BEFORE THE 

U.S. DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

Application of 

PAPILLON AIRWAYS, INC. 

for a certificate of public convenience and necessity 

under 49 U.S.C. § 41102 to engage in interstate 

scheduled air transportation of persons, property 

and mail 

Docket DOT -OST -2011-

APPLICATION OF PAPILLON AIRWAYS, INC. FOR A 

CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY 

Communications with respect to this document should be sent to: 

Mr. Alan R. Stephen 

Vice President Corporate Affairs 

Papillon Airways, Inc. 

1265 Airport Road 

Boulder City, Nevada 89005 

Aaron A. Goerlich 

Garofalo Goerlich Hainbach PC 

1200 New Hampshire Avenue, N.W. 

Washington, D.C. 20036-6802 

agoerlich@ggh-airlaw.com 

202776-3974 

Counsel for Papillon Airways, Inc. 

Notice: Any person who wishes to support or oppose this application should file an answer by April 

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 OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASIDNGTON, D.C. 

PAPILLON AIRWAYS,INC. Docket DOT-OST-2011-

for a certificate of public convenience and necessity i 

under 49 U.S.C. § 41102 to engage in interstate 

scheduled air transportation of persons, property 

and mail 

APPLICATION OF P APILLON AIRWAYS, INC. FOR A 

CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY 

Papillon Airways, Inc. (Papillon) applies, pursuant to Section 411 02 of Title 49 of the United 

States Code, Parts 201 and 204 of the Economic Regulations, and Subpart B of the Rules of Practice 

of the U.S. Department of Transportation, for a certificate of public convenience and necessity to 

engage in interstate scheduled air transportation of persons, property and mail. Papillon currently 

holds a DOT commuter air carrier authorization, an FAA air carrier certificate, and FAA Part 135 

operations specifications, and is in active operation under those authorities utilizing a fleet of 39 

helicopters. This application involves no change in the nature or scope ofPapillon' s operations; the 

purpose of the application is for Papillon to obtain a DOT certificate (as distinguished from its 

existing commuter air carrier authorization) for corporate and state tax reasons. Consistent with its 

Part 135 operations specifications, Papillon requests that its certificate of public convenience and 

necessity be issued in the name -

P APILLON AIRWAYS, INC. 

d/b/a PAPILLON GRAND CANYON HELICOPTERS 

d/b/a GRAND CANYON HELICOPTERS 

In support of this application, Papillon states as follows: 
1. Papillonis a citizen of the United States as defined in 49 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 of whom are U.S. citizens. All ofPapillon's key personnel are U.S. citizens. 

2. Papillon holds FAA Air Carrier Certificate Number PG9 A174H and is engaged in air taxi 

operations pursuant to 14 C.F.R. Parts 135 and 298, including daily scheduled service between 

Boulder City Municipal Airport in Boulder City, Nevada, and Grand Canyon West Airport in Peach 

Springs, Arizona. 1 Papillon operates a fleet of 39 helicopters, all of which are configured for six 

passengers and used primarily for on-demand aerial sightseeing tours of the Grand Canyon and 

surrounding region. In addition Papillon provides helicopter transportation under contract to several 

federal and state agencies, and operates scheduled service as described above. Papillon plans to 

expand its fleet by three units during 2011, for a total of 42 helicopters. 

3. By this application Papillon requests issuance of a certificate of public convenience and 

necessity, superseding the commuter air carrier authority issued to Papillon by Order 95-9-26. 

Papillon requires a DOT certificate rather than a commuter authorization for corporate and state tax 

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 and the other services Papillon provides is contained in Attachment A and Exhibits I 

through X of this application? The information is keyed to the requirements of § 204.3 of the DOT 

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 carrier owned, like Papillon, by members of the Halvorson family. Financial statements 

of a small air taxi also owned by the Halvorsons, Air Grand Canyon, Inc., have not been included as they are of 

dubious relevance: Air Grand Canyon operates only a single four-seat Cessna 182 aircraft, holds out no service 

to the public, and receives business only by referral from GCA. For the same reason, fmancial statements of 

the Halvorson-owned special-purpose companies that own 37 ofPapillon' s 39 helicopters and lease them to the 

carrier are not included. In the event the Department wishes to review any of this information, it will be filed 

upon request subject to a motion to withhold from public disclosure. The Department did not require 

submission of this information in the context of GCA' s fitness review and certification (see Docket DOT -OST2008-0114). 
regulations. Additional information such as OST Form 1010.5, OST Form 4523 and Papillon's 

family assistance plan is being filed in the appropriate DOT dockets and, in the case of the family 

assistance plan, with the NTSB. 

5. Papillon requests that this application be processed by the use of expedited non-hearing 

procedures. There are no issues of material fact, and the use of expedited procedures will 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 necessity to engage in interstate scheduled air transportation of persons, 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 Papillon Airways, 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 on March 22, 2011, to each of the following persons: 

Federal Aviation Administration, 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 of Supporting Documents - Certificate Application of Pap ilion 

Airways, Inc. 

Attachment A 

14 CFR § 204.3 Questions and Responses 

Exhibit I 

Certificate of Good Standing from Arizona Corporation Commission 

Exhibit II 

Affidavit of Citizenship 

Exhibit III 

Brief Review of Company History / Synopsis of Operations 

Flight Schedule Published in OAG Flight Guide 

OST Form 6410 (Original on File with DOT) 

Management Organization Chart 

Resumes of Key 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 of Elling Halvorson 25 percent shareholder 

E. Kent Halvorson, son of Barbara and Elling Halvorson 25 percent shareholder 

Stewart Kuehne, CFO / Secretary / Treasurer 

John Becker, COO and Part 119.69 designated Director of Operations 

Irit Langness, Vice President of Sales 

Robert Graff, Vice President of Marketing 

Alan Stephen, Vice President Corporate Affairs 

Luis Garcia, Part 119.69 designated Director of Maintenance 

Thaney Silva, Part 119.69 designated Chief Pilot 

David Bales, company designated Director of Safety 

Exhibit IV 

Aircraft Accidents or Incidents 

Exhibit V 

Papillon Financial 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 Canyon Airlines 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 of Safety Compliance 

Exhibit VIII 

Papillon 2011 Forecast Quarterly Profit and Loss Statement 

Papillon 2011 F orecast Year End Balance Sheet 

Exhibit IX 

OST Form 1010.5 (original on file in Docket DOT-OST-2002-12556) 

OST Form 4523 (original on file 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 of the applicant. 

Papillon Airways, Inc., d/b/a Papillon Grand Canyon Helicopters and d/b/a Grand 

Canyon Helicopters 

Corporate Address: 12515 Willows Road NE, Suite 200, Kirkland, W A 98034 

Arizona Operations and Maintenance Base: 3568 Airport Road, Grand Canyon 

National Park Airport, Tusayan, AZ with mailing address of P.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 of applicant's organization. 

Corporation 

(c) The state law under which the applicant is organized. 

Arizona 

(d) If the applicant is a corporation, a statement provided by the Office of the 

Secretary of State, or other agent of the State in which the applicant is 

incorporated, certifying that the applicant corporation is in good standing. 

See Exhibit I for Certificate of Good Standing 

(e) A sworn affidavit stating that the applicant is a citizen of the United States. 

See Exhibit II for Affidavit of Citizenship 

(f) The identity of the key personnel who will be employed by the applicant. 

(1) Each person's name, address and citizenship; 

(2) The experience, expertise and responsibilities of each; 

(3) The number of shares of the applicants voting stock held by each and the 

percentage of the total number of such shares issued and outstanding, and 

the citizenship and principal business of any person for whose account, if 

other than the holder, such interest is held; 

(4) The citizenship of each, and 
(5) A description of the officerships, directorships, shares of stock (if 10 

percent or more of the total voting stock outstanding), and other interests 

each holds or has held in any air carrier, foreign air carrier, common 

carrier, person substantially engaged in the business of aeronautics or 

person's whose principal business (in purpose or fact) is the holding of 

stock in or control of any air carrier, common carrier or person 

substantially engaged in the business of aeronautics. 

See Exhibit III for Company Organization Chart and Key Personnel Resumes 

Elling Halvorson, Chainnan of the Board and Director 

12515 Willows Road, NE, Suite 200 

Kirkland, W A 98034 

U.S. Citizen 

o Shares 

Husband of Barbara Halvorson, father of Brenda, Lon and E. Kent Halvorson 

Brenda Halvorson, President, Chief Executive Officer and Director 

1265 Airport Road 

Boulder City, NV 89005 

U.S. Citizen 

12,500 shares - 25 percent 

Daughter of Elling and Barbara Halvorson and sister of Lon and E. Kent 

Halvorson 

Lon Halvorson, Executive Vice President and Director 

15327 101st Place NE 

Bothell, W A 98011 

U.S. Citizen 

12,500 Shares 25 percent 

Son of Elling and Barbara Halvorson and brother of Brenda and E. Kent 

Halvorson 

Barbara Halvorson, Director 

12515 Willows Road NE, Suite 200 

Kirkland, W A 98034 

U.S. Citizen 

12,500 Shares - 25 percent 

Wife of Elling Halvorson and mother of Brenda, 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 

Son of Elling and Barbara Halvorson and brother of Brenda and E. Kent 

2 
Halvorson 

Stewart Kuehne, Chief Financial Officer, Secretary and Treasurer 

4605 224th Court NE 

Redmond, W A 98053 

U.S. Citizen 

o Shares 

John Becker, Chief Operating Officer and Director of Operations 

Highway 64 Box 455 

Grand Canyon, AZ 86023 

U. S. Citizen 

o Shares 

Irit Langness, Vice President of Sales 

3230 Brookfield Dr. 

Las Vegas, NV 89120 

U.S. Citizen 

o Shares 

Robert Graff, Vice President of Marketing 

8210 Windsor Crest Court 

Las Vegas, NV 89123 

U.S. Citizen 

o Shares 

Alan Stephen, Vice President Corporate Affairs 

6947 Emerald Springs Lane 

Las Vegas, NV 89113 

U.S. Citizen 

o Shares 

Luis Garcia, Director of Maintenance 

P.O. Box 3603 

Grand Canyon, AZ 86023 

U.S. Citizen 

o Shares 

Thaney Silva, Chief Pilot 

Highway 64 Box 455 

Grand Canyon, AZ 86023 

U.S. Citizen 

o Shares 

David Bales, Director of Safety 

1535 Broken Bell Lane 

3 
Henderson, NV 89002 

U.S. Citizen 

o Shares 

(g) A list of all persons having a substantial interest in the applicant. Such list 

shall include: 

(1) Each person's name, address and citizenship. 

(2) The number of shares of the applicant's voting stock held by each such 

person and the corresponding percentage of the total number of shares 

issued and outstanding, and the citizenship and principal business of any 

person for whose account, if other than the holder, such interest is held; 

(3) If any two or more persons are related by blood or marriage, such 

relationships shall be included in the list; 

See answers provided in the response to question (t). 

(4) If any person or subsidiary of a person having a substantial interest in the 

applicant is or has ever been 

(i) An air carrier, foreign air carrier, a common carrier, or 

(ii) Substantially engaged in the business of aeronautics, or 

(iii) An officer or director of any such entity, or 

(iv) A holder of 10 percent or more of the total outstanding voting stock 

of any such entity, the list shall describe the relationship(S). 

Elling Halvorson, 25 percent of the stock of Grand Canyon Airlines, Inc. 

and 25 percent of the stock of Air Grand Canyon, Inc. 

Brenda Halvorson, 25 percent of the stock of Grand Canyon Airlines, Inc. 

and 25 percent of the stock of Air Grand Canyon, Inc. 

Lon Halvorson, 25 percent of the stock of Grand Canyon Airlines, Inc. and 

25 percent of the stock of Air Grand Canyon, Inc. 

E. Kent Halvorson, 25 percent of the stock of Grand Canyon Airlines, Inc. 

and 25 percent of the stock of Air Grand Canyon, Inc. 

Note: The folloWing companies are referenced elsewhere in this application or in 

the attached resumes of key personnel. 

Grand Canyon Airlines, Inc. ("GCA") is an FAA Part 135 on-demand and 

commuter air carrier with substantial fixed-wing aircraft operations. By Order 

2008-12-10, December 19,2008, DOT issued GCA an effective Certificate of 

Public Convenience and Necessity 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 operates just one 4-seat single engine Cessna, 

holds out no service to the public, and receives business only by referral from 

GCA. 

Whisper Jet, Inc. engineers, develops and certifies "quiet technology" (QT) noise 

abatement systems for helicopters. At present approximately half ofPapillon's 

fleet is QT -equipped. (All helicopters operated by Papillon comply with FAR 

Part 36 noise standards.) 

Rainier Heli International, Inc. operates one helicopter for firefighting operations 

under a Part 133 certificate issued by the FAA. 

Rainier Helicopter Logging, Inc. was a helicopter logging and utility company 

that is now out of business. 

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 own helicopters 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 of applicant's subsidiaries, if any, including a description of each 

subsidiary's principal business and relationship to the applicant. 

Not applicable; Papillon has no subsidiary companies. 

(i) A list of applicant's shares of stock in, or control of any air carrier, foreign 

air carrier, common carrier or person substantially engaged in the business 

of aeronautics. 

None 

(j) To the extent any relevant corporation has been engaged in any business 

prior to the filing of the application, each applicant shall provide: 

(1) Copies of the 10K Annual Reports filed in the last three years by any 

relevant corporation required to file such reports with the Securities and 

Exchange Commission. 

(2) Copies of recently filed 10Q Quarterly Reports, as necessary to show the 

financial condition and results of operations of the enterprise current into 3 

months of the date of the filing of the application. 

5 
Papillon Airways, Inc. is not required to file 10K and 10Q reports. 

(k) If 10K reports are not filed with the Securities and Exchange Commission, 

the following, for the 3 most recent calendar or fiscal years, reflecting the 

financial condition and results of operations of the enterprise to within 3 

months of the date of the filing of the application: 

(1) The Balance Sheet of each relevant corporation; 

(2) The Income Statement of each relevant 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 of the significant accounting policies of each 

relevant corporation, such as for depreciation, amortization of 

intangibles, overhauls, unearned revenues and cost capitalization; 

(4) A statement of significant events occurring subsequent to the most recent 

Balance Sheet date for each relevant corporation; 

(5) A statement identifying the person who has prepared the financial 

statements, his or her accounting qualifications, and any affiliation he or 

she has with the applicant. 

See Exhibit V, Income Statements and Balance Sheets 2007-2010 for Papillon 

Airways, Inc., and Exhibit VI, 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 by Barb Johnson, 

its Controller. GCA's 2010 income statement and balance sheet were prepared by 

Mary Schneider, GCA's CFO, assisted by Mark Slack, its VP-Administration. 

(I) A list of all actions and outstanding judgments for more than $5,000 against 

any relevant corporation, key personnel employed (or to be employed) by 

any relevant corporation, or person having a substantial interest in any 

relevant corporation, including the amount of each judgment, the party to 

whom it is payable and how long it has been outstanding. 

None for Papillon Airways, Inc., Grand Canyon Airlines, Inc., Air Grand Canyon, 

Inc., and their officers, directors and shareholders other than as follows: 

1. On July 13,2009, a wrongful termination of employment suit against Papillon was 

filed by a former employee ofPapillon. The amount of damages was not specified. 

Papillon is 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 

transportation taxes for the period from July 1,2003 through September 30, 2005. 

On October 10, 2007, the IRS assessed air transportation excise taxes against 

Papillon for that period in the 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 in the United States Court of Federal 

Claims, Case No.1 :09-297T. The government filed a response to Papillon's suit, 

asserting a counterclaim for the balance of the assessment. The discovery phase of 

the litigation is ongoing but set to be completed in the near future. Papillon intends 

to continue to prosecute its case, defend the IRS counterclaim, and seek judgment in 

its favor. In light of several 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 court determining that the assessment was incorrect and improper. 

(m)The number of actions and outstanding judgments of less than $5,000 against 

each relevant corporation, key personnel employed (or to be employed) by 

any relevant corporation, or a person having a substantial interest in any 

relevant corporation, and the total amount owed by each on such judgments. 

None for Papillon Airways, Inc., Grand Canyon Airlines, Inc., Air Grand Canyon, 

Inc., and their officers, directors and shareholders. 

(n) A description ofthe applicant's fleet of aircraft, including: 

(1) The number of each type of aircraft 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, of which 2 are owned and 37 leased. The fleet 

includes 5 model AS350-B2 helicopters, 14 model BHT-206-Ll helicopters, 

1 model BHT-206-L3 helicopter, 3 model BHT 407-407 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 combination thereof. 

All lessors of the helicopters leased by Papillon are special-purpose (leasing) 

companies owned by members of the Halvorson family. 

See Exhibit VII for the Affidavit of Safety Compliance. 

(0) A description of the current status of all pending investigations, enforcement 

actions, and formal complaints filed by the Department of Transportation, 

7 
including the FAA, involving the applicant or any relevant corporation, or 

any personnel employed (or to be employed) by any relevant corporation or 

person having a substantial interest in any relevant corporation, regarding 

compliance with the Statute, or orders, rules, regulations or requirements 

issued pursuant to the Statute, and any corrective actions taken. 

Papillon Airways, Inc.: None. 

Air Grand Canyon, Inc.: None. 

Grand Canyon Airlines, Inc.: On September 27, 201 0, FAA Western Pacific Region, 

Drug Abatement Division, issued a letter of investigation concerning certain alleged 

deficiencies in GCA's compliance with 49 CFR Part 40 and 14 CFR Part 120 (FAA 

File Number 2010WP910252). GCA responded on October 5, 2010, and is awaiting 

FAA's reply. The case remains open. 

(p) A description of all charges of unfair or deceptive or anticompetitive business 

practices, or of fraud, felony, or anti-trust violation, brought against any 

relevant corporation or person having a substantial interest in any relevant 

corporation, or member of the key personnel employed (or to be employed) 

by any relevant corporation in the past 10 years. 

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 of any aircraft incidents or accidents (as defined in the 

National Transportation Safety Board Regulations (49 CFR 830.2) 

experienced by the applicant, its personnel, or any relevant corporation, 

which occurred either during the year preceding the date of application or at 

any time in the past and which remain under investigation by the FAA, the 

NTSB, or the company itself, including: 

(1) The date of the occurrence; 

(2) The type of flight; 

(3) The number of passengers and crew on board and an enumeration of any 

injuries of fatalities; 

(4) A description of any damage to the aircraft; 

(5) The FAA and NTSB file numbers and the status of the investigation, 

including any enforcement actions initiated against the carrier or any of its 

personnel, and 

(6) Positive actions taken to prevent reoccurrence. 

See Exhibit IV, Aircraft Accidents and Incidents 

(r) A brief narrative history of the applicant. 

8 
See Exhibit III, Company History and Synopsis of Operations 

(s) A description of all Federal, State and foreign authority under which the 

applicant has conducted or is conducting transportation operations, and the 

identity of the local FAA office and personnel responsible for processing an 

application for any additional authority needed to conduct the proposed 

operation. 

Papillon conducts on-demand and commuter operations pursuant to DOT Order 

95-9-26, its FAA air carrier certificate and FAA 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 of the service to be operated if the application is granted, 

including a (1) forecast Balance Sheet and (2) a forecast Income Statement. 

Papillon's operations will not be affected by the issuance of a DOT Certificate of 

Public Convenience and Necessity as Papillon will continue to operate on-demand and 

commuter services as it has continuously provided for the past 15 years. Papillon's 

scheduled service will continue to represent a small proportion of its operations, i.e., 

less than 1 % of its 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 of this 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 of Agreement 18900 (OST Form 4523) as required by 

part 203 of this chapter. 

See Exhibit IX for OST Form 4523 executed on behalf ofPapillon Airways, 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, on behalf ofPapillon Airways, Inc. 

9 
EXHIBIT I 
STATE OF ARIZONA 

Office of the 

CORPORATION COMMISSION 

CERTIFICATE OF GOOD STANDING 

To all to whom these presents shall come, greeting: 

I, Ernest G. Johnson, Executive Director of the Arizona Corporation Commission, do 

hereby certify that 

***PAPILLON AIRWAYS, INC *** 

a domestic corporation organized under the laws of the State of Arizona, did Incorporate on 

June 28, 1995. 

I further certify that according to the records of the Arizona Corporation Commission, as 

of the date set forth hereunder, the said corporation is not administratively dissolved for 

failure to comply with the provisions of the Arizona Business Corporation Act; and that its 

most recent Annual Report, subject to the provisions of A.R.S. sections 10-122, 10-123, 

10-125 & 10-1622, has been delivered to the Arizona Corporation Commission for filing; and 

that the said corporation has not filed Articles of Dissolution as of the date of this certificate. 

This certificate relates only to the legal existence of the above named entity as of the date 

Issued. This certificate Is not to be construed as an endorsement, recommendation, or 

notice of approval of the entity's condition or business activities and practices. 

IN WITNESS WHEREOF, I have hereunto set my hand and affixed 

the official seal of the Arizona Corporation Commission. Done at 

Phoenix, the Capital, this 16th Day of February, 2011, A. D. 

cG(b~ Executive Director 

By: 573613 
EXHIBIT II 
Affidavit of Citizenship 

State of Nevada 

County of Clark 

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 Papillon 

Airways, Inc. and that he is authorized to and does make this affidavit for it. 

2. That Papillon Airways, Inc. is a citizen of the United States within the meaning of 49 U.S.C 

40102(a)(15). 

Alan Stephen 

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

KIMBERlEY ANDERSON 

NI*ry NIle ... of HeY ... 

No. 11-3804-1 ... ,.. ea.. 0IcembIr 13. 2014 Notary Public 
EXHIBIT III 
A Brief Review Company History and Synopsis of Operations 

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 

Canyon National Park Airport and the Supai Village on the Havasupai Indian 

Reservation, contract flights for the National Park Service and U.S. Forest Service, in 

addition to its on-demand scenic tour flights of the Grand Canyon National Park. 

In conjunction with Halvorson family estate planning, on June 28, 1995 a new Arizona 

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 of the Elling Halvorson family would have ownership of the air 

tour operation through the new company and to have the Department transfer and reissue 

its commuter authority from Papillon I 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 southern Nevada in addition to its base at the 

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 Canyon National Park Airport (AZ). 

Do to major flooding in 2009 decimating the Supai Village, Pap ill on temporarily 

suspended its scheduled services there at the request of the 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 of Defense. 
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, established this 

position a decade ago reporting directly to the CEO as part of its comprehensive 

commitment to air safety and regulatory compliance. Papillon is a founding member of 

the Tour Operators Progranl of Safety. Papillon has developed a Family Assistance Plan 

in support of this application. 

This application for a Certificate of Public Convenience and Necessity is supported by 

reviewed financial statements for 2007,2008 and 2009 and a company prepared Balance 

Sheet and Income Statement as of December 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 of Public Convenience and Necessity in November 2008. As required in the 

application process Papillon is submitting responses to each of the questions concerning 

relevant corporations on behalf of GCA. 
) ) ) 

Schedule update 21 DEC1 0 

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 BH2 
AGENCY 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, If you wish to comment on the accuracy of 

the estimate or make suggestions for reducing this burden, please direct your comments to: U ,5. Department of Transportation, Office of Aviation Analysis, 

X-56, 400 7th St, Sw., Washington, D.C. 20590. According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of 

information unless it displays a valid OMB control number. 

,... Jffice of the Secretary 

Of Transportation 

NOTE: For information on where to file completed copies of this 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 of this form with the Federal Aviation Administration, AFS-260, 800 Independence Ave., SW" Washington, D.C. 

20591. (See EXCEPTIONS 1 and 2 below.) 

i EXCEPTION 1: If Block 2B on the reverse is filled in because the insured is a commuter air carrier. file a signed original of this 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 of Alaska (re~ardless as to whether Block 2A, 2B, or 2C is filled in), file a signed 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, except signatures) 

THIS CERTIFIES THAT: United States Aviation Underwriters, Inc. & Certain Other Insurers 

(Name of Insurer) 

has issued a policy or policies of Aircraft 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 of the intent 

to terminate coverage is received by the Department of Transportation . 

.. GTE: Part 205 of the 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, under the policy of policies listed below, aircraft accident liability insured to minimums at least equal to the following during 

operations. maintenance, or use of aircraft 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 or combined coverage as appropriate). 

o Separate Coverages: 

Policy No. Type of Liability 

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 only and excludes passenger liability insurance 

OST Form 6410 THIS CERTIFICATE CANCELS AND REPLACES ALL PREVIOUSLY ISSUED CER'rIFICATES 
B. U.S. COMMUTER AND CERTIFICATED AIR CARRIERS OPERATING SMALL AIRCRAFT 

The aircraft covered by this policy are SMAll AIRCRAFT (Le., with 60 or fewer passenger seats or with a maximum payload capacity of 18,000 

pounds or less). (Check separate or combined coverage as appropriate). 

o Separate Coverages: 

x 

o 

C 

0 

.. 

0 

0 

Policy No. Type of Liability 

Combined Bodily Injury (Excluding Passengers other than 

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 of Coverage $50,000,000. Combined Single 

limit 

This policy covers CARGO operations only and 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). (Check separate or combined coverages as appropriate): 

Separate Coverages: 

Minimum limit 

Policy No. Type of Liability Each person Each Occurrence 

Combined Bodily Injury (Excluding Passengers other than $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 of Coverage 

This policy covers CARGO operations only and 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 of Insurer) 

Contact (person who can verify the effectiveness of the coverage) 

(Area Code, Phone Number) I (Area Code I Fax Number) 

(Signature, if applicable) 

(Date) 

Caledonian Insurance Group, Inc. 

(Name of Broker, if applicable) 

PO Box 60 

(Address) 

Mercer Island, WA 98040 

(City, State, Zip Code) 

Anthony H. Cowan, President 

(Officer or authorized representative) 

206-232-9870 206-232-9515 

(Area Code, Phone Number) Area Code I Fax Number) 

(Signature, if applicable) 

October 27,2010 

(Date) 
Company Organizational Chart 

Pap/.llon 

GrIlM CIJnyon 

2/1/2011 

Alan Stephen 

VP Corporate 

Affairs 

Stewart 

Kuehne 

CFO 

Barb Johnson 

Controller 

Brenda 

Halvorson 

President/CEO 

Lon Halvorson David Bales 

Executive VP Safety Manager 

lise Harvey 

DirectorHR 

Borden Miller 

Utility Manager 

Jeff Bubier 

Flight 

Une/Tower 

Ma"'ler 

---/----i 

John Becker 

COO/DO 

Thaney Silva 

Chief Pilot 

Becky Wirth 

Customer 

Service 

Dale Griffith 

GCWManager 

Luis Garcia 

Director of 

Maintenenace 

Irit Langness 

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 of the 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 Con tractors of America - 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 
Brenda Halvorson 

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. Additionally performing government contracts including 

Department of Defense, 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 of the Grand 

Canyon as well as many other destinations in the southwest. They operate a fleet 

of DeHavilland Twin Otter airplanes 

Elling Halvorson, Inc., Director 

Parent company of Monarch 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 of selling 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 of Directors (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 of Commerce (Past President) 
Brenda Halvorson 

Page 3. 

Memberships and Affiliations: 

Helicopter Association International (HAl) 

National Business Aircraft Association 

Tour Operators Program of Safety 

Rotary Club Community Leader of the 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 of Sales & 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 
LON A. HALVORSON 

15327 lOpt Place NE 

Bothell, WA 98011 

Home 425-487-1047 Business 425-820-8800 

Operating Companies: 

PROFILE 

Elling Halvorson, Inc., President/CEO 

Parent company of Monarch 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 in remote locations in Latin 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. Additionally performing 

government contracts including Department of Defense, Department of Interior, Fish & 

Wildlife, fire fighting, and search & rescue. 

Grand Canyon Airlines, Inc., Executive Vice President 

An airplane company based at Grand Canyon South Rim and, Page, Arizona, and Boulder City, 

Nevada specializing in air tours of the Grand Canyon as well as many other destinations in the 

southwest. They operate a fleet of eight (17) DeHavilland Twin Otter airplanes. 

Grand Canyon Coaches, Inc., Executive Vice President 

A bus company providing ground transportation at Grand Canyon South Rim. 

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 of selling 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 Bar LLC, Weal LLC, 

Xebec LLC, Zuni LLC, Managing Member 

Real Estate Companies: 

Cooper Point 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 Olympia Plaza, a retail shopping center. 

Boomerang LLC, Managing Member 

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 by real estate. 

Board of Directors (Past and *Present): 

*Elling Halvorson, Inc. 

*Monarch Enterprises, Inc. 

*Rainier Heli 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 

*Cooper Point 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 Customer Advisory Board 

Washington Contract Loggers Association 

Vertical Flight Association 

National Business Aircraft Association 

Tour Operator's Program of Safety 

United States Air Tours 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 Halvorson Pacific 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 construction projects throughout the 

western United States and Alaska. 

Cost estimator and project manager. Managed $35,000,000 in construction projects 

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 herself full-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 of January 1, 2011 
PERSONAL PROFILE 

E. KENT HALVORSON 

QUALIFICATIONS: 

Thirty years in all phases of commercial, 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 of firm 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 University 
E. 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 

Chief Financial 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 of companies located in multiple locations in the 

United States. 

Officer of the 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 of JMS Group, Inc. 

Redmond, Washington 

1991 - 1992 

Responsible for Finance and Management Information System Departments 

for a $15 million food products manufacturer with two locations: Redmond, 

W A and Raleigh NC. 

Controller 

National Preserves Co. 

Subsidiary ofRHM Holdings, 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 of the Corporation: Secretary. 

Controller 

Merlino's Macaroni, Inc. 

Subsidiary of RHM 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 of Washington, 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 

helicopter pilot. Over 6,500 accident free flying hours in 

rotary wing aircraft. I have held positions as Vice 

President of Operations, Director of Operations, 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 

1994 to Present Papillon Airways Inc. Currently I hold the 

position as Chief Operating OfficerlDirector of Operations 

for Papillon Airways Inc. I have also held the positions as 

the Utility Division Manager, Lead Pilot, Contract Pilot and 

Line Pilot. 
EDUCATION: 

1974 to 1994 United States Anny. I retired as a Chief 

Warrant Officer after 20 years of Honorable 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 

October 2005 - Present 

Vice President of Sales 

Grand Canyon Airlines & 

Papillon Grand Canyon Helicopters 

July 2000 - Present Papillon Grand Canyon Helicopters 

Vice President of Sales 

March 1999-June 2000 Sunrise Airlines, Inc 

Vice President of Sales & Marketing 

• Responsible for essential air service routes in Arizona, Nevada and Utah. 

• Responsible for all tourism related revenues to include air tour over Grand 

Canyon, Lake Powell, Monument Valley and Bryce Canyon.Jan 1998 to 

Jan 1999 Scenic Airlines 

Consultant to 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 of Sales and Customer Services 

• Expanded company from single to multiple markets, diversified sales force 

and increased annual sales by a minimum of 20% 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, Monument Valley 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 
. ROBERT Y. GRAFF ' 

8210 Windsor Crest Court, Las Vegas, NY 89123 

Tel: (702) 263"9433 Fax: (702) 270-9532 

E-Mall: RobertvGraff@hotmail.com 

,syMMARY OF OUALmCATIONS 

Professional background encompassing over 20 yearl experience in ,SALES & M.ARKETING; specializing 

in strategic Market PJannlng, Internet Marketing, Domestic and Intcmational Tour & Travel. 

• 

'" Intemational Clientele, Wholesale ami Receptive Operator Development & Maintenance 

... Advertising, Marketing and Promoting U.S. and lDt.ernational Tour & Travel 

... Media, Govemmem and Airline, Native American relations 

.. Domestic Motoicoach and Tour Operator Development 

.. Travel Information Technologies 

• Extensive experience in SALES MANAGEMENT and ADMINISTRATION .. Forecast, Cost Controls and Budget Development 

'" Product Development and Travel Automation .. Worldwide Multi-Office Farmation and Operation 

* Supervising Management & Non-Management Personnel 

SPECIALTYTRAINING-EDVCATIOl1 

UNIVERSITY NEVADA LAS VEGAS INDIANA UNIVERSITY UNIVERSITY LA V:mum 

Las Vegas. Nevada Bloomington, Indiana Athens, Greece 

Major: Hotel Administration Major: Business Administration Major: BusinessILiberal Arts 

·Numerous Seminars and Workshops onIntemational and Domestic Trade and Travel. .' 

*Proficioncy in mM PC compatible computers utilizing Microsoft ~o:ftware products. 

Awards and Bcmors; Tourism Development Award, Govem.or TouriamAward, ISMC Board Member, 

Distinguished Men of Nevada and Intcmational Marketing by The Visit USA Committee, Belgium. 

LANGUAGES: FLUENT IN: English; French; Arable; Greek; Russian; Italian 

KNOWLEDGE OF: Spanish; Romanian 

;fROFESSIONAL EXPERIENCE ' 

5101- PAPnLON AJRWAYS dba PAPILLON GRAND CANYONlmUCOPTBRS Las Vegas, Nevada 

Present VICE PRESIDENT OF MARKETING 

8198-

3101 

COIporate responsibility for global marketing and strategic planning of 38 Domestic and International 

Sales offices, Advertising, Product Development, Consumer Internet , Work in conjunction with wholesale, 

tour companies, internet dlstn"butors, travel agents, airlines.ami Travel Information Technologies. Liaise 

with state and local tourism and convention authorities. RespODSlOle for Sales and Marketing of the Canyon 

Alliance Group comprising of the Natiow Geographic IMAX Grand Canyon Visitor Center, Canyon Plaza 

Quality Inn and Suites, Beat Western Grand Canyon Squire Inn, Grand Canyon Helicopters, and Grtmd 

Canyon Airlines. 

AccompllsIunents: Increased revenues from 15 to 100 mUll on. $Ild yield by 12 percent, diversification 

of agency sales and marketing. incorporation o~ Consortium and Membership Organization (AAA), 

JntemetlOnline and Consum.er Marketing initiatives. StreamJ.ined and re-engineered product line and 

market placement, established direct sell outlet subsidiary, 

HEU USA, INC. 

. VICE PRESIDENT OF SALES AND MA.Rl(ETING 

Las Vegas, Nevada 

RespOll8ib1e for corporate worldwide market:in~ and sales ofBelicopterlAtlraction company. 

Implementation of company infrastructure to provide future growth through diversification and expansion 

of travel related products. Reorgllllization of domestic and international distribution networks and 

accounts; establishing company in US and intemational travel related associations; Product line 

development, crOSS marketing partnerships with an extensive focus on Media related activities. 

Development of advertising and market plan agendas. 

Accomplishments: Increased revenues from 6 million to 13 million +, in first year; established market 

dominance and global distribution netwOrk; established 28 Inter~atlonal sales and reservation offices 

covering 34 markets. Bxpanded company's domestic market lead~ship position; Personally handled over 

365 Wholesale accounts worldwide. ' 
ROBERT Y. GRAFF 

8210 Windsor Crest Court, Las Vegas, NV 89123 

Tel: (702) 263-9433 'Fax: (702) 270-9532 

E-Mail: RobertvGraff@hotmail.com 

12/93 - SKYWEST INC. ASW/Scemc subsidiary Las Vegas, Nevada ~198 VICE PRESIDENT OF SALES AND MARKETING 

Responsible for worldwide marketing and sales of Airline, Sightseeing, Motorcoach and Hotel Reservation 

company. Prepared and administered 13 million dollar annual budget; Directed 25 international Sales 

and Reservation omeell; Analyzed, implemented and forecasted market 1rcruls; Developed Interline 

Marketing and Airline Code sharing a~; Implemented worldwide advertiaiDg, TV, radio. public 

relations and Internet agenda; Monitored professional and legislative developmentll at the local. state, 

national and intemationallevelsi Coordinated and initiated company ISO 9002 compliance and 

establishment of in-house advertising agency. 

Aeeompllshm.: Expanded company subsidiaries to 30 International markets; Developedjoint 

worldwide marketing and revenue generating programs with such coIporatioDs as: Delta AlrUnes, Planet 

Hollywood, Caesars', .Amlae, Coach USA and GrayUne Tour,. 

12192 - AIR NBV ADA AIRLINES Las Vegas, Nevada 

12193 VICE PRESIDENT INTERNATIONAL SALES AND MARKETING 

Responsible for customer service, marketing and sales deparf:ments of scheduled airline and tour service to 

the National Parks; Reorganized domestic and international distr.ibution rmtworks and accountll at the retail, 

wholesale and receptive levels; Developed marketing and emergency response plans; Handled rate 

negotiations and budget approval. 

A.ecompHshments: Increased revenue by 45 percent, expanded comp~ operations, re-engineered 

product line and subsidiary services. while maintaining cost control initiatives. 

9187- SCENIC AlRLlNES Las Vegas, Nevada 

12192 DlRECIOR OF INTERNATIONAL SALES 

Responsible for marketing and sales of Sightseeing. Tours and Airline Services worldwide; Coordinated 

and suporvised 13 International Sales Offices; Prepared forecasts and marketing SUIVCYS: Developed and 

administered $515.000 + annual budget; Handled press. public relations and advcrtishlg worldwide; 

Introduced services and interacted heavily with wholesale and receptive operatom, the travel trade and 

COIpOIate executives: Attended all major overseas Travel Trade Shows; Negotiated contracts; Interviewed, 

hiredlfired, gave written perfOl'JD81lCC appraisals and supervised 13 International Field Omces, 

Managers and their stafF, conducted 1raining scssions for Dl8DagcDlCDt personnel. 

AccoinpllShmenq: Opened 4 new locatioDS in Italy, France. United Kingdom and Sweden; Analyzed and 

implemented coat saving procedures that increased yield, revenue and load factors; personally handled over 

400 Wholesale Accountll worldwide. 

MEMBERSHIPS AND ORGANIZATIONS 

Travel Industry Association of America ('l1A). American Society ofTrave1 Agent (ASTA). National Tour 

Association (NTA). United States Tour Operator Association (USTOA), Receptive Service Association (RSA). Las 

Vegas Territory (L VT). Interline Sales and Marketing (ISMC), Orand Circle Association (OCA), Visit USA and 

Clark County Teachers mentoring programs. 

NOTE: Background Clearance Accustomed to Extensive Exeeutive Travel 

REFERENCES; Professional and Personal references upon request. 

, ',' 

: . 
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 Pilot Program, 

General Aviation Manufacturers Association, Washington, DC 

1975-1976, Manager Market Research, Piper Aircraft Corporation, Lock Haven, 

PA 

1976-1978, Program Specialist, Office of General 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 of Scenic 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), Chief Operating 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. In March 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 of Maintenancel 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 of accidents while managing maintenance costs. 

Received Helicopter Association International Mechanic Safety Award in April 1999. 

Can otTer full commitment to company goals, problem solving abilities and the drive and 

detennination that produces results. 

Experience: Director of Maintenance-Papillon Grand Canyon Helicopter-Grand Canyon. AZ 

February 2000-Present 

Duties 

• Provide a program for proper maintenance of all aircraft. 

• Insure that all maintenance is performed in accordance with FAA regulations, mandatory manufactures 

recommendations, and the best practices of the industry. 

• Maintain system of records and technical data. 

• Screen, select and employ properly qualified personal. 

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

• Keep abreast of new techniques in maintenance and management to ascertain their value to the company. 

Chief Inspector-Papillon Grand Canyon Helicopters-Grand Canyon, AZ 

January 1998-January 2000 

• Supervise and conduct performance evaluation of five inspectors and ten mechanics on performing 100, 200 and 

300 hours annual requirements on helicopters to insure airworthiness and high standard of workmanship are 

accomplished. 

• Accountable for the maintenance records of Grand Canyon, Las Vegas, Department of Defense, and National 

Park Service. 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 of Aircraft 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) of helicopters for utility contracts with OAS 

and Papi110n Grand Canyon Utility Manager: Utility contracts are with: Arizona Game and Fish, Kaibab National 

Forest, Bureau of Land Management (BLM) in St. George, Utah, Department of Defense, 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 of initial and recurrent training of maintenance 

personnel. 
(continued) 

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

,... the daily operations in an effective and professional manner. Effectively deals with negative issues with staff or 

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 of established 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 of all helicopter maintenance on all models. 

• Performed major repair on aircraft structures, which include fuselage, transmission decks and tailbooms. 

• Performed for two years-overhauls on all major components. 

• Provided assistance to Chief Inspector and Director of Maintenance 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 of maintenance 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 

Eurocopter EC 130 Field Maintenance Course, Grand Prairie, TX 

Turbomeca Arriel 2B 1 Engine Course, Grand Prairie, TX 

Continued on next page 

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, V A 
Areas of 

Experience: 

Certificates: 

Part 43,91, 133, 135, 145, 100,200, and 300-hour annual inspections. 

Rigging, overhaul, removal and repair of the following helicopters and related systems: 

• Be1l206B and L Series .Be1l407 

• MD900 .MD500 

• Eurocopter: AS350-B3/ EC130 B4 

• Turbomeca Arriel 2B 1 Engine. 

• Allison 250-C47B, C30P, C28, C20Band PW 206A engines 

• Collective, cyclic and tail rotor controls 

• Pneumatics, Electrical Systems and Components 

• Static balance and alignment of main rotor blades 

• Track and balance of main and tail rotor blades 

• Chadwick Helmuth Vibrex- 172, 8500 

• Servicing and inspecting Marathon and Saft Nicad Batteries with 

Christe Reflex 80 Charger. 

• Airframe and Power Plant License Certificate Number: 2786899 

• Inspectors Authorization Certificate Number: 2786899 

• Federal Communication Commission General Radio Telephone Operators License 

Certificate Number: PG-GB-OI019 
CERTIFICATES: 

FLIGHT TIME: 

WORK EXPERIENCE: 

JAN 04 PRESENT 

JAN 09 - JAN 10 

FEB 02 -JAN 04 

JAN 98 - DEC 99 

JAN 92 - NOV 98 

THANEY R. SIL VA 

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 BHT 407 

139 Unaided Night 2 TB-9 

2389 Mountain 

88 Instrument 

Papillon Grand Canyon Helicopters - Grand Canyon, AZ 

EC130B4,BH407, BH206 Series PIC; Company Chief Pilot & CFR Part 135 

Company Check Airman. USFS/ AMD carded (reconnaissance & surveillance, 

mountain flying), Instructor Pilot, Maintenance Test Pilot, 14 CFR Part 135 sightseeing 

tours, 14 CFR Part 135 scheduled/unscheduled charter operations. 

Petroleum Helicopters Inc, - Lafayette, LA 

Line pilot providing support to the Oil & Gas industry in the Gulf of Mexico 

Rainbow Air Academy - Long Beach, CA 

RH22 CFI/PIC; Flight instruction, },erial photography, Scenic flights 

HCR Air taxi Campinas- Sao Paulo- Brazil 

Scenic flights, charters 

Transportadora Saltense ltda- Salto- SP- Brazil 

Logistics Supervision of 50+ Semi-trucks 

FLIGHT TRAINING / EDUCATION: 

MARlO American Eurocopter- Dallas-Fort Worth 

EC 130B4 Factory Training 

FEBIO 

FEB 09 

OCT 07 

NOV 05 

M.i\R03 

FEB 02 

DEC 98 

PERSONAL: 

Helicopter Foundation Intemational- Houston, TX 

Human Factors: 1breat & Error lvfanagement 

Helicopter Underwater Egress Training- Lafayette, U\ 

HUET (Water survival + Aviation crash Survival) 

American Eurocopter- Dallas-Fort Worth 

EC130B4 Factory Training 

Papillon Helicopters- Grand Canyon, AZ 

Utility Training Class for AMD 

Robinson Helicopter Company- Torrance, CA 

Flight Instructor Safety & Refresher clinic 

Rainbow Air Academy- Long Beach- 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. Box 3662; Grand Canyon, AZ 86023 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 - APRIL 2009 

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 

Papillon Airways, Inc., Grand Canyon Airlines, Inc., and Air Grand Canyon, Inc. have no 

aircraft accidents or incidents to report pursuant to § 204.3(q) of the Department's regulations, 

except as follows: 

Under the broad definition of "incidenf' utilized by the NTSB ("incident means an occurrence 

other than an accident, associated with the operation of an aircraft, which affects or could affect 

the safety of operations"), Papillon submits the following information pursuant to § 204.3(q): 

April 4, 2010: A model EC-I30-B4 helicopter on a sightseeing flight operated by Papillon 

suffered a bird strike to the left windscreen en route from Boulder City Municipal Airport to the 

Grand Canyon. Windscreen was damaged but stable. One pilot and 6 passengers were aboard; 

there were no injuries. The helicopter made a precautionary off-airport landing in the desert. No 

enforcement action has been initiated against Papillon or any of its employees. FAA PTRS No. 

2010-04-04-0032 (no incident number was issued by FAA or NTSB). 

April 7, 2010: A model EC-130-B4 helicopter preparing to operate a Papillon sightseeing flight 

originating at Grand Canyon National Park Airport experienced an engine overspeed condition 

prior to departure. One pilot and 6 passengers were aboard; there were no injuries to any person 

or damage to the aircraft. The aircraft was removed from service and immediate investigation by 

Papillon's maintenance department revealed that the main drive shaft aft end coupling had 

disconnected from the shaft resulting in the engine overspeed. All Papillon model EC-130 

aircraft were immediately grounded by the company and inspected for security of the main rotor 

couplings. All were found in good condition. No enforcement action has been initiated against 

Papillon or any of its employees. FAA PTRS No. 2010-04-07-0031 (no incident number was 

issued by FAA or NTSB). 

November 9, 2010: The tailrotor ofa model AS350-B2 helicopter operated by Papillon 

contacted a cactus bush while the aircraft was maneuvering to land at the base of the Grand 

Canyon near the Grand Canyon West Airport. One pilot and 2 passengers were aboard; there 

were no injuries to any person. Damage to the aircraft was limited to small scratches on the 

tailrotor blades. No enforcement action has been initiated against Papillon or any of its 

employees. To Papillon's knowledge, no incident number or other identifier was issued by FAA 

orNTSB. 

March 11,2011: A model EC-130-B4 helicopter taking off from Boulder City Municipal 

Airport on a sightseeing flight operated by Papillon experienced a control problem. The pilot 

elected against continuing the flight; however, a hard landing occurred on-airport. One pilot and 

6 passengers were aboard; there were no injuries to any person. The helicopter suffered minor 

damage to the landing gear and cowlings. The matter is currently under review and 

investigation. No enforcement action has been initiated against Papillon or any of its employees. 

FAA Incident No. I-WP192011008; no incident number was issued by NTSB. 
EXHIBIT V 
PAPILLON AIRWAYS INC. 

Profit and Loss Statement 

For The Period Ending December 31,2010 

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 OPERATING PROFIT 

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 

OTHER EXPENSES 

H.O. SUBLEASE INCOME 

HELICOPTER LEASES 

OTHER LEASES 

DEPRECIATION 

INTEREST EXP. 

INTEREST INCOME 

OTHER 

NET INCOME BEFORE TAXES 

2010 YTD TOTAL 

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 

4,976,094 
Papillon 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 Payroll Tax Liabilities 53,256 

Current Portion of Long Term Note 100,000 Overflight Fee Liabilities 135,525 

Line of Credits UBOC 0 

TOTAL CURRENT ASSETS 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) 

LONG TERM 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 LIABILITIES AND EQUITY 19,121,282 
Papillon 

Airways 

Inc. 

Financial 

Report 

December 31 

2009 
Contents --_ ... _._---_ .... ----.. ------_ ...... ---. -.~---

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 Public Accountants 

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 of the management of Papillon Airways, Inc. 

A review 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 of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. 

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 of any 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 of America. 

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 a member flml of RSM Inlernationalan affiliatiOl1 of separate and indepeodenllegal entities. 
Financial 

Statements 
Balance Sheets 

Papillon Airways, Inc. 

December 31, 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 financial statements. 

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',152 
2009 200B 

Liabilities and Stockholders' Equity 

Current Liabilities 

Disbursements in excess of bank balance $ 46,945 $ 1,206,15B 

Line of credit 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 par value; 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 

3 
Statements 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 of year 

See notes to financial statements. 

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 of fixed 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 of credit 300,000 (300,000) 

F Proceeds from stockholders 1,850,001 401,000 

Principal payments on long-term debt (892,894! (845,7 45) 

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 of year 137,904 593,551 

End of year $ 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 financial statements. 

',,-. See accountant's reporl. 5 
Notes to Financial Statements 

Papillon Airways, Inc. 

December 31, 2009 and 2008 

Note 1 • Nature of Operations and Summary of Significant Accounting Policies 

Nature of Operations 

Papillon Airways, Inc. (the Company) was incorporated under the laws of the state of Arizona in June 1995. The Company 

leases and operates a 11eet of 42 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 of the Grand Canyon) and 

performing government contracts. Special flight rules in the Park restrict flight hours, routes, and the number of flights made 

each year. Other operations include contract services for a variety of federal and state government agencies. Heliport and 

hangar facilities 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 of financial statements in conformity with accountin~ 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 differ from 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 a maturity of three 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 a review 

of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly 

evaluating individual customer receivables and considering a customer's financial condition. credit history and current 

economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable 

previously written off are recorded when received. Management feels no allowance for doubtful receivables is necessary at 

December 31, 2009 and 2008. 

(continued) 

See accountant's report. 

6 
Notes to Financial Statements 

Papillon AinNays, Inc. 

December 31, 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 lower of 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 number of hours of 

usage of the related assets and a standard 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 of office and shop 

equipment is computed using the straight-line method over the 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 2009 and 2008 was $1,188,986 and 

$1,595,039, respectively. 

Deferred Revenue 

Customer deposits and prepayments are recorded as deferred revenue and may be refunded jf the reservation is cancelled at 

least 24 hours prior to the flight. 

Income Taxes 

The Company has elected to be taxed as an S corporation, 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. 

Reclassifications 

Certain prior year balances have been reclassified to conform to current year presentation, with no impact to net income. 

(continued) 

See accountant's report. 

7 
Notes 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 a variable interest entity, or 

VIE, and requires ongoing reassessment of whether 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 of this 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 a variable 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 for the financial statement recognition and measurement of a tax position 

taken or expected to be taken in a tax return. It also provides guidance on derecognition of tax benefits. classification on the 

balance sheet, interest and penalties, accounting in interim periods, disclosure and transition. The provisions of the 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 a material 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. 

8 
Notes to Financial Statements 

Papillon Airways, Inc. 

December 31 , 2009 and 2008 

Note 3 • Notes Payable 

Line of Credit 

The Company has an unsecured line of credit with a bank 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 December 31, 

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 December 31, 2008. The notes 

were modified during 2009 to recognize additional amounts provided. Each note is under the 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 December 31,2009 . 

. ".... Note 4 • Long-Term Debt 

Long-term debt at December 31 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 a finance company, maturing December 2009; due in monthly 

payments of $2,171; interest at 3.9 percent; collateralized by three vehicles. 

Note payable to a finance company. maturing September 2009; due in monthly 

installments of $917; no interest; collateralized by a vehicle. 

Note payable to a finance company, maturing August 2009; due in monthly 

installments of $917; no interest; collateralized by a vehicle. 

(continued) 

See accountant's report. 

9 

2009 2008 

$ 772.214 $ 947,055 

27,028 

8,251 

7,335 
Notes to Financial Statements ---------------------------------------------------------

Papillon Airways, Inc. 

December 31, 2009 and 2008 

Note 4· Long-Term Debt (concluded) 

Note payable to a finance company, maturing May 2009; due in monthly 

installments of $936; interest at 2.9 percent; collateralized by a vehicle .. 

Note payable to a finance company, maturing March 2009; due in monthly 

installments of $661; interest at 3.9 percent; collateralized by a vehicle. 

Note payable to a finance company, maturing February 2009; due in monthly 

installments of $13,389; interest at LI BOR (2.08 percent at December 31, 2008) 

plus 1.65 percent; collateralized by equipment. 

Note payable to a finance company, maturing May 2010; due in monthly 

installments of $14,306; interest at 6.67 percent; collateralized by a helicopter 

engine. 

Note payable to a finance company, maturing August 2013; due in monthly 

installments of $13,333; interest at 5.15 percent; collateralized by seven buses. 

Note payable to a finance company, maturing June 2011; due in monthly 

installments of $19,343; interest at 3.125 percent; collateralized by a helicopter 

engine. 

Note payable to a finance 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 

2008 

4,668 

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 

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

, 

",.. 

Notes to Financial Statements 

Papillon Airways, Inc. 

December 31, 2009 and 2008 

Note 5 • Related·Party Transactions and Commitments 

Leases 

The Company leases helicopters, a heliport, 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 under these lease agreements totaled $8,028,069 and $7,026,309, respectively. The Company also leases office 

space and equipment from 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 a related 

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 a monthly operating lease were $10,000 and $30,000, respectively, from a 

related party using space at the Grand Canyon heliport facility. 

The Company began renting a mobile home to a related party under a monthly operating lease in 2002. Rent received totaled 

$16,200 during 2009 and 2008. 

During 2009 and 2008, under the 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 a related 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. 

11 
Notes to Financial Statements 

Papillon Airways, Inc. 

December 31,2009 and 2008 

Note 6 • Employee Benefit Plan 

The Company has a 401 (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 a matching 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 a defendant in various legal proceedings. Resolution of these 

matters is not expected to have a material impact on the financial position or operations of the Company. 

The Company is currently in the midst of an IRS excise tax examination for the 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 of this matter cannot be determined at this time. 

Note 8 • Subsequent Events 

The Company has evaluated subsequent events through the date and time of the issuance of these 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 Public Accountants 

Papillan Airways, Inc. 

Financial Report 

December 31, 2008 

McGladfey & Pullen, LLP is a member firm of RSM Inlernationalan affiliatioo of separate and indepandenllegal anlilles. 
McGladrey & Pullen 

CertHied Public Accountants 

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 for Accounting and Review Services issued by the American Institute of Certified Public Accountants, All 

information included in these financial statements is the representation of the management of Pap ilion Airways, Inc. 

A review 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 of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. 

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 order for them to be in conformity with 

accounting principles generally accepted in the United States of America. 

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 a member firm of RSM InlemaUonal 

an affiliation of separate and Independent legal entitles. 
Papillan 

Airways 

Inc. 

Financial 

Report 

December 31 

2008 
Contents 

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 
Financial 

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 financial statements. 

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 $17,773,778 
2008 2007 

Liabilities and Stockholders' Equity 

CUrrent Liabilities 

Disbursements in excess of bank balance $ 1,206,158 $ 340,912 

Line of credit 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 

3 
Statements of Income and Retained 

Papillon Ahways, Inc. 

Years Ended December 31, 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 of fixed assets 

Total other Income {expense} 

Net Income 

Retained Earnings 

Beginning of year 

Net income 

Dividends 

End of year 

See notes to financial statements. 

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 $5,151,007 
Statements 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 of fixed 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 of fixed 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 financial statements. 

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 

(94,171l 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 

1,449,598 515,000 
Notes 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 of the state of Arizona in June 1995. The Company 

leases and operates a fleet 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 of the Grand Canyon) and 

performing government contracts. Special flight rules in the Park restrict flight hours. routes, and the number of flights made 

each year. Other operations include contract services for a variety of federal and state government agencies. Heliport and 

hangar facilities 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 of financial statements in conformity with accounting principles generally accepted in the United States of 

America requires management to make estimates and assumptions that affect the amounts reported in the financial 

statements and accompanying notes. Actual results could differ from 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 a maturity of three 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 a review 

of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly 

evaluating individual customer receivables and considering a customer's financial condition, credit history and current 

economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable 

previously written off are recorded when received. Management feels no allowance for doubtful receivables is necessary at 

December 31, 2008 and 2007. 

(continued) 

See accountant's report. 

6 
Notes to Financial Statements 

Pap ilion 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 at the lower of 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 number of hours of 

usage of the related assets and a standard 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, Depreciation of office and shop equipment is computed using the straightline method over the 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 

Customer deposits and prepayments are recorded as deferred revenue and may be refunded if the reservation is cancelled at 

least 24 hours prior to the flight. 

Income Taxes 

The Company has elected to be taxed as an S corporation, 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, 

7 
Notes 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 of VariableInterest Entities, 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 for the entity to finance its activities without additional 

subordinated financial support. FIN 46R requires a company to evaluate all eXisting arrangements to identify situations where 

a company has a "variable-interest" in a "variable-interest entity· and to further determine when such variable-interests require 

a company 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 Uncertainty in 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, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial 

statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides 

guidance on derecognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim 

periods, disclosure, and transition. 

In December 2008, the FASB provided for a deferral of the effective date of FIN 48 for certain non public entities to annual 

financial statements for fiscal 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 

for Contingencies. 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 about Derivative 

Instruments and Hedging Activities - an Amendment of FASa Statement No. 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 of the fair values of derivative instruments and their gains and losses in a tabular format. SFAS 

No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15.2008, or 

the Company's quarter ended 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. 

8 
Notes to Financial Statements 

Papillon Airways, Inc. 

December 31, 2008 and 2007 

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 

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 a bank for up to $2,500,000. The balance due totaled $2,200,000 and 

$2,500,000 at December 31, 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 under the same terms, due on demand and 

require monthly Interest-only payments. The notes bear interest at prime (3.25 percent at December 31,2008) 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 of the 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 $1,121,896 
Notes to Financial Statements 

Papillon Airways, Inc. 

December 31, 2008 and 2007 

Note 4· Long·Term Debt (continued) 

Notes payable to a finance company, maturing January 2008; due in monthly 

installments of $1,776; no interest; collateralized by two vehicles. 

Notes payable to a finance company, maturing December 2009; due in monthly 

payments of $2,171; interest at 3.9 percent; collateralized by three vehicles. 

Note payable to a finance company, maturing September 2009; due in monthly 

installments of $917; no interest; collateralized by a vehicle. 

Note payable to a finance company, maturing August 2009; due in monthly 

installments of $917; no interest; collateralized by a vehicle. 

Note payable to a finance company, maturing May 2009; due in monthly 

""... installments of $936; interest at 2.9 percent; collateralized by a vehicle. 

Note payable to a finance company, maturing March 2009; due in monthly 

installments of $661; interest at 3.9 percent; collateralized by a vehicle. 

Note payable to a finance 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 a finance company, maturing May 2010; due in monthly 

installments of $14,306; interest at 6,67 percent; collateralized by a helicopter 

engine. 

Note payable to a finance company, maturing August 2013; due in monthly 

installments of $19,418; interest at 5.15 percent; collateralized by seven buses. 

Note payable to a finance company, maturing June 2011; due in monthly 

installments of $13,333; interest at 4.50 percent; collateralized by a helicopter 

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 $1,295,494 
Notes to Financial Statements 

Pap ilion Airways, Inc. 

December 31, 2008 and 2007 

Note 4· Long-Term Debt (concluded) 

Maturities of long-term debt for 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, a heliport, 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 under these 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. 

11 
Notes 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 for the years ended December 2008 and 2007. 

During 2008 and 2007, the Company purchased $339,274 and $393.400, respectively, of aircraft insurance from a related 

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 a monthly operating lease was $30,000 annually from a related party using 

space at the Grand Canyon heliport facility. 

The Company began renting a mobile home to a related party under a monthly 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 a 401(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 a matching 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 a defendant in various legal proceedings. Resolution of these 

matters is not expected to have a material impact on the financial position or operations of the 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 of this 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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• • • • • • • • • • • • • • • • J. 

• • • • • • • • • • • • • • • • J. 

• • • 

McGladrey & Pullen 

Certified Public Accountants 

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 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 of the management of Papillon Airways, Inc. 

A review 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 of America, the opjective of which is the expression of an opinion regarding the financial statements taken as a whole. 

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 order for 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 a member finn of RSM International 

an affiUation of separate and independent legal enUties. 
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Financial 

Statements 
• 

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"... • • 

Balance Sheets • 

• 

Papillon Airways, Inc. • 

December 31 ! 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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See notes to financial statements. 4 

See accountant's report. 4 

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Liabilities and Stockholders' Equity 

Current Liabilities 

Disbursements in excess of bank balance 

Line of credit 

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 par value; 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 
,.,. , 4 

• 

Statements of Income and Retained • 

4 

Papillon Airways, Inc. • 

Years Ended December 31,2007 and 2006 • 

• 

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 

Interest expense (354,540) (403,216) 4 Interest income 1,150 2,326 

Other income 79,420 701,969 4 

Gain on sale of fixed 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 of year $5,151,007 $3,270,396 4 

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See notes to financial statements. • See accountant's report. 

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• Statements of Cash Flows 

• 

-

• 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 

~ Other assets 

-- 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 of year $ 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 financial statements. 

See accountant's report. 

). 5 

• 

• 

• 
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 under the laws of the state of Arizona in June 1995. The Company 

leases and operates a fleet 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 of flights made 

each year. Other operations include contract services for a variety of federal and state government agencies. Heliport and 

hangar facilities 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 of financial 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 differ from 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 a maturity of three 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 a review 

of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly 

evaluating individual customer receivables and considering a customer's financial condition, credit history and current 

economic conditions. Account receivables are written off when deemed uncollectible. Recoveries of account receivables 

previously written off are recorded when received. Management feels 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 lower of 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 number of hours of 

usage of the related assets and a standard 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 over the estimated useful fives 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 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 prior to the flight. 

Income Taxes 

The Company has elected to be taxed as an S corporation, 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 differ significantly 

from depreciation recorded under accounting principles generally accepted in the United States of America. 

FASB Interpretation No. 46 

Financial Accounting Standards Board (FASB) has issued FASB Interpretation No. 46 (FIN 46), Consolidation of VariableInterest Entities, 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 for the entity to finance its activities without additional 

subordinated financial support. FIN 46R requires a company to evaluate all existing arrangements to identify situations where 

a company has a "variable-interest" in a "variable-interest entitf" and to further determine when such variable-interests require 

a company to consolidate the variable-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's report. 

7 
Notes to Financial Statements 

Papillon Airways, Inc. 

December 31,2007 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 of credit with a bank for up to $2,500,000. The balance due totaled $2,500,000 and 

$250,000, at December 31,2007 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 

December 31, 2007) plus 0.5 percent. 

Note 4 • Long-Term Debt 

Long-term debt at December 31 consists of the following: 

Notes pa¥able to stockholders, maturing June 2007; due in monthly installments of 

$23,834; Interest at LlBOR (5.31 percent at December 31,2006) plus 2 percent on 

minimum amounts of $100,000 and 0.5 percent over prime 8.75 ,percent at 

December 31, 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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Papillon Airways, Inc . 

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 a finance 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 a finance company, maturing January 2008; due in monthly 

installments of $1,776; 0 percent interest; collateralized by two vehicles. 

Notes payable to a finance company, maturing December 2009; due in monthly 

payments of $2,171; 3.9 percentinterest; collateralized by three vehicles. 

Note payable to a finance company, maturing September 2009; due in monthly 

installments of $917; 0 percent interest; collateralized by a vehicle. 

Note payable to a finance company, maturing August 2009; due in monthly 

installments of $917; 0 percent interest; collateralized by a vehicle. 

Note payable to a finance company, maturing May 2009; due in monthly 

installments of $936; 2.9 percent interest; collateralized by a vehicle. 

Note payable to a finance company, maturing March 2009; due in monthly 

installments of $661; 3.9 percent interest; collateralized by a vehicle. 

(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. 

December 31, 2007 and 2006 

Note 4· Long·Term Debt (concluded) 

Note payable to a finance 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 a finance company maturing May 2010; due in monthly 

installations of $14,30; interest at 6.67 percent; collateralized by a helicopter 

engine. 

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: 

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, a heliport, 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 under these 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 

• • • • • • • • 
I' 

t 

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• t 

t 

• 

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• • • • • I 

• 

, •

,... 

< 

• • • • • • • 

, • 

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, 

t 

• .. 

Notes to Financial Statements ----------------------------------------------------

Papillon Airways, Inc. 

December 31, 2007 and 2006 

Note 5 • Related·Party Transactions and Commitments (concluded) 

Minimum lease payments for future years ending December 31 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 a related 

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 under a monthly operating lease was $30,000 annually from a related party using 

space at the Grand Canyon heliport facility. 

The Company began renting a mobile home to a related party under a monthly operating lease in 2002. Rent received totaled 

$16,200 annually during 2007 and 2006. 

During 2007 and 2006, under the terms of their 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 a 401 (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 a matching contribution. The Company contributed $20,115 and 

$24,110 in 2007 and 2006, respectively. 

See accountant's report. 

11 
Notes to Financial Statements 

Papillon Airways, Inc. 

December 31, 2007 and 2006 

Note 7 • Contingencies 

During 2006 two outstanding lawsuits were settled, resulting in a net gain of $700,000, which is included on the statements of 

income. 

In addition, through the ordinary course of business, the Company is a defendant in various legal proceedings. Resolution of 

these matters is not expected to have a material impact on the financial position or operations of the 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 of this matter cannot 

be determined at this time. 

Note 8 • Subsequent Event 

Subsequent to year-end, the Company entered into a note payable with an unrelated party, totaling $800,000, for the 

purchase of tour buses; maturing January 2013. 

See accountant's report. 

12 

• 

, 

• 

• 

• 

4 

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• 

• 

• 

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, 

, 

• 

• 

• 

• 

4 

4 

4 

4 

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4 

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4 

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t i 
EXHIBIT VI 
GRAND CANYON AIRLINES, INC 

Profit and Loss Statement 

For The 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 OPERATING PROFIT 

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 

1,450,828 
ASSETS 

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 of Independent Certified Public Accountants Thereon) 

LL Bradford & Company, LLC 

Certified Public Accountants & Consultants 
TABLE OF CONTENTS 

Report oflndependent Certified Public Accountants 

Financial Statements 

Balance Sheet 

Statement of Operations 

Statement of Stockholder's Deficit 

Statement of Cash Flows 

Notes to Financial Statements 

2 

3 

4 

5 

6 
(7 l:~.BradfDrd 

REPORT OF INDEPENDENT CERTIFIED PUBLlC ACCOUNTANTS 

To the board of directors 

Grand Canyon Airlines, Inc. 

Las Vegas, Nevada 

We have audited the accompanying balance sheets of Grand Canyon Airlines, Inc., as of December 31,2009, and the 

related statements of operations, stockholder's deficit and cash flows for the year then ended. These financial statements 

are the responsibility of Grand 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 of America. Those 

standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial 

statements are free of material 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 statement presentation. 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 of December 31,2009, and the results of its operations and its cash flows for the year 

then ended in conformity with accounting principles generally accepted in the United States of America, 

L.L. Bradford & Company, LLC 

March 9, 2010 

Las Vegas, Nevada 
,.. 

GRAND CANYON AIRLINES, INC. 

Current assets 

Cash 

Accounts receivable, net 

BALANCE SHEET 

DECEMBER 3 J , 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 

Due to 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 

{4,575,5941 

(271,5941 

$ 8,646,207 
,.... 

GRAND CANYON AIRLINES, INC. 

STA TEMENT OF OPERATIONS 

FOR THE YEAR ENDED DECEMBER 31,2009 

Revenues $ 24,820,991 

Cost of revenues 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 of asset p,889l 

Total other expense (21,968) 

Net Joss $ (593,550) 

See Accompanying Notes to Financial Statements 

3 
Balance 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. 

STA TEMENT 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 of assets 

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 of equipment 

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 of cash 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 

18,079 
GRAND CANYON AIRLINES, INC. 

NOTES TO FINANCIAL STATEMENTS 

DECEMBER 31, 2009 

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Organization and Principles of Consolidation - The accompanying financial statements include the consolidated 

accounts of Grand Canyon Airlines, Inc. and Scenic Airlines, Inc. Grand Canyon Airlines, Inc. was incorporated in 

the State of Arizona in J 957. Scenic Airlines, Inc. was incorporated in the State of Nevada in 1992 and is the 

wholly owned subsidiary of Grand 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 of business 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 of estimates - The preparation of financial statements in conformity with accounting principles generally 

accepted in the United States of America requires management to make estimates and assumptions that affect the 

reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the 

financial statements and the reported amounts of revenue 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 of unpaid ticket sales less management's estimate of uncollectible accounts. Payments 

received in advance of providing the corresponding services are recorded as deferred revenue and totaled $465,012 

as of December 31,2009. 

Inventory and expendable parts Inventory and expendable parts consist primarily of expendable 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 of the 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 impairment oflong-lived assets - The Company accounts for impairment oflong-lived assets in 

accordance with Statement of Financial Accounting Standards ("SF AS") No. 144, Accountingfor the Impairment 

or Disposal q( Long-Lived Assets. 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 sheet date the Company evaluates whether events and circumstances have occurred that would indicate 

a possible impairment. In accordance with SF AS No. 144, the Company uses an estimate of the future undiscounted 

net cash flows of the 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 engine overhauls of which the cost is less 

than $20,000 as they are incurred. Aircraft component costs that exceed $20,000 are capitalized and depreciated 

over the estimated useful life. 

6 
GRAND CANYON AIRLINES, INC. 

NOTES TO FINANCIAL STATEMENTS 

DECEMBER 3 I, 2009 

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING 

POLICIES( continued) 

Income taxes - The Company, with the consent of its stockholders, has elected to be taxed as an S corporation under 

the Internal Revenue Code, which provides that stockholders separately account for items of income, 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 of accounts receivable, including accounts receivable - related party totaling $255,220, as of December 

31, 2009, consists of the 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 of the following at December 31, 2009: 

Expendable parts, materials and supplies 

Fuel inventory 

4. PROPERTY AND EQUIPMENT, NET 

Property and equipment consist of the 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) 

3,682,826 
GRAND CANYON AIRLINES, INC. 

NOTES TO FINANCIAL STATEMENTS 

DECEMBER 31, 2009 

5. RELATED PARTY BALANCES AND TRANSACTIONS 

As of December 31,2009 the Company has borrowed $ J 92,000 from stockholders of the 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 of the Company. As of 

December 31,2009 the balance owed from these companies totaled $255,220 which represents approximately 19% 

of total accounts receivable. 

Included in accounts payable are amounts to companies owned by stockholders ofthe Company. As of December 

31, 2009 the balances owed to these companies totaled $4,697,972 which represents approximately 86% of total 

accounts payable. 

The Company leases aircrafts from multiple companies owned by stockholders of the Company. The monthly lease 

payments range from $2,000 and $25,000 and expire between September 20 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 of December 31, 2009: 

2010 

2011 

2012 

2013 

2014 

6. REVOL VING 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 of December 

31, 2009 totaled $2,000,000. The obligation is secured by the Company's equipment and tenant improvements. The 

company pays interest on the last day of every 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 at the discretion ofthe Company's board of directors. The Plan is qualified under 

the Internal Revenue Code. The Company approved contributions totaling $34,028 for the year ended December 31, 

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 of 0.85% of gross annual sales or a minimum annual lease 

payment of $12,000, under an operating lease of its 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% of gross annual sales derived from its operation. 

Future minimum base lease payments as of December 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 year ended December 31,2009, totaled $469,992. The following 

is a schedule offuture minimum lease payments for the lease as of December 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 schedule offuture minimum lease payments for the lease as of December 

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 & Consultants 
TABLE OF CONTENTS 

Report of Independent Certified Public Accountants 

Financial Statements 

Balance Sheet 

Statement of Operations 

Statement of Stockholder's Deficit 

Statement of Cash 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 of directors 

Grand Canyon Airlines, Inc. 

Las Vegas, Nevada 

We have audited the accompanying balance sheets of Grand Canyon Airlines, Inc., as of December 31, 2008, and the 

related statements of operations, stockholder's deric it and cash flows lor the year then ended. These financial statements 

are the responsibility of Grand Canyon Airlines .. Inc.' s man3gement. Our responsibility is to express an opinion on these 

financial statemenls based Oil our audit. 

We conducted our audit in accordance wilh auditing standards generally accepl.ed in the United Stf1tcs of America. Those 

standards require thal we plan and pertorm the audi! to obtain reasonable assurance about whether the financial 

statements are free of material 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 

signi ficant est imates made by management, a.s well as evaluating the overall financia I statement presentation. We be 1 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 A irlincs, inc., as of December 3 I. 2008, and the results of its operations and its cash flows for the year 

then ended in conformity with accounting principles generally accepted in the United States of America. 

,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.com 
GRAND 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) 

7,844,513 
GRAND CANYON AIRLINES, INC. 

STATEMENT OF OPERA TIONS 

FOR THE YEAR ENDED DECEMBER 31, 2008 

Revenues $ 31,703,620 

Cost of revenues 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 of asset {7272 

Total other expense (150,753) 

Net loss $ ~231,903) 

See Accompanying Notes to Financial Statements 

3 
Balance 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 of fixed 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 of equipment 

Cash proceeds from sale of asset 

Net cash used in investing activities 

Cash nows from financing activities: 

Principal payments on revolving 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 3 J , 2008 

Supplemental disclosure of cash flow information: 

Cash paid for interest 

Non-cash contributions of assets from stockholders 

$ 

See Accompanying Notes 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 

141 
I. 

GRAND CANYON AIRLINES, INC. 

NOTES TO FINANCIAL STATEMENTS 

DECEMBER 31, 2008 

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Organization and Principles of Consolidation - The accompanying financial statements include the consolidated 

accounts of Grand Canyon Airlines, Inc. and Scenic Airlines, Inc. Grand Canyon Airlines, Inc. was incorporated in 

the State of Arizona in 1957. Scenic Airlines, Inc. was incorporated in the State of Nevada in 1992 and is the wholly 

owned subsidiary of Grand 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 of business 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 of estimates - The preparation of financial statements in conformity with accounting principles generally 

accepted in the United States of America requires management to make estimates and assumptions that affect the 

reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial 

statements and the reported amounts of revenue 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 of unpaid ticket sales less management's estimate of uncollectible accounts. 

Inventory and expendable parts - Inventory and expendable parts consist primarily of expendable 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 of the 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). 

Accounting for the impairment oflong-lived assets - The Company accounts for impairment of long-lived assets in 

accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, Accounting/or the Impairment or 

Disposal 0/ Long-Lived Assets. SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever 

events or changes in circumstances indicate that the book value of the asset may 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 of the future undiscounted net cash 

flows of the 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 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. 

6 
GRAND 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 of its stockholders. has elected to be taxed as an S corporation under 

the Internal Revenue Code, which provides that stockholders separately account for items of income, deductions, 

losses and credits. Accordingly, no provisions for federal income taxes are included in the accompanying financial 

statements for the year ended December 3 I , 2008. 

2. ACCOUNTS RECEIVABLE 

The aging of accounts receivable, including accounts receivable - related party totaling $636,643, as of December 

31,2008, consists of the following: 

0- 30 days 

3 J 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 of the following at December 31,2008: 

Expendable parts, materials and supplies 

Fuel inventory 

4. PROPERTY AND EQUIPMENT, NET 

Property and equipment consist of the 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 3 I, 2008 

RELATED PARTY BALANCES AND TRANSACTIONS 

As of December 31, 2008 the Company has borrowed $600,000 from stockholders of the 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 of the Company. As of 

December 31,2008 the balance owed from these companies totaled $451 ,486 which represents approximately 18% 

of total accounts receivable. 

Included in accounts payable are amounts to companies owned by stockholders of the Company. As of December 

31,2008 the balances owed to these companies totaled $5,702,521 which represents approximately 87% of total 

accounts payable. 

The Company leases aircrafts from multiple companies owned by stockholders of the Company. The monthly lease 

payments range from $1,000 and $29,000 and expire between September 2009 and November 20 I O. The Company 

recognized $2,963,733 in related party lease expense for the year ended December 31,2008. 

Future minimum base lease payments as of December 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 a financial institution. The balance as of December 31, 

2008 totaled $600,000. The obligation is secured by the Company's equipment and tenant improvements. The 

company pays interest on the last day of every 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, 2008) on maturity at October 2009. 

7. NOTE PAYABLE 

Note payable consists of the following at December 31,2008: 

Note payable to a bank; payable in monthly 

installments of $8,333 plus interest at the rate of 5.4%, 

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 of the Company's board of directors. The Plan is qualified under 

the Internal Revenue Code. The Company approved contributions totaling $14,758 for the year ended December 3 I, 

2008. 

8 
GRAND CANYOJ\ AIRLINES, INC. 

NOTES TO FINANCIAL STATEMENTS 

DECEMBER 3], 2008 

9. COMMITMENTS AND CONTINGENCIES 

The Company is required to make contingent rentals of 0.85% of gross annual sales or a minimum annual lease 

payment of $]2,000, under an operating lease of its fixed-based operation, which expires in September 20 J 7. 

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 of fuel 

sold and 5% of gross annual sales derived from its operation. 

Future minimum base lease payments as of December 31,2008: 

2009 

2010 

20]1 

20]2 

20]3 

Thereafter 

$ 13,220 

]3,220 

13,220 

13,220 

J 3,220 

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 year ended December 3 1 , 2008, totaled $469,992. The following is 

a schedule of future minimum lease payments for the lease as of December 31, 2008: 

2009 

2010 

2011 

2012 

2013 

Thereafter 

9 

$ 469,992 

469,992 

469,992 

469,992 

469,992 

1 ,879,968 
GRAND CANYON AIRLINES, INC. 

AND SUBSIDIARY 

FINANCIAL STATEMENTS 

DECEMBER 31, 2007 

(With Report of Independent Certified Public Accountants Thereon) 

L.L. Bradford & Company, LLC 

Certified Public Accountants & Consultants 
TABLE OF CONTENTS 

Report of Independent Certified Public Accountants 

Financial Statements 

Balance Sheet 

Statement oflncome 

Statement of Stockholder's Deficit 

Statement of Cash 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 of directors 

Grand Canyon Airlines, Inc. and Subsidiary 

Las Vegas, Nevada 

We have audited the accompanying balance sheets of Grand Canyon Airlines, Inc. and Subsidiary, as of Dec ember 31, 

2007. and the related statements of income, stockholder's deficit and cash flows for the year then ended. These fmandal 

statements are the responsibility of Grand Canyon Airlines, Inc. and Subsidiary's 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 of America. 

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial 

statements are free of material 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 fmancial statement presentation. We believe 

that our audit provides a reasonable basis for our opinion. 

In our opinion, the fmancial statements referred to above present fairly, in all material respects, the fmandal position of 

Grand Canyon Airlines, Inc. and Subsidiary, as of December 31, 2007, and the results of its activities and cash flows for 

the year then ended. 

LL-. ~Q ~~JIU-CL.L. Bradford & Company, LLC 

June 9, 2008 

Las Vegas, Nevada 

Member o{ Center for Public Company Audit I'inns Peer Review Progrun • Rcpstered Finn of PCAOB .' Member of Center for Audll Quality 

1#1 S. Eastern AVL'fIUC • Las Vegas, Nevada 89169' 702·735·5030' Fa'; 702·735·4$$4 
GRAND 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 

T otalliabiIities 

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 of revenues 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 

3 
Balance at January 1,2007 

Contributions 

Net loss 

Balance at December 31, 2007 

GRAND CANYON AIRLINES, INC. AND SUBSIDIARY 

STATEMENT OF STOCKHOLDER'S DEFICIT 

FOR THE YEAR ENDED DECEMBER 31, 2007 

Common Stock Additional Accumulated 

Shares Amount Paid-in Capital. 

4,000 $ 4,000 $ 150,462 

1,848,865 . 

41000 $ 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,746,814l 
GRAND 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 expendable parts 

Other current assets 

Accounts payable 

Accounts payable - related parties 

Accrued expenses 

Net cash used in operating activities 

Cash flows from investing activities: 

Purchase of equipment 

Acquisition of Scenic 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 of cash 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 

551°85 

350,000 

234,003 
GRAND CANYON AIRLINES, INC. AND SUBSIDIARY 

NOTES TO FINANCIAL STATEMENTS 

DECEMBER 31, 2007 

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Organization and Principles of Consolidation - The accompanying financial statements include the consolidated 

accounts of Grand Canyon Airlines, Inc. and Scenic Airlines, Inc. Grand Canyon Airlines, Inc. was incorporated in 

the State of Arizona in 1957. Scenic Airlines, Inc. was incorporated in the State of Nevada in 1992 and is the 

wholly owned subsidiary of Grand 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 of business 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 of financial statements in conformity with accounting principles generally 

accepted in the United States of America requires management to make estimates and assumptions that affect the 

reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the 

financial statements and the reported amounts of revenue 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 of unpaid ticket sales less management's estimate of uncollectible accounts. 

InventOIY and expendable parts -Inventory and expendable parts consist primarily of expendable 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 of the 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). 

Accounting for the impairment oflong-lived assets - The Company accounts for impairment oflong-lived assets in 

accordance with Statement of Financial Accounting Standards ("SF AS") No. 144, Accountingfor the Impairment 

or Disposal of Long-Lived Assets. SFAS No. 144 requires that long-lived assets be reviewed for impairment 

whenever events or changes in circumstances indicate that the book value of the asset may 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 SF AS No. 144, the Company uses an estimate of the future undiscounted 

net cash flows of the 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 engine overhauls of which 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 useful life. 

6 
GRAND CANYON AIRLINES, INC. AND SUBSIDIARY 

NOTES TO FINANCIAL STATEMENfS 

DECEMBER 31, 2007 

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING 

POLICIES( continued) 

Income taxes - The Company, with the consent of its stockholders, has elected to be taxed as an S corporation under 

the Internal Revenue Code, which provides that stockholders separately account for items of income, deductions, 

losses and credits. Accordingly, no provisions for federal income taxes are included in the accompanying financial 

statements for the year ended December 31, 2007. 

Purchase of Scenic Airlines - On March 28, 2007 Grand Canyon Airlines, Inc. purchased the common stock of 

Scenic Airlines Inc. (Scenic) in exchange for $350,000. The common stock included 2,500 authorized shares of 

which 1,000 were issued and outstanding. As part of the transaction no'liabilities were assum~d by the new owners 

of Scenic. Scenic was purchased at a discount relative to the historical values recorded for the assets purchased from 

Scenic and as such certain property and equipment and other assets. has been written down to account for the 

valuation of the 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 of accounts receivable as of December 31, 2007, consists of the following: 

0-30 days 

31 -60 days 

60 90 days 

Over 90 days 

Less: allowance for doubtful accounts 

3. INVENTORY AND EXPENDABLE PARTS 

$ 865,012 

615,139 

697,950 

1,423,130 

3,601,231 

(569,628) 

$ 3,031 603 

Inventory and expendable parts consist of the following at December 31, 2007: 

Expendable parts, materials and supplies 

Fuel inventory 

4. PROPERTY AND EQUIPMENT 

Property and equipment consist of the 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 

2,802.136 
GRAND CANYON AIRLINES, :INC. AND SUBSIDIARY 

NOTES TO FINANCIAL STATEMENTS 

DECEMBER 31, 2007 . 

5. RELATED PARTY BALANCES AND TRANSACTIONS 

As of December 31, 2007 the Company has borrowed $600,000 from stockholders of the Company. The balance 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 ofthe Company. As of 

December 31, 2007 the balance owed from these companies totaled $1,468,126, which represents 33% of total 

accounts receivable. . 

Included in accounts payable are amounts to companies owned by stockholders of the Company. As of December 

31,2007 the balances owed to these companies totaled $4,406,889, which· represents 91 % of total accounts payable. 

The Company leases aircrafts from multiple companies owned by stockholders ofthe Company. The monthly lease 

payments range from $1 ,000 and $34,750 and expire between September 2008 and November 2010. The Company 

recognized $3,743,059 in related party lease expense for the year ended December 31, 2007 

Future minimum base lease payments as of December 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. The balance as of December 

31,2007 totaled $2,000,000. The obligation is secured by the Company's equipment and tenant improvements. The 

outstanding balance is payable in monthly installments of interest only at the bank's prime lending rate (7.25% at 

December 31, 2007) and matures during October 2008. 

7. NOTEPAYABLE 

Note payable consists of the 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 

99.996 
GRAND CANYON AIRLINES, INC. AND SUBSIDIARY 

NOTES TO FINANCIAL STATEMENTS 

DECEMBER 31, 2007 . 

7. NOTE PAYABLE (CONTINUED) 

A schedule of maturities of notes payable is as follows: 

Year Ending December 31, 

2008 

2009 

$ 99,996 

75.004 

.$ 115 000 

8. 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 at the discretion of the Company's board of directors. The Plan is qualified under 

the Internal Revenue Code. The Company approved contributions totaling $42,589 for the year ended December 31, 

2007. 

9. COMMITMENTS AND CONTINGENCIES 

The Company is required to make contingent rentals of 0.85% of gross annual sales or a minimum annual lease 

payment of$12,000, under an operating lease of its 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$O.03 per gallon offuel 

sold and 5% of gross annual sales derived from its operation. 

Future minimum base lease payments as of December 31, 2007: 

2008 

2009 

2010 

2011 

2012 

Thereafter 

9 

$ 13,220 

13,220 

13,220 

13,220 

13,220 

66.100 
EXHIBIT VII 
Affidavit of Safety Compliance 

State of Nevada 

county of Clark 

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 Pap ilion 

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, of the Federal 

Aviation Regulations. 

Alan Stephen 

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

"

KIMBERLEY ANDERSON 

NaIIry PublIc S1aII of Nevada 

No. 11·3804-1 ~ 

Mv ... Exp. DIcImber 13. 2014 ~ 

Notary Public 
EXHIBIT VIII 
,.. 

,... 

PAPILLON AIRWAYS INC. 

For'casted Profit and Loss Statement 

For The Year' Ending December :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 

Pap ilion Airways Inc 

Forcasted Balance Sheet 

December 31,2011 

." 

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!]' v Of 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.~ of Titk ..+9 of the U.S, Code (formerly ,ection I DOS( b) of the Felleral A\ i,lIion Act 

of 1958. a, amended I the person named Ilelow as ir., Agent upon whom ser\'ice of alJ nOlices and proce",,, and all oroer,. decision ... 

and requirements of the Depunmenr of Trans po nation may be made for and on behalf of suid carrier. hereby cunceling all pre\'jou!-

designations of agenr~ made by it to the DOT. 

Name Aaron A. Goerlich, Garofalo Goerlich Hainbach PC 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--t 0.,. 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 of Transportation 

Office of the Secretary of Transportation 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 it with any government: 

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

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

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

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

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

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

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

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

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

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

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

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

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

passenger." 

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

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

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

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

"ADVICE TO INTERNATIONAL PASSENGER ON LIMITATION OF LIABILITY 

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

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

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

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

liability of 

[certain ]* 

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

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

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

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

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

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

examined on request 

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

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

information please consult your airline or insurance company representative." 

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

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

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

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

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

5. Any Carrier party hereto may withdraw from this Agreement by giving twelve 12) months' written notice of withdrawal 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- tl flttw 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..Sf S- 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 of the applicant, have not in any manner knowingly and willfully falsified, 

concealed or covered up any material fact or made any false, fictitious, or fraudulent 

statement or knowingly used any documents which contain such statements in connection 

with the preparation, filing or prosecution of the application. I understand that 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