UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    ---------

                                    FORM 10-Q

                                    ---------

(MARK ONE)
|X|   QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
      OF 1934.

      FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008

                                      OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934.

      FOR THE TRANSITION PERIOD FROM              TO
                                     ------------    ------------

                        COMMISSION FILE NUMBER 001-32580

                                    ---------

                           U.S. HELICOPTER CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                    ---------

                DELAWARE                               27-0096927
    (STATE OR OTHER JURISDICTION OF                 (I.R.S. EMPLOYER
     INCORPORATION OR ORGANIZATION)               IDENTIFICATION NO.)

           6 EAST RIVER PIERS, SUITE 216, DOWNTOWN MANHATTAN HELIPORT
                               NEW YORK, NY 10004
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (212) 248-2002
                (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)

                                    ---------

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes |X| No |_|

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer |_|                        Accelerated filer |_|
Non-accelerated filer |_|                          Smaller reporting company |X|
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|

                     APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of November 10, 2008, 45,712,669
shares of common stock.
<PAGE>

                           U.S. HELICOPTER CORPORATION
                                    FORM 10-Q
                       FOR THE QUARTER ENDED JUNE 30, 2008

                                      INDEX

                                                                            PAGE

                          PART 1--FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS (Unaudited)
           Balance Sheets                                                      1
           Statements of Operations                                            3
           Statements of Cash Flows                                            4
           Notes to Financial Statements                                       5
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATION                                           15
ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK         34
ITEM 4.    CONTROLS AND PROCEDURES                                            34

                           PART II--OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS                                                  36
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS        36
ITEM 3.    DEFAULTS UPON SENIOR SECURITIES                                    36
ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                36
ITEM 5.    OTHER INFORMATION                                                  36
ITEM 6.    EXHIBITS                                                           36
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

U.S. HELICOPTER CORPORATION
BALANCE SHEETS AS OF

                                                    SEPTEMBER 30,
                                                        2008        DECEMBER 31,
ASSETS:                                              [UNAUDITED]        2007*
                                                     -----------        -----
CURRENT ASSETS:
  Cash                                               $   274,343    $   670,136
  Restricted Cash                                        179,465        179,325
  Accounts Receivable                                    482,891        347,495
  Inventory                                               45,918         45,032
  Prepaid Expenses                                        57,630        150,820
  Other Current Assets                                   375,602        121,079
                                                     -------------  -----------
   TOTAL CURRENT ASSETS                                1,415,849      1,513,887
                                                     -------------  -----------
PROPERTY AND EQUIPMENT:
  Leasehold Improvements                               1,418,109      1,346,935
  Office Equipment                                       185,890        167,564
  Less: Accumulated Depreciation and Amortization       (939,391)      (658,808)
                                                     -------------  -----------
PROPERTY AND EQUIPMENT, NET                              664,608        855,691
                                                     -------------  -----------
OTHER ASSETS:
  Deferred Financing Costs, Net                          722,671          9,852
  Deferred Offering Costs                                201,251         45,421
  Deposits                                               898,380        893,506
                                                     -------------  -----------
   TOTAL OTHER ASSETS                                  1,822,302        948,779
                                                     -------------  -----------
   TOTAL ASSETS                                      $ 3,902,759    $ 3,318,357
                                                     =============  ===========

* Derived from audited financial statements for the year ended December 31, 2007
(see Form 10-KSB Annual Report filed on April 15, 2008 with the Securities and
Exchange Commission).

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


                                       1
<PAGE>

U.S. HELICOPTER CORPORATION
BALANCE SHEETS AS OF

                                                   SEPTEMBER 30,
                                                        2008       DECEMBER 31,
                                                    [UNAUDITED]        2007*
LIABILITIES AND STOCKHOLDERS' [DEFICIT]:
CURRENT LIABILITIES:
  Accounts Payable and Accrued Expenses            $  6,081,002    $  3,699,705
  Note Payable, Net                                   6,311,012         844,838
  Derivative Liability                                2,205,001              --
  Deferred Salary and Taxes Payable                       9,081           9,081
  Accrued Salary and Taxes Payable                      175,704          83,375
  Air Traffic Liability                                 238,481         190,685
                                                   --------------  ------------
  TOTAL CURRENT LIABILITIES                          15,020,281       4,827,684

LONG-TERM DEBT, NET                                   1,163,370       4,980,692

LONG-TERM DERIVATIVE LIABILITY                        3,128,512       1,572,661

DEFERRED CHARGES                                        284,897         376,746
                                                   --------------  ------------
  TOTAL LIABILITIES                                  19,597,060      11,757,783
                                                   --------------  ------------
COMMITMENTS AND CONTINGENCIES                                --              --
                                                   --------------  ------------
STOCKHOLDERS' [DEFICIT]:
  Convertible Series A Preferred Stock, $0.001
   Par Value; 25,000,000 and 1,500,000 Shares
   Authorized; -0- Shares Issued and Outstanding             --              --

  Common Stock, $0.001 Par Value; 500,000,000
   and 95,000,000 Shares Authorized;45,612,671
   and 45,554,171 Issued and Outstanding                 45,612          45,554

  Additional Paid-In Capital                         22,872,484      19,929,875

  Deferred Equity Compensation                         (130,202)        (37,490)

  Accumulated Deficit                               (38,482,195)    (28,377,365)

  TOTAL STOCKHOLDERS' [DEFICIT]                     (15,694,301)     (8,439,426)
                                                   --------------  ------------
  TOTAL LIABILITIES AND STOCKHOLDERS' [DEFICIT]    $  3,902,759    $  3,318,357
                                                   ==============  ============


* Derived from audited financial statements for the year ended De  cember 31,
2007 (see Form 10-KSB Annual Report filed on April 15, 2008 with the
Securities and Exchange Commission).

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


                                       2
<PAGE>

U.S. HELICOPTER CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED              NINE MONTHS ENDED
                                                     SEPTEMBER 30,                   SEPTEMBER 30,
                                                 2008            2007            2008            2007
                                                 ----            ----            ----            ----
<S>                                          <C>             <C>             <C>             <C>
Revenues                                     $  1,371,285    $  1,589,494    $  3,280,810    $  2,769,422
                                             ------------    ------------    ------------    ------------
EXPENSES:
  Payroll                                         678,954         985,788       2,219,320       2,971,321
  Payroll Taxes and Benefits                      129,080         131,721         423,055         411,842
  Crew Costs and Other                             33,384           8,023         152,559         228,066
  Substitute Service/Interrupted Passenger         74,075          10,624          88,993          11,959
  Maintenance                                     293,682         490,097         912,544       1,248,502
  Fuel                                            246,059         215,016         536,322         484,704
  Aircraft and Traffic Servicing                  190,866         232,921         573,773         627,219
  Other Taxes                                          --           2,090           1,352           6,374
  Professional Fees                               395,147         414,398       1,214,845       1,391,905
  Insurance                                       182,639         167,327         470,528         570,444
  Office Expense                                   33,605          60,459         160,674         175,879
  Website and Website Design                        2,625           1,700           8,775           9,755
  Travel                                           28,809           8,553          59,936          31,458
  Rent                                            156,353         143,539         445,928         406,280
  Lease Expense - equipment                       356,517         471,723       1,298,137       1,424,711
  Reservation Expense                              53,821          79,442         212,448         208,440
  Advertising                                      39,873          60,740         108,328         420,126
  Licenses and Fees                                   139             224           1,199           5,789
  Depreciation and Amortization                   106,415          96,553         280,584         311,592
                                             ------------    ------------    ------------    ------------
          Total Expenses                        3,002,043       3,580,938       9,169,350      10,946,366
                                             ------------    ------------    ------------    ------------
  OPERATING (LOSS)                             (1,630,758)     (1,991,444)     (5,888,540)     (8,176,944)
                                             ------------    ------------    ------------    ------------
OTHER INCOME (EXPENSE):
  Interest Income                                   1,514           1,472           4,523          15,485
  Interest Expense                               (342,882)       (291,110)       (858,591)       (733,508)
  Amortization of Deferred Financing Costs       (780,182)     (1,467,506)       (941,330)     (1,728,491)
  Change in Fair Value of Derivative              397,822       2,775,433       1,087,745       2,821,430
  Amortization of Debt Discount                (1,999,070)     (3,103,228)     (3,508,636)     (3,582,824)
                                             ------------    ------------    ------------    ------------
  NET OTHER (EXPENSE)                          (2,722,798)     (2,084,939)     (4,216,289)     (3,207,908)
                                             ------------    ------------    ------------    ------------
  NET (LOSS)                                   (4,353,556)     (4,076,383)   $(10,104,829)   $(11,384,852)
                                             ============    ============    ============    ============
  NET (LOSS) PER COMMON SHARE:

  Basic and Diluted                          $       (.10)   $       (.11)   $       (.22)   $       (.32)
                                             ============    ============    ============    ============
  WEIGHTED AVERAGE NUMBER OF SHARES COMMON
  SHARES OUTSTANDING                           45,612,671      36,681,497      45,582,353      35,955,892
                                             ============    ============    ============    ============
</TABLE>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


                                       3
<PAGE>

U.S. HELICOPTER CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
                                                          NINE MONTHS ENDED
                                                             SEPTEMBER 30,
                                                             -------------
                                                         2008            2007
                                                         ----            ----
<S>                                                  <C>             <C>
OPERATING ACTIVITIES:
  Net (Loss)                                         $(10,104,830)   $(11,384,852)
  Adjustments to Reconcile Net (Loss)
   to Net Cash (Used for) Operating
   Activities:
    Depreciation Expense                                  280,585         311,592
    Amortization of Deferred Financing Costs              941,330       1,728,491
    Change in Fair Value of Derivative
    Liability                                          (1,087,745)     (2,821,430)
    Amortization of Debt Discount                       3,508,636       3,582,824
    Amortization of Deferred Equity
    Compensation                                           91,205         837,469
    Fees paid for Services - Noncash                       40,898         100,638
   Changes in Assets and Liabilities:
    (Increase) Decrease in:
     Accounts Receivable                                 (135,396)       (315,815)
     Inventory, Prepaid Expenses, and Other
     Current Assets                                      (162,219)        230,885
     Restricted Cash                                         (140)           (629)
    Increase (Decrease) in:
     Accounts Payable and Accrued Liabilities           2,521,422       2,851,146
     Deposits                                              (4,874)        (60,467)
     Deferred Charges                                     (91,849)        (91,514)
                                                     ------------    ------------
  NET CASH - OPERATING ACTIVITIES                      (4,202,977)     (5,031,929)
                                                     ------------    ------------
INVESTING ACTIVITIES:
  Acquisition of Property and Equipment                   (89,501)       (196,171)
                                                     ------------    ------------
FINANCING ACTIVITIES:
  Proceeds From Issuance of Debt                        4,455,000       2,977,537
  Payment of Debt                                        (580,000)             --
  Release of Restricted Cash                                   --              --
  Proceeds from Sale of Common Stock/Warrants           1,067,188          50,500
  Payment of Financing Costs                           (1,045,503)       (389,311)
                                                     ------------    ------------
  NET CASH - FINANCING ACTIVITIES                       3,896,685       2,638,726
                                                     ------------    ------------
  NET (DECREASE) IN CASH                                 (395,793)     (2,589,374)
                                                     ------------    ------------
CASH - BEGINNING OF PERIODS                               670,136       2,620,540
                                                     ------------    ------------
  CASH - END OF PERIODS                              $    274,343    $     31,166
                                                     ============    ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the periods for:
   Interest                                          $     27,389    $     36,684
   Income Taxes                                      $         --    $         --
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


                                       4
<PAGE>

                     U.S. HELICOPTER CORPORATION NOTES TO
                             FINANCIAL STATEMENTS

                                 (Unaudited)

(1) BASIS OF PRESENTATION

U.S. Helicopter Corporation ("U.S. Helicopter," the "Company," "we" or "us")
began flight operations on March 27, 2006 between the Downtown Manhattan
Heliport ("DMH") and John F. Kennedy International Airport ("Kennedy"). our core
business will be providing regularly scheduled helicopter shuttle service
between many of the nation's larger metropolitan airports and surrounding
city-based heliports. We also currently provide on-demand charter services and
seasonal scheduled services from New York City to East Hampton, NY and Belmar,
NJ.

The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and with the instructions to Form 10-Q and
Article 8 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary in order to make the interim financials not
misleading have been included and all such adjustments are of a normal and
recurring nature. The operating results for the nine months ended September 30,
2008 are not necessarily indicative of the results that can be expected for the
year ending December 31, 2008.

(2) GOING CONCERN

The accompanying financial statements have been prepared assuming that we will
continue as a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. We have
incurred substantial net operating losses and used substantial amounts of cash
in our operating activities. Since our inception, we have incurred losses, have
an accumulated deficit, and have experienced negative cash flows from
operations. The expansion and development of our business will likely require
additional capital. This condition raises substantial doubt about our ability to
continue as a going concern. Our independent registered public accounting firm
included a going concern opinion as part of our financial statements for the
fiscal year ended December 31, 2007.

In addition, during recent weeks the United States and global financial markets
have undergone extreme levels of volatility. The United States and global credit
markets have also become more restrictive than in the past. We have primarily
utilized these markets for financing and raising capital. As a result of the
recent changes in these markets, it may not be possible for us to continue to
raise capital.

The accompanying consolidated financial statements do not include any
adjustments that might be necessary should we be unable to continue as a going
concern. If we fail to generate positive cash flows or obtain additional
financing when required, we may have to modify, delay or abandon some or all of
our business and expansion plans.

Our operating plan seeks to minimize our capital requirements, but expansion of
our flight services in the New York market and other markets will require
additional capital. As of September 30, 2008, we had approximately $275,000 in
cash. We believe that additional capital is required to satisfy our cash
requirements for the following 12 months with our current cash and expected
revenues from operations. We have recently entered into a number of financing
transactions (see Notes 7 and 8 to our Financial Statements), and we are
continuing to seek other financing initiatives and have had, and continue to
have, discussions with a number of potential investors concerning investments in
our securities.


                                       5
<PAGE>

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 the disclosure of contingent assets and
liabilities at the date of the financial statements, as well as reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.

CONVERTIBLE SECURITIES WITH CONVERSION FEATURES - The Company accounts for the
fair value conversion features embedded in the Company's convertible notes in
accordance with SFAS No. 133 "Accounting For Derivative Instruments and Hedging
Activities" and EITF Issue No. 00-19 "Accounting For Derivative Financial
Instruments Indexed To and Potentially Settled In a Company's Own Stock" which
requires the Company to bifurcate and separately account for the conversion
feature as embedded derivatives contained in the Company's convertible notes.
Pursuant to SFAS No. 133, the Company bifurcated the fair value of the
conversion feature from the convertible notes, since the conversion features
were determined to not be clearly and closely related to the debt host. The
Company is required to carry these embedded derivatives on its balance sheet at
fair value and unrealized changes in the value of these embedded derivatives are
reflected in the statement of operations. The resulting discount on the debt is
amortized to interest expense over the life of the related debt.

ESTIMATING THE FAIR MARKET VALUE OF OUR COMMON STOCK - The fair market value of
our common stock is a significant estimate used in determining the value of our
various equity related instruments (options, warrants, conversion features,
etc.). In determining the fair market value of our stock we consider such things
as the liquidity of our common stock, the most recent equity transactions,
changes in the Company's financial position, progressions in product development
and the effects of dilutive debt conversions.

REVENUE RECOGNITION - We recognize revenue when transportation has been
provided, including scheduled passenger and charter services.

We had revenue for the three months and nine months ended September 30, 2008 and
2007 as follows:

                         Nine Months Ended        Three Months Ended
                           September 30,             September 30,
                           -------------             -------------
                         2008         2007         2008         2007
                         ----         ----         ----         ----

Scheduled Passenger   $2,661,975   $1,935,696   $1,086,242   $1,175,838
Charter                  596,225      809,690      277,829      403,207
Miscellaneous             22,610       24,036        7,214       10,449
                      ----------   ----------   ----------   ----------
Totals                $3,280,810   $2,769,422   $1,371,285   $1,589,494
                      ==========   ==========   ==========   ==========

See other significant accounting policies are set forth in Note 3 to our
financial statements in our December 31, 2007 Form 10-KSB.

(4) AIR TRAFFIC LIABILITY

We had an air traffic liability of $238,481 and $190,685 at September 30, 2008
and December 31, 2007, respectively. Air traffic liability refers to tickets we
have sold where the passenger has not yet used the ticket to fly. These include
seats sold for scheduled future flights and tickets not used for flights which
have already occurred. This excludes seats which have been sold to our partners
for future flights for which they have not been invoiced.


                                       6
<PAGE>

(5) EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share are computed by dividing net income (loss) by
the weighted-average number of common shares outstanding for the period. Diluted
earnings (loss) per share are computed giving effect to all potential dilutive
common stock, including options and convertible debentures. For all periods
presented, options, convertible shares of Series A Preferred Stock, and
convertible debentures were not included in the computation of diluted loss per
share because the effect would be antidilutive. However, these instruments may
have a dilutive effect in future periods.

(6) FAIR VALUE MEASUREMENTS

Effective January 1, 2008, we adopted SFAS 157, Fair Value Measurements (SFAS
157). SFAS 157 clarifies the definition of fair value, prescribes methods for
measuring fair value, and establishes a fair value hierarchy to classify the
inputs used in measuring fair value as follows:

Level 1-Inputs are unadjusted quoted prices in active markets for identical
assets or liabilities available at the measurement date.

Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets and liabilities
in markets that are not active, inputs other then quoted prices that are
observable, and inputs derived from or corroborated by observable market data.

Level 3-Inputs are unobservable inputs which reflect the reporting entity's own
assumptions on what assumptions the market participants would use in pricing the
asset or liability based on the best available information.

The adoption of SFAS No. 157 did not have a material impact on our fair value
measurements.

The following tables present our assets and liabilities that are measured at
fair value on a recurring basis and are categorized using the fair value
hierarchy. The fair value hierarchy has three levels based on the reliability of
the inputs used to determine fair value.

<TABLE>
<CAPTION>
                                                      Fair Value Measurements at Reporting Date Using
                                               ------------------------------------------------------------
      Description         September 30, 2008    Quoted Prices in
                                               Active Markets for    Significant Other       Significant
                                                Identical Assets     Observable Inputs      Unobservable
                                                    (Level 1)            (Level 2)        Inputs (Level 3)
-----------------------------------------------------------------------------------------------------------
<S>                       <C>                  <C>                  <C>                  <C>
Assets:                   $               --   $               --   $               --   $               --
                          ------------------   ------------------   ------------------   ------------------
TOTAL ASSETS              $               --   $               --   $               --   $               --
                          ==================   ==================   ==================   ==================
LIABILITIES

Derivative Liability -
Short Term (See Note 7)   $        2,205,001   $               --   $        2,205,001   $               --
                          ------------------   ------------------   ------------------   ------------------
Derivative Liability -
Long Term (See Note 7)    $        3,128,512                   --   $        3,128,512   $               --
                          ------------------   ------------------   ------------------   ------------------
TOTAL LIABILITIES         $        5,333,513   $               --   $        5,333,513   $               --
                          ==================   ==================   ==================   ==================
</TABLE>

(7) CONVERTIBLE DEBT

On March 31, 2008 we entered into a Securities Purchase Agreement (the "March
31, 2008 SPA") with YA pursuant to which we issued convertible debentures in the
principal amount of $1,250,000 (the "March 31, 2008 Debenture"). The March 31,
2008 Debenture bears interest at a rate of 18% per annum and is convertible into
shares of our common stock at the option of YA any time up to maturity at a
conversion price equal to the lesser of $0.30 or 80% of the lowest closing bid
price of our common stock during the 15 trading days immediately preceding the
conversion date. The March 31, 2008 Debenture is repayable as of the earlier of
(a) September 30, 2008 or (b) on the closing date of the next equity financing
completed by us resulting in not less than $5.0 million in gross proceeds. We
used approximately $613,000 of the proceeds received in connection with the
March 31, 2008 Debenture to repay all amounts due and owing the March 14, 2008
Debenture. Pursuant to the March 31, 2008 SPA, we also issued warrants to YA to
purchase a total of 2,783,333 shares of our common stock with an exercise price
of $0.01 per share. The warrants are exercisable for a period of five years.


                                       7
<PAGE>

As a condition to closing the March 31, 2008 Debenture transaction, YA and
certain of our bridge lenders (the "Bridge Lenders") were required to enter into
a Subordination Agreement providing that payment by us of the bridge loans made
by the Bridge Lenders in the aggregate amount of $350,000 shall be subordinate
to our repayment of a total of $6,250,000 of indebtedness owed to YA.

As an additional condition to closing the March 31, 2008 Debenture transaction,
our five most senior executive officers (collectively, "Management") agreed to
continue pre-existing reductions of their salaries by 20% until such time as we
repaid a total of $6,250,000 from proceeds to be received by us in an
institutional private placement (the "YA Repayment"). After we make such
repayments, Management's salaries may be reinstated in full, and all unpaid
salary amounts may be issued to Management in the form of shares of our common
stock at a price equal to the greater of the volume weighted average price of
our common stock as quoted by Bloomberg, LP on the day prior to the YA Repayment
or $0.50 per share. Each Management member has the option, however, to receive
payment of such unpaid salary in cash once the total indebtedness owed by us to
YA is reduced by $6.25 million or more.

On March 31, 2008, we amended the terms of three secured convertible debentures
previously issued to YA on March 31, 2006 (in the remaining principal amount of
$5.9 million), November 3, 2006 (in the principal amount of $2.75 million) and
March 30, 2007 (in the remaining principal amount of $844,836) (collectively,
the "Prior Debentures"). The Prior Debentures contained conversion prices equal
to the lesser of $0.50 per share or 95% of the lowest daily volume weighted
average price of our common stock for the 30 days prior to the notice of
exercise ("Fair Market Value"), and provided for an adjustment in the conversion
price in the event that we completed a financing whereby the price per share of
our common stock (or its equivalent on an as-converted basis) was less than the
conversion price of the Prior Debentures. As required by the terms of the Prior
Debentures and in light of prior financings completed by us, we amended the
terms of the Prior Debentures to provide for a conversion price equal to the
lesser of $0.30 per share or 95% of the Fair Market Value of our common stock.

In addition, on March 31, 2008, we amended certain warrants previously issued to
YA in connection with certain convertible debenture financings to purchase up to
an aggregate of 9,452,774 shares of our common stock (the "Prior Warrants"). The
Prior Warrants contained an exercise price of $0.50 per share. The Prior
Warrants provided for an adjustment in the exercise price and the number of
shares issuable under the Prior Warrants in the event that we completed a
financing whereby the price per share of our common stock (or its equivalent on
an as-converted basis) was less than the exercise price of the applicable Prior
Warrant. In light of prior financings completed by us and in accordance with the
terms of the Prior Warrants, we amended the Prior Warrants to provide for an
exercise price of $0.30 per share.

On February 11, 2008, we completed bridge loan transactions with two investors
pursuant to which we issued promissory notes totaling $50,000 in principal that
are convertible into shares of our common stock at a price of $0.25 per share
(the "February, 2008 Bridge Loans"). In connection with the February 2008 Bridge
Loans, we also issued to the Investors warrants to purchase an aggregate of
30,000 shares of our common stock with an exercise price of $0.50 per share and
an exercise period of five years. The notes accrue interest at the rate of 15%
per annum. The Notes, together with accrued and unpaid interest, are repayable
on or before the earlier of the date of the next financing completed by us other
than a bridge loan financing, or the six month anniversary of the closing date
of the Notes.

On February 21, 2008, we entered into a $300,000 bridge loan financing with one
investor pursuant to which we issued a total of $300,000 in principal amount of
convertible notes (the "February 2008 Notes"). The February 2008 Notes accrue
interest at the rate of 10% per annum. The notes, together with accrued and
unpaid interest, are convertible at a price equal to $0.25 per share and are
repayable on or before the earlier of the date of the next financing completed
by us other than a bridge loan financing, or the one year anniversary of the
closing date of the Notes.


                                       8
<PAGE>

On March 14 and March 31, 2008, we entered into a Securities Purchase Agreements
with Cornell Capital pursuant to which we issued convertible debentures in the
principal amount of $1,250,000 (see above).

On July 15, 2008, we entered into a $1,500,000 bridge loan financing pursuant to
a Convertible Note Purchase Agreement pursuant to which we issued a total of
$1,500,000 in principal amount of convertible notes (the "July 2008 Note"). The
July 2008 Note is repayable on the earlier of (a) the first closing of a private
placement of our debt or equity securities to institutional investors in an
institutional capital raise (the "Institutional Private Placement") or (b)
December 31, 2008. To secure repayment of the July 2008 Note, certain third
parties agreed to pledge a total of 375,000 shares of common stock (the
"Collateral") of an unrelated, privately held third party corporation. The July
2008 Note bears interest at the rate of 15% per annum based on a 360-day year,
of which 60 days' worth of interest, equal to $37,500, was prepaid on the
closing of the July 2008 Note. As additional consideration, we paid the investor
upon the closing of the July 2008 Note an origination fee of five percent (5%)
of the amount of the loan, equal to $75,000. The July 2008 Note, together with
accrued but unpaid interest, is convertible at the option of the investor, into
shares of our common stock at a price equal to the lower of (a) the conversion
price for convertible debt issued in the first closing of the Institutional
Private Placement or (b) $0.20 per share. In connection with the July 2008 Note
financing, we issued to the investor warrants to purchase up to 3,000,000 shares
of Common Stock, at an exercise price of $0.20 per share and a term of five
years from the date of issuance. Certain members of our management agreed to
transfer 525,000 shares of Common Stock with a fair value of $157,500 to the
investor as an inducement to purchase the July 2008 Note. Additionally, certain
members of management agreed to transfer 1,225,000 shares of Common Stock with a
fair value of $367,500 to the pledgors and certain third parties as an
inducement to the pledgors to pledge the July 2008 Collateral, in consideration
of an existing lender's agreement to forbear from exercising its rights under
its outstanding note agreement, and other consideration. In addition, we agreed
to pay to the pledgors and certain third parties fees totaling $225,000 as an
inducement to pledge the July 2008 Collateral securing the repayment of the July
2008 Note and other consideration.

On August 28, 2008, we closed on a $400,000 bridge loan financing (the "August
2008 Loan") pursuant to a Convertible Note Purchase Agreement dated August 28,
2008 with the November 2008 Investor, pursuant to which we issued a total of
$400,000 in principal amount of convertible notes (the "August 2008 Notes"). The
August 2008 Notes accrue interest at the rate of 15% per annum, of which 30
days' worth of interest equal to $5,000 was prepaid at the closing of the August
2008 Loan. The Notes, together with accrued and unpaid interest, are convertible
at the option of the holder into shares of our common stock at a conversion
price equal to $0.20 per share and, upon issuance, were repayable 30 days after
the issuance of the August 2008 Notes. In November 2008, we amended the August
2008 Notes and included the principal in the November 2008 Notes as described
below. In connection with this financing, we paid an origination fee to the
November 2008 Investor equal to 5% of the amount of the Loan, or $20,000, as
well as a structuring fee to certain third parties equal to 15% of the amount of
the August 2008 Loan, or $60,000. In connection with the August 2008 Loan
financing, we agreed to issue to the November 2008 Investor warrants to purchase
up to 600,000 shares of our common stock, which have an exercise price of $0.20
per share and a term of five years from the date of issuance. The shares of
common stock issuable upon exercise of such warrant are entitled to piggyback
registration rights.

On September 12, 2008, we entered into a Note Purchase Agreement with an
investor (the "September 2008 Investor"), pursuant to which we issued a total of
$125,000 in principal amount of convertible notes (the "September 2008 Notes").
In connection with this financing, we also issued to the September 2008 Investor
warrants to purchase an aggregate of 250,000 shares of our common stock as an
inducement to enter into the transaction. Such warrants contain an exercise
price of $0.20 per share and are exercisable for a period of five years. The
September 2008 Notes accrue interest at the rate of 15% per annum from the date
of issuance. We also paid origination fees totaling $6,250 to the September 2008
Investor upon the closing of the September 2008 Notes. We also paid a 15%
structuring fee to the September 2008 Investor totaling $18,750 as an inducement
to make the loan. The September 2008 Notes, together with accrued and unpaid
interest, are convertible at the option of the holder into shares of Common
Stock at a conversion price equal to $0.20 per share. The September 2008 Notes,
along with all accrued and unpaid interest, were repayable 30 days after the
closing of the September 2008 Notes.

On September 30, 2008 we entered into a $250,000 bridge loan financing (the
"September 30, 2008 Note"). The September 30, 2008 Note is repayable on
September 30, 2009. To secure repayment, certain third parties agreed to pledge
a total of 25,000 shares of common stock of an unrelated, privately held third
party corporation. The September 30, 2008 Note bears interest at the rate of 15%
per annum of which 60 days worth of interest, equal to $6,250, was prepaid on
the closing of the September 30, 2008 Note. We paid an origination fee of five
percent (5%) of the a mount of the loan, equal to $12,500. The Note, together
with accrued but unpaid interest, is convertible into shares of our common
stock, at a price equal to $0.20 per share. In connection with this financing,
we agreed to issue warrants to purchase up to 1,250,000 shares of Common Stock,
with an exercise price of $0.20 per share and a term of five years. Certain
members of our management agreed to transfer 125,000 shares of Common Stock with
a fair value of $37,500 to the lender as an inducement to making the loan. We
paid fees totaling $25,000 as an inducement to pledge the Collateral securing
the repayment of the September 30, 2008 Note. In addition, certain members of
our management have agreed to transfer a total of 154,167 shares of Common Stock
with a fair value of $46,250 to the Pledgors and certain third parties as an
inducement to the Pledgors to pledge the Collateral, in consideration of an
existing lender's agreement to forbear from exercising its rights under its
outstanding note agreement, and other consideration.


                                       9
<PAGE>

Future principal repayments as of September 30, 2008 are as follows:

Year Ended
September 30,
   2009                               10,619,838
   2010                                2,750,000
   Thereafter                                 --
                                    ------------
   TOTAL                            $ 13,369,838
                                    ============

(8) SECURITIES OFFERINGS

PRIVATE PLACEMENT WITH KUWAIT HOLDINGS, K.S.C. - The Company received gross
proceeds of $1,250,000 in a private placement transaction with Kuwait Holdings,
KSC ("KH") pursuant to a Securities Purchase Agreement dated March 25, 2008 (the
"KH SPA"). Pursuant to the KH SPA, we issued two warrants to purchase an
aggregate of 6,950,000 shares of our common stock, which have an exercise price
of $0.01 per share and a term of five years from the date of issuance (the "KH
Warrants"). KH also received piggyback registration rights in connection with
the shares of common stock issuable upon exercise of the KH Warrants.

(9) COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

Total rental expense was $156,353 and $143,539 respectively, for the three month
periods ended September 30, 2008 and 2007, and $445,928 and $406,280,
respectively for the nine month periods ended September 30, 2008 and 2007.

In 2005 and 2006, we entered into separate five year operating leases for three
Sikorsky S-76 helicopters with a different lessor. These leases expire five
years after the commencement of the leases or upon redelivery to the lessor.
Rent on two of the helicopters is payable at the monthly rate of $35,834 per
month and at a monthly rate of $45,417 for the third helicopter. Each lease
provides that the lessor will finance up to $200,000 per helicopter towards the
costs of shipping and modification; the amortization of this amount is included
in the lease payment. The net effect of this is the Deferred Charges balance of
$284,897 at September 30, 2008, which amount will be amortized as a reduction in
the rental expense over the life of each lease. There are no purchase or renewal
options. In connection with these leases, we entered into a Technical Support
Agreement ("Support Agreement") where we will pay a set rate per flight hour,
subject to price escalation, to cover all of the helicopter's major maintenance
costs.

On July 10, 2008, we reached an agreement (the "Standstill Agreement") with the
lessor of certain of our equipment (the "Other Party") providing for a 60 day
standstill and forbearance period whereby each party has agreed to refrain from
seeking to enforce its respective rights under certain lease agreements (the
"Lease Agreements") and technical support agreements (the "Support Agreements")
relating to three of our aircraft. The Standstill Agreement was subsequently
extended to September 30, 2008. As part of the Agreement, we agreed to a revised
payment schedule under the Lease Agreements and the Support Agreements, and we
preserved our claims against the Other Party up to the amounts paid to the Other
Party under such agreements between January 1, 2008 and the commencement of the
standstill period. The Other Party and we are currently in the process of
negotiating a global settlement of our respective claims as they pertain to
payment and other obligations under the Lease Agreements and the Support
Agreements, including the return or repair of at least one aircraft by the Other
Party and the possibility of a revised lease agreement for such aircraft. There
can be no assurances, however, that we will be able to reach a settlement
agreement favorable to us or at all.


                                       10
<PAGE>

Minimum future lease rent payments as of September 30, 2008 were:

Period Ending
September 30,
   2009                                        1,617,160
   2010                                        1,419,184
   2011                                          568,757
   2012                                               --
                                            ------------
   TOTAL MINIMUM FUTURE LEASE PAYMENTS      $  3,605,101
                                            ============

On or about July 29, 2006, Textron Innovations, Inc. ("Textron") instituted a
trademark cancellation proceeding against us before the U.S. Patent and
Trademark Office, Trademark Trial and Appeal Board. In the cancellation
proceeding, Textron seeks to cancel our trademark registration for the mark U.S.
HELICOPTER(R), Trademark Registration No. 3,072,323, as used by us for our
scheduled airline services (the "Mark"). We registered the Mark on March 21,
2006 on the Supplemental Register of the U.S. Patent and Trademark Office.
Textron contends in the Cancellation Proceeding that a subsidiary of Textron was
named "U.S. Helicopter" and used that business entity name for "helicopter
repair services" in Texas prior to the use of the Mark by us. On or about
September 7, 2006, we filed an answer to the petition to cancel, generally
denying the allegations of Textron, and seeking dismissal of the cancellation
proceeding. We are vigorously defending this claim. The case is currently in a
discovery phase.

(10) RELATED PARTY TRANSACTIONS

On July 15, 2008, we closed on the July 2008 Note transaction as described in
Note 7 in the principal amount of $1,500,000. Pursuant to the July 2008 Note
transaction, certain persons (the "Third Party Pledgors") pledged shares of
common stock of an unrelated third party corporation (the "Pledge Entity") to
secure repayment of the July 2008 Note in exchange for certain payments and
other consideration. Thomas P. Gallagher, our Corporate Secretary, is one of the
pledgors of the shares of common stock of such entity securing repayment of the
July 2008 Note. The estimated value of the collateral pledged by Mr. Gallagher
for the July 2008 Note is approximately $275,000.

In addition, on September 30, 2008, we entered into the September 30, 2008 Note
financing as described in Note 7 above in the principal amount of $250,000.
Pursuant to the September 30, 2008 Note transaction, the Third Party Pledgors
pledged additional shares of common stock of the Pledge Entity to secure
repayment of the September 30, 2008 Note in exchange for certain payments and
other consideration. Thomas P. Gallagher, our Corporate Secretary, is one of the
pledgors of the shares of common stock of the Pledge Entity securing repayment
of the September 30, 2008 Note. The estimated value of the collateral pledged by
Mr. Gallagher for the September 30, 2008 Note is approximately $18,500.

      In addition, on November 7, 2008, we closed on a $250,000 bridge loan
financing (the "Additional Loan") pursuant to an Amended and Restated
Convertible Note Purchase Agreement dated November 7, 2008 with Philadelphia
Financial, LLC (the "Investor") as described in Note 13 below. Pursuant to this
transaction, we issued a total of $650,000 in principal amount of convertible
notes (the "November 2008 Notes"), which includes an advance in the principal
amount of $400,000 made to us on August 28, 2008 (the "First Advance"). The
Third Party Pledgors pledged additional shares of common stock of the Pledge
Entity to secure repayment of the November 2008 Notes in exchange for certain
payments and other consideration. Thomas P. Gallagher, our Corporate Secretary,
is one of the pledgors of the shares of common stock of the Pledge Entity
securing repayment of the November 2008 Notes. The estimated value of the
collateral pledged by Mr. Gallagher for the November 2008 Notes is approximately
$18,500.

Donal McSullivan, Senior Vice President and Chief Marketing Officer, and John
Capozzi, Marketing and Business Development Advisor and Director, have provided
certain consulting services to the Company from its inception. In connection
with the provision of such consulting services, they had an agreement with the
Company (the "Marketing Services Agreement") to jointly receive 10% of the
proceeds of any financings arranged with Cornell Capital and certain other
investors. As of the date of this report, they have received $832,500 of the
proceeds of the transactions with Cornell Capital and certain other investors
plus warrants to purchase up to 600,000 shares of the Company's common stock. On
January 17, 2007, we entered into a Settlement Agreement and Release with
respect to the Marketing Services Agreement (the "Settlement Agreement"). In
exchange for a full termination of the Marketing Services Agreement, we agreed
to the following: (i) a payment of $50,000 to each of Mr. Capozzi and Mr.
McSullivan upon the signing of the settlement agreement; (ii) a payment of
$99,985 to each of Mr. Capozzi and Mr. McSullivan as of March 15, 2007; and


                                       11
<PAGE>

(iii) the issuance of warrants to purchase 300,000 and 200,000 shares to Mr.
Capozzi and Mr. McSullivan, respectively, with an exercise price of $0.05 per
share and a term of five years. As of the date of this report, we have not made
the payment described in (ii) or issued the warrants described in (iii). In
connection with the May 2007 Debenture financing, we have agreed to not make
such payment until we receive at least $10 million in financing transactions and
our Board reasonably believes we will have sufficient capital to finance
operations for the 12 months following such financing. In May 2008, we entered
into an amendment to the Settlement Agreement pursuant to which we agreed (A) to
make the payments described in (ii) above on or before the earlier of (x) the
first closing of an institutional private placement of our securities or (y)
September 30, 2008 with interest calculated from March 15, 2007 at a rate equal
to 15% per annum through the date such payment is made; and (B) to issue
additional warrants to each of Mr. Capozzi and Mr. McSullivan to purchase
230,735 shares of our common stock each, which have an exercise price of $0.13
per share and all other terms and conditions substantially identical to other
warrants issued in accordance with the Settlement Agreement.

We are a party to an agreement dated October 28, 2005 with William Street
Advisors, LLC ("William Street") which provides for payment to William Street of
a cash fee equal to five percent of the consideration paid by investors
introduced to us by William Street, as well as warrants to purchase up to five
percent of the stock purchased by such investors. William Street is a subsidiary
of The Chart Group, LP, of which Christopher Brady, one of our directors, is
founder and Chairman. In October, 2005, we entered into common stock purchase
agreements with six separate purchasers for a total of $6,250,000 whereby we
issued 6,250,000 shares and warrants to purchase up to 750,000 shares. In
connection with these transactions, we paid William Street a cash fee of
$312,500 and warrants to purchase a total of 312,500 shares of our common stock,
of which 156,250 warrants were issued in the name of Univest Group Limited.

(11) INCOME TAXES

We have approximately $3,894,000 of unamortized capitalized pre-operating costs
that have not been deducted for tax purposes at December 31, 2007. These
deductions are being applied against future taxable income in the sixty month
period following the commencement of operations.

These future deductions were recorded by us as deferred tax assets totaling
approximately $1,558,000 at December 31, 2007. As the effective utilization of
this deferred tax asset is dependent on future taxable profits, a valuation
allowance of approximately $1,558,000 was recorded at December 31, 2007, leaving
a net deferred tax asset of $-0- for all periods presented and the valuation
allowance decreased by $370,000 in 2007.

We have approximately $24,100,000 of net operating losses ("NOLS") that have not
been used for tax purposes as of December 31, 2007. These NOLs expire twenty
years following the year in which the loss occurred. Our NOLs begin expiring in
2023. The amount of loss carryforwards may be limited under regulations detailed
in Section 382 of the Internal Revenue Code. Section 382 contains a complex set
of rules which limit the carryforward of NOLs in periods following a greater
than 50 percent ownership change, as defined. We are currently in the process of
determining the effect of such limitations.

(12) RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures" ("SFAS
157"). SFAS 157 (and its amendments described below) defines fair value and
establishes a framework for measuring fair value in accordance with generally
accepted accounting principles. This Statement also applies to other accounting
pronouncements that require or permit a fair value measure. As defined by this
Statement, the fair value of an Asset or Liability would be based on an "exit
price" basis rather than an "entry price" basis. Additionally, the fair value
should be market-based and not an entity-based measurement. SFAS 157 (as
originally issued) was effective for fiscal years beginning after November 15,
2007 (amended to November 15, 2008 - see below).

FSP FAS 157-1 amends FAS 157 to exclude FASB Statement No. 13, "Accounting for
Leases" (FAS 13), and its related interpretive accounting pronouncements that
address leasing transactions. The FASB decided to exclude leasing transactions
covered by FAS 13 in order to allow it to more broadly consider the use of fair
value measurements for these transactions as part of its project to
comprehensively reconsider the accounting for leasing transactions.


                                       12
<PAGE>

FSP FAS 157-2 delays the effective date of FAS 157 by one year for nonfinancial
assets and nonfinancial liabilities that are recognized or disclosed at fair
value in the financial statements on a nonrecurring basis. The delay gives the
FASB and constituents additional time to consider the effect of various
implementation issues that have arisen, or that may arise, from the application
of FAS 157 to these assets and liabilities. For items covered by the FSP, FAS
157 will now go into effect in fiscal years beginning after November 15, 2008
and in interim periods within those fiscal years.

FSP FAS 157-3 clarifies the application of FASB Statement No. 157, Fair Value
Measurements, in a market that is not active and provides an example to
illustrate key considerations in determining the fair value of a financial asset
when the market for that financial asset is not active. This FSP shall be
effective upon issuance, including prior periods for which financial statements
have not been issued. Revisions resulting from a change in the valuation
technique or its application shall be accounted for as a change in accounting
estimate (FASB Statement No. 154, Accounting Changes and Error Corrections,
paragraph 19). The disclosure provisions of Statement 154 for a change in
accounting estimate are not required for revisions resulting from a change in
valuation technique or its application.

(13) SUBSEQUENT EVENTS

On or about October 1, 2008, we entered into a Consulting Agreement with the
September 30, 2008 Investor whereby we agreed to issue 250,000 restricted shares
of Common Stock in exchange for certain consulting services rendered to us for
the one year period commencing on October 1, 2008.

On November 7, 2008, we closed on a $250,000 bridge loan financing (the
"Additional Loan") pursuant to an Amended and Restated Convertible Note Purchase
Agreement dated November 7, 2008 with Philadelphia Financial, LLC (the
"Investor"), pursuant to which we issued a total of $650,000 in principal amount
of convertible notes (the "November 2008 Notes"), which includes an advance in
the principal amount of $400,000 made to us on August 28, 2008 (the "First
Advance").

The November 2008 Notes accrue interest at the rate of 15% per annum, of which
60 days worth of interest under the Additional Loan equal to $6,250 was prepaid
at the closing of the Additional Loan. The Notes, together with accrued and
unpaid interest, are convertible at the option of the holder into shares of our
common stock at a conversion price equal to $0.20 per share of our common stock
and are repayable on the earlier of (a) 90 days after the issuance of the Notes
or (b) the date upon which we receive at least $3.0 million in gross proceeds in
a private placement of our securities. As a result, the maturity date for the
First Advance was extended by a minimum of 130 days. To secure repayment of the
November 2008 Notes, certain third parties agreed to pledge a total of 25,000
shares of common stock of an unrelated, privately held third party corporation
(the "Third Party Collateral"). In addition, to secure repayment of the Notes,
certain members of our management agreed to pledge a total of 600,000 shares of
our Common Stock pursuant to the terms of a second Pledge and Escrow Agreement.
We paid an origination fee to the Investor equal to 5% of the amount of the
Additional Loan, or $12,500, as well as an origination fee to certain third
parties equal to 8% of the amount of the Additional Loan, or $20,000. In
addition, we agreed to pay to the Third Party Pledgors a fee totaling $25,000 as
an inducement to pledge the Third Party Collateral securing the repayment of the
Notes. We agreed to issue to the Investor warrants to purchase up to 937,500
shares of our Common Stock, which have an exercise price of $0.20 per share and
a term of five years from the date of issuance.


                                       13
<PAGE>


On or about November 1, 2008, the City of New York transferred management of the
Downtown Manhattan Heliport (the "DMH") from the Port Authority of New York and
New Jersey (the "Port Authority") to FirstFlight, Inc. ("FirstFlight").
Immediately prior to transferring management of the DMH, the Company was advised
that FirstFlight did not maintain the approvals required to provide Federal
airline security screening at the DMH. As a consequence, we have been unable to
provide either scheduled or charter flight services from the DMH since November
1, 2008 due to the lack of TSA-approved security screening services and will not
be able to do so until FirstFlight obtains all required TSA approvals. We have
been advised that FirstFlight and the TSA are working diligently to ensure that
FirstFlight has all required approvals as quickly as possible; however, there
can be no assurances that FirstFlight will obtain such approvals on a timely
basis or at all. Accordingly, our financial condition and our ability to
implement our business plan may suffer in the event that we are unable to
conduct our flight operations from the DMH for an extended period of time.

In addition, we are negotiating in good faith with FirstFlight for a new
operating agreement with such entity. FirstFlight has agreed to abide by the
same terms observed by the Port Authority through November 30, 2008. While our
management believes that a mutually acceptable agreement will be entered into
prior to such date, there can be no assurances that we will be able to enter
into an agreement with FirstFlight on a timely basis or at all.

On November 19, 2008, we entered into a Note Purchase Agreement with an investor
(the "November 19, 2008 Investor"), pursuant to which we agreed to issue a total
of $1,000,000 in principal amount of notes (the "November 19, 2008 Notes"). In
connection with this financing, we also agreed to issue to the November 19, 2008
Investor warrants to purchase an aggregate of 2,000,000 shares of our common
stock as an inducement to enter into the transaction. Such warrants contain an
exercise price of $0.20 per share, are exercisable for a period of five years
and carry piggyback registration rights for the shares underlying such warrants.

The first closing of the November 19, 2008 Notes took place on November 19,
2008, pursuant to which we issued a promissory note in the principal amount of
$500,000 and warrants to purchase up to 1,000,000 shares of our common stock.
The parties agreed that the closing of the second tranche in an amount of
$500,000 will occur on December 22, 2008, pursuant to which we will issue a note
in the principal amount of $500,000 and additional warrants to purchase up to
1,000,000 shares of our common stock.

The November 19, 2008 Notes accrue interest at the rate of 15% per annum from
the date of issuance. We also paid origination fees totaling $25,000 to the
November 19, 2008 Investor upon the first closing, as well as 60 days' worth of
prepaid interest under the initial $500,000 advance made by the November 19,
2008 Investor. Such fees are also payable upon the closing of the second tranche
of $500,000.

The September 2008 Notes, along with all accrued and unpaid interest, are
repayable on the earlier of (a) January 31, 2009 or (b) the date upon which we
receive at least $5.0 million in gross proceeds pursuant to a sale of our
securities in a private placement exempt from the registration requirements of
the Securities Act of 1933, as amended. Notwithstanding the foregoing, we agreed
to remit certain payments made by our largest customer on a monthly basis in the
event that the November 19, 2008 Investor elects because of a default under the
November 19, 2008 Notes, or the investor reasonably believes that (i) our
financial condition has experienced a material adverse change, or is reasonably
likely to experience a material adverse change in the immediate future, or (ii)
we have failed to make sufficient progress towards obtaining financing from
potential investors identified by the Company.

AGREEMENT WITH LESSOR - The Company reached an agreement (the "Agreement") as of
July 10, 2008 with its primary equipment lessor and maintenance provider (the
"Lessor") providing for a 60 day standstill and forbearance period whereby each
party has agreed to refrain from seeking to enforce its respective rights under
certain lease agreements (the "Lease Agreements") and Technical Support
Agreements (the "Support Agreements") relating to three of the Company's
aircraft. The Agreement was subsequently extended to September 30, 2008. As part
of the Agreement, the Company and the Lessor agreed to a revised payment
schedule under the Lease Agreements and the Support Agreements, and the Company
preserved its claims against the Lessor up to the amounts paid to the Lessor
under such agreements between January 1, 2008 and the commencement of the
standstill period. The Company and the Lessor are currently in the process of
negotiating a global settlement of their respective claims as they pertain to
payment and other obligations under the Lease Agreements and the Support
Agreements, including a revised payment schedule, a new power-by-the-hour
agreement, the return of at least one aircraft to the Lessor and the possibility
of a revised lease agreement for such aircraft. There can be no assurances,
however, that the Company and the Lessor will be able to reach a settlement
agreement on terms favorable to the Company or at all.


                                       14
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION

      Information included in this Form 10-Q may contain forward-looking
statements. This information may involve known and unknown risks, uncertainties
and other factors which may cause our actual results, performance or
achievements to be materially different from the future results, performance or
achievements expressed or implied by any forward-looking statements.
Forward-looking statements, which involve assumptions and describe our future
plans, strategies and expectations, are generally identifiable by use of the
words "may," "will," "should," "expect," "anticipate," "estimate," "believe,"
"intend" or "project" or the negative of these words or other variations on
these words or comparable terminology.

      This Form 10-Q contains forward-looking statements, including statements
regarding, among other things, (a) our projected sales and profitability, (b)
our growth strategies, (c) anticipated trends in our industry, (d) our future
financing plans and (e) our anticipated needs for working capital. Actual events
or results may differ materially from those discussed in forward-looking
statements as a result of various factors, including, without limitation, the
risks outlined under "Risk Factors" and matters described in this Form 10-Q
generally. In light of these risks and uncertainties, there can be no assurance
that the forward-looking statements contained in this Form 10-Q will in fact
occur.

      The following discussion and analysis should be read together with the
financial statements and the accompanying notes thereto included elsewhere in
this Form 10-Q.

                                   GENERAL

      We are a provider of scheduled and charter passenger helicopter services
and are, at present, the only certificated United States based airline focused
on scheduled helicopter flight service. Our operations currently center on
scheduled flights connecting midtown and downtown Manhattan with Newark Liberty
International Airport ("Newark") and John F. Kennedy International Airport
("Kennedy Airport"). We are currently the only operator offering regularly
scheduled helicopter service in the New York market.

      We believe the timing is favorable, particularly in light of traffic
congestion problems affecting many of the nation's highways serving major
metropolitan areas during peak traffic hours (especially direct and connecting
routes to major airports where gridlock has become the norm), to introduce our
new Metro-hop Airport Shuttle Service ("MASS"). Our MASS service will provide
regular, scheduled passenger helicopter service between many of the nation's
larger metropolitan airports and surrounding city-based heliports. On March 27,
2006, we commenced regularly scheduled flight operations between the Downtown
Manhattan Heliport and Kennedy Airport. We estimate that there are annually over
29 million air passengers traveling in and out of Manhattan who could utilize a
regularly scheduled helicopter service to access major airports, when it becomes
available.

      Our principal target market is the business traveler who, we believe, is
willing to pay fares between $139 and $169. Individual travelers purchase
tickets at the higher end of the price range. Large corporate travel management
companies or corporations purchase volume sales, which are negotiated at a
"per-ticket-price" at the lower end of the price range and are based upon large
ticket commitments. Our regularly scheduled U.S. Helicopter flights between
Manhattan and Newark and Kennedy Airports take approximately eight minutes and
stand in contrast to paying $850 to $2,770 for the same flights offered by a
charter helicopter service or paying fares from $75-$125 plus tolls and tips for
65-125 minutes of travel time (or longer) via taxi or limousine airport ride.
While our service is available to the general public including corporate CEOs
and affluent leisure travelers, we believe our service has the greatest appeal
to the segment of the business traveler market (like managers, directors, etc.)
that currently uses town car/executive car services, limos or taxi
transportation, travels 2-3 times per month and recognizes the true time-saving
value offered via helicopter. We believe our service is highly attractive (for
personal reasons as well as business reasons) compared to ground-based travel
when the helicopter connection is reasonably and moderately priced in the range
that we offer.

      During 2006, we introduced our MASS service in the Metro New York City
market with service between Kennedy Airport and Newark Airport and the Downtown
Manhattan Heliport. In February 2007 we expanded our service between Kennedy
Airport and Newark Airport to the East 34th Street Heliport. In June 2006, we
also commenced service between Sikorsky Memorial Airport in Stratford,
Connecticut and the Downtown Manhattan Heliport. We intend to expand our service
to LaGuardia International Airport and the West 30th Street Heliport in
Manhattan during the next 12 months. Subsequently we intend to introduce our


                                       15
<PAGE>

airport shuttle service in the metropolitan Washington DC, Chicago and Los
Angeles markets, with further expansion into other major U.S. metro-markets. The
number of passengers who originate or terminate their travel from within close
proximity to one of these cities' heliports is estimated at over 200 million
annually. In addition to our regularly scheduled flight services to and from New
York City metropolitan-area airports from Manhattan, we also provide on-demand
charter services and limited scheduled service between Manhattan and Sikorsky
Memorial Airport (Stratford, Connecticut), and limited seasonal service between
Manhattan and East Hampton Airport (East Hampton, New York) and Monmouth
Executive Airport (Belmar, New Jersey).

      Many of the same factors (population growth, economic expansion and
airline deregulation), which drove the growth in air passenger travel during the
years since 1975, are also responsible for the demand which currently exists for
reliable, scheduled "Metro-hop" airport shuttle services. Even so, as traffic
congestion intensified and systemic gridlock became the norm (while corporate
charter helicopter usage expanded), the demand for scheduled helicopter services
to and from airports to serve the general public, especially regular business
travelers, has remained largely ignored and un-served in the United States.

      We believe that there is significant unfulfilled demand for scheduled,
"Metro-Hop" airport helicopter shuttle services in the U.S., especially in our
initial target market of the New York City metropolitan area. This demand has
been largely unfulfilled since the late 1970s, when New York Airways' scheduled
helicopter service carried over 400,000 passengers annually. During this period
the market size was approximately 35 million passengers as compared to today,
where the market size has grown to over 96 million passengers.

      Due to significant growth in many U.S. cities, the need for ground-based
infrastructure servicing metropolitan areas, and roadways servicing major
airports in particular, has outpaced capacity. Only so many subways, bus lines,
and taxis can be added to service these high demand routes before each city runs
out of space and capability. Adding more limousine and taxi services will not
help the situation either because the bottleneck is in the infrastructure
itself. U.S. Helicopter believes that the future of transportation for short
distances into and out of these densely populated urban areas is by helicopter.
By using the vertical take off and landing capabilities of the helicopter,
passengers will be able to travel through the city and to local destinations
without suffering through hours of gridlock. People will be able to quickly
travel across town, to the local airport, or to a neighboring city in minutes
instead of hours.

                              RESULTS OF OPERATIONS

              THREE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO
                    THREE MONTHS ENDED SEPTEMBER 30, 2007

         REVENUES For the three months ended September 30, 2008, total revenues
decreased to $1,371,285. For the three months ended September 30, 2007, our
total revenues were $1,589,494. The decrease in total revenues is attributable
to lower charter and passenger revenue as a result of decreased availability of
aircraft in the third quarter of 2008 versus 2007.

         PAYROLL EXPENSES Payroll expenses decreased to $678,954 for the three
months ended September 30, 2008 from $985,788 for the three months ended
September 30, 2007. The decrease in payroll expense is due to a smaller number
of employees and reimbursement of certain payroll expenses by third parties.

         PROFESSIONAL FEES For the three months ended September 30, 2008, we
incurred professional fees totaling $395,147, compared to $414,398 for the three
months ended September 30, 2007. These fees are comprised of legal fees for
general matters, accounting fees, assurance fees paid to our independent
registered public accounting firm, other consulting fees, transfer agent fees,
registered agent fees, security fees and Board of Directors fees.

         EQUIPMENT EXPENSES Equipment lease expenses decreased to $356,517 for
the three months ended September 30, 2008 from $471,723 for the three months
ended September 30, 2007, due to rent forgiveness on one of our aircraft.

                                       16
<PAGE>


         ADVERTISING EXPENSES Advertising expenses decreased to $39,873 for the
three months ended September 30, 2008 from $60,740 for the three months ended
September 30, 2007 as a result of less advertising purchased by us.

         OPERATING LOSS We reported an operating loss of $(1,630,758) for the
three months ended September 30, 2008 compared to an operating loss of
$(1,991,444) for the three months ended September 30, 2007. The decrease in
operating loss is due to lower revenue levels offset by a decrease in expenses
as described above.

         NET LOSS We reported a net loss of $(4,353,556) for the three months
ended September 30, 2008 compared to a net loss of $(4,076,383) for the three
months ended September 30, 2007. The decrease in net loss is due to a lower
operating loss as described above. Net loss was negatively impacted by higher
(net) non-operating expenses of $(2,722,798) for the three months ended
September 30, 2008 compared to (net) non-operating expenses of $(2,084,939) for
the three months ended September 30, 2007. The difference is attributable to:
(i) higher interest expense of $342,882; (ii) a gain from changes in the fair
value of derivative liabilities in the third quarter of 2007 of $397,822; and
(iii) a significantly higher amortization of debt discount in the third quarter
of 2008.

         NET LOSS PER COMMON SHARE Basic and diluted net loss per common share
was $(0.10) for the three months ended September 30, 2008 compared to a $(0.11)
loss for the three months ended September 30, 2007.

                NINE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO
                      NINE MONTHS ENDED SEPTEMBER 30, 2007

         REVENUES For the nine months ended September 30, 2008, total revenues
increased to $3,280,810. For the nine months ended September 30, 2007, our total
revenues were $2,769,422. The increase in total revenues for the nine months is
attributable to increased passenger counts in 2008 versus 2007 and a higher net
fare.

         PAYROLL EXPENSES Payroll expenses decreased to $2,219,320 for the nine
months ended September 30, 2008 from $2,971,321 for the nine months ended
September 30, 2007. The decrease in payroll expense is due to a smaller number
of employees and reimbursement of certain payroll expenses by third parties.

         PROFESSIONAL FEES For the nine incurred professional fees totaling
$1,214,845, compared to $1,391,905 for the nine months ended September 30, 2008,
we months ended September 30, 2007. These fees are comprised of legal fees for
general matters, accounting fees, assurance fees paid to our independent
registered public accounting firm, other consulting fees, transfer agent fees,
registered agent fees, security fees and Board of Directors fees.

         EQUIPMENT EXPENSES Equipment lease expenses decreased to $1,298,137 for
the nine months ended September 30, 2008 from $1,424,711 for the nine months
ended September 30, 2007 primarily as a result of rent forgiveness on one of our
aircraft.

         ADVERTISING EXPENSES Advertising expenses decreased to $108,328 for the
nine months ended September 30, 2008 from $420,126 for the nine months ended
September 30, 2007, due to less advertising purchased by us.

         OPERATING LOSS We reported an operating loss of $(5,888,540) for the
nine months ended September 30, 2008 compared to an operating loss of
$(8,176,944) for the nine months ended September 30, 2007. The decrease in
operating loss is due to higher revenue levels and a decrease in expenses as
described above.

         NET LOSS We reported a net loss of $(10,104,829) for the nine months
ended September 30, 2008 compared to a net loss of $(11,384,852) for the nine
months ended September 30, 2007. The decrease in net loss is due to lower
expense levels and an increase in revenue as we expanded our operation. Net loss
was negatively impacted by higher (net) other expenses of $(4,216,289) for the
nine months ended September 30, 2008 compared to (net) other expenses of
$(3,207,908) for the nine months ended September 30, 2007. The difference in
(net) other expense is due to: (i) higher interest expense of $(858,591); (ii) a
reduced gain from changes in the fair value of derivative liabilities in the
first nine months of 2008 and (iii) increased debt discount expense in 2008.

         NET LOSS PER COMMON SHARE Basic and diluted net loss per common share
was $(0.22) for the nine months ended September 30, 2008 compared to a $(0.32)
loss for the nine months ended September 30, 2007.


                                       17
<PAGE>

      Results of the third quarter are not necessarily indicative of the results
for the full year of 2008. Certain of our operations (particularly charter
flights and certain seasonal services) will have the effect of increasing our
total revenue during the second and third quarters.

LIQUIDITY AND FINANCIAL CONDITION

GENERAL

      At September 30, 2008, cash and cash equivalents were $274,343. Total
liabilities at September 30, 2008 were $19,597,060, consisting of current
liabilities in the aggregate amount of $15,020,281 and long-term liabilities in
the amount of $4,576,779. At September 30, 2008, assets included $1,415,849 in
current assets, $664,607 in furniture and equipment, net of depreciation; and
other assets including debt issuance costs of $1,822,302. As of September 30,
2008, our working capital deficit was $(13,604,432) as compared to $(3,313,797)
at December 31, 2007 largely due to an increase in short-term notes payable and
derivative liability. We expect to incur additional operating losses as we
continue our commercialization efforts.

Our debt before discount at September 30, 2008 and December 31, 2007 were as
follows:

                              September 30, 2008     December 31, 2007
                              ------------------     -----------------
Short-term notes              $        7,150,000     $         844,838
Short-term bridge loans                3,469,838                    --
Long Term Convertible notes            2,750,000             8,650,000
                              ------------------     -----------------
       Total                  $       13,369,838     $       9,494,838
                              ==================     =================

      For more detailed information on long-term liabilities, see Note 7 to our
financial statements contained herein.

FINANCING TRANSACTIONS

      Since inception, we have incurred substantial operating losses. As of
September 30, 2008, we had an accumulated deficit of $(38,482,195). We did not
receive any revenues from inception until the start of operations on March 27,
2006. Our operations have been financed primarily through the private placement
of our debt and equity securities and the cash exercise of outstanding warrants.
The terms of these debt and equity financings are set forth below.

NOVEMBER 19, 2008 BRIDGE LOAN FINANCING

         On November 19, 2008, we entered into a Note Purchase Agreement with an
investor (the "November 19, 2008 Investor"), pursuant to which we agreed to
issue a total of $1,000,000 in principal amount of notes (the "November 19, 2008
Notes"). In connection with this financing, we also agreed to issue to the
November 19, 2008 Investor warrants to purchase an aggregate of 2,000,000 shares
of our common stock as an inducement to enter into the transaction. Such
warrants contain an exercise price of $0.20 per share, are exercisable for a
period of five years and carry piggyback registration rights for the shares
underlying such warrants.

         The first closing of the November 19, 2008 Notes took place on November
19, 2008, pursuant to which we issued a promissory note in the principal amount
of $500,000 and warrants to purchase up to 1,000,000 shares of our common stock.
The parties agreed that the closing of the second tranche in an amount of
$500,000 will occur on December 22, 2008, pursuant to which we will issue a note
in the principal amount of $500,000 and additional warrants to purchase up to
1,000,000 shares of our common stock.

         The November 19, 2008 Notes accrue interest at the rate of 15% per
annum from the date of issuance. We also paid origination fees totaling $25,000
to the November 19, 2008 Investor upon the first closing, as well as 60 days'
worth of prepaid interest under the initial $500,000 advance made by the
November 19, 2008 Investor. Such fees are also payable upon the closing of the
second tranche of $500,000.

         The September 2008 Notes, along with all accrued and unpaid interest,
are repayable on the earlier of (a) January 31, 2009 or (b) the date upon which
we receive at least $5.0 million in gross proceeds pursuant to a sale of our
securities in a private placement exempt from the registration requirements of
the Securities Act of 1933, as amended. Notwithstanding the foregoing, we agreed
to remit certain payments made by our largest customer on a monthly basis in the
event that the November 19, 2008 Investor elects because of a default under the
November 19, 2008 Notes, or the investor reasonably believes that (i) our
financial condition has experienced a material adverse change, or is reasonably
likely to experience a material adverse change in the immediate future, or (ii)
we have failed to make sufficient progress towards obtaining financing from
potential investors identified by the Company.

NOVEMBER 7, 2008 BRIDGE LOAN FINANCING

      On November 7, 2008, we closed on a $250,000 bridge loan financing (the
"Additional Loan") pursuant to an Amended and Restated Convertible Note Purchase
Agreement dated November 7, 2008 with Philadelphia Financial, LLC (the "November
2008 Investor"), pursuant to which we issued a total of $650,000 in principal
amount of convertible notes (the "November 2008 Notes"), which include an
advance in the principal amount of $400,000 made to us on August 28, 2008 (the
"First Advance").

      The November 2008 Notes accrue interest at the rate of 15% per annum, of
which 60 days' worth of interest under the Additional Loan equal to $6,250 was
prepaid at the closing of the Additional Loan. The November 2008 Notes, together
with accrued and unpaid interest, are convertible at the option of the holder
into shares of our common stock at a conversion price equal to $0.20 per share
of our common stock, par value $0.001 per share ("Common Stock") and are
repayable on the earlier of (a) 90 days after the issuance of the November 2008
Notes or (b) the date upon which we receive at least $3.0 million in gross
proceeds in a private placement of our securities. As a result, the maturity
date for the First Advance was extended by a minimum of 130 days. The shares
issuable upon conversion of the November 2008 Notes are entitled to piggyback
registration rights.


                                       18
<PAGE>

      To secure repayment of the November 2008 Notes, certain third parties (the
"Third Party Pledgors") agreed to pledge a total of 25,000 shares of common
stock (the "Third Party Collateral") of an unrelated, privately held third party
corporation (the "Pledge Company") pursuant to the terms and provisions of a
Pledge and Escrow Agreement. In addition, to secure repayment of the November
2008 Notes, certain members of our management agreed to pledge a total of
600,000 shares of our Common Stock held by such persons pursuant to the terms of
a second Pledge and Escrow Agreement.

      In connection with this financing, we paid an origination fee to the
November 2008 Investor equal to 5% of the amount of the Additional Loan, or
$12,500, as well as an origination fee to certain third parties equal to 8% of
the amount of the Additional Loan, or $20,000. In addition, we agreed to pay to
the Third Party Pledgors a fee totaling $25,000 as an inducement to pledge the
Third Party Collateral securing the repayment of the November 2008 Notes. We
used the net proceeds received in this financing for working capital.

      In connection with the Additional Loan financing, we agreed to issue to
the November 2008 Investor warrants to purchase up to 937,500 shares of our
Common Stock, which have an exercise price of $0.20 per share and a term of five
years from the date of issuance. The shares of Common Stock issuable upon
exercise of such warrant are entitled to piggyback registration rights.

      Certain members of our management agreed to transfer 325,000 shares of
Common Stock to the November 2008 Investor as an inducement to purchase the
November 2008 Notes. Such shares are also entitled to piggyback registration
rights. In addition, certain members of our management have agreed to transfer a
total of 87,400 shares of Common Stock to the Third Party Pledgors as an
inducement to pledge the Third Party Collateral.

SEPTEMBER 30, 2008 BRIDGE LOAN FINANCING

      On September 30, 2008, we closed on a $250,000 bridge loan financing
pursuant to a Note Purchase Agreement dated September 30, 2008 with one investor
(the "September 2008 Investor"), pursuant to which we issued a total of $250,000
in principal amount of convertible notes (the "September 2008 Note"). The
September 2008 Note is repayable on September 30, 2009. To secure repayment of
the September 2008 Note, the Third Party Pledgors agreed to pledge a total of
25,000 shares of common stock (the "Collateral") of the Pledge Company pursuant
to the terms and provisions of a Pledge and Escrow Agreement.

      The September 2008 Note bears interest at the rate of 15% per annum based
on a 365-day year, of which 60 days' worth of interest, equal to $6,250, was
prepaid on the closing of the September 2008 Note. As additional consideration,
we paid the September 2008 Investor upon the closing of the September 2008 Note
an origination fee of five percent (5%) of the amount of the loan, equal to
$12,500. We received net proceeds of approximately $185,000 after deducting
prepaid interest and fees and expenses of the offering. We used the net proceeds
received in this financing for working capital.

      The September 2008 Note, together with accrued but unpaid interest, is
convertible at the option of the September 2008 Investor, into shares of Common
Stock at a price equal to $0.20 per share. The shares issuable upon conversion
of the September 2008 Note are entitled to piggyback registration rights.

      In connection with the September 2008 Note financing, we agreed to issue
to the September 2008 Investor warrants to purchase up to 1,250,000 shares of
Common Stock, which have an exercise price of $0.20 per share and a term of five
years from the date of issuance. The shares of Common Stock issuable upon
exercise of such warrant are entitled to piggyback registration rights.

      Certain members of our management agreed to transfer 125,000 shares of
Common Stock to the October 2008 Investor as an inducement to purchase the
September 30, 2008 Note. Such shares are also entitled to piggyback registration
rights. In addition, certain members of our management have agreed to transfer a
total of 154,167 shares of Common Stock to the Pledgors and certain third
parties as an inducement to the Pledgors to pledge the Collateral, in
consideration of an existing lender's agreement to forbear from exercising its
rights under its outstanding note agreement, and other consideration.


                                       19
<PAGE>

      Commissions paid by us in connection with this transaction consisted of an
8% placement fee to certain third parties. In addition, we agreed to pay to the
Third Party Pledgors fees totaling $25,000 as an inducement to pledge the
Collateral securing the repayment of the September 30, 2008 Note.

      On or about October 1, 2008, we entered into a Consulting Agreement with
the September 30, 2008 Investor whereby we agreed to issue 250,000 restricted
shares of Common Stock in exchange for certain consulting services rendered to
us for the one year period commencing on October 1, 2008.

SEPTEMBER 12, 2008 BRIDGE LOAN FINANCING

      On September 12, 2008, we entered into a Note Purchase Agreement with an
investor (the "September 2008 Investor"), pursuant to which we issued a total of
$125,000 in principal amount of convertible notes (the "September 2008 Notes").
In connection with this financing, we also issued to the September 2008 Investor
warrants to purchase an aggregate of 250,000 shares of our common stock as an
inducement to enter into the transaction. Such warrants contain an exercise
price of $0.20 per share and are exercisable for a period of five years.

      The September 2008 Notes accrue interest at the rate of 15% per annum from
the date of issuance. We also paid origination fees totaling $6,250 to the
September 2008 Investor upon the closing of the September 2008 Notes. We also
paid a 15% structuring fee to the September 2008 nvestor totaling $18,750 as an
inducement to make the loan.

      The September 2008 Notes, together with accrued and unpaid interest, are
convertible at the option of the holder into shares of Common Stock at a
conversion price equal to $0.20 per share.

      The September 2008 Notes, along with all accrued and unpaid interest, were
repayable 30 days after the closing of the September 2008 Notes.

      The proceeds of the September 2008 Note financing were used for general
working capital purposes.

AUGUST 2008 BRIDGE LOAN FINANCING

      On August 28, 2008, we closed on a $400,000 bridge loan financing (the
"August 2008 Loan") pursuant to a Convertible Note Purchase Agreement dated
August 28, 2008 with the November 2008 Investor, pursuant to which we issued a
total of $400,000 in principal amount of convertible notes (the "August 2008
Notes").

      The Notes accrue interest at the rate of 15% per annum, of which 30 days'
worth of interest equal to $5,000 was prepaid at the closing of the August 2008
Loan. The Notes, together with accrued and unpaid interest, are convertible at
the option of the holder into shares of our common stock at a conversion price
equal to $0.20 per share and, upon issuance, were repayable 30 days after the
issuance of the August 2008 Notes. The shares issuable upon conversion of the
Note are entitled to piggyback registration rights. In November 2008, we amended
the August 2008 Notes and included the principal in the November 2008 Notes as
described above.

      In connection with this financing, we paid an origination fee to the
November 2008 Investor equal to 5% of the amount of the Loan, or $20,000, as
well as a structuring fee to certain third parties equal to 15% of the amount of
the August 2008 Loan, or $60,000.

      We received net proceeds of approximately $315,000 after deducting prepaid
interest and fees and expenses of the offering. We used the remaining net
proceeds received in this financing for working capital.

      In connection with the August 2008 Loan financing, we agreed to issue to
the November 2008 Investor warrants to purchase up to 600,000 shares of our
common stock, which have an exercise price of $0.20 per share and a term of five
years from the date of issuance. The shares of common stock issuable upon
exercise of such warrant are entitled to piggyback registration rights.


                                       20
<PAGE>

JULY 2008 CONVERTIBLE NOTE FINANCING

      On July 15, 2008, we closed on a $1,500,000 bridge loan financing pursuant
to a Note Purchase Agreement dated July 3, 2008 with one investor (the "July
2008 Investor"), pursuant to which we issued a total of $1,500,000 in principal
amount of convertible notes (the "July 2008 Note"). The July 2008 Note is
repayable on the earlier of (a) the first closing of a private placement of our
debt or equity securities to institutional investors in an institutional capital
raise (the "Institutional Private Placement") or (b) December 31, 2008. To
secure repayment of the July 2008 Note, certain third parties agreed to pledge a
total of 375,000 shares of common stock (the "July 2008 Collateral") of an
unrelated, privately held third party corporation pursuant to the terms and
provisions of a Pledge and Escrow Agreement.

      The July 2008 Note bears interest at the rate of 15% per annum based on a
360-day year, of which 60 days' worth of interest, equal to $37,500, was prepaid
on the closing of the July 2008 Note. As additional consideration, we paid the
July 2008 Investor upon the closing of the July 2008 Note an origination fee of
five percent (5%) of the amount of the loan, equal to $75,000. We received net
proceeds of approximately $585,000 after deducting prepaid interest and fees and
expenses of the offering, and after repayment of certain debt and other
obligations owed by us. We plan to use the remaining net proceeds received in
this financing for working capital.

      The July 2008 Note, together with accrued but unpaid interest, is
convertible at the option of the July 2008 Investor, into shares of our common
stock at a price equal to the lower of (a) the conversion price for convertible
debt issued in the first closing of the Institutional Private Placement or (b)
$0.20 per share. The shares issuable upon conversion of the July 2008 Note are
entitled to piggyback registration rights.

      In connection with the July 2008 Note financing, we agreed to issue to
stock, which have an exercise price of $0.20 per share and a term of five years
from the date of issuance. The shares of common stock issuable upon exercise of
such warrant are entitled to piggyback registration rights.

      Certain members of our management agreed to transfer 525,000 shares of
U.S. Helicopter common stock to the July 2008 Investor as an inducement to
purchase the July 2008 Note. Such shares are also entitled to piggyback
registration rights. In addition, certain members of our management have agreed
to transfer a total of 1,225,000 shares of U.S. Helicopter common stock to the
pledgors and certain third parties as an inducement to the pledgors to pledge
the July 2008 Collateral, in consideration of an existing lender's agreement to
forbear from exercising its rights under its outstanding note agreement, and
other consideration.

      Commissions paid by us in connection with this transaction consisted of an
8% placement fee to certain third parties. In addition, we agreed to pay to the
pledgors fees and certain third parties totaling $225,000 as an inducement to
pledge the July 2008 Collateral securing the repayment of the July 2008 Note and
other consideration.

MAY 2008 NOTE FINANCING

      On May 30, 2008, we closed on a $250,000 convertible bridge loan financing
with an existing bridge lender in accordance with a Convertible Note Purchase
Agreement, pursuant to which we issued a total of $250,000 in principal amount
of convertible notes (the "May 2008 Notes"). Such notes accrue interest at the
rate of 15% per annum and are repayable on or before the earlier of the earlier
of (a) the next closing of a private placement of our debt or equity securities,
or (b) 60 days after the date of the loan. We repaid this loan in full with
proceeds received in the July 2008 Note financing as described above.

MARCH 2008 CONVERTIBLE DEBENTURE FINANCING

      We received gross proceeds totaling $1,250,000 from YA Global Investments,
L.P., formerly known as Cornell Capital Partners, L.P. ("YA") pursuant to a
Securities Purchase Agreement dated March 31, 2008 (the "March 2008 SPA").
Pursuant to the March 2008 SPA, we issued convertible debentures in the
principal amount of $1,250,000 (the "March 2008 Debenture"). The March 2008
Debenture bears interest at a rate of 18% per annum and is convertible into
shares of our common stock at the option of YA any time up to maturity at a
conversion price equal to the lesser of $0.30 or 80% of the lowest closing bid
price of our common stock during the 15 trading days immediately preceding the
conversion date. The March 2008 Debenture is repayable as of the earlier of
September 30, 2008 or (b) on the closing date of the next equity financing
completed by us resulting in not less than $5.0 million in gross proceeds. We
used approximately $613,000 of the proceeds received in connection with the
March 2008 Debenture to repay all amounts due and owing under a debenture issued
to YA on March 14, 2008. We used the remaining proceeds received in this
financing for working capital.


                                       21
<PAGE>

      Pursuant to the March 2008 SPA, we also issued warrants to YA to purchase
a total of 2,783,333 shares of our common stock with an exercise price of $0.01
per share. The warrants are exercisable for a period of five years after
issuance.

      We entered into an amended security agreement with YA pursuant to which we
continued the security interest of YA in all our assets which we granted in
connection with debentures issued by us to YA in August 2004.

      We have agreed to include the shares of common stock issuable upon
conversion of the debentures and upon exercise of the warrants issued in this
transaction in the event we determine to file a registration statement other
than on Form S-4 or Form S-8 and YA elects to include the shares issuable upon
conversion of the debentures and upon exercise of the warrants in such
registration statement.

      Fees and expenses paid in connection with this transaction included a
monitoring fee of $78,750 to Yorkville Advisors, LLC. We also paid structuring
fees to Yorkville Advisors, LLC in the amount of $25,000.

As a condition to closing the March 2008 Debenture transaction, YA and certain
of our bridge lenders (the "Bridge Lenders") were required to enter into a
Subordination Agreement providing that payment by us of the bridge loans made by
the Bridge Lenders in the aggregate amount of $350,000 shall be subordinate to
our repayment of a total of $6,250,000 of indebtedness owed to YA.

      As an additional condition to closing the March 2008 Debenture
transaction, our five most senior executive officers (collectively,
"Management") agreed to continue pre-existing reductions of their salaries by
20% until such time as we repaid a total of $6,250,000 from proceeds to be
received by us in an institutional private placement (the "YA Repayment"). After
we make such repayments, Management's salaries may be reinstated in full, and
all unpaid salary amounts may be issued to Management in the form of shares of
our common stock at a price equal to the greater of the volume weighted average
price of our common stock as quoted by Bloomberg, LP on the day prior to the YA
Repayment or $0.50 per share. Each Management member has the option, however, to
receive payment of such unpaid salary in cash to the extent of such Management
member's contribution to the Common Stock Purchase once the total indebtedness
owed by us to YA is reduced by $6.25 million or more.

MARCH 2008 AMENDMENT OF PRIOR YA DEBENTURES AND WARRANTS

      On March 31, 2008, we amended the terms of three secured convertible
debentures previously issued to YA on March 31, 2006 (in the remaining principal
amount of $5.9 million), November 3, 2006 (in the principal amount of $2.75
million) and March 30, 2007 (in the remaining principal amount of $844,836)
collectively, the "Prior Debentures"). The Prior Debentures contained conversion
prices equal to the lesser of $0.50 per share or 95% of the lowest daily volume
weighted average price of our common stock for the 30 days prior to the notice
of exercise ("Fair Market Value"), and provided for an adjustment in the
conversion price in the event that we completed a financing whereby the price
per share of our common stock (or its equivalent on an as-converted basis) was
less than the conversion price of the Prior Debentures. As required by the terms
of the Prior Debentures and in light of prior financings completed by us, we
amended the terms of the Prior Debentures to provide for a conversion price
equal to the lesser of $0.30 per share or 95% of the Fair Market Value of our
common stock.

      In addition, on March 31, 2008, we amended certain warrants previously
issued to YA in connection with certain convertible debenture financings to
purchase up to an aggregate of 9,452,774 shares of our common stock (the "Prior
Warrants"). The Prior Warrants contained an exercise price of $0.50 per share.
The Prior Warrants provided for an adjustment in the exercise price and the
number of shares issuable under the Prior Warrants in the event that we
completed a financing whereby the price per share of our common stock (or its
equivalent on an as-converted basis) was less than the exercise price of the
applicable Prior Warrant. In light of prior financings completed by us and in
accordance with the terms of the Prior Warrants, we amended the Prior Warrants
to provide for an exercise price of $0.30 per share.


                                       22
<PAGE>

MARCH 2008 $1,250,000 WARRANT FINANCING

      On March 31, 2008, we received gross proceeds totaling $1,250,000 from
Kuwait Holding, KSC ("KH") pursuant to a Securities Purchase Agreement dated
March 25, 2008 (the "KH SPA"). Pursuant to the KH SPA, we issued two warrants to
purchase an aggregate of 6,950,000 shares of our common stock, which have an
exercise price of $0.01 per share and a term of five years from the date of
issuance (the "KH Warrants"). KH also received piggyback registration rights in
connection with the shares of common stock issuable upon exercise of the KH
Warrants.

      We did not pay any commissions on this transaction.

MARCH 2008 DEBENTURE FINANCING

      On March 14, 2008, we entered into a Securities Purchase Agreement (the
"March 14, 2008 SPA") with YA pursuant to which we issued secured debentures in
the principal amount of $608,000 (the "March Debenture"). The March Debenture
was repaid in full with proceeds received by us in connection with the March
2008 Debenture.

      In connection with the March Debenture, we entered into an amended
security agreement with YA pursuant to which we continued the security interest
of YA in all our assets which we granted in connection with debentures issued by
us to YA in August 2004.

      Commissions to YA in connection with this transaction included monitoring,
structuring and legal fees in the total amount of $30,000.

FEBRUARY 2008 BRIDGE LOAN FINANCINGS

      On February 21, 2008, we closed on a $300,000 bridge loan financing
pursuant to a Convertible Note Purchase Agreement dated February 20, 2008 with
one investor, pursuant to which we issued a total of $300,000 in principal
amount of convertible notes (the "Notes"). Such notes accrue interest at the
rate of 10% per annum and are convertible, together with accrued interest, at
the option of the holder into shares of our common stock at a conversion price
equal to $0.25 per share. Such notes are repayable on or before the earlier of
the date of the next financing completed by us other than a bridge loan
financing, or the one year anniversary of the closing date of such notes.

      On February 11, 2008, we entered into Convertible Note Purchase Agreements
with two investors, pursuant to which we issued a total of $50,000 in principal
amount of convertible notes. In connection with these financings, we also issued
to such investors warrants to purchase an aggregate of 30,000 shares of our
common stock as an inducement to enter into the transactions. Such warrants
contain an exercise price of $0.50 per share and are exercisable for a period of
five years. The notes accrue interest at the rate of 15% per annum and are
convertible, together with accrued and unpaid interest, at the option of the
holders into shares of our common stock at a conversion price equal to $0.25 per
share. Such notes are repayable on or before the earlier of the date of the next
financing completed by us other than a bridge loan financing, or the six month
anniversary of the closing date of the Notes.

OCTOBER 2007 PRIVATE PLACEMENT

      On October 17, 2007, we received gross proceeds of $6,600,000 in a private
placement transaction with International Financial Advisors, K.S.C.C. ("IFA")
pursuant to a Securities Purchase Agreement dated October 15, 2007 (the "IFA
SPA") and entered into on October 17, 2007. In accordance with the terms of the
IFA SPA, we issued to IFA 8,000,000 shares of our Common Stock, plus warrants to
purchase an additional 14,000,000 shares of Common Stock, which have an exercise
price of $0.01 per share and a term of five years from the date of issuance. As
an inducement to enter into the SPA, we also agreed to issue to IFA warrants to
purchase an additional 14,700,000 shares of Common Stock, which have an exercise
price of $0.01 per share and a term of five years from the date of issuance. The
8,000,000 shares of common stock issued to IFA are non-voting due to U.S.
Department of Transportation regulations limiting the amount of ownership of us
(a domestic airline) by foreign persons. To the extent that the shares may
become voting shares in the future, they will not become so if it would result
in non-U.S. citizens holding more than 24.9% of our voting stock or 49.9% of our
total outstanding equity without regard to voting rights.


                                       23
<PAGE>

      In accordance with the terms of the IFA SPA, we agreed to increase the
number of our directors to nine and granted IFA the right to appoint one
additional director. As a result, IFA presently maintains the right to appoint
two directors to our Board, after taking into account IFA's right to appoint a
director in connection with a previous financing transaction between IFA and us
on October 26, 2005. On February 14, 2008, the Board appointed Mr. Richard
Bushman to serve as IFA's second nominee to the Board in addition to Mr.
Christopher Brady.

      We also agreed to grant IFA certain anti-dilution rights in the event that
we conclude a financing transaction in the 12 month period following the closing
with IFA, as well as a right to participate in any future financing in an amount
equal to one-third of the gross proceeds to be raised in such future offering
for a period of two years following the SPA closing.

      Our completion of the SPA financing with IFA required that we repay
certain bridge loans owed to YA. As agreed upon between YA and us, we paid YA a
total of approximately $1,700,000 out of the gross proceeds received by us in
connection with the SPA. As a result of this repayment, convertible debentures
issued by us to YA on August 24, 2007 (in the principal amount of $800,000) and
May 14, 2007 (in the principal amount of $500,000), inclusive of interest, were
repaid in full, and we repaid a total of approximately $340,000 in connection
with a convertible debenture issued by us to YA on March 30, 2007 (in the
principal amount of $1,100,000), leaving a total of approximately $845,000 due
and owing under such debenture as of October 17, 2007.

      We did not pay any commissions on this transaction.

AUGUST 2007 CONVERTIBLE DEBENTURE FINANCING

      On August 24, 2007, we entered into a Securities Purchase Agreement with
YA pursuant to which we issued convertible debentures in the principal amount of
$800,000 (the "August 2007 Debenture"). The debentures are convertible at the
option of YA any time up to maturity at a conversion price equal to the lesser
of $0.50 or 80% of the lowest closing bid price of our common stock during the
15 trading days immediately preceding the conversion date. The debentures were
repayable as of October 24, 2007 and accrued interest at 18% per year payable in
cash. We used the proceeds received in this financing for working capital. On
October 17, 2007, we repaid all principal and accrued interest under the August
2007 Debenture in connection with proceeds received under the IFA SPA.

      Pursuant to the Securities Purchase Agreement, we issued warrants to YA to
purchase a total of 2,745,375 shares of our common stock with exercise prices of
$0.50 per share (as to 1,045,375 warrants) and $0.01 per share (as to 1,700,000
warrants). The warrants are exercisable for a period of five years.

      We entered into an amended security agreement with YA pursuant to which we
continued the security interest of YA in all our assets which we granted in
connection with the original debentures issued by us to YA.

      We have agreed to prepare and file a registration statement under the
Securities Act of 1933, as amended, that includes the shares of common stock
issuable upon conversion of the debentures and upon exercise of the warrants
issued in this transaction in the event we determine to file a registration
statement other than on Form S-4 or Form S-8 and YA elects to include the shares
issuable upon conversion of the debentures and upon exercise of the warrants in
such registration statement.

      Commissions to YA in connection with this transaction included a
monitoring fee of 6% of the purchase price of the debentures which we paid in
cash ($48,000). We also paid structuring fees to Yorkville Advisors, LLC of
$10,000.


                                       24
<PAGE>

      As a condition to closing the August 2007 Debenture Transaction, YA and
certain of our bridge lenders (the "Bridge Lenders") entered into a
Subordination Agreement providing that payment by us of the bridge loans made by
the Bridge Lenders in the aggregate amount of $500,000 shall be subordinate to
our repayment of all indebtedness owed to YA. In consideration of the Bridge
Lenders' agreement to subordinate repayment of their loans, we agreed to amend
the exercise price of 312,500 warrants issued to the Bridge Lenders from $0.50
to $0.01 per share. In addition, the maturity date of the Bridge Lenders' loans
was extended to October 31, 2007. In October 2007, we received notice that one
bridge lender elected to convert its bridge loan in the principal amount of
$150,000, and we repaid all other non-YA bridge loans.

      As an additional condition to closing the August 2007 Debenture
transaction, our five most senior executive officers (collectively,
"Management") purchased shares of our common stock at a purchase price of $0.52
per share (the "Common Stock Purchase"). In addition, Management agreed to
reduce their salaries by 20% until such time as the August 2007 Debenture and
debentures previously issued by us to YA in the aggregate principal amount of
$1,600,000 are repaid in full (collectively, the "YA Bridge Loans"). We amended
such agreements with Management in connection with the March 2008 Debenture
financing as described above.

AUGUST 2007 AMENDMENT OF PRIOR DEBENTURES AND WARRANTS

      On August 24, 2007, we amended the terms of four secured convertible
debentures previously issued to YA on March 31, 2006 (in the principal amount of
$6.0 million), November 3, 2006 (in the principal amount of $2.75 million),
March 30, 2007 (in the principal amount of $1.1 million) and May 14, 2007 (in
the principal amount of $.5 million) (collectively, the "Prior Debentures"). The
Prior Debentures contained conversion prices equal to the lesser of $1.45 per
share or 95% of the lowest daily volume weighted average price of our common
stock for the 30 days prior to the notice of exercise ("Fair Market Value"), as
adjusted in accordance with the terms of the Prior Debentures, and provided for
an adjustment in the conversion price in the event that we issued shares of our
common stock for a price per share less than the conversion price of the Prior
Debentures.

      Between June and August 2007, we completed bridge loan transactions with
certain investors pursuant to which we issued promissory notes totaling $525,000
in principal that are convertible into shares of our common stock at a price of
$0.50 per share (the "2007 Bridge Loans"). In light of these transactions and in
accordance with the terms of the Prior Debentures, we amended the terms of the
Prior Debentures to provide for a conversion price equal to the lesser of $0.50
per share or 95% of the Fair Market Value of our common stock.

      In addition, on August 24, 2007, we amended eighteen warrants previously
issued to YA in connection with certain convertible debenture financings (the
"Prior Warrants"). The Prior Warrants provided YA with the right to purchase an
aggregate of 5,254,625 shares of our common stock at exercise prices ranging
from $1.00 per share to $1.75 per share. The Prior Warrants provided for an
adjustment in the exercise price and the number of shares issuable under the
Prior Warrants in the event that we issued shares of our common stock for a
price per share less than the exercise price of the applicable Prior Warrant.

      In light of the 2007 Bridge Loans and in accordance with the terms of the
Prior Warrants, we issued amended and restated warrants to YA providing for the
issuance of up to an aggregate of 8,407,400 shares of our common stock at an
exercise price of $0.50 per share, reflecting an increase of 3,152,775 shares
issuable pursuant to such warrants.

JUNE - AUGUST 2007 CONVERTIBLE NOTE FINANCINGS

      During June and July 2007, we entered into agreements pursuant to which we
issued convertible notes to 15 accredited investors in an aggregate amount of
$772,000 (the "2007 Convertible Notes"). In connection with these financings, we
also issued to the investors warrants to purchase an aggregate of 804,450 shares
of our common stock as an inducement to enter into the transactions. The
warrants contain an exercise price of $0.50 per share and are exercisable for a
period of five years from the date of issuance.

      The 2007 Convertible Notes accrued interest at the rate of 15% per annum.
We paid 30 days worth of interest in advance on the respective closing dates of
the first two loans totaling $250,000 in principal. We also paid origination
fees totaling $25,000 to the investors upon the closings of the Notes. The
Notes, together with accrued and unpaid interest, were convertible at the option
of the holders into shares of our common stock at a conversion price equal to
$0.50 per share. In October 2007, we received notice that one lender elected to
convert its bridge loan in the principal amount of $150,000 in full, and we
repaid all other 2007 Convertible Notes in full.


                                       25
<PAGE>

      In connection with these financings, we also issued to holders of the
Convertible Notes warrants to purchase an aggregate of 804,450 shares of our
common stock as an inducement to enter into the transactions. The Warrants
contained an exercise price of $0.50 per share and are exercisable for a period
of five years. We subsequently agreed to reduce the exercise price of 402,225
warrants to $0.01 per share in consideration for such lenders' agreement to
subordinate repayment of their loans to YA. In addition, in October 2007, we
agreed to issue to one lender an additional 250,000 warrants and 150,000 shares
in partial consideration of such lender's agreement to subordinate repayment of
its loan to YA, and we agreed to issue 146,917 shares of stock to the other
lender in partial consideration of such lender's agreement to subordinate
repayment of its loan to YA.

MAY 2007 CONVERTIBLE DEBENTURE FINANCING

      On May 14, 2007, we entered into a Securities Purchase Agreement (the "May
2007 SPA") with YA pursuant to which we agreed to issue a secured convertible
debenture to YA in the principal amount of $500,000 (the "May 2007 Debenture"),
which was funded on May 16, 2007. The May 2007 Debenture became due as of July
14, 2007. The May 2007 Debenture accrued interest at 18% per year payable in our
common stock at the rate equal to the conversion price of the debenture in
effect at the time of payment. On October 17, 2007, we repaid all principal and
interest due, in cash, under the May 2007 Debenture in connection with proceeds
received pursuant to the IFA SPA.

      Pursuant to the May 2007 SPA, we also agreed to issue to YA warrants to
purchase a total of 99,144 shares of our common stock with the following
exercise prices: $1.00 per share (as to 31,250 warrants); $1.20 per share (as to
26,042 warrants); $1.40 per share (as to 22,321 warrants); and $1.60 per share
(as to 19,531 warrants). The warrants are exercisable for a period of five
years. In accordance with the terms and conditions of such warrants, we reduced
the exercise price of these warrants in March 2008 to $0.30 per share as
described above.

      In connection with the May 2007 SPA, we also agreed to register upon
written request from YA the shares that may be acquired under the May 2007
Debenture and the 99,144 shares that may be issued pursuant to the warrants.

MARCH 2007 CONVERTIBLE DEBENTURE FINANCING

      On March 30, 2007, we entered into a Securities Purchase Agreement (the
"March 2007 SPA") with YA pursuant to which we agreed to issue a secured
convertible debenture to YA in the principal amount of $1,100,000 (the "March
2007 Debenture"), which was funded on April 2, 2007. On June 30, 2007, the
maturity date of the March 2007 Debenture was automatically extended to
September 30, 2007 due to our inability to complete a financing of at least $1.1
million prior to such time. The March 2007 Debenture accrues interest at 12% per
year payable in our common stock at the rate equal to the conversion price of
the debenture in effect at the time of payment. Beginning June 30, 2007, the
date which the maturity date of the March 2007 Debenture was extended, the
interest rate under the debenture increased by two percent per month and
continued to do so through and until September 30, 2007. The current interest
rate on the March 2007 Debenture is 18%. On October 17, 2007, we repaid a total
of $255,162 in principal and $85,710 in accrued interest under the March 2007
Debenture in connection with proceeds received pursuant to the IFA SPA.

      The March 2007 Debenture is convertible at YA's option into shares of our
common stock at a price per share equal to the lower of $0.50 per share or 95%
of the lowest daily volume weighted average price of our common stock ("Fair
Market Value") for the 30 days prior to the notice of exercise, as adjusted in
accordance with the terms of the March 2007 Debenture. YA's conversion right
under the March 2007 Debenture is subject to certain limitations including that
YA may not convert the March 2007 Debenture for a number of shares in excess of
that number of shares which, upon giving effect to such conversion, would cause
the aggregate number of shares of our common stock beneficially held by YA to
exceed 4.99% of our then outstanding common stock.


                                       26
<PAGE>

      In addition, in the event we close on any debt or equity financing after
the issuance date of the March 2007 Debenture, we are required to use 100% of
the net proceeds of such financings to prepay outstanding amounts under the
March 2007 Debenture until the March 2007 Debenture is repaid in full. In
connection with this financing, we also agreed to repay up to a total of
$5million owed to YA pursuant to the March 2007, November 2006 and March 2006
Debentures in the event we are successful in raising $5.0 million in two
separate private placement transactions. YA agreed to waive these provisions on
a one-time basis in connection with the financing transaction with IFA and the
2007 Convertible Notes as described above.

      We have agreed to grant a security interest to YA covering substantially
all of our assets to secure our obligations under the March 2007 Debenture
pursuant to an Amended and Restated Security Agreement. Pursuant to the March
2007 SPA, we also agreed to issue to YA warrants to purchase a total of 155,481
shares of our common stock with the following exercise prices: $1.15 per share
(as to 47,827 warrants); $1.35 per share (as to 40,741 warrants); $1.55 per
share (as to 35,484 warrants); and $1.75 per share (as to 31,429 warrants). The
warrants are exercisable for a period of five years. In accordance with the
terms and conditions of such warrants, we reduced the exercise price of these
warrants in March 2008 to $0.30 per share as described above.

      In connection with the March 2007 SPA, we also agreed to register upon
written request from YA the shares that may be acquired under the March 2007
Debenture and the 155,481 shares that may be issued pursuant to the warrants.

NOVEMBER 2006 CONVERTIBLE DEBENTURE FINANCING

      On November 10, 2006, we entered into a Securities Purchase Agreement (the
"November SPA") with YA pursuant to which we agreed to issue a secured
convertible debenture to YA in the principal amount of $2,750,000 (the "November
2006 Debenture"), which was funded on November 28, 2006. The November 2006
Debenture will mature 36 months after issuance and accrues interest at 8% per
year which will be payable in shares of our common stock at the lower of $0.50
per share or 95% of the Fair Market Value for the 30-day period prior to the
interest payment due date.

      The November 2006 Debenture is convertible at YA's option into shares of
our common stock upon the same terms and conditions as the March 2007 Debenture.
Effective May 10, 2007, YA agreed to limit its resales of our common stock
acquired under the November 2006 Debenture to $250,000 worth for a period of 30
days if our common stock falls below $1.45 per share for five consecutive
trading days (the "Resale Limitation"). The Resale Limitation would not apply
upon an event of default as defined in the November 2006 Debenture, if waived in
writing by us, or to private resales by YA. We are required pursuant to the
November 2006 Debenture to reserve a total of 20% of the maximum number of
shares that may be owned by persons who are not U.S. citizens as determined in
accordance with U.S. Department of Transportation regulations for issuance
pursuant to the November 2006 Debenture.

      In addition, in the event we close on any debt or equity financing after
the issuance date of the November 2006 Debenture, we are required to use 50% of
the net proceeds of such financings to prepay outstanding amounts under the
November 2006 Debenture or any other debenture issued by us to YA Capital. YA
agreed to waive this requirement on a one-time basis in connection with the
financing with IFA and the 2007 Convertible Notes as described above. If amounts
to be prepaid by us do not total at least the equivalent of $70,000 per month
beginning on April 1, 2007, we must prepay the difference to match such amount
up to $2,000,000. No further prepayments are required once we prepay a total of
$2,000,000.

      We granted a security interest to YA covering substantially all of our
assets to secure our obligations under the November 2006 Debenture pursuant to
an Amended and Restated Security Agreement. Pursuant to the November SPA, we
also agreed to issue to YA warrants to purchase a total of 2,000,000 shares of
our common stock with the following exercise prices: $1.20 per share (as to
500,000 warrants); $1.35 per share (as to 500,000 warrants); $1.50 per share (as
to 500,000 warrants); and $1.65 per share (as to 500,000 warrants). In
accordance with the terms and conditions of such warrants, we reduced the
exercise price of these warrants in March 2008 to $0.30 per share as described
above.


                                       27
<PAGE>

      In connection with the November SPA, we also entered into an Investor
Registration Rights Agreement whereby we have agreed to register upon written
request from YA up to 6,875,000 shares that may be acquired under the November
2006 Debenture and the 2,000,000 shares that may be issued pursuant to the
warrants.

MANAGEMENT'S PLANS TO OVERCOME OPERATING AND LIQUIDITY DIFFICULTIES

      Our operating plan seeks to minimize our capital requirements, but
expansion of our flight services in the New York market and other markets will
require additional capital. As of September 30, 2008, we had $274,343 in cash.
As of the date of this report, we believe that we will be able to satisfy our
cash requirements through December, 2008, assuming no additional financing is
completed. We believe that additional capital is required to satisfy our cash
requirements for the following 12 months with our current cash and expected
revenues from operations.

      We have recently entered into a number of financing transactions (see
Notes 7, 8 and 13 to our Financial Statements), and we are continuing to seek
other financing initiatives and have had, and continue to have, discussions with
a number of potential investors concerning investments in our securities.

      We are presently working to raise additional capital to meet our working
capital needs, for the repayment of debt and for capital expenditures including
expansion of our aircraft fleet. During the next twelve months, we anticipate
that we will need approximately $9.0 million of working capital (inclusive of
capital expenditures), $20.0 million of lease financing, and $10.6 million to
repay debt, including $5.9 million of convertible debentures due on June 30,
2009.

      Such capital is anticipated to come from helicopter lease financing and
the sale of equity or debt securities. As of the date of this report, we are in
discussions with financing sources for helicopter operating lease financing. We
believe that if we are successful in raising approximately $39.6 million through
$20.0 million of operating lease financing and $19.6 million of some combination
of debt and equity financings, we would have sufficient funds to meet our needs
for working capital, repayment of debt and for capital improvements over the
next 12 months based on our current business plan which includes the acquisition
of approximately five additional helicopters. There can be no assurances,
however, that we will be able to complete such financings on terms favorable to
us or at all.

      We are also in the process of seeking additional bridge financing of up to
$3.0 million which would cover our working capital expenses for approximately
three months. We have been seeking $20.0 million of long term equity financing
during the past several months. We have met with a number of strategic investors
who have experience in long term aviation finance. We believe that we will
conclude such a financing on or before January 31, 2008. We cannot provide
assurance, however, that we will be successful in obtaining the required
short-term bridge financing or long-term equity financing that we are seeking on
a timely basis or at all.

GOING CONCERN MATTERS

      The accompanying financial statements have been prepared assuming that we
will continue as a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. We have
incurred substantial net operating losses and used substantial amounts of cash
in our operating activities. Since our inception, we have incurred losses, have
an accumulated deficit, and have experienced negative cash flows from
operations. The expansion and development of our business will likely require
additional capital. This condition raises substantial doubt about our ability to
continue as a going concern. Our independent registered public accounting firm
included a going concern opinion in connection with our financial statements for
the year ended December 31, 2007.

      In addition, during recent weeks the United States and global financial
markets have undergone extreme levels of volatility. The United States and
global credit markets have also become more restrictive than in the past. We
have primarily utilized these markets for financing and raising capital. As a
result of the recent changes in these markets, it may not be possible for us to
continue to raise capital.

      We expect cash flows from operating activities to improve, primarily as a
result of an increase in revenue, although there can be no assurance thereof.
The accompanying consolidated financial statements do not include any
adjustments that might be necessary should we be unable to continue as a going
concern. If we fail to generate positive cash flows or obtain additional
financing when required, we may have to modify, delay or abandon some or all of
our business and expansion plans.


                                      28
<PAGE>

CRITICAL ACCOUNTING POLICIES

      Our consolidated financial statements and related public financial
information are based on the application of accounting principles generally
accepted in the United States ("GAAP"). GAAP requires the use of estimates,
assumptions, judgments and subjective interpretations of accounting principles
that have an impact on the assets, liabilities, revenue and expense amounts
reported. These estimates can also affect supplemental information contained in
our external disclosures including information regarding contingencies, risk and
financial condition. We believe our use of estimates and underlying accounting
assumptions adhere to GAAP and are consistently and conservatively applied. We
base our estimates on various assumptions that we believe to be reasonable under
the circumstances. Actual results may differ materially from these estimates
under different assumptions or conditions. We continue to monitor significant
estimates made during the preparation of our financial statements.

      Our significant accounting policies are summarized in the Notes of our
consolidated financial statements. While all these significant accounting
policies impact its financial condition and results of operations, we view
certain of these policies as critical. Policies determined to be critical are
those policies that have the most significant impact on our consolidated
financial statements (or are anticipated to have such impact when operations
commence) and require management to use a greater degree of judgment and
estimates. Actual results may differ from those estimates. Our management
believes that given current facts and circumstances, it is unlikely that
applying any other reasonable judgments or estimate methodologies would cause a
material effect on our consolidated results of operations, financial position or
liquidity for the periods presented in this report. Our critical accounting
policies are useful lives of assets, impairment testing of assets, revenue
recognition, and deferred offering costs.

      Effective January 1, 2008, we adopted SFAS 157, Fair Value Measurements
(SFAS 157). SFAS 157 clarifies the definition of fair value, prescribes methods
for measuring fair value, and establishes a fair value hierarchy to classify the
inputs used in measuring fair value as follows:

      Level 1-Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities available at the measurement date.

      Level 2-Inputs are unadjusted quoted prices for similar assets and
liabilities in active markets, quoted prices for identical or similar assets and
liabilities in markets that are not active, inputs other then quoted prices that
are observable, and inputs derived from or corroborated by observable market
data.

      Level 3-Inputs are unobservable inputs which reflect the reporting
entity's own assumptions on what assumptions the market participants would use
in pricing the asset or liability based on the best available information.

      The adoption of SFAS No. 157 did not have a material impact on our fair
value measurements.

      Fair value estimates, assumptions and methods used to estimate fair value
of our financial instruments are made in accordance with the requirements of
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments." We have
used available information to derive our estimates. However, because these
estimates are made as of a specific point in time, they are not necessarily
indicative of amounts we could realize currently. The use of different
assumptions or estimating methods may have a material effect on the estimated
fair value amounts.

IMPAIRMENT OF LONG-LIVED ASSETS

      We adopted Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS No.
144") SFAS No. 144 requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. An impairment charge
could materially impact our financial condition and results of operations.


                                       29
<PAGE>

REVENUE RECOGNITION

      We recognize revenue when transportation has been provided, including
scheduled passenger and charter services.

CONVERTIBLE SECURITIES WITH CONVERSION FEATURES

      The Company accounts for the fair value conversion features embedded in
the Company's convertible notes in accordance with SFAS No. 133 "Accounting For
Derivative Instruments and Hedging Activities" and EITF Issue No. 00-19
"Accounting For Derivative Financial Instruments Indexed To and Potentially
Settled In a Company's Own Stock" which requires the Company to bifurcate and
separately account for the conversion feature as embedded derivatives contained
in the Company's convertible notes. Pursuant to SFAS No. 133, the Company
bifurcated the fair value of the conversion feature from the convertible notes,
since the conversion features were determined to not be clearly and closely
related to the debt host. The Company is required to carry these embedded
derivatives on its balance sheet at fair value and unrealized changes in the
value of these embedded derivatives are reflected in the statement of
operations. The resulting discount on the debt is amortized to interest expense
over the life of the related debt.

ESTIMATING THE FAIR MARKET VALUE OF OUR COMMON STOCK

      The fair market value of our common stock is a significant estimate used
in determining the value of our various equity related instruments (options,
warrants, conversion features, etc.). In determining the fair market value of
our stock we consider such things as the most recent equity transaction, changes
in the Company's financial position, progressions in product development and the
effects of dilutive debt conversions.

ADDITIONAL INFORMATION

      With respect to our cash requirements and sources during the next 12
months, see Management's Discussion and Analysis - Liquidity and Financial
Condition. During fourth quarter 2008, we anticipate that our most significant
equipment-related and plant-related expenses will be a combination of helicopter
lease and/or debt payments (approximately $2.5 million). With respect to changes
in number of employees, we had 51 full time employees and 10 part-time employees
as of September 30, 2008 and expect to have approximately the same number of
employees at the end of 2008.

OFF-BALANCE SHEET ARRANGEMENTS

      U.S. Helicopter has no off-balance sheet arrangements.

INCOME TAXES

      As part of the process of preparing our financial statements, we are
required to estimate our taxes in each of the jurisdictions of operation. This
process involves management estimating the actual current tax expense together
with assessing temporary differences resulting from differing treatment of items
for tax and accounting purposes. These differences result in deferred tax assets
and liabilities, which are included within the balance sheet. We then must
assess the likelihood that the deferred tax assets will be recovered from future
taxable income and, to the extent recovery is not likely, we must establish a
valuation allowance. Future taxable income depends on the ability to generate
income in excess of allowable deductions. Significant management judgment is
required in determining the provision for income taxes, deferred tax assets and
liabilities and any valuation allowance recorded against net deferred tax
assets. In the event that actual results differ from these estimates or we
adjust these estimates in future periods, we may need to change our valuation
allowance that could materially impact our financial condition and results of
operations.


                                       30
<PAGE>

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

      In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures"
("SFAS 157"). SFAS 157 (and its amendments described below) defines fair value
and establishes a framework for measuring fair value in accordance with
generally accepted accounting principles. This Statement also applies to other
accounting pronouncements that require or permit a fair value measure. As
defined by this Statement, the fair value of an Asset or Liability would be
based on an "exit price" basis rather than an "entry price" basis. Additionally,
the fair value should be market-based and not an entity-based measurement. SFAS
157 (as originally issued) was effective for fiscal years beginning after
November 15, 2007 (amended to November 15, 2008 - see below).

      FSP FAS 157-1 amends FAS 157 to exclude FASB Statement No. 13, "Accounting
for Leases" (FAS 13), and its related interpretive accounting pronouncements
that address leasing transactions. The FASB decided to exclude leasing
transactions covered by FAS 13 in order to allow it to more broadly consider the
use of fair value measurements for these transactions as part of its project to
comprehensively reconsider the accounting for leasing transactions.

      FSP FAS 157-2 delays the effective date of FAS 157 by one year for
nonfinancial assets and nonfinancial liabilities that are recognized or
disclosed at fair value in the financial statements on a nonrecurring basis. The
delay gives the FASB and constituents additional time to consider the effect of
various implementation issues that have arisen, or that may arise, from the
application of FAS 157 to these assets and liabilities. For items covered by the
FSP, FAS 157 will now go into effect in fiscal years beginning after November
15, 2008 and in interim periods within those fiscal years.

      FSP FAS 157-3 clarifies the application of FASB Statement No. 157, Fair
Value Measurements, in a market that is not active and provides an example to
illustrate key considerations in determining the fair value of a financial asset
when the market for that financial asset is not active. This FSP shall be
effective upon issuance, including prior periods for which financial statements
have not been issued. Revisions resulting from a change in the valuation
technique or its application shall be accounted for as a change in accounting
estimate (FASB Statement No. 154, Accounting Changes and Error Corrections,
paragraph 19). The disclosure provisions of Statement 154 for a change in
accounting estimate are not required for revisions resulting from a change in
valuation technique or its application.

                                  RISK FACTORS

      WE ARE SUBJECT TO VARIOUS RISKS THAT MAY MATERIALLY HARM OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. IF ANY OF THESE RISKS OR
UNCERTAINTIES ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION OR OPERATING
RESULTS COULD BE MATERIALLY HARMED. IN THAT CASE, THE TRADING PRICE OF OUR
COMMON STOCK COULD DECLINE AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.

      IN ADDITION TO THE RISK FACTORS SET FORTH IN OUR REPORT ON FORM 10-KSB FOR
THE YEAR ENDED DECEMBER 31, 2007, INVESTORS SHOULD BE AWARE OF THE FOLLOWING
RISKS:

RISKS RELATED TO OUR BUSINESS AND AVIATION INDUSTRY

      WE HAVE LIMITED REVENUE FROM OPERATIONS AND MAY NEED TO RAISE ADDITIONAL
CAPITAL TO FINANCE OPERATIONS. OUR OPERATIONS SINCE INCEPTION HAVE NOT GENERATED
A PROFIT.

      We began operations on March 27, 2006 but had no revenue from operations
prior to that date. We have relied on and will continue to rely on significant
external financing to fund our operations. To date our financing has come from
the sale of approximately $14.53 million of convertible debentures $1.75 million
of warrant exercises, $14.1 million in private placement proceeds from the sale
of our equity securities in 2005, 2007 and 2008, $4.15 million from the sale of
convertible notes in 2005, 2007 and 2008, $0.3 million in private placement
proceeds in the 2004 Private Placement, and $11.0 million that will be available
to us under the SEDA (the "SEDA funds") upon the effectiveness of a registration
statement. We anticipate that we will need to raise [$1.5] million in additional
capital to finance operations through year-end 2008, assuming that our results
of operations reasonably correspond to our business plan. We must also raise
[$16.0] million for the leasing of aircraft.


                                       31
<PAGE>

      Our operations since inception in March 2003 have not generated a profit.
We generated a net loss of $(17,865) during the period from inception in March
2003 to December 31, 2003, a net loss of $(549,961) during the twelve months
ended December 31, 2004, a net loss of $(2,546,291) for the 12 months ended
December 31, 2005, a net loss of $(9,619,760) for the 12 months ended December
31, 2006, a net loss of $(15,643,488) for the 12 months ended December 31, 2007
and a net loss of $(10,104,830) for the nine months ended September 30, 2008.

      We cannot assure you that financing, whether from external sources or
related parties, will be available on favorable terms. Our inability to obtain
adequate financing will result in the need to reduce or curtail business
operations. Any of these events would be materially harmful to our business and
may result in a lower stock price. We may need to raise additional capital to
fund our anticipated future expansion. No financing commitments for future
capital needs have been obtained as of the date of this report, although
discussions are being held.

      OUR FAILURE TO SUCCESSFULLY TAKE DELIVERY OF, PLACE INTO SERVICE AND
INTEGRATE INTO OUR OPERATIONS THE AIRCRAFT WE INTEND TO LEASE/PURCHASE COULD
HARM OUR BUSINESS.

      We have received our initial four aircraft between November 2005 and May
2006. Our estimated delivery of four additional aircraft through September, 2009
is as follows:

      o     November 2, 2005: Received one Sikorsky S-76B aircraft
      o     December 1, 2005: Received one Sikorsky S-76B aircraft
      o     February 14, 2006: Received one Sikorsky S-76B aircraft
      o     May 15, 2006: Received one Sikorsky S-76B aircraft
      o     February, 2009: Anticipated delivery of one Sikorsky S-76B
            aircraft
      o     April, 20009: Anticipated delivery of one Sikorsky S-76B
            aircraft
      o     June, 2009: Anticipated delivery of one Sikorsky S-76B
            aircraft
      o     August, 2009: Anticipated delivery of one Sikorsky S-76B
            aircraft
      o     September, 2009: Anticipated delivery of one Sikorsky S-76B
            aircraft




      The above dates for delivery of aircraft we have not yet received
represent the anticipated delivery to us. The aircraft will require
modifications to bring them to our standards, which we estimate will take
approximately 60 days per aircraft. These acquisitions would require financing
in the amount of $20.0 million. Acquisition of aircraft involves a variety of
risks relating to its ability to be successfully placed into service, including:

      o     difficulties or delays in obtaining the necessary certification from
            aviation regulatory authorities and validation from the FAA as to
            the aircraft's airworthiness;
      o     delays in meeting the aircraft delivery schedule;
      o     difficulties in obtaining financing on acceptable terms; and
      o     an inability of the aircraft and all of its components to comply
            with agreed upon specifications and performance standards.

      In addition, we also face risks in integrating this aircraft into our
infrastructure and operations, including, among other things, the costs,
resources and time needed to hire and train pilots, technicians and other
skilled support personnel. Our failure to successfully take delivery of, place
into service and integrate into our operations our new aircraft could harm our
business.

      OUR FINANCIAL CONDITION AND OUR ABILITY TO IMPLEMENT OUR BUSINESS PLAN MAY
SUFFER IN THE EVENT WE ARE UNABLE TO RESOLVE ALL MATTERS WITH A MAINTENANCE
PROVIDER FOR OUR AIRCRAFT, AS WELL AS CERTAIN OTHER OF OUR VENDORS.

      During the first quarter of 2008, we received notice of a claim from the
lessor of certain of our equipment (the "Other Party") of payments claimed to be
owed by us of approximately $400,000 in connection with certain leases and a
Technical Services Agreement related to the maintenance and repair of certain of
our aircraft. Our management believes that we have valid defenses to the Other
Party's claim and that the Other Party owes the Company an amount well in excess
of $400,000 for losses sustained as a result of certain defaults by the Other
Party. We have had, and continue to have, discussions with the Other Party to
resolve all claims.


                                       32
<PAGE>

      On July 10, 2008, we reached an agreement (the "Standstill Agreement")
with the Other Party providing for a 60 day standstill and forbearance period
whereby each party has agreed to refrain from seeking to enforce its respective
rights under certain lease agreements (the "Lease Agreements") and technical
support agreements (the "Support Agreements") relating to three of our aircraft.
The Standstill Agreement was subsequently extended to September 30, 2008. As
part of the Agreement, we agreed to a revised payment schedule under the Lease
Agreements and the Support Agreements, and we preserved our claims against the
Other Party up to the amounts paid to the Other Party under such agreements
between January 1, 2008 and the commencement of the standstill period. The Other
Party and we are currently in the process of negotiating a global settlement of
our respective claims as they pertain to payment and other obligations under the
Lease Agreements and the Support Agreements, and the possibility of entering
into a new agreement relating to the maintenance of our aircraft. There can be
no assurances, however, that we will be able to reach a settlement agreement on
terms favorable to us or at all.

      Our financial condition may suffer in the event that we are unsuccessful
in negotiating a settlement with the Other Party and the Other Party takes legal
action to repossess its aircraft, and seeks and obtains a judgment holding us
responsible for all amounts alleged to be owed to the Other Party. If we are
unable to reach a satisfactory settlement with the Other Party, we may seek
recovery of our losses against the Other Party, including legal fees and costs,
through legal action.

      During the first quarter of 2008, we signed a technical support agreement
with another party to support the portions of our aircraft not covered by a New
Technical Services Agreement agreed to by the Other Party. While there can be no
assurance, we believe a replacement agreement can be signed to cover our
aircraft at the cost and levels of coverage that was provided under the
Technical Services Agreement.

      In addition to the above, we are in default to certain other third parties
in connection with payments to certain vendors for services rendered and
payments to other parties that are necessary to operate our business. We are
attempting to seek additional financing to meet our payment obligations to such
third parties. If we are unable to satisfy such payment obligations, such third
parties may suspend services rendered to us, or we may become subject to
litigation or other collection efforts which may negatively impact our ability
to implement our business plan or our financial condition.

      OUR FINANCIAL CONDITION AND OUR ABILITY TO IMPLEMENT OUR BUSINESS PLAN MAY
SUFFER IN THE EVENT THAT ALL ISSUES ARE NOT RESOLVED WITH THE NEW OPERATOR OF
OUR DOWNTOWN MANHATTAN HELIPORT FACILITIES.

      On or about November 1, 2008, the City of New York transferred management
of the Downtown Manhattan Heliport (the "DMH") from the Port Authority of New
York and New Jersey (the "Port Authority") to FirstFlight, Inc. ("FirstFlight").
Immediately prior to transferring management of the DMH, the Company was advised
that FirstFlight did not maintain the appropriate TSA approvals required to
provide Federal airline security screening at the DMH. As a consequence, we have
been unable to provide either scheduled or charter flight services from the DMH
since November 1, 2008 due to the lack of TSA-approved security screening
services and will not be able to do so until FirstFlight obtains all requiredTSA
approvals. We have been advised that FirstFlight and the TSA are working
diligently to ensure that FirstFlight has all required approvals as quickly as
possible; however, there can be no assurances that FirstFlight will obtain such
approvals on a timely basis or at all. Accordingly, our financial condition and
our ability to implement our business plan may suffer in the event that we are
unable to conduct our flight operations from the DMH for an extended period of
time.

      In addition, we are negotiating in good faith with FirstFlight for a new
operating agreement with such entity. FirstFlight has agreed to abide by the
same terms observed by the Port Authority through November 30, 2008. While our
management believes that a mutually acceptable agreement will be entered into
prior to such date, there can be no assurances that we will be able to enter
into an agreement with FirstFlight on a timely basis or at all.


                                       33
<PAGE>

      OUR FINANCIAL CONDITION AND OUR ABILITY TO IMPLEMENT OUR BUSINESS PLAN MAY
SUFFER DUE TO RECENT VOLATILITY IN U.S. AND GLOBAL MARKETS.

      During recent weeks the United States and global financial markets have
undergone extreme levels of volatility. The United States and global credit
markets have also become more restrictive than in the past. We have primarily
utilized these markets for financing and raising capital. As a result of the
recent changes in these markets, it may not be possible for us to continue to
raise capital. Our financial condition and our ability to implement our business
plan may accordingly suffer in the event that we are unable to raise capital
through the sale of our securities.

                        RISKS RELATED TO YA FINANCING

      We are party to certain agreements with YA relating to the issuance of
approximately $14.53 million in convertible debentures (together, the
"Convertible Debentures") and the sale of up to $11.0 million worth of our
common stock pursuant to the SEDA. Investors should be aware that there are
certain risks and uncertainties associated with such agreements. In addition,
while the Company entered into the SEDA in August, 2004, in light of the
successful financings that the Company has closed since then, it does not
currently intend to file a registration statement to register the shares
issuable under the SEDA. The decision in this regard is anticipated by December
31, 2008. Investors should take this into account when considering the following
risk factors.

      YA COULD ACQUIRE A SIGNIFICANT AMOUNT OF OUR COMMON STOCK AND, IF IT DOES
SO, COULD EXERCISE SIGNIFICANT INFLUENCE OVER US.

      YA owned 2,914,893 shares of common stock as of September 30, 2008 and,
based upon the conversion rights under the March 2006, November 2006, March 2007
and March 2008 Convertible Debentures, could acquire up to approximately 51.32%
of our common stock based on a conversion price of $0.30 per share, or an
estimated 67.11% if the conversion price is assumed to be $0.15 per share, or an
estimated 75.16% if the conversion price is assumed to be $0.10 per share. Such
calculation does not take into account applicable DOT restrictions on foreign
ownership, which prohibits foreign persons including YA from acquiring more than
24.9% of our common stock, or more than 49% of our overall outstanding equity
without regard to voting rights, subject to DOT approval. The acquisition of
such interest would be dependent upon the non-applicability of such regulations,
the occurrence of an event of default under the Convertible Debentures and a
waiver of YA's restriction on owning more than 4.99% of our issued and
outstanding common stock. If YA acquired such 51.32%-75.16% of our common stock,
it could exercise significant influence over the election of directors,
determination of policies, appointing the persons constituting management, and
determining the outcome of corporate actions requiring stockholder approval,
including mergers, consolidations, and the sale of all or substantially all of
our assets. The interests of YA may differ from the interests of other
stockholders.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

      As required by Rule 15d-15(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), our Chief Executive Officer and Chief Financial
Officer carried out an evaluation under the supervision and with the
participation of our management, of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 15d-14 as of the end of the period covered by this report. Based on the
foregoing evaluation, we have concluded that our disclosure controls and
procedures are effective in timely alerting them to material information
required to be included in our periodic filings with the Securities and Exchange
Commission and to ensure that information required to be disclosed in our
periodic filings with the Securities and Exchange Commission is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosures.


                                       34
<PAGE>

      Our management does not expect that our disclosure controls and procedures
or our internal control over financial reporting will necessarily prevent all
fraud and material error. Our disclosure controls and procedures are designed to
provide reasonable assurance of achieving our objectives and our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures are effective at that reasonable assurance level. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the internal control. The design of
any system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
Over time, control may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may deteriorate.

      There have not been any changes in our internal control over financial
reporting during the quarter ended September 30, 2008 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.


                                       35
<PAGE>

                                    PART II.
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      Previously reported in our Annual Report on Form 10-KSB for the year ended
December 31, 2007.

ITEM 1A. RISK FACTORS

      Please see Part I, Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operation.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

      On or about October 1, 2008, we entered into a Consulting Agreement with
the October 2008 Investor whereby we agreed to issue 250,000 restricted shares
of Common Stock in exchange for certain consulting services rendered to us for
the one year period commencing on October 1, 2008.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

      None.

ITEM 5. OTHER INFORMATION

      None.

ITEM 6. EXHIBITS

      The following Exhibits are filed as part of this Report or incorporated
herein by reference:

10.75   Note Purchase Agreement dated as of August 28, 2008 by and between
        U.S. Helicopter Corporation and Philadelphia Financial, LLC+

10.76   Convertible Promissory Note dated August 28, 2008 in the principal
        amount of $400,000 issued in favor of Philadelphia Financial, LLC+

10.77   Warrant to Purchase up to 600,000 Shares of Common Stock of U.S.
        Helicopter Corporation issued to Philadelphia Financial, LLC and
        dated August 28, 2008+

10.78   Note Purchase Agreement dated as of September 12, 2008 by and between
        U.S. Helicopter Corporation and Portfolio Lenders II, LLC+

10.79   Convertible Promissory Note dated September 12, 2008 in the principal
        amount of $125,000 issued in favor of Portfolio Lenders II, LLC+

10.80   Warrant to Purchase up to 250,000 Shares of Common Stock of U.S.
        Helicopter Corporation issued to Portfolio Lenders II, LLC and dated
        September 12, 2008+

10.81   Note Purchase Agreement dated as of September 30, 2008 by and between
        U.S. Helicopter Corporation and Teekell Oil & Gas, Inc.+


                                       36
<PAGE>

10.82   Convertible Promissory Note dated September 30, 2008 in the principal
        amount of $250,000 issued in favor of Teekell Oil & Gas, Inc.+

10.83   Warrant to Purchase up to 1,250,000 Shares of Common Stock of U.S.
        Helicopter Corporation issued to Teekell Oil & Gas, Inc. and dated
        September 30, 2008+

10.84   Consulting Agreement dated as of October 1, 2008 by and between U.S.
        Helicopter Corporation and Teeekell Oil & Gas, Inc.+

10.85   Amended and Restated Note Purchase Agreement dated as of November 7,
        2008 by and between U.S. Helicopter Corporation and Philadelphia
        Financial, LLC+

10.86   Amended and Restated Convertible Promissory Note dated November 7,
        2008 in the principal amount of $650,000 issued in favor of
        Philadelphia Financial, LLC+

10.87   Warrant to Purchase up to 937,500 Shares of Common Stock of U.S.
        Helicopter Corporation issued to Philadelphia Financial, LLC and
        dated November 7, 2008+

10.88   Pledge and Escrow Agreement II dated as of November 7, 2008 by and
        among U.S. Helicopter Corporation, Philadelphia Financial, LLC,
        Pledgors and Gallagher, Briody & Butler+

31.1    Certification of Chief Executive Officer pursuant to Section 302 of
        the Sarbanes Oxley Act of 2002+

31.2    Certification of Chief Financial Officer pursuant to Section 302 of
        the Sarbanes-Oxley Act of 2002+

32.1    Certification of Chief Executive Officer pursuant to 18 U.S.C.
        Section 1350, as adopted pursuant to Section 906 of the
        Sarbanes-Oxley Act of 2002+

32.2    Certification of Chief Financial Officer pursuant to 18 U.S.C.
        Section 1350, as adopted pursuant to Section 906 of the
        Sarbanes-Oxley Act of 2002+

+     Exhibit filed herewith in this Report.


                                       37
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                     U.S. HELICOPTER CORPORATION


Date: November 19, 2008              By: /s/ John G. Murphy
                                         -------------------------------------
                                         John G. Murphy
                                         Chief Executive Officer and President
                                         (Principal Executive Officer)


                                     By: /s/ George J. Mehm, Jr.
                                         ------------------------------------
                                         George J. Mehm, Jr.
                                         Chief Financial Officer and
                                         Senior Vice President
                                         (Principal Financial and Accounting
                                         Officer)


                                       38