### BEFORE THE U.S. DEPARTMENT OFTRANSPORTATION OFFICE OFTHE SECRETARY WASHINGTON, D.C.

Application of 

### PAPILLON AIRWAYS, INC. for a certificate ofpublic convenience and necessity under 49 U.S.C. 

### § 41102 to engage in interstate scheduled air transportation ofpersons, property and mail Docket DOT-OST-2011-



### APPLICATION OFPAPILLON AIRWAYS, INC. FORA CERTIFICATE OFPUBLIC CONVENIENCE AND NECESSITY

Communications withrespect to this document should be sent to:


### Mr. Alan 

### R. Stephen Vice President Corporate Affairs PapillonAirways, Inc. 1265 Airport Road Boulder City, Nevada 89005 AaronA. Goerlich Garofalo Goerlich Hainbach PC 1200 New Hampshire Avenue, N.W. Washington, D.C. 20036-6802 agoerlich@ggh-airlaw.com 202776-3974 

### Counsel for PapillonAirways, Inc.

Notice: Anypersonwhowishesto supportoropposethis application shouldfile ananswerbyApril 12,2011, and must serve that answer on above-named counsel and all persons served with this application.

March 22, 2011

### Application of 

### BEFORE THE U.S. DEPARTMENT OFTRANSPORTATION OFFICE OF THE SECRETARY WASIDNGTON, D.C.

PAPILLON AIRWAYS,INC. Docket DOT-OST-2011- for a certificate ofpublic convenience and necessity i 

### under 49 U.S.C. 

### § 41102 to engage ininterstate scheduled airtransportation ofpersons, property and mail



### APPLICATION OFPAPILLON AIRWAYS, INC. FORA CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY PapillonAirways, Inc. (Papillon) applies, pursuantto Section41102 ofTitle49 ofthe United States Code, Parts 201 and 204 oftheEconomic Regulations, and SubpartB oftheRules ofPractice ofthe U.S. Department ofTransportation, for a certificate ofpublic convenience and necessity to engage in interstate scheduled air transportation ofpersons, property and mail. Papillon currently holds a DOT commuter air carrier authorization, anFAA air carrier certificate, and FAA Part 135 operations specifications, and is in active operation under those authorities utilizing a fleet of39 helicopters. Thisapplicationinvolvesno changeinthenature orscopeofPapillon'soperations;the purpose ofthe application is for Papillon to obtain a DOT certificate (as distinguished from its existingcommuteraircarrierauthorization)for corporate and state taxreasons. Consistentwithits Part 135 operations specifications, Papillon requests that its certificate ofpublic convenience and necessity be issued inthe name - 

### PAPILLON AIRWAYS, INC. d/b/a PAPILLON GRAND CANYON HELICOPTERS d/b/a GRAND CANYON HELICOPTERS
In support ofthis application, Papillon states as follows:1. 

### Papillonisa citizenoftheUnited States as definedin49 U.S.C. 

### §40102(a)(15). As was the case when Papillon was found fit as a commuter air carrier some 15 years ago (Order 95-9-26, September 25, 1995), Papillon is an Arizona corporation owned entirely by members of the Halvorson family, all ofwhom are U.S. citizens. All ofPapillon'skeypersonnel are U.S. citizens.

2. PapillonholdsFAAAirCarrierCertificateNumberPG9A174H andisengaged

### inairtaxi operations pursuant to 14 C.F.R. Parts 135 and 298, including daily scheduled service between BoulderCityMunicipalAirportinBoulderCity, Nevada, and GrandCanyonWestAirportinPeach Springs, Arizona. 1 

### Papillon operates a fleet of39 helicopters, all ofwhich are configured for six passengers and used primarily for on-demand aerial sightseeing tours ofthe Grand Canyon and surroundingregion. In additionPapillonprovideshelicoptertransportationundercontractto several federal and state agencies, and operates scheduled service as described above. Papillon plans to expand its fleet bythree units during 2011, for a total of42 helicopters.

3. Bythis application Papillonrequests issuance ofa certificate ofpublic convenience and necessity, superseding the commuter air carrier authority issued to Papillon by Order 95-9-26. Papillonrequires aDOTcertificateratherthana commuterauthorizationfor corporate and statetax reasons. No change in the nature or scope ofPapillon's operations is contemplated.

4. Information in support of Papillon's fitness to continue to engage in scheduled air transportation andthe other services Papillonprovides is containedin AttachmentA andExhibitsI throughX ofthis application? Theinformationiskeyedto therequirements of

### §204.3 oftheDOT

Accordingly, Papillon's FAA Part 135 operations specifications include authority for rotorcraft (helicopter) 

### commuter operations as defmed in 14 C.F.R. § 119.3.

2 The exhibits include financial statements and other information of Grand Canyon Airlines, Inc. (GCA), a certificated carrierowned, like Papillon, by members ofthe Halvorson family. Financial statements ofa smallairtaxi also ownedbythe Halvorsons, AirGrand Canyon, Inc., have notbeenincluded as they are of dubiousrelevance: AirGrand Canyon operates only a single four-seat Cessna 182 aircraft, holds outno service to the public, and receives business only byreferral from GCA. Forthe samereason, fmancial statements of the Halvorson-owned special-purposecompaniesthatown37 ofPapillon's 39helicoptersand leasethemtothe carrierare not included. Inthe eventthe Departmentwishes toreview anyofthis information, itwillbefiled upon request subject to a motion to withhold from public disclosure. The Department did not require submissionofthis information inthecontextofGCA'sfitness reviewandcertification

### (see DocketDOT-OST2008-0114).

### regulations. Additional information such as OST Form 1010.5, OST Form 4523 and Papillon's family assistance plan is being filed inthe appropriate DOT dockets and, in the case ofthe family assistance plan, with the NTSB.
5. Papillonrequests that this application be processedbythe use ofexpeditednon-hearing procedures. There are no issues ofmaterial fact, andtheuse ofexpeditedprocedureswill serve the public interest. Papillon asks additionally that upon issuance of the requested certificate, the Department make the authority effective immediately since Papillon's pre- and post-certification operations will be continuous and unchanged.
WHEREFORE, Papillon requests that the Department issue a certificate of public convenience and necessityto engage ininterstate scheduled airtransportation ofpersons, property and mail to Papillon Airways, Inc. d/b/a Papillon Grand Canyon Helicopters d/b/a Grand Canyon Helicopters. Respectfully submitted,

# ~L~~ Aaron A. Goerlich Garofalo Goerlich Hainbach PC 

### Counsel for PapillonAirways, Inc.

March 22, 2011

### CERTIFICATE OF SERVICE



### I hereby certify that a copy of the foregoing application, including all attachments, has been furnished bye-mail onMarch 22, 2011, to each ofthe following persons:
Federal AviationAdministration, Las Vegas FSDO: Nicholas Harrington, Principal Operations Inspector, nicholas.f.harrington@faa.gov Boulder City Municipal Airport, Boulder City, Nevada: Kerry Aheam, Airport Manager, kaheam@bcnv.org Grand Canyon West Airport, Peach Springs, Arizona: Stephan Degan, Airport Manager, stephan

_degan@grandcanyomesort.com

## List ofSupporting Documents - Certificate Application ofPap ilion 

## Airways, Inc. Attachment A 14 CFR 

### § 204.3 Questions and Responses Exhibit I Certificate ofGood Standing from Arizona Corporation Commission Exhibit II Affidavit ofCitizenship Exhibit III BriefReview ofCompany History / Synopsis ofOperations Flight Schedule Published in OAGFlight Guide 

### OSTForm 6410 (Original onFile with DOT) Management Organization Chart Resumes ofKey Personnel Elling Halvorson, Chairman Brenda Halvorson, President, CEO and Director

- 25 percent shareholder Lon Halvorson, Executive Vice President and Director

- 25 percent shareholder Barbara Halvorson, wife ofElling Halvorson 25 percent shareholder E. Kent Halvorson, son ofBarbara and Elling Halvorson 25 percent shareholder Stewart Kuehne, CFO / Secretary / Treasurer John Becker, COO and Part 119.69 designated Director ofOperations Irit Langness, Vice President ofSales Robert Graff, Vice President ofMarketing Alan Stephen, Vice President Corporate Affairs Luis Garcia, Part 119.69 designated Director ofMaintenance Thaney Silva, Part 119.69 designated ChiefPilot David Bales, company designated Director ofSafety Exhibit IV Aircraft Accidents or Incidents ExhibitV PapillonFinancial Statements Company Prepared 12/3112010 Profit and Loss Statement Company Prepared 12/31/2010 Balance Sheet Independent CPA Reviewed 12/31/2009 Financial Report


### 1

### Independent CPA Reviewed 12/3112008 

### Financial Report Independent CPA Reviewed 12/3117007

### Financial Report Exhibit VI Grand CanyonAirlines Financial Statements Company Prepared 12/31/2010 

### Profit and Loss Statement Company Prepared 12/3112010 

### Balance Sheet Independent CPA Audited 12/31/2009

### Financial Statement Independent CPA Audited 12/3112008 

### Financial Statement Independent CPA Audited 12/3112007

### Financial Statement Exhibit VII Affidavit ofSafety Compliance Exhibit VIII Papillon 2011 Forecast Quarterly Profit and Loss Statement Papillon 2011 Forecast Year End Balance Sheet Exhibit IX OST Form 1010.5 (original on file inDocket DOT-OST-2002-12556) OST Form 4523 (original onfile in Docket DOT-OST-1995-236) Exhibit X Verification Statement



### 2

## ATTACHMENT A

## 14 

## CFR § 

## 204.3 Questions and Responses
(a) The name, address and telephone number ofthe applicant. Papillon Airways, Inc., d/b/a Papillon Grand CanyonHelicopters andd/b/a Grand Canyon Helicopters Corporate Address: 12515 Willows RoadNE, Suite 200, Kirkland, W A 98034 Arizona Operations and Maintenance Base: 3568 Airport Road, Grand Canyon National Park Airport, Tusayan, AZ with mailing address ofP.O. Box 455, Grand Canyon, AZ 86023. Phone: (928) 638-9330 Southern Nevada Operations and Maintenance Base: 1265 Airport Road, Boulder City, NV 89005. Phone: (702) 638-3200 

### (b) The form ofapplicant's organization. Corporation 

### (c) The state law underwhich the applicant is organized. Arizona 

### (d) If

### the applicant is a corporation, a statement provided by the Office ofthe Secretary ofState, or otheragent ofthe State in which the applicant is incorporated, certifying thatthe applicant corporation is in good standing. See Exhibit I for Certificate ofGood Standing 

### (e) A sworn affidavit statingthatthe applicantis a citizen ofthe United States. See Exhibit II for Affidavit ofCitizenship (f) 

### The identity ofthe key personnelwho will be employed by the applicant. (1) Each person's name, address and citizenship; (2) The experience, expertise andresponsibilities ofeach; (3) The number ofshares ofthe applicants voting stockheld by each and the percentage ofthe total number ofsuch shares issued and outstanding, and the citizenship and principal business ofany person for whose account, if other than the holder, such interest is held; (4) The citizenship ofeach, and

### (5) A description ofthe officerships, directorships, shares ofstock (if 10 percent ormore ofthetotal voting stock outstanding), and other interests eachholds orhas held in any air carrier, foreign air carrier, common carrier, person substantially engaged in the business ofaeronautics or person'swhose principal business (inpurpose or fact) is the holding of stock inor control ofany air carrier, commoncarrier orperson substantially engaged inthe business ofaeronautics. See Exhibit III for Company Organization Chart and Key Personnel Resumes Elling Halvorson, Chainnan ofthe Board and Director 12515 Willows Road, NE, Suite 200 Kirkland, W A 98034 U.S. Citizen 

# oShares Husband ofBarbaraHalvorson, father ofBrenda, Lon and E. Kent Halvorson BrendaHalvorson, President, ChiefExecutive Officer and Director 1265 Airport Road Boulder City, NV 89005 U.S. Citizen 12,500 shares

- 25 percent Daughter ofElling and Barbara Halvorson and sister ofLon and E. Kent Halvorson Lon Halvorson, Executive Vice President and Director 15327 101 st 

### Place NE Bothell, W A 98011 U.S. Citizen 12,500 Shares 25 percent SonofElling and Barbara Halvorson and brother ofBrenda and E. Kent Halvorson BarbaraHalvorson, Director 12515 Willows Road NE, Suite 200 Kirkland, W A 98034 U.S. Citizen 12,500 Shares

- 25 percent Wife ofElling Halvorson and mother ofBrenda, Lon and E. Kent Halvorson 

### E. Kent Halvorson, Director 6615 214th Avenue NE Redmond, W A 98053 U.S. Citizen 12,500 Shares -25 percent SonofElling and Barbara Halvorson and brother ofBrendaand E. Kent



### 2

### Halvorson Stewart Kuehne, ChiefFinancial Officer, Secretary and Treasurer 4605 224th CourtNE Redmond, W A 98053 U.S. Citizen 

# oShares John Becker, ChiefOperating Officer and Director ofOperations Highway 64 Box 455 Grand Canyon, AZ 86023 U.S. Citizen 

# oShares Irit Langness, Vice President ofSales 3230Brookfield Dr. Las Vegas, NV 89120 U.S. Citizen 

# oShares Robert Graff, Vice President ofMarketing 8210 Windsor Crest Court Las Vegas, NV 89123 U.S. Citizen 

# oShares Alan Stephen, Vice President Corporate Affairs 6947 Emerald Springs Lane Las Vegas, NV 89113 U.S. Citizen 

# oShares Luis Garcia, Director ofMaintenance P.O. Box 3603 Grand Canyon, AZ 86023 U.S. Citizen 

# oShares Thaney Silva, ChiefPilot Highway 64 Box 455 Grand Canyon, AZ 86023 U.S. Citizen 

# oShares David Bales, Director ofSafety 1535 BrokenBell Lane



### 3

### Henderson, NV 89002 U.S. Citizen 

# oShares 

### (g) A list ofall persons having a substantial interestin the applicant. Such list shall include: (1) Eachperson's name, address and citizenship. (2) The number ofshares ofthe applicant's voting stock held by each such person and the corresponding percentage ofthe total number ofshares issued and outstanding, andthe citizenship and principal business ofany person for whose account, ifotherthan the holder, such interest is held; (3) Ifany two ormorepersons are related byblood ormarriage, such relationships shall be included inthe list; See answers provided inthe response to question 

### (t). (4) Ifany person or subsidiary ofa person having a substantial interest inthe applicant is or has everbeen (i) An 

### air carrier, foreign air carrier, a commoncarrier, or (ii) Substantially engaged inthe business ofaeronautics, or 

### (iii) An 

### officer or director ofany such entity, or (iv) A holder of 10 percent ormore ofthetotal outstanding voting stock ofany such entity, the list shall describe the relationship(S). Elling Halvorson, 25 percent ofthe stock ofGrand CanyonAirlines, Inc. and 25 percent ofthe stock ofAir Grand Canyon, Inc. BrendaHalvorson, 25 percent ofthe stock ofGrand Canyon Airlines, Inc. and 25 percent ofthe stock ofAir Grand Canyon, Inc. LonHalvorson, 25 percent ofthe stock ofGrand Canyon Airlines, Inc. and 25 percent ofthe stock ofAir Grand Canyon, Inc. E. Kent Halvorson, 25 percent ofthe stock ofGrand Canyon Airlines, Inc. and 25 percent ofthe stock ofAirGrand Canyon, Inc. 

### Note: ThefolloWing companies are referencedelsewhere in this application or in the attachedresumes of keypersonnel. Grand Canyon Airlines, Inc. ("GCA") is an FAA Part 135 on-demand and commuter aircarrierwith substantial fixed-wing aircraft operations. By Order 2008-12-10, December 19,2008, DOT issued GCA an effective Certificate of Public Convenience andNecessity for Interstate Air Transportation.



### 4

### Air Grand Canyon, Inc. ("AGC") is an FAA Part 135 on-demand air carrier with very limited flight operations. It operatesjustone 4-seat single engine Cessna, holds out no service to the public, and receives business only byreferral from GCA. Whisper Jet, Inc. engineers, develops and certifies "quiettechnology" (QT) noise abatement systems for helicopters. Atpresent approximately halfofPapillon's fleet is QT-equipped. (All helicopters operated byPapilloncomply with FAR Part 36 noise standards.) Rainier Heli International, Inc. operates one helicopterfor firefighting operations under a Part 133 certificate issued bythe FAA. Rainier Helicopter Logging, Inc. was a helicopter logging and utility company that is now out ofbusiness. Papillon Hawaiian Helicopters operated as a Hawaii-based aerial sightseeing provider; the business was sold in approximately 1997. Canyon Flight Trading Company LLC is a gift shop. Special-purpose (leasing) companies that ownhelicopters leased to Papillon include American Helicopters LLC, Aztec LLC, Diamond Bar LLC, Juliet Inc., Xebec LLC, Yaki Point LLC, Zuni LLC, Monarch Enterprises Inc., Alpha II Inc., Bravo I Inc., Foxtrot Inc., GulfInc. and Weal LLC. 

### (h) A list ofapplicant's subsidiaries, ifany, including a description ofeach subsidiary's principal business andrelationship to the applicant. Not applicable; Papillonhas no subsidiary companies. 

### (i) A list ofapplicant's shares ofstockin, orcontrol ofany aircarrier, foreign aircarrier, common carrier orperson substantially engaged in the business ofaeronautics. None (j) 

### To the extent any relevant corporation has been engaged in any business priorto the filing ofthe application, each applicant shall provide: (1) Copies ofthe 10KAnnual Reports filed inthe last three years by any relevant corporationrequired to file such reports with the Securities and Exchange Commission. (2) Copies ofrecently filed 10Q Quarterly Reports, as necessary to showthe financial condition and results ofoperations ofthe enterprise current into 3 months ofthe date ofthe filing ofthe application.

5

### Papillon Airways, Inc. is not required to file 10K and 10Q reports. 

### (k) If

### 10Kreports are notfiled with the Securities and Exchange Commission, the following, for the 3 most recent calendarorfiscal years, reflecting the financial condition and results ofoperations ofthe enterpriseto within 3 months ofthe date ofthe filing ofthe application: (1) The Balance Sheet ofeachrelevant corporation; (2) The Income Statement ofeachrelevant corporation; (3) All footnotes applicable to the financial statements including: (i) A statement as to whether the documents were prepared in accordance Generally accepted Accounting Principles, and (ii) A description ofthe significant accounting policies ofeach relevant corporation, such as for depreciation, amortization of intangibles, overhauls, unearned revenues and cost capitalization; (4) A statement ofsignificant events occurring subsequentto the most recent Balance Sheet date for eachrelevant corporation; (5) A statement identifying the person who has prepared the financial statements, his orher accounting qualifications, and any affiliationhe or she has withthe applicant. See Exhibit V, Income Statements and Balance Sheets 2007-2010 for Papillon Airways, Inc., and ExhibitVI, Income Statements and Balance Sheets 2007-2010 for Grand Canyon Airlines, Inc. Papillon's 2010 income statement and balance sheet were prepared by Stewart Kuehne, Papillon's CFO, assisted byBarb Johnson, its Controller. GCA's 2010 income statement and balance sheetwere prepared by Mary Schneider, GCA's CFO, assisted by Mark Slack, its VP-Administration. 

### (I) A list ofall actions and outstandingjudgments for more than $5,000 against any relevant corporation, key personnel employed (orto beemployed) by any relevant corporation, orperson having a substantial interestin any relevant corporation, including the amount ofeachjudgment,the partyto whom itis payable and how long ithas been outstanding. None for Papillon Airways, Inc., Grand Canyon Airlines, Inc., Air Grand Canyon, Inc., and their officers, directors and shareholders otherthan as follows: 1. OnJuly 13,2009, a wrongful termination ofemployment suit against Papillon was filed by a former employee ofPapillon. The amount ofdamages was not specified. Papillonis defending the suit and believes the claim is without merit. 2. Papillon is involved in a dispute with the Internal Revenue Service in regard to air transportationtaxes for the period from July 1,2003 through September 30, 2005. OnOctober 10, 2007, the IRS assessed air transportation excise taxes against Papillonfor thatperiod inthe amount of$6,451,894, plus penalties of$I,287,395

6

### and interest (accruing at statutory rate). Papillon timely paid a divisible portion of the assessment and filed a complaint for refund inthe United States Court ofFederal Claims, Case No.1 :09-297T. The government filed a response to Papillon's suit, asserting a counterclaim for the balance ofthe assessment. The discovery phase of the litigation is ongoing but set to be completed inthe near future. Papillon intends to continue to prosecute its case, defend the IRS counterclaim, and seekjudgment in its favor. In light ofseveral recent court decisions, as well as the outcome of previous tax audits involving the same issue present in Papillon's case, company management anticipates that the case will be resolved favorably for Papillon, with the courtdetermining that the assessment was incorrect and improper. 

### (m)The numberofactions and outstandingjudgments ofless than $5,000 against each relevant corporation, key personnel employed (orto be employed) by any relevant corporation, ora person having a substantial interestin any relevant corporation, and the total amount owed by each on suchjudgments. None for PapillonAirways, Inc., Grand Canyon Airlines, Inc., Air Grand Canyon, Inc., andtheir officers, directors and shareholders. 

### (n) A description ofthe applicant's fleet ofaircraft, including: (1) The number ofeachtype ofaircraft owned, leased and to be purchased or leased; (2) Applicant's plans, including financial plans for the purchase or lease of additional aircraft, and (3) A sworn affidavit stating that each aircraft owned or leased has been certified by the FAA and currently complies with all FAA safety standards. Papillon Airways currently has 39 aircraft listed on its FAA Operations Specifications, paragraph D085, ofwhich 2 are owned and 37 leased. The fleet includes 5 model AS350-B2 helicopters, 14 model BHT-206-Ll helicopters, 1model BHT-206-L3 helicopter, 3 model BHT407-407 helicopters, 15 model EC-130-B4 helicopters and 1 model MDHS-MD-900 helicopter. Papillon is scheduled to purchase 1 model EC-130-B4 helicopter and to lease 2 model EC-130-B4 helicopters in 2011. The purchase will involve internally generated cash flow and/or traditional aircraft financing or a combinationthereof.

All lessors ofthe helicopters leasedbyPapillon are special-purpose (leasing) companies owned bymembers ofthe Halvorson family. See Exhibit VII for the Affidavit ofSafety Compliance. (0) 

### A description ofthe current status ofall pending investigations, enforcement actions, andformal complaints filed by theDepartmentofTransportation,

7

### including theFAA, involvingthe applicant or any relevant corporation, or any personnel employed (orto be employed) by any relevant corporation or person having a substantialinterestin any relevant corporation, regarding compliancewith the Statute, ororders, rules, regulations orrequirements issued pursuantto the Statute, and any corrective actions taken. Papillon Airways, Inc.: None. Air Grand Canyon, Inc.: None. Grand CanyonAirlines, Inc.: On September 27, 2010, FAA Western Pacific Region, Drug Abatement Division, issued a letter ofinvestigation concerning certain alleged deficiencies in GCA's compliance with 49 CFR Part 40 and 14 CFRPart 120 (FAA FileNumber 2010WP910252). GCA responded on October 5, 2010, and is awaiting FAA'sreply. The case remains open.



### (p) A description ofall charges ofunfair ordeceptive oranticompetitivebusiness practices, oroffraud, felony, or anti-trustviolation, brought against any relevant corporation or person having a substantialinterestin any relevant corporation, or memberofthekey personnel employed (or to be employed) by any relevant corporation in the past 10years. Papillon Airways, Inc. and its officers, directors and shareholders: None. Air Grand Canyon, Inc. and its officers, directors and shareholders: None. Grand Canyon Airlines, Inc. and its officers, directors and shareholders: None.

(q) 

### A description ofany aircraftincidents oraccidents (as defined in the National Transportation Safety BoardRegulations (49 CFR830.2) experienced by the applicant, its personnel, or any relevant corporation, which occurred either duringthe year precedingthe date ofapplication orat anytime in the past and which remain underinvestigation bytheFAA, the NTSB, orthecompany itself, including: (1) 

### The date ofthe occurrence; (2) Thetype offlight; (3) The number ofpassengers and crew onboard and an enumeration ofany injuries offatalities; (4) A description ofany damage to the aircraft; (5) The FAA and NTSB file numbers andthe status ofthe investigation, including any enforcement actions initiated against the carrier or any ofits personnel, and (6) Positive actions taken to preventreoccurrence. See Exhibit IV, Aircraft Accidents and Incidents



### (r) A briefnarrative history ofthe applicant.

8

### See Exhibit III, Company History and Synopsis ofOperations 

### (s) A description ofall Federal, State and foreign authority underwhich the applicant has conducted oris conducting transportation operations, and the identity ofthe local FAA office and personnel responsible for processing an application for any additional authority needed to conducttheproposed operation. Papillon conducts on-demand and commuter operations pursuantto DOT Order 95-9-26, its FAA air carrier certificate andFAA part 135 operations specifications. The FAA Flight Standards District Office with oversight for Papillon is: Las Vegas Flight Standards District Office Attn: Nicholas F. Harrington, Principal Operations Inspector 7181 Amigo Street, Suite 180 Las Vegas, NV 89119 Phone: (702) 269-1445, ex. 343 nicholas.f.harrington@faa.gov



### (t) A description ofthe service to be operated ifthe application is granted, including a (1) forecast Balance Sheet and (2) a forecast Income Statement. Papillon's operations will not be affected bythe issuance ofa DOT Certificate of Public Convenience andNecessity as Papillon will continueto operate on-demand and commuter services as it has continuously provided for thepast 15 years. Papillon's scheduled service will continueto represent a small proportion ofits operations, i.e., less than 1 % 

### ofits total revenues. Since Papillon's ongoing operations will not change, the Department's working capital reserve test, to Papillon's understanding, does not apply in the context ofthis application. See Exhibit VIII for Papillon's company-wide forecast Balance Sheet and Income Statement for 2011 (forecast prepared by Stewart Kuehne, CFO, and Barb Johnson, Controller).



### (u) A signed counterpart ofAgreement 18900 (OST Form 4523) as required by part203 ofthis chapter. See Exhibit IX for OST Form 4523 executed onbehalfofPapillonAirways, Inc.



### (v) Certification by the applicant's representative that the representations in the application and in subsequent submissions shall be accurate. See Exhibit X for the required certification executed by Alan Stephen, Vice President Corporate Affairs, onbehalfofPapillonAirways, Inc.



### 9

## EXHIBIT I

# STATE OF

# ARIZONA

Office ofthe 

## CORPORATION COMMISSION CERTIFICATE OFGOOD STANDING To all to whom these presents shall come, greeting: I, Ernest G. Johnson, Executive Directorofthe Arizona Corporation Commission, do herebycertify that 

### ***PAPILLONAIRWAYS, INC

## ***

a domestic corporation organizedunderthe laws ofthe State ofArizona, did Incorporate on June 28, 1995.

I further certify that according to the records ofthe Arizona Corporation Commission, as ofthe date set forth hereunder, the said corporation is notadministratively dissolved for failure to comply with the provisions of the Arizona Business Corporation Act; andthatits mostrecentAnnual Report, subjectto the provisions ofA.R.S. sections 10-122, 10-123, 10-125 & 10-1622, has been deliveredto the Arizona Corporation Commission for filing; and that the saidcorporation has not filedArticles ofDissolution as ofthe date of this certificate.
This certificate relates onlyto the legal existence of the above named entityas ofthe date Issued. This certificate Is not to be construedas an endorsement, recommendation, or notice ofapproval of the entity's condition orbusiness activities andpractices.
IN WITNESS WHEREOF, I have hereunto setmy handandaffixed the officialseal of the Arizona Corporation Commission. Done at Phoenix, the Capital, this 16th DayofFebruary, 2011, A. D.

# cG(b~ Executive Director By: 

### 573613

## EXHIBIT II

### AffidavitofCitizenship

State of Nevada County ofClark

Alan Stephen, beingfirst duly sworn, deposes and says: 1. Thatheis duly elected, qualified and serving asVice presidentof

### CorporateAffairs of

### Papillon Airways, Inc. andthat he is authorizedtoand does makethis affidavitfor it.
2. That

### Papillon Airways, Inc. is a citizen ofthe United Stateswithin the meaning of49 U.S.C 40102(a)(15).

Alan Stephen

Swornto and subscribed before methis 25th 

### day of February, 2011.



### KIMBERlEY ANDERSON NI*ryNIle

...ofHeY

... 

### No. 11-3804-1



# ...,..ea.. 0IcembIr 13. 2014 

### Notary Public

## EXHIBIT III

### A BriefReview Company History and Synopsis ofOperations 

### Papillon Airways Inc. traces its roots back to 1965 when Elling Halvorson founded North American Helicopter Services Inc., a Washington corporation. In 1967 North American began air tour and charter services at Grand Canyon, AZ. In 1983, the company received DOT commuter authority by Order 83-1-21. In 1989, the company changed its name to Papillon Airways Inc. d/b/a Papillon Grand Canyon Helicopters ("Papillon I"). During this period the company also conducted scheduled service between the Grand CanyonNational Park Airport and the Supai Village onthe Havasupai Indian Reservation, contract flights for the National Park Service and U.S. Forest Service, in addition to its on-demand scenic tour flights ofthe Grand Canyon National Park. In conjunction with Halvorson family estate planning, on June 28, 1995 a newArizona company was incorporated as Papillon Airways Inc. ("Papillon II"). On August 28, 1995, Papillon I filed an application with the DOT outlining a corporate restructuring whereby other members ofthe Elling Halvorson family would have ownership ofthe air tour operation through the new company and to have the Department transfer and reissue its commuter authority from PapillonI to Papillon II. Papillon II's application stated that it would retain virtually the same management and operations as Papillon I and that when the transfer was completed Papillon I would become Monarch Leasing Inc. On September 25, 1995 by Order 95-9-26, DOT found Papillon II fit, willing and able to conduct commuter air carrier operations and on October 2, 1995 Papillon I ceased all air transportation operations and Papillon II began operations as stated in its application. In 1998 Papillon Grand Canyon Helicopters expanded its on-demand and air tour services by establishing a second operational base in southernNevada in addition to its base atthe Grand Canyon south rim. Today, Papillon operates daily on-demand air tour flights from Las Vegas McCarran International Airport, Boulder City Municipal Airport (NV), the airport at Grand Canyon West (AZ) located on the Hualapai Indian Reservation, and Grand CanyonNational Park Airport (AZ). Do to major flooding in 2009 decimating the Supai Village, Pap

### illon temporarily suspended its scheduled services there at the request ofthe Havasupai and has not yet resumed that service. Effective January 1,2011 Papillon commenced a new daily scheduled service between Boulder City (NY) 

### and Grand Canyon West CAZ) with one round trip flight per day. In 2011, Papillon plans to operate 42 helicopters all under part 135 principally for its Grand Canyon air tours. However Papillon continues to do substantial contract work for the National Park Service, Department ofInterior, U.S. Forest Service, AZ Game and Fish Department, and U.S. Department ofDefense.

### Management structure, duties and qualifications are addressed in Exhibit III. Papillon, while not required to have a safety officer as a part 135 air carrier, establishedthis position a decade ago reporting directly to the CEO as part ofits comprehensive commitment to air safety and regulatory compliance. Papillon is a founding member of the Tour Operators Progranl ofSafety. Papillon has developed a Family Assistance Plan in support ofthis application. This application for a Certificate ofPublic Convenience and Necessity is supported by reviewed financial statements for 2007,2008 and 2009 and a company prepared Balance Sheet and Income Statement as ofDecember 31, 2010 (Exhibit V). A forecast for company operations in 2011 is contained in Exhibit VIII and the company expects to remain solidly profitable for the year. Grand Canyon Airlines Inc. ("GCA") is a related company to Papillon and is a "relevant corporation" as defined by the regulations. By Order 2008-12-10, DOT issued GCA a Certificate ofPublic Convenience andNecessity inNovember 2008. As required in the application process Papillon is submitting responses to each ofthe questions concerning relevant corporations on behalfofGCA.

# ) ) 

# ) Schedule update 21 DEC10 File with: IATA.SRS@INNOVATA-LLC.COM azualaga@innovata-Ilc.com schedules@oag.com GCN Grand Canyon, AZ. HAE Havasupai, AZ. BlD Boulder City, NV GCW Grand Canyon West, AZ. BH2 Bell Helicopter Papillon Airways Inc.
- HI 563 Effective from Effective until Origin Destination Departure Time Arrival Time Class of Svc # Seats Frequency Equipment Winter HI500 01-Jan-11 12-Mar-11 BLD GCW 7:00am PST 8:30am MST Y 6 Daily BH2 HI600 01-Jan-11 12-Mar-11 GCW BLD 11:00am MST 10:30am PST Y 6 Daily BH2 Summer

HI500 13-Mar-11 05-Nov-11 BLD GCW 6:30am PDT 7:00am MST Y 6 Daily BH2 HI600 13-Mar-10 05-Nov-11 GCW BLD 10:30am MST 11:00am PDT Y 

### 6 Daily BH2 Winter HI500 06-Nov-11 10-Mar-12 BLD GCW 7:00am PST 8:30am MST Y 6 Daily BH2 HI600 06-Nov-11 10-Mar-12 GCW BLD 11:00am MST 10:30am PST Y 6 Daily BH2 Summer

HI500 11-Mar-12 03-Nov-12 BlD GCW 6:30am PDT 7:00am MST Y 6 Daily BH2 HI600 11-Mar-12 03-Nov-12 GCW BLD 10:30am MST 11:00am PDT Y 6 Daily BH2AGENCY DISPLAY OF ESTIMATED BURDEN

U.S. Department of Transportation The public reporting burden for this collection of information is estimated to average 30 minutes per response, Ifyou wish to comment on the accuracy of the estimate or make suggestions for reducing this burden, please direct your comments to: U,5. Department ofTransportation, Office ofAviation Analysis, X-56, 400 7 th St, Sw., Washington, D.C. 20590. According to the Paperwork Reduction Act of 1995, no persons are required to respond to acollection of information unless it displays avalid OMB control number.

,...Jffice of the Secretary OfTransportation NOTE: For information on where to file completed copies ofthis form, see FILING INSTRUCTIONS below.
OMS No. 2106-0030 Expires 9-30-2007 U.S. AIR CARRIERS
- CERTIFICATE OF INSURANCE POLICIES OF INSURANCE FOR AIRCRAFT ACCIDENT BODILY INJURY AND PROPERTY DAMAGE LIABILITY FILING INSTRUCTIONS: File a signed original ofthis form with the Federal Aviation Administration, AFS-260, 800 Independence Ave., SW" Washington, D.C. 20591. (See EXCEPTIONS 1and 2 below.) i EXCEPTION 1: If Block 2B on the reverse is filled in because the insured is a commuterair carrier. file a signed original ofthis form with the Department of

Transportation, Air Carrier Fitness Division, X-56, 400 7th St., SW, Washington, DC 20590. EXCEPTION 2: For!!DY insured that is located in the State ofAlaska**(re~ardless** as to whether Block 2A, 2B, or 2C is filled in), file asigned original of this form with the Federal Aviation Administration, Alaskan Region HQ., AAL-230, 222 W 7 Ave., #14, Anchorage, Alaska 99513. (Please type information, exceptsignatures) THIS CERTIFIES THAT: United States Aviation Underwriters, Inc. & Certain Other Insurers (Name of Insurer) has issued a policy or policies ofAircraft Liability Insurance to Papillon Airways, Inc. 12515 Willows Road NE, Suite 200, Kirkland, WA 98034 FAA Certificate No: PG9A174H (Name and address of Insured U.S. Air Carrier) effective from November 1,2010 until ten (10) days after written notice from the insurer or carrier ofthe intent to terminate coverage is received by the Department of Transportation

.

..GTE: Part 205 ofthe Department's Regulations does not allow for a predetermined termination date, and a certificate showing such a date is unacceptable.

1. The Insurer (Check One): 

### [;3J is licensed to issue aircraft insurance policies in the United States; 

## D is licensed or approved by the government of to issue aircraft insurance policies; or



## ------------------------ D is an approved surplus line insurer in the State(s) of 2. The insurer assumes, underthe policy of policies listed below, aircraft accident liability insured to minimums at least equal to the following during operations. maintenance, or use ofaircraft in "air transportation" as that term is defined in 49 U.S.C. 40102. (Complete applicable section(s) below): A. U.S. AIR TAXI OPERATORS WITH PART 298 AUTHORITY ONLY The aircraft covered by this policy are SMALL AIRCRAFT (I.e., with 60 or fewer passenger seats or with a maximum payload capacity of 18,000 pounds or less). (Check separate orcombined coverage as appropriate). 

# o Separate Coverages:
Policy No. Type ofLiability Bodily Injury Liability (Excluding Passengers) Passenger Bodily Injury Each person $75,000 $75,000 Minimum Limit Each Occurrence

$300,000 $75.000 x 75% of total number of passenger seats installed in aircraft Property Damage $100,000 Combined Coverage: This combined coverage is a single limit of liability for each occurrence at least equal to the required minimums stated above for bodily injury (excluding passengers), property damaged, and passenger bodily injury. Policy No. SIHL1-360P Amount of Coverage $50,000,000 Combined Sin Ie Limit This policy covers CARGO operations onlyand excludes passenger liability insurance OST Form 6410 THIS CERTIFICATE CANCELS AND REPLACES ALL PREVIOUSLY ISSUED CER'rIFICATESB. U.S. COMMUTER AND CERTIFICATED AIR CARRIERS OPERATING SMALL AIRCRAFT The aircraft covered by this policy are SMAllAIRCRAFT (Le., with 60 or fewer passenger seats or with a maximum payload capacity of 18,000 pounds or less). (Checkseparate orcombined coverage as appropriate). 

# o Separate Coverages:



# x


# o
C 

## 0



# .. 0 0 Policy No. Type ofLiability Combined Bodily Injury (Excluding Passengers otherthan cargo attendants) and Property Damage Liability Passenger Bodily Injury Minimum limit Each person Each Occurrence $300,000 $300,000 $2,000,000 $300,000 x 75% of total number of passenger seats installed in aircraft Combined Coverage: This combined coverage is a single limit of liability for each occurrence at least equal to the required minimums stated above for bodily injury (excluding passengers), property damaged, and passenger bodily ill.iury. Policy No. SIHL1·360P Amount ofCoverage $50,000,000. Combined Single limit This policy covers CARGO operations onlyand excludes passenger liability insurance.
US CERTIFICATED AIR CARRIERS OPERATING LARGE AIRCRAFT



# .. The aircraft covered by this policy are LARGE AIRCRAFT (i.e., with more than 60 passenger seats or with a maximum payload capacity of more than 18,000 pounds). (Checkseparate orcombinedcoverages as appropriate): Separate Coverages: Minimum limit Policy No. Type ofLiability Each person Each Occurrence Combined Bodily Injury (Excluding Passengers otherthan $300,000 $20,000,000 cargo attendants) and Property Damage liability $300,000 x 75% Passenger Bodily Injury $300,000 of total number of passenger seats installed in aircraft Combined Coverage: This combined coverage is a single limit of liability for each occurrence at least equal to the required minimums stated above for bodily injury (excluding passengers), property damaged, and passenger bodily injury. Policy No. Amount ofCoverage This policy covers CARGO operations onlyand excludes passenger liability insurance
3. The policy or policies listed in this certificate insurers) (Check One): Make and Model FAA or Foreign Flag Registration No. [81 

## o 

# o Operations conducted with all aircraft operated by the Insured Operations conducted with the following types of aircraft Operations with the following aircraft: (Use additional page if necessary) 4. Each policy listed in this certificate meets or exceeds the reqUirements in 14 CFR Part 205.

(Name ofInsurer)

Contact (person who can verify the effectiveness ofthe coverage)
(Area Code, Phone Number) I (Area Code I Fax Number)

(Signature, ifapplicable)
(Date) Caledonian Insurance Group, Inc. (Name ofBroker, ifapplicable) PO Box 60 (Address) Mercer Island, WA 98040 (City, State, Zip Code) Anthony H. Cowan, President (Officer orauthorized representative) 206-232-9870 206-232-9515 (Area Code, Phone Number) Area Code I Fax Number)

(Signature, ifapplicable) October27,2010 (Date)Company Organizational Chart 

# Pap/.llon GrIlMCIJnyon

2/1/2011

Alan Stephen VP Corporate Affairs Stewart Kuehne

CFO

BarbJohnson

Controller Brenda Halvorson President/CEO

Lon Halvorson David Bales SafetyManager ExecutiveVP

lise Harvey DirectorHR

Borden Miller Utility Manager

Jeff Bubier Flight Une/Tower



### Ma"'ler ---/----i

John Becker

COO/DO

Thaney Silva

Chief Pilot

BeckyWirth

Customer

Service

Dale Griffith GCWManager Luis Garcia Directorof Maintenenace IritLangness VPSales RobertGraff VP Marketil'll

## ELLING B. HALVORSON 12515 Willows Road N.E. Suite 200 Kirkland, WA 98034 (425) 820-8800 Fax (425) 823-5335

EDUCATION: Waldorf College, Forest City, Iowa University of Idaho, Moscow, Idaho Willamette University, Salem, Oregon Degrees: B.A.

- Economics Minors

- Civil Engineering & Mathematics
HONORARIES: Distinguished Alumni Award, Waldorf College, 1969 Public Works Contractor of the Year Award, Washington State, 1979 Doctor of Laws Degree, Waldorf College, April 1998 President's Citation for "Outstanding Achievement in Safety Leadership", Flight Safety Foundation International, November 2001 Member for Life, Helicopter Association International, June 2001 Distinguished Alumni Citation for Achievement in Business, Willamette University, 2003 Construction Hall of Fame Inductee, AGC, May 2004 Lawrence G. Bell Memorial Award for "Saluting Excellence in Management Leadership", Helicopter Association International, February 2005 Meritorious Service Award, Helicopter Association International, February 2006 Meritorious Achievement Award, Tour Operators' Program of Safety, February 2005 Academic "Phi Gamma Mu" Social Science Honorary National Junior Chamber of Commerce Numerous other awards of support from charitable organizations
BUSINESSES (Present 

### I Past*): *Halvorson-Osborne Construction Co., President *Papillon Hawaiian Helicopters, Chairman ofthe Board Cooper Point Associates, Partner Elling Halvorson, Inc., Chairman of the Board Grand Canyon Airlines, Inc. (Scenic Airlines), Chairman of the Board Grand Canyon Squire Inn, Chairman of the Board Grand Canyon IMAX Theatre Ventures, Partner Hydro-Resources, Inc., Secretary Monarch Enterprises, Inc., Chairman of the Board Papillon Grand Canyon Helicopters, Chairman of the Board Rainier Heli International, Inc., Chairman of the Board Whisper Jet, Inc., Chairman

- Board of Directors

f:\data\eh\resume EH Updated as of June 30. 2010

## ELLING B. HALVORSON Page two TRADE ASSOCIATIONS: Aircraft Owners & Pilots Association Member American Helicopter Society

- Member Associated General Contractors ofAmerica

- Board of Directors. Honorary Lifetime Member Construction Hall of Fame Helicopter Association International

- Chairman, Board of Directors (twice) National Business Aircraft Association Member Past Chair of the, Finance Committee, Legislative Committee, and the Tour Operators Committee Smithsonian National Air and Space Museum Advisory Board Tour Operators Program of Safety (TOPS)

- Founder, Board Member United States Air Tour Association, Board of Directors

ORGANIZATIONS (Present 

### I Past): Augsburg College, Board of Regents Bear Creek Homeowners Association, Board of Directors Highland Covenant Church, Chairman Lake Washington Technical College, Governor appointed Trustee

- 2004 Chair North Park University, Board of Directors Luther Child Center, Board Member Lutherland Youth Camp, Board Member Muscular Dystrophy Association, Board Member Resource Center for the Handicapped, Board Chairman Search Institute, Board Member Cultural Exchange "Son of Heaven, Imperial Arts of China", Chairman
FRATERNAL ORGANIZATIONS AND CLUBS: Bear Creek Country Club, Woodinville, Washington Q-Club, Pacific Lutheran University, Seattle, Washington Rotary Club, Seattle, Washington Swedish Club, Seattle, Washington The Bellevue Club, Bellevue, Washington Elling B. Halvorson was born in St. Paul, Minnesota on January 2, 1932. In 1953 he married Barbara Tweed. They have five children: Brenda, E. Kent, Lon, Randal, and Rodney. He presently resides in Woodinville, Washington. He completed high school at Hillcrest Lutheran Academy in Fergus Falls, Minnesota. He then attended Waldorf College in Forest City, Iowa, the University of Idaho in Moscow, Idaho, and completed his degree at Willamette University in Salem, Oregon. His business history includes being Chief Executive Officer of Elling Halvorson, Inc., Chief Executive Officer and founder of Papillon Airways, Inc., Vice President and Partner of Grand Canyon Airlines (Scenic Airlines), President and Chief Executive Officer of Squire Motor Inns, Inc., as well as many smaller partnerships and corporations.

f:\data\ehlresume EH Updated as of June 30, 2010

# BrendaHalvorson

1265 Airport Road Boulder City, NV 89005



## Present Operating Companies: 

### PROFILE

Papillon Airways, Inc., President/CEO, Director A helicopter company specializing in helicopter tours/charters. Locations at Grand Canyon South Rim, Las Vegas McCarran International Airport, and Boulder City Nevada. Additionallyperforming government contracts including Department ofDefense, Department ofInterior, Fish & Wildlife, fire fighting, and search & rescue. Grand Canyon Airlines, Inc., President/CEO, Director A fixed wing airplane company based at Grand Canyon South Rim and Page Arizona, and Boulder City, Nevada specializing in air tours/charters ofthe Grand Canyon as well as many other destinations in the southwest. They operate a fleet ofDeHavilland Twin Otter airplanes Elling Halvorson, Inc., Director Parent company ofMonarch Enterprises, Inc. and Rainier Heli-Lift, Inc. Monarch Enterprises, Inc., Director A helicopter, equipment and facilities leasing company. Rainier Heli International, Inc., Director An 

### international helicopter utility company specializing in oil exploration and production support in remote locations in Latin America. Domestic and international aircraft leasing, and fire fighting in the western United States. Grand Canyon Coaches, Inc., President/CEO A bus company providing ground transportation at Grand Canyon South Rim. Grandcanyon.com, Inc., President/CEO A retail travel assistance company specializing in the Canyon Lands. Best Tours LLC, Manager, Member A company specializing in the business ofselling tours in the Las Vegas Market.

### Brenda Halvorson Page 2.

Helicopter Leasing Companies: American Helicopters LLC, Manager, Member Aztec LLC, Member Diamond Bar LLC, Member Juliet, Inc., Shareholder Xebec LLC, Member Yaki Point LLC, Member Zuni LLC, Manager, Member Real Estate Companies: Boomerang LLC, Manager, Member A real estate investment company. Pair-A-Dice LLC, Manager, Member A real estate investment company holding two rental properties in Las Vegas, Nevada. Tusayan LLC, Member A real estate investment company holding two rental properties in Grand Canyon, Arizona Board ofDirectors (Past and *Present): *Papillon Airways, Inc. *Elling Halvorson, Inc. *Monarch Enterprises, Inc. *Rainier Heli International, Inc. *Grand Canyon Airlines, Inc. *United States Air Tour Association (Vice Chair) Grand Canyon Tusayan Fire Department (Vice Chair, Founding Member) *Buck Schrader Memorial Fund Grand Canyon Chamber ofCommerce (Past President)

### Brenda Halvorson Page 3. Memberships and Affiliations: 

### Helicopter Association International (HAl) National Business Aircraft Association Tour Operators Program ofSafety Rotary Club Community Leader ofthe Year 2000 Grand Canyon High School Booster Club (Past President) Helicopter Tour Operators Committee (HAl) Fly Neighborly (HAl) Arizona Governors Committee, Grand Canyon Airport Paradise Springs Home Owners Association Bella Mira Home Owners Association 1986 to Present: 

### Papillon Airways, Inc. Executive Assistant to the President, Special Projects Coordinator, Vice President ofSales & 

### Marketing, Executive Vice President, President & 

### CEO 1982 to 1985: 

### Scott Sports Investor Manager 1979 to 1981: 

### Home-Maker 1975 to 1978: 

### Elling Halvorson, Inc. Project Secretary, Hoopa, California, Construction Camp Manager, Unalakleet, Alaska Education: 

### Bellevue Community College, Bellevue, Washington Seattle Pacific University, Seattle, Washington Travel Central (Travel Agent School), Seattle, Washington City University, Seattle, Washington

## LONA. HALVORSON 15327 lOptPlace NE Bothell, WA 98011 Home 425-487-1047 Business 425-820-8800



### Operating Companies: 

## PROFILE

Elling Halvorson, Inc., President/CEO Parent companyofMonarch Enterprises, Inc. and Rainier Heb-Lift, Inc. Monarch Enterprises, Inc., President/CEO A helicopter, equipment and facilities leasing company. Rainier Heli International, Inc., President/CEO An international helicopter utility company specializing in oil exploration and production support inremote locations inLatin America and domestic fire fighting. Papillon Airways, Inc., Executive Vice President A company specializing in helicopter tours. Locations at Grand Canyon South Rim, Las Vegas McCarran International Airport, and Boulder City, Nevada. Additionallyperforming government contracts including Department ofDefense, Department ofInterior, Fish 

### & Wildlife, fire fighting, and search 

### & rescue. Grand Canyon Airlines, Inc., Executive Vice President An airplane companybased at Grand Canyon South Rim and, Page, Arizona, and Boulder City, Nevada specializing in air tours ofthe Grand Canyon as well as manyother destinations in the southwest. They operate a fleet ofeight (17) DeHavilland Twin Otter airplanes. Grand Canyon Coaches, Inc., Executive Vice President A bus companyproviding ground transportation at Grand Canyon SouthRim. Grandcanyon.com, Inc., Executive Vice President A retail travel assistance company specializing in the Canyon Lands. Best Tours LLC, Manager, Member A company specializing in the business ofselling tours in the Las Vegas Market

### Lon A. Halvorson Helicopter Leasing Companies: 

### Alpha II, Inc., Bravo I, Inc., Foxtrot, Inc., Gulf, Inc., Juliet, Inc., President American Helicopters LLC, Aztec LLC, Diamond BarLLC, Weal LLC, Xebec LLC, Zuni LLC, Managing Member Real Estate Companies: 

### CooperPoint Corporation, President A General Partner in West Olympia Plaza, a retail shopping center. H.W.H. Associates, Limited Partner A limited partner invested in West OlympiaPlaza, a retail shopping center. BoomerangLLC, ManagingMember A real estate investment company. Pair-A-Dice LLC, Managing Member Rental Properties in Las Vegas, Nevada Tusayan LLC, Managing Member Rental Properties in Grand Canyon, Arizona Investment Companies: 

### Phoenix I LLC, Authorized Agent An 

### investment company specializing in high risklhigh return investments, primarily short-term loans secured byreal estate. Board ofDirectors (Past and *Present): 

### *Elling Halvorson, Inc. *MonarchEnterprises, Inc. *RainierHeli International, Inc. *Grand Canyon Airlines, Inc. *

Air Grand Canyon, Inc. *Papillon Airways, Inc. Clearview Plaza Owners' Association *West Olympia Plaza College Hill, Luther Child Center Vertical Flight Association Northwest *CooperPoint Corporation

### Lon A. Halvorson 

### K-MAX Operator's Association *Helicopter Companies

- Alpha II, Inc. through Juliet, Inc. *Bridlewood III Home Owners Association Memberships and Affiliations: 

### Helicopter Association International (HAl) Bell Helicopter CustomerAdvisory Board Washington Contract Loggers Association Vertical Flight Association National Business Aircraft Association Tour Operator's Program ofSafety United States AirTours Association Coeur d'Alene River Association Columbia Athletic Club Young Men's Christian Association (YMCA) 1992-1998 

### Rainier Helicopter Logging, Inc., President A helicopter logging and utility company. 1988-1991 

### HalvorsonPacific Development Company, President/Owner A fee development and construction management company. Commercial Real Estate. 1984-1987 

### Halvorson-Osborne Construction Company

1973-1984

1972-1973 

### A construction company specializing in difficult constructionprojects throughout the western United States and Alaska. Cost estimator and project manager. Managed $35,000,000 in constructionprojects during this time. Elling Halvorson, Inc. A general contractor specializing in difficult construction projects throughout the western United States and Alaska. 1973-1980 1980-1984 Carpenter, foreman, and superintendent. Cost estimator and construction project manager. Grand Canyon Helicopters A helicopter touring company. Fuel lineman, helicopter loader.

# BARBARAJ.HALVORSON 12515 Willows Road N.E. Suite 200 Kirkland, 

### W A 98034

EDUCATION: Waldorf College, Forest City, Iowa
BUSINESSES 

### (present/past*): Cooper Point Associates, Partner Papillon Airways Inc., Principal 

### (425) 820-8800 Fax (425) 823-5335

State of Oregon, Secretary of State, Gas Tax Refund Dept., Bookkeeping* Standard Oil Company, Mason City, lA, Gas Tax Refund Dept., Bookkeeping*

ORGANIZATIONS AND CLUBS: Bear Creek Country Club, Woodinville, Washington Q-Club, Pacific Lutheran University, Seattle, Washington
Barbara Tweed was born in Joice, Iowa on January 31, 1934. In 1953 she married Elling Halvorson. They have five children: Brenda, E. Kent, Lon, Randal, and Rodney. She presently resides in Woodinville, Washington. She completed high school at Hillcrest Lutheran Academy in Fergus Falls, Minnesota. She then attended Waldorf College in Forest City, Iowa. After her employment with the State of Oregon, she dedicated herselffull-time as a domestic engineer. Her business history includes being Partner of Papillon Airways, Inc., as well as many smaller partnerships and corporations.

Updated as ofJanuary 1, 2011

## PERSONAL PROFILE E. KENT HALVORSON

QUALIFICATIONS: Thirty years in all phases ofcommercial, institutional, and retail project and construction management for both public and private sectors. Extensive experience in nearly every type of construction technique from remodels, cast-in-place concrete, architectural concrete, wood frame, masonry, structural steel, tilt-up concrete and precast concrete, as well as pipelines, underground utilities, and complicated earthwork projects. EXPERIENCE: E. Kent Halvorson, Inc. has extensive experience in most facets of construction including: hotel. condominium, retail, assisted living, theater, schools and churches. RESPONSIBILITIES: Mr. Halvorson directs the full scope offirm services and resources and is the source of responsibility for the quality of work and contractual commitments to the clients. He monitors construction costs, estimating, schedules, staffing and client relations. Kent determines management strategies, company policies, business planning and company goals and directions. POSITIONS: E. Kent Halvorson, Inc.
- President Elling Halvorson, Inc.
- Board of Directors Papillon Airways, Inc.
- Board of Directors Rainier Heli-lift, Inc.
- Board of Directors Monarch Enterprises, Inc.
- Vice President & Board of Directors Diamond Bar, LLC
- Member Yaki Point, LLC
- Member Xebec, LLC
- Member youth for Christ, Nonprofit
- Past Board Member Bellevue Christian School, Nonprofit
- Past Board Member CRISTA Ministries, Nonprofit
- Past Board Member
EDUCATION: 1973
- 1978 Washington State University
- Construction Management Seattle Pacific UniversityE. KENT HALVORSON Personal Profile
E. Kent Halvorson has thirty years of experience as a general contractor with the last twenty-two years as President of E. Kent Halvorson, Inc. General Contractors. E. Kent Halvorson, Inc. is a commercial general contractor licensed in twenty-three states, performing: commercial, mixeduse, hotel! hospitality, retail, schools, churches, office and warehouse projects. The projects range in value from five to forty-million dollars, and up to twenty stories in size. E. Kent Halvorson is also involved with his family in the aviation industry. He is a stockholder and board member in Papillon Airways, Inc., Rainier Heli-lift and Grand Canyon Airlines as well as part owner in several aircraft leaSing companies. Kent is a dedicated member of the Halvorson Family's commitment to the aviation industry. Affiliate Companies & Positions E. Kent Halvorson, Inc.
- President Elling Halvorson, Inc.
- Board of Directors Papillon Airways, Inc.
- Board of Directors Rainier HelHift, Inc.
- Board of Directors Monarch Enterprises, Inc.
- Vice President & Board of Directors Diamond Bar, LLC
- Member Yaki Point, LLC
- Member Xebec, LLC
- Member Non-Profit Boards CRISTA Ministry
- past Seattle Urban Academy
- past youth for Christ
- past Bellevue Christian School -past

### STEWART R. KUEHNE, C.P.A. 4605 224th COURT N.E. REDMOND, W A 98053

ChiefFinancial Officer Papillon Airways, Inc. Elling Halvorson, Inc. Monarch Enterprises, Inc. Rainier Heli International, Inc. Whisper Jet, Inc. 

### PRESENT EXPERIENCE

Canyon Flight Trading Company LLC Grand Canyon Airlines, Inc. Kirkland, Washington 1997

- Present

Responsible for Finance and Management Information System Departments for a diversified group ofcompanies located in multiple locations in the United States. Officer ofthe Corporations: Secretary/Treasurer



### Controller E&E Foods Corporation Seattle, Washington 

### PAST EXPERIENCE

1994

- 1997

Responsible for Finance and Management Information System Departments for a $30 million Seafood Trading, Meat Distributor, and Food Products manufacturer in Seattle, Washington. 

### Controller Lennon Foods, Inc. Seattle, Washington 1992 1994

Responsible for Finance and Management Information System Departments for an $8 million food products manufacturer in Seattle, Washington.

### Stewart R. Kuehne Page Two Controller HFI Foods, Inc. Subsidiary ofJMS Group, Inc. Redmond, Washington 1991

- 1992

Responsible for Finance and Management Information System Departments for a $15 million food products manufacturerwith two locations: Redmond, W A and RaleighNC. Controller National Preserves Co. SubsidiaryofRHMHoldings, USA San Jose, California 1987 1991

Responsible for Financial, Personnel and Management Information System Departments for a $100 million food products manufacturer. Rank Hovis and McDougall, PLC British Parent. Managed the Financial and Management Information Systems at the following locations: San Jose, CA; Watsonville, CA; Salem, OR; and Lynden, WA. 

### Officer ofthe Corporation: Secretary. Controller Merlino's Macaroni, Inc. Subsidiary ofRHM Holdings, USA Kent, Washington 1983 1987

Responsible for finance for a $15 million food products manufacturer. Rank, Hovis and McDougall, PLC British Parent.

EDUCATION

Bachelors Degree in Business Administration Finance University ofWashington, Seattle, Washington (1982) Masters Degree in Business Administration Seattle University, Seattle, Washington (1987)

# John E. Becker

OBJECTIVE: CERTIFICATES AND R.A.TINGS:

QUALIFICATIONS:

FLIGHT EXPERIENCE:

ACHIEVEMENTS: Hwy 64 Box 455. Grand Canyon, Arizona 86023 (928) 606-6143W iohnfaJ,papillon.com

Career move with opportunities

Commercial pilot Certificate # 66463089 Rotorcraft-Helicopter; Instrument Helicopter Mechanic Certificate 

### # 66463089 Airframe; Powerplant
Twenty five years experience as a commercial instrument helicopterpilot. Over 6,500 accident free flying hours in rotary wing aircraft. I have held positions as Vice President ofOperations, Director ofOperations, General Manager, Department Manager, Standardization Instructor Pilot, Production Control Manager and Supply Manager. I hold a current Commercial Instrument Helicopter License, Airframe and Power-plant License and have a current class 2 medical certificate. Airman Certificate number 66463089. Total flight time 6,500 hours. Rated in the Bell 206, Bell 407, MD 900, S-55QT, EC 130, UHIHN, and Hughes 300. My flight experience includes but is not limited to Helicopter Tours, EMS, Search and Rescue, Animal Surveys/Capture, Firefighting, External load, Instrument flight, Night Vision Goggle High Altitude/Mountain flying and Power-line patroL 1994to Present Papillon Airways Inc. Currently I hold the position as ChiefOperating OfficerlDirector ofOperations for Papillon Airways Inc. I have also held the positions as the Utility DivisionManager, Lead Pilot, Contract Pilot and Line Pilot.

### EDUCATION: 1974 to 1994 United States Anny. I retired as a Chief Warrant Officer after 20 years ofHonorable service. During my career as an anny officer and Pilot I held positions as a Standardization Instructor Pilot, Production Control Manager, Maintenance Test Pilot and Technical Supply Officer. I was deployed world wide serving in Panama, Sinai Egypt, Gennany, South Korea and multiple locations through out the Continental United States. Advanced Safety Course HAl, Basic Safety Course HAl, Human Factors Course HAl, Emergency Response Course, Improving Communication Course. Bell 407 Factory School, MD 900 Factory School, S55QT Factory School, Aviation Ground Schools A&P License. Maintenance Manager Maintenance Test Pilot Course United States Anny, Instructor Pilot Course United States Anny, Warrant Officer Advanced Course United States Anny, Rotary Vhng Aviation Course United States Anny. Embry Riddle Aeronautical University Flight Technology (96 credit hours)3230 Brookfield Drive Las Vegas, NV 89120 

# lrit Langness

Experience

Education October2005
- Present Vice President of Sales Grand Canyon Airlines & Papillon Grand Canyon Helicopters July 2000
- Present Papillon Grand Canyon Helicopters Vice President 

### ofSales March 1999-June 2000 Sunrise Airlines, Inc Vice President 

### ofSales & Marketing • Responsible for essential air service routes in Arizona, Nevada and Utah. • Responsible for all tourism related revenues to include airtour over Grand Canyon, Lake Powell, MonumentValley and Bryce Canyon.Jan 1998 to Jan 1999 Scenic Airlines Consultantto company President • Assist President in transitioning the business to new ownership. • Assist management team to retain and expand revenue opportunities through merging brands (Eagle/Scenic). • Assist President and management team with procedures for customer service operations. 1978-1999 Lake Powell Air / Scenic Airlines Vice President 

### ofSales and Customer Services • Expanded company from single to multiple markets, diversified sales force and increased annual sales by a minimum of20% annually. • Responsible for recruiting, hiring, training, directing and evaluating employees. • Set and maintain policies for all the following stations: Las Vegas, Grand Canyon, Page, Phoenix, Scottsdale, Sedona, MonumentValley and Bryce Canyon. • Responsible for the following international offices: Japan, Germany, Austria, Switzerland, France, UK, Italy, Netherlands, Canada, Mexico, New Zealand, South Africa, Argentina, Venezuela, Brazil. 1971-1974 Geneva University Degree: Simultaneous Interpreter. Languages: English, French and Hebrew

### Community Service School Board President
- Page Unified School District City Council member
- Page, Arizona Arizona Community Foundation
- Board Member Page Affiliate Board Member
- Grand Canyon Association


### Personal Interests Enjoy travel, hiking, camping, boating and snow skiing

## .ROBERTY. GRAFF ' 8210 WindsorCrest Court,Las Vegas,NY 89123 Tel: (702) 263"9433 Fax: (702) 270-9532 E-Mall: RobertvGraff@hotmail.com ,syMMARYOFOUALmCATIONS Professionalbackgroundencompassing over20 yearl experience in,SALES & M.ARKETING;specializing instrategicMarketPJannlng, InternetMarketing,Domestic andIntcmational Tour & Travel. 

## • '" IntemationalClientele, Wholesale amiReceptive OperatorDevelopment& 

### Maintenance

... Advertising,Marketing andPromotingU.S. andlDt.ernational Tour& Travel

... Media, GovemmemandAirline, Native Americanrelations

.. DomesticMotoicoachandTourOperatorDevelopment

.. TravelInformation Technologies • Extensive experience inSALESMANAGEMENT andADMINISTRATION

.. Forecast, CostControls andBudgetDevelopment '" ProductDevelopmentandTravelAutomation

.. WorldwideMulti-OfficeFarmation and Operation 

## * SupervisingManagement& Non-ManagementPersonnel SPECIALTYTRAINING-EDVCATIOl1 

### UNIVERSITYLA

# V:mum UNIVERSITYNEVADA

### LAS VEGAS INDIANAUNIVERSITY Las Vegas.Nevada Bloomington, Indiana Athens, Greece Major: HotelAdministration Major: BusinessAdministration Major:BusinessILiberalArts ·NumerousSeminars andWorkshops onIntemational andDomesticTrade andTravel. .' *Proficioncyin

### mMPC compatible computers utilizingMicrosoft**~o:ftware**products. Awards andBcmors; TourismDevelopmentAward, Govem.orTouriamAward, ISMCBoardMember, DistinguishedMen ofNevadaandIntcmationalMarketing byTheVisitUSA Committee,Belgium. LANGUAGES: FLUENTIN: English; French; Arable; Greek; Russian; Italian Spanish;Romanian KNOWLEDGEOF: ;fROFESSIONAL

### EXPERIENCE ' 5101- PAPnLONAJRWAYS 

### dbaPAPILLON

### GRAND CANYONlmUCOPTBRS Las Vegas, Nevada Present VICE PRESIDENTOFMARKETING

8198- 3101 COIporateresponsibilityfor globalmarketing and strategicplanning of38Domestic andInternational Sales offices, Advertising, ProductDevelopment, ConsumerInternet ,Workinconjunction withwholesale, tour companies, internetdlstn"butors, travel agents, airlines.amiTravelInformationTechnologies. Liaise withstate andlocaltourismandconventionauthorities. RespODSlOle forSales andMarketing ofthe Canyon Alliance Group comprising oftheNatiowGeographicIMAX Grand CanyonVisitorCenter, CanyonPlaza Quality

### Innand Suites, BeatWestern Grand CanyonSquire Inn, Grand CanyonHelicopters, andGrtmd CanyonAirlines. AccompllsIunents: Increasedrevenues from 15 to 100 mUllon. $Ildyieldby 12percent, diversification ofagencysales and marketing. incorporation**o~** ConsortiumandMembership Organization (AAA), JntemetlOnline and

### Consum.erMarketing initiatives. StreamJ.ined andre-engineeredproductline and marketplacement, establisheddirect sell outlet

### subsidiary, HEUUSA, INC.

. VICE PRESIDENT OFSALES AND MA.Rl(ETING Las Vegas, Nevada

RespOll8ib1efor corporateworldwide**market:in~**andsales ofBelicopterlAtlractioncompany. Implementationofcompanyinfrastructure toprovide future 

### growththroughdiversificationandexpansion oftravelrelatedproducts. Reorgllllization ofdomestic andinternationaldistributionnetworks and accounts; establishingcompanyinUS andintemational travel relatedassociations; Productline development, crOSSmarketingpartnerships withan extensive focus onMediarelated activities. Developmentofadvertising andmarketplanagendas. Accomplishments: Increased revenues from 6million to 13 million

### +, infirstyear; establishedmarket dominance and global distributionnetwOrk; established28**Inter~atlonal** sales andreservation offices covering34 markets. Bxpandedcompany's domesticmarket**lead~ship**position; Personallyhandled over 365Wholesale accounts worldwide. '

## ROBERT Y. GRAFF 8210 WindsorCrestCourt,LasVegas, NV 89123 Tel: (702) 263-9433 'Fax: (702) 270-9532 E-Mail: RobertvGraff@hotmail.com
12/93

- SKYWESTINC. ASW/Scemc subsidiary 

### Las Vegas, Nevada**~198** VICE PRESIDENT OF SALESAND MARKETING Responsibleforworldwidemarketing and sales ofAirline, Sightseeing, MotorcoachandHotelReservation 

### company. Preparedand administered 

### 13 milliondollarannualbudget; Directed25international Sales and Reservation omeell; Analyzed, implemented andforecastedmarket1rcruls; DevelopedInterline Marketing andAirline Code sharing**a~;** Implementedworldwide advertiaiDg, TV, radio.public relations andInternetagenda; Monitoredprofessional andlegislativedevelopmentll atthe local. state, nationalandintemationallevelsi CoordinatedandinitiatedcompanyISO 9002 complianceand establishmentofin-house advertisingagency. Aeeompllshm.: Expanded company subsidiaries to 30 International markets;Developedjoint worldwide marketing andrevenue generatingprograms with suchcoIporatioDs as: DeltaAlrUnes, Planet Hollywood, Caesars', .Amlae, CoachUSA and GrayUneTour,. 

### 12192

- AIRNBVADAAIRLINES Las Vegas, Nevada 12193 VICE PRESIDENTINTERNATIONAL SALES AND MARKETING Responsiblefor customerservice, marketing and sales deparf:ments ofscheduledairline andtour service to the NationalParks; Reorganizeddomestic andinternationaldistr.ibution rmtworks and accountll atthe retail, wholesale andreceptive levels; Developedmarketing andemergencyresponseplans; Handledrate negotiations andbudgetapproval. A.ecompHshments: Increasedrevenue

### by45percent, expanded**comp~**operations, re-engineered product line and subsidiaryservices. while maintaining costcontrolinitiatives. 9187- SCENICAlRLlNES 

### Las Vegas, Nevada 12192 DlRECIOROFINTERNATIONAL SALES Responsible formarketing and sales ofSightseeing. Tours andAirline Services worldwide; Coordinated and suporvised 13 InternationalSales Offices; Preparedforecasts andmarketing SUIVCYS: Developedand administered

### $515.000

### +annualbudget; Handledpress.publicrelations and advcrtishlg worldwide; Introducedservices and interactedheavily withwholesale andreceptive 

### operatom, the travel trade and COIpOIate executives: Attended 

### allmajoroverseasTravel Trade Shows; Negotiatedcontracts; Interviewed, hiredlfired, gave writtenperfOl'JD81lCC appraisals and supervised 13 InternationalField Omces, Managers and

### theirstafF, conducted 1raining scssions forDl8DagcDlCDtpersonnel. AccoinpllShmenq: Opened4newlocatioDS in

### Italy, France. UnitedKingdomand Sweden; Analyzedand implementedcoatsavingprocedures thatincreased yield, revenue andloadfactors; personallyhandled over 400 WholesaleAccountll worldwide. MEMBERSHIPS AND ORGANIZATIONS TravelIndustryAssociationofAmerica ('l1A). American SocietyofTrave1Agent (ASTA). NationalTour Association (NTA). UnitedStates Tour OperatorAssociation (USTOA), Receptive ServiceAssociation (RSA).Las Vegas Territory (L VT).

### Interline Sales 

### andMarketing (ISMC), OrandCircle Association (OCA), VisitUSA and ClarkCountyTeachers mentoringprograms. NOTE: BackgroundClearanceAccustomedto ExtensiveExeeutive Travel
REFERENCES; Professional andPersonalreferences uponrequest.

, ',' : 

### .

## ALAN R. STEPHEN 6947 Emerald Springs Lane Las Vegas, Nevada 89113

FAA Certificates: Private Pilot, single and multi-engine, instrument

- No longer active Education: BA, Environmental and Regulatory Aeronautics (special major), San Jose State University, 1975 Employment History: 1971-1974, Special Assistant to the President and Director Safe PilotProgram, General Aviation Manufacturers Association, Washington, DC 1975-1976, ManagerMarket Research, Piper Aircraft Corporation, LockHaven, PA 1976-1978, Program Specialist, Office ofGeneral Aviation, Federal Aviation Administration, Washington, DC 1978-1987, Director Operations, Vice President Operations, then Executive Vice President, Regional Airline Association, Washington, DC 1987-2004, President ofScenic Airlines Inc., a Part 135 air carrier, and Scenic Aviation Services, Inc., providing FBO services. In 1993, Scenic sold its air tour business (as an asset sale) and renamed its remaining business as Twin Otter International Inc. engaged in aircraft leasing; thereafter in 1993 applicant served as CEO. Also in 1993, Scenic Aviation Services was sold, Las Vegas, NY 1997

-Present, Vice President (1997-2007), ChiefOperating Officer (2007-2009) Vice President, Corporate Affairs (2009-Present), and Director (2007- Present) Grand Canyon Airlines, Grand Canyon, AZ

## 2004-2007, Director, Regulatory Affairs, Scenic Airlines Inc. InMarch 2007, Scenic Airlines was acquired by Grand Canyon Airlines and Grand Canyon Airlines became a Nevada, based company 2009-Present, Vice President, Corporate Affairs, Papillon Airways Inc., Las Vegas, NV. Other: 1987-1995, Board Member, Mesaba Holdings Inc. and Mesaba Airlines Inc. 1994-1998, Board Member, Air Tran Holdings and Air Tran Airways Inc. 1992-1994, Board Member, and Chairman (1993) Regional Airline Association

### LUIS GARCIA PO Box 3603 Grand Canyon, AZ 86023 ,-...Home: (928) 

### 638-0914 Work: (928) 

### 638-9440 Objective: Responsible position as Director ofMaintenancel Accountable Manager. Summary: Twenty years comprehensive experience in the helicopter maintenance field.

Work The highest consideration in the services provided by Papillon's Maintenance Department is the prevention ofaccidents while managing maintenance costs. Received Helicopter Association International Mechanic Safety Award in April 1999. Can otTer full commitmentto company goals, problem solving abilities and the drive and detenninationthat produces results. Experience: Director ofMaintenance-Papillon Grand Canyon Helicopter-Grand Canyon. AZ February 2000-Present Duties

• Provide a program for proper maintenance ofall aircraft.

• Insure that all maintenance is performed in accordance with FAA regulations, mandatory manufactures recommendations, and the best practices ofthe industry.



### • Maintain system ofrecords and technical data.

• Screen, select and employ properly qualified personal.

• Coordinate with Flight Operations and other departments to improve total company performance.

• Keep abreast ofnew techniques in maintenance and management to ascertain their value to the company. ChiefInspector-Papillon Grand Canyon Helicopters-Grand Canyon, AZ January 1998-January 2000

• Supervise and conduct performance evaluation offive inspectors and ten mechanics on performing 100, 200 and 300 hours annual requirements on helicopters to insure airworthiness and high standard ofworkmanship are accomplished. • Accountable for the maintenance records ofGrand Canyon, Las Vegas, Department ofDefense, and National ParkService. Ensure all maintenance records are accurate and in full compliance with Federal Aviation Agency (FAA) and manufacturer regulations. • Maintain good working relationship with FAA and Office ofAircraft Services (OAS). Maintaining good rapport with these agencies has dramatically decreased mistakes in historical records, airworthiness directives and service bulletins. • Responsible for coordinating inspections and approval (OAS carded) ofhelicopters for utility contracts with OAS and Papi110n Grand Canyon Utility Manager: Utility contracts are with: Arizona Game and Fish, Kaibab National Forest, Bureau ofLand Management (BLM) in St. George, Utah, Department ofDefense, and National Park Service. • Coordinate aircraft maintenance inspection and flight priorities between pilots and mechanics. • Develop, implement and improve inspection policies and procedures for all appropriate activities within the Maintenance Department. • Assist in the development, implementation and supervision ofinitial and recurrent training of maintenance personnel.

### (continued)

• Manage the Maintenance Department operations as "acting" Director ofMaintenance during his absence. Handles

,... the daily operations in an effective and professional manner. Effectively deals with negative issues with staffor other agencies. • Schedule employees to handle daily workload, within staffing capabilities, to meet goals and objectives of Maintenance Department. • Resolve procedural deficiencies dealing with the interpretation and application ofestablished maintenance standards. • Respond to emergency requests from National Park Service to perform maintenance repairs on MD900.
Work Experience: (continued) Papillon Grand Canyon Helicopters

- Grand Canyon, AZ Lead Inspector

- January 1994

- 1998

• Schedule and coordinator ofall helicopter maintenance on all models. • Performed majorrepair on aircraft structures, which include fuselage, transmission decks and tailbooms. • Performed for two years-overhauls on all major components. • Provided assistance to ChiefInspector and Director ofMaintenance on all annual inspections and approved aircraft to return to service. Papillon Grand Canyon Helicopters, Grand Canyon, AZ Inspector !Mechanic

- April 1993

- January 1994

• Weekend Supervisor ofmaintenance personnel. • Performed scheduled inspections. • Trained maintenance personnel to trouble-shoot for improved aircraft availability. • Provide assistance to Lead Inspector upon request. Education:

Career Buckeye High School, Buckeye, AZ Airframe, Powerplant and FCC License Coconino Community College Rio Salado Community College Central Texas College Northern Arizona University

Related Training: Eurocopter AS350-B3 Field Maintenance Course, Grand Prairie, TX EurocopterEC 130 Field Maintenance Course, Grand Prairie, TX Turbomeca Arriel 2B 1Engine Course, Grand Prairie, TX

Continued on nextpage 

### Bell 206/407: 

### Dallas, Texas Field Maintenance School Component Overhaul Electrical Maintenance MD900: Grand Canyon, AZ Allison 250-C30 Engine School: Indianapolis, IN MD 500 DIE School: Mesa AZ Rice Aviation: Aircraft Mechanic School Chandler-Gilbert Community College: Chandler, AZ Aviation Center FCC Prep Course Bell 209 Field Maintenance Course: Fort Eustis, VA

### Areas of Experience:

Certificates: Part 43,91, 133, 135, 145, 100,200, and 300-hour annual inspections. Rigging, overhaul, removal and repair ofthe following helicopters and related systems: • Be1l206B and L Series .Be1l407 • MD900 .MD500 • Eurocopter: AS350-B3/EC130 B4 • Turbomeca Arriel 2B 1Engine. • Allison 250-C47B, C30P, C28, C20Band PW 206A engines • Collective, cyclic and tail rotor controls • Pneumatics, Electrical Systems and Components • Static balance and alignment ofmain rotor blades • Track and balance ofmain and tail rotor blades • Chadwick Helmuth Vibrex- 172, 8500 • Servicing and inspecting Marathon and Saft Nicad Batteries with Christe Reflex 80 Charger.

• Airframe and PowerPlant License Certificate Number: 2786899 • Inspectors Authorization Certificate Number: 2786899 • Federal Communication Commission General Radio Telephone Operators License Certificate Number: PG-GB-OI019CERTIFICATES:

FLIGHTTIME:

WORKEXPERIENCE: JAN 04 PRESENT

JAN 09

- JAN 10

FEB 02

-JAN 04

JAN 98

- DEC 99

JAN 92

- NOV 98 

## THANEYR. SILVA

FAA

- ATPL

- Rotorcraft Helicopter #2614990 FAA

- Certified Flight Instructor

- Rotorcraft Helicopter First Class

- Airman Medical Certificate No Restrictions 4050 Total Flight Hours 4048 Total Rotary Wing 1939 Bell 206 Series 3873 Pilot in Command 1550 Robinson R22/R44 998 Cross Country 354 EC130B4 470 Offshore 205 BHT407 139 Unaided Night 2 TB-9 2389 Mountain 88 Instrument Papillon Grand Canyon Helicopters

- Grand Canyon, AZ EC130B4,BH407, BH206 Series PIC; Company ChiefPilot & CFR Part 135 Company CheckAirman. USFS/AMD carded (reconnaissance & surveillance, mountain flying), Instructor Pilot, Maintenance Test Pilot, 14 CFRPart 135 sightseeing tours, 14 CFRPart 135 scheduled/unscheduled charter operations. Petroleum Helicopters Inc,

- Lafayette,LA Line pilot providing support to the Oil & Gas industry in the GulfofMexico RainbowAir Academy

- LongBeach, CA RH22 CFI/PIC; Flight instruction, },erialphotography, Scenic flights HCR Air taxi Campinas- Sao Paulo- Brazil Scenic flights, charters Transportadora Saltense ltda- Salto- SP- Brazil Logistics Supervision of50+ Semi-trucks FLIGHT TRAINING / EDUCATION: MARlO American Eurocopter- Dallas-Fort Worth EC130B4 FactoryTraining FEBIO
FEB 09

OCT07

NOV 05
M.i\R03

FEB 02

DEC 98
PERSONAL: Helicopter Foundation Intemational- Houston,TX Human Factors: 1breat & Errorlvfanagement Helicopter Underwater Egress Training- Lafayette, U\ HUET (Water survival + Aviation crash Survival) American Eurocopter- Dallas-Fort Worth EC130B4 FactoryTraining Papillon Helicopters- Grand Canyon, AZ Utility Training Class for AMD Robinson Helicopter Company- Torrance, CA Flight Instructor Safety & Refresher clinic RainbowAirAcademy- LongBeach- CA Commercial Pilot / CFI- Rotorcraft Helicopter (Graduated) Universidade Metodista Piracicaba- Piracicaba- Brazil Business Administration (Graduated) DOB: 02/28/1976 Nationality: USA / BRl\ZIL Languages: Fluent in English, Portuguese, and Spanish P.O. Box3662; Grand Canyon, AZ86023 USA Plume: (928) 606 6146 E-nuu1: thaneysilva@)yallOo.com

# DAVID

# E. BALES 1535 Broken Bell Ln, Henderson, NY 89002 (702) 797-0106

EMPLOYMENT

SAFETY DIRECTOR 

### Papillon Grand Canyon Helicopters LEAD PILOT 

### Papillon Grand Canyon Helicopters LINE PILOT 

### Papillon Grand Canyon Helicopters

EDUCATION 

### david.bales@papillon.com

APRIL 2009

- PRESENT LAS VEGAS, l'v1l MARCH 2008

- APRIL2009 LAS VEGAS, NV JUNE 2007 MARCH 2008 LAS VEGAS, NV

ASSOCIATES DEGREE IN AVIATION SCIENCE GRADUATED: DEC 2005
RATINGS PORTLAND COMMUNITY**EoiiE~---~** 

## ....----.-......----- ··--·-Port!rind,OR



### Commercial Instrument Rotorcraft Helicopter (Certificate Number 2851823) Certified Flight Instrument Instructor

- Helicopter

ACHIEVEMENTS


### • OSHA general industry 511 Course • Safety Managers Course conducted at HAl • NTSB rotorcraft accident response course • Received Eagle Scout Award.

## EXHIBIT IV

## Aircraft Accidents or Incidents PapillonAirways, Inc., Grand CanyonAirlines, Inc., and Air Grand Canyon, Inc. have no aircraft accidents orincidents to reportpursuant to 

### § 204.3(q) ofthe Department'sregulations, except as follows: Under the broad definition of"incidenf' utilized by the NTSB 

### ("incident means an occurrence other than an accident, associated withthe operation ofan aircraft, which affects or could affect the safety ofoperations"), Papillon submits the following informationpursuant to 

### § 204.3(q): April 4, 2010: A model EC-I30-B4 helicopter ona sightseeing flight operated by Papillon suffered a bird strike to the left windscreen enroute from Boulder City Municipal Airport to the Grand Canyon. Windscreen was damagedbut stable. One pilot and 6 passengers were aboard; there were no injuries. The helicoptermade a precautionary off-airport landing inthe desert. No enforcement action has beeninitiated against Papillon or any ofits employees. FAA PTRS No. 2010-04-04-0032 (no incident number was issued by FAA orNTSB). April 7, 2010: A model EC-130-B4 helicopterpreparing to operate a Papillon sightseeing flight originating at Grand Canyon National Park Airport experienced an engine overspeed condition priorto departure. One pilot and 6 passengers were aboard; there were no injuries to any person ordamage to the aircraft. The aircraft was removed from service and immediate investigationby Papillon's maintenance departmentrevealed that the main drive shaft aft end coupling had disconnected from the shaftresulting in the engine overspeed. All Papillonmodel EC-130 aircraft were immediately grounded bythe company and inspected for security ofthe main rotor couplings. All were found in good condition. No enforcement actionhas been initiated against Papillon or any ofits employees. FAA PTRS No. 2010-04-07-0031 (no incident number was issued by FAA orNTSB). November 9, 2010: The tailrotor ofamodel AS350-B2 helicopter operated by Papillon contacted a cactus bush while the aircraft was maneuvering to land at the base ofthe Grand Canyonnear the Grand Canyon West Airport. Onepilot and 2 passengers were aboard; there were no injuries to any person. Damage to the aircraft was limited to small scratches onthe tailrotorblades. No enforcement action has been initiated against Papillon orany ofits employees. To Papillon's knowledge, no incident number orother identifierwas issued byFAA orNTSB. March 11,2011: A model EC-130-B4 helicoptertaking offfrom Boulder CityMunicipal Airport ona sightseeing flight operated by Papillon experienced a control problem. The pilot elected against continuingthe flight; however, a hard landing occurred on-airport. Onepilot and 6 passengers were aboard; there were no injuries to anyperson. The helicopter suffered minor damage to the landing gear and cowlings. The matter is currentlyunderreview and investigation. No enforcement action has been initiated against Papillon orany ofits employees. FAA IncidentNo. I-WP192011008; no incident numberwas issued by NTSB.

## EXHIBIT V

## PAPILLON AIRWAYS INC. Profit and Loss Statement ForThe Period EndingDecember31,2010

REVENUES COST OF OPERATIONS PAYROLL & P/R TAXES COMMISSIONS REPAIR PARTS DYNAMIC DEPRECIATION FUEL LANDING SITE FEES SHunLE EXP. GROUND TOUR EXP. INTERCO TRANSPORTATION ALLOC. MISCELLANEOUS

GROSS OPERATINGPROFIT GENERAL & ADMIN. EXP. MARKETING EXPENSES INSURANCE EXP. UTILITIES BUSINESS TAXES PROFESSIONAL FEES OFFICE EXPENSES SEMINARITRAINING LAND LEASES TRAVEL EXPENSES HEALTH INSURANCE BANK DISCOUNT HOUSING EXPENSES MISCELLANEOUS

INCOME FROM OPERATIONS OTHEREXPENSES H.O. SUBLEASE INCOME HELICOPTER LEASES OTHER LEASES DEPRECIATION INTEREST EXP. INTEREST INCOME OTHER

NET INCOME BEFORE TAXES 2010 YTDTOTAL 59,379,816
13,777,849

6,285,004 4,918,827 3,807,485 5,197,972 2,374,413 1,550,154 2,466,310 (3,589,843) 121,621 36,909,792 22,470,024

1,071,746 2,638,551

583,426 178,989 382,304 429,463

40,380 910,429 394,834 1,095,312 1,015,647 33,931 689,188 9,464,200 13,005,824

(109,015) 6,409,713 1,005,140

682,711 248,151 (73,426) (133,544) 8,029,730 4,976,094Papillon Airways Inc Balance Sheet December 31,2010 ASSETS 2010 UABIUTIES AND SHAREHOLDERS' EQUITY 2010 Cash 129,058 Accounts Payable 1,989,137 Accounts Receivable 832,816 Reservation Deposits 690,259 Inventory 69,941 Accrued Payroll 480,023 Helicopter Parts Inventory 2,745,511 Accrued Liabilities 62,397 Prepaid Expenses 77,133 PayrollTax Liabilities 53,256 Current Portion of Long Term Note 100,000 Overflight Fee Liabilities 135,525 Line of Credits UBOC 0 TOTAL CURRENTASSETS 3,954,459 Shareholder Loans 4,121,000 Current Portion of Long Term Debts 626,957 LONG TERM INVESTMENTS Long Term Note 2,699,430 TOTAL CURRENT lIBllITIES 8,158,554 Less Current Portion of Long Term Note (100,000) LONGTERM DEBT TOTAL LONG TERM ASSETS 2,599,430 Bank One Loan- N137PH 597,373 PROPERTy & EQUIPMENTS Bulk Loans 614,013 Less Current Portion of Long Term Debts (626,957) Helicopters 3,022,452 Less Helicopters Depreciation (1,475,790) TOTAL LONG TERM LIABILITIES 584,429 Vehicles &.Equipments 2,799,296 Less Vehicles & Equip. Depreciation (1,774,975) OTHER LIABILITIES Mobile Homes 273,263 Less Mobile Homes Depreciation (228,008) Reservation for Component Overhaul 497,645 Building & Office Equipments 1,621,782 Less Bldg. & Office Equip. Depreciation (1,097,237) TOTAL OTHER LIABILITIES 497,645 Dynamic Components 18,024,601 Less Dynamic Components (8,706,466) TOTAL LIABILITIES 9,240,628 TOTAL PROPERTY & EQUIPMENETS 12,458,918 Capital Stock 200,000 OTHER ASSETS Shareholder Distributions (15,651,153) Retained Earnings 20,355,713 Other Deposits 108,475 Year-to Date Income 4,976,094 TOTAL OTHER ASSETS 108,475 SHAREHOLDERS' EQUITY 9,880,654 TOTAL ASSETS 19,121,282 LIABILITIESAND EQUITY 19,121,282Papillon Airways Inc.

Financial Report

December 31 2009Contents --_...

### _._---_
.... 

### ---- ..

### ------_ ......---.**-.~---** Independent Accountant's Report

.................................................................................. 

### 1
Financial Statements Balance Sheets

................................................................................................................2-3 Statements of Income and Retained Earnings

...................................................................4 Statements of Cash Flows

..................................................................................................5 Notes to Financial Statements

.......................................................................................6-12(-' 

# ',-. McGladrey& 

# Pullen
if 

### Certified PublicAccountants

To the Board of Directors Papillon Airways, Inc. Kirkland. Washington Independent Accountant's Report

We have reviewed the accompanying balance sheets of Papillon Airways, Inc. as of December 31, 2009 and 2008, and the related statements of income and retained earnings, and cash flows for the years then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation ofthe management of Papillon Airways, Inc. Areview consists principally of inquiries of Papillon Airways, Inc. personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with auditing standards generally accepted in the United States ofAmerica, the objective of which is the expression ofan opinion regarding the financial statements taken as awhole. Accordingly, we do not express such an opinion. 

# 'I""'" Based on our reviews, with the exception of the matter described in the following paragraph, we are not aware ofany material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States ofAmerica. Papillan Airways, Inc. declined to consolidate certain variable-interest entities or to disclose the effect of not consolidating these entities as required by generally accepted accounting principles.

Seattle, Washington March 23, 2010

McGladrey &Pullen, LLP is amemberflml of RSM Inlernationalan affiliatiOl1 of separate and indepeodenllegal entities.Financial StatementsBalance Sheets Papillon Airways, Inc. December31, 2009 and 2008

Assets Current Assets Cash and cash equivalents Accounts receivable Accounts receivable from related parties Current portion of note receivable from related party Inventory Prepaid expenses Total current assets Equipment, Net Other Assets Noncurrent Assets Long-term portion of note receivable from related party

Total assets



### See notes to financialstatements. See accountant's report. 2 2009 2008



### $ 463,307 $ 137,904 1,884.686 1 i06O,912 1,738,657 5,952,803

100,000 2,620,436 2,491,783

175,099 371,973 

### 6,982,185 10,015,375 11,603,850 10,220,102 108,475 93,675 2,900,000

$21,594,510 $20,329',1522009 200B Liabilities and Stockholders' Equity Current Liabilities Disbursements in excess of bank balance $ 46,945 $ 1,206,15B Line ofcredit 2,500,000 2,200,000 Notes payable to stockholders 2,921,001 1,071,000 Accounts payable 2,B21,355 2,856,557 Accounts payable to related parties 1,849,433 1,034,802 Accrued liabilities 801,862 851,335 Deferred revenue 511,011 455,221 Current portion of long·term debt 626,957 844,863 Total current liabilities 12,078,564 10,519,936 Long-Term Debt, Net of Current Portion 1,211,386 1,630,657 

# ,.. Commitments and Contingencies Stockholders' Equity Common stock, $10 parvalue; 50,000 shares authorized; 20,000 shares issued and outstanding 200,000 200,000 Retained earnings 8,104,560 7,978,559 Total stockholders' equity 8,304,560 8,178,559 Total liabilities and stockholders' equity $21,594,510 $20,329,152

3Statements of Income and Retained Papillon Airways. Inc. Years Ended December 

### 31. 2009 and 

### 2008

Revenue Operating Expenses General and Administrative Expenses Operating income Other Income (Expense) Interest expense Interest income Other income Rental income Total other income (expense) Net income
Retained Earnings Beginning of year Net income Dividends End ofyear

See notes to financialstatements. See accountant's report. 

### 4 2009 2008 $52.024.008 $61,158.584 (39,403.173) (47,623,812)

(9,979,125) (10,544,598) 2,641,710 2,990,174



### (240,017) (295,461) 9 42 35,285 23,782 109,015 109,015 (95,708) (162,622) 

### $ 2,546,002 $ 2,827,552



### $7,978,559 $5,151,007

2,546,002 2,827,552 (2,420,001) $8,104,560 $7,978,559

# ,....
Statements of Cash Flows

..**~~**...

### -- Papillon Airways, Inc. Years Ended December 31,2009 and 2008
2009 2008 Cash Flows from Operating Activities Net income $2,546,002 $2,827,552 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,700,800 4,630,940 Bad debt 667 Changes in operating accounts:

Accounts receivable (823,774) 908,178 Accounts receivable from related parties 1,214,146 (1,703,311 Inventory (128,653)**~354,513** Prepaid expenses 196,874 113,270 Other assets

### ~14,800~ J23,782 Accounts payable 35,202 (1, 53,258 Accounts payable to related parties 814,631 8,338 Accrued liabilities (49,473) (94,171j Deferred revenue 55,790 (303,186 

# ". Net cash provided by operating activities 7,476,341 4,330,184 Cash Flows from Investing Activities Proceeds from sale offixed assets 41,512 Purchase of**e~uipment** Net cash use in investing activities**~4,828,831** 4,828,831)**~4,947,844~** 4,906,332 Cash Flows from FinanCing Activities Disbursements in excess of bank balance (1,159,213) 865,246 Borrowings (repayment) on line ofcredit 300,000 (300,000) F Proceeds from stockholders 1,850,001 401,000 Principal payments on long-term debt (892,894! (845,745) Dividends paid to stockholders**~2,420,001** Net cash provided by (used in) financing activities 2,322,107 120,501 Net increase (decrease) in cash and cash equivalents 325,403 (455,647) Cash and Cash Equivalents Beginning ofyear 137,904 593,551 End ofyear $ 463,307 

### $ 137,904 Supplemental Disclosures of Cash Flow Information Cash paid for interest 

### $240,017 

### $ 295,461 Non-cash financing of equipment 255,717 1,449,598
See notes/0 financialstatements. 

# ',,-. See accountant's reporl. 

### 5Notes to Financial Statements Papillon Airways, Inc. December31, 2009 and 2008
Note 1• Nature of Operations and Summary of Significant Accounting Policies Nature of Operations Papillon Airways, Inc. (the Company) was incorporated underthe laws ofthe state ofArizona in June 1995. The Company leases and operates a11eet of42 helicopters. Operations consist primarily of providing flight-seeing tours (at the Grand Canyon National Park (Park) and in Las Vegas and Boulder City, extending to the west rim ofthe Grand Canyon) and performing government contracts. Special flight rules in the Park restrict flight hours, routes, and the numberofflights made each year. Other operations include contract services for avariety offederal and state government agencies. Heliport and hangarfacilities are located at Grand Canyon National Park Airport, Arizona; at Boulder City, Nevada; and Las Vegas Airport, Nevada. Administrative headquarters are in Kirkland, Washington. Use of Estimates Preparation offinancial statements in conformity with**accountin~** principles generally accepted in the United States of America requires managementto make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differfrom those estimates. Significant estimates relate to the depreciation of dynamic components, and the estimated residual value ofthe helicopters. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations ofcredit risk are primarily cash and accounts receivable. The Company places its deposits in high-quality financial institutions; however, at times, deposits may exceed federally insured limits. The Company has not experienced any losses with respect to these accounts. The Company extends unsecured credit to customers, principally in the tourism industry, and regularly monitors the credit limits and payment habits of its customers to mitigate the risk of loss from uncollectible accounts. Cash and Cash Equivalents The Company considers all highly liquid short·term investments with amaturity ofthree months or less at date of purchase to be cash equivalents. Revenue Recognition The Company recognizes revenue upon providing services to customers. Accounts Receivable Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on areview of all outstanding amounts on amonthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering acustomer's financial condition. credit history and current economic conditions. Accounts receivable are written offwhen deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. Management feels no allowance for doubtful receivables is necessary at December31, 2009 and 2008. (continued) See accountant's report. 

### 6Notes to Financial Statements Papillon AinNays, Inc. December31, 2009 and 2008
Note 1• Nature of Operations and Summary of Significant Accounting Policies 

### (continued) Inventory Inventory consists of helicopter parts, which are valued at the lowerofcost or market. Cost is determined using the first-in, first-out method. The cost of Inventory is charged to expense as parts are used. Equipment Equipment is stated at cost. Depreciation of dynamic components and engines is computed based on the numberof hours of usage ofthe related assets and astandard rate based on purchases and average hours. During 2008 the standard rate used for calculating depreciation of dynamic components and engines was increased. The effect of the change was to decrease net income for 2008 by approximately $548,000. The standard rate was not change in 2009. Depreciation ofoffice and shop equipment is computed using the straight-line method overthe estimated useful lives ofthe related assets. The Company leases aircraftwhich are not Company owned, underoperating lease agreements with related parties (see Note 5). The leases provide that the Company maintain the aircraft in compliance with Federal Aviation Administration requirements and return them to the lessor in the same condition as delivered. Advertising The Company expenses advertising costs as incurred. Advertising expense in 2009 and 2008 was $1,188,986 and $1,595,039, respectively. Deferred Revenue Customerdeposits and prepayments are recorded as deferred revenue and may be refunded jfthe reservation is cancelled at least 24 hours priorto the flight. Income Taxes The Company has elected to be taxed as an Scorporation, whereby taxable income or loss is included in the personal returns of its stockholders. Depreciation on dynamic components and engines for income tax purposes may differsignificantly from depreciation recorded under accounting principles generally accepted in the United States ofAmerica. Reclassifications Certain prioryear balances have been reclassified to conform to current year presentation, with no impact to net income. 

### (continued) See accountant's report. 7Notes to Financial Statements Papillon Airways, Inc. December

### 31,2009 and 

### 2008
Note 1• Nature of Operations and Summary of Significant Accounting Policies (concluded) Recent Accounting Pronouncements In June 

### 2009, the FASB issued new accounting guidance on when an entity should be included in consolidated financial statements. The new guidance amends the evaluation criteria to identify the primary beneficiary of avariable interest entity, or VIE, and requires ongoing reassessment ofwhether an enterprise is the primary beneficiary of the VIE. The new guidance significantly changes the consolidation rules for VIEs, including the consolidation of common structures, such as joint ventures, equity-method investments, and collaboration arrangements. The guidance is applicable to all new and existing VIEs. The provisions ofthis new accounting guidance are effective for annual reporting periods ending after November 

### 15, 2009. The Company has declined to consolidate entities in which it has avariable interest, as required by generally accepted accounting principles, and has not evaluated the effects of not consolidating. The Company holds variable-interests in related-party entities. In July 

### 2006, the FASB issued new accounting guidqnce that clarifies the accounting for uncertainty in income taxes recognized in an entity's financial statements in accordance with the previous guidance. The new guidance prescribes a recognition threshold and measurement attribute forthe financial statement recognition and measurement of atax position taken orexpected to be taken in atax return. It also provides guidance on derecognition oftax benefits. classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure and transition. The provisions ofthe new guidance are effective for annual financial statements for fiscal years beginning after December 

### 15, 2008. The Company has assessed its uncertain tax positions and believes it will not have amaterial effect on the financial statements.
Note 2• Equipment Equipment at December 

### 31 consists of the following: 

### 2009 2008 Dynamic components and engines 

### $16,198,653 $13,561,033 Helicopters 

### 3,022,452 3,022,452 Office and shop equipment 

### 1,534,581 1,370,286 Vehicles 

### 2,563,869 2,283,091 Mobile homes 

### 273,263 273,263 23,592,818 20,510,125 Less accumulated depreciation 

### 11,988,968 10,290,023 Equipment, net 

### $11,603,850 $10.220,102

See accountant's report. 

### 8Notes to Financial Statements Papillon Airways, Inc. December31 ,2009 and 2008
Note 3• Notes Payable Line of Credit The Company has an unsecured line of credit with abank for up to $2,500,000. The balance due totaled $2,500,000 and $2,200,000 at December 31,2009 and 2008, respectively. The line bears interest at LlBOR (.235 percent at December31, 2009) plus 2.25 percent and is guaranteed by the stockholders. Notes Payable to Stockholders The Company had unsecured notes payable with three stockholders totaling $1,071,000 at December31, 2008. The notes were modified during 2009 to recognize additional amounts provided. Each note is underthe same terms, due on demand, and requires monthly interest-only payments. The notes bear interest at 3.75 percent. Notes payable to stockholders totaled $2,921,000 at December31,2009

.

. ".... Note 4• Long-Term Debt Long-term debt at December31 consists of the following:

Notes payable to stockholders, maturing May 2014; due in monthly installments of $14,570; interest at LlBOR (1.83 percent at December 31,2009) plus 1.6 percent. The stockhoiders'loans·to the bank contain the same terms. The bank has collateral in an aircraft belonging to the Company. The Company has guaranteed the stockholders' notes to the bank. Notes payable to afinance company, maturing December2009; due in monthly payments of $2,171; interest at 3.9 percent; collateralized by three vehicles. Note payable to afinance company. maturing September 2009; due in monthly installments of $917; no interest; collateralized by avehicle. Note payable to afinance company, maturing August 2009; due in monthly installments of $917; no interest; collateralized by avehicle. (continued)
See accountant's report. 

### 9 2009 2008

$ 772.214 $ 947,055 27,028

8,251 7,335Notes to Financial Statements



### --------------------------------------------------------- Papillon Airways, Inc. December31, 2009 and 2008
Note 4· Long-Term Debt (concluded)

Note payable to afinance company, maturing May 2009; due in monthly installments of $936; interest at 2.9 percent; collateralized by avehicle

.. Note payable to afinance company, maturing March 2009; due in monthly installments of $661; interest at 3.9 percent; collateralized by avehicle. Note payable to afinance company, maturing February 2009; due in monthly installments of $13,389; interest at LIBOR (2.08 percent at December 31, 2008) plus 1.65 percent; collateralized by equipment. Note payable to afinance company, maturing May 2010; due in monthly installments of $14,306; interest at 6.67 percent; collateralized by ahelicopter engine. Note payable to afinance company, maturing August 2013; due in monthly installments of $13,333; interest at 5.15 percent; collateralized by seven buses. Note payable to afinance company, maturing June 2011; due in monthly installments of $19,343; interest at 3.125 percent; collateralized by ahelicopter engine. Note payable to afinance company, maturing in April 2014; due in monthly installments of $5,000; interest at 3.25 percent; collateralized by two buses

Less portion due within one year Long-term debt, net of current portion Maturities of long-term debt for future years ending December 31 are as follows: 2010 2011 2012 2013 2014 Thereafter Total See accountant's reporl. 10 2009 $

526,582
328,831 210,716 1,838,343

626,957 $1,211,386 20084,668 1,927
58,167
173,559

. 686,582
560,948

2,475,520

844,863 $1,630,657
$ 626,957 491,555 394,841 252,139

72,851 $1,838,343r-----.. 

### ,



## ",.. Notes to Financial Statements Papillon Airways, Inc. December31, 2009 and 2008
Note 5• Related·Party Transactions and Commitments Leases The Company leases helicopters, aheliport, facilities, vehicles and housing under operating lease agreements with related parties. Leases expire at various dates through 2019. Rent expense, included in operating expenses, incurred during 2009 and 2008 underthese lease agreements totaled $8,028,069 and $7,026,309, respectively. The Company also leases office space and equipmentfrom unrelated parties and incurred expenses of $281 ,021 and $279,726 during 2009 and 2008, respectively. Minimum lease payments for future years ending December 31 are as follows: Related Unrelated Parties Parties Total 2010 $ 6,392,463 $114,562 $ 6,507,025 2011 5,423,200 61,040 5,484,240 2012 4,304,700 45,035 4,349,735 2013 2,034,000 45,035 2,079,035 2014 844,000 45,035 889,035 Thereafter 730,000 187,645 917,645 Total 

### $19,728,363 $498,352 $20,226,715 Certain facilities leased by the Company are subleased to related parties under month·to·month sublease agreements. Sublease income was $109,015 for the years ended December 2009 and 2008. 

## r During 2009 and 2008, the Company purchased $378,781 and $339,274, respectively, of aircraft insurance from arelated insurance company. The Company also incurred expenses of $5,414,824 and $7,115,695 for various services and goods provided by related parties in 2009 and 2008, respectively. Rental income received in 2009 and 2008 under amonthly operating lease were $10,000 and $30,000, respectively, from a related party using space at the Grand Canyon heliportfacility. The Company began renting amobile home to arelated party under amonthly operating lease in 2002. Rent received totaled $16,200 during 2009 and 2008. During 2009 and 2008, underthe terms of their long-term notes the Company paid $235,144 and $203,988, respectively, in interest expense to the stockholders. During 2009, the Company collected revenue and incurred expenses on behalf of arelated party totaling $1,445,928 and $1,152,674, respectively. The net proceeds were subsequently distributed to the related party totaling $293,254. 

### See accountant's report. 11Notes to Financial Statements Papillon Airways, Inc. December31,2009 and 2008
Note 6• Employee Benefit Plan The Company has a401 (k) profit sharing plan for the benefit of all full-time employees. Participants may make voluntary contributions, while the Company, at its discretion, may make amatching contribution. The Company contributed $24,363 and $23,007 in 2009 and 2008, respectively.
Note 7•Contingencies Through the ordinary course of business, the Company is adefendant in various legal proceedings. Resolution ofthese matters is not expected to have amaterial impact on the financial position oroperations ofthe Company. The Company is currently in the midst of an IRS excise tax examination forthe years 2003 through 2005. The IRS has assessed $10,955,998 including interest and penalties related to federal excise taxes. There is also an assessed amount of $695,345 in Arizona for state and use tax. Management vigorously disputes these assessments and believes they will prevail in eliminating the entire assessment. However, the outcome ofthis matter cannot be determined at this time.
Note 8•Subsequent Events The Company has evaluated subsequent events through the date and time ofthe issuance ofthese financial statements on March 23, 2010. The Company distributed $2,600,000 to its owners as of February 9,2010.

See accountant's report. 12

# McGladrey& 

# Pullen Certified PublicAccountants 

# Papillan Airways, Inc. Financial Report December 31, 2008

McGladfey &Pullen, LLP is amemberfirm of RSM Inlernationalan affiliatioo of separate and indepandenllegal anlilles.

# McGladrey& 

# Pullen CertHiedPublicAccountants

To the Board of Directors Papillon Airways, Inc. Kirkland, Washington Independent Accountant's Report

We have reviewed the accompanying balance sheets of Paplllon Airways, Inc. as of December 31, 2008 and 2007, and the related statements of income and retained earnings, and cash flows for the years then ended, in accordance with Statements on Standards forAccounting and Review Services issued bythe American Institute of Certified Public Accountants, All information included in these financial statements is the representation of the management of Papilion Airways, Inc. Areview consists principally of inquiries of Papillon Airways, Inc. personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with auditing standards generally accepted in the United States ofAmerica, the objective of which is the expression of an opinion regarding the financial statements taken as awhole. Accordingly, we do not express such an opinion. Based on our reviews, with the exception ofthe matter described in the following paragraph, we are not aware of any material modifications that should be made to the accompanying financial statements in orderfor them to be in conformity with accounting principles generally accepted in the United States ofAmerica. Papillon Airways, Inc. declined to consolidate certain variable-interest entities or to disclose the effect of not consolidating under Financial Accounting Standards Board Interpretation No. 46 (FIN 46), as described in Note 1. Such consolidation is required by generally accepted accounting principles.

Seattle, Washington February 6, 2009

McGladrey &Pullen, llP Is amemberfirm of RSM InlemaUonal an affiliation ofseparate and Independent legal entitles.Papillan Airways Inc.

Financial

Report

December 31 

### 2008Contents Independent Accountant's Report

.................................................................................. 1
Financial Statements Balance Sheets ...............................................................................................................2-3 Statements of Income and Retained Earnings

...................................................................

### 4 Statements of Cash Flows ......................................,......................................,..............."

... 

### 5 Notes to Financial Statements

....................,...,',

.......................................,.,...........,...... 6-12Financial Statements

# "... Balance Sheets Papilion Airways, Inc. December 31, 2006 and 2007

Assets Current Assets Cash and cash equivalents Accounts receivable Accounts receivable from related parties Inventory Prepaid expenses Total current assets Equipment, Net Other Assets

Total assets



### See notes to financialstatements. See accountant's report. 

### 2 2008 2007

$ 137,904 $ 593,551 1,060,912 1,969,090 5,952,803 4,250,159 2,491,783 2,137,270

371,973 258,703 10,015,375 9,208,773 10,220,102 8,471,330 93,675 93,675

$20,329,152 $17,773,7782008 2007 Liabilities and Stockholders' Equity CUrrent Liabilities Disbursements in excess of bank balance $ 1,206,158 

### $ 340,912 Line ofcredit 2,200,000 2,500,000 Notes payable to stockholders 1,071,000 670,000 Accounts payable 2,280,484 3,733,742 Accounts payable to related parties 1,034,802 1,026,464 Accrued liabilities 1,427,408 1,521,579 Deferred revenue 455,221 758,407 Current portion of long-term debt 844,863 576,173 Total current liabilities 10,519,936 11,127,277 Long-Term Debt, Net of Current Portion 1,630,657 1,295,494 Commitments and Contingencies Stockholders' Equity Common stock, $10 par value; 50,000 shares authorized;

20,000 shares issued and outstanding 200,000 200,000 Retained earnings 7,978,559 5,151,007 Total stockholders' equity B,17B,559 5,351,007 Total liabilities and stockholders' equity $20,329,152 $17,773,77B

3Statements of Income and Retained Papillon Ahways, Inc. Years Ended December31, 2008 and 2007

Revenue Operating Expenses General and Administrative Expenses Operating income Other Income (Expense) I nterest expense Interest income Other income Gain on sale offixed assets Total other Income {expense} Net Income
Retained Earnings Beginning ofyear Net income Dividends End ofyear

See notes to financialstatements. See accountant's report. 

### 4 2008 2007 $61,158,584 $56,927A28 (47,623,812) (44,315,802) (10,435,583) (10,262,631 )

3,099,189 2,348,995

(295A61) (354,540) 42 1,150 79A20 23,782 985,586 {271,637} 711,616 $ 2,827,552 $ 3,060,611

$5,151,007 $3,270,396

2,827,552 3,060,611 (1,180,000) $7,978,559 $5,151,007Statements of Cash Flows Papillon Airways, Inc. Years Ended December 31, 2008 and 2007

Cash Flows from Operating Activities Net income Adjustments to reconcile net income to net cash provided by operating activities:

DepreCiation Gain on sale offixed assets Bad debt Changes in operating accounts:

Accounts receivable Accounts receivable from related parties Inventory Prepaid expenses Accounts payable Accounts payable to related parties Accrued liabilities Deferred revenue Net cash provided by operating activities Cash Flows from Investing Activities Proceeds from sale offixed assets Purchase of equipment Net cash used in investing activities Cash Flows from Financing Activities Disbursements in excess of bank balance Borrowings on line of credit Proceeds from stockholders Principal payments on long-term debt Dividends paid to stockholders Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and Cash Equivalents Beginning of year End of year Supplemental Disclosures of Cash Flow Information Cash paid for interest Non-cash financing of equipment
See notes to financialstatements. See accountant's report. 5 2008 2007 $2,827,552 $3,060,611

4,630,940 3,714,327

(23,782) (985,586) 667 908,178 (79,461

### ~ (1,703,311 (4,155,149**~354,513** (196,351 113,270 28,003 (1,453,258 1,117,254 8,338 757,219 (94, 171

# l 266,434 (303,186 89,044 4,330,184 3,616,345 41,512 1,889,783**~4,947,844~** 4,906,332**~4,514,929~** 2,625,146 865,246 (531,819) (300,000) 2,250,000 401,000 670,000 (845,745) (2,108,729; 1,180,000 120,501 (900,548 (455,647) 90,651 593,551 502,900 

### $ 137,904 

### $ 593,551 $ 295,461 $354,540 1,449,598 515,000Notes to Financial Statements Papillon Airways, Inc. December 31, 2008 and 2007
Note 1• Nature of Operations and Summary of Significant Accounting Policies Nature of Operations Papillon Airways, Inc. (the Company) was incorporated under the laws ofthe state of Arizona in June 1995. The Company leases and operates afleet of 41 helicopters. Operations consist primarily of providing**fli~ht-seeing** tours (at the Grand Canyon National Park (Park) and in Las**Ve~as** and Boulder City, extending to the west rim ofthe Grand Canyon) and performing government contracts. Special flight rules in the Park restrict flight hours. routes, and the number offlights made each year. Otheroperations include contract services for avariety offederal and state government agencies. Heliport and hangarfacilities are located at Grand Canyon National ParkAirport. Arizona; at Boulder City, Nevada; and Las Vegas Airport. Nevada. Administrative headquarters are In Kirkland. Washington. : Use of Estimates Preparation offinancial statements in conformity with accounting principles generally accepted in the United States of America requires managementto make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differfrom those estimates. Significant estimates relate to the depreciation of dynamic components. and the estimated residual value of the helicopters. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and accounts receivable. The Company places its deposits in high-quality financial institutions; however, at limes, depOSits may exceed federally insured limits. The Company has not experienced any losses with respect to these accounts. The Company extends unsecured credit to customers, prinCipally in the tourism industry, and regularly monitors the credit limits and payment habits of its customers to mitigate the risk of loss from uncollectible accounts. i Cash and Cash Equivalents The Company considers all highly liquid short-term investments with amaturity ofthree months or less at date of purchase to be cash equivalents. Revenue Recognition The Company recognizes revenue upon providing services to customers. Accounts Receivable Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on areview of all outstanding amounts on amonthly basis. Managementdetermines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering acustomer's financial condition, credit history and current economic conditions. Accounts receivable are written offwhen deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. Managementfeels no allowance for doubtful receivables is necessary at December 31, 2008 and 2007. (continued) See accountant's report. 6Notes to Financial Statements Papilion Airways, Inc. December 31. 2008 and 2007
Note 1 . Nature of Operations and Summary of Significant Accounting Policies (continued) Inventory Invehtory consists of helicopter parts, which are valued atthe lowerof cost or market Cost is determined using the first-in, first-out method. The cost of inventory is charged to expense as parts are used. Equipment Equipment is stated at cost.**Depr~ciation** of dynamic components and engines is computed based on the numberof hours of usage ofthe related assets and astandard rate based on purchases and average hours, During 2008 the standard rate used for calculating depreciation ofdynamic components and engines was increased. The effect ofthe change was to decrease net incomefor 2008 by approximately $548,000, Depreciation of office and shop equipment is computed using the straightline method overthe estimated useful lives of the related assets, The Company leases aircraft which are not Company owned, under operating lease agreements with related parties (see Note 5), The leases provide that the Company maintain the aircraft in compliance with Federal Aviation Administration requirements and return them to the lessor in the same condition as delivered. Advertising The Company expenses advertising costs as incurred, Advertising expense in 2008 and 2007 was $1,595,039 and $1,486,632. respectively,

. Deferred Revenue Customerdeposits and prepayments are recorded as deferred revenue and may be refunded ifthe reservation is cancelled at least 24 hours prior to the flight. Income Taxes The Company has elected to be taxed as an Scorporation, whereby taxable income or loss is included in the personal returns of its stockholders, Depreciation on dynamic components and engines for income tax purposes may differ significantly from depreciation recorded under accounting principles generally accepted in the United States of America, (continued)

See accountant's report, 

### 7Notes to Financial Statements Papillon Airways, Inc. December 31, 2008 and 2007
Note 1•Nature of Operations and Summary of Significant Accounting Policies (concluded) FASB Interpretation No. 46 Financial Accounting Standards Board (FASB) has issued FASB Interpretation No. 46 (FIN 46), Consolidation ofVariableInterestEntities, and its amendment FIN 46R. This interpretation clarifies existing accounting prinCiples related to the preparation of consolidated financial statements when the equity investors in an entity do not have the characteristics of a controlling financial interest or when the equity at risk is not sufficient forthe entity to finance its activities without additional subordinated financial support. FIN 46R requires acompany to evaluate all eXisting arrangements to identify situations where acompany has a"variable-interest" in a"variable-interest entity· and to further determine when such variable-interests require acompany to consolidate the variable-interest entity's financial statements with its own. The Company has declined to consolidate, as required by FIN 46, and has not evaluated the effects of not consolidating. The Company holds variableinterests in related-party entities. FASB Interpretation No. 48 In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertaintyin Income Taxes (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity's financial statements in accordance with Statement No. 109, AccountingforIncome Taxes. FIN 48 prescribes arecognition threshold and measurement attribute forthe financial statement recognition and measurement of atax position taken orexpected to be taken in atax return. FIN 48 also provides guidance on derecognition oftax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure, and transition. In December 2008, the FASB provided for adeferral ofthe effective date of FIN 48 for certain nonpublic entities to annual financial statements forfiscal years beginning after December 15, 2008. The Company has elected this deferral and accordingly will be required to adopt FIN 48 in its 2009 annual financial statements. Prior to adoption of FIN 48, the Company will continue to evaluate its uncertain tax positions and related income tax contingencies under Statement No.5, Accounting forContingencies. SFAS No.5 requires the Company to accrue for losses it believes are probable and can be reasonably estimated. FASB Statement No. 161 In March 2008, the FASB issued Statements of Financial Accounting Standards No. 161, Disclosures aboutDerivative Instruments andHedging Activities
- an AmendmentofFASa StatementNo. 133 (SFAS No. 161). SFAS No. 161 requires additional disclosures about the objectives of using derivative instruments, the method by which the derivative instruments and related hedged items are accounted for under Statement No. 133 and its related interpretations, and the effect of derivative instruments and related hedged items on financial position. financial performance, and cash flows. SFAS No. 161 also requires disclosure ofthe fair values of derivative instruments and their gains and losses in atabularformat. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15.2008, or the Company's quarterended March 31. 2009. As this pronouncement is only disclosure-related, it will not have an impact on the financial position and results of operations. See accountant's report. 

### 8Notes to Financial Statements Papillon Airways, Inc. December 31, 2008 and 2007
Note 2- Equipment Equipment at December31 consists ofthe following: Dynamic components and engines Helicopters Office and shop equipment Vehicles Mobile homes Less accumulated depreciation EqUipment, net Note 3- Notes Payable Line of Credit 2008 $13,561,033

3,022,452 1,370,286 2,283,091

273,263 

### 20,510,125 10,290,023 

### $10,220,102 2007 $10,389,840

3,022,452 1,357,244 1,363,577

280,764 

### 16,413,877

7,942,547 

### $ 8,471,330

The Company has an unsecured line of credit with abank for up to $2,500,000. The balance due totaled $2,200,000 and $2,500,000 at December31, 2008 and 2007, respectivelv. The line bears interest at prime (3.25 percent at December 31, 2008) plus 0.5 percent and is guaranteed by the stockholders. Notes Payable to Stockholders The Company entered Into unsecured notes jJayable with two stockholders during 2007, which totaled $670,000 at December 31,2007. These two notes were modified during 2008 to recognize additional amounts. The Company entered into an unsecured note payable with another stockholder during 2008. All these notes underthe same terms, due on demand and require monthly Interest-only payments. The notes bear interest at prime (3.25 percent at December31,2008) plus 0.5 percent. Total notes payable to stockholders are $1,071,000 at December 31, 2008. Note 4· Long-Term Debt Long-term debt at December 31 consists ofthe following:
Notes payable to stockholders, maturing May 2014; due in monthly installments of $14,570; interest at USOR (2.08 percent at December 31,2008) plus 1.9 percent. The stockholders' loans to the bank contain the same terms. The bank has collateral in an aircraft belonging to the Company. The Company has guaranteed the stockholders' notes to the bank. (continued) See accountant's report. 

### 9 2008 2007

$ 947,055 $1,121,896Notes to Financial Statements Papillon Airways, Inc. December 

### 31, 2008 and 

### 2007
Note 4· Long·Term Debt (continued)

Notes payable to afinance company, maturing January 

### 2008; due in monthly installments of 

### $1,776; no interest; collateralized by two vehicles. Notes payable to afinance company, maturing December 

### 2009; due in monthly payments of 

### $2,171; interest at 

### 3.9 percent; collateralized by three vehicles. Note payable to afinance company, maturing September 

### 2009; due in monthly installments of 

### $917; no interest; collateralized by avehicle. Note payable to afinance company, maturing August 

### 2009; due in monthly installments of 

### $917; no interest; collateralized by avehicle. Note payable to afinance company, maturing May 

### 2009; due in monthly ""... installments of 

### $936; interest at 

### 2.9 percent; collateralized by avehicle. Note payable to afinance company, maturing March 

### 2009; due in monthly installments of 

### $661; interest at 

### 3.9 percent; collateralized by avehicle. Note payable to afinance company, maturing February 

### 2009; due in monthly installments of 

### $13,389; Interest at L1BOR 

### (2.08 percent at December

### 31, 2008) plus 

### 1.65 percent; collateralized by equipment. Note payable to afinance company, maturing May 

### 2010; due in monthly installments of 

### $14,306; interest at 

### 6,67 percent; collateralized by ahelicopter engine. Note payable to afinance company, maturing August 

### 2013; due in monthly installments of 

### $19,418; interest at 

### 5.15 percent; collateralized by seven buses. Note payable to afinance company, maturing June 

### 2011; due in monthly installments of 

### $13,333; interest at 

### 4.50 percent; collateralized by ahelicopter engine.

Less portion due within one year Long·term debt, net of current portion (continued) See accountant's reporl. 

### 10 2008 2007 $ $ 1,776 27,028 51,499

8,251 19,253 7,335 18,336 4,668 15,591 1,927 9.621
58,167 218,834
173,559 414,861 686,582
560,948 2,475,520 1,871,667

844,863 576,173 $1,630,657 $1,295,494Notes to Financial Statements Papilion Airways, Inc. December 31, 2008 and 2007
Note 4· Long-Term Debt (concluded) Maturities of long-term debtfor future years ending December 31 are as follows: 2009 2010 2011 2012 2013 Thereafter Total
Note 5- Related·Party Transactions and Commitments Leases 

### $ 844,863 569,987 431,556 334,841 221,423

72,850 $2,475,520

The Company leases helicopters, aheliport, facilities, vehicles and housing under operating lease agreements with related parties. leases expire at various dates through 2019. Rent expense, included in operating expenses, incurred during 2008 and 2007 underthese lease agreements totaled $7,026,309 and $6,918,684, respectively. The Company also leases office space and equipmentfrom unrelated parties and incurred expenses of $279,726 and $181,806 during 2008 and 2007, respectively. Minimum lease payments for future years ending December 31 are as follows: Related Unrelated Parties Parties Total 2009 $ 5,653,819 $ 71,420 $ 5,725,239 2010 3,750,956 37,224 3,788,180 2011 2,254,398 37,224 2,291,622 2012 522,000 37,224 559,224 2013 522,000 37,224 559,224 Thereafter 707,500 192,324 899,824 Total $13,410,673 $412,640 $13,823,313 (continued)
See accountant's report. 11Notes to Financial Statements Papillon Airways; Inc. December 31. 2008 and 2007
Note 5•Related·Party Transactions and Commitments (concluded) Certain facilities leased by the Company are subleased to related parties under month-to-month sublease agreements. Sublease income was $109,015 forthe years ended December 2008 and 2007. During 2008 and 2007, the Company purchased $339,274 and $393.400, respectively, of aircraft insurance from arelated insurance company. The Company also incurred expenses of $7,115,695 and $4,283,597 for various services and goods provided by related parties in 2008 and 2007, respectively. Rental income received in 2008 and 2007 under amonthly operating lease was $30,000 annually from arelated party using space at the Grand Canyon heliportfacility. The Company began renting amobile home to arelated party under amonthly operating lease in 2002. Rent received totaled $16,200 annually during 2008 and 2007. During 2008 and 2007, under the terms of their long-term notes the Company paid $203,988 and $213,135, respectively, in interest expense to the stockholders.
Note 6•Employee Benefit Plan The Company has a401(k) profit sharing plan for the benefit of all full-time employees. PartiCipants may make voluntary contributions, while the Company, at its discretion, may make amatching contribution. The Company contributed $23,007 and $20,115 in 2008 and 2007, respectively.
Note 7•Contingencies Through the ordinary course of business, the Company is adefendant in various legal proceedings. Resolution ofthese matters is not expected to have amaterial impact on the financial position or operations ofthe Company. The Company Is currently In the midst of an IRS excise tax examination for the years 2003 through 2005. The IRS has assessed $7,742,269 in interest and penalties related to federal excise taxes. Management vigorously disputes this assessment and believes they will prevail in eliminating the entire assessment. However, the outcome ofthis matter cannot be determined at this time.

See accountant's report. 12

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# •**~** Papillon AilWays Inc.

Financial

Report

December 

### 31 

### 2007

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# • McGladrey& 

# Pullen Certified PublicAccountants

To the Board of Directors Papillon Airways, Inc. Kirkland. Washington Independent Accountant's Report

We have reviewed the accompanying balance sheets of Papillon Airways, Inc. as of December 31,2007 and 2006, and the related statementsof income and retained earnings, and cash flows forthe years then ended, in accordance with Statements on Standards forAccounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation ofthe management of Papillon Airways, Inc. Areview consists principally of inquiries of Papillon Airways, Inc. personnel and analytical procedures applied to financial data. It

### is substantially less in scope than an audit in aCGordance with auditing standards generally accepted in the United States ofAmerica, the opjective ofwhich is the expression of an opinion regarding the financial statements taken as awhole. Accordingly, we do not express such an opinion. Based on our reviews, with the exception of the matter described in the following paragraph, we are not aware of any material modifications that should be made to the accompanying financial statements in orderfor them to be in conformity with accounting principles generally accepted in the United States of America. Paplllan Airways, Inc. declined to consolidate certain variable-interest entities or to disclose the effect of not consolidating under Financial Accounting Standards Board Interpretation No. 

### 46 (FIN 

### 46), as described in Note 

### 1. Such consolidation is required by generally accepted accounting principles.

Seattle, Washington February 15. 2008

McGladrey &Pullen. LLP is amemberfinn of RSM International an affiUation of separate and independent legal enUties.

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# • J. Financial Statements

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# • • Balance Sheets 

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# • Papillon Airways, Inc. 

# • December31 ! 

### 2007 and 2006 

# • • 2007 2006 

# • • Assets 

# • Current Assets 

# • Cash and cash equivalents 

### $ 593,551 

### $ 502,900 

# • Accounts receivable 1,969,090 1,889,629 Accounts receivable from related parties 4,250,159 95,010 

# • Inventory 2,137,270 1,940,919 

# • Prepaid expenses 258,703 286,706 Total current assets 

### 9,208,773 4,715,164 

# • Equipment, Net 8,471,330 8,059,925 

# • • Other Assets 93,675 93,675 

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# • • Total assets 

### $17,773,778 $12,868,764 

## « « « « 

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# • • 4 4 See notes to financialstatements. 

### 4 See accountant's report. 

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# • • •**~** Liabilities and Stockholders' Equity Current Liabilities Disbursements in excess of bank balance Line ofcredit Notes payable to stockholders Accounts payable Accounts payable to related parties Accrued liabilities Deferred revenue Current portion of long-term debt Total current liabilities Long-Term Debt, Net of Current Portion Commitments and Contingencies Stockholders' Equity Common stock, $10 parvalue; 50,000 shares authorized;

20,000 shares issued and outstanding Retained earnings Total stockholders' equity T

otalliabllitiesand,stockholders'equity

3 2007



### $ 340,912

2,500,000

670,000 3,733,742 1,026,464 1,521,579

758,407 576,173 11,127,277

1,295,494

200,000 5,151,007 5,351,007 ,$17,173,778 2006



### $ 872,731 250,000 2,616,488

269,245 1,255,145

669,363 2,012,149 7,945,121 1,453,247

200,000 3,270,396 3,470,396 $12,868,764

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# • Statements of Income and Retained 

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# • Papillon Airways, Inc. Years Ended December 31,2007 and 2006 

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# • 2007 2006 

# • • Revenue $56,927,428 $56,118,777 

# • Operating Expenses (44,315,802) (44,831,634) 

### 4 General and Administrative Expenses (10,262,631) (9,755,917) 

# • 4 Operating Income 

### 2,348,995 1,531,226 

### 4 Other Income (Expense) 

## 4 Interestexpense (354,540) (403,216) 

### 4 Interest income 1,150 2,326 Other income 79,420 701,969 

## 4 Gain on sale offixed assets 985,586 

## 4 Total other income (expense) 

### 711,616 301,079 

## 4 Net Income 

### $ 3,060,611 $ 

### 1,832,305 

## 4 4 Retained Earnings 

## 4 Beginning of year $3,270,396 $3,118,091 Net income 3,060,611 1,832,305 

## 4 Dividends (1,180,000) (1,680,000) 

## 4 End ofyear 

### $5,151,007 $3,270,396 

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# • See notes to financialstatements. 

# • See accountant's report. 

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• Statements of Cash Flows 

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# • Papillon Airways, Inc. 

# • Years Ended December 

### 31, 2007 and 

### 2006 

# • • 2007 2006 

# • Cash Flows from Operating Activities 

# • Net income 

### $3,060,611 $1,832,305 Adjustments to reconcile net income to net cash 

# • provided bli operating activities: 

# • Deprecia ion 

### 3,714,327 3,706,853 Gain on sale of fixed assets 

### (985,586) 

# • Changes in operating accounts: Accounts receivable 

### (79,461 1 (428,4591**~** 

### Accounts receivable from related parties 

### (4,155,149**~81,718** 

# • Inventory 

### (196,351 ( 52,357 Prepaid expenses 

### 28,003 3,461**~** 

### Otherassets 

### -- 6,000 Accounts payable 

### 1,117,254 (464,490) 

# t Accounts pay'able to related parties 

### 757,219 69,411 Accrued liabilities 

### 266,434 574,989 

# t Deferred revenue 

### 89,044 333,159 

# J.. Net cash provided by operating activities 

### 3,616,345 5,199,154 Cash Flows from**Investin~** 

### Activities Proceeds from sale of Ixed assets 

### 1,889,783 

# t Purchase of**e~uipment** 

# t Net cash use in investing activities**~4,514,929~** 

### 2,625,146**~3,645,598~** 

### 3,645,598 

# t Cash Flows from Financing Activities Disbursements in excess of bank balance 

### (531,819) 363,433 

# • Borrowings on line of credit 

### 2.250.000 250.000 

# t Proceeds from -term debt 

### 454,758

.Proceeds from holders 

### 670.000 

# t Principal payments on 10nPc-term debt

### ~2,108,7291 (727.9161 Dividends paid to stockho ders 

### 1.180,000**~1,680,000** 

# • Net cash used in financing activities 

### (900,548 1,339,725 

# t Net increase in cash and cash equivalents 

### 90,651 213,831**~** 

### Cash and Cash Equivalents**~** 

### Beginning of year 

### 502,900 289,069**~** 

### End ofyear 

### $ 593,551 

### $ 502.900 

# • • Supglemental Disclosures of Cash Flow Information ash paid for interest 

### $354,540 $403,216 

# • Non-cash financing of equipment 

### 515.000 165,831 

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# • See notes to financialstatements. See accountant's report. 

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# • • 

# •Notes to Financial Statements Papillon Airways, Inc. December 31,2007 and 2006 Note 1•Nature of Operations and Summary of Significant Accounting Policies Nature of Operations Papillon Airways, Inc. (the Company) was incorporated underthe laws ofthe state ofArizona in June 

### 1995. The Company leases and operates afleet of 38 helicopters. Operations consist primarily of providing flight-seeing tours (at the Grand Canyon National Park (Park) and in Las Ve9as and Boulder City, extending to the west rim of the Grand Canyon) and performing government contracts. Speciallllght rules in the Park restrict flight hours, routes, and the number offlights made each year. Otheroperations include contract services for avariety offederal and state government agencies. Heliport and hangarfacilities are located at Grand Canyon National Park Airport, Arizona; at Boulder City, Nevada; and Las Vegas Airport, Nevada. Administrative headquarters are In Kirkland, Washington. Use of Estimates Preparation offinancial statements in conformity with accountin9 principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differfrom those estimates. Significant estimates relate to the depreciation of dynamic components, and the estimated residual value of the helicopters. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and accounts receivable. The Company places its deposits in high-quality financial institutions; however, at times, deposits may exceed federally insured limits. The Company has not experienced any losses with respect to these accounts. The Company extends unsecured credit to customers, principally in the tourism industry, and regularly monitors the credit limits and payment habits of its customers to mitigate the risk of loss from uncollectible accounts. Cash and Cash Equivalents The Company considers all highly liquid short-term investments with amaturity ofthree months or less at date of purchase to be cash equivalents. Revenue Recognition The Company recognizes revenue upon providing services to customers. Account Receivables Account receivables are carried at original invoice amount less an estimate made for doubtful receivables based on areview of all outstanding amounts on amonthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering acustomer's financial condition, credit history and current economic conditions. Account receivables are written offwhen deemed uncollectible. Recoveries of account receivables previously written off are recorded when received. Managementfeels no allowance for doubtful receivables is necessary at December 31,2007 and 2006. (continued) See accountant's report. 6 

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# • Notes to Financial Statements Papillon Airways, Inc. December 31,2007 and 2006 Note 1•Nature of Operations and Summary of Significant Accounting Policies (concluded) Inventory Inventory consists of helicopter parts. which are valued at the lowerof cost or market. Cost is determined using the first-in, first-out method. The cost of inventory is charged to expense as parts are used. Equipment Equipment is stated at cost. Depreciation of dynamic components and engines is computed based on the numberof hours of usage ofthe related assets and astandard rate based on purchases and average hours. During 2006 the standard rate used for calculating depreciation of dynamic components and engines was increased. The effect of the change was to decrease net income for 2006 by approximately $419,000. Depreciation of office and shop equipment is computed using the straightline method overthe estimated useful fives ofthe related assets. The Company leases aircraftwhich are not Company owned, underoperating lease agreements with related parties (see Note 5). The leases provide thatthe Company maintain the aircraft in compliance with Federal Aviation Administration requirements and return them to the lessorin the same condition as delivered. Advertising The Company expenses advertising costs as incurred. Advertising expense in 2007 and 2006 was $1,486,632 and $1,399.247, respectively. Deferred Revenue Customer deposits and prepayments are recorded as deferred revenue and may be refunded if the reservation is cancelled at least 24 hours priorto the flight. Income Taxes The Company has elected to be taxed as an Scorporation, whereby taxable income or loss is included in the Rersonal returns of its stockholders. DepreCiation on dynamic components and engines for income tax purposes may differsignificantly from depreciation recorded underaccounting principles generally accepted in the United States ofAmerica. FASB Interpretation No. 46 Financial Accounting Standards Board (FASB) has issued FASB Interpretation No. 

### 46 (FIN 46), Consolidation ofVariable

### InterestEntities, and its amendment FIN 46R. This interpretation clarifies existing accounting principles related to the preparation ofconsolidated financial statements when the equity investors in an entity do not have the characteristics ofa controlling financial interest orwhen the equity at risk is not sufficientforthe entity to finance its activities without additional subordinated financial support. FIN 

### 46R requires acompany to evaluate all existing arrangements to identify situations where acompany has a"variable-interest" in a"variable-interest entitf" and to further determine when suchvariable-interests require acompany to consolidate thevariable-interest entity's financia statements with its own. The Company has declined to consolidate, as required by FIN 

### 46, and has not evaluated the effects of not consolidating. The Company holds variableinterests in related-party entities. 

### See accountant'sreport. 7Notes to Financial Statements Papillon Airways, Inc. December31,2007 and 2006 Note 2• Equipment Equipment at December 31 consists of the following:
Dynamic components and engines Helicopters Office and shop equipment Vehicles Mobile homes Less accumulated depreciation Equipment, net Note 

### 3• Notes Payable Line 

### of Credit 2007 $10,389,840

3,022,452 1.357,244 1,363,577

280,764 

### 16,413,877

7,942,547 

### $ 

### 8,471,330 2006 $ 7,722,634

4,656,698 1,196,891 1,221,948

280,764 

### 15,078,935 7,019,010 

### $ 8,059,925

The Company has an unsecured line ofcredit with abank for

## up to $2,500,000. The balance due totaled $2,500,000 and $250,000, at December31,2007 and 2006, respectively. The line bears interest at prime (7.25 percent at December 31, 2007) plus 0.5 percent and is guaranteed by the stockholders. Notes Payable to Stockholders The Company entered into unsecured notes payable with two stockholders during 2007, which totaled $670,000 at December 31, 2007, are due on demand and require monthly interest-only payments. The notes bear interest at prime (7.25 percent at December31, 2007) plus 0.5 percent. Note 4• Long-Term Debt Long-term debt at December 31 consists ofthe following: Notes pa¥able to stockholders, maturing June 2007; due in monthly installments of $23,834; Interest at LlBOR (5.31 percent at December31,2006) plus 2percent on minimum amounts of $100,000 and 0.5 percent overprime 8.75 ,percentat December31, 2006) on the remaining principal balance. The stockholders' loans from the bank contain the same balance and terms. The bank has collateral in aircraft and equipment belonging .to the Company. The Company has guaranteed the stockholders loans to the bank in the same amounts; paid in full during 2007. (continued) See accountant's report. 8 2007 2006

$ $1,562,656

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. December 31, 2007 and 2006
Note 4· Long·Term Debt (continued)

Notes payable to stockholders, maturing May 2007; due in monthly installments of $2,458; interest at LlBOR (5.31 percent at December 31,2006) plus 2.75 percent. The stockholders' loans to the bank contain the same terms. The bank has collateral in vehicles belonging to the Company. The Company has guaranteed the stockholders' notes to the bank; paid in full during 2007. Notes payable to stockholders, maturing May 2014; due in monthly installments of $14,570; interest at LlBOR (4.22 percent at December 31, 2007) plus 1.9 percent. The stockholders' loans to the bank contain the same terms. The bank has collateral in an aircraft belonging to the Company. The Company has guaranteed the stockholders' notes to the bank. Notes payable to afinance company, maturing February through March 2007; due in monthly installments of $3,601; 0 percent interest; collateralized by several vehicles; paid in full during 2007. Notes payable to afinance company, maturing January 2008; due in monthly installments of $1,776; 0percent interest; collateralized by two vehicles. Notes payable to afinance company, maturing December 2009; due in monthly payments of $2,171; 3.9 percentinterest; collateralized by three vehicles. Note payable to afinance company, maturing September 2009; due in monthly installments of $917; 0 percent interest; collateralized by avehicle. Note payable to afinance company, maturing August 2009; due in monthly installments of $917; 0percent interest; collateralized by avehicle. Note payable to afinance company, maturing May 2009; due in monthly installments of $936; 2.9 percent interest; collateralized by avehicle. Note payable to afinance company, maturing March 2009; due in monthly installments of $661; 3.9 percent interest; collateralized by avehicle. (continued) See accountant's report. 9 2007 2006



### $ $ 14,642

1,121,896 1,296,732

10,803 1,776 23,093 51,499 75,133 19,253 30,254 18,336 29,337 15,591 26,212 9,621 17,034

### Notes to Financial Statements Papillon Airways, Inc. December31, 2007 and 2006
Note 4· Long·Term Debt (concluded)



### Note payable to afinance company, maturing February 2009; due in monthly installments of$13,389; interest at USOR (4.22 percent at December 31,2007) plus 1.65 percent; collateralized by equipment. Note payable to afinance company maturing May 2010; due in monthly installations of $14,30; interest at 6.67 percent; collateralized by ahelicopter engine.

Less portion due within one year Long·term debt, net of current portion Maturities of long-term debt forfuture years ending December 31 are as follows: 2008 2009 2010 2011 2012 Thereafter Total
Note 5• Related.Party Transactions and Commitments 2007
$ 218,834
414,861 

### 1,871,667

576,173 $1,295,494 2006


### $ 379,500



### 3,465,396 2,012,149 

### $1,453,247
$ 576,173 451,752 246,368 174,841 174,841 247,692 

### $1,871,667**~M~** • 

### The Company leases helicopters, aheliport, facilities, vehicles and housing under operating lease agreements with related • parties. Leases expire at various dates through 2019. Rent expense, included in operating expenses, incurred during 2007 

## t and 2006 underthese lease agreements totaled $6,918,684 and $6,742,721, respectively. The Company also leases office space and equipment from unrelated parties and incurred expenses of $181,806 and $311,503 during 2007 and 2006, 

## t respectively. 

## t (continued) See accountant's report. 

### 10 

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## ---------------------------------------------------- Papillon Airways, Inc. December31, 2007 and 2006
Note 5• Related·Party Transactions and Commitments 

### (concluded) Minimum lease payments for future years ending December31 are as follows: Related Parties 2008 $4.394,938 2009 2.277,836 2010 855,700 2011 522,000 2012 522,000 Thereafter 1,029.500 Total 

### $9,601,974 Unrelated Parties Total $101,619 $ 4,496,557

69,896 2,347,732 37,224 892,924 37,224 559,224 37,224 559,224 229,548 1,259,048 

### $512,735 $10,114,709 Certain facilities leased by the Company are subleased to related parties under month-to-month sublease agreements. Sublease income was $109,015 for the years ended December 2007 and 2006. During 2007 and 2006, the Company purchased $393,400 and $439,830, respectively, of aircraft insurance from arelated insurance company. The Company also incurred expenses of $4,283,597 and $4,388,327 for various services and goods provided by related parties in 2007 and 2006, respectively. Rental income received in 2007 and 2006 undera monthly operating lease was $30,000 annually from arelated party using space atthe Grand Canyon heliport facility. The Company began renting amobile home to arelated party underamonthly operating lease in 2002. Rent received totaled $16,200 annually during 2007 and 2006. During 2007 and 2006, underthe terms oftheir long-term notes the Company paid $213,135 and $240,592, respectively, in interest expense to the stockholders.
Note 6• Employee Benefit Plan The Company has a401(k) profit sharing plan forthe benefit of all full-time employees. Participants may make voluntary contributions, while the Company, at its discretion, may make amatching contribution. The Company contributed $20,115 and $24,110 in 2007 and 2006, respectively. 

### See accountant's report. 11

### Notesto Financial Statements Papillon Airways, Inc. December31, 2007 and 2006


### Note 7•Contingencies During 2006 two outstanding lawsuits were settled, resulting in anet gain of $700,000, which is included on the statements of income. In addition, through the ordinary course of business, the Company is adefendant in various legal proceedings. Resolution of these matters is not expected to have amaterial impacton the financial position or operations of the Company. The Company is currently in the midst of an IRS excise tax examination forthe years 2003 through 2005. The IRS has assessed $7,742,269 in interest and penalties related to federalexcise taxes. Management vigorously disputes this assessment and believes they will prevail in eliminating the entire assessment. However, the outcome ofthis mattercannot be determined atthis time.


### Note 8•Subsequent Event Subsequentto year-end, the Company entered into anote payable with an unrelated party, totaling $800,000, for the purchase oftour buses; maturing January 2013.

See accountant's report. 

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## EXHIBIT VI

# GRAND CANYON AIRLINES, INC Profit and Loss Statement ForThe Period Ending December 31, 2010

REVENUES COST OF OPERATIONS PAYROLL & P/R TAXES FUEL COMMISSIONS GROUND TRANSPORTATION COSTS FEDERAL EXCISE TAX AIRCRAFT MAINTENANCE AIRCRAFT RELATED COSTS GROUND LEASES/FACILITIES TOUR RELATED EXPENSES FBO RELATED DYNAMIC DEPRECIATION



### GROSS OPERATINGPROFIT GENERAL & ADMIN. EXP. MARKETING EXPENSES CREDIT CARD DISCOUNT HEALTH INSURANCE HOUSING EXPENSES PROFESSIONAL FEES UTILITIES OFFICE EXPENSES TRAVEL EXPENSES OTHER G &A



### INCOME FROM OPERATIONS OTHER EXPENSES AIRCRAFT LEASES DEPRECIATION INTEREST EXPENSE INTEREST INCOME OTHER



### NET INCOME (LOSS) 2010 YTD TOTAL 27,731,756

5,694,618 2,415,746 2,100,391 2,083,987 1,371,057 1,194,309 1,105,141 1,055,638

776,627 716,656 412,491 18,926,661

8,805,095

898,950 753,151 487,614 315,200 247,346 203,667

35,990 26,976 1,661,439 4,630,333 4,174,762
2,484,000 147,175

95,754 (2.995) 2,723,934 1,450,828ASSETS Current Assets Cash Accounts Receivable, net Inventory & Expendable Parts Other Current Assets Total Current Assets Property & Equipment Aircraft Equipment Less Aircraft Equipment Depreciation Vehicles Less Vehicles Depreciation Furniture and Fixtures Less Furniture and Fixtures Depreciation Leasehold Improvements Less Leasehold Improvements Depreciation CPT Mobile Homes Less CPT Mobile Homes Depreciation Buildings Less Depreciation Buildings Computers/Office Equipment Less Computers/Office Equipment Depreciation Dynamic Aircraft Components Less Dynamic Aircraft Components DepreCiation Total Property & Equipment
Other Assets Deposits Total Assets YTD 2010

$ 358,344 1,448,062 1,549,560

519,886 3,875,852

246,641 (170,111)

108,163 (45,083) 134,972 (107,427) 1,520,894 (1,061,371) 734,160 (432,511) 593,873 (593,873) 583,939 (542,241) 4,127,201 (1,324,968) 3,772,258

449,386 $ 8,097,496 Grand 

### Canyon Airlines, Inc. Balance Sheet December 31, 2010

LIABILITIES & STOCKHOLDER'S EQUITY Current Liabilities Accounts Payable Reservation Deposits Accrued Payroll Accrued Liabilities Payroll Tax Liabilities Federal Excise Tax Payable Deferred Revenue Shareholder Loans Note Payable- Bank Current Portion of Long Term Note Total Current Liabilities Long Tenn Liabilities Long Term Note- Papillon Less Current Portion of Long Term Note Total Long Tenn Obligations

Stockholder's Equity Common Stock Additional Paid in Capital Retained Earnings Retained Earnings- Current Year Total Stockholder's Equity

Total liabilities and Stockholder's Equity YTD 2010

$ 973,542 241,067 169,151 662,317 106,393

10,751 723,610 192,000 100,000 3,178,831

2,699,430

(100,000) 2,599,430

4,000 5,439,998 (4,575,591)

1,450,828 2,319,235

$ 8,097,496

## GRAND CANYON AIRLINES, INC. FINANCIAL STATEMENTS DECEMBER 31, 2009 (With Report ofIndependent Certified Public Accountants Thereon)

LL Bradford& Company, LLC CertifiedPublicAccountants & ConsultantsTABLE OF CONTENTS

Report oflndependent Certified Public Accountants Financial Statements Balance Sheet StatementofOperations Statement ofStockholder's Deficit StatementofCash Flows Notes to Financial Statements 2 3 4 5 6

# (7**l:~.BradfDrd**

REPORT OF INDEPENDENT CERTIFIED PUBLlC ACCOUNTANTS

To the board ofdirectors Grand Canyon Airlines, Inc. Las Vegas, Nevada We have audited the accompanying balance sheets ofGrand Canyon Airlines, Inc., as ofDecember 31,2009, and the related statements ofoperations, stockholder's deficit and cash flows for the year then ended. These financial statements are the responsibility ofGrand Canyon Airlines, InC.'5 management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. 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 evaluating the overall financial statementpresentation. Wr: believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial pOSItion of Grand Canyon Airlines, Inc., as ofDecember 31,2009, and the results ofits operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States ofAmerica,

L.L. Bradford & Company, LLC March 9, 2010 Las Vegas, Nevada

# ,.. GRAND CANYON AIRLINES, INC.

Current assets

Cash Accounts receivable, net BALANCE SHEET DECEMBER 3J , 2009

ASSETS

Accounts receivable

- related parties Inventory and expendable parts Prepaid expenses and other current assets

Total current assets Property and equipment, net Other assets Total assets $ 1,730,221 1,096,341

255,220 1,267,709

547,833 4,897.324 3,689,896

LIABILITIES AND STOCKHOLDER'S DEFICIT Current liabilities

Accounts payable Accounts payable

- related parties Accrued expenses Dueto stockholders Revolving line-of-credit Deferred revenue

Total current liabilities Total liabilities Commitments and contingencies Stockholder's deficit

Common stock; $1 par value; 10,000 shares authorized;

4,000 shares issued and outstanding Additional paid-in capital Accumulated deficit

Total stockholder's deficit Total liabilities and stockholder's deficit

See Accompanying Notes to Financial Statements 2 $ 787,699 4,697,972

775,118 192,000 2,000,000

465,012 8,917,801 8,917,801

4,000 4,300,000 {4,575,594

## 1

(271,594

## 1 $ 8,646,207

# ,.... GRAND CANYON AIRLINES, INC. STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31,2009

Revenues $ 24,820,991 Cost ofrevenues 20,248,151

Gross profit 4,572,840 Operating expenses

General and administrative 4,589,547 Depreciation 554,875

Total operating expenses 5,144,422 Loss from operations (571,582) Other expense

Interest expense (18,079) Loss on sale ofasset 

## p, 889

## l

Total other expense (21,968) Net Joss $ (593,550)

See Accompanying Notes to Financial Statements 3Balance at January 1, 2009 Contributions Net loss Balance at December 31, 2009 GRAND CANYON AIRLINES, INC. STATEMENT OF STOCKHOLDER'S DEFICIT FOR THE YEAR ENDED DECEMBER 31,2009

Common Stock Additional Shares Amount Paid-in Capital 4,000 $ 4,000 $ 2,300,000 2,000,000

4,000 $ 4,000 $ 4,300,000

See Accompanying Notes to Financial Statements 4 Total Accumulated Stockholders Deficit Deficit $ (3,982,044) $ (1,678,044) 2,000,000 (593,550) (593,550) $ (4,575,594) $**!271,594~**

# ,... GRAND CANYON AIRLINES, INC. STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2009

Cash flows from operating activities:

Net loss $ Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation Gain on sale ofassets Changes in:

Accounts receivable, net Accounts receivable

- related parties Inventory and expendable parts Other assets Accounts payable Accounts payable

- related parties Accrued expenses Deferred revenue

Net cash used in operating activities Cash flows from investing activities:

Purchase ofequipment Net cash used in investing activities Cash flows from financing activities:

Proceeds from stockholder contributions Proceeds from revolving line-of-credit Principal payments on line-of-credit Principal payments on note payable to stockholders Principal payments on note payable Net cash provided by financing activities Net change in cash Cash balance at January 1, 2009 Cash balance at December 31, 2009 $ Supplemental disclosure ofcash flow information:

Cash paid for interest $

See Accompanying Notes to Financial Statements 5 (593,550)
554,&75

3,&&9 1,012,391

196,266 (209,&96)

29,73& (45,658) (1,004,549)

(429,&&2)

(33,244) (519,620)
(&00,544) (&00,544)
2,000,000 3,200,000 (1,&00,000)

(408,000)

(&3,423) 2,908,577 1,588,413

141,&0& 1,730,221
18,079GRAND CANYON AIRLINES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Principles ofConsolidation

- The accompanying financial statements include the consolidated accounts ofGrand Canyon Airlines, Inc. and Scenic Airlines, Inc. Grand Canyon Airlines, Inc. was incorporated in the State ofArizona in J957. Scenic Airlines, Inc. was incorporated in the State of Nevada in 1992 and is the wholly owned subsidiary ofGrand Canyon Airlines, Inc., such consolidated group is collectively referred to as Grand Canyon Airlines, Inc. (hereafterreferred to as the "Company"). All significant inter-company balances and transactions have been eliminated in the consolidation. Description ofbusiness activity -The Company is an air transportation enterprise. The Company provides air service to the Grand Canyon, Arizona, and chartered sightseeing tours from Las Vegas, Nevada, to the Grand Canyon. Use ofestimates

- The preparation offinancial statements in conformity with accounting principles generally accepted in the United States ofAmerica requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts ofrevenue and expenses during the reporting period. Actual results could differ from those estimates. Revenue recognition

- Revenue from ticket sales is recognized when the transportation is provided. As such, accounts receivable consists ofunpaid ticket sales less management'sestimateofuncollectible accounts. Payments received in advance ofproviding the corresponding services are recorded as deferred revenue and totaled $465,012 as ofDecember 31,2009. Inventory and expendable parts Inventory and expendable parts consist primarily ofexpendable aircraft parts, materials and supplies, which are stated at average cost. Property and eguipment- Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives ofthe assets, which are generally 3 to 10 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of depreciable assets, cost and accumulated depreciation are removed from the accounts and any gain or Joss is reflected in other income (expense). Accounting for the impairmentoflong-lived assets
- The Company accounts for impairmentoflong-lived assets in accordance with StatementofFinancial Accounting Standards ("SFAS") No. 144,Accountingforthe Impairment or Disposal q(Long-LivedAssets. SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the book value ofthe asset may not be recoverable. At each balance sheetdatethe Company evaluates whetherevents and circumstances have occurred that would indicate apossible impairment. In accordance with SFAS No. 144, the Company uses an estimateofthe future undiscounted net cash flows ofthe related asset or asset grouping over the remaining life in evaluating whether the assets are recoverable. Maintenance costs
- The Company expenses maintenance costs related to engineoverhaulsofwhich the costis less than $20,000 as they are incurred. Aircraft component costs that exceed $20,000 are capitalized and depreciated over the estimated useful life.

6GRAND CANYON AIRLINES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 3I, 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Income taxes
- TheCompany, with the consent ofits stockholders, has elected to be taxed as an S corporation under the Internal Revenue Code, which provides that stockholders separately account for items ofincome, deductions, losses and credits. Accordingly, no provisions for federal income taxes are included in the accompanying financial statements for the year ended December 31 , 2009. 2. ACCOUNTS RECEIVABLE The aging ofaccounts receivable, including accounts receivable

- related party totaling $255,220, as ofDecember 31, 2009, consists ofthe following: 

## o 30 days 31 60 days 60

- 90 days Over 90 days Less: allowance for doubtful accounts

3. INVENTORY AND EXPENDABLE PARTS $ 657,884 213,923 237,187 312,567 1,421,561

(70,000) $ 1.351.561

Inventory and expendable parts consist ofthe following at December 31, 2009: Expendable parts, materials and supplies Fuel inventory

4. PROPERTY AND EQUIPMENT, NET Property and equipment consist ofthe following at December 31, 2009: Aircraft and aircraft components Ground equipment Buildings Mobile home trailer Fuel farm Computer and office equipment Less accumulated depreciation

7 $

$

$ 1,201,453 66,256

3,833,392

106,459 ],795,533

734,160 319,234 718,910 7,507,688 (3,817,792)



### 3,682,826GRAND CANYON AIRLINES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009

5. RELATED PARTY BALANCES AND TRANSACTIONS As ofDecember31,2009 the Company has borrowed $ J92,000 from stockholders ofthe Company. The balance bears interest at the prime rate plus .5% (3.25% at December 31,2009) and is due on demand. Included in accounts receivable are amounts due from companies owned by stockholders ofthe Company. As of December31,2009the balanceowed from these companies totaled $255,220 which represents approximately 19% oftotal accounts receivable. Included in accounts payable are amounts to companies owned by stockholders ofthe Company. As ofDecember 31, 2009 the balances owed to these companies totaled $4,697,972 which represents approximately 86%oftotal accounts payable. The Company leases aircrafts from multiple companies owned by stockholders ofthe Company. The monthly lease payments range from $2,000 and $25,000 and expirebetween September20 11 and November 2014. The Company recognized $2,632,000 in related party lease expense for the year ended December 31,2009. Future minimum base lease payments as ofDecember 31, 2009: 2010 2011 2012 2013 2014

6. REVOLVING LINE-OF CREDIT $ 1,245,600 552,000 502,000

48,000 48,000 

### $ 2,395,600

The Company has a $2,000,000 revolving line-of-credit with a financial institution. The balance as ofDecember 31, 2009totaled $2,000,000. The obligation is secured by theCompany's equipmentand tenant improvements. The company pays interest on the last day ofevery month for each Libor rate advance with all outstanding principal balances payable in full at the bank's prime lending rate (3.25% at December 31,2009) on maturity at October 2010. 7. PROFIT SHARING PLAN The Company has established a Defined Contribution Profit Sharing Retirement Plan for its employees. All employees who have been employed continuously for one year are eligible for participation in the plan. The contribution is determined solely atthe discretion oftheCompany's board ofdirectors. The Plan is qualified under the Internal Revenue Code. The Company approved contributionstotaling $34,028 for the yearended December31, 2009.

8

# ,... GRAND CANYON AIRLINES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009

8. COMMITMENTS AND CONTINGENCIES The Company is required to make contingent rentals of0.85% ofgross annual sales or a minimum annual lease payment of$12,000, under an operating lease ofits fixed-based operation, which expires in September 2017. The Company operates and maintains a fuel storage facility and is required to make a minimum lease payment of $1,220, annually, adjusted annually for inflation, under an operating lease with the Grand Canyon National Park Airport, which expires September 2017. The lease also requires contingent rental fees of$0.03 per gallon offuel sold and 5% ofgross annual sales derived from its operation. Future minimum base lease payments as ofDecember 3

### t, 2009: 2010 2011 2012 2013 2014 Thereafter $ 13,220 13,220 13,220 13,220 13,220 36,355 $ 102AS5 The Company is obligated under a non-cancelable operating lease for a hanger facility that expires in December 2017. The total rent expense for the lease for the yearended December 31,2009,totaled $469,992. The following is a schedule offuture minimum lease payments for the lease as ofDecember 31,2009: 2010 $ 469,992 2011 469,992 2012 469,992 2013 469,992 20]4 469,992 Thereafter 1,409,976

The Company is obligated under a non-cancelable operating sublease agreement for a hangar facility located at Boulder City that expires February 2014. The total rent expense for the lease for the year ended December 31, 2009, totaled 320,000. The following is a scheduleoffutureminimum lease paymentsforthe lease as ofDecember 31,2009: 2010 $ 384,000 2011 384,000 20]2 384,000 20]3 384,000 2014 64,000 $ 1.@Q,OOO

9

# GRAND CANYON AIRLINES, INC. FINANCIAL STATEMENTS DECEMBER 31, 2008 (With Report ofIndependent Certified Public Accountants Thereon)

L.L. Bradford& Company, LLC Certified Public Accountants & ConsultantsTABLE OF CONTENTS

Report ofIndependent Certified Public Accountants Financial Statements Balance Sheet Statement ofOperations Statement ofStockholder's Deficit Statement ofCash Flows Notes to Financial Statements PAGE NO.

2 3 4 5 6**~~~---** .......**~-** ...**~~-----** 

# L.L.Bradford Certified Publ!!: Accountants 6 Consuitants

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the board ofdirectors Grand Canyon Airlines, Inc. Las Vegas, Nevada We have audited the accompanying balance sheets ofGrand Canyon Airlines, Inc., as ofDecember 31, 2008, and the related statements ofoperations, stockholder's dericit and cash flows 

### lorthe yearthen ended. These financial statements are the responsibility ofGrand Canyon Airlines

.. Inc.'s man3gement. Our responsibility is to express an opinion on these financial statemenls based Oil our audit. We conducted ouraudit in accordance wilh auditing standards generally accepl.ed in the United Stf1tcs ofAmerica. Those standards require thal we plan and pertorm the audi! to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the

,.. amounts and disclosures in the financial statements. A.n audit f1ls!) include;, the accounting principles used and significant estimates made by management, a.s well as evaluatingthe overall financia Istatement presentation. We be1 ieve that our audit provides a reasonable basis for our opinion. In our opinion, the financial :;tatements referred to above**pr~sent** fairly, in all material respects, the financial position of Grand Canyon Airlincs, inc., as ofDecember 3 I. 2008, and the results ofits operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States ofAmerica.

,i\ If ill".',"

...'''' 1t\Jr'1'ffJfJ

..**'ftl.\ll(.-~-, ~\**  L.L. Bradford & Company, LLC March 6, 2009 Las Vegas, Nevada

702-735-5030·34L11 Eastern /\VG., Las**Vega~** 

### r\lv 89169. www.llbradford.comGRAND CANYON AIRLINES, INC.

Current assets

Cash Accounts receivable, net BALANCE SHEET DECEMBER 31, 2008

ASSETS

Accounts receivable

- related parties Inventory and expendable parts Prepaid expenses and other current assets

Total current assets Property and equipment, net Other assets Total assets $

$

LIABILITIES AND STOCKHOLDER'S DEFIClT Current liabilities

Accounts payable Accounts payable

- related parties Accrued expenses Due to stockholders Revolving line-of-credit Deferred revenue Note payable

Total current liabilities Total liabilities Commitments and contingencies Stockholder's deficit

Common stock; $1 par value; 10,000 shares authorized;

4,000 shares issued and outstanding Additional paid-in capital Accumulated deficit

Total stockholder's deficit Total liabilities and stockholder's deficit

See Accompanying Notes to Financial Statements 2 $

$ 141,808 2,108,732

451,486 1,057,813

575,806 4,335,645 3,448,116 60,752 7,844,513

833,357 5,702,521 1,205,000

600,000 600,000 498,256

83,423 9,522,557 9,522,557

4,000 2,300,000 (3,982,044) (l,678,044) 7,844,513GRAND CANYON AIRLINES, INC. STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2008

Revenues $ 31,703,620 Cost ofrevenues 26,890,327

Gross profit 4,813,293 Operating expenses

General and administrative 4,352,815 Depreciation 541,628

Total operating expenses 4,894,443 Loss from operations (81,150) Other expense

Interest expense (150,026) Loss 011 sale ofasset {7272

Total other expense (150,753) Net loss $**~231,903)**

See Accompanying Notes to Financial Statements 3Balance at January I, 2008 Contributions Net loss Balance at December 31 , 2008 GRAND CANYON AIRLINES, INC. STATEMENT OF STOCKHOLDER'S DEFICIT FOR THE YEAR ENDED DECEMBER 31,2008

Common Stock Additional Shares Amount Paid-in Capital 4,000 $ 4,000 $ 1,999,327 300,673

4,000 $ 4,000 $ 2,300,000

See Accompanying Notes to Financial Statements 4 Total Accumulated Stockholder's Deficit Deficit $ (3,750,141) $ (1,746,814) 300,673 (231,903) (231,903) $ (3,982,044) $ (1,678,044)GRAND CANYON AIRLINES, INC. STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2008

Cash flows from operating activities:

Net loss Adjustments to reconcile net loss to net cash provided by operating activities:

Loss on sale offixed asset Depreciation Changes in:

Bank overdraft Accounts receivable, net Accounts receivable

- related parties Inventory and expendable parts Other current assets Accounts payable Accounts payable

- related parties Accrued expenses

Net cash provided by operating activities Cash flows from investing activities:

Purchase ofequipment Cash proceeds from sale ofasset Net cash used in investing activities Cash nows from financing activities:

Principal payments onrevolving line-of-credit Principal payments on note payable Net cash used in financing activities Net change in cash Cash balance at January 1,2008 Cash balance at December 3J , 2008 Supplemental disclosure ofcash flow information:

Cash paid for interest Non-cash contributions ofassets from stockholders $

See AccompanyingNotes to Financial Statements 

# " (231,903)

727 541,628 (779,704) 922,871 1,016,640

100,490 191,586 401,461 1,295,632

(89,120) 3,370,308
(1,737,673) 750 (1,736,923)
(1,400,000) (91,577) (1,491,577) 141,808

141I. GRAND CANYON AIRLINES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2008

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Principles ofConsolidation

- The accompanying financial statements include the consolidated accounts ofGrand Canyon Airlines, Inc. and Scenic Airlines, Inc. Grand Canyon Airlines, Inc. was incorporated in the State ofArizona in 1957. Scenic Airlines, Inc. was incorporated in the State ofNevada in 1992 and is the wholly owned subsidiary ofGrand Canyon Airlines, Inc
.. such consolidated group is collectively referred to as Grand Canyon Airlines, Inc. (hereafter referred to as the "Company"). All significant inter-company balances and transactions have been eliminated in the consolidation. Description ofbusiness activity -TheCompany is an airtransportation enterprise. The Companyprovides air service to the Grand Canyon, Arizona. and chartered sightseeing tours from Las Vegas, Nevada, to the Grand Canyon. Use of estimates

- The preparation of financial statements in conformity with accounting principles generally accepted in the United States ofAmerica requires management to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure ofcontingentassets and liabilities atthe date ofthe financial statements and the reported amounts ofrevenue and expenses during the reportingperiod. Actual results could differ from those estimates. Revenue recognition Revenue from ticket sales is recognized when the transportation is provided. As such, accounts receivable consists ofunpaid ticket sales less management's estimate ofuncollectible accounts. Inventory and expendable parts
- Inventory and expendable parts consist primarily ofexpendable aircraft parts, materials and supplies, which are stated at average cost. Property and equipment Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method overthe estimated useful lives ofthe assets, which are generally 3to 10 years. The cost ofrepairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition ofdepreciable assets, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense). Accounting for the impairment oflong-lived assets
- The Company accounts for impairment oflong-lived assets in accordance with Statement ofFinancial Accounting Standards ("SFAS") No. 144,Accounting/ortheImpairment or Disposal

### 0/ Long-LivedAssets. SFAS No. 144 requires that long-lived assets be reviewed for impairmentwhenever events orchanges in circumstances indicate thatthe book value ofthe assetmay not be recoverable. At each balance sheet date the Company evaluates whether events and circumstances have occurred that would indicate a possible impairment. In accordance with SFAS No. 144, the Company uses an estimate ofthe future undiscounted net cash flows ofthe related assetorassetgrouping over the remaining life in evaluating whetherthe assets are recoverable. Maintenance costs
- The Company expenses maintenance costs related to engine overhauls ofwhich the cost is less than $15,000 as they are incurred. Aircraft component costs that exceed $15,000 are capitalized and depreciated over the estimated useful1ife.

6GRAND CANYON AIRLINES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2008

1. DESCRIPTION OFBUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Income taxes
- The Company, with the consent ofits stockholders. has elected to be taxed as an Scorporation under the Internal Revenue Code, which provides that stockholders separately account for items ofincome, deductions, losses and credits. Accordingly, no provisions for federal income taxes are included in the accompanying financial statements for the year ended December 3I, 2008.
2. ACCOUNTS RECEIVABLE The aging ofaccounts receivable, including accounts receivable

- related party totaling $636,643, as ofDecember 31,2008, consists ofthe following: 0- 30 days 3J 60 days 60 90 days Over 90 days Less: allowance for doubtful accounts

3. INVENTORY AND EXPENDABLE PARTS $ 1,090,391 288,898 278,959 1,155,004 2,813,252 (253,034)

Inventory and expendable parts consist ofthe following at December 31,2008: Expendable parts, materials and supplies Fuel inventory

4. PROPERTY AND EQUIPMENT, NET Property and equipment consist ofthe following at December 31, 2008: Aircraft and aircraft components Ground equipment Buildings Mobile home trailer Fuel farm Computer and office equipment Less accumulated depreciation

7 $ 1,003,847 53,966

$ 3,117,226 132,459 1,795,533

734,160 319,234 624,098 6,722,710 3,274,594

# ,... 5.

6. GRAND CANYON AIRLINES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 3I, 2008

RELATED PARTY BALANCES AND TRANSACTIONS As ofDecember 31, 2008 the Company has borrowed $600,000 from stockholders ofthe Company. The balance bears interest at the prime rate plus .5% (3.75% at December 31,2008) and is due on demand. Included in accounts receivable are amounts due fi'ol11 companies owned by stockholders ofthe Company. As of December 31,2008 the balance owed from these companies totaled $451 ,486 which represents approximately 18% oftotal accounts receivable. Included in accounts payable are amounts to companies owned by stockholders ofthe Company. As ofDecember 31,2008 the balances owed to these companies totaled $5,702,521 which represents approximately 87% oftotal accounts payable. The Company leases aircrafts from multiple companies owned by stockholders ofthe Company. The monthly lease payments range from $1,000 and $29,000 and expire between September 2009 and November 20IO. The Company recognized $2,963,733 in related party lease expense for the year ended December 31,2008. Future minimum base lease payments as ofDecember 31,2008: 2009 $ 2,640,000 2010 823,000 $ 3.463,000 REVOLVING LINE-OF CREDIT The Company has a $2,000,000 revolving line-of-credit with afinancial institution. The balance as ofDecember31, 2008 totaled $600,000. The obligation is secured by the Company's equipment and tenant improvements. The company pays interest on the last day ofevery month for each Libor rate advance with all outstanding principal balances payable in full atthe bank's prime lending rate (3.25% at December31,2008)on maturity at October2009. 7. NOTE PAYABLE Note payable consists ofthe following at December 31,2008: Note payable to a bank; payable in monthly installments of$8,333 plus interest at the rate of5.4%, through August 15,2009 secured by two airplane engines. 8. PROFIT SHARING PLAN 83.423

The Company has established a Defined Contribution Profit Sharing Retirement Plan for its employees. All employees who have been employed continuously for one year are eligible for participation in the plan. The contribution is determined solely at the discretion ofthe Company's board ofdirectors. The Plan is qualified under the Internal Revenue Code. The Company approved contributions totaling $14,758 for the year ended December3I, 2008.

8GRAND CANYOJ\ AIRLINES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 3], 2008

9. COMMITMENTS AND CONTINGENCIES The Company is required to make contingent rentals of0.85% ofgross annual sales or a minimum annual lease payment of$]2,000, under an operating lease ofits fixed-based operation, which expires in September 20J7. The Company operates and maintains a fuel storage facility and is required to make a minimum lease payment of $],220, annually, adjusted annually for inflation, under an operating lease with the Grand Canyon National Park Airport, which expires September 20]7. The lease also requires contingent rental fees of$0.03 per gallon offuel sold and 5% ofgross annual sales derived from its operation. Future minimum base lease payments as ofDecember 31,2008: 2009 2010 20]1 20]2 20]3 Thereafter $ 13,220 ]3,220 13,220 13,220 J3,220 52,880**~.118,980** The Company is obligated under a non-cancelable operating lease for a hanger facility that expires in December 2017. The total rent expense for the lease for the yearended December 3 1 ,2008, totaled $469,992.The following is a schedule offuture minimum lease payments for the lease as ofDecember 31, 2008: 2009 2010 2011 2012 2013 Thereafter

9 $ 469,992 469,992 469,992 469,992 469,992 1,879,968

## GRAND CANYONAIRLINES, INC. AND SUBSIDIARY FINANCIAL STATEMENTS DECEMBER 31, 2007 (With Report ofIndependent Certified Public Accountants Thereon)

L.L. Bradford & Company, LLC CertifiedPublicAccountants & ConsultantsTABLE OF CONTENTS

Report ofIndependent Certified Public Accountants Financial Statements Balance Sheet Statement oflncome Statement ofStockholder's Deficit Statement ofCash Flows Notes to Financial Statements PAGE NO.

2 3 4 5 6

### L.L. BrlldfOnl& 

### COII/P(IIl}', 

### LLC Cerlijied

### Public ACCOllllful1IS & 

### Consultants
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the board ofdirectors Grand Canyon Airlines, Inc. and Subsidiary Las Vegas, Nevada Wehave auditedthe accompanyingbalance sheets ofGrand Canyon Airlines, Inc. and Subsidiary, as ofDecember 31, 2007. and therelated statements ofincome, stockholder'sdeficitand cash flows fortheyearthen ended. These fmandal statements aretheresponsibility ofGrandCanyon Airlines,Inc. and Subsidiary'smanagement. Ourresponsibility is to express an opinion on these financial statements based on our audit. We conducted our .audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standardsrequirethat we plan and perform the auditto obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An auditalso includes assessingtheaccounting principles used and significantestimates madeby management, as well asevaluatingthe overall fmancial statementpresentation. Webelieve that our audit provides areasonable basis for our opinion. In ouropinion, thefmancial statementsreferredto abovepresent fairly, in all materialrespects,thefmandal positionof GrandCanyonAirlines, Inc. and Subsidiary, as ofDecember 31, 2007, andtheresultsofitsactivities and cash flows for the year then ended. 

# LL-.**~Q ~~JIU-C**  L.L. Bradford & Company, LLC June 9, 2008 Las Vegas, Nevada

Member o{Centerfor Public Company Audit I'inns PeerReview Progrun • Rcpstered Finn ofPCAOB .' Member ofCenter forAudll Quality 1#1 S. Eastern AVL'fIUC • Las Vegas, Nevada 89169' 702·735·5030' Fa'; 702·735·4$$4GRAND CANYON AIRLINES, INC. AND SUBSIDIARY BALANCE SHEET DECEMBER 31, 2007

Current assets

Cash Accounts receivable, net Accounts receivable

- related parties Inventory and expendable parts Other current assets

Total current assets Property and equipment, net Other assets Total assets ASSETS

LIABILITIES AND STOCKHOLDER'S DEFICIT Current liabilities

Bank overdraft Accounts payable Accounts payable

- related parties Accrued expenses Revolving line-of-credit Note payable

- current portion

Total current liabilities Long-term liabilities

Note payable

- long-term portion Due to stockholder

Total long-term obligations TotalliabiIities Commitments and contingencies Stockholder's deficit

Common stock; $] par value; 10,000 shares authorized;

4,000 shares issued and outstanding Additional paid-in capital Accumulated deficit

Total stockholder's deficit Total liabilities and stockholder's deficit

See Accompanying Notes to FinanCial Statements 2 $

$

$ 3,031,603 1,468,126 1,002,125

603,729 6,105,583 2,109,053

224,415 81439,051

779,704 431,896 4,406,889 1,792,376 2,000,000 99,996 9,510,861
75,004 600,000 675,004 10,185,865

4,000 1,999,327 (3,750,141) (1,746,814)

# ,. GRAND CANYON AIRLINES, INC. AND SUBSIDIARY STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2007

Revenues $ 31,993,815 Cost ofrevenues 30,838,266

Gross profit 1,155,549 Operating expenses

General and administrative 5,528,708 Depreciation

Total operating expenses Loss from operations (4,792,211) Other income (expense)

Miscellaneous income 4,695 Interest expense**~234,003~**

Total other expense (229,308) Net loss $**~5,021,519l**

See Accompanying Notes to Financial Statements 3Balance at January 1,2007 Contributions Net loss Balance at December 31, 2007 GRAND CANYON AIRLINES, INC. AND SUBSIDIARY STATEMENT OF STOCKHOLDER'S DEFICIT FORTHE YEAR ENDED DECEMBER 31, 2007

Common Stock Additional Accumulated Shares Amount Paid-in Capital. 4,000 $ 4,000 $ 150,462 1,848,865

.

4 1000 $ 4,000 $ 1,999,327

See Accompanying Notes to Financial Statements 4 Deficit $ 1,271,378

(5,021,519) $**~3,750,141l** Total Stockholder's Deficit $ 1,425,840 1,848,865 (5,021,519) $ p,746,814

## lGRAND CANYON AIRLINES, INC. AND SUBSIDIARY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2007

Cash flows from operating activities:

Net loss $ Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation Changes in:

Accounts receivable, net Accounts receivable

- related parties Inventory and expendableparts Other current assets Accounts payable Accounts payable

- related parties Accrued expenses

Net cash used in operating activities Cash flows from investing activities:

Purchase ofequipment Acquisition ofScenic Airlines, Inc Cash received (paid) for refundable deposits Net cash used in investing activities Cash flows from financing activities:

Proceeds from bank overdraft Net proceeds from revolving line-of-credit Contributions from stockholders Net proceeds from stockholders loans Principal payments on note payable Net cash provided by financing activities Net change in cash Cash balance at January 1, 2007 Cash balance at December 31, 2007 $ Supplemental disclosure ofcash flow information: Acquisition Scenic Airlines

Inventory Prepaid assets Refundable deposits $ Cash paid for interest $

See Accompanying Notes to Financial Statements· 5 (5,021,519)
419,052 (2,620,995) (l,468, 126)

420,224 (344,554)

98,229 4,406,889 1,315,527 (2,795,273)
(l,598,692)

(350,000)

187,329 (1,761,363)

779,704 1,000,000 1,848,865

516,432 p6,4322 4,128,569

(428,067) 428,067

261,195

33,720 55 1°85 350,000 234,003GRAND CANYON AIRLINES, INC. AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2007

1. DESCRIPTION OFBUSINESS AND SUMMARY OF SIGNIFICANTACCOUNTING POLICIES Organization and Principles ofConsolidation

- The accompanying financial statements include the consolidated accounts ofGrand Canyon Airlines, Inc. and ScenicAirlines, Inc. Grand CanyonAirlines, Inc. was incorporated in the State ofArizona in 1957. Scenic Airlines, Inc. was incorporated in the State ofNevada in 1992 and is the wholly owned subsidiary ofGrand Canyon Airlines, Inc., such consolidated group is collectively referred to as Grand Canyon Airlines, Inc. and Subsidiary (hereafter referred to as the "Company"). .All significant intercompany balances and transactions have been eliminated in the consolidation. Description ofbusiness activity -The Company is an air transportation enterpdse. The. Company provides air service to the Grand Canyon, Arizona, and chartered sightseeing tours from Las Vegas, Nevada, to the Grand Canyon. Use of estimates

- The preparation offinancial statements in conformity with accounting principles generally accepted in the United States ofAmerica requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts ofrevenue and expenses during thereportingperiod. Actual results could differ from those estimates. Revenue recognition Revenue from ticket sales is recognized when the transportation is provided. As such, accounts receivable consists ofunpaid ticket sales less management's estimate ofuncollectible accounts. InventOIY and expendable parts -Inventory and expendableparts consist primarily ofexpendable aircraft parts, materials and supplies, which are stated at average cost. Property and equipment

- Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives ofthe assets, which are generally 3 to 10 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of depreciable assets, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense). Accountingforthe impairmentoflong-lived assets
- TheCompanyaccounts for impairment oflong-lived assets in accordance with Statement ofFinancial Accounting Standards("SFAS")No. 144,AccountingfortheImpairment or Disposal of Long-LivedAssets. SFAS No. 144 requires that long-lived assets be reviewed for impairment wheneverevents or changes in circumstances indicatethat thebook value ofthe asset may not be recoverable. At each balance sheet date the Company evaluates whetherevents and circumstanceshaveoccurredthat would indicate apossibleimpairment. In accordance with SFASNo. 144,theCompany uses an estimate ofthefutureundiscounted net cash flows ofthe related asset or asset grouping over the remaining life in evaluating whether the assets are recoverable. Maintenancecosts
- TheCompanyexpenses maintenancecostsrelatedtoengineoverhaulsofwhich thecostisless than $15,000 as they are incurred. Aircraft component costs that exceed $15,000 are capitalized and depreciated over the estimated useful life.

6GRAND CANYON AIRLINES, INC. AND SUBSIDIARY NOTES TO FINANCIAL STATEMENfS DECEMBER31, 2007

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Incometaxes
- TheCompany, with theconsent ofits stockholders,has electedtobetaxed as an Scorporation under the Internal RevenueCode, which provides that stockholders separately account for items ofincome, deductions, losses and credits. Accordingly, noprovisionsfor federal incometaxesare included in theaccompanyingfinancial statements for the year ended December 31, 2007. Purchase ofScenic Airlines

- On March 28, 2007 Grand Canyon Airlines, Inc. purchased the common stock of Scenic Airlines Inc. (Scenic) in exchange for $350,000. Thecommon stock included 2,500 authorized shares of which 1,000 were issued and outstanding.Aspart ofthetransactionno'liabilities were**assum~d**bythenewowners ofScenic. Scenicwaspurchased at a discount relativetothehistorical valuesrecorded for the assetspurchased from Scenic and as such certain property and equipment and other assets. has been written down to account for the valuation ofthe assets at the purchase price of$350,000. The following reflects the :values assigned to Scenic Airlines assets as of the purchase date; inventory $261,195, prepaid assets $33,720 and refundable deposits $55,085. 2. ACCOUNTS RECEIVABLE The aging ofaccounts receivable as ofDecember 31, 2007, consists ofthe following: 0-30 days 31 -60 days 60 90 days Over 90 days Less: allowance for doubtful accounts

3. INVENTORY ANDEXPENDABLE PARTS $ 865,012 615,139 697,950 1,423,130 3,601,231 (569,628) $ 3,031 603

Inventory and expendable parts consist ofthe following at December 31, 2007: Expendable parts, materials and supplies Fuel inventory

4. PROPERTY AND EQUIPMENT Property and equipment consist ofthe following at December 31, 2007: Aircraft and aircraft components Ground equipment Buildings Mobile home trailer Fuel Farm Computer and office equipment Less accumulated depreciation

7 $ 911,960 90.165 $ 1.0Q2.125

$ 1,745,347 44,146 1,677,576

500,787 319,234 624,099 4,911,189 2,802.136GRAND CANYON AIRLINES, :INC. AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2007

.

5. RELATED PARTY BALANCES AND TRANSACTIONS As ofDecember 31, 2007the Companyhas borrowed $600,000from stockholdersoftheCompany.Thebalance is non-interest bearing and has no repayment terms. No amounts are expected to be paid during 2008. Included in accounts receivable are amounts due from companies owned by stockholders oftheCompany. As of December 31, 2007 the balance owed from these companies totaled $1,468,126, which represents 33% oftotal accounts receivable.

. Includedinaccountspayable are amountsto companies owned by stockholdersofthe Company. As ofDecember 31,2007the balancesowedtothesecompaniestotaled$4,406,889, which·represents91% oftotal accountspayable. TheCompanyleasesaircrafts from multiplecompaniesownedby stockholders oftheCompany.Themonthlylease paymentsrangefrom $1 ,000and $34,750 and expirebetween September2008andNovember2010.The Company recognized $3,743,059 in related party lease expense for the year ended December 31, 2007 Future minimum base lease payments as ofDecember 31, 2007: 2008 2009 2010

6. REVOLVING LINE-OF CREDIT $ 3,626,000 3,012,000

980.000 $ 7618,000

The Company has a $2,000,000 revolving line-of-credit with a financial institution. Thebalanceas ofDecember 31,2007totaled $2,000,000. Theobligationis securedbytheCompany's equipmentandtenantimprovements. The outstanding balance ispayablein monthly installments ofinterest onlyatthebank'sprime lendingrate (7.25%at December 31, 2007) and matures during October2008. 7. NOTEPAYABLE Note payable consists ofthe following at December 31, 2007: Note payable to a bank; payable in monthly installments of$8,333 plus interest at the LIBOR rate of6.495%, through August 15,2009 secured by two airplane engines. Less current portion:

8 $ 175,000 99.996GRAND CANYON AIRLINES, INC. AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2007

.

7. NOTE PAYABLE (CONTINUED) A schedule ofmaturities ofnotes payable is as follows: YearEnding December 31, 2008 2009 $ 99,996 75.004 .$ 115 000 8. PROFITSHARING PLAN The Company has established a Defined Contribution Profit Sharing Retirement Plan for its employees. All employees who have been employed continuously for one year are eligible for participation in the plan. The contributionis determined solely atthediscretion ofthe Company'sboard ofdirectors. ThePlan is qualifiedunder theInternal RevenueCode. TheCompany approved contributions totaling $42,589fortheyearendedDecember31, 2007. 9. COMMITMENTS AND CONTINGENCIES The Company is required to make contingent rentals of0.85% ofgross annual sales or aminimum annual lease payment of$12,000, under an operating lease ofits fixed-based operation, which expires in September 2017. The Company operates and maintains a fuel storagefacility and is required to make a minimum lease payment of $1,220, annually, adjusted annually for inflation, under an operating lease with the Grand CanyonNational Park Airport, which expires September 2017. Thelease alsorequires contingent rental fees of$O.03 per gallon offuel sold and 5% ofgross annual sales derived from its operation. Future minimum base lease payments as ofDecember 31, 2007: 2008 2009 2010 2011 2012 Thereafter

9 $ 13,220 13,220 13,220 13,220 13,220 66.100

## EXHIBIT VIIAffidavit ofSafety Compliance

State of Nevada county ofClark

Alan Stephen, being first duly sworn, deposes and says: 1. That he is duly elected, qualified and serving as Vice president of Corporate Affairs of Papilion Airways, Inc. and that he is authorized to and does make this affidavit for it.
2. That all aircraft owned and leased by Papillon Airways, Inc. have been certified by the Federal Aviation Administration and currently comply with all applicable Federal Aviation Administration safety standards under Part 135, as well as the noise standards of Part 36, ofthe Federal Aviation Regulations.

Alan Stephen

Sworn to and subscribed before me this 25th day of February, 2011.



### " KIMBERLEY ANDERSON NaIIry PublIcS1aII of Nevada 

### No. 11·3804-1**~** 

### Mv
...Exp. DIcImber 13. 2014**~** Notary Public

## EXHIBIT VIII

# ,..

,... PAPILLONAIRWAYS INC. For'casted Profit and Loss Statement For The Year' EndingDecember :31, 2011

lstQtr 2011 2nd Qtr 2011 3rd Qtr 2011 Passengers 30,713 81,703 114,967

REVENUES 6,583,714 16,467,938 20,676,929 COST OF OPERATIONS PAYROLL & P/R TAXES 3,217,528 3,781,339 4,023,762 COMMISSIONS 531,582 1,577,851 1,521,021 REPAIR PARTS 643,528 1,028,880 1,072,887 DYNAMIC DEPRECIATION 458,670 1,027,836 1,333,318 FUEL 494,460 1,087,672 1,675,891 LANDING SITE FEES 304,088 664,395 769.917 SHUTILE EXP, 180,080 369,950 460,741 GROUND TOUR EXP. 438,650 1,050,618 55,544 INTERCO TRANSPORTATION ALLOC**(531,140~** (901,952) (1,090,**156~** MISCELLANEOUS 65,591 38,567 51,683 5,803,038 9,725,155 9,874,607 GROSS OPERATING PROFIT 780,676 6,742,783 10,802,321 GENERAL & ADMIN. EXP. MARKETING EXPENSES 144,821 114,147 513,617 INSURANCE EXP, 589,449 679,130 714,683 UTILITIES 105,966 180,128 162,983 BUSINESS TAXES 23,482 47,935 50,247 PROFESSIONAL FEES 53,398 91,417 66,953 OFFICE EXPENSES 120,743 196,078 109,334 SEMINARI TRAINING 34,447 7,076 357 LAND LEASES 178,554 280,206 248,235 TRAVEL EXPENSES 85,747 94,894 131,880 HEALTH INSURANCE 225,139 262,911 272,161 BANK DISCOUNT 109,866 241,044 377,784 HOUSING EXPENSES 4,272 7,757 (12,933) MISCELLANEOUS 92,692 115,789 81,191 1,768,576 2,318,510 2,716,492 INCOME FROM OPERATIONS (987,900) 4,424,273 8,085,830 OTHER EXPENSES H.O. SUBLEASE INCOME (28,617), (28,618) (28,618) HELICOPTER LEASES 1,745,900 1,749,302 1,828,383 OTHER LEASES 262,588 236,152 319,931 DEPRECIATION 197,297 186,014 186,014 INTEREST EXP. 39,885 39,502 36,674 INTEREST INCOME (5) (3) (1) OTHER 0 2,217,049 2,182,349 2,342,383 NET INCOME (LOSS) (3,204,949) 2,241,923 5,743,446

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 4th Qtr 2011
52,618

10,896,732 3,114,160

965,256 1,861,994

677,012 933,268 462,439 304,272 503,406 (621,393)

46,469 8,246,883 2,649,849

290,737 595,950 149,379 140,095 121,294 180,140

9,506 245,963 123,599 269,514 263,888

1,048 80,807 2,471,918

177,931 (28,618) 1,863,822

261,133 (180,318) 135,957 (37,049) 270,060 2,284,988 (2,107,057)

These estimates have been made on an accrual basis. Passengers, revenues and expenses are based on prior information and plans for 2011. Revenue recognition YTD 1213112011
279,999

54,625,312 14,136,788 4,595,709 4,607,290 3,496,836 4,191,291 2,200,839 1,315,043 2,048,218 (3,144,642)

202,310 33,649,683 20,975,630

1,063,321 2,579,211

598,456 261,759 333,062 606,295

51,386 952,957 436,120 1,029,725

992,582 145 370,479 9,275,496 11,700,133

(114,470) 7,187,408 1,079,804

389,007 252,019 P7,059) 270,060 9,026,769 2,673,364

Revenue from ticket sales is recognized when the transportation is provided. As such, accounts receivable consists of unpaid tickets. Inv!!DiQ[l! and**ex~endable** l2arts Inventory and expendable parts consist primarily of expendable aircraft parts, materials and supplies, which are stated at the lower of cost or market Property and Equipment Fixed assets are stated at cost less accumulated depreciation Maintenance Costs The company expenses maintenance costs under $20,000 as they are incurred. Engine overhauls and maintenance repairs in excess of this amount are recorded using the deferral method.

# "

ASSETS Cash Accounts Receivable Employee Advances Inventory Helicopter Parts Inventory Prepaid Expenses
TOTAL CURRENT ASSETS LONG TERM INVESTMENTS Long Term Note
TOTAL LONG TERM ASSETS PROPERTY & EQUIPMENT Helicopters Less Helicopters Depreciation Vehicles & Equipments Less Vehicles & Equip. Depreciation Mobile Homes Less Mobile Homes Depreciation Building & Office Equipments Less Bldg. & Office Equip. Depreciation Dynamic Components Less Dynamic Components TOTAL PROPERTY & EQUIPMENETS OTHER ASSETS Other Deposits TOTAL OTHER ASSETS
TOTAL ASSETS 

### Papilion Airways Inc Forcasted Balance Sheet December31,2011 ."

LIABILITIES AND SHAREHOLDERS'EQUITY 2,802,422 Accounts Payable

832,816 Reservation Deposits Accrued Payroll 69,941 Accrued Liabilities 2,745,511 Payroll Tax Liabilities 77,133 Overflight Fee Liabilities Line of Credits

------------- Shareholder Loans 6,527,823 TOTAL CURRENT LIABILITIES 2,699,430 LONG TERM DEBT
2,699,430 Bank One Loan- N137PH Bulk Loans
3,022,452 TOTAL LONG TERM LIABILITIES (1,475,790)

2,799,296 OTHER LIABILITIES (1,774,975) 273,263 (228,008) 1,621,782 TOTAL OTHER LIABILITIES (1,097,237) 18,024,601 (9,204,111) TOTAL LIABILITIES 11 ,961 ,273 Capital Stock Shareholder Distributions Retained Earnings Year-to Date Income 108,475

-------------------- SHAREHOLDERS' EQUITY 108,475
21,297,001 LIABILITIES AND EQUITY 2,015,416 690,259 480,023

62,397 53,256 135,525 4,121,000
7,557,876

597,373 614,013
1,211,386

8,769,262

200,000 (15,651,153)

25,305,528

2,673,364 12,527,739

21,297,001 

# )

## EXHIBIT IX;' U,S,Deporlm.nlo' TrOn5poriolion**o~r·ce** Of me Sec rei!]'vOf**Tr8."'lSP~··**..J"01) Chief. Documentary Services Div, Department of Transportation WashinglOn, D,C. 20590 DESIGNATION OF AGENT FOR SERVICE OF NOTICE, PROCESS, ORDERS DECISIONS AND REQUIREMENTS

ATTENTION: DOCKET SECTION, C-55 Papillon Airways, Inc,

. having its principal (Name of Company. please print)

office at 1265 Airport Road, Boulder City, Nevada 89005 (Address) hereby de,ignates.**pursu~nt** \0 section 461**O.~** ofTitk ..+9 of the U.S, Code (formerly ,ection IDOS( b) of the Felleral A\ i,lIion Act of 1958. a, amended I the person named Ilelow as ir., Agent upon whom ser\'ice ofalJ nOlices and proce",,, and all oroer,. decision

... and requirements ofthe Depunmenr ofTransponation may be made for and on behalfofsuid carrier. hereby cunceling all pre\'jou!- designations of**agenr~** made by it to the DOT.
Aaron A. Goerlich, Garofalo Goerlich Hainbach PC Name of Agent

______________________________**~**____________**~------------------** ______ __ (Please Print)

Address 1200 New Hampshire Avenue NW, Suite 800, Washington, DC 20036 The Agent so designated has wrinen his name and also his initials in the following space:

Name 

# kL&r«'" (Initial:s)

# _-=d.-=-'A---=$~ _____ _
IN WITNESS WHEREOF. __________________

### P_a~p_i_l1o_n __

A_irw

__

### a~y~s_,_I_n_c_._________________ has caused these (Name of Company)
presents to be signed in its name by 

## ___**-.:!3~,.~~::::!l...!::Jv~o.~~tbL..!..-=:'t~\w\~, ......:e:....:V......:s"'-C"'\I\~_=_..:=___** _____• Pre sident (Please Print) of said company. and to be attested under its corporate seal by



# ,

on this

___ '2...-=-

__ day**of_-L!M:..:....:::t:(:!:.:It!...:c..=L.~**___,**~** 

### GO \,( (Secretary. or**ot~e~** Title)n...., • V (' CQ--

## t0.,. KNo. 

### M
..**~**r 

### s

Papillon Airways, Inc. (Name of Company)

ATTEST:

# ;~~£~'iZ!-= (President) By:

### \1,e~rrc)~**Of~~**

### J CST F 1010.5 (1-95),.... U.S. Department ofTransportation Office ofthe Secretary ofTransportation AGREEMENT Docket OST 95-236

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 itwith 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) ofsaid 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 ofAmerica as a point of origin, point ofdestination, 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 ofa 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 ofa passenger, avail itself of any defense under Article 20(1) ofsaid Convention or said Convention as amended by said Protocol. Nothing herein shall be deemed to affect the rights and liabilities of the Carrierwith 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 ofthe 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 ajourney involving an ultimate destination ora stop in a country other than the country oforigin are advised that the provisions of a treaty known as the Warsaw Convention may be applicable to the entirejourney, including any portion entirely within the country oforigin or destination. For such passengers on a journey to, from, orwith an agreed stopping place in the United States ofAmerica, 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 ofor 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 ofthe 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 ofAmerica, liability ofthe carrier for death or personal injury to passengers is limited in most cases to approximately US $10,000 or US $20,000. The names ofCarriers parties to such speCial contracts are available at all ticket offices ofsuch 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 ofthe 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 ofthe 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 ofcounterparts, all ofwhich 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 maywithdraw from this Agreement by giving twelve 12) months' written notice ofwithdrawal to DOT and the other Carriers parties to the Agreement 'Either alternative may be used.

OST Form 4523 (Formerly CAB Form 263) (Signature and Date)

__**..!L.::.=.~:.......:---"~:::....**___ ---,t!:::...:o"---'-lIi,,",,,,'--'--""O,-,-+_ (Printed Name and Title) 

## At..fttJ ..s"C&/ff:;rN 

### I 

## "P Cc>rpOtq,T-e- 

## tlflttw t (Name and Address of Carrier) ---'P.:.....t:t-'+f..::..i_1I_d---')'\

____

# 1i.L;·:..I.r-'Wi!:..:...!~9,.t'-fr-:ru=-.J""-"c~.'---__ _ I

### z..SfS- 

## Wi/lows**l~.** 

## N

## E S[E 200 

## 1l.,UUt-tJ D I 

## WA- '1(03

## 'r

## EXHIBIT X

### VERIFICATION



### Pursuant to title 18 United States Code section 1001, I, Alan Stephen, Vice President Corporate Affairs, Papillon Airways Inc., in my official capacity and as the authorized representative ofthe 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 orprosecution ofthe application. I understand that an individual who is found to have violated the provisions of 18 U.S.C. section 1001 shall be fined no more than $10,000 or imprisoned not more than five years, or both.

Alan Stephen, Vice President Corporate Affairs Papillon Airways Inc. February 1--.)",2011