of the first annual reporting period beginning on or after 

December 15,2008, and is to be applied prospectively. Early adoption is prohibited. SFAS 141R will impact the Company only ifit elects to 

enter into a business combination subsequent to December 31, 2008. 

Effective January 1,2009, AvStar Aviation adopted the authoritative guidance for Non-Controlling Interests to improve the relevance, 

comparability, and transparency of the financial information a reporting entity provides in its consolidated fmancial statements. SFAS 160 

amends ARB 51 to establish accounting and reporting standards for noncontrolling interests in subsidiaries and to make certain consolidation 

procedures consistent with the requirements of SF AS 141R. It defmes a noncontrolling interest in a subsidiary as an ownership interest in the 

consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 changes the way the consolidated 

income statement is presented by requiring consolidated net income to include amounts attributable to the parent and the noncontrolling 

interest. SF AS 160 establishes a single method of accounting for changes in a parent's ownership interest in a subsidiary which does not result 

in deconsolidation. SFAS 160 also requires expanded disclosures that clearly identify and distinguish between the interests of the parent and 

the interests of the noncontrolling owners ofa subsidiary. SFAS 160 is effective for financial statements issued for fiscal years beginning on or 

aftl[ecember 15,2008, and interim periods within those fiscal years. Early adoption is prohibited. SFAS 160 shall be applied prospectively, 

Wi exception of the presentation and disclosure requirements which shall be applied retrospectively for all periods presented. The 

( . y does not believe that the adoption of SF AS 160 would have a material effect on its consolidated fmancial position, results of 

operations or cash flows. 

ACCOUNTING ESTIMATES 

The preparation of consolidated 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 at the date of the 

consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ 

from those estimates. These estimates mainly involve the useful lives of property and equipment, the impairment of unproved oil and gas 

properties, the valuation of deferred tax assets and the realizability of accounts receivable. (_AND CASH EOUIVALENTS 

For purposes of reporting cash flows, the Company considers all short-term investments with an original maturity of three months or less when 

purchased to be cash equivalents. 

MAINTENANCE & REPAIR AND AIR CARRIER ACTIVITIES 

Twin Air Calypso Services, Inc., our indirect, wholly-owned Florida subsidiary (the "MRO Subsidiary") conducts our business of providing 

maintenance, repair and overhaul ("MRO") products and services for aircraft in the general aviation sector. The MRO Subsidiary was the result 

of the consolidation on April 8, 2010 of our subsidiary San Diego Airmotive ("SDA") and Miami Aviation Maintenance Co. ("MAMCO"). 

SDA (through its predecessor entity) had been providing MRO services in California since 1987, while MAMCO commenced its operations in 

200 I and continued them until the time of the consolidation, but for an approximately I8-month period during which MAMCO ceased 

providing services. The services are being offered out of North Perry Airport in Pembroke Pines, Florida in Broward County. 

After the move of our MRO business from southern California to Florida, we "jump started" our transition by establishing an exclusive 

maintenance, fueling and ground support contract with the Air Carrier Subsidiary, a company discussed in the next section that we eventually 

acquired in August 2010. We are in the process of developing new customer relationships, and thus far we have had limited success. 

The MRO Subsidiary recently commenced a focused, direct marketing program of its services and is starting to see an increased interest from 

potential customers. Moreover, the MRO Subsidiary currently has the only avionics shop at North Perry Field, providing services for the 

electronic systems on aircraft that provide communications, navigation and guidance, display systems, flight management systems, sensors and 

indicators, weather radars, electrical systems, and various onboard computers. Finally, the MRO Subsidiary has recently entered into lease 

negotiations regarding a fuel truck, pursuant to which the MRO Subsidiary could offer to sell fuel to third parties. This truck will also provide 

fuel to the Air Carrier Subsidiary (discussed immediately below) at discounted rates, enabling the subsidiary to realize fuel cost savings. All 

training regarding the operation of the fuel truck and the fire inspector's inspection have been completed, and commencement of sales by this 

~s contingent solely upon the completion of negotiations regarding its lease to the MRO Subsidiary. We have no assurance that we will be 

• complete the lease of the fuel truck and commence sales of fuel with it. 

Twin Air Calypso Limited, Inc., our wholly-owned Florida subsidiary (the "Charter Air Subsidiary"), conducts our charter air service business. 

We acquired the Air Carrier Subsidiary on August 19,2010. The Air Carrier Subsidiary operates an air carrier service from South Florida to the 

Bahamas utilizing eight leased aircraft. It has regular flights of both passengers and cargo to two destinations on the island of Abaco and three 

destinations on the island ofEleuthera. The Air Carrier Subsidiary also flies to other destinations in the Bahamas on a charter basis. 

We lease seven aircraft pursuant to an aircraft lease agreement (the "Lease Agreement") with Aircraft Charters, LLC, an entity controlled by 

Kenneth W. Langston, who was an equity owner ofMAMCO and TAC Limited. The start date of the Lease Agreement was February 2010, 

and the Lease Agreement has a term of five years, subject to earlier termination upon lessee default. Our monthly rental rate per aircraft is 

$2,150. The aircraft are being leased on an "AS IS, WHERE IS" basis. The Lease Agreement contains customary representations and 

warranties on our part, customary affIrmative and negative covenants on our part, and customary events of default that entitle the lessor to 

terminate the Lease Agreement. 

OIL AND GAS PRODUCING ACTIVITIES 

The Company follows the "successful efforts" method of accounting for its oil and gas properties. Under this method of accounting, all 

property acquisition costs (cost to acquire mineral interests in oil and gas properties) and costs (to drill and equip) of exploratory and 

development wells are capitalized when incurred, pending determination of whether the well has found proved reserves. If an exploratory well 

has not found proved reserves in commercial quantities, the costs associated with the well are charged to expense. The costs of development 

wells are capitalized whether productive or nonproductive. Geological and geophysical costs and the costs of carrying and retaining 

undeveloped properties are expensed as incurred. 

OTHER PROPERTY AND EQUIPMENT 

p.y and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of 3 to 5 years 

ce furniture and equipment and transportation and other equipment. Additions or improvements that increase the value or extend the life 

L. ~ asset are capitalized. Expenditures for normal maintenance and repair are expensed as incurred. Disposals are removed from the accounts 

at cost less accumulated depreciation and any gain or loss from disposition is reflected in operations. 

OIL AND GAS REVENUES 

Oil and gas revenues are recorded under the sales method. We recognize oil and gas revenues as production occurs. As a result, we accrued 
revenue relating to production for which we have not received payment. 

IMPAIRMENT OF LONG-LIVED ASSETS 

•

event facts and circumstances indicate the carrying value of a long-lived asset, including associated intangibles, may be impaired, an 

( tion of recoverability is performed by comparing the estimated future undiscounted cash flows associated with the asset to the asset's 

chujing amount to determine if a write-down to fair market value or discounted cash flow is required. Based upon a recent evaluation by 

management, an impairment write-down of the Company's long-lived assets was recorded to write such assets down to their estimated net 

realizable value resulting in an impairment expense of$137,613 and $42,926 in 2009 and 2008, respectively. 

STOCK BASED COMPENSATION 

Effective January 1,2009, AvStar Aviation adopted the authoritative guidance for Stock Compensation which established financial accounting 

and reporting standards for stock based employee compensation plans. It defines a fair value based method of accounting for an employee stock 

option or similar equity instrument. In January 2006, the Company implemented SFAS No. 123R, and accordingly, the Company accounts for 

compensation cost for stock option plans in accordance with SFAS No. 123R. 

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS 

Financial instruments which subject the Company to concentrations of credit risk include cash and cash equivalents and accounts receivable. 

The Company has concentrated its credit risk by maintaining deposits in a fmancial institution, which may at times exceed the amounts covered 

by insurance provided by the United States Federal Deposit Insurance Corporation ("FDIC") The Company has not experienced any losses on 

deposits. 

INCOME TAXES 

The Company uses the liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined 

based on differences between financial reporting and income tax carrying amounts of assets and liabilities and are measured using the enacted 

tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance, if necessary, is provided against 

deferred tax assets, based upon management's assessment as to their realization. 

1. AND DILUTED NET LOSS PER SHARE 

Basic loss per share is computed using the weighted average number of shares of common stock outstanding during each period. Diluted loss 

per share includes the dilutive effects of common stock equivalents on an "as if converted" basis. For the years ended December 31, 2010 and 

2009, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. 

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS 

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's 

results of operations, fmancial position or cash flow. 

2. GOING CONCERN CONSIDERATIONS 

Since its inception, the Company has suffered recurring losses from operations and has been dependent on existing stockholders and new 

investors to provide the cash resources to sustain its operations. During the years ended December 31, 2010 and 2009, the Company reported 

losses of $(1,527,949) and $ (988,990), respectively. These conditions raise substantial doubt as to the Company's ability to continue as a going 

concern. 

The Company developed a multi-step plan and during 2009 and 2010 took actions to improve its financial position and deal with its liquidity 

problems. The fmal steps of the plan are still being developed, but may include additional private placements of the Company's common stock, 

and efforts to raise additional debt financing or equity offerings. 

The Company's long-term viability as a going concern is dependent on certain key factors, as follows:- The Company's ability to obtain p. adequate sources of outside financing to support near term operations and to allow the Company to continue forward with current strategic 

1... ~ompany's ability to ultimately achieve adequate profitability and cash flow to sustain operations. 

The consolidated fmancial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going 

concern. 
3. OIL AND GAS PROPERTIES 

Oil and gas properties consist consisted of the following at December 31, 2009: 

• Oil and gas properties 309,074 

Less accumulated depletion (271,953) 

Net oil and gas properties $ 37,121 

During the years ended December 31, 2009 and 2008, the Company recorded dry hole, abandonment and impairment charges of $137,613 and 

$42,926, respectively. At December 31,2009, the Company had working interests in two wells. 

4. PROPERTY AND EOUIPMENT 

Property and equipment consists of the following at December 31,2009: 

5. INCOME TAXES 

Office equipment 

Furniture and fixtures 

Less accumulated depreciation 

Net property and equipment 

3 to 5 years 

3 to 5 years 

$33,174 

33,174 

(13,638) 

$19,536 

The Company has incurred losses since its inception and, therefore, has not been subject to federal income taxes. As of December 31, 2009, the 

Company had net operating loss ("NOL") carryforwards for income tax purposes of approximately $8,240,528, which expire in various tax 

y~ough 2027. Additionally, because United States tax law limits the time during which NOL carryforwards may be applied against future 

;~ income, the Company will, in all likelihood, be unable to take full advantage of its NOLs for federal income tax purposes should the 

L~ ... lpany generate taxable income. 

The composition of deferred tax assets and the related tax effects at December 31, 2010 are as follows: 

Net operating losses $3,081,173 

Less valuation allowance (3,081,173) 

Net deferred tax asset $ 

6. COMMITMENTS AND CONTINGENCIES 

LEASE 

Our principal executive offices are located in approximately 2,000 square feet of executive office space. Entities with whom our management 

has other business relationships are providing this space to us on a gratuitous, at-will basis. If this arrangement were to end, we would be 

required to start paying rent, or fmd alternative space, or both. 

EMPLOYMENT AGREEMENT 

The Company currently has employment agreements now in effect with two of our Named Executive Officers. 

We have an employment agreement dated May 5,2010 between our subsidiary Twin Air Calypso Limited, Inc. (the "Air Carrier Subsidiary") 

aeyton I. Gamber, our president and Chief Executive Officer (the "Gamber Employment Agreement"). The Gamber Employment 

/ ent provides for a term of five years that commenced in May 20 I 0, subject to earlier termination by the MRO Subsidiary upon certain 

ct.~,vmary events. It provides that Mr. Gamber will receive a weekly salary of $1,250, and will be entitled to participate in any and all 

employee benefit plans now existing or hereafter established for the MRO Subsidiary'S employees, provided that he meets the eligibility 

criterion therefor, and provided further that Mr. Gamber will be entitled to appropriate medical insurance in all cases. If we are successful in 

raising additional funds or improving significantly our financial performance, management expects that Mr. Gamber and the Company will renegotiate the Gamber Employment Agreement with a salary closer to market levels, consistent with any restrictions on salaries imposed by any 

investors providing the additional funds. 
We have an employment agreement dated September 1, 2010 with Henry A. Schulle, a Vice President and the Corporate Secretary (the 

"Schulle Employment Agreement"). The Schulle Employment Agreement Provides for a term of five years that commenced in September 

2010, subject to earlier termination by the Company upon certain customary events. It provides that Mr. Schulle will receive a monthly salary 

of $4,350.00, and will be entitled to participate in any and all employee benefit plans now existing or hereafter established for the Subsidiary's 

•

10yeeS, provided that he meets the eligibility criterion therefor, and provided further that Mr. Schulle will be entitled to appropriate medical 

. ce in all cases. Ifwe are successful in raising additional funds or improving significantly our financial performance, management 

l s that Mr. Schulle and the Company will re-negotiate the Schulle Employment Agreement with a salary closer to market levels, 

consistent with any restrictions on salaries imposed by any investors providing the additional funds. 

During a part of fiscal 2010, we had in effect an employment agreement dated March 17, 2010 with Russell Ivy, our former president and Chief 

Executive Officer (the "Ivy Employment Agreement"). The Ivy Employment Agreement had a one-year term, possibly subject to earlier 

termination by either Mr. Ivy or the Company upon notice to the other. Under the Ivy Employment Agreement, Mr. Ivy was to receive an 

annual salary of$37,500, which represented a significant reduction from a salary that Mr. Ivy had heretofore been receiving pursuant to a 

verbal employment agreement. Furthermore, per the Ivy Employment Agreement, we agreed to issue to Mr. Ivy, 15.0 million shares of our 

common stock as an inducement to Mr. Ivy to enter into the written employment agreement. Mr. Ivy was also entitled to participate in any and 

all employee benefit plans now existing or hereafter established for our employees, provided that he met the eligibility criterion therefor. The 

Ivy Employment Agreement replaced a verbal employment agreement with Mr. Ivy, pursuant to which Mr. Ivy was to receive a salary in the 

amount of$15,000 per month. Because of our lack of funds, Mr. Ivy received none of his salary in 2009, but all of his salary was accrued. In 

addition, Mr. Ivy received 4.0 million shares of our common stock as a sign-on bonus at a time when these shares had a value of $240,000 

based on the closing price of our shares on the date of grant. The Ivy Employment Agreement terminated in September 2010. 

7. STOCKHOLDERS' EQUITY 

PREFERRED STOCK 

The Company's articles of incorporation authorize the issuance of up to 10,000,000 shares of series preferred stock, with a par value of $.00 1 

and other characteristics determined by the Company's board of directors. As of December 31,2010, there was no preferred stock issued or 

outstanding. 

COMMON STOCK 

• the year ended December 31, 2010, the Company issued shares as compensation to employees and consultants. 

During January 2010 the Company issued 600,000 shares of its common stock to CMS Capital to resolve temporarily certain disagreements 

between this firm and the Company. 

During February 2010, the Company issued 521,052 shares of its common stock to SMT Trust in cancellation of debt in the amount of $99,000 

owed by the Company to Henry L. Schulle. 

On March 19,2010, the Company issued 15.0 million shares of its common stock to Russell Ivy, then our president and Chief Executive 

Officer, in connection with the re-negotiation of this officer's verbal employment agreement (including a salary reduction) and the 

memorialization of this agreement in writing. These shares were issued as an inducement to Mr. Ivy to enter into the written employment 

agreement. 

Moreover, the Company issued an aggregate of21.0 million shares of its common stock to three persons holding interests in a convertible 

promissory note in exchange for an aggregate of$52,500 of the indebtedness represented by this note. Of these shares, 14.0 million were issued 

near the end of March 2010, and 7.0 million were issued about the third week of April 2010. 

During June 2010, the Company issued 750,000 shares of its common stock to Miami Aviation Maintenance Company in connection with the 

sale of its assets to Twin Air Calypso Services, Inc. 

During June 2010, the Company issued 4,000,000 shares of its common stock to an attorney for legal services previously provided having a 

value to be determined. 

During July 2010, the Company issued an aggregate of 10.0 million shares of its common stock to an investors' relations firm for services to be 

provided, and 5.0 million shares of our common stock to a person holding interest in a convertible promissory note in exchange for a deduction 

0.500 of the indebtedness represented by this note. 

D .... _llg August 2010, the Company issued an aggregate of23 million shares of its common stock for the following purposes: 

*5 million shares of its COmmon stock to Henry A. Schulle for services as a founder of the Company and as an incentive for him to sign an 

employment agreement 
*11.3 million shares of its common stock to Clayton I. Gamber and Robin V. Gamber JTTEN 

in connection with the acquisition of Twin Air Calypso Limited, Inc. and Twin Air Calypso Services, Inc. 

*6.3 million shares of its common stock to Kenneth W. Langston in connection with the 

a.tion of Twin Air Calypso Limited, Inc. and Twin Air Calypso Services, Inc. 

L .... .ng October 2010, the Company issued 12.0 million shares of its common stock, to a person holding a convertible note, in exchange for the 

payment of$12,500 of the indebtedness represented by the note. 

STOCK OPTIONS 

The Company periodically issues incentive stock options to key employees, officers, and directors to provide additional incentives to promote 

the success of the Company's business and to enhance the ability to attract and retain the services of qualified persons. The Board of Directors 

approves the issuance of such options. The exercise price of an option granted is determined by the fair market value of the stock on the date of 

grant. 

A summary of the Company's stock option activity and related information for the years ended December 31, 2010 and 2009 follows: 

Balance outstanding at: 

December 31, 2009 

Balance outstanding at: 

December 31, 2010 

NUMBER OF 

SHARES 

UNDER 

OPTION 

350,000 

1,000 

EXERCISE 

PRICE 

$0.20-$1. 00 

$0.50 

WEIGHTED 

AVERAGE 

EXERCISE 

PRICE 

$0.56 

$0.50 

All outstanding stock options are exercisable at December 31,2010. A summary of outstanding stock options at December 31,2010 follows: 

• REMAINING EXPIRATION 

NUMBER OF COMMON DATE 

STOCK EQUIVALENTS 

1,000 January 2010 

REMAINING 

CONTRACTED 

LIFE 

(YEARS) 

0.08 

EXERCISE 

PRICE 

$0.50 

In connection with the acquisition of Twin Air Calypso Limited, Inc. ("TAC Limited"), and in order to effectuate a verbal agreement and 

understanding that they had made some time ago, we and the stockholders of T AC Limited entered into certain option agreements (the "Option 

Agreements"). The Option Agreements permit us to repurchase a portion of the 18.0 million shares of common stock issued in connection with 

the acquisition for an aggregate purchase price of $1. 75 million. The number of shares depends on the per-share "Market Value" of our 

common stock, which is basically the 20-day trading average prior to the time of exercise. The portion of such 18.0 million shares that may be 

repurchased generally equals the quotient obtained by dividing $1.25 million by the Market Value; provided, however, that the stockholders of 

T AC Limited may retain a maximum of 7.353 million shares and a minimum of 625,000 shares. Moreover, the Option Agreements require us 

to repurchase the portion of shares determined in accordance with the preceding whenever we complete a private placement of our securities 

for an aggregate purchase price of at least $3.0 million. 

Effective June 1, 2005, the Company adopted the 2005 Equity Compensation Plan (the "Plan") under which stock in lieu of cash compensation 

awards may be granted from time to time to employees and consultants of the Company. The Plan allows for grants to other individuals 

contributing to the success of the Company at the discretion of the Company's board of directors. The purpose of the Plan is to provide 

additional incentives to promote the success of the Company and to enhance the Company's ability to attract and retain the services of qualified 

individuals. The Company reserved 25,000,000 shares of stock for issuance under the Plan. No further shares are currently available for 

issuance pursuant to the Plan. 

There are no non-vested shares at December 31, 2010. 

STOCK WARRANTS 

Tempany did not grant any warrants in 2009 or 2010. 

STOCK WARRANTS 

A summary of the Company's stock warrant activity and related information for the years ended December 31, 2010 and 2009 follows: 
• 

Warrants outstanding at: 

December 31, 2008 

Issued 

Exercised 

Expired 

Warrants outstanding at: 

December 31, 2009 

Issued 

Exercised 

Expired 

Warrants outstanding at: 

December 31, 2010 

NUMBER OF SHARES 

UNDER WARRANT 

21,935,387 

° 

10,910,387 ° 

11,025,000 

0 

0 

2,025,000 

90,000 

EXERCISE 

PRICE 

AVERAGE 

WEIGHTED 

PRICE 

$0.008-$0.015 $0.01 

$0.01-$0.015 $0.014 

All stock warrants are exercisable at December 31, 2010. A summary of outstanding stock warrants at December 31,2010 follows: 

REMAINING 

NUMBER OF COMMON 

STOCK EQUIVALENTS 

EXPIRATION 

DATE 

REMAINING EXERCISE 

CONTRACTED PRICE 

LIFE 

(YEARS) 

20,000 January 2012 1. 08 $0.01 

70,000 February 2012 1.17 $0.015 

8. SUBSEQUENT EVENTS 

OUrth quarter of2010 the Company entered discussions with Aircraft Charters, LLC ("Aircraft Charters") for the acquisition ofa thirtyf cent interest in the LLC. A Letter of Intent has been presented to Aircraft Charters, and the transaction is proposed for closing in late 

1\ "' 011. 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNT ANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. 

There have been no changes in or disagreements with accountants on accounting and fmancial disclosure. 

ITEM 9A(T). CONTROLS AND PROCEDURES. 

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES 

As of the end of the period of this report, our principal executive and principal fmancial officer carried out an evaluation of the effectiveness of 

the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the 

participation of our management, including our Chief Executive Officer and Principal Financial Officer. We have concluded, based on that 

evaluation, that, as of such date, the disclosure controls and procedures were not effective to ensure that information required to be disclosed in 

reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including its Chief Executive Officer 

and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management identified significant 

deficiencies with respect to the timely public reporting of events requiring such reporting. During 2010, these deficiencies caused us to file late 

five Current Reports on Form 8-K. Some of these instances resulted from the failure of relevant company personnel to understand the need for 

prompt disclosure. As funds are available therefore, we intend to institute the following corrective action to ensure that such events are timely 

reported publicly: . 

* Adopting a disclosure policy requiring our personnel to communicate to a designated committee for evaluation any information potentially 

material and thereby requiring public disclosure; 

* Developing a basic program to educate management as to the events requiring expedited disclosure; 

* .Oid late disclosure of events requiring expedited disclosure, adopting certain procedures, such as required consultation with securities 

( before issuing any equity shares, entering into any agreement that may be material, taking any action at a Board of Directors meeting 

01 ~le like; and 

* To avoid late filings of documents having regular due dates (such as Annual Reports on Form 10-K and Quarterly Reports on Form 1O-Q), 

establishing timelines within which our professional personnel will strive to work. 

Because the implementation of the preceding corrective action will begin after the end of the period of this report, the significant deficiencies 

that we identified still existed as of the end of the period of this report. 
Notwithstanding management's assessment that our disclosure controls and procedures were not effective as of December 31, 2010, and the 

significant deficiencies described above, we believe that this Annual Report on Form 10-K and the consolidated financial statements included 

in this Annual Report on Form 10-K correctly present our financial condition, results of operations and cash flows for the fiscal years covered 

thereby in all material respects. 

• 

• 

• 
LIMITATIONS ON EFFECTIVENESS OF CONTROLS AND PROCEDURES 

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and 

procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can PI' e only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must 

J the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent 

Ii tions in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, 

within our company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decisionmaking can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the 

individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of 

controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will 

succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in 

conditions, or the degree of compliance with the policies or procedures may deteriorate. 

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15( t) 

under the Exchange Act). Our 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 purposes using accounting principles generally accepted 

in the United States. 

Because of its inherent limitations, internal control over fmancial reporting may not prevent or detect misstatements. Therefore, even those 

systems determined to be effective can provide only reasonable assurance of achieving their control objectives. 

There were no adjustments at year-end and so management considers the controls in place are adequate for us. 

Management uss a separation of function approach to insure adequate controls. There was no material weakness identified during the 

preparation of year-end financial statements. 

This annual report does not include an attestation report of our registered public accounting firm regarding internal controls over fmancial 

reling. 

C GES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING 

During the fourth fiscal quarter of20l0, there were no changes in our internal control over financial reporting that have materially affected, or 

are reasonably likely to materially affect our internal control over fmancial reporting. 

ITEM 9B. OTHER INFORMATION. 

Not applicable . 

• 
PART III 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE 

WRNANCE; COMPLIANCE WITH SECTION 16{A) OF THE EXCHANGE ACT. 

DIRECTORS AND EXECUTIVE OFFICERS 

Our current directors and executive officers are as follows: 

NAME 

Clayton I. Gamber 

Henry A. Schulle 

Stephen Wood 

James H. Short 

Russell Ivy 

Robert Wilson 

AGE 

61 

46 

41 

67 

44 

53 

The following is the background of our officers and directors: 

POSITIONS 

Chief Executive Officer, President and 

director 

Vice President, Secretary, and director 

Chief Technology Officer and director 

Director 

Director 

Vice President and Chief Financial Officer 

CLAYTON I. GAMBER. Mr. Gamber has served as one of our directors and our Chief Executive Officer and President since August 2010. He 

has been involved in the aviation business in South Florida since 1970, serving in capacities that have included Director of Maintenance, 

Director of Operations, Accountable Manager, executive officer, director and owner. For more than the past five years, he has served as a 

director and an executive officer of aviation companies in which he has been a part owner. One of these companies, Twin Town Leasing Co., 

d/b/a "Twin Air Calypso," filed for protection under Federal bankruptcy laws in June 2010 due to a single liability. Mr. Gamber holds a 

Bachelor of Science in Industrial Engineering and Operations Research from Virginia Tech. He also holds an FAA Airline Transport Pilot 

License, has over 8000 flight hours and a DC-3 Type Rating, and holds a FAA Airframe and Powerplant License. Prior to his election as an 

office and a director, Mr. Gamber was serving as a director and the President of Twin Air Calypso Services, Inc., a recently-formed, whollyowned subsidiary of ours. 

y A. SCHULLE. Mr. Schulle has served as one of our directors and our Vice President and Secretary since February 2009. Mr. Schulle 

1 ed as AvStar Services' Vice President and a member of AvStar Services' Board of Directors since July 2006; from July 2006 until 

J~ 2008 he also served as A vStar Services' President and Chairman of the Board of Directors. Since January 8, 2004 he has served as 

Chairman of the Board of Directors and a principal of Marte x Trading Company, a privately held company active in the oil and gas industry as 

well as real estate investments and development. Martex Trading Company was the controlling member of Aurora Financial Services, LLC, a 

FINRA-registered broker dealer that has acted as a placement agent for AvStar Services. From December 2003 until July 2004 Mr. Schulle 

served as a member of the Board of Directors of TexCom, Inc. (Pink Sheets: TEXC). AvStar Services acquired San Diego Airmotive from 

TexCom, Inc. From January 1997 to November 2003, he was President and a Director of Texas Commercial Resources, Inc. (Pink Sheets: 

TCRl) from its inception as a privately held company that merged with EZUtilities in 2001. Mr. Schulle continued as an officer and director of 

Texas Commercial Resources, Inc. through its subsequent successful combination with Petrosearch Energy Corporation (OTCBB: PTSG), a 

Houston based energy company. He served as Chairman of the Board ofUnicorp, Inc., which was quoted on the OTC Bulletin Board from 

November 1991 until January 1998. Mr. Schulle negotiated the merger ofUnicorp, Inc. with United States Refining Company, a diversified, 

vertically integrated petroleum refming and petrochemical company that was acquired by Houston American Energy Corp. in April 2001. From 

January 1998 to July 2004, Mr. Schulle was employed by Dell Computer Corporation as a database support specialist working on international 

assignments . 

• 
STEPHEN WOOD. Mr. Wood has served as one of our directors and our Chief Technology Officer since September 2010. For over the past 

five years, Mr. Wood has acted as an entrepreneur. In addition to his work on our behalf, Mr. Wood will continue to hold positions in three 

corporations, AmeriMovers Group, Inc. (CEO), Local Media Group, Inc. (CEO), and AmeriBusiness Products, Inc. (CFO/COO). In 2001 he 

launched his first Internet site, AmeriMovers, of more than 150 presently owned. Shortly thereafter AmeriMovers developed the first movers 

bl.· g tool in the world. During 2006 Local Media Group was formed to become the marketing arm for AmeriMovers and other Internet 

, s. While continuing to make acquisitions for the AmeriMovers Brand, Mr. Wood established AmeriBusiness Products in 2007. 

Ai.. usiness Products, formerly known as AmeriBusiness Forms, holds a large buyers group contract with more than 20,000 members and 

clients within major industries. As our CTO, Mr. Wood plans to incorporate technology into our current business model, streamlining it and 

expanding it into our future acquisitions. 

JAMES H. SHORT. Mr. Short has served as one of our directors since February 2009. He has been a member of AvStar Services' Board of 

Directors since July 2006. Since December 2003 he has served as a member of the Board of Directors ofTexCom, Inc. (pink Sheets: TEXC). 

AvStar Services acquired San Diego Airmotive from TexCom, Inc. He also served as a member of the Board of Directors of Texas 

Commercial Resources, Inc. (pink Sheets: TCRI) from 2001 until 2003. Mr. Short is currently a principal and Vice president of Finance & 

Administration for Sabine Storage & Operations, Inc., an engineering and a consulting firm specializing in the design, engineering, permitting, 

construction management, and operations of hydrocarbon storage facilities in subsurface salt dome formations. In addition, he is a principal and 

Vice President of Marketing for Sabine Resources, Inc., a surface and mineral owner of property having hydrocarbon storage potential in a salt 

dome formation. Mr. Short was previously associated with Energy Consultants, Inc., a natural gas marketing entity serving municipalities in 

South Illinois and Indiana, on an independent contractor basis, from 1984 until 200I.From 1979 to 1984, he was Senior Vice President and a 

director of Coronado Transmission Company with responsibilities for gas acquisition, transportation, and sales throughout the Southern States 

and Rocky Mountain area. Mr. Short served as Vice President of Corporate Planning and Vice President of Gas Supply, Transportation and 

Sales of Lovaca Gathering Company from 1972 to 1979. He was an employee of Cities Service Oil Company from 1966 to 1972. Mr. Short 

holds a B.S. degree from the University of Tennessee 

RUSSELL NY. Mr. Ivy has served as one of our directors since April 2009, and he was our Chief Executive Officer and President from April 

2009 to August 2010. Mr. Ivy served as President and Chief Executive Officer of AvStar Aviation Services, Inc., our controlling stockholder 

from January 2009 to August 2010. From January 1996 through the present, he has been a principal of the Ivy Companies, several companies 

that provided various merger and acquisition consulting services for various operating entities both private and public. From September 2002 to 

May 2004, Mr. Ivy was a principal of Seafood Anywhere, 

LLC., a Houston-based startup seafood distribution company supplying various types of seafood to restaurants in the Houston, Austin, San 

Antonio, and Dallas areas. He earned a Bachelors Degree in International Trade/Economics in 1991 from Texas Tech University. r.RT WILSON. Mr. Wilson has served as our Vice President and Chief Financial Officer since April 2008. He has also served as AvStar 

~~_ es' Vice President and Chief Financial Officer since July 2004. Mr. Wilson also serves as the Chief Financial Officer and Operations 

Principal for several broker dealers and investment banking firms where his duties include compliance with FINRA, SEC and NYSE rules and 

regulations, the design and implementation of accounting and operations control procedures, representing firms as an expert witness and with 

FINRA examinations. He currently serves as a director and audit committee chairman for American Security Resources, Inc. and American 

Enterprise Development Corporation and as a consultant with The Professional Directors Institute. Mr. Wilson is a CPA and has over 15 years 

of experience as the owner of a certified public accounting firm, was previously a member of the FINRA Board of Arbitrators and has several 

FINRA and NYSE licenses. Mr. Wilson has previously served as operations compliance manager of the AIM Management Group, Vice 

President Compliance/lnternal Audit of the Kemper Securities Group and an auditor with Price Waterhouse. Mr. Wilson is a 1977 graduate of 

Houston Baptist University and pursued additional studies at Georgetown University . 

• 
Our Board of Directors has five members. Each director serves a one-year term that expires at the following annual meeting of stockholders. 

Executive officers are appointed by the Board of Directors and serve until their successors are appointed. There are no family relationships 

among our directors or executive officers. 

1IIJORATEGOVERNANCE 

Our Board of Directors has not established any standing committees, including an Audit Committee, Compensation Committee or a 

Nominating Committee. The Board of Directors as a whole undertakes the functions of those committees. The Board of Directors may 

establish one or more of these committees whenever it believes that doing so would benefit us. 

CODE OF ETHICS 

We adopted a Code of Ethics for our Principal Executive and Senior Financial Officers on February 6, 2005. Anyone can obtain a copy of the 

Code of Ethics by contacting us at the following address: 3600 Gessner, Suite 220, Houston, Texas 77063, attention: Chief Executive Officer, 

telephone: (713) 914-9193. The first such copy will be provided without charge. 

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who are the beneficial 

owners of more than ten percent of our common stock (collectively, the "Reporting Persons") to file reports of ownership and changes in 

ownership with the Securities and Exchange Commission and to furnish us with copies of these reports. To the best of our knowledge based 

solely on information available to us, the following persons have failed to file, on a timely basis, the identified reports required by Section 16 

(a) of the Exchange Act during fiscal year ended December 31,2010: Russell Ivy failed to file a Form 4 regarding a March 2010 grant to him 

of shares for re-negotiating his employment agreement and a Form 5 to correct the failure to file the Form 4. AvStar Aviation Services, Inc. 

failed to file a Form 4 regarding company shares spun-off by it to its shareholders, and a Form 5 to correct the failure to file the Form 4. Henry 

A. Schulle failed to file (i) a Form 4 regarding an August 2010 grant to him of shares for agreeing to serve as an employee and a Form 5 to 

correct the failure to file the Form 4, and (ii) a Form 4 regarding company shares spun-off to him by AvStar Aviation Services, Inc. and a Form 

5 to correct the failure to file the Form 4. James H. Short failed to file a Form 4 regarding company shares spun-off to him by AvStar Aviation 

Services, Inc. and a Form 5 to correct the failure to file the Form 4. Robert Wilson failed to file a Form 4 regarding an April 2010 grant to him 

of shares for services provided and a Form 5 to correct the failure to file the Form 4. Stephen Wood failed to file a Form 3 regarding when he 

wllected to the Board of Directors and a Form 5 to correct the failure to file the Form 3. 

L.~ 11. EXECUTIVE COMPENSATION. 

The following table sets forth the compensation we paid during the fiscal years ended December 31, 2010 and 2009 to our principal executive 

officer and any other executive officer whose total compensation exceeded $100,000. The executive officers listed in the table below are 

referred to as the "Named Executive Officers." 

SUMMARY COMPENSATION TABLE (1) 

Name and Year Salary ($) Bonus ($) Stock Total 

Principal position Awards ($) 

(a) (b) (c) (d) (e) (j) 

Clayton I. Gamber 

Chief Executive 

Officer (2) 2010 43,750 (3 ) $-0- $-0-

Russell Ivy, 

Chief Executive 

Officer (4) 2010 28,125 (5) $345,000(6) $-0-

2009 $120,000 (5) $240,000(7) $6,000(8) $366,000 

Gregory H. Noble, 

Interim Chief Executive 

Officer and Vice 

President (9) 2009 $ -0- $ -0- $150,000(10)$150,000 

Thomas Mathew, 

Chief Executive 

Officer (11) 2009 $ -0- $ -0- $ -0- $ -0-

{. Columns designated by the Securities and Exchange Commission for the reporting of option awards, non-equity incentive plan 

compensation, nonqualified deferred compensation earnings or all other compensation have been eliminated as no such awards, compensation 

or earnings were made to, earned by, or paid to or with respect to any person named in the table during any fiscal year covered by the table. 

(2) Mr. Gamber was elected Chief Executive Officer and President effective August 19,2010. 

(3) Of this amount, $30,655.07 was paid, and $13,094.93 was accrued and not paid. 

(4) Mr. Ivy was elected Chief Executive Officer and President effective April 30, 2009, and he served as such until August 19,2010. 

(5) All of this amount was accrued and not paid. 
-- ---------

(6) The figure in the table is based on a contract re-negotiation bonus comprised of 15.0 million shares of our common stock multiplied by 

$.023, the closing price of our common stock on the date of grant. These 15.0 million shares had a value of $49,500 as of March 18,2011, 

based on the $.0033 closing price of our common stock on that date. 

(7) The figure in the table is based on a sign-on bonus comprised of 4.0 million shares of our common stock multiplied by $.06, the closing 

price of our common stock on the date of grant. These 4.0 million shares had a value of $13,200 as of April 12, 2010, based on the $.0033 

• 

price of our common stock on that date. 

( e figure in the table is based on a stock award for services as a director comprised of 100,000 shares of our common stock multiplied by 

$.06, the closing price of our common stock on the date of grant. 

(9) Mr. Nobel was elected Interim Chief Executive Officer effective April 3, 2009, and he served as such until April 30, 2009. He was elected 

Vice President effective February 20,2009, and he served as such until October 5, 2009. 

(10) The figure in the table is based on an issuance of 2.5 million shares of our common stock to settle claims for compensation multiplied by 

$.06, the closing price of our common stock on the date of grant. These 2.5 million shares had a value of $87,500 as of April 12, 2010, based 

on the $.035 closing price of our common stock on that date. 

(11) Mr. Mathew was elected President effective December 31,2008, and he served as such until February 27, 2009. 

No options or unvested stock awards had been granted in favor of our Named Executive Officers as of December 31,2010. 

EMPLOYMENT AGREEMENTS 

The Company currently has employment agreement in effect with one of our Named Executive Officers. 

We have an employment agreement dated May 5, 2010 between our subsidiary Twin Air Calypso Limited, Inc. ("TAC Limited") and Clayton 

I. Gamber, our president and Chief Executive Officer (the "Gamber Employment Agreement"). The Gamber Employment Agreement provides 

for a term of five years that commenced in May 2010, subject to earlier termination by the TAC Limited upon certain customary events. It 

provides that Mr. Gamber will receive a weekly salary of $1 ,250, and will be entitled to participate in any and all employee benefit plans now 

existing or hereafter established for the T AC Limited's employees, provided that he meets the eligibility criterion therefore, and provided 

further that Mr. Gamber will be entitled to appropriate medical insurance in all cases. Ifwe are successful in raising additional funds or 

improving significantly our fmancial performance, management expects that Mr. Gamber and we will re-negotiate the Gamber Employment 

Agreement to pay a salary closer to market levels, consistent with any restrictions on salaries imposed by any investors providing the additional 

funds. 

'1ve an employment agreement dated September 1, 2010 with Henry A. Schulle, a Vice President and the Corporate Secretary (the 

, Ie Employment Agreement"). The Schulle Employment Acreement Provides for a term of five years that commenced in September 

20 ,subject to earlier termination by the Company upon certain customary events. It provides that Mr. Schulle will receive a monthly salary 

of$4,350.00, and will be entitled to participate in any and all employee benefit plans now existing or hereafter established for the MRO 

Subsidiary's employees, provided that he meets the eligibility criterion therefore, and provided further that Mr. Schulle will be entitled to 

appropriate medical insurance in all cases. Ifwe are successful in raising additional funds or improving significantly our financial performance, 

management expects that Mr. Schulle and the Company will re-negotiate the Schulle Employment Agreement to pay a salary closer to market 

levels, consistent with any restrictions on salaries imposed by any investors providing the additional funds. 

During a part of fiscal 2010, we had in effect an employment agreement dated March 17, 2010 with Russell Ivy, our former president and Chief 

Executive Officer (the "Ivy Employment Agreement"). The Ivy Employment Agreement had a one-year term, possibly subject to earlier 

termination by either Mr. Ivy or us upon notice to the other. Under the Ivy Employment Agreement, Mr. Ivy was to receive an annual salary of 

$37,500, which represented a significant reduction from a salary that Mr. Ivy had heretofore been receiving pursuant to a verbal employment 

agreement. Furthermore, per the Ivy Employment Agreement, we agreed to issue to Mr. Ivy, 15.0 million shares of our common stock as an 

inducement to Mr. Ivy to enter into the written employment agreement. Mr. Ivy was also entitled to participate in any and all employee benefit 

plans now existing or hereafter established for our employees, provided that he met the eligibility criterion therefor. The Ivy Employment 

Agreement replaced verbal employment agreement with Mr. Ivy, pursuant to which Mr. Ivy was to receive a salary in the amount of$15,000 

per month. Because of our lack of funds, Mr. Ivy received none of his salary in 2009, but all of his salary was accrued. In addition, Mr. Ivy 

received 4.0 million shares of our common stock as a sign-on bonus at a time when these shares had a value of $240,000 based on the closing 

price of our shares on the date of grant. The Ivy Employment Agreement terminated in September 2010. 

DIRECTOR COMPENSATION 

Our directors received no compensation for their services as such during the fiscal year ended December 31,2010. 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED 

SIKHOLDER MATTERS. 

Th able sets forth below contains certain information as of March 13, 2011 concerning the beneficial ownership of our voting stock by: 

* each person known by us to be the owner of more than 5% of our outstanding shares of common stock; 

* each of our executive officers and directors; and 

* all our executive officers and directors as a group. 
We know of no person outside of management who owns more than % of our outstanding shares of common stock. 

Except as otherwise indicated, all persons listed below have (i) sole voting power and investment power with respect to their shares, except to 

the extent that authority is shared by spouses under applicable law, and (ii) record and beneficial ownership with respect to their shares. Shares 

n.standing but deemed beneficially owned by virtue of the right of a person or member of a group to acquire them within 60 days of 

~ 13, 2011 are treated as outstanding only for determination of the number and percent owned by such group or person. Except as 

o ise indicted, the address for all persons indicated in the table is 3600 Gessner, Suite 220, Houston, Texas 77063 . 

• 

• 
Amount and Nature of Beneficial Ownership 

• 

Name of Beneficial Owner 

DIRECTORS AND EXECUTIVE OFFICERS 

Russell Ivy 

Clayton I. Gamber 

Henry A. Schulle 

Robert Wilson 

James A. Short 

All directors and executive officers 

as a group (five persons) 

Number 

22,100,000 

11,300,000 

8,643,334 

1,600,000 

300,000 

43,943,334 

----------

Percent 

10.6% 

( 1) 5.4% 

4.2% 

* 

* 

21.1% 

(1) These shares are held by Mr. Gamber in his name and in the name of his wife, Robin V. Gamber, as joint tenants with right of survivorship. 

Mr. Gamber disclaims beneficial ownership of one-half these shares to the extent that his wife has an interest in such one-half. Mr. Gamber 

holds (with Ms. Gamber) shared voting power and investment power with respect to these shares. 

* Less than one percent 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. 

Except as described below, none of the following persons has any direct or indirect material interest in any transaction to which we were or are 

a party since the beginning of the last fiscal year, or in any proposed transaction to which we propose to be a party: 

(a) any of our directors or executive officers; 

(b) any nominee for election as one of our directors; 

(c) any person who is known by us to beneficially own, directly or indirectly, shares carrying more than 5% of the voting rights attached to our 

common stock; or 

(d) any member of the immediate family (including spouse, parents, children, siblings and in-laws) of any of the foregoing persons named in 

paragraph (a), (b) or (c) above. 

~.·18, 2010, (a) Twin Air Calypso Services, Inc., a newly-formed, indirect wholly-owned Florida subsidiary (the "MRO Subsidiary") of 

l d (b) Miami Aviation Maintenance Co. ("MAMCO") executed a bill of sale whereby MAMCO assigned to the MRO Subsidiary certain 

of Its assets used to provide aviation MRO services. At the time of this transaction, MAMCO was owned in part by Clayton I. Gamber, who 

became one of our directors and our Chief Executive Officer and President in August 2010. After the completion of this transaction, Mr. 

Gamber was hired as an officer of the MRO Subsidiary. For more information about this transaction, see "Item 1. Business - General 

Development of Business 

- Formation ofMRO Subsidiary." 

On August 19,2010, we completed a transaction in which we acquired all of the outstanding stock in Twin Air Calypso Limited, Inc. ("TAC 

Limited"). At the time of this transaction, T AC Limited was owned in part by Clayton I. Gamber, who at the time was an officer of the MRO 

Subsidiary and as a result of the transaction became one of our directors and our Chief Executive Officer and President. For more information 

about this transaction, see "Item 1. Business 

- General Development of Business - Acquisition of FAA Air Carrier." 

INDEPENDENCE OF DIRECTORS 

The rules of the American Stock Exchange (the "AMEX") generally require that a listed company's Board of Directors be composed ofa 

majority of independent directors. However, these rules provide that a "smaller reporting company" need only maintain a Board of Directors 

comprised of at least 50% independent directors. A lthough we are not listed on the A MRX, we use the standard.;; established by the AMEX for 

determining whether or not each of our directors is "independent." We have determined that, as of April 13, 2011, James 

H. Short is an "independent" director in accordance with the AMEX independence standards. 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. 

During 2010 and 2009, the aggregate fees that we paid to Clay Thomas, P.C., our independent auditors, for professional services were as 

follows: 

• 

Audit Fees (1) 

Audit-Related Fees 

Tax Fees 

All Other Fees 

YEAR ENDED DECEMBER 31, 

$ 

2010 

35,000 

N/A 

N/A 

N/A 

$ 

2009 

47,000(2) 

N/A 

N/A 

N/A 
(1) Fees for audit services include fees associated with the annual audit and the review of our quarterly reports on Form 10-Q. 

(2) Includes $15,000 for the audit of the 2008 financial statements of San Diego Airmotive, which was acquired during 2009. 

~ COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF INDEPENDENT 

J~TERED PUBLIC ACCOUNTING FIRM. 

We do not have an audit committee, but our entire Board of Directors functions as such. Our Board of Directors pre-approves the engagement 

of Clay Thomas, P.C. for all audit and permissible non-audit services. Our Board of Directors annually reviews the audit and permissible nonaudit services performed by Clay Thomas, P.e., and reviews and approves the fees charged by Clay Thomas, P.C. Our Board of Directors has 

considered the role of Clay Thomas, P.e. in providing tax and audit services and other permissible non-audit services to us and has concluded 

that the provision of such services was compatible with the maintenance of Clay Thomas, P.e. 's independence in the conduct of its auditing 

functions. 

PART IV 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. 

(a) The following Exhibits are filed as part of this report. 

Exhibit Description 

No. 

2.1 Stock Acquisition and Reorganization Agreement between us and Segway II Corp. dated April 26, 2000 is incorporated herein by reference 

to our Current Report on Form 8-K (SEC File No. 0-30503) filed with the SEC on April 28, 2000, Exhibit 2.1. 

2.2 Share Exchange Agreement by and between us and A vStar Aviation Services, Inc. is incorporated herein by reference to our Current Report 

on Form 8-K (SEC File No. 0-30503) filed with the SEC on February 25, 2009, Exhibit 2.1. 

3.1 First Amended and Restated Articles of Incorporation are incorporated herein by reference to our Current Report on Form 8-K (SEC File 

No. 0-30503) filed with the SEC on September 22,2009, Exhibit 3.1. 

3.2 By-laws are incorporated herein by reference to our Current Report on Form 8-K (SEC File No. 0-30503) filed with the SEC on April 28, 

2.xhibit 3.2. 

• 

10.1 Bill of Sale dated April 8, 2010 by and between Twin Air Calypso 

Services, Inc. and Miami Aviation Maintenance Co. is incorporated 

herein by reference to our Current Report on Form 8-K (SEC File No. 

0-30503) filed with the SEC on April 13, 2010, Exhibit 10.1. 

10.2 Modification agreement regarding promissory note dated November 22, 

2006 is incorporated herein by reference to our Annual Report on Form 

10-K (SEC File No. 0-30503) filed with the SEC on May 15, 2009, 

Exhibit 10.2. 

10.3 Pledge of Shares of Stock dated November 17, 2006 is incorporated 

herein by reference to our Annual Report on Form 10-K (SEC File No. 

0-30503) filed with the SEC on May 15, 2009, Exhibit 10.3. 

10.4 Employment Agreement dated March 17, 2010 with Russell Ivy is 

incorporated herein by reference to our Current Report on Form 8-K (SEC 

File No. 0-30503) filed with the SEC on May 19, 2010, Exhibit 

10.1. 

10.5 Stock Sale and Purchase Agreement dated effective as of June 27, 2010 

by and between us, on the one hand, and Clayton I. Gamber, Kenneth W. 

Langston and Robin V. Gamber, on the other hand, is incorporated herein 

by reference to our Current Report on Form 8-K (SEC File No. 0-30503) 

filed with the SEC on August 16, 2010, Exhibit 10.1. 

10.6 First Amendment to Stock Sale and Purchase Agreement dated effective as 

of July 11, 2010 is incorporated herein by reference to our Current 

Report on Form 8-K (SEC File No. 0-30503) filed with the SEC on August 

16, 2010, Exhibit 10.2. 

10.7 Stock Option Agreement dated August 19, 2010 between us and Clayton I. 

Gamber and Robin V. Gamber is incorporated herein by reference to our 

Current Report on Form 8-K (SEC File No. 0-30503) filed with the SEC on 

August 25, 2010, Exhibit 10.1. 

10.8 Stock Option Agreement dated August 19, 2010 between us and Kenneth W. 

Langston is incorporated herein by reference to our Current Report on 

Form 8-K (SEC File No. 0-30503) filed with the SEC on August 25, 2010, 

Exhibit 10.2. 

10.9 Employment Agreement dated May 5, 2010 between Twin Air Calypso 

Limited, Inc. and Clayton I. Gamber is incorporated herein by reference 

to our Current Report on Form 8-K (SEC File No. 0-30503) filed with the 

SEC on August 25, 2010, Exhibit 10.3. 

10.10 Aircraft Lease dated February 1, 2010 by and between Air Charters, LLC 

and Twin Air Calypso Limited - previously filed 

14.1 Code of Ethics is incorporated herein by reference to Annual Report on 

Form 10-KSB for the year ended December 31, 2005 (SEC File No. 0-30503), 
21.1 

Exhibit 14.1. 

Subsidiaries filed herewith. 3. 31.01 Sarbanes Oxley Section 302 Certifications - filed herewith 

Sarbanes Oxley Section 906 Certifications - filed herewith 

• 

• 
SIGNATURES 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, 

thereunto duly authorized. 

• 

> 

• 

• 

A VSTAR A VIA TION GROUP, INC. 

By: /s/ Clayton I. Gamber 

Clayton I. Gamber 

Chief Executive Officer & President 

Date: April 20, 2011 
Exhibit 31.01 

CERTIFICATIONS I.on 1. Gamber, certify that: 

1. 1 have reviewed this Annual Report on Form lO-KiA of AvStar Aviation Group, Inc.; 

2. Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact 

necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to 

the period covered by this Annual Report; 

3. Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all 

material respects the fmancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this 

Annual Report; 

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as 

defined in Exchange Act Rules 13a-l5(e) and l5d-l5(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13al5(f)) for the registrant and have: 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 

to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those 

entities, particularly during the period in which this report is being prepared; 

b) Designed such internal control over fmancial reporting, or caused such internal control over financial reporting to be designed under our 

supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of fmancial statements for 

external purposes in accordance with generally accepted accounting principles; 

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the 

effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

l.closed in this report any change in the registrant'S internal control over fmancial reporting that occurred during the registrant'S most 

recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to 

materially affect, the registrant's internal control over financial reporting; and 

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal controls, to the registrant's 

auditors and the audit committee of registrant's Board of Directors: 

a) all significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely 

affect registrant'S ability to record, process, summarize and report financial information; and 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal 

controls. 

Date: April 20, 2011 

• 

/s/ Clayton I. Gamber 

Clayton I. Gamber, 

Chief Executive Officer 
Exhibit 3l.02 

I, Robert Wilson, certify that: 

~.ve reviewed this Annual Report on Form 10-KfA of AvStar Aviation Group, Inc.; 

2. tlased on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact 

necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to 

the period covered by this Annual Report; 

3. Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all 

material respects the fmancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this 

Annual Report; 

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as 

defined in Exchange Act Rules 13a-15(e) and 15d-15(e» and internal control over financial reporting (as defined in Exchange Act Rules l3a15(t)) for the registrant and have: 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 

to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those 

entities, particularly during the period in which this report is being prepared; 

b) Designed such internal control over financial reporting, or caused such internal control over fmancial reporting to be designed under our 

supervision, to provide reasonable assurance regarding the reliability of fmancial reporting and the preparation of financial statements for 

external purposes in accordance with generally accepted accounting principles; 

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the 

effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most 

r<afiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to 

1 wally affect, the registrant's internal control over financial reporting; and 

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal controls, to the registrant'S 

auditors and the audit committee of registrant's Board of Directors: 

a) all significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely 

affect registrant's ability to record, process, summarize and report financial information; and 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal 

controls. 

lsi Robert Wilson 

Robert Wilson, 

Date: April 20, 2011 Chief Financial Officer 

• 
Exhibit 32.01 

• 

CERTIFICATION PURSUANT TO 

18 U.S.c. SECTION 1350, 

AS ADOPTED PURSUANT TO 

SECTION 906 OF THE 

SARBANES OXLEY ACT OF 2002 

In connection with the Annual Report of AvStar Aviation Group, Inc. (the "Company") on Form 10-KJ A for the period ended December 31, 

2010, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned certifies, pursuant to 18 U.S.C. 

Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of2002, that: 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

(2) The information contained in the Report fairly presents, in all material respects, the fmancial condition and results of operations of the 

Company. 

April 20, 2011 By: /s/ Clayton I. Gamber 

Clayton I. Gamber 

Chief Executive Officer 

• 

• 
Exhibit 32.02 

• 

CERTIFICATION PURSUANT TO 

18 U.S.C. SECTION 1350, 

AS ADOPTED PURSUANT TO 

SECTION 906 OF THE 

SARBANES OXLEY ACT OF 2002 

In connection with the Annual Report of AvStar Aviation Group, Inc. (the "Company") on Form 10-K/ A for the period ended December 31, 

20 lO, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned certifies, pursuant to 18 U.S.c. 

Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of2002, that: 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the 

Company. 

April 20, 2011 By: /s/ Robert Wilson 

Robert Wilson, 

Chief Financial Officer 

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• 
• 

. ,A",-=,~, ',_:" ~i",t;;"".~';~"'3. '..r~L.+-, 

• 
EDGARhnline 

• 

AVSTAR AVIATION GROUP, INC. 

FORM 10-0 

(Quarterly Report) 

• Filed 05/16/11 for the Period Ending 03/31/11 

• 

Address 

Telephone 

CIK 

Symbol 

SIC Code 

Industry 

Sector 

Fiscal Year 

3600 GESSNER 

STE 220 

HOUSTON, TX 77063 

2817107103 

0001077319 

AAVG 

4581 - Airports, Flying Fields, and Airport Terminal Services 

Misc. Transportation 

Transportation 

12/31 

Pl>wered '" EDGA.Rbruine 

http://www.edgar-online.com 

© Copyright 2011, EDGAR Online, Inc. All Rights Reserved. 

Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. 
UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

• WASHINGTON, D.C. 20549 

• 

FORM lO-Q 

(MARK ONE) 

[Xl QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE 

SECURITIES EXCHANGE ACT OF 1934 

for the quarterly period ended March 31, 2011 

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE 

SECURITIES EXCHANGE ACT OF 1934 

for the transition period from to 

Commission file number 0-30503 

AVSTAR AVIATION GROUP, INC. 

(Exact Name of Registrant as Specified in Its Charter) 

Colorado 76-0635938 

(State or other jurisdiction of (I.R.S. Employer Identification No.) 

incorporation of organization) 

3600 Gessner, Suite 220, Houston, Texas 77063 

(Address of principal executive offices) 

(713) 965-7582 

(Registrant's telephone number) 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ ] No [X] 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data 

File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or 

for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ] 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting 

company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange 

Act (Check one). 

• 
Large accelerated filer [ ] Accelerated filer [ ] 

Non-accelerated filer [ ] Smaller reporting company [X] 

(Do not check if smaller reporting company) 

lee by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [] No [X] 

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 236,270,834 common 

shares as of May 13,2011 

• 

• 
PART I FINANCIAL INFORMATION 

ITEM 1. FINANCIAL STATEMENTS. 

• 

• 

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BALANCE SHEET 

AVSTARAVIATION GROUP, INC. 

Period End: March 31, 2011 

Current assets 

Cash 

ASSETS 

Accounts receivable 

Prepaid expenses 

Inventory 

Total Current Assets 

Property and equipment: 

Proven oil and gas properties (successful 

efforts method), net of accumulated 

depletion of $144,723 

Unproven oil and gas properties (successful 

efforts method) 

Total Fixed Assets 

Investment in subsidiary 

Total assets 

March 31, 

2011 

25,214 

161,075 

11,757 

55,937 

253,983 

46,840 

46,840 

810,938 

1,111,761 

AVSTARAVIATION GROUP, INC. 

BALANCE SHEET 

Period End: March 31, 2011 

LIABILITIES AND STOCKHOLDERS' DEFICIT 

Current liabilities 

Accounts payable 

Credit card payable 

Other current liabilities 

March 31, 

2011 

140,689 

0 

304,166 

Accrued interest payable to related 

Notes payable to related parties 

Notes payable 

parties 99,197 

Stock payable 

Total current liabilities 

Long term debt to related parties 

Asset retirement obligations 

Total liabilities 

Stockholders' deficit: 

Preferred stock: $.001 par value; 

1,000,000 shares authorized, 

none issued and outstanding 

Common stock: $.001 par value; 

500,000,000 shares authorized; 

236,270,834 shares issued and 

outstanding 

Additional paid-in capital 

Accumulated deficit 

Total stockholders' deficit 

Total liabilities and stockholders' deficit 

571,900 

3,713 

1,119,665 

1,050,577 

o 

2,170,242 

208,271 

21,471,591 

(22,738,343) 

(1,058,481) 

1,111,761 

December 31, 

2010 

5,648 

146,826 

11,007 

4,858 

168,339 

5,280 

4,540 

9,820 

781,840 

959,999 

December 31, 

2010 

83,189 

0 

383,574 

99,197 

477,336 

1,043,296 

1,057,477 

o 

2,100,773 

176,900 

21,441,852 

(22,759,526) 

(1,140,774) 

959,999 
• 

A VSTAR AVIATION GROUP, INC. 

CONSOLIDATED STATEMENTS OF OPERATIONS 

(unaudited) 

Oil and gas revenue 

Income from subsidiary operations 

Total revenue 

Costs and expenses: 

Cost of goods sold by subsidiary 

Lease operating expenses 

Production taxes 

Dry hole costs 

Depreciation and depletion 

Selling, general and administrative, 

including stock based compensation 

Total costs and expenses 

Income (Loss) from operations 

Other (expenses): 

Interest expense 

Net income (loss) 

Three Months Ended Three Months 

March 31 March 31 

2011 2010 

$1,293 $1,090 

584,442 100,428 

585,735 101,518 

417,220 60,619 

260 3,540 

135,962 638,800 

553,442 702,959 

32,293 (42,513) 

11,110 

$ 21,183 $ (601,441) 

Basic and diluted net loss per common share $(0.00) $(0.00) 

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Ended 
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AVSTARAVIATION GROUP, INC. 

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS 

for the three months ended March 31, 2011 and 2010 

(Unaudited) 

Three Months Ended 

March 31 

Cash flows from operating activities: 

Net income (loss) $ 

Adjustments to reconcile net loss to 

net cash used in operating activities 

Accounts receivable 

Accounts payable 

Payable to shareholder 

Net cash used in operating activities 

Cash flows from investing activities: 

Capital and exploratory expenditures 

Investment in subsidiary 

Furniture and equipment 

Net cash used in investing activities 

Cash flows from financing activities: 

Repayment of debt 

Paid in capital 

Common stock 

Net cash used in financing activities 

Net increase (decrease) in cash and 

cash equivalents 

Cash and cash equivalents at beginning 

of period 

Cash and cash equivalents at end of 

period 

Supplemental Disclosures: 

Cash paid for interest 

Cash paid for income taxes 

Noncash investing and financing 

activities: 

Oil and gas property acquired 

with common stock issuance 

2011 

21,183 

(17,624) 

(12,899) 

75,805 

4,739 

71,204 

260 

(58,063) 

(36,935) 

(94,738) 

(6,900) 

31,371 

18,629 

43,100 

19,566 

5,648 

$ 25,214 

$-

Three Months Ended 

March 31 

2010 

$(601,441) 

120,646 

(480,795) 

3,540 

3,540 

(475,524) 

3,731 

$ 2,000 

$-

$32,000 
• 

A VSTAR A VIA TION GROUP, INC. 

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT 

For the Three Months ended March 31, 2011 

Balances as of 

December 31, 

2010 

Debt reduction 

Imputed interest 

Net income 

Balance at March 

Preferred 

Stock 

Shares 

Additional Total 

Common Stock Paid-In Accumulated Stockholders' 

Shares Amount Capital Deficit Deficit 

178,899,542 176,900 21,441,852 (22,759,526) (1,140,774) 

31,371,292 31,371 18,629 50,000 

11,110 11,110 

21,183 21,183 

31,2011208,270,834208,27121,471,591 (22,738,343) (1,058,481) 

• 

• 
A VST AR AVIATION GROUP, INC. 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1.IS OF PRESENTATION 

Toe accompanying unaudited interim consolidated financial statements of AvStar Aviation Group, Inc. (the "Company"), a Colorado 

corporation formerly known as "Pangea Petroleum Corp.," have been prepared in accordance with accounting principles generally accepted in 

the United States of America and the rules of the Securities and Exchange Commission (the "SEC") and should be read in conjunction with the 

audited financial statements and notes thereto contained in the Company's latest Annual Report on Form 10-K filed with the SEC. In the 

opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation offmancial position and 

the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not 

necessarily indicative of the results to be expected for the full year. 

Notes to the consolidated fmancial statements that would substantially duplicate the disclosure contained in the audited fmancial statements for 

the most recent fiscal year, December 31,2010, as reported in the Company's latest Annual Report on Form lO-K, have been omitted. 

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS 

Effective January 1,2009, AvStar Aviation adopted the authoritative guidance for Derivative Values and Hedging. This guidance resolves 

issues addressed in Statement 133 Implementation Issue No. Dl, "Application of Statement 133 to Beneficial Interests in Securitized Financial 

Assets". This Statement permits fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that 

otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of 

Statement 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives 

or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in 

the form of subordination are not embedded derivatives, amends Statement 140 to eliminate the prohibition on a qualifying special-purpose 

entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This 

statement is effective for fiscal years beginning after September 15, 2006. Its adoption did not have a material impact on the Company's 

fmancial condition or results of operations. 

Ef.tive January 1,2009, AvStar Aviation adopted the authoritative guidance for Fair Value Measurements and Disclosures which establishes 

~ I framework for measuring fair value under GAAP. It defines and docifies the many defmitions of fair value included among various 

L uthoritative literature, clarifies and, in some instances, expands on the guidance for implementing fair value measurements, and 

increases the level of disclosure required for fair value measurements. Although SF AS 157 applies to and amends the provisions of existing 

FASB and AI CPA pronouncements, it does not, of itself, require any new fair value measurements, nor does it establish valuation standards. 

SFAS 157 applies to all other accounting pronouncements requiring or permitting fair value measurements, except for SFAS No. 123 (F), 

share-based payment and related pronouncements, the practicability exceptions to fair value determinations allowed by various other 

authoritative pronouncements, and AICPA Statements of Position 97-2 and 98-9 that deal with software revenue recognition. This statement is 

effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. 

Management does not believe the adoption of SFAS 157 will have a material impact on the Company's fmancial condition or results of 

operations. Effective January 1,2009, AvStar Aviation adopted the authoritative guidance for Financial Instruments which is an elective, 

irrevocable election to measure eligible financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument 

basis. The election may only be applied at specified election dates and to instruments in their entirety rather than to portions of instruments. 

Upon initial election, the entity reports the difference between the instruments' carrying value and their fair value as a cumulative-effect 

adjustment to the opening balance of retained earnings. At each subsequent reporting date, an entity reports in earnings, unrealized gains and 

losses on items for which the fair value option has been elected. SF AS 159 is effective for fmancial statements issued for fiscal years beginning 

after November 15,2007, and is applied on a prospective basis. Early adoption of SF AS 159 is permitted provided the entity also elects to 

adopt the provisions of SF AS 157 as of the early adoption date selected for SFAS 159. The Company has elected not to adopt the provisions of 

SF AS 159 at this time. 

Effective January 1,2009, AvStar Aviation adopted the authoritative guidance for Income Taxes which clarifies the accounting for uncertainty 

in income taxes recognized in fmancial statements in accordance with FASB 109, "Accounting for Income Taxes". FIN 48 prescribes a 

recognition threshold and measurement attribute for the fmancial statement recognition and measurement of a tax position taken or expected to 

be taken in a tax return. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006, with the cumulative effect 

of the change in accounting principle recorded as an adjustment to opening retained earnings. The adoptions of this pronouncement did not 

have a material effect on the fmancial position or results of operations of the Company. 

E.·ve January 1,2009, AvStar Aviation adopted the authoritative guidance for Business Combinations to increase the relevance, 

rr tational faithfulness, and comparability of the information a reporting entity provides in its fmancial reports about a business 

CL. , ation and its effects. SFAS 141R replaces SFAS 141, "Business Combinations" but, retains the fundamental requirements of SF AS 

141 that the acquisition method of accounting be used and an acquirer be identified for all business combinations. SF AS 141R expands the 

defmition of a business and of a business combination and establishes how the acquirer is to: (1) recognize and measure in its financial 

statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquired company; (2) recognize and 

measure the goodwill acquired in the business combination or a gain from a bargain purchase; and (3) determine what information to disclose 

to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R is applicable to 
business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 

December 15,2008, and is to be applied prospectively. Early adoption is prohibited. SFAS 141R will impact the Company only ifit elects to 

enter into a business combination subsequent to December 31, 2008. 

E.· ve January 1, 2009, A vStar Aviation adopted the authoritative guidance for Non-Controlling Interests to improve the relevance, 

( ability, and transparency of the financial information a reporting entity provides in its consolidated financial statements. SF AS 160 

a. .<10S ARB 51 to establish accounting and reporting standards for noncontrolling interests in subsidiaries and to make certain consolidation 

procedures consistent with the requirements of SF AS 141 R. It defines a noncontrolJing interest in a subsidiary as an ownership interest in the 

consolidated entity that should be reported as equity in the consolidated fmancial statements. SF AS 160 changes the way the consolidated 

income statement is presented by requiring consolidated net income to include amounts attributable to the parent and the noncontrolling 

interest. SF AS 160 establishes a single method of accounting for changes in a parent's ownership interest in a subsidiary which does not result 

in deconsolidation. SFAS 160 also requires expanded disclosures that clearly identify and distinguish between the interests of the parent and 

the interests of the noncontrolling owners of a subsidiary. SF AS 160 is effective for [mancial statements issued for fiscal years beginning on or 

after December 15,2008, and interim periods within those fiscal years. Early adoption is prohibited. SFAS 160 shall be applied prospectively, 

with the exception of the presentation and disclosure requirements that shall be applied retrospectively for all periods presented. The Company 

does not believe that the adoption of SF AS 160 would have a material effect on its consolidated financial position, results of operation or cash 

flows. 

ACCOUNTING ESTIMATES 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the country-region place 

United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at 

the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results 

could differ from those estimates. These estimates mainly involve the useful lives of property and equipment, the impairment of unproved oil 

and gas properties, the valuation of deferred tax assets and the realizability of accounts receivable. 

CASH AND CASH EQUIVALENTS 

For purposes of reporting cash flows, the Company considers all short-term investments with an original maturity of three months or less when 

purchased to be cash equivalents . 

• STOCK BASED COMPENSATION 

Effective January 1,2009, AvStar Aviation adopted the authoritative guidance for Stock Compensation, which established financial accounting 

and reporting standards for stock based employee compensation plans. It defmes a fair value based method of accounting for an employee stock 

option or similar equity instrument. In January 2006, the Company implemented SFAS No. 123R, and accordingly, the Company accounts for 

compensation cost for stock option plans in accordance with SF AS No. 123R. 

CONCENTRATION OF CREDIT RISK 

Financial instruments which subject the Company to concentrations of credit risk include cash and cash equivalents and accounts receivable. 

The Company has concentrated its credit risk for cash by maintaining deposits in a financial institution, which may at times exceed the amounts 

covered by insurance provided by the United States Federal Deposit Insurance Corporation ("FDIC"). The Company has not experienced any 

losses on deposits. 

INCOME TAXES 

The Company uses the liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined 

based on differences between fmancial reporting and income tax carrying amounts of assets and liabilities and are measured using the enacted 

tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance, if necessary, is provided against 

deferred tax assets, based upon management's assessment as to their realization. 

BASIC AND DILUTED NET LOSS PER SHARE 

Basic loss per share is computed using the weighted average number of shares of common stock outstanding during each period. Diluted loss 

per share includes the dilutive effects of common stock equivalents on an "as if converted" basis. For the years ended December 31, 2010 and 

2.otential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. 

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS 

The Company does not expect the adoption of recently issued accounting pronouncements to have 

a significant impact on the Company's results of operations, financial position or cash flow. 
3. GOING CONCERN CONSIDERA nONS 

Since its inception, the Company has suffered recurring losses from operations and has been dependent on existing stockholders and new 

investors to provide cash resources to sustain its operations. During the three months ended March 31, 2011 and 2010, the Company reported 

.~e of$21,183 and net loss of $601,441 respectively. These conditions raise substantial doubt about our ability to continue as a going 

The Company has developed a multi-step plan and has taken actions to improve its financial position and deal with its liquidity problems. The 

final steps of the plan are still being developed, but may include additional private placements of our common stock, and efforts to raise 

additional debt financing or equity investments. There can be no assurance that any of the plans developed by the Company will produce cash 

flows sufficient to ensure its long-term viability as a going concern. 

Our long-term viability as a going concern is dependent on certain key factors, as follows: 

* our ability to obtain adequate sources of outside financing to support near term operations and to allow the Company to continue forward 

with current strategic plans. 

* our ability to ultimately achieve adequate profitability and cash flows to sustain continuing operations. 

4. STOCKHOLDERS' EQUITY 

During January 2011 the Company issued an aggregate of 16,029,412 shares of its common stock in three issues to Asher Enterprises for the 

partial conversion of a convertible promissory note. 

During February 2011 the Company issued 6, Ill, III shares of its common stock to Asher Eneterprises for a partial conversion of a 

convertible promissory note. 

During March 2100 the Company issued 9,230,769 shares of its common stock to Asher Enterprises for a partial conversion ofa convertible 

promissory note. 

fA.: May 2011 the Company issued 8,000,000 shares of its common stock to a person holding a convertible promissory note in exchange for 

,~tion of $40,000 of the indebtedness represented by this note . 

• 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. 

CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS 

•

uarterlY Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as 

; ed, and 

St"non 2lE of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations 

and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions 

about us that may cause our 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 such forward-looking statements. In some cases, you can identifY 

forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," 

"continue," or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but 

are not limited to, those described in our other Securities and Exchange Commission filings. The following discussion should be read in 

conjunction with our Financial Statements and related Notes thereto included elsewhere in this report. 

GENERAL 

Until February 2009, we had historically been an independent energy company focused on exploration and development of oil and natural gas 

reserves, whose core business was directed to the development of oil and gas prospects in proven onshore production areas. In February 2009, 

we adopted a significant change in our corporate direction. At that time, we decided to focus our efforts on acquiring aviation related 

businesses and developing these businesses to their commercial potential. Due to acquisitions, we are now in two aviation sectors, the 

maintenance, repair and overhaul ("MRO") of aircraft providing products and services for the general aviation sector, and the charter air service 

business. 

Currently, we are striving to stabilize our two existing businesses in view of the difficult economy over the past few years. Once these are 

stabilized, our business plan will be to acquire, consolidate and grow businesses in the general aviation industry. We have adjusted our future 

goals and will place our primary focus on the acquisition of a portfolio of fixed base operations ("FBOs") at airports that support light jet traffic 

along with turbine powered and piston engine aircraft. We believe that the time is here to invest in this sector. A combination of the economic 

trends, valuation levels, and technological innovations has impacted this sector, making our prospects of growing a portfolio of FBO businesses 

compelling. These facilities will be supported by our existing MRO business. We believe that after September 11, 2001, both private air 

transportation and the number of aircraft owned by both individuals and business dramatically increased, although such increase has been 

ted in recent years due to the recent unfavorable economy. Each of these sectors, in addition to routine maintenance, has mandated a 

1 of inspections by the FAA that are commonly included in traditional MRO services. 

In February 2009, we acquired San Diego Airmotive ("SDA"), which had been operating (through its predecessor entity) as an MRO since 

1987. SDA historically provided MRO services for single and multi-engine aircraft. 

On March 31, 2010, the Hangar Sublease dated May 1, 2007 between SDA and French Valley Aviation, Inc. ("French Valley") terminated. The 

original term of this Hangar Sublease had already expired, and the parties had continued the sublease on a month-to-month basis. French 

Valley decided that it did not want to continue this arrangement beyond March 31, 2010, and accordingly this arrangement terminated on such 

date. We decided not to seek alternative space to continue SDA's services at French Valley Airport in Southern California, but we are 

continuing such services in Florida, per the transaction described immediately below. We intend to maintain in force and effect SDA's licenses 

and permits so that we can return to provide services in California in the future, if we elect to do so. 

On April 8, 2010, (a) Twin Air Calypso Services, Inc., a newly-formed, indirect wholly-owned Florida subsidiary (the "MRO Subsidiary") of 

ours, and (b) Miami Aviation Maintenance Co. ("MAMCO") executed a bill of sale whereby MAMCO assigned to the MRO Subsidiary certain 

of its assets used to provide aviation MRO services. These assets were assigned in consideration of 750,000 shares of our common stock. In 

connection with the organization of the MRO Subsidiary, SDA had previously assigned all of its assets to the MRO Subsidiary in consideration 

of all of the shares of the common stock of the MRO Subsidiary to be outstanding for the foreseeable future. The MRO Subsidiary was formed 

to provide aviation MRO services, as well as airline support services. The services are being offered out of North Perry airport in Pembroke 

Pines, Florida in Broward County, Florida. The impetus for the transaction was the recent termination of SDA's Hangar Sublease at French 

Valley Airport in Southern California and the perception that the continuation in Florida of the business historically conducted by SDA was 

advisable in view of the perceived greater strength of the local Florida economy relative to the local California market in which SDA has 

historically provided services. 

The MRO Subsidiary has the following features and provides the following services: 

* .1 Inspections 

* uterized Aircraft Weight and Balance 

* cugine Maintenance, Repair & Overhaul including custom installations and refurbishment. 

* Aircraft Modifications and STC kit installations 

* Routine Maintenance/Insurance and Accident Repairs 

* Composite Airframe Repairs 

* Pre-purchase Inspections/Log Book Analysis 

* Oxygen ServiceiNitrogen Service 
* Service Parts 

* JanitroliSouthwind Heater Service/AD compliance inspections 

* DyelFluorescent Penetrant Inspection Service 

* Aircraft Exterior & Interior Detailing Services *IS Dynamic propeller balancing service 

* nics installations and repairs 

, or paint repairs and detailing 

* Instrument Panel upgrades and Component installs 

* Engine Scanners and Monitor installation 

* EGT/CHT calibration 

The MRO Subsidiary recently commenced a focused, direct marketing program of its services and is starting to see an increased interest from 

potential customers. Moreover, the MRO Subsidiary currently has the only avionics shop at North Perry Field, providing services for the 

electronic systems on aircraft that provide communications, navigation and guidance, display systems, flight management systems, sensors and 

indicators, weather radars, electrical systems, and various onboard computers. Finally, the MRO Subsidiary recently completed the lease of a 

fuel truck, pursuant to which it will offer to sell fuel to third parties. This truck will also provide fuel to the Air Carrier Subsidiary (discussed 

immediately below) at discounted rates, enabling this other subsidiary to realize fuel cost savings. All training regarding the operation of the 

fuel truck has been completed, and commencement of sales by this truck is contingent solely upon the completion of the fIre inspector's 

inspection, which is expected by the end of November 2010, but we have no assurance in this regard. 

On August 19,2010, we completed a transaction in which we acquired all of the outstanding stock in Twin Air Calypso Limited, Inc. (the "Air 

Carrier Subsidiary"), a company related to MAMCO. We acquired the Air Carrier Subsidiary in exchange for 18.0 million shares of our 

common stock and some cash payments in the approximate aggregate amount of $275,000 to be paid in a small number of future installments 

over the fairly near future. Because of amounts previously paid, we were not required to pay any cash down payment at closing. In connection 

with the completion of this transaction, Clayton I. Gamber, a stockholder in and the chief executive officer of the Air Carrier Subsidiary, was 

elected to our Board of Directors and as our Chief Executive Officer and President. 

In connection with the acquisition of the Air Carrier Subsidiary and in order to effectuate a verbal agreement and understanding that they had 

made some time ago, we and the prior stockholders of the Air Carrier Subsidiary entered into certain option agreements (the "Option 

Agreements"). The Option Agreements permit us to repurchase a portion of the 18.0 million shares of common stock issued in connection with 

the acquisition for an aggregate purchase price of $1. 75 million. The number of shares depends on the per-share "Market Value" of our 

coWn stock, which is basically the 20-day trading average prior to the time of exercise. The portion of such 18.0 million shares that may be 

rased generally equals the quotient obtained by dividing $1.25 million by the Market Value; provided, however, that the stockholders of 

L Carrier Subsidiary may retain a maximum of 7.353 million shares and a minimum of 625,000 shares. Moreover, the Option Agreements 

require us to repurchase the portion of shares determined in accordance with the preceding whenever we complete a private placement of our 

securities for an aggregate purchase price of at least $3.0 million. 

The Air Carrier Subsidiary operates air service from South Florida to the Bahamas with eight leased aircraft. It has regular flights of both 

passengers and cargo to two destinations on the island of Abaco and three destinations on the island of Eleuthera. The Air Carrier Subsidiary 

also flies to other destinations in the Bahamas on a chartered basis. Currently, only three of the Air Carrier Subsidiary's leased aircraft are 

flying, as fIve of these aircraft are currently down for routine maintenance and refurbishing. However, we will need to raise about $350,000 to 

complete this maintenance and refurbishing. Our goal is to raise this amount, and complete the maintenance and refurbishing, so that all eight 

planes will be phased into operation. Although we are now seeking to raise this amount, we have no assurance that we will be able to do so. We 

are striving to get all eight aircraft operational in order to fIll the voids in the market caused by the challenging economy in the market. This 

challenging market has caused some of our competitors to suspend or cease flying, creating a void in certain routes that we believe we can fIll 

in a manner positive to our fInancial performance. The additional aircraft will allow the West Palm Beach market to be opened and new 

destination in the Bahamas started. 

As capital is available to us, we intend to grow our business through the expansion of our existing MRO business as well as by acquisitions of 

fIxed base operations ("FBOs"), expansion of our existing maintenance, repair and overhaul operations ("MROs"), and charter operations. 

Several companies have been identifIed as acquisition targets as capital is available to us. 

In February 2011, the Air Carrier Subsidiary relocated both its passenger and freight operations to a newly constructed facility at the Sheltair 

North complex at the Ft. Lauderdale-Hollywood International Airport. With this move the passenger and freight facilities are separated, giving 

the passengers more of an "airline terminal" atmosphere, while maintaining the perks of free parking and easy luggage handling, without the 

"big terminal" inconveniences. The customer acceptance has been overwhelmingly good and our ground support operations are operating much 

more efficiently. 

Being to this new facility we also lowered our fuel costs by approximately 15%. This price reduction (along with a fuel surcharge 

ii d in February) has mitigated the fuel price increases of the market considerably. With fuel being our largest single cost by far, the 

relocation has contributed greatly to our operations being profItable for the fIrst quarter. 

While refurbishment of the aircraft has not progressed as quickly as scheduled, we were able to return one aircraft to service in late March. 

Revenues received from the addition of this aircraft will be recognized beginning in the second quarter. We expect to return another aircraft to 

service in June. Efforts are continuing, to secure fInancing that will allow us to accelerate the return to service of additional aircraft. 
During the frrstquarter the Air Carrier Subsidiary's personnel have been preparing our application to the Department of Transportation to 

upgrade our authorities to "Commuter" status. This new authority will allow us to increase our frequency to each destination and advertise our 

schedule in the traditional airline venues. We expect this authority to become effective in the fourth quarter of this year allowing us to take full 

advantage of the 2011-2012 winter season. Additionally, the Air Carrier Subsidiary's personnel have been designing and implementing a new 

s.uling and reservation software. The scheduling module became operational in March of2011, the reservation module will be installed in 

I y and the freight module will be installed in early June. The full implementation of these modules will give better internal controls over 

) . anagement and freight management and will allow booking of reservations over the internet. The fmal module will be to fully integrate 

the operational systems into the accounting system required for the DOT commuter requirements. 

With the increased fuel costs oflate 2010 and early 2011, the general aviation segment continues to suffer. We are continuing to search for 

opportunities to acquire aviation maintenance and service organizations. At this time we feel that more favorable opportunities will be available 

during the fall and early winter of 20 11. Weare currently negotiating sources of capital to be in a position to pursue these opportunities as they 

are identified. 

Since our inception, we have recurring losses from operations and have depended on existing stockholders and new investors to provide the 

cash resources to sustain its operations. During the tlrree months ended March 31, 20 11, we reported a net income of $ 21,183 compared to a 

loss of $ 601,441 reported for the tlrree months ended March 31, 2010. 

Our long-term viability as a going concern depends on certain key factors, as follows: 

* Our ability to continue to obtain sources of outside fmancing to allow us to continue our business operations. 

* Our ability to increase profitability and sustain a cash flow level that will ensure support for continuing operations. 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES 

Our discussion and analysis of the fmancial condition and results of operations are based upon our 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, revenue and expenses, and related disclosure 

of contingent assets and liabilities. On an ongoing basis, we evaluate estimates. We base our estimates on historical experience and on various 

other assumptions that are believed to be reasonable under the circumstances. These estimates and assumptions provide a basis for making 

j.ents about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from 

t timates under different assumptions or conditions, and these differences may be material. Critical accounting policies that affect our 

1. ignificant judgments and estimates used in the preparation of our consolidated financial statements are discussed in the footnotes to the 

financial statements comprising a part of this report. 

RESULTS OF OPERATIONS 

Financial results for the quarter ended March 31, 2011 are not directly comparable to financial results for the quarter ended March 31,2010. 

During August 2010, we completed the acquisition of Twin Air Calypso Limited, Inc. ("TAC Limited"). TAC Limited operates air carrier amd 

air charter services. This acquisition appreciably affected the financial results for the quarter ended March 31, 2011 compared to the financial 

results for the quarter ended March 31, 20 I O. 

QUARTER ENDED MARCH 31, 2011 COMPARED TO THE QUARTER ENDED MARCH 31, 2010 

REVENUES. Revenues for the first quarter 2011 were $585, 735 (consisting of $584,442 in revenues from aviation operations and $1,293 in 

revenues from oil and gas operations) compared to revenues of$101,518 for the first quarter 2010 (consisting of$100,428 in revenues from 

aviation operations and $1,090 in revenues from oil and gas operations). The increase in aviation operations in the first quarter of2011 from 

the first quarter of 20 10 resulted from the acquisition of Twin Air Calypso Limited and additional business for Twin Air Calypso Services. 

EXPENSES. Costs and expenses for the frrst quarter 2011 were $ 553,442 compared to costs and expenses of$702,959 for the first quarter 

2010. 

This decrease in costs and expenses reflects the following: 

* $417,220 in costs of goods sold in the frrst quarter 20 II compared to $60,619 in costs of goods sold in the first quarter 2010 as the volume of 

services provided increased. 

* .962 in selling, general and administrative expenses including stock based compensation in the first quarter 2011 compared to $638,800 

i; expenses in the frrst quarter 2010; of the $638,800, $450,000 relates to the issuance of 15.0 million shares of our common stock to our 

fOlIller President and Chief Executive Officer in connection with the re-negotiation of this officer's verbal employment agreement. 

NET INCOME. As a result of aviation related revenues, the net income of$21 ,183 for the first quarter 2011 represents a swing of $622,624 

from the net loss of$601,441 for the first quarter 2010. 
LIQUIDITY AND CAPITAL RESOURCES 

As of March 31, 2011, we had a working capital deficiency of approximately $865,682. Currently, we have limited financial ability to pursue 

our new business plan. In addition to stabilizing our two existing businesses, our immediate financial goal is to raise approximately $350,000 to 

c.ete the scheduled maintenance and refurbishing of our remaining eight aircraft. Although we are now seeking to raise this amount, we 

) 0 assurance that we will be able to do so. We believe that, once these aircraft are flying again, our goal of stabilizing our existing 

b~ . ~ ess can be accomplished, and we can start considering the resumption of our original business plan of acquiring other businesses. Once 

the stabilization is accomplished (if at all), we begin trying to determine the scope of the business activities that we will pursue in the 

foreseeable future. The amount of capital that we will need depends on the scope of the business activities that we ultimately decide to pursue. 

This scope is uncertain at this time. However, we know that we must obtain additional financing to pursue our business plan at any level that 

we are likely to pursue. We are currently searching for sources of financing, but we currently do not have any binding commitments for, or 

readily available sources of, fmancing. We cannot assure anyone that financing will be available to us when needed or, if available, that such 

fmancing can be obtained on commercially reasonably terms. Ifwe do not obtain financing we will be constrained to contract the scope of our 

business plan, Under certain circumstances, we may be constrained to attempt to sell some of our assets. However, we cannot assure anyone 

that we will be able to find interested buyers or that the funds received from any such sale would be adequate to fund our activities. Under 

certain circUIIlstances, we could be forced to cease our operations and liquidate our remaining assets, if any. 

Our independent certified public accountant has added an emphasis paragraph to its report on our consolidated financial statements for the year 

ended December 31, 2010 regarding our ability to continue as a going concern. Key to this determination is our historical losses of $1,016,664 

in 2010 and $988,990 in 2009. Management plans to try to fund our company partially through the raising of capital through the sale of our 

equity instruments or issuance of debt, although there can be no assurance of success in this regard. Moreover, management plans on additional 

revenues from operations from our business as a source to finance our company, although there can be no assurance of that these revenues will 

materialize at the expected rates. There can be no assurance that we will be successful in achieving these objectives, becoming profitable or 

continuing our business without either a temporary interruption or a permanent cessation. 

Recent Convertible Debt 

Asher Notes. Commencing on April 19, 2010, we entered into a series of transactions in which we issued five convertible promissory Asher 

Notes (singly a "Asher Note" and collectively the "Asher Notes") to Asher Enterprises, Inc. ("Asher") in consideration of certain amounts 

loaned by Asher to us. The following table gives the designations to which the Asher Notes are referred hereinafter, the dates of the Asher 

Notes, the original principal amounts of the Asher Notes, and the scheduled maturity dates of the Asher Notes: 

• DESIGNATION ISSUANCE ORIGINAL PRINCIPAL MATURITY 

OF NOTE DATE OF NOTE AMOUNT OF NOTE DATE OF NOTE 

------- ------------ -------------- ------------ First 4/19/2010 $50,000 1/21/2011 

Second 6/1/2010 $25,000 3/31/2011 

Third 8/31/2010 $40,000 6/2/2011 

Fourth 10/21/2010 $35,000 7/25/2011 

Fifth 12/20/2010 $45,000 9/22/2011 

------- TOTAL $195,000 

While the terms of the Asher Notes vary somewhat, these terms are generally the same from note to note. The following is a description of the 

terms of the Asher Notes. 

Each of the Asher Notes bears regular interest at a rate of8% per annum, with a default rate of22% per annum. The Asher Notes are 

unsecured, and each of them is due and payable on or before their respective maturity dates. At any time prior to the payment in full of the 

entire balance of an Asher Note, Asher has the option of converting all or any portion of the unpaid balance of the Asher Note into shares of 

our common stock at a conversion price discussed hereafter. Nevertheless, Asher is not entitled to convert any portion of an Asher Note to the 

extent that the shares to be issued in connection therewith would cause Asher's beneficial ownership of our common stock to exceed 4.99% of 

the outstanding shares of our common stock. Each conversion price for the Asher Notes features a "variable" conversion price, and the First 

and Second Asher Notes also feature a "fixed" conversion price of $.002, which will apply if it is less than the related variable conversion 

price. The variable conversion price is a percentage discount from an average of the three lowest closing bid prices of our common stock for 

the 10 most recent trading days preceding the date of exercise. The percentage discounts for the variable conversion prices provided for in the 

Asher Notes range from 42% for the First Asher Note, 50% for the Second, Third and Fourth Asher Notes, and 55% for the Fifth Asher Note. 

BAe of the operation of the floating conversion price and the limitation on the ability of Asher to convert as described above, we are unable 

tt ~ine at any time that number of shares into which Asher could convert one or more of the Asher Notes. Nevertheless, based on the 

"fIx.ed" conversion price of $.002, Asher could convert the remaining outstanding balance of the Asher Notes indicated below into at least 50.0 

million shares of the Company's common stock 

The Asher Notes (and related documentation) contain customary representations and warranties, customary affirmative and negative covenants, 

customary anti-dilution provisions, and customary events of default that entitle Asher to accelerate the due date of the unpaid principal amount 

of, and all accrued and unpaid interest on, the Asher Notes. A default on any of the Asher Notes could lead to certain penalties, including an 
obligation to (a) pay all of the following, plus an additional 50% of (i) default interest, (ii) other monetary penalties, and (iii) the outstanding 

balance on the related Asher Note, and (b) to issue shares of our common stock to satisfy the amount computed in accordance with (a) 

immediately preceding. 

_ encing October 25,2010, Asher began converting some of the Asher Notes. As of the date of the Report, Asher had converted an 

. ate principal amount of the Asher Notes equal to $95,000 into 59,871,292 shares of our common stock, leaving an aggregate outstanding 

p. .v pal amount of the Asher Notes equal to $100,000 as of May 6, 2011. The First and Second Asher Notes have been fully converted, while 

the Third Asher Note has been partially converted. 

Schulle Notes. On July 1,2010, we issued a convertible promissory note in the original principal amount of $70,000 (the "First Schulle Note") 

to Henry L. Schulle, a consultant to us ("Schulle"), in lieu of cash for consulting services provided by Schulle to us. On January 31, 2011, we 

issued a second convertible promissory note in the original principal amount of $60,000 (the "Second Schulle Note") to Schulle, in lieu of cash 

for consulting services provided by Schulle to us. We believes that the execution and delivery of the First Schulle Note was probably not 

material enough to require the filing of this Report, but that upon the execution and delivery of the Second Schulle Note, the First Schulle Note 

and the Second Schulle Note (taken as a whole) were material enough to require the filing of this Report. While the terms of the two notes vary 

somewhat, these terms are generally the same from note to note. The following is a description of the terms of the two notes. 

Each of the Schulle Notes bears regular interest at a rate of 8 and 1/2% per annum. The Schulle Notes are unsecured, and each of them is due 

and payable one year after the date of their respective issuances. At any time prior to the payment in full ofthe entire balance ofa Schulle Note, 

Schulle has the option, upon a 65-days notice, of converting all or any portion of the unpaid balance of the Schulle Note into shares of our 

common stock at a conversion price discussed hereafter. Each conversion price for the Schulle Notes features a "variable" conversion price and 

also a "fixed" conversion price of$.04, which will apply if it is less than the related variable conversion price. The variable conversion price is 

the closing trading prices of our common stock for the most recent trading days preceding the date of exercise; provided, however, that the 

variable conversion price has a minimum floor of $.005 per share. In view of our most recent closing trading prices and the minimum variable 

conversion price, Schulle could convert the two Schulle Notes into an aggregate of26.0 million shares. The Schulle Notes contain customary 

representations and warranties, registration rights, customary anti-dilution provisions, and customary events of default that entitle Schulle to 

accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the Schulle Notes. 

On May 2, 2011, Schulle converted $40,000 of the principal amount of the First Schulle Notes into 8.0 million shares of our common stock, 

leaving an aggregate outstanding principal amount of the Schulle Notes equal to $90,000. 

e Legacy Debt 

We have outstanding the following notes that became due and payable on December 1,2008. These notes have an aggregate principal amount 

totaling $624,771plus accrued interest of as of April 13, 2011. We are currently exploring ways to satisfy these amounts. 

(a) Note payable to Mary Pollock Merritt, daughter of our former chief executive officer. This note bears interest at rates of 12% per year and 

became due on December 31,2008. This note is not collateralized. The current outstanding balance on this note as of April 13, 2011 was 

$103,683, plus accrued interest. 

(b) Note payable to Charles Pollock, our former chief executive officer and a significant stockholder of ours. This note bears interest of 12% 

per year and became due on December 31, 2008. This note is not collateralized. The current outstanding balance on this note as of April 13, 

2011 was $400,911, plus accrued interest. 

(c) Note payable to Mark Weller, our former president and a significant stockholder of ours. This note bears interest of 12% per year and 

became due on December 31,2008. This note is not collateralized. The outstanding balance on this note as of April 13,2011 was $112,169, 

plus accrued interest. 

OFF-BALANCE SHEET ARRANGEMENTS 

We have no off balance sheet arrangements. 

OIL AND GAS ASSETS 

Management is currently exploring options for our remaining oil and gas assets, which may include a sale of it or a spin-off of them to 

shareholders, so that management can devote its entire attention to our current aviation business. 

re4T. CONTROLS AND PROCEDURES. 

EV ALUA TION OF DISCLOSURE CONTROLS AND PROCEDURES 

As of the end of the period of this report, our principal executive and principal financial officer carried out an evaluation of the effectiveness of 

the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the 
participation of our management, including our Chief Executive Officer and Chief Financial Officer. We have concluded, based on that 

evaluation, that, as of such date, the disclosure controls and procedures were not effective to ensure that information required to be disclosed in 

reports filed or submitted under the Securities Exchange Act of 1934 (the "Exchange Act") is accumulated and communicated to our 

management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required 

E

i osure. Management identified significant deficiencies with respect to the timely public reporting of events requiring such reporting. During 

ese deficiencies caused us to file late five Current Reports on Form 8-K, and during 2011 thus far they have caused us to file late three 

\. ~ t Reports on Form 8-K. Some of the late filings resulted from the failure of relevant company personnel to understand the need for 

prompt disclosure. We are trying to institute the following corrective action to ensure that such events are timely reported publicly: 

* The adoption of a disclosure policy requiring our personnel to communicate to a designated committee for evaluation any information 

potentially material and thereby requiring public disclosure; 

* The development of a basic program to educate management as to the events requiring expedited disclosure; 

* To avoid late disclosure of events requiring expedited disclosure, the adoption of certain procedures, such as required consultation with 

securities counsel before issuing any equity shares, entering into any agreement that may be material, taking any action at a Board of Directors 

meeting or the like; and 

* To avoid late filings of documents having regular due dates (such as Annual Reports on Form 10-K and Quarterly Reports on Form lO-Q), 

the establishment of time lines within which our professional personnel will strive to work. 

Budget limitations have impaired our ability to institute the corrective action described above. Because the implementation of such corrective 

action was not completed as of the end of the period of this report, the significant deficiencies that we identified still existed as of the end of the 

period of this report. 

LIMITATIONS ON EFFECTIVENESS OF CONTROLS AND PROCEDURES 

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and 

procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can 

provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must 

reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent 

limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, 

within our company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decisionmaking can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the 

~ual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of 

(~s also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will 

s ... _veed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in 

conditions, or the degree of compliance with the policies or procedures may deteriorate. 

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING 

There have not been any changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(t) and 15d-15(t) under 

the Exchange Act, during the period of this report that have materially affected, or are reasonably likely to materially affect our internal control 

over financial reporting. 

PART II OTHER INFORMATION 

ITEM 6. EXHIBITS. 

(a) The following exhibits are filed with this Quarterly Report or are incorporated herein by reference: 

Exhibit 

Number Description 

10.01 

31.01 

31.02 

• 

32.01 

32.02 

Form of 8% Convertible Note made payable by us to Asher Enterprises, 

. Inc. 

Certification pursuant to Rule 13a-14(a) of the Securities Exchange 

Act of 1934. 

Certification pursuant to Rule 13a-14(a) of the Securities Exchange 

Act of 1934. 

Certification Pursuant to 18 U.S.C. Section 1350, as pursuant to 

Section 906 of the Sarbanes-Oxley Act of 2002. 

Certification Pursuant to 18 U.S.C. Section 1350, as pursuant to 

Section 906 of the Sarbanes-Oxley Act of 2002. 

SIGNATURES 

In accordance with the requirements of the Exchange Act, the Registrant has 
duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. 

• 

May 16, 2011 

• 

• 

AVSTARAVIATION GROUP, INC. 

(Registrant) 

By: /s/ Clayton I. Gamber 

Clayton I. Gamber, 

Chief Executive Officer 

(Principal Executive Officer) 

By: /s/ Robert Wilson 

Robert Wilson, 

Vice President and Chief 

Financial Officer 

(Principal Financial Officer and 

Principal Accounting Officer) 
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO 

WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS 

AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, 

TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE 

• 

TIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL 

, BE SELECTED BY THE HOLDER), IN A GENERALL Y ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED 

\. R SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING 

THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER 

LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. 

Principal Amount: $ _____ Issue Date: _____ _ ,201 Purchase Price: $ ____ _ 

CONVERTIBLE PROMISSORY NOTE 

FOR VALUE DECEIVED, A VST AR A VIA TION GROUP, INC., a Colorado corporation (hereinafter called the "Borrower"), hereby 

promises to pay to the order of ASHER ENTERPRISES, INC., a Delaware corporation, or registered assigns (the "Holder") the sum of 

$ together with any interest as set forth herein, on ,201_ (the "Maturity Date"), and to pay interest on the 

unpaid principal balance hereof at the rate of percent ~%) (the "Interest Rate") per annum from the date hereof (the "Issue 

Date") until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be 

prepaid in whole or in part. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of 

________ percent ( %) per annum from the due date thereof until the same is paid ("Default Interest"). Interest shall 

commence accruing on the Issue Date, shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments 

due hereunder (to the extent not converted into common stock, $0.001 par value per share (the "Common Stock") in accordance with the terms 

hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall 

hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be 

due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a 

business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date 

thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term 

"business day" shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are 

authorized or required by law or executive order to remain closed. Each capitalized term used herein, and not otherwise defmed, shall have the 

meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued 

(~urchase Agreement"). 

'1 ~ote is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or 

other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof. 

The following terms shall apply to this Note: 

ARTICLE I. CONVERSION RIGHTSIARTICLE I. CONVERSION RIGHTS 

1.1 Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the date of this Note 

and ending on the later of: (1) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III) pursuant to 

Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the 

outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock 

exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be 

changed or reclassified at the conversion price (the "Conversion Price") determined as provided herein (a "Conversion"); provided however 

that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which 

the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock 

which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted 

portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) 

and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the 

determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the 

outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be 

determined in accordance with Section 13( d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Regulations 13DG thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be 

waived by the Holder upon, at the election of the Holder, not less than 61 days' prior notice to the Borrower, and the provisions of the 

conversion limitation shall continue to apply until such 61 st day (or such later date, as determined by the Holder, as may be specified in such 

notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the 

CAsion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in 

t1 Wn attached hereto as Exhibit A (the "Notice of Conversion"), delivered to the Borrower by the Holder in accordance with Section 1.4 

below; provided that the Notice of Conversion is submitted by facsimile (or by other means resulting in, or reasonably expected to result in, 

notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the "Conversion Date"). The term "Conversion 

Amount" means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such 

conversion plus (2) at the Borrower's option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this 

Note to the Conversion Date, provided, however, that the Company shall have the right to pay any or all interest in cash plus (3) at the 

Borrower's option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the 
Holder's option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. 

1.2 Conversion Price . 

• 

cutation of Conversion Price. The Conversion Price shall be the lesser of: (1) the Variable Conversion Price (as defined herein) and (ii) 

1 ed Conversion Price (as defined herein) (subject, in each case, to equitable adjustments for stock splits, stock dividends or rights 

Olu;rings by the Borrower relating to the Borrower's securities or the securities of any subsidiary of the Borrower, combinations, 

recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean the Applicable 

Percentage (as defined herein) multiplied by the Market Price (as defined herein). "Market Price" means the average of the lowest three (3) 

Trading Prices (as defined below) for the Common Stock during the ten (lO) Trading Day period ending one Trading Day prior to the date the 

Conversion Notice is sent by the Holder to the Borrower via facsimile (the "Conversion Date"). "Trading Price" means, for any security as of 

any date, the closing bid price on the Over-the-Counter Bulletin Board, or applicable trading market (the "OTCBB") as reported by a reliable 

reporting service ("Reporting Service") mutually acceptable to Borrower and Holder and hereafter designated by Holders of a majority in 

interest of the Notes and the Borrower or, if the OTCBB is not the principal trading market for such security, the closing bid price of such 

security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security 

is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the 

"pink sheets" by the National Quotation Bureau, Inc. If the Trading Price cannot be calculated for such security on such date in the manner 

provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in 

interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of 

such Notes, "Trading Day" shall mean any day on which the Common Stock is traded for any period on the OTCBB, or on the principal 

securities exchange or other securities market on which the Common Stock is then being traded. "Applicable Percentage" shall mean __ %. 

"Fixed Conversion Price" shaH mean $0. __ . 

(b) Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the 

Borrower 

(i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Borrower 

is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially all of the assets of the 

Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer to purchase 50% or more of the 

Borrower's Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause (1) or (ii) is hereinafter referred 

to as the "Announcement Date"), then the Conversion Price shall, effective upon the Announcement Date and continuing through the Adjusted 

Conversion Price Termination Date (as defmed below), be equal to the lower of 

(x. Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion 

P at would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be 

(. ined as set forth in this 

Section 1.2(a). For purposes hereof, "Adjusted Conversion Price Termination Date" shaH mean, with respect to any proposed transaction or 

tender offer (or takeover scheme) for which a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which 

the Borrower (in the case of clause 

(i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment 

of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative. 

1.3 Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized 

and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the 

full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved 

three times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect 

from time to time) (the "Reserved Amount"). The Reserved Amount shall be increased from time to time in accordance with the Borrower's 

obligations pursuant to Section 4(g) of the Purchase Agreement. The Borrower represents that upon issuance, such shares will be duly and 

validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure 

which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the 

Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock 

authorized and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has 

irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and 

(ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock 

certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with he terms and conditions of this Note. 

If, at any time a Holder of this Note submits a Notice of Conversion, and the Borrower does not have sufficient authorized but unissued shares 

of Common Stock available to effect such conversion in accordance with the provisions of this Article I (a "Conversion Default"), the 

Borrower shall issue to the Holder all of the shares of Common Stock which are then available to effect such conversion. The portion of this 

Note which the Holder included in its Conversion Notice and which exceeds the amount which is then convertible into available shares of 

co.n Stock (the "Excess Amount") shall, notwithstanding anything to the contrary contained herein, not be convertible into Common Stock 

ir dance with the terms hereof until (and at the Holder's option at any time after) the date additional shares of Common Stock are 

at. ,zed by the Borrower to permit such conversion, at which time the Conversion Price in respect thereof shall be the lesser of (i) the 

Conversion Price on the Conversion Default Date (as defined below) and (ii) the Conversion Price on the Conversion Date thereafter elected by 

the Holder in respect thereof. In addition, the Borrower shall pay to the Holder payments ("Conversion Default Payments") for a Conversion 

Default in the amount of (x) the sum of (1) the then outstanding principal amount of this Note plus (2) accrued and unpaid interest on the 

unpaid principal amount of this Note through The Authorization Date (as defined below) plus (3) Default Interest, if any, on the amounts 

referred to in clauses (1) and/or (2), multiplied by (y) ._' multiplied by (z) (N/365), where N = the number of days from the day the holder 
submits a Notice of Conversion giving rise to a Conversion Default (the "Conversion Default Date") to the date (the "Authorization Date") that 

the Borrower authorizes a sufficient number of shares of Common Stock to effect conversion of the full outstanding principal balance of this 

Note. The Borrower shall use its best efforts to authorize a sufficient number of shares of Common Stock as soon as practicable following the 

earlier of (i) such time that the Holder notifies the Borrower or that the Borrower otherwise becomes aware that there are or likely will be 

insufficient authorized and unissued shares to allow full conversion thereof and (ii) a Conversion Default. The Borrower shall send notice to 

telder of the authorization of additional shares of Common Stock, the Authorization Date and the amount of Holder's accrued Conversion 

1 t Payments. The accrued Conversion Default Payments for each calendar month shall be paid in cash or shall be convertible into 

Common Stock (at such time as there are sufficient authorized shares of Common Stock) at the applicable Conversion Price, at the Borrower's 

option, as follows: 

(a) In the event Holder elects to take such payment in cash, cash payment shall be made to Holder by the fifth (5th) day of the month following 

the month in which it has accrued; and 

(b) In the event Holder elects to take such payment in Common Stock, the Holder may convert such payment amount into Common Stock at 

the Conversion Price (as in effect at the time of conversion) at any time after the fifth day of the month following the month in which it has 

accrued in accordance with the terms of this Article I (so long as there is then a sufficient number of authorized shares of Common Stock). 

The Holder's election shall be made in writing to the Borrower at any time prior to 6:00 p.m., New York, New York time, on the third day of 

the month following the month in which Conversion Default payments have accrued. If no election is made, the Holder shall be deemed to 

have elected to receive cash. Nothing herein shall limit the Holder's right to pursue actual damages (to the extent in excess of the Conversion 

Default Payments) for the Borrower's failure to maintain a sufficient number of authorized shares of Common Stock, and each holder shall 

have the right to pursue all remedies available at law or in equity (including degree of specific performance and/or injunctive relief). 

1.4 Method of Conversion. 

(a) Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder iii whole or in part at any time from time to 

time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile or other reasonable means of communication 

dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at 

the principal office of the Borrower. 

(b) Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance 

\\ee terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal 

t of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the 

dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical 

surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Borrower shaH, prima facie, 

be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as 

aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the 

Borrower will forthwith issue and deliver upon the order of the Holder a new Note oflike tenor, registered as the Holder (upon payment by the 

Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The 

Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following 

conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the 

amount stated on the face hereof. 

(c) Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue 

and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in 

street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the 

person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder's account) requesting 

the issnance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that 

such tax has been paid. 

(d) Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder ofa facsimile transmission (or other 

reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the 

Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock 

issuable upon such conversion within three (3) business days after such receipt (and, solely in the case of conversion of the entire unpaid 

principal amount hereof, surrender of this Note) (such second business day being hereinafter referred to as the "Deadline") in accordance with 

the terms hereof and the Purchase Agreement (including, without limitation, in accordance with the requirements of [Section 2(g)] of the 

Purchase Agreement that certificates for shares of Common Stock issued on or after the effective date of the Registration Statement upon 

co.ion of this Note shall not bear any restrictive legend). 

(e.gation of Borrower to Deliver Common Stock. Upon receipt by the Borrower ofa Notice of Conversion, the Holder shall be deemed to 

be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and 

unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article I, 

all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or 

other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided 

herein, the Borrower's obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the 
absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any 

judgment against any person or any action to enforce the same, any failure or delay in The enforcement of any other obligation of the Borrower 

to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any 

obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the 

Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as 

tetice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time, on such date. 

(f) Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon 

conversion, provided the Borrower's transfer agent is participating in the Depository Trust Company ("DTC") Fast Automated Securities 

Transfer ("FAST") program, upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this Section 1.4, 

the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the 

Holder by crediting the account of Holder's Prime Broker with DTC through its Deposit Withdrawal Agent Commission ("DW AC") system. 

(g) Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder's right to pursue other remedies, including 

actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is more 

than three (3) business days after the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which failure shall 

be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower 

fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it 

has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has 

accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this 

Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. 

1.5 Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such 

shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished 

with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) 

to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such 

shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) ( Rule 144") or (iv) such shares are transferred to an 

"affiliate" (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this 

Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase 

Agreement (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of 

this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of 

securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of 

tete that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration 

!> ent or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate: 

"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES 

INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS 

AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, 

TRANSFERRED OR ASSIGNED en IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE 

SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL 

SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM. THAT REGISTRATION IS NOT REQUIRED 

UNDER SAID ACT OR 

(II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT NOTWITHSTANDING THE FOREGOING, THE 

SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING 

ARRANGEMENT SECURED BY THE SECURITIES." 

The legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if 

(1) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel 

in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Act 

and the shares are so sold or transferred, (ii) such Holder provides the Borrower or its transfer agent with reasonable assurances that the 

Common Stock issuable upon conversion of this Note (to the extent such securities are deemed to have becn acquired on the same date) can be 

sold pursuant to Rule 144 or (iii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by 

the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction 

as to the number of securities as of a particular date tat can then be immediately sold. 

1.6. Effect of Certain Events. 

(a) Effect of Merger, Consolidation. Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets 

of • orr ower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of the voting power 

o orrOwer is disposed of, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as 

dermed below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default (as defined in Article III) 

pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an 

amount equal to the Default Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof. "Person" shall mean any 

individual, corporation, limited liability company, partnership, association, trust or other entity or organization. 
(b) Adjustment Due to Merger. Consolidation. Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the 

Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which 

shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock or 

securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other 

than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive 

•

onversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock 

i. tiiately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such 

transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth 

herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end 

that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable 

upon conversion of the Note) shall thereafter be applicable, as neatly as may be practicable in relation to any securities or assets thereafter) 

deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to 

the extent practicable, thirty 

(30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of 

shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, 

recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and 

(b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The 

above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges. 

(c) Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders 

of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the 

Borrower's shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-oft» (a "Distribution"), then 

the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such 

Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock 

issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of 

shareholders entitled to such Distribution. 

(d) Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or sells, or in 

accordance with this Section 1.6( d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or for a 

consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection 

therewith) less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a 

"Dilutive Issuance"), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration per 

seeceived by the Borrower in such Dilutive Issuance. 

The Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants, 

rights or options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to purchase Common 

Stock or other securities convertible into or exchangeable for Common Stock ("Convertible Securities") (such warrants, rights and options to 

purchase Common Stock or Convertible Securities are hereinafter referred to as "Options") and the price per share for which Common Stock is 

issuable upon the exercise of such Options is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such 

price per share. For purposes of the preceding sentence, the "price per share for which Common Stock is issuable upon the exercise of such 

Options" is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or 

granting of all such Options, plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise 

of all such Options, plus, in the case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of 

additional consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or 

exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming the 

conversion of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the actual issuance of 

such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon exercise of 

such Options. 

Additionally, the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any 

Convertible Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and the 

price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then in effect, then the 

Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the "price per share for which Common 

Stock is issuable upon such conversion or exchange" is determined by dividing (i) the total amount, if any, received or receivable by the 

Borrower as consideration for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of additional 

consideration, if any, payable to the Borrower upon the conversion or exchange thereof at the time such Convertible Securities first become 

convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the conversion or exchange of all 

such Convertible Securities. No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon 

conversion or exchange of such Convertible Securities. 

(.chase Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights to 

purchase stock, warrants, securities or other property (the "Purchase Rights") pro rata to the record holders of any class of Common Stock, then 

the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which 

such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of this 

Note (without regard to any limitations on conversion contained herein) immediately before the date on which a record is taken for the grant, 

issuance or sale of such Purchase Rights or, ifno such record is taken, the date as of which the record holders of Common Stock are to be 
determined for the grant, issue or sale of such Purchase Rights. 

(f) Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described 

in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to the Holder 

0llrtificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is 

l The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i) such 

al.J ment or readjustment, 

(ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or 

property which at the time would be received upon conversion of the Note. 

1.7 Trading Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market on which the 

Common Stock is then listed or waded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note and the 

other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that the Borrower can 

issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded (the "Maximum Share 

Amount"), which shall be 4.99% of the total shares outstanding on the Closing Date (as defined in the Purchase Agreement), subject to 

equitable adjustment from time to time for stock splits, stock dividends, combinations, capital reorganizations and similar events relating to the 

Common Stock occurring after the date hereof. Once the Maximum Share Amount has been issued (the date of which is hereinafter referred to 

as the "Maximum Conversion Date"), if the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of any 

stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Borrower or any of its securities on 

the Borrower's ability to issue shares of Common Stock in excess of the Maximum Share Amount (a "Trading Market Prepayment Event"), in 

lieu of any further right to convert this Note, and in full satisfaCtion of the Borrower's obligations under this Note, the Borrower shall pay to the 

Holder, within fifteen (15) business days of the Maximum Conversion Date (the "Trading Market Prepayment Date"), an amount equal to 

150% times the sum of (a) the then outstanding principal amount of this Note immediately following the Maximum Conversion Date, plus (b) 

accrued and unpaid interest on the unpaid principal amount of this Note to the Trading Market Prepayment Date, plus (c) Default Interest, if 

any, on the amounts referred to in clause (a) and/or (b) above, plus (d) any optional amounts that may be added thereto at the Maximum 

Conversion Date by the Holder in accordance with the terms hereof (the then outstanding principal amount of this Note immediately following 

the Maximum Conversion Date, plus the amounts referred to in clauses (b), (c) and (d) above shall collectively be referred to as the "Remaining 

Convertible Amount"). In the event that the sum of (x) the aggregate number of shares of Common Stock issued upon conversion of this Note 

and the other Notes issued pursuant to the Purchase Agreement plus (y) the aggregate number of shares of Common Stock that remain issuable 

upon conversion of this Note and the other Notes issued pursuant to the Purchase Agreement, represents at least one hundred percent (100%) of 

the Maximum Share Amount (the "Triggering Event"), the Borrower will use its best efforts to seek and obtain Shareholder Approval (or 

obtain such other relief as will allow conversions hereunder in excess of the Maximum Share Amount) as soon as practicable following the 'f..ring Event and before the Maximum Conversion Date. As used herein, "Shareholder Approval" means approval by the shareholders of 

t rrower to authorize the issuance of the full number of shares of Common Stock which would be issuable upon full conversion of the then 

outstanding Notes but for the Maximum Share Amount. 

1.8 Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, 

which cannot be issued because their issuance would exceed such Holder's allocated portion of the Reserved Amount or Maximum Share 

Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder's rights as a Holder of such converted portion of this 

Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided 

herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. 

Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day 

after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise 

elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note 

with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the 

Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, 

the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments 

pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to 

have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower's failure to 

convert this Note. 

ARTICLE II. CERTAIN COVENANTS 

2.1 Distributions on Capital Stock. So long as the Borrower'shall have any obligation under this Note, the Borrower shall not without the 

Holder's written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other 

securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock 

or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for 

distributions pursuant to any shareholders' rights plan which is approved by a majority of the Borrower's disinterested directors. 

2.triction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the 

HUIUer's written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) 

in anyone transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase 

or acquire any such shares. 

2.3 Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written 

consent, create, incur, assume or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed on the date 
hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to trade creditors or financial 

institutions incurred in the ordinary course of business or (c) borrowings, the proceeds of which shall be used to repay this Note. 

2.4 Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder's written c.t sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the 

c ition of any assets may be conditioned on a specified use of the proceeds of disposition. 

2.5 Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder'S 

written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, 

officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the 

date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of business or (c) 

not in excess of $1 00,000. 

2.6 Contingent Liabilities. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's 

written consent, which shall not be unreasonably withheld, assume, guarantee, endorse, contingently agree to purchase or otherwise become 

liable upon the obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments 

for deposit or collection and except assumptions, guarantees, endorsements and contingencies (a) in existence or committed on the date hereof 

and which the Borrower has informed Holder in writing prior to the date hereof, and (b) similar transactions in the ordinary course of business. 

ARTICLE III. EVENTS OF DEFAULT 

If any ofthe following events of default (each, an "Event of Default") shall occur: 

3.1 Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at 

maturity, upon a Trading Market Prepayment Event pursuant to Section 1.7, upon acceleration or otherwise; 

3.2 Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens that it will not 

honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails 

to transfer or cause its transfer agent to transfer (electronically or in certificated form) any certificate for shares of Common Stock issued to the 

Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove any restrictive legend (or to 

w.· aw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon 

c ion of or otherwise pursuant to this Note as and when required by this Note (or makes any announcement, statement or threat that it 

Q\.. J ot intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any announcement, 

statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) days after the Borrower shall have been notified 

thereof in writing by the Holder; 

3.3 Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any 

collateral documents including but not limited to the Purchase Agreement and such breach continues for a period often (10) days after written 

notice thereof to the Borrower from the Holder; 

3.4 Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or 

certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or 

misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on 

the rights of the Holder with respect to this Note or the Purchase Agreement; 

3.5 Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or 

consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall 

otherwise be appointed; 

3.6 Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower 

or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days 

unless otherwise consented to by the Holder, which consent will not be unreasonably withheld; 

3.7 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief 

under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower; 

3 .• ·sting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTCBB or an 

e' nt replacement exchange, the Nasdaq National Market, the Nasdaq Smallcap Market, the New York Stock Exchange, or the American 

Stu"J( Exchange; 

3.9 Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; andlor 

the Borrower shall cease to be subject to the reporting requirements of the Exchange Act; or 
3.10 Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business. 

3.11 Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as 

such debts become due, provided, however, that any disclosure of the Borrower's ability to continue as a "going concern" shall not be an 

a_ion that the Borrower cannot pay its debts as they become due. 

3~aintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other 

assets which are necessary to conduct its business (whether now or in the future). 

3.13 Financial Statement Restatement. The restatement of any fmancial statements filed by the Borrower with the SEC for any date or period 

from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by 

comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note 

or the Purchase Agreement. 

3.14 Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder. 

Upon the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the 

principal hereof or interest thereon when due at the Maturity Date), the Borrower shall pay to the Holder, in full satisfaction of its obligations 

hereunder, an amount equal to the Default Stun (as defined herein). Upon the occurrence and during the continuation of any Event of Default 

specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on this Note upon a Trading 

Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3,2, 3.3, 3.4, 3.6, or 3.8 exercisable through the delivery of written 

notice to the Borrower by such Holders (the "Default Notice"), and upon the occurrence of an Event of Default specified the remaining sections 

of Articles III (other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note 

shall become immediately due and payable and the Borrower shall pay to the Holder, in the satisfaction of its obligations hereunder, an amount 

equal to the greater of (i) 150% times the sum of(w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on 

the unpaid principal amount of this Note to the date of payment (the "Mandatory Prepayment Date") plus (y) Default Interest, if any, on the 

amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then 

outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be 

known as the "Default Sum") or (ii) the "parity value" of the Default Sum to be prepaid, where parity value means (a) the highest number of 

shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the 

Trading Day immediately preceding the Mandatory Prepayment Date as the "Conversion Date" for purposes of determining the lowest 

ble Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such 

( sion Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common Stock during the period beginning 

on t e date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (the "Default Amount") and 

all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which 

hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall 

be entitled to exercise all other rights and remedies available at law or in equity. 

If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the 

Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient 

authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of 

Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect. 

ARTICLE IV. MISCELLANEOUS 

I 4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder 

shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise 

, thereof or of any other right power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights 

or remedies otherwise available. 

4.2 Notices. All notices. demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing 

and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, 

postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or 

facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or 

other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, 

with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a 

business day during normal business hours where such notice is to be received), or the fust business day following such delivery (if delivered 0': on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the 

d ailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first 

o(,~_. he addresses for such communications shall be: 

If to the Borrower, to: 

A VIA TION GROUP, INC. 

3600 Gessner - Suite 220 
Attn: RUSSELL IVY, President 

facsimile: 516-466-3555 

Houston, TX 77063 

• copy by fax only to (which copy shall not constitute notice): 

[enter name of law fIrm] 

Attn: [attorney name] 

(enter address line 1] [enter city, state, zip] facsimile: [enter fax number] 

Attn: Curt Kramer, President 

facsimile: 516-498-9894 

If to the Holder: 

ASHER ENTERPRISES, INC. 

1 Linden PI., Suite 207 

Great Neck, NY. 11021 

With a copy by fax only to (which copy shall not constitute notice): 

Naidich Wurmall Birnbaum & Maday LLP 80 Cuttermill Road. Suite 410 

Great Neck, NY 11 021 

Attn: Bernard S. Feldman, Esq. 

facsimile: 516-466-3555 

4.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the 

Holder. The tenIl "Note" and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued 

pursuant to the Purchase Agreement) as originally executed, or iflater amended or supplemented, then as so amended or supplemented . 

• 

signability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefIt of the Holder 

successors and assigns. Each transferee of this Note must be an "accredited investor" (as defmed in Rule 501(a) of the 1933 Act). 

Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fIde margin account or 

other lending arrangement. 

4.5 Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including 

reasonable attorneys' fees. 

4.6 Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to 

principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall 

be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The parties to this Note 

hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on 

lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury. The prevailing party shall be 

entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note or any other 

agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule oflaw, then such provision shall be 

deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any 

such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of 

any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or 

proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certifIed mail or 

overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such 

service shall constitute good and suffIcient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way 

any right to serve process in any other manner permitted by law. 

4.7 Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount 

(or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower and 

the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be diffIcult to detenIline and the 

• 

to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss 

opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a 

pn m excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated 

damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert 

this Note into shares of Common Stock. 

4.8 Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable tenIlS of the Purchase Agreement. 
4.9 Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common 

Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification 

of any meeting of the Borrower's shareholders (and copies of proxy materials and other information sent to shareholders). In the event of any 

taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any 

di";dend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, 

•

ification or recapitalization) any share of any class or any other securities or property, or to receive any other right or for the purpose of 

ining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the 

assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, 

at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, 

whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and 

a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The 

Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the 

notification to the Holder in accordance with the terms of this Section 4.10. 

4.10 Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by 

vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a 

breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the 

provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the 

penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically 

the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required. 

IN WITNESS WHEREOF, Borrower has caused this No to e signed in its name by its duly authorized officer this _______ _ 

__ ,201 

AVSTARAVIATION GROUP, INC. 

By:. __________ _ 

CK.NO. __________ _ 

DATE _________ _ 

• 

• 
NOTICE OF CONVERSION 

(To be Executed by the Registered Holder in order to Convert the Notes) 

derSigned hereby irrevocably elects to convert $ principal amount of the Note (defined below) into shares of common stock, 

par value per share ("Common Stock"), of A VST AR A VIA nON GROUP, INC., a Colorado corporation (the "Borrower") according to 

tli nditions of the convertible note of the Borrower dated as of (the "Notes"), as of the date written below. If securities are to 

be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is 

delivering herewith such certificates. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any. A copy of each 

Note is attached hereto (or evidence of loss, theft or destruction thereof). 

The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned 

or its nominee with DTC through its Deposit Withdrawal Agent Commission system ("DW AC Transfer"). 

Name ofDTC Prime Broker: Account --------------------------------- Number: ______________________________ ___ 

In lieu of receiving shares of Common Stock issuable pursuant to this Notice of Conversion by way of a DWAC Transfer, the undersigned 

hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers 

are based on the Holder's calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an 

attachment hereto: 

Name: _______________________ Address: ________________________ _ 

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable to the undersigned upon 

conversion of the Notes shall be made pursuant to registration of the securities under the Securities Act of 1933, as amended (the "Act"), or 

pursuant to an exemption from registration under the Act. 

Date of Conversion: Applicable Conversion Price: _________________ Number of Shares of Common 

Stock to be Issued Pursuant to Conversion of the Notes: Signature: ______________________ _ 

}TA Address: 

ThWc,rrower shall issue and deliver shares of Common Stock to an overnight courier not later than three business days following receipt of 

the original Note(s) to be converted, and shall make payments pursuant to the Notes for the number of business days such issuance and delivery 

is late . 

• 
EXHIBIT 31.01 

CERTIFICATIONS 

won I. Gamber, certify that: 

1. I have reviewed this quarterly report on Fonn lO-Q of AvStar Aviation Group, Inc.; 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to 

make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period 

covered by this report; 

3. Based on my knowledge, the financial statements, and other financial infonnation included in this report, fairly present in all material 

respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 

4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined 

in Exchange Act Rules 13a-IS(e) and lSd-lS(e» and internal control over fmancial reporting (as defined in Exchange Act Rules 13a-lS(f) and 

ISd-15(f) for the Company and have: 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 

to ensure that material infonnation relating to the Company, including its consolidated subsidiaries, is made known to us by others within those 

entities, particularly during the period in which this report is being prepared; 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our 

supervision, to provide reasonable assurance regarding the reliability of fmancial reporting and the preparation of financial statements for 

external purposes in accordance with generally accepted accounting principles; 

(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the 

effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

•

closed in this report any change in the company's internal controls over financial reporting that occurred during the Company's most 

rt fiscal quarter (the company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to 

materially affect, the company's internal controls over fmancial reporting; and 

S. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over fmancial 

reporting, to the company's auditors and the audit committee of the company's Board of Directors (or persons performing the equivalent 

functions): 

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are 

reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial infonnation; and 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal 

controls over fmancial reporting. 

Date: May 16, 2011 

• 

/s/ Clayton I. Gamber 

Clayton I. Gamber, 

Chief Executive Officer 
EXHIBIT 31.02 

CERTIFICATIONS .ert Wilson, certify that: 

1. I have reviewed this quarterly report on Fonn IO-Q of AvStar Aviation Group, Inc.; 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to 

make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period 

covered by this report; 

3. Based on my knowledge, the fmancial statements, and other fmancial infonnation included in this report, fairly present in all material 

respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 

4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defmed 

in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over fmancial reporting (as defined in Exchange Act Rules 13a-15(f) and 

15d-15( f)) for the Company and have: 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 

to ensure that material infonnation relating to the Company, including its consolidated subsidiaries, is made known to us by others within those 

entities, particularly during the period in which this report is being prepared; 

(b) Designed such internal control over fmancial reporting, or caused such internal control over fmancial reporting to be designed under our 

supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for 

external purposes in accordance with generally accepted accounting principles; 

(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the 

effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

.sclosed in this report any change in the Company's internal controls over fmancial reporting that occurred during the Company's most 

~ fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to 

materially affect, the Company's internal controls over fmancial reporting; and 

5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial 

reporting, to the Company's auditors and the audit committee of the company's Board of Directors (or persons perfonning the equivalent 

functions): 

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are 

reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial infonnation; and 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal 

controls over fmancial reporting. 

Date: May 16, 2011 

/s/ Robert Wilson 

Robert Wilson, 

Chief Financial Officer 

• 
EXHIBIT 32.01 

CERTIFICATION PURSUANT TO 

18 U.S.c. SECTION 1350 

AS ADOPTED PURSUANT TO _ION 906 OF THE SARBANES-OXLEY ACT OF 2002 

In connection with the Quarterly Report of AvStar Aviation Group, Inc. (the "Company") on Form lO-Q for the quarter ended March 31, 2011 

as filed with the Securities and Exchange Commission on or about the date hereof ("Report"), the undersigned, in the capacities and on the 

dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 

2002, that to his knowledge: 

1. The Report fully complies with the requirements of Section 13(a) or l5(d) of the Securities Exchange Act of 1934; and 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the 

Company. 

Dated: May 16, 2011 

• 

• 

/s/ Clayton I. Gamber 

Clayton I. Gamber, 

Chief Executive Officer 
EXHIBIT 32.02 

CERTIFICATION PURSUANT TO 

18 U.S.c. SECTION 1350 

AS ADOPTED PURSUANT TO 

aION 906 OF THE SARBANES-OXLEY ACT OF 2002 

In connection with the Quarterly Report of AvStar Aviation Group, Inc. (the "Company") on Fonn lO-Q for the quarter ended March 31, 2011 

as filed with the Securities and Exchange Commission on or about the date hereof ("Report"), the undersigned, in the capacities and on the 

dates indicated below, hereby certifies pursuant to 18 U.S.c. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 

2002, that to his knowledge: 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

2. The infonnation contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the 

Company. 

Dated: May 16, 2011 /s/ Robert Wilson 

Robert Wilson, 

Chief Financial Officer 

• 

•