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 MARCH 31, 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
                       (NAME OF REGISTRANT 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 May 15, 2008, 45,654,168 shares
of common stock.


<PAGE>






                           U.S. HELICOPTER CORPORATION
                                    FORM 10-Q
                      FOR THE QUARTER ENDED MARCH 31, 2008

                                      INDEX

                                                                            PAGE
                          PART 1--FINANCIAL INFORMATION

ITEM 1.          FINANCIAL STATEMENTS
                 Balance Sheet                                                 1
                 Statements of Operations                                      3
                 Statements of Stockholders Equity [Deficit]                   4
                 Statements of Cash Flows                                      5
                 Notes to Financial Statements                                 6
ITEM 2.          MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATION                 29
ITEM 3.          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                 MARKET RISK                                                  51
ITEM 4.          CONTROLS AND PROCEDURES                                      51
ITEM 4(T).       MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER
                 FINANCIAL REPORTING                                          52

                           PART II--OTHER INFORMATION

ITEM 1.          LEGAL PROCEEDINGS                                            53
ITEM 2.          UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS  53
ITEM 3.          DEFAULTS UPON SENIOR SECURITIES                              53
ITEM 4.          SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS          53
ITEM 5.          OTHER INFORMATION                                            53
ITEM 6.          EXHIBITS                                                     53



<PAGE>






                          PART I--FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
U.S. HELICOPTER CORPORATION
BALANCE SHEETS

                                                                    MARCH 31    DECEMBER 31
ASSETS:                                                              2008           2007
                                                                 -----------    -----------
                                                                 (unaudited)
CURRENT ASSETS:
<S>                                                              <C>            <C>
  Cash                                                           $ 1,485,664    $   670,136
  Restricted Cash                                                    179,526        179,325
  Accounts Receivable                                                341,201        347,495
  Inventory                                                           42,177         45,032
  Prepaid Expenses                                                   188,547        150,820
  Other Current Assets                                               146,008        121,079
                                                                 -----------    -----------
    TOTAL CURRENT ASSETS                                           2,383,123      1,513,887
                                                                 -----------    -----------

PROPERTY AND EQUIPMENT:
  Leasehold Improvements                                           1,388,385      1,346,935
  Office Equipment                                                   173,963        167,564
  Less: Accumulated Depreciation                                    (728,639)      (658,808)
                                                                 -----------    -----------
PROPERTY AND EQUIPMENT - NET                                         833,709        855,691
                                                                 -----------    -----------

OTHER ASSETS:
  Deferred Financing Costs,
     Net of Accumulated Amortization of $31,222 and $2,096,949       252,352          9,852
  Deferred Offering Costs                                             50,211         45,421
  Deposits                                                           893,506        893,506
                                                                 -----------    -----------
    TOTAL OTHER ASSETS                                             1,196,069        948,779
                                                                 -----------    -----------
    TOTAL ASSETS                                                 $ 4,412,901    $ 3,318,357
                                                                 ===========    ===========

             THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>


                                      -1-
<PAGE>


<TABLE>
<CAPTION>

U.S. HELICOPTER CORPORATION
BALANCE SHEETS


                                                                         MARCH 31,      DECEMBER 31,
                                                                           2008            2007
                                                                      ------------    ------------
                                                                      (unaudited)
LIABILITIES AND STOCKHOLDERS' [DEFICIT]:
CURRENT LIABILITIES:
<S>                                                                   <C>             <C>
  Accounts Payable and Accrued Expenses                               $  4,235,447    $  3,699,705
  Note Payable, net of discount of $4,634,732 and $-0-                   3,710,106         844,838
  Derivative Liability                                                   2,453,985            --
  Deferred Salary and Taxes Payable                                          9,081           9,081
  Accrued Salary and Taxes Payable                                         157,494          83,375
  Air Traffic Liability                                                    212,663         190,685
                                                                      ------------    ------------

  TOTAL CURRENT LIABILITIES                                             10,778,776       4,827,684

LONG-TERM DEBT - NET OF DISCOUNT OF $2,042,158 AND $3,669,308              707,842       4,980,692

LONG-TERM DERIVATIVE LIABILITY                                           2,158,754       1,572,661

DEFERRED CHARGES                                                           346,241         376,746
                                                                      ------------    ------------

  TOTAL LIABILITIES                                                     13,991,613      11,757,783
                                                                      ------------    ------------

COMMITMENTS AND CONTINGENCIES                                                 --              --
                                                                      ------------    ------------

STOCKHOLDERS' [DEFICIT]:
  Convertible Series A Preferred Stock, $0.001 Par Value; 1,500,000
    Shares Authorized; -0- Shares Issued and Outstanding                      --              --

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

  Additional Paid In Capital                                            21,467,778      19,929,875

  Deferred Equity Compensation                                            (176,156)        (37,490)

  Accumulated Deficit                                                  (30,915,888)    (28,377,365)
                                                                      ------------    ------------

  TOTAL STOCKHOLDERS' [DEFICIT]                                         (9,578,712)     (8,439,425)
                                                                      ------------    ------------

  TOTAL LIABILITIES AND STOCKHOLDERS' [DEFICIT]                       $  4,412,901    $  3,318,357
                                                                      ============    ============

               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>


                                      -2-
<PAGE>


<TABLE>
<CAPTION>

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

                                                           THREE MONTHS ENDED
                                                               MARCH 31,
                                                      2 0 0 8        2 0 0 7
                                                   ------------    ------------


<S>                                                <C>             <C>
REVENUES                                           $    810,326    $    296,726
                                                   ------------    ------------

EXPENSES:

   Payroll                                              864,137         975,021
  Payroll Taxes and Benefits                            155,297         146,442
  Crew Costs and Other                                   73,689         177,510
  Substitute Service/Interrupted Passenger                  443             867
  Maintenance                                           171,798         342,999
  Fuel                                                  107,377         122,518
  Aircraft and Traffic Servicing                        182,289         153,195
  Other Taxes                                             1,352           3,846
  Professional Fees                                     351,378         383,357
  Insurance                                             136,302         215,580
  Office Expense                                         58,384          60,009
  Website and Website Design                              3,500           4,930
  Travel                                                 11,747          11,012
  Rent                                                  145,549         131,241
  Lease Expense - equipment                             467,703         474,773
  Reservation Expense                                   104.487          61,061
  Advertising                                            35,023         292,918
  Licenses and Fees                                         960           5,465
  Depreciation and Amortization                          69,831         110,227
                                                   ------------    ------------

  TOTAL EXPENSES                                      2,941,246       3,670,971
                                                   ------------    ------------

  OPERATING (LOSS)                                   (2,130,921)     (3,374,245)

OTHER INCOME (EXPENSE):
  Interest Income                                         1,717          11,632
  Interest Expense                                     (230,137)       (190,888)
  Amortization of Deferred Financing Costs              (31,222)       (100,992)
  Change in Fair Value of Derivative                    306,464          23,927
  Amortization of Debt Discount                        (454,424)       (228,853)
                                                   ------------    ------------

  NET OTHER INCOME (EXPENSE)                           (407,602)       (485,174)
                                                   ------------    ------------

    Deduct: Preferred Stock Dividend                       --              --
                                                   ------------    ------------

  NET (LOSS) APPLICABLE TO COMMON SHAREHOLDERS     $ (2,538,523)   $ (3,859,419)
                                                   ============    ============

  NET (LOSS) PER COMMON SHARE:
    BASIC AND DILUTED                              $       (.06)   $       (.11)
                                                   ============    ============

  WEIGHTED AVERAGE NUMBER OF SHARES                  45,554,171      35,467,431
                                                   ============    ============

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>



                                      -3-
<PAGE>

<TABLE>
<CAPTION>

U.S. HELICOPTER CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY [DEFICIT]


                                               PREFERRED                     COMMON STOCK
                                                 STOCK
                                                                                                    PAID-IN
                                          SHARES       AMOUNT           SHARES        AMOUNT        CAPITAL
                                    ------------    ------------    ------------   ------------   ------------
<S>                <C>                    <C>       <C>               <C>          <C>            <C>

Balance at January 1, 2008                  --              --        45,554,171   $     45,554   $ 19,929,875

Issuance of stock options,
  warrants and restricted
  stock awards                              --              --              --             --          199,420
Amortization of deferred
  equity compensation                       --              --              --             --             --
Issuance of debt with
  beneficial conversion
  feature and warrants                      --              --              --             --          115,464
Issuance of warrants for cash               --              --              --             --        1,250,000
Offering Costs related to
  warrant issuance                          --              --              --             --          (26,981)
Net Loss                                    --              --              --             --             --
                                    ------------    ------------    ------------   ------------   ------------
Balance at March 31, 2008
  (unaudited)                               --              --        45,554,171   $     45,554   $ 21,467,778
                                    ============    ============    ============   ============   ============








                                   DEFERRED EQUITY
                                    COMPENSATION        DEFICIT            TOTAL
                                    ------------    ---------------    ------------

Balance at January 1, 2008          $    (37,490)   $ (28,377,365)     $(8,439,426)

Issuance of stock options,
  warrants and restricted
  stock awards                          (183,817)              --           15,603
Amortization of deferred
  equity compensation                     45,151               --           45,151
Issuance of debt with
  beneficial conversion
  feature and warrants                      --                 --          115,464
Issuance of warrants for cash               --                 --        1,250,000
Offering Costs related to
  warrant issuance                          --                 --          (26,981)
Net Loss                                    --         (2,538,523)      (2,538,523)
                                    ------------    ---------------    ------------
Balance at March 31, 2008
  (unaudited)                       $   (176,156)   $ (30,915,888)    $ (9,578,712)
                                    ============    =============     ============


        THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>


                                      -4-
<PAGE>

<TABLE>
<CAPTION>

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

                                                     THREE MONTHS ENDED MARCH 31
                                                       2 0 0 8         2 0 0 7
                                                     -----------    -----------
OPERATING ACTIVITIES:
<S>                                                  <C>            <C>
  Net (Loss)                                         $(2,538,523)   $(3,859,419)
  Adjustments to Reconcile Net (Loss)
    to Net Cash (Used for) Operating Activities:
      Depreciation Expense                                69,831        110,227
      Amortization of Deferred Financing Costs            31,222        110,992
      Recognition of Deferred Income                     (30,505)       (30,169)
      Change in Fair Value of Derivative Liability      (306,464)       (18,478)
      Amortization of Debt Discount                      454,424        223,404
      Amortization of Deferred Equity Compensation        45,151        100,293
      Fees paid for Services - Noncash                    15,604        279,156
    Changes in Assets and Liabilities:
      (Increase) Decrease in:
        Accounts Receivable                                6,294        (32,890)
        Prepaid Expenses, and Other Current Assets       (59,801)       (40,068)
        Restricted Cash                                     (201)        (1,097)
        Deposits                                             (--)       (60,467)
      Increase (Decrease) in:
        Accounts Payable and Accrued Liabilities         631,839        732,922
                                                     -----------    -----------
  NET CASH - OPERATING ACTIVITIES                     (1,681,129)    (2,495,594)
                                                     -----------    -----------

INVESTING ACTIVITIES:
  Acquisition of Property and Equipment                  (47,849)      (153,815)
                                                     -----------    -----------

FINANCING ACTIVITIES:
  Proceeds From Short-Term Debt                        1,830,000      1,100,000
  Payment of Short-Term Debt                            (230,000)          --
  Release of Restricted Cash                                --             --
  Proceeds from Sale of Common Stock/Warrants          1,250,000             75
  Payment of Financing Costs                            (273,722)       (59,000)
  Payment of Offering Costs                              (31,772)          --

  NET CASH - FINANCING ACTIVITIES                      2,544,506      1,041,075
                                                     -----------    -----------

  NET (DECREASE) INCREASE IN CASH                        815,528     (1,608,334)
                                                     -----------    -----------

CASH - BEGINNING OF PERIODS                              670,136      2,620,540
                                                     -----------    -----------

  CASH - END OF PERIODS                              $ 1,485,664    $ 1,012,206
                                                     ===========    ===========
  Cash paid during the periods for:
    Interest                                         $    12,460    $     2,630
    Income Taxes                                     $      --      $      --

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During the first quarter of 2008, the Company entered into a consulting
agreement and issued 75,000 shares of restricted stock and 1,132,500 warrants to
purchase common stock. The restricted stock and warrants were valued at a fair
value of approximately $184,000 and were recognized as Deferred Equity
Compensation in the Balance Sheet. For the three months ended March 31, 2008,
approximately $7,700 of consulting services were amortized in connection with
the service term of the agreement.

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>

                                      -5-
<PAGE>



                      U.S. HELICOPTER CORPORATION NOTES TO
                              FINANCIAL STATEMENTS

(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"). Prior to
that date we were a development stage company that devoted most of our efforts
to activities such as financial planning, capital raising, and the development
of a business plan. The Company's core business will be providing regularly
scheduled helicopter shuttle service between many of the nation's larger
metropolitan airports and surrounding city-based heliports. U.S. Helicopter was
incorporated in the State of Delaware on March 4, 2003. We have introduced, and
intend to expand our service, which we call "Metro-hop Airport Shuttle Service"
("MASS"), in the New York City market. When fully implemented, our plan in the
New York City-area market is to offer frequent service between Kennedy, Newark
Liberty and LaGuardia airports and the New York metropolitan area heliports
located at Wall Street, East 34th Street, and West 30th Street. We also provide
limited scheduled service between Manhattan and Sikorsky Memorial Airport
(Stratford, Connecticut), East Hampton Airport (East Hampton, New York), and
Monmouth Executive Airport (Belmar, New Jersey).

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 accruals)
considered necessary in order to make the interim financials not misleading have
been included and all such adjustments are of normal recurring nature. The
operating results for the three months ended March 31, 2008 are not necessarily
indicative of the results that can be expected for the year ending December 31,
2008.

(2) GOING CONCERN

The accompanying consolidated 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. 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.

                                      -6-
<PAGE>



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 March 31, 2008, we had $1,485,665 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 11
and 12 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. During the next
twelve months, we anticipate that we will need approximately $10.0 million of
working capital (inclusive of capital expenditures), $12.0 million of lease
financing, and $8.3 million to repay debt including $5.9 million of Convertible
Debentures due on March 31, 2009.

Such capital is expected 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 $30.3 million through $12 million
of operating lease financing and $18.3 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.
There can be no assurances, however, that we will be able to complete such
financings on terms favorable to us or at all.

(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.

CASH EQUIVALENTS - We consider all highly liquid investments with original
maturities of three months or less when purchased to be cash equivalents. We had
no cash equivalents at March 31, 2008 and December 31, 2007.

RESTRICTED CASH - We had restricted cash of $179,526 and $179,325 at March 31,
2008 and December 31, 2007. Our restricted cash related to a cash deposit
securing a letter of credit we were required to post.

CONCENTRATIONS OF CREDIT RISK - Financial instruments that potentially subject
us to significant concentrations of credit risk consist principally of cash and
cash equivalents and accounts receivable.

We maintain our cash and cash equivalents in accounts with major financial
institutions in the United States in the form of demand deposits and money
market accounts. Deposits in these banks may exceed the amounts of insurance
provided on such deposits. As of March 31, 2008 and December 31, 2007, we had
approximately $162,234 and $906,868, in deposits subjected to such risk. We have
not experienced any losses on our deposits of cash and cash equivalents.

                                      -7-
<PAGE>


We generally do not require collateral related to our financial instruments.

Concentrations of credit risk with respect to trade accounts receivable are
limited due to the fact that most customers pay for the flights in advance of
the flights. The allowance for doubtful accounts as of March 31, 2008 and
December 31, 2007 was $0 and $0, respectively. We routinely assess the financial
strength of customers and, based upon factors concerning credit risk, we
establish an allowance for doubtful accounts. Management believes that accounts
receivable credit risk exposure beyond such allowance is limited.

FAIR VALUE OF FINANCIAL INSTRUMENTS - Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosure about Fair Value of Financial
Instruments," require the disclosure of fair values for all financial
statements, both on- and off-balance-sheet, for which it is practicable to
estimate fair value. We estimate that there are no material variations between
fair value and book value of our financial assets or liabilities as of March 31,
2008 and December 31, 2007.

PROPERTY AND EQUIPMENT - We record our property and equipment at cost less
accumulated depreciation. For financial reporting purposes, we use the
straight-line method to compute depreciation based upon estimated useful lives
of two to five years for flight equipment and one to seven years for other
equipment. Leasehold improvements are amortized over the shorter of the related
lease term or the estimated life of the improvements. Equipment under capital
leases are amortized over the lease term and such amortization is included in
the depreciation of property and equipment. Upon selling or otherwise disposing
of property and equipment, we remove cost and accumulated depreciation from the
accounts and reflect any resulting gain or loss in earnings. Depreciation and
amortization totaled $69,831 and $110,227 for the three months ended March 31,
2008 and 2007, respectively.

IMPAIRMENT OF LONG-LIVED ASSETS -We review our long-lived assets and
identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. When such factors and circumstances exist, we compare the projected
undiscounted future cash flows associated with the future use and disposal of
the related asset or group of assets to their respective carrying amounts.
Impairment, if any, is measured as the excess of the carrying amount over the
fair value based on market value (when available) or discounted expected cash
flows of those assets, and is recorded in the period in which the determination
is made.

DEFERRED OFFERING COSTS - Amounts paid or accrued for costs associated with an
anticipated public offering will be expensed and not recorded as a reduction of
the net proceeds, if the offering is not consummated. Upon successful completion
of such an offering, these expenses will be recorded as a reduction of the net
proceeds.

ADVERTISING COSTS - We expense advertising costs as incurred.

REVENUE RECOGNITION - We recognize revenue when transportation has been
provided, including scheduled passenger and charter services. Some charter
services provided during the year ended December 31, 2006 have become part of
our scheduled routes in the year ended December 31, 2007 [and the period ended
March 31, 2008?].

                                      -8-
<PAGE>


We had revenue for the three months ended March 31, 2008 and 2007 as follows (no
adjustments have been made for former charter flights which have become part of
our scheduled service):


                                   2 0 0 8               2 0 0 7
                                   -------               -------
Scheduled Passenger           $         711,827     $          179,964
Charter                                  92,263                111,873
Miscellaneous                             6,236                  4,889
                              ------------------    -------------------
Totals                        $         810,326     $          296,726
                              ==================    ===================

INCOME TAXES - We account for income taxes under the provisions of Statement
109, "Accounting for Income Taxes." Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect for the years in which the differences are expected to affect taxable
income. Valuation allowances will be established when necessary to reduce
deferred tax assets to the amounts expected to be realized.

RECENT ACCOUNTING PRONOUNCEMENTS -- In January 2007 the FASB issued Derivatives
Implementation Group Statement 133 Implementation Issue No. B40, "Embedded
Derivatives: Application of Paragraph 13(b) to Securitized Interested in
Prepayable Financial Assets". This Issue provides a narrow scope exception from
paragraph 13(b) of Statement No. 133 for securitized interests that contain only
an embedded derivative that is tied to the prepayment risk of the underlying
prepayable financial assets. The guidance in this Issue is generally effective
upon initial adoption of Statement No. 155. The effects of these standards are
not anticipated to have a material impact on our financial position, results of
operations or cash flows.

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.

We do expect SFAS 157 to affect our disclosures. We are still evaluating the
effects, if any, SFAS No. 157, SFAS 157-1and SFAS 157-2 may have on our
financial position, results of operations or cash flows.

                                      -9-
<PAGE>

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities" ("SFAS No. 159"). SFAS No. 159
permits entities to choose to measure, on an item-by-item basis, specified
financial instruments and certain other items at fair value. Unrealized gains
and losses on items for which the fair value option has been elected are
required to be reported in earnings at each reporting date. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007, the provisions of
which are required to be applied prospectively. The Company adopted this
Statement as of January 1, 2008 and has elected not to apply the fair value
option to any of its financial instruments.

In December 2007, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141 (revised 2007),
Business Combinations, which replaces SFAS No 141. The statement retains the
purchase method of accounting for acquisitions, but requires a number of
changes, including changes in the way assets and liabilities are recognized in
the purchase accounting. It also changes the recognition of assets acquired and
liabilities assumed arising from contingencies, requires the capitalization of
in-process research and development at fair value, and requires the expensing of
acquisition-related costs as incurred. SFAS No. 141R is effective for business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008. The
adoption of SFAS No. 141 could have a material effect on the Company's financial
reporting but currently the effect is indeterminable.

In December 2007, the FASB issued SFAS No. 160. "Noncontrolling Interests in
Consolidated Financial Statements-and Amendment of ARB No. 51." SFAS 160
establishes accounting and reporting standards pertaining to ownership interests
in subsidiaries held by parties other than the parent, the amount of net income
attributable to the parent and to the noncontrolling interest, changes in a
parent's ownership interest, and the valuation of any retained noncontrolling
equity investment when a subsidiary is deconsolidated. This statement also
establishes disclosure requirements that clearly identify and distinguish
between the interests of the parent and the interests of the noncontrolling
owners. SFAS 160 is effective for fiscal years beginning on or after December
15, 2008. The adoption of SFAS 160 is not currently expected to have a material
effect on the Company's consolidated financial position, results of operations,
or cash flows.

In March 2008, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 161, Disclosures about Derivative Instruments and Hedging
Activities. The new standard is intended to improve financial reporting about
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity's financial
position, financial performance, and cash flows. It is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. The company is currently evaluating
the impact of adopting SFAS. No. 161 on its financial statements.

In May 2008, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 162, "The Hierarchy of Generally
Accepted Accounting Principles." The new standard is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with U.S. generally accepted accounting
principles (GAAP) for non-governmental entities. We are currently evaluating the
effects, if any, that SFAS No. 162 may have on our financial reporting.



                                      -10-
<PAGE>

(4) DEPOSITS

We had deposits of $893,506 at March 31, 2008 and December 31, 2007. Deposits
are principally related to our leasing of four helicopters and a deposit we
placed with a manufacturer for the purchase of four new helicopters.

(5) ACCOUNTS PAYABLE AND ACCRUED EXPENSES

We had accounts payable and accrued expenses of $4,235,447 and $3,699,701 at
March 31, 2008 and December 31, 2007, broken down as follows:

                                                          MARCH         DECEMBER
                                                           31,            31,
                                                         2 0 0 8        2 0 0 7
                                                       ----------     ----------
Professional Fees                                      $  502,403     $  446,191

Reservations Service                                      250,478        213,857
Advertising                                                59,088         26,638
Maintenance                                               679,221        630,625
Insurance                                                 133,070        162,569
Interest                                                1,315,230      1,103,853
Deferred Financing Costs                                  241,595        199,970
Training                                                  151,075        148,075
Lease Expense                                             435,044        467,558
Other Accounts Payable and Accrued Expenses               468,243        300,368
                                                       ----------     ----------
    TOTALS                                             $4,235,447     $3,699,705
                                                       ==========     ==========

(6) AIR TRAFFIC LIABILITY

We had air traffic liability of $212,663 and 190,685 at March 31, 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.

(7) OFFICERS PAYROLL

Effective April 16, 2004, U.S. Helicopter entered into a five-year employment
agreement with John G. Murphy. Mr. Murphy is employed as the President and Chief
Executive Officer of U.S. Helicopter. Mr. Murphy's annual salary is $225,000.
Payment of Mr. Murphy's salary commenced on August 9, 2004. Mr. Murphy deferred
two weeks salary during the second quarter of 2007 and an additional four weeks
in the third quarter of 2007. These deferred amounts were repaid in October
2007. As an additional condition to closing the August 2007 Debenture [Note 11]
and the March 31, 2008 Debenture [Note 11], Mr. Murphy, as one of our five most
senior executive officers, agreed to reduce his salary by 20% until such time as
we repaid a total of $6,250,000 to YA from proceeds to be received from an
institutional private placement (see below).

George J. Mehm, Jr. is employed as the Senior Vice President, Treasurer and
Chief Financial Officer of U.S. Helicopter. Mr. Mehm's annual salary is
$130,000. Payment of Mr. Mehm's salary commenced on August 9, 2004. Effective
December 4, 2007, U.S. Helicopter approved an extension of Mr. Mehm's previous
employment agreement through December 31, 2009. Mr. Mehm deferred two weeks
salary during the second quarter of 2007 and an additional four weeks in the
third quarter of 2007. These deferred amounts were repaid in October 2007. As an
additional condition to closing the August 2007 Debenture [Note 11] and the
March 31, 2008 Debenture [Note 11], Mr. Mehm, as one of our five most senior
executive officers, agreed to reduce his salary by 20% until such time as we
repaid a total of $6,250,000 to YA from proceeds to be received from an
institutional private placement (see below).


                                      -11-
<PAGE>


Donal McSullivan is employed as the Senior Vice President and Chief Marketing
Officer of U.S. Helicopter. Mr. McSullivan's annual salary is $130,000. Payment
of Mr. McSullivan's salary began on August 9, 2004. Effective December 4, 2007,
U.S. Helicopter approved an extension of Mr. McSullivan's previous employment
agreement through December 31, 2009. Mr. McSullivan deferred two weeks salary
during the second quarter of 2007 and an additional four weeks in the third
quarter of 2007. These deferred amounts were repaid in October 2007. As an
additional condition to closing the August 2007 Debenture [Note 11] and the
March 31, 2008 Debenture [Note 11], Mr. McSullivan, as one of our five most
senior executive officers, agreed to reduce his salary by 20% until such time as
we repaid a total of $6,250,000 to YA from proceeds to be received from an
institutional private placement (see below).

Effective July 18, 2004, U.S. Helicopter entered into a five-year employment
agreement with Gabriel Roberts. Mr. Roberts is employed as the Vice President of
Finance and Administration of U.S. Helicopter. Mr. Roberts is currently being
paid at the annual rate of $95,000. Payment of Mr. Roberts' salary commenced on
August 9, 2004. Mr. Roberts deferred two weeks salary during the second quarter
of 2007 and an additional four weeks in the third quarter of 2007. These
deferred amounts were repaid in October 2007. As an additional condition to
closing the August 2007 Debenture [Note 11] and the March 31, 2008 Debenture
[Note 11], Mr. Roberts, as one of our five most senior executive officers,
agreed to reduce his salary by 20% until such time as we repaid a total of
$6,250,000 to YA from proceeds to be received from an institutional private
placement (see below).

Terence O. Dennison is employed as the Senior Vice President and Chief Operating
Officer of U.S. Helicopter. Mr. Dennison is currently being paid at the annual
rate of $130,000. Effective December 4, 2007, U.S. Helicopter approved an
extension of Mr. Dennison's previous employment agreement through December 31,
2009. Mr. Dennison deferred two weeks salary during the second quarter of 2007
and an additional four weeks in the third quarter of 2007. These deferred
amounts were repaid in October 2007. As an additional condition to closing the
August 2007 Debenture [Note 11] and the March 31, 2008 Debenture [Note 11], Mr.
Dennison, as one of our five most senior executive officers, agreed to reduce
his salary by 20% until such time as we repaid a total of $6,250,000 to YA from
proceeds to be received from an institutional private placement (see below).

As an additional condition to closing the August 2007 Debenture [Note 11] and
the March 31, 2008 Debenture [Note 11], our five most senior executive officers
(collectively, "Management") agreed to reduce their salaries by 20% until such
time as we repaid debt owed to YA Global Investments, L.P., f/k/a Cornell
Capital Partners, LP ("YA") totaling $6,250,000 from proceeds to be received
from an institutional private placement (the "YA Repayment"). After we make such
repayment, Management's salaries will be reinstated in full, and all unpaid
salary amounts will 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 [Note 11]. In addition, the five officers
purchased a combined total of $50,000 in common stock during August 2007.

(8) STOCK-BASED COMPENSATION

In accordance with SFAS No. 123R, "Share-Based Payment" we currently utilize a
standard option pricing model (the Black-Scholes-Merton Model) to measure the
fair value of stock options granted to employees. Compensation cost is
recognized in the financial statements for all share-based payments granted
after that date.


                                      -12-
<PAGE>

On March 30, 2006 we issued a total of 1,000,000 shares of common stock to
various directors, officers, employees and consultants of the Company in
connection with our 2004 Stock Incentive Plan ("Restricted Stock Awards") as
Deferred Equity Compensation. The Restricted Stock Awards had a restriction on
transferability and sale. We expensed $725,000 for these Restricted Stock Awards
in 2007.

In 2006, we issued an additional 226,000 shares of common stock and options to
purchase an additional 576,000 shares of common stock to employees, officers and
directors, which have various restrictions on transferability and sale for
periods after the issuance date. In 2007, we issued an additional 150,000 shares
of common stock and 600,000 options to purchase shares of common stock to
non-employees for services, which have various restrictions on transferability
and sale for periods after the issuance date.

We issued an additional 3,550,000 options to directors, officer and employees
during the fourth quarter of 2007 pursuant to our 2007 Stock Incentive Plan,
which will be placed before the Company's shareholders at their next meeting.

For the three months ended March 31, 2008, we had share-based compensation costs
of $15,603 associated with these issuances.

(9) 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.

(10) DEFERRED OFFERING COSTS AND DEFERRED FINANCING COSTS

We have incurred certain costs related to financing activities since inception.
These costs consisted primarily of legal fees, placement agent fees, and
commissions which are related to the placement of debt securities (deferred
financing costs) and equity securities (deferred offering costs).

At March 31, 2008 and December 31, 2007, we had net deferred financing costs of
$252,352 and $9,852, respectively. During the fourth quarter of 2007 we expensed
the remaining costs related to the placement of the March 2006 Debenture, the
November 2006 Debenture, the March 2007 Debenture and the May 2007 Debenture as
a result of the debenture and warrant modifications under the August 2007
Debenture Transaction [Note 11]. Debentures issued to Cornell Capital Partners,
LP ("Cornell Capital") in April 2005 (in the original principal amount of
$1,335,424) August 2005 (in the principal amount of $220,000) were converted on
September 11, 2006 and all deferred financing costs related to that issuance
were written off at that time. We incurred $273,722 in costs related to various
financings during the first quarter of 2008 [Note 11]. We recorded amortization
expense related to deferred financing totaling $31,222 and $100,992 for the
three month periods ended March 31, 2008 and 2007, respectively.

At March 31, 2008 and December 31, 2007, we had net deferred offering costs of
$50,211 and $45,421, respectively. These costs were related to professional fees
in our proposed equity financing and will be offset against the proceeds of such
financing. Costs related to our Standby Equity Distribution Agreement [Note 13]
were expensed in the fourth quarter of 2007.


                                      -13-
<PAGE>


(11) CONVERTIBLE DEBT

LONG-TERM CONVERTIBLE DEBT

On March 30, 2006 we issued a $6,000,000, 8% interest convertible debenture (the
"March 2006 Debenture") to Cornell Capital. We registered shares equal to the
amount of shares which may be converted under the March 2006 Debenture pursuant
to an amended registration statement declared effective by the SEC on May 14,
2007. Upon issuance, the March 2006 Debenture was convertible at the option of
Cornell Capital any time up to maturity at a conversion price equal to the
lesser of $1.45 or 95% of the lowest volume weighted average price of our common
stock during the thirty trading days immediately preceding the conversion date
or the interest payment date, as applicable, as quoted by Bloomberg, LP, but in
no event less than $.001. The March 2006 Debenture accrues interest at 8% per
year payable in our common stock at the rate equal to the conversion price of
the March 2006 Debenture in effect at the time of payment. Interest and
principal payments on the March 2006 Debenture are due on the maturity date of
March 31, 2009. In connection with this financing, we issued to Cornell Capital
five year warrants with the following exercise prices: 1,250,000 at $1.00 per
share, 1,250,000 at $1.15 per share, 1,250,000 at $1.30 and 1,250,000 at $1.45.
The two warrants with exercise prices of $1.00 and $1.25 were exercised on
October 20, 2006 [Note 12]. We later amended and reduced the exercise prices of
the remaining two warrants to $0.50 per share in August 2007 and subsequently to
$0.30 per share in March 2008 as described below. We have filed a registration
statement including these shares with the Securities and Exchange Commission.

On November 10, 2006, we entered into a Securities Purchase Agreement (the
"November SPA") with Cornell Capital pursuant to which we issued a secured
convertible debenture to Cornell Capital in the principal amount of $2,750,000
(the "November 2006 Debenture"). The November 2006 Debenture matures 36 months
after issuance and accrues interest at 8% per year which, upon issuance of the
November 2006 Debenture, was payable in shares of our common stock at the lower
of $0.50 per share (the "Fixed Conversion Price") or 95% of the lowest daily
volume weighted average price of our common stock ("Fair Market Value") for the
30-day period prior to the interest payment due date, representing the
conversion price in effect for such debenture. We later reduced the Fixed
Conversion Price for the November 2006 Debenture to $0.50 per share in August
2007 and subsequently to $0.30 per share in March 2008 as described below.

                                      -14-
<PAGE>


Upon issuance, the November 2006 Debenture was convertible at Cornell Capital's
option into shares of our common stock at a price per share equal to the lower
of $1.45 per share or 95% of the fair market value of our common stock for the
30 days prior to the notice of exercise, as adjusted in accordance with the
terms of the November 2006 Debenture. We are required to register the shares
issuable upon conversion of the November 2006 Debenture and the warrants issued
in connection therewith within 45 days of our receipt of a written request from
Cornell Capital to register such shares. Cornell Capital's conversion right
under the November 2006 Debenture is subject to certain limitations including
that Cornell Capital may not convert the November 2006 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 Cornell Capital to exceed 4.99% of our then outstanding
common stock. Effective May 10, 2007, Cornell Capital agreed to limit its
resales of our common stock acquired under the November 2006 Debenture to no
more than $250,000 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
Cornell Capital. 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. Pursuant to the November SPA, we issued to Cornell Capital
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). We later amended and reduced the
exercise prices of these warrants to $0.50 per share in August 2007 and
subsequently to $0.30 per share in March 2008 as described below.

We agreed to grant a security interest to Cornell Capital covering substantially
all of our assets to secure our obligations under the November 2006 Debenture
and the March 2006 Debenture pursuant to an Amended and Restated Security
Agreement.


                                      -15-
<PAGE>


On March 30, 2007, we entered into a Securities Purchase Agreement (the "March
2007 SPA") with Cornell Capital pursuant to which we issued convertible
debentures in the principal amount of $1,100,000 (the "March 2007 Debenture").
Upon issuance, the March 2007 Debenture was convertible at the option of Cornell
Capital any time up to maturity at a conversion price equal to the lesser of
$1.45 or 95% of the lowest volume weighted average price of our common stock
during the thirty trading days immediately preceding the conversion date or the
interest payment date, as applicable, as quoted by Bloomberg, LP, but in no
event less than $.001. The March 2007 Debenture was originally repayable as of
June 30, 2007; however, the maturity date was extended to September 30, 2007 in
light of our inability to complete a financing of at least $1.1 million prior to
the original maturity date. YA has agreed in principle to an additional
extension of the maturity date for this debenture through the earlier of
September 30, 2008 or the closing date of the next equity financing completed by
us resulting in not less than $5.0 million in gross proceeds. The debentures
accrue interest at 12% per year payable in our common stock at the rate equal to
the conversion price of the debentures in effect at the time of payment.
Pursuant to the March 2007 Debenture, the interest rate under the debentures
increased by two percent per month through and until September 30, 2007.

Pursuant to the March 2007 SPA, we issued warrants to Cornell Capital 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). We later amended and reduced the exercise prices of
these warrants to $0.50 per share in August 2007 and subsequently to $0.30 per
share in March 2008 as described below. The warrants are exercisable for a
period of five years. We entered into an amended security agreement with Cornell
Capital pursuant to which we continued the security interest of Cornell Capital
in all our assets which we granted in connection with the original debentures
issued by us to Cornell Capital.

On May 14, 2007, we entered into a Securities Purchase Agreement with Cornell
Capital (the "May 2007 SPA") pursuant to which we issued convertible debentures
in the principal amount of $500,000 (the "May 2007 Debenture"). Upon issuance,
the May 2007 Debenture was convertible at the option of Cornell Capital any time
up to maturity at a conversion price equal to the lesser of $1.45 or 95% of the
lowest volume weighted average price of our common stock during the thirty
trading days immediately preceding the conversion date or the interest payment
date, as applicable, as quoted by Bloomberg, LP, but in no event less than
$.001. The May 2007 Debenture was repayable as of July 14, 2007. The debentures
accrued interest at 18% per year payable in our common stock at the rate equal
to the conversion price of the debentures in effect at the time of payment. On
October 17, 2007, we repaid the May 2007 Debenture in full.

Pursuant to the May 2007 SPA, we issued warrants to Cornell Capital 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. We
later amended and reduced the exercise prices of these warrants to $0.50 per
share in August 2007 and subsequently to $0.30 per share in March 2008 as
described below. We entered into an amended security agreement with Cornell
Capital pursuant to which we continued the security interest of Cornell Capital
in all our assets which we granted in connection with the original debentures
issued by us to Cornell Capital.


                                      -16-
<PAGE>


On August 24, 2007, we entered into a Securities Purchase Agreement with YA (the
"August 2007 SPA") pursuant to which we issued convertible debentures in the
principal amount of $800,000 (the "August 2007 Debenture"). Upon issuance, the
August 2007 Debenture was 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 August 2007 Debenture was repayable as of
October 24, 2007 and accrued interest at 18% per year payable in cash. We repaid
the August 2007 Debenture in full on October 17, 2007.

Pursuant to the August 2007 SPA, we issued warrants to YA to purchase a total of
2,745,375 shares of our common stock with the 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. In March 2008, we reduced
the exercise price of such warrants to $0.30 per share as described below. 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.

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. We repaid these bridge loans in full in
October 2007. 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"), which was
extended in March 2008 by each Management member to a total repayment to YA of
not less than $6,250,000 . After we make such repayments, Management's salaries
will be reinstated in full, and all unpaid salary amounts will 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 repayment date of the YA Bridge Loans 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.


                                      -17-
<PAGE>


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 $5.9
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. In March 2008, we amended the exercise price
of such warrants to $0.30 per share as described below.

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 14, 2008 Debenture"). The March 14,
2008 Debenture was repayable on the earlier of (a) the closing date of the next
financing to be completed by us, or (b) June 30, 2008, and accrues interest at
18% per year payable in cash. We used the proceeds received in this financing
for working capital. The March 14, 2008 Debenture was treated as an advance
against funds received in connection with the March 31, 2008 SPA as described
below and was deducted, with accrued interest, from the gross proceeds received
in such financing.


                                      -18-
<PAGE>


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.

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.


                                      -19-
<PAGE>


SHORT-TERM CONVERTIBLE DEBT - In February 2006 we issued a convertible note (the
"February 2006 Note") in the amount of $494,505 to an investor in exchange for
494,505 shares of our common stock held by the investor. This investor had
previously acquired such shares in a private transaction with Cornell Capital.
The February 2006 Note bore interest at 10% per annum was repayable on February
23, 2007. The February 2006 Note was convertible into shares of our common stock
at the lesser of $1.00 per share or 100% of the fair market value of our common
stock for the ten trading days prior to the conversion date, provided that the
conversion price was not less than $0.50 per share. We registered shares equal
to the amount of shares which may be converted under the February 2006 Note
pursuant to an amended registration statement declared effective by the SEC on
June 13, 2006. The February 2006 Note was converted on June 21, 2007 into
999,897 shares of our common stock.

On March 30, 2007, we entered into a Securities Purchase Agreement with Cornell
Capital pursuant to which we issued convertible debentures in the principal
amount of $1,100,000 (see above).

On May 14, 2007, we entered into a Securities Purchase Agreement with Cornell
Capital pursuant to which we issued convertible debentures in the principal
amount of $500,000 (see above).

On August 24, 2007, we entered into a Securities Purchase Agreement with Cornell
Capital pursuant to which we issued convertible debentures in the principal
amount of $800,000 (see above).

On June 15 and June 20, 2007, respectively, we entered into Convertible Note
Purchase Agreements with two investors (the "Investors"), pursuant to which we
issued a total of $250,000 in principal amount of convertible notes (the
"Notes"). In connection with these financings, we also issued to the Investors
warrants (the "Warrants") to purchase an aggregate of 312,500 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. In August, 2007, we agreed to reduce the exercise price of 156,250
warrants to $0.01 per share in partial 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 150,000 shares of stock to the other
lender in partial consideration of such lender's agreement to subordinate
repayment of its loan to YA. In October 2007, we received notice that one
Investor elected to convert its Note in full, plus accrued interest totaling
$157,644 into a total of 525,480 shares of common stock, and we repaid the other
Note in full.

The Notes accrued interest at the rate of 15% per annum, of which 30 days worth
of interest was paid in advance on the respective closing dates. We also paid
origination fees totaling $12,500 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. The Notes, along with all accrued and unpaid interest,
were repayable on the earlier of (a) the first closing of a private placement of
our debt or equity securities, or (b) 120 days after the closing of the Notes.
Repayment of the Notes was secured by certain of our assets and we were
obligated to prepay the Notes out of certain revenues to be received by us. The
proceeds of these financings were used for general working capital purposes.


                                      -20-
<PAGE>


Between July and August 2007, we completed bridge loan transactions with certain
investors pursuant to which we issued promissory notes totaling $522,000 in
principal that are convertible into shares of our common stock at a price of
$0.50 per share (the "2007 Bridge Loans"). In connection with the 2007 Bridge
Loans, we issued to such investors warrants to purchase up to 491,950 shares of
our common stock with an exercise price of $0.50 per share. In November 2007, we
amended the exercise price of 245,975 of such warrants to $0.01 per share in
consideration of such lenders' agreement to subordinate repayment of the 2007
Bridge Loans to YA. In light of these transactions and in accordance with the
terms of the Debentures then held by YA, we amended the terms of the such
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, which was later
amended in March 2008 to the lesser of $0.50 per share or 95% of the Fair Market
Value of our common stock. We repaid the 2007 Bridge Loans on October 17, 2007.

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 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.

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).


                                      -21-
<PAGE>



Future principal repayment as of March 31, 2008 is as follows:

YEAR ENDING
DECEMBER 31,
    2008                                                     2,444,838
    2009                                                     8,650,000
    Thereafter                                                  --
                                                     ------------------

    TOTAL                                            $      11,094,838
                                                     ==================

DERIVATIVE LIABILITY

The above issued convertible notes and warrants (in addition to the Short-Term
Convertible Debt) require the Company to register the resale of
the shares of common stock upon conversion or exercise of these securities. The
Company accounts for the fair value of these outstanding warrants to purchase
common stock and conversion feature of its 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 and warrants 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. In addition, since the
effective registration of the securities underlying the conversion feature and
warrants is an event outside of the control of the Company, pursuant to EITF
Issue No. 00-19, the Company recorded the fair value of the conversion feature
and warrants as either short-term or long-term liabilities (based on the
underlying term of the notes) as it was assumed that the Company would be
required to net-cash settle the underlying securities. The Company is required
to carry these embedded derivatives on its balance sheet at fair value and
unrealized changes in the values of these embedded derivatives are reflected in
the consolidated statement of operations.

In valuing the terms of the March 2006 Debenture, the November 2006 Debenture,
the March 2007 Debenture, the May 2007 Debenture and the August 2007 Debenture
in accordance with SFAS No. 133, we elected to value the debenture using the
Black Scholes-Merton model. The effect of this valuation was the creation of a
derivative liability of $3,724,718 for the March 2006 Debenture, $80,140 for the
November 2006 Debenture, $5,449 for the March 2007 Debenture, $5,271 for the May
2007 Debenture, $4,419,203 related to the August 2007 Debenture and
modifications and $3,976,542 related to the March 2008 Debentures and
modifications, which was recorded as a derivative liability and as discounts to
the corresponding debt. These discounts are being amortized over the respective
36 month lives of the March 2006 Debenture, the November 2006 Debenture, the six
month life of the March 2007 Debenture, the two month life of the May 2007
Debenture and August 2007 Debenture and the six month life of the March 2008
Debenture. The long-term derivative liability is periodically revalued using the
Black-Scholes-Merton model. For the three month periods ended March 31, 2008 and
2007 we recorded changes in fair value of derivative liability of $306,464, and
$23,297, respectively, in the Statement of Operations.


                                      -22-
<PAGE>

(12) - 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
                                                        ---------------------------------------------------
                                                        Quoted Prices in                        Significant
                                                         Active Markets       Significant      Unobservable
Description                             March 31,        for Identical          Other            Inputs
                                          2008              Assets            Observable        (Level 3)
                                                          (Level 1)            Inputs
                                                                              (Level 2)
-----------------------------------------------------------------------------------------------------------
<S>                                   <C>                <C>                <C>               <C>
Assets:                               $     --           $      --          $      --         $     --

                                      ----------         -----------        -----------       ----------
TOTAL ASSETS                          $     --           $      --          $      --         $     --
                                      ==========         ===========        ===========       ==========

LIABILITIES


Derivative  Liability - Short-Term    $2,453,985         $      --          $      --         $2,453,985
(See Note 11 )

Derivative Liability - Long-Term       2,158,754                --                 --          2,158,754
(See Note 11)
                                      ----------         -----------        -----------       ----------
TOTAL LIABILITIES                     $4,612,739         $      --          $      --         $4,612,739
                                      ==========         ===========        ===========       ==========

</TABLE>


                                      -23-
<PAGE>


(13) SECURITIES OFFERINGS

PRIVATE PLACEMENT WITH INTERNATIONAL FINANCIAL ADVISORS, K.S.C.C. - On October
17, 2007, the Company 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 "SPA")
and entered into on October 17, 2007. In accordance with the terms of the SPA,
we issued to IFA 8,000,000 shares of our common stock, par value $0.001 per
share ("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 U.S. Helicopter
(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 24.99% of the voting stock or 49.9% of
our total outstanding shares.

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.

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.

EXERCISE OF WARRANTS BY CORNELL CAPITAL - On October 20, 2006, the Company and
Cornell Capital amended the terms of two warrant agreements (the "Cornell
Warrants") relating to the issuance of 1,250,000 shares of the Company's common
stock each. The Cornell Warrants contained exercise prices of $1.00 and $1.15,
respectively. To induce Cornell Capital to make an additional investment in the
Company via the cash exercise of the Cornell Warrants, the Company agreed to
reduce the exercise price of each Cornell Warrant to $0.70 per share. We
received proceeds of $1,750,000 from the exercise of these warrants on October
20, 2006. In addition, we also agreed to issue additional warrants to purchase
an additional 500,000 shares of common stock with the following exercise prices:
$1.20 per share (as to 125,000 warrants); $1.35 per share (as to 125,000
warrants); $1.50 per share (as to 125,000 warrants); and $1.65 per share (as to
125,000 warrants). We later amended the exercise prices of these warrants in
August, 2007 (to $.50 per share) and March, 2008 (to $.30 per share).


                                      -24-
<PAGE>


On October 20, 2006, the Company issued a total of 2,500,000 shares of common
stock in connection with a notice of exercise of certain Cornell Warrants
received from Cornell Capital on such date. In connection with this agreement,
the Company issued additional warrants to purchase up to 500,000 shares of the
Company's common stock with the following exercise prices: $1.20 per share (as
to 125,000 warrants); $1.35 per share (as to 125,000 warrants); $1.50 per share
(as to 125,000 warrants); and $1.65 per share (as to 125,000 warrants). We
amended the exercise price of these warrants to $0.30 per share in March 2008 as
described above.

STANDBY EQUITY DISTRIBUTION AGREEMENT - On August 4, 2004, we entered into a
Standby Equity Distribution Agreement ("SEDA") with an investor. Under the
original terms of the SEDA, we could, at our discretion, periodically issue and
sell to the investor shares of common stock for a total purchase price of $10.0
million. These placements could occur, as elected by us, in increments not to
exceed $250,000 every seven business days. There is no minimum placement under
the SEDA. These placements of common stock will be at a 1% discount to the
volume weighted average price of our common stock for the 5 days immediately
following the notice date.

Under the terms of the SEDA, the investor will receive a fee equal to 5% of the
gross proceeds received by us pursuant to the SEDA. The SEDA has a term of 2
years from the Effectiveness of the SEDA registration. We are required to
register the SEDA shares under the Securities Act of 1933 prior to any sales of
our common stock under the SEDA, which has not occurred as of the date of filing
this report.

On April 8, 2005, we entered into an Amended and Restated Standby Equity
Distribution Agreement (the "New SEDA"). The New SEDA increased the total amount
of stock available for purchase from $10 million to $11 million and the maximum
size of each advance was increased from $250,000 to $300,000. Under the New SEDA
the maximum advances over each period of 30 days is $1,200,000.

(14) COMMITMENTS AND CONTINGENCIES

OPERATING LEASES - To establish our executive offices, we entered into a three
year operating lease for real property, which expired on August 16, 2007 (as
amended), at a rate of approximately $780 per month. We remain a tenant on a
monthly basis.


                                      -25-
<PAGE>


Effective February 1, 2006, we entered into an agreement to use an additional
1,590 square feet of space at the DMH as our passenger facility. The term of the
agreement expired August 16, 2007, which corresponded to the expiration of the
Port Authority's agreement with the City of New York for the DMH. The lease
between the Port Authority and the City of New York has not been extended and we
remain a tenant on a monthly basis. The monthly rental for the space is $6,360.
In addition, we agreed to pay the Port Authority an additional fee of $8,333 per
month, which may increase based on the gross receipts we earn from DMH departing
flights. We do not anticipate any additional fee payments over the next 12
months.

During 2007 we renewed the lease agreement for office and hangar space for our
operations base. Monthly rent is approximately $17,000.

On December 1, 2006, we entered into a three year lease agreement for office
space in Cranford, New Jersey. Monthly rent for this facility is $4,732 for the
first year of the lease, $4,845 for the second year of the lease and $4,957 for
the third year of the lease.

Total rental expense was $145,549 and $131,241 for the three months ended March
31, 2008 and 2007, respectively.

We entered into a three year operating lease for a helicopter, which expires on
October 31, 2008, at a monthly lease rate of $31,500 per month. There are no
purchase or renewal options, although we expect to begin renewal discussions in
the second quarter of 2008. Effective November 1, 2005, we secured a Technical
Support Agreement to provide us with certain exchange components, spare parts,
and technical support for the equipment for the length of the lease term.

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
$346,241 at March 31, 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.

Minimum future lease rent payments as of December 31, 2007 were:

YEAR ENDING
DECEMBER 31,
    2008                                                     1,946,660
    2009                                                     1,446,547
    2010                                                     1,405,020
    2011                                                       253,336
    Thereafter                                                  --
                                                     ------------------

    TOTAL MINIMUM FUTURE LEASE PAYMENTS              $       5,051,563
                                                     ==================


                                      -26-
<PAGE>


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.

(15) RELATED PARTY TRANSACTIONS

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. 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 (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.

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.

(16) 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.


                                      -27-
<PAGE>


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 dependant 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. 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.

(17) STOCK OPTIONS ISSUED UNDER 2004 STOCK INCENTIVE PLAN AND 2007 STOCK
     INCENTIVE PLAN

On July 23, 2004, we issued an option to acquire 231,000 shares of our common
stock for $0.50 per share. On October 27, 2004, we issued options to acquire
581,000 shares of our common stock for $0.50 per share. On May 25, 2005, we
issued an option to acquire 70,000 shares of our common stock for $0.50 per
share. On April 3, 2006 we issued options to acquire 150,000 shares of our
common stock for $0.50 per share. On October 26, 2006 we issued options for
351,000 shares at $1.40 per share. On December 21, 2006 we issued options for
75,000 shares at $1.25 per share. On March 10, 2007 we issued options for
600,000 shares at $1.05 per share.

On November 1 2007, we issued options to purchase a total of 350,000 shares of
our common stock for $0.53 per share under our 2007 Stock Incentive Plan. On
December 4, 2007, we issued options to purchase a total of 3,200,000 shares of
our common stock for $0.40 per share.

We recorded $4,353 and $47,868 in the three months ended March 31, 2008 and
2007, respectively in recognition of the cost of the options issued during those
periods. There were no options granted in the first quarter of 2008.

The following is a summary of options outstanding:

<TABLE>
<CAPTION>

                                                                   WEIGHTED AVERAGE
                                                 NUMBER OF SHARES   EXERCISE PRICE
                                                 ----------------   --------------

<S>                                                  <C>       <C>
Outstanding at December 31, 2004                         812,000   $          0.50
Granted                                                   70,000              0.50
Exercised                                                   --                --
Forfeited                                                   --                --
Outstanding at December 31, 2005                         882,000   $          0.50
                                                 ===============   ===============

Granted                                                  576,000   $  0.50 - $1.40
Exercised                                                 --                  --
Forfeited                                                (70,000)             0.50
                                                 ---------------   ---------------
Outstanding at December 31, 2006                       1,388,000   $  0.50 - $1.40
                                                 ===============   ===============

Granted                                                4,150,000   $   0.40 - $1.05
Exercised                                                 --                  --
Forfeited                                               (152,500)  $   0.53 - $1.40
                                                 ---------------   ---------------
Outstanding at December 31, 2007                       5,385,500   $   0.40 - $1.40
                                                 ===============   ===============

Granted                                                        0   $             0
Exercised                                                      0                 0
Forfeited                                               (106,000)     0.53 - $1.40
                                                 ---------------   ---------------
Outstanding at March 31, 2008                          5,279,500      0.40 - $1.40
                                                 ===============   ===============

                                                        At               At
                                                  MARCH 31, 2008   DECEMBER 31, 2007
                                                 ---------------   -----------------

Options Exercisable                                    4,799,500         4,790,500
                                                 ===============  ================

                                                   Quarter Ended     Quarter Ended
                                                     March 31,         March 31,
                                                        2008              2007
                                                        ----              ----
Weighted Average Fair Value of Options
  Granted During the Periods                     $           -0-  $        147,868
                                                 ===============  ================
</TABLE>


                                      -28-
<PAGE>


As of March 31, 2008 the weighted average exercise price of all of our employee
stock options is $0.553. The weighted average remaining contractual life is
approximately 8.23 years.

As of March 31, 2008, the weighted average exercise price for our employee stock
options which have vested is $0.525. The weighted average contractual life is
approximately 8.61 years.

The fair value of each option granted is estimated on the grant date using the
Black-Scholes Model. The following assumptions were made in estimating fair
value:


                                                        YEARS ENDED DECEMBER 31,
                                                         2007              2006
                                                         ----              ----
Dividend Yield                                           -- %              -- %
Risk-Free Interest Rate                                 4.75%             4.75%
Expected Life                                         10 years          10 years
Expected Volatility                                     N/A               N/A



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.


                                      -29-
<PAGE>


                                     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. 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
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. We estimate that over 29 million passengers originate or terminate
their trips from the island of Manhattan.

         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.


                                      -30-
<PAGE>


         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 MARCH 31, 2008 COMPARED TO
                        THREE MONTHS ENDED MARCH 31, 2007

         REVENUES From inception on March 4, 2003 through March 27, 2006, we had
no revenues from operations and did not generate any revenues from operations
until March 27, 2006. For the three months ended March 31, 2008, total revenues
increased to $810,326. For the three months ended March 31, 2007, our total
revenues were $296,726. The increase in total revenues is attributable to
increased passenger counts in 2008 versus 2007 and a higher net fare. We also
introduced service from the East 34th Street Heliport to Kennedy and Newark
Airports in February 2007. The first quarter of 2008 reflects a full quarter's
revenue from operations that included flights to and from the East 34th Street
Heliport versus a partial quarter for such operations in 2007.

         PAYROLL EXPENSES Payroll expenses decreased to $864,137 for the three
months ended March 31, 2008 from $975,021 for the three months ended March 31,
2007. The decrease in payroll expense is due to a stable number of employees and
reimbursement of certain payroll expenses by third parties.


                                      -31-
<PAGE>


         PROFESSIONAL FEES For the three months ended March 31, 2008, we
incurred professional fees totaling $351,378, compared to $383,357 for the three
months ended March 31, 2007. These fees are comprised of legal fees for general
matters, accounting and audit fees, other consulting fees, transfer agent fees,
registered agent fees, security fees and Board of Directors fees.

         EQUIPMENT EXPENSES Equipment lease expenses decreased to $467,703 for
the three months ended March 31, 2008 from $474,773 for the three months ended
March 31, 2007.

         ADVERTISING EXPENSES Advertising expenses decreased to $35,023 for the
three months ended March 31, 2008 from $292,918 for the three months ended March
31, 2007.

         OPERATING LOSS We reported an operating loss of $(2,130,921) for the
three months ended March 31, 2008 compared to an operating loss of $(3,374,245)
for the three months ended March 31, 2007. The decrease in operating loss is due
to higher revenue levels and a decrease in expenses as we expanded our operation
significantly during 2007.

         NET LOSS We reported a net loss of $(2,538,523) for the three months
ended March 31, 2008 compared to a net loss of $(3,859,419) for the three months
ended March 31, 2007. The decrease in loss is due to lower expense levels and an
increase in revenue as we expanded our operation. Net loss was also impacted by
slightly lower other income and (expenses) of $(407,602) for the three months
ended March 31, 2008 compared to other income/(expenses) of $(485,174) for the
three months ended March 31, 2007. The difference in other income expense is due
to higher interest expense, a gain from derivative liability calculation in the
first three months of 2008, a higher amortization of debt discount in the first
quarter of 2008 and a lower amortization of deferred financing costs.

         NET LOSS PER COMMON SHARE Basic and diluted net loss per common share
was $(.06) for the three months ended March 31, 2008 compared to a $(.11) loss
for the three months ended March 31, 2007.

         Results of the first 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.


                                      -32-
<PAGE>


LIQUIDITY AND FINANCIAL CONDITION

GENERAL

         At March 31, 2008, cash and cash equivalents were $1,485,664. Total
liabilities at March 31, 2008 were $13,991,615, consisting of current
liabilities in the aggregate amount of $10,778,776 and long-term liabilities in
the amount of $3,212,837. At March 31, 2008, assets included $188,547 in prepaid
expenses, $833,709 in furniture and equipment, net of depreciation; $252,352 in
debt issuance costs, net of amortization; and other assets of $943,717. As of
March 31, 2008, our working capital deficit was $(8,395,651) as compared to
$(3,313,797) at March 31, 2007. We expect to incur additional operating losses
as we continue our commercialization efforts.

Our debt before discount at March 31, 2008 and December 31, 2007 were as
follows:
                                            March 31, 2008     December 31, 2007
                                           ---------------     -----------------
     Short-term notes                      $    7,994,838       $      844,838
     Short-term bridge loans                      350,000                --
     Long Term Convertible notes                2,750,000            8,650,000
                                           --------------       --------------
                                     Total $   11,094,838       $    9,494,838
                                           ==============       ==============

         For more detailed information on long-term liabilities, see Note 11 to
our financial statements contained herein.

FINANCING TRANSACTIONS

         Since inception, we have incurred substantial operating losses. As of
March 31, 2008, we had an accumulated deficit of $(30,915,888). 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.

MARCH 2008 CONVERTIBLE DEBENTURE FINANCING

         We received gross proceeds totaling $1,250,000 from 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 plan to use the remaining proceeds received in this
financing for working capital.


                                      -33-
<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.

         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.


                                      -34-
<PAGE>


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.

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.


                                      -35-
<PAGE>


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.


                                      -36-
<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.


                                      -37-
<PAGE>


         We entered into an amended security agreement with YA pursuant to
whichwe 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.

         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.


                                      -38-
<PAGE>


         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.

         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.


                                      -39-
<PAGE>


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. In addition, YA has agreed to
not sell any shares that may be acquired under the March 2007 Debenture until
March 31, 2008; provided, however, that such limitation does not apply in the
event that the closing bid price of our common stock is greater than $1.75 for
five consecutive trading days, upon the occurrence of an event of default under
the March 2007 Debenture, if waived by YA or to private resales by YA.

         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 $5
million 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.


                                      -40-
<PAGE>


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.

         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.



                                      -41-
<PAGE>


OCTOBER 2006 WARRANT AMENDMENTS AND EXERCISE

         On October 20, 2006, YA and we amended the terms of two warrant
agreements (the "YA Warrants") relating to the issuance of 1,250,000 shares of
common stock each that were issued in connection with the March 2006 Debenture
(defined below). The YA Warrants contained exercise prices of $1.00 and $1.15,
respectively. To induce YA to make an additional investment in us via the cash
exercise of the YA Warrants, the Company agreed to reduce the exercise price of
each YA Warrant to $0.70 per share. On October 20, 2006, we issued a total of
2,500,000 shares of common stock in connection with a notice of exercise of the
YA Warrants received from YA on such date. In connection with this agreement, we
also agreed to issue additional warrants to purchase up to 500,000 shares of our
common stock with the following exercise prices: $1.20 per share (as to 125,000
warrants); $1.35 per share (as to 125,000 warrants); $1.50 per share (as to
125,000 warrants); and $1.65 per share (as to 125,000 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.

MARCH 2006 CONVERTIBLE DEBENTURE FINANCING

         On March 31, 2006, we entered into a Securities Purchase Agreement with
YA pursuant to which we issued convertible debentures in the principal amount of
$6,000,000 (the "March 2006 Debenture"). The March 2006 Debenture is convertible
at the option of YA any time up to maturity upon the same terms as the March
2007 and November 2006 Debentures. We are not permitted to issue such number of
shares to YA upon conversion that would result in YA owning in excess of 4.99%
of our outstanding common stock, which may only be waived by YA either in its
sole discretion with 60 days' notice or without notice upon an event of default.
The debentures have a three-year term and accrue interest at 8% per year payable
in our common stock at the rate equal to the conversion price of the debentures
in effect at the time of payment. Interest and principal payments on the March
2006 Debenture are due on the maturity date of March 31, 2009. To date, we have
issued a total of 100,473 shares to YA pursuant to conversion notices of a total
of $100,000 under the March 2006 Debenture.

         We entered into an Amended and Restated Security Agreement with YA in
connection with the March 2006 Debenture pursuant to which we continued the
security interest of YA in all our assets which we granted in connection with
the original debenture issued by us to YA in August 2004.

         We were required to register all shares issuable pursuant to the March
2006 Debenture pursuant to the terms of an Investor Registration Rights
Agreement between YA and us. We registered a total of 10,802,179 shares of
common stock underlying the March 2006 Debenture pursuant to a registration
statement declared effective by the SEC on May 14, 2007 (the "May 2007
Registration Statement").

         In connection with this financing, we issued to YA five year warrants
with the following exercise prices: 1,250,000 at $1.00 per share, 1,250,000 at
$1.15 per share, 1,250,000 at $1.30 and 1,250,000 at $1.45. The warrants
containing exercise prices of $1.15 and $1.00 were amended in October 2006 as
described above. We registered the shares issuable upon conversion of the
remaining 2,500,000 warrants (as well as the 2,500,000 shares issued upon
exercise of the amended warrants, as described above) in the May 2007
Registration Statement. We reduced the exercise price of 3,750,000 of these
warrants in March 2008 to $0.30 per share as described above.


                                      -42-
<PAGE>


OCTOBER 2005 PRIVATE PLACEMENTS

         On October 26, 2005, we entered into a Common Stock Purchase Agreement
with International Financial Advisors, K.S.C. pursuant to which, on November 1,
2005 we issued 3,000,000 shares of our common stock at a purchase price of
$1.00per share for a total purchase price of $3 million. We also issued to this
investor on November 1, 2005 a warrant to purchase up to 750,000 shares of our
common stock. The warrant is exercisable at an exercise price of $1.00 per share
for a period of three years from its date of issuance. We registered these
shares of common stock and the shares of common stock issuable upon exercise of
the warrant in the May 2007 Registration Statement.

         The Common Stock Purchase Agreement provides the investor with (1) the
right to participate in future equity or debt securities offerings conducted by
us for a period of two years so long as the investor holds at least five percent
of our outstanding common stock and (2) the exclusive right to develop with us a
joint venture, partnership or any other commercial arrangement involving the
establishment of aviation operations in the Middle East (as defined in the
agreement) for a period of three years. We also agreed to appoint Christopher D.
Brady to our Board of Directors pursuant to the Common Stock Purchase Agreement
effective on the closing date. Mr. Brady was appointed to the Board of Directors
on November 1, 2005.

         On October 26, 2005, we also entered into separate Common Stock
Purchase Agreements with four individual investors pursuant to which we agreed
to issue an aggregate of 250,000 shares of our common stock at a purchase price
of $1.00 per share for a total purchase price of $250,000. We registered these
shares of common stock in the May 2007 Registration Statement.

         We paid commissions of $325,000 in cash and warrants to purchase up to
162,500 shares of our common stock exercisable at an exercise price of $1.00 per
share for a period of three years from its date of issuance in connection with
this financing. Of these commissions, a total of $162,500 in cash and warrants
to purchase 162,500 shares were paid to broker dealers. We registered the shares
of common stock issuable upon exercise of these warrants in the May 2007
Registration Statement.

         On October 26, 2005, we entered into a Common Stock Purchase Agreement
with Samama Global Corporation ("Samama") pursuant to which on November 1, 2005
we issued 3,000,000 shares of our common stock at a purchase price of $1.00 per
share for a total purchase price of $3 million. We registered these shares of
common stock in the May 2007 Registration Statement.



                                      -43-
<PAGE>

         We also agreed to appoint a nominee of Samama to our Board of Directors
in connection with this financing. Effective February 8, 2006, we appointed
George A. Fechter to the Board in satisfaction of this obligation. Samama also
agreed that its voting rights may be automatically suspended as to any shares
held by Samama which exceed an aggregate of 24.99% of our outstanding voting
securities when taken together with shares held by all other non-U.S. citizens.

         We paid commissions of $300,000 in cash and warrants to purchase up to
150,000 shares of our common stock exercisable at an exercise price of $1.00 per
share for a period of three years from its date of issuance in connection with
this financing. Of these commissions, a total of $150,000 in cash and the
warrants to purchase 150,000 shares were paid to broker dealers. We registered
the shares of common stock issuable upon exercise of these warrants in the May
2007 registration statement.

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 March 31, 2008, we had $1,486,490 in cash. As
of the date of this report, we believe that we will be able to satisfy our cash
requirements through May, 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 11, 12 and 17 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.
During the next twelve months, we anticipate that we will need approximately
$10.0 million of working capital (inclusive of capital expenditures), $16.0
million of lease financing, and $8.3 million to repay debt including $5.9
million of Convertible Debentures due on March 31, 2009. In addition, in the
event we are successful in raising at least $20 million in gross proceeds in a
private placement of our securities, we also anticipate the need for up to an
additional $38 million of lease/debt financing.

         Such capital is expected to come from helicopter lease financing and
the sale of equity or debt securities, which may include the sale of common
stock under our existing $11 million SEDA. As of the date of this report, we are
in discussions with financing sources for helicopter operating lease financing.
We believe that we will need to raise approximately $28.5 million through $16.0
million of operating lease financing and $12.5 million of some combination of
debt, equity or SEDA draws, we would have sufficient funds to meet our needs for
working capital, repayment of debt and for capital improvements over the next 12
months. There can be no assurances, however, that we will be able to complete
such financings on terms favorable to us or at all.

GOING CONCERN MATTERS

         The accompanying consolidated 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. 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.



                                      -44-
<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.

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.

REVENUE RECOGNITION

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

DEFERRED OFFERING COSTS AND DEFERRED FINANCING COSTS

         We incurred certain costs related to financing activities during the
three-month periods ended March 31, 2008 and March 31, 2007. These costs
consisted primarily of legal fees, placement agent fees and commissions which
are related to the placement of debt securities (deferred financing costs) and
equity securities (deferred offering costs).

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. We plan to lease or purchase approximately one additional used,
low-time helicopter during the second quarter of 2008. During that time period,
we expect 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 have 58 full
time employees and 15 part-time employees as of March 31, 2008 and expect to
have approximately 82 full-time and 15 part-time employees at the end of 2008.


                                      -45-
<PAGE>


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.

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.

         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.

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.


                                      -46-
<PAGE>


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In January 2007 the FASB issued Derivatives Implementation Group
Statement 133 Implementation Issue No. B40, "Embedded Derivatives: Application
of Paragraph 13(b) to Securitized Interested in Prepayable Financial Assets".
This Issue provides a narrow scope exception from paragraph 13(b) of Statement
No. 133 for securitized interests that contain only an embedded derivative that
is tied to the prepayment risk of the underlying prepayable financial assets.
The guidance in this Issue is generally effective upon initial adoption of
Statement No. 155. The effects of these standards are not anticipated to have a
material impact on our financial position, results of operations or cash flows.

         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 nonfinancial assets and nonfinancial
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.

         We do expect SFAS 157 to affect our disclosures. We are still
evaluating the effects, if any, SFAS No. 157, SFAS 157-1and SFAS 157-2 may have
on our financial position, results of operations or cash flows.


                                      -47-
<PAGE>

         In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities" ("SFAS No. 159"). SFAS No. 159
permits entities to choose to measure, on an item-by-item basis, specified
financial instruments and certain other items at fair value. Unrealized gains
and losses on items for which the fair value option has been elected are
required to be reported in earnings at each reporting date. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007, the provisions of
which are required to be applied prospectively. The Company adopted this
Statement as of January 1, 2008 and has elected not to apply the fair value
option to any of its financial instruments.

         In December 2007, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 141 (revised
2007), Business Combinations, which replaces SFAS No 141. The statement retains
the purchase method of accounting for acquisitions, but requires a number of
changes, including changes in the way assets and liabilities are recognized in
the purchase accounting. It also changes the recognition of assets acquired and
liabilities assumed arising from contingencies, requires the capitalization of
in-process research and development at fair value, and requires the expensing of
acquisition-related costs as incurred. SFAS No. 141R is effective for business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008. The
adoption of SFAS No. 141 could have a material effect on the Company's financial
reporting but currently the effect is indeterminable.

         In December 2007, the FASB issued SFAS No. 160. "Noncontrolling
Interests in Consolidated Financial Statements-and Amendment of ARB No. 51."
SFAS 160 establishes accounting and reporting standards pertaining to ownership
interests in subsidiaries held by parties other than the parent, the amount of
net income attributable to the parent and to the noncontrolling interest,
changes in a parent's ownership interest, and the valuation of any retained
noncontrolling equity investment when a subsidiary is deconsolidated. This
statement also establishes disclosure requirements that clearly identify and
distinguish between the interests of the parent and the interests of the
noncontrolling owners. SFAS 160 is effective for fiscal years beginning on or
after December 15, 2008. The adoption of SFAS 160 is not currently expected to
have a material effect on the Company's consolidated financial position, results
of operations, or cash flows.

         In March 2008, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging
Activities. The new standard is intended to improve financial reporting about
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity's financial
position, financial performance, and cash flows. It is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. The company is currently evaluating
the impact of adopting SFAS. No. 161 on its financial statements.

         In May 2008, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 162, "The Hierarchy of
Generally Accepted Accounting Principles." The new standard is intended to
improve financial reporting by identifying a consistent framework, or hierarchy,
for selecting accounting principles to be used in preparing financial statements
that are presented in conformity with U.S. generally accepted accounting
principles (GAAP) for non-governmental entities. We are currently evaluating the
effects, if any, that SFAS No. 162 may have on our financial reporting.


                                      -48-
<PAGE>






                                  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, $1.37 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 $12.5
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.

         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 $(2,538,523) for the three months ended March 31,
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.


                                      -49-
<PAGE>


         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 eight aircraft through October, 2008 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    May 31, 2008: Anticipated delivery of one Sikorsky S-76B aircraft
     o    July, 2008: Anticipated delivery of one Sikorsky S-76B aircraft
     o    September, 2008: Anticipated delivery of one Sikorsky S-76B aircraft
     o    October, 2008: 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 $16.0 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 MAY SUFFER IN THE EVENT WE ARE UNABLE TO
RESOLVE ALL MATTERS WITH A MAINTENANCE PROVIDER FOR OUR AIRCRAFT.

         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. However, 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.

                          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 June 30,
2008. Investors should take this into account when considering the following
risk factors.



                                      -50-
<PAGE>

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

         YA currently owns 2,874,935 shares of common stock as of March 31, 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
50.29% of our common stock based on a conversion price of $0.30 per share, or an
estimated 66.18% if the conversion price is assumed to be $0.15 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 50.29%-66.18% 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.


                                      -51-
<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 March 31, 2008 that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.

ITEM 4(T).      MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

         Our management is responsible for establishing and maintaining adequate
internal control over financial reporting for the company in accordance with as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal
control over financial reporting is designed to provide reasonable assurance
regarding the (i) effectiveness and efficiency of operations, (ii) reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles, and (iii)
compliance with applicable laws and regulations.

         Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

         Management's assessment of the effectiveness of the small business
issuer's internal control over financial reporting is as of the three months
ended March 31, 2008. We believe that internal control over financial reporting
is effective. We have not identified any, current material weaknesses
considering the nature and extent of our current operations and any risks or
errors in financial reporting under current operations.

         This quarterly report does not include an attestation report of the
Company's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
Company's registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permits us to provide only management's
report in this report.



                                      -52-
<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

         Not applicable; previously reported on Form 8-K.

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:

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.




                                      -53-
<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:  May 20, 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)




                                      -54-