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

                             ----------------------
                                   FORM 10-QSB

                             ----------------------

(MARK ONE)

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007


                                       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 SMALL BUSINESS ISSUER 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 shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|


================================================================================

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                     PROCEEDINGS DURING THE PAST FIVE YEARS


Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes |_| No |_|


                      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 August 6, 2007, 36,641,779
shares of common stock.


Transitional Small Business Disclosure Format (check one):   Yes |_|   No |X|

 <PAGE>



                           U.S. HELICOPTER CORPORATION
                                   FORM 10-QSB
                       FOR THE PERIOD ENDED JUNE 30, 2007


                                      INDEX

                                                                            PAGE
                          PART 1--FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

            Balance Sheet (Unaudited)                                        1

            Statements of Operations (Unaudited)                             3

            Statements of Stockholders Equity (Unaudited)                    4

            Statements of Cash Flows (Unaudited)                             5

            Notes to Financial Statements (Unaudited)                        6

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS       20

ITEM 3.     CONTROLS AND PROCEDURES                                          36

                           PART II--OTHER INFORMATION

ITEM 5.     OTHER INFORMATION                                                36

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K                                 37





<PAGE>




                         PART I - FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

U.S. HELICOPTER CORPORATION
BALANCE SHEET AS OF JUNE 30, 2007
(UNAUDITED)

ASSETS:
CURRENT ASSETS:
<S>                                                                 <C>
  Cash                                                              $    60,643
  Restricted Cash                                                       181,655
  Accounts Receivable                                                   349,399
  Inventory                                                              43,183
  Prepaid Expenses                                                      157,954
  Other Current Assets                                                  225,448
                                                                    -----------

    TOTAL CURRENT ASSETS                                              1,018,282
                                                                    -----------

PROPERTY AND EQUIPMENT:
  Leasehold Improvements                                              1,230,002
  Office Equipment                                                      150,376
  Less: Accumulated Depreciation                                       (465,574)
                                                                    -----------

  PROPERTY AND EQUIPMENT - NET                                          914,804
                                                                    -----------

OTHER ASSETS:
  Deferred Financing Costs, Net of Accumulated Amortization
    of $441,667                                                       1,420,101
  Deferred Offering Costs                                               220,806
  Deposits                                                              918,507
                                                                    -----------

    TOTAL OTHER ASSETS                                                2,559,414
                                                                    -----------
                                                                    $ 4,492,500
    TOTAL ASSETS
                                                                    ===========

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


                                      -1-
<PAGE>

<TABLE>
<CAPTION>

U.S. HELICOPTER CORPORATION
BALANCE SHEET AS OF JUNE 30, 2007
(UNAUDITED)

LIABILITIES AND STOCKHOLDERS' [DEFICIT]:
CURRENT LIABILITIES:
<S>                                                                   <C>
  Accounts Payable and Accrued Expenses                               $  3,771,183
  Note Payable, net of discount of $139,638                              1,655,395
  Deferred Salary and Taxes Payable                                         12,651
  Accrued Salary and Taxes Payable                                         103,145
  Air Traffic Liability                                                    215,713
                                                                      ------------
  TOTAL CURRENT LIABILITIES                                              5,578,087


LONG-TERM DEBT - NET OF DISCOUNT OF $2,651,257                           6,038,743

LONG-TERM DERIVATIVE LIABILITY                                             216,477

DEFERRED CHARGES                                                           438,426
                                                                      ------------

  TOTAL LIABILITIES                                                     12,451,733
                                                                      ------------

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;
    36,641,779 Issued and Outstanding                                       36,642

  Additional Paid In Capital                                            12,400,607

  Deferred Equity Compensation                                            (354,136)

  Accumulated Deficit                                                  (20,042,346)
                                                                      ------------

  TOTAL STOCKHOLDERS' [DEFICIT]                                         (7,959,233)
                                                                      ------------
                                                                      $  4,492,500
  TOTAL LIABILITIES AND STOCKHOLDERS' [DEFICIT]
                                                                      ============

   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              SIX MONTHS ENDED
                                                             JUNE 30,                       JUNE 30,
                                                    2 0 0 7          2 0 0 6        2 0 0 7         2 0 0 6
                                                    -------          -------        -------         -------


<S>                                              <C>             <C>             <C>             <C>
REVENUES                                         $    883,202    $    290,975    $  1,179,928    $    304,852
                                                 ------------    ------------    ------------    -------------

EXPENSES:
  Payroll                                           1,010,513         929,763       1,985,533       1,286,406
  Payroll Taxes and Benefits                          133,679          75,918         280,121         130,075
  Crew Costs and Other                                 42,533          25,042         220,043          53,023
  Substitute Service/Interrupted Passenger                468            --             1,335            --
  Maintenance                                         415,406         284,694         758,405         360,273
  Fuel                                                147,170         104,207         269,688         138,502
  Aircraft and Traffic Servicing                      241,102          57,929         394,298          68,687
  Other Taxes                                             438             194           4,284             844
  Professional Fees                                   594,150         570,459         977,507         797,923
  Insurance                                           189,537         174,623         403,117         241,823
  Office Expense                                       52,467          53,003         112,475          84,815
  Website and Website Design                            3,125          10,593           8,055          18,231
  Travel                                               11,893          11,032          22,905          32,556
  Rent                                                131,500          93,657         262,741         128,937
  Lease Expense - equipment                           478,215         354,657         952,988         595,018
  Reservation Expense                                  67,937          50,768         128,998          96,507
  Advertising                                          66,468         364,352         359,386         812,777
  Licenses and Fees                                       100           5,758           5,565          10,943
  Depreciation and Amortization                       104,812          66,208         215,039          79,069
                                                 ------------    ------------    ------------    -------------
  TOTAL EXPENSES                                    3,691,513       3,232,857       7,362,483        4,936,409
                                                 ------------    ------------    ------------    -------------
  OPERATING (LOSS)                                 (2,808,311)     (2,941,882)     (6,182,555)      (4,631,557)
                                                 ------------    ------------    ------------    -------------

OTHER INCOME (EXPENSE):
  Interest Income                                       2,382          45,037          14,013          72,374
  Interest Expense                                   (254,455)       (133,458)       (445,343)       (154,533)
  Amortization of Deferred Financing Costs           (159,993)        (54,750)       (260,985)       (228,188)
  Change in Fair Value of Derivative                   22,070         624,791          45,997         382,046
  Amortization of Debt Discount                      (250,743)       (229,205)       (479,596)       (231,284)
                                                 ------------    ------------    ------------    -------------
  NET OTHER INCOME (EXPENSE)                         (640,739)        252,415      (1,125,914)        (159,585)
                                                 ------------    ------------    ------------    -------------
   Deduct: Preferred Stock Dividend                      --              --              --              --
                                                 ------------    ------------    ------------    -------------
  NET (LOSS) APPLICABLE TO COMMON SHAREHOLDERS     (3,449,050)     (2,689,467)   $ (7,308,469)   $ (4,791,142)
                                                 ============    ============    ============    =============

  NET (LOSS) PER COMMON SHARE:

    BASIC AND DILUTED                            $       (.10)   $       (.08)   $       (.21)   $        (.15)
                                                 ============    ============    ============    =============

  WEIGHTED AVERAGE NUMBER OF SHARES                35,706,088      32,154,635      35,587,077      31,478,963
                                                 ============    ============    ============    =============

                    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]
(UNAUDITED)


                                       PREFERRED STOCK                  COMMON STOCK            ADDITIONAL
                                       ---------------                  ------------             PAID-IN
                                     SHARES        AMOUNT           SHARES         AMOUNT        CAPITAL
                                     ------        ------           ------         ------      -------------

<S>                                  <C>        <C>               <C>           <C>             <C>
Balance at January 1, 2006           316,000    $        316      30,795,723    $     30,796    $  6,167,184

Conversion of Amir Elbaz's
  stock to convertible note -
  February 23, 2006                     --              --          (494,505)           (495)       (494,010)
Conversion of Portfolio
  Lenders promissory note -
  March 26, 2006                        --              --           500,000             500         249,500
Issuance of
  Restricted Stock                 1,000,000           1,000       1,449,000      (1,450,000)           --
                                ------------    ------------    ------------    ------------    ------------
Issuance of common stock
  to Newbridge Securities
  for services rendered                 --              --             5,556               6           9,994
                                ------------    ------------    ------------    ------------    ------------
Issuance of common
  stock to IGAS for
  services rendered                     --              --           200,000             200         289,800
                                ------------    ------------    ------------    ------------    ------------
Issuance of shares to
  Three Wing Flying
  Services for services
  rendered                              --              --            20,000              20          28,980
                                ------------    ------------    ------------    ------------    ------------
Conversion of preferred
  stock into common stock           (269,000)           (269)        238,096             238              31
                                ------------    ------------    ------------    ------------    ------------
Issuance of warrants
  for payment of services               --              --              --              --           120,000
                                ------------    ------------    ------------    ------------    ------------
Issuance of warrants
  for payment of services               --              --              --              --           299,918
                                ------------    ------------    ------------    ------------    ------------
Issuance of options
  for payment of services               --              --              --              --           170,598
                                ------------    ------------    ------------    ------------    ------------
Amortization of
  deferred equity
  compensation                          --              --              --              --              --
                                ------------    ------------    ------------    ------------    ------------
Net loss                                --              --              --              --              --
                                ------------    ------------    ------------    ------------    ------------
Balance at June 30, 2006              47,000    $         47      32,264,870    $     32,265    $  8,290,996
                                ============    ============    ============    ============    ============

Balance at January 1, 2007            47,000              47      35,449,931          35,450      11,531,008
Issuance of common stock
  to IGAS for services                  --              --            75,000              75          52,425
Issuance of options for
  payment of services -
  Breaux                                --              --              --              --            23,934
Issuance of options
  for payment of
  services - IGAS                       --              --              --              --            23,934
Conversion of debt and
  accrued interest -
  A. Elbaz                              --              --           999,897           1,000         558,942
                                ------------    ------------    ------------    ------------    ------------
Conversion of preferred
  stock into common stock            (47,000)            (47)         61,951              62             (15)
                                ------------    ------------    ------------    ------------    ------------
Issuance of common stock
  upon exercise of warrants             --              --            55,000              55             445
                                ------------    ------------    ------------    ------------    ------------
Issuance of convertible debt
  with beneficial
  conversion feature                    --              --              --              --           209,934
                                ------------    ------------    ------------    ------------    ------------
Amortization of
  deferred equity
  compensation                          --              --              --              --              --
                                ------------    ------------    ------------    ------------    ------------
Net Loss                                --              --              --              --              --
                                ------------    ------------    ------------    ------------    ------------
                                        --              --        36,641,779          36,642      12,400,607
Balance at June 30, 2007






                                 DEFERRED
                                  EQUITY        ACCUMULATED
                               COMPENSATION      DEFICIT           TOTAL
                               ------------    ------------    ------------
Balance at January 1, 2006      $      --       $ (3,114,117)  $   3,084,180

Conversion of Amir Elbaz's
  stock to convertible note -
  February 23, 2006                     --              --          (494,505)
Conversion of Portfolio
  Lenders promissory note -
  March 26, 2006                        --              --           250,000
Issuance of
  Restricted Stock
                                ------------    ------------    ------------
Issuance of common stock
  to Newbridge Securities
  for services rendered                 --              --            10,000
                                ------------    ------------    ------------
Issuance of common
  stock to IGAS for
  services rendered                     --              --           290,000
                                ------------    ------------    ------------
Issuance of shares to
  Three Wing Flying
  Services for services
  rendered                              --              --            29,000
                                ------------    ------------    ------------
Conversion of preferred
  stock into common stock               --              --              --
                                ------------    ------------    ------------
Issuance of warrants
  for payment of services            120,000
                                ------------    ------------    ------------
Issuance of warrants
  for payment of services           (299,918)           --              --
                                ------------    ------------    ------------
Issuance of options
  for payment of services               --              --           170,598
                                ------------    ------------    ------------
Amortization of
  deferred equity
  compensation                       279,157            --           279,157
                                ------------    ------------    ------------
Net loss                                --        (4,791,142)     (4,791,142)
                                ------------    ------------    ------------
Balance at June 30, 2006        $ (1,470,761)   $ (7,905,259)   $ (1,052,712)
                                ============    ============    ============

Balance at January 1, 2007          (912,449)    (12,733,877)     (2,079,821)
Issuance of common stock
  to IGAS for services                  --              --            52,500
Issuance of options for
  payment of services -
  Breaux                                --              --            23,934
Issuance of options
  for payment of
  services - IGAS                       --              --            23,934
Conversion of debt and
  accrued interest -
  A. Elbaz                              --              --           559,942
                                ------------    ------------    ------------
Conversion of preferred
  stock into common stock               --              --              --
                                ------------    ------------    ------------
Issuance of common stock
  upon exercise of warrants             --              --               500
                                ------------    ------------    ------------
Issuance of convertible debt
  with beneficial
  conversion feature                    --              --           209,934
                                ------------    ------------    ------------
Amortization of
  deferred equity
  compensation                       558,313            --           558,313
                                ------------    ------------    ------------
Net Loss                                --        (7,308,469)     (7,308,469)
                                ------------    ------------    ------------
                                    (354,136)    (20,042,346)     (7,959,233)
Balance at June 30, 2007


   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)

                                                                       SIX MONTHS ENDED
                                                                           JUNE 30,
                                                                           --------
                                                                   2 0 0 7         2 0 0 6
                                                                   -------         -------
OPERATING ACTIVITIES:
<S>                                                             <C>            <C>
  Net (Loss)                                                    $(7,308,469)   $(4,791,142)
  Adjustments to Reconcile Net (Loss)
    to Net Cash (Used for) Operating Activities:
      Depreciation Expense                                          215,039         79,069
      Amortization of Deferred Financing Costs                      260,985        228,188
      Recognition of Deferred Income                                   --          (40,561)
      Change in Fair Value of Derivative Liability                  (45,997)      (382,046)
      Amortization of Debt Discount                                 545,034        231,284
      Amortization of Deferred Equity Compensation                  558,313        279,156
      Fees paid for Services - Noncash                              100,638        180,599
    Changes in Assets and Liabilities:
      (Increase) Decrease in:
        Accounts Receivable                                        (308,805)       (88,903)
        Inventory, Prepaid Expenses, and Other Current Assets       150,697       (116,345)
        Restricted Cash                                              (2,213)       (53,403)
      Increase (Decrease) in:
        Accounts Payable and Accrued Liabilities                  1,936,469        277,969
        Deposits                                                    (85,468)      (564,585)
        Deferred Charges                                            (60,674)       600,000
                                                                -----------    -----------
  NET CASH - OPERATING ACTIVITIES                                (4,044,721)    (4,160,720)
                                                                -----------    -----------

INVESTING ACTIVITIES:
  Acquisition of Property and Equipment                            (153,816)      (913,411)
                                                                -----------    -----------

FINANCING ACTIVITIES:
  Proceeds From Long-Term Debt                                    1,850,000       6,000,000
  Payment of Short-Term Debt                                           --        (1,507,834)
  Release of Restricted Cash                                           --          250,000
  Proceeds from Sale of Common Stock                                    500
  Payment of Financing Costs                                       (211,860)    (1,022,514)
                                                                -----------    -----------
  NET CASH - FINANCING ACTIVITIES                                 1,638,640      3,719,652
                                                                -----------    -----------

  NET (DECREASE) INCREASE IN CASH                                (2,559,897)    (1,354,479)
                                                                -----------

CASH - BEGINNING OF PERIODS                                       2,620,540      4,459,397
                                                                -----------    -----------

  CASH - END OF PERIODS                                         $    60,643    $ 3,104,918
                                                                ===========    ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the periods for:
    Interest                                                    $    26,456    $     2,096
    Income Taxes                                                $      --      $       --

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Since inception, the Company has entered into certain agreements whereby it
issued convertible debentures and amended the existing debentures and
commitments to purchase its common stock [See Note 11].

        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.


The accompanying unaudited consolidated financial statements of U.S. Helicopter
have been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-QSB and Item
310(b) of Regulation S-B. Accordingly, they do not include all information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary in order to make the interim
financial statements not misleading have been included. Results for the six and
three months ended June 30, 2007 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2007. These interim
consolidated financial statements should be read in conjunction with the
consolidated financial statements and footnotes thereto of the Company and
management's discussion and analysis of financial condition and results of
operations included in the Company's annual report on Form 10-KSB for the year
ended December 31, 2006.


(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.

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 June 30, 2007, we had $60,643 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 10
and 11 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 $5.0 million of
working capital (inclusive of capital expenditures), $12.0 million of lease
financing, and $3.1 million to repay debt.

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 Standby Equity Distribution Agreement ("SEDA") (Note 12).
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 $20.1 million through $12 million of operating lease
financing and $8.1 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.

                                      -6-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(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 June 30, 2007.

RESTRICTED CASH - We had restricted cash of $181,655 at June 30, 2007. Our
restricted cash at June 30, 2007 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 June 30, 2007, we had approximately $168,719,
in deposits subjected to such risk. We have not experienced any losses on our
deposits of cash and cash equivalents.

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 June 30, 2007 was $0. 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 June 30,
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 $215,039 and $79,069 for the six months ended June 30, 2007
and 2006 and $104,812 and $66,208 for the three months ended March 31, 2007 and
2006, 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.

                                      -7-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ADVERTISING COSTS - We expense advertising costs as incurred.

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

We had revenue for the six months and three months ended June 30, 2007 and 2006
as follows:

                                      SIX MONTHS              THREE MONTHS
                                        JUNE 30,                 JUNE 30,

                                 2 0 0 7      2 0 0 6      2 0 0 7      2 0 0 6
                                 -------      -------      -------      -------

Scheduled Passenger            $  759,858   $  143,471   $  579,894   $  129,894
Charter                           408,752      155,227      294,610      155,227
Miscellaneous                      11,318        6,154        8,618        5,854
                               ----------   ----------   ----------   ----------

Totals                         $1,179,928   $  304,852   $  883,202   $  290,975
                               ==========   ==========   ==========   ==========

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 December 2006, the Financial Accounting
Standards Board ("FASB") issued FASB Staff Position EITF 00-19-2 ("FSP EITF
00-19-2") that addresses an issuer's accounting for registration payment
arrangements. FSP EITF 00-19-2 specifies that the contingent obligation to make
future payments or otherwise transfer consideration under a registration payment
arrangement, whether issued as a separate agreement or included as a provision
of a financial instrument or other agreement, should be separately recognized
and measured in accordance with FASB Statement No. 5, "ACCOUNTING FOR
CONTINGENCIES". The guidance in FSP EITF 00-19-2 amends FASB Statements No. 133,
"ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, No. 150,
ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY, and FASB Interpretation No. 45, GUARANTOR'S ACCOUNTING
AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT GUARANTEES OF
INDEBTEDNESS OF OTHERS, to include scope exceptions for registration payment
arrangements. This pronouncement further clarifies that a financial instrument
subject to a registration payment arrangement should be accounted for in
accordance with other applicable generally accepted accounting principles (GAAP)
without regard to the contingent obligation to transfer consideration pursuant
to the registration payment arrangement. Under FSP EITF 00-19-2, the contingent
obligation to make future payments or otherwise transfer consideration under a
registration payment arrangement shall be recognized and measured separately in
accordance with Statement 5 and FASB Interpretation No. 14, REASONABLE
ESTIMATION OF THE AMOUNT OF A LOSS. FSP EITF 00-19-2 is effective immediately
for registration payment arrangements entered into after December 21, 2006 and
for financial statements issued for fiscal years beginning after December 15,
2006, and interim periods within those fiscal years. The adoption of this
standard will not have a material effect on our financial satements.


In September 2006, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements" ("SAB 108"), which provides interpretive guidance on the
consideration of the effects of prior year misstatements in quantifying current
year misstatements for the purpose of a materiality assessment. SAB 108 is
effective for us as of December 31, 2007. The adoption of this standard will not
have a material effect on our financial satements.


In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures" ("SFAS
157"). SFAS 157 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 is effective for fiscal years

                                      -8-
<PAGE>


U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

beginning after November 15, 2007. We are still evaluating the effects, if any,
SFAS No. 157 may have on our financial position, results of operations or cash
flows. The adoption of this standard will not have a material effect on our
financial satements.


In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" ("FIN
48"), which clarifies the accounting for uncertainty in income taxes recognized
in an enterprise's financial statements. This Interpretation prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. Specifically, FIN 48 requires the recognition in financial
statements of the impact of a tax position, if that position is more likely than
not of being sustained on audit, based on the technical merits of the position.
Additionally, FIN 48 provides guidance on the de-recognition of previously
recognized deferred tax items, classification, accounting for interest and
penalties, and accounting in interim periods related to uncertain tax positions,
as well as, requires expanded disclosures. FIN 48 is effective for fiscal years
beginning after December 15, 2006, with the cumulative effect of the change in
accounting principle recorded as an adjustment to opening retained earnings. The
adoption of this standard will not have a material effect on our financial
satements.

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets - an amendment of FASB Statement No. 140" ("SFAS 156"). This
Statement amends FASB Statement No. 140, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities," with respect to
accounting for separately recognized servicing assets and servicing liabilities.
This Statement clarifies when servicing rights should be separately accounted
for, requires companies to account for separately recognized servicing rights
initially at fair value, and gives companies the option of subsequently
accounting for those servicing rights at either fair value or under the
amortization method. SFAS 156 is effective for fiscal years beginning after
September 15, 2006. The implementation of this standard did not have a material
impact on our financial position, results of operations or cash flows.

In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments - an amendment to FASB Statements No. 133 and 140" ("SFAS
155"). SFAS155 simplifies the accounting for certain hybrid financial
instruments containing embedded derivatives. SFAS 155 allows fair value
measurement for any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation under SFAS 133. In addition,
it amends SFAS 140 to eliminate the prohibition on a qualifying special-purpose
entity from holding a derivative financial instrument that pertains to a
beneficial interest other than another derivative financial instrument. SFAS 155
is effective for all financial instruments acquired, issued, or subject to a
re-measurement (new basis) event occurring after the beginning of an entity's
first fiscal year that begins after September 15, 2006. The implementation of
this standard did not have a material impact on our financial position, results
of operations or cash flows.

In October 2006 the FASB issued FSB No. FAS 123(R)-5, "Amendment of FASB Staff
Position FAS 123(R)-1". This FSP concluded that for instruments that were
originally issued as employee compensation and then modified, and for which such
modification is made to the terms of the instrument solely to reflect an equity
restructuring that occurs when the holders are no longer employees, no change in
the recognition or the measurement (due to a change in classification) of those
instruments will result if certain conditions are met. The FSP is to be applied
in the first reporting period beginning after October 10, 2006. The
implementation of this standard did not have a material impact on our financial
position, results of operations or cash flows.

In October 2006 the FASB issued FSB No 123(R)-6, "Technical Corrections of FASB
Statement No. 123(R)". This FSP made four technical corrections to eliminate
certain inconsistencies in FASB Statement No. 123(R), Share-Based Payment. This
FSP should be applied in the first reporting period beginning after October 20,
2006. The implementation of this standard did not have a material impact on our
financial position, results of operations or cash flows.

In December 2006 the FASB issued FSB No. AUG AIR-1, "Accounting for Major
Maintenance Activities". This FSP prohibits the use of the accrue-in-advance
method of accounting for planned major maintenance activities in annual and
interim financial reporting periods. The guidance in the FSP is applicable to
entities in all industries and must be applied to the first fiscal year
beginning after December 15, 2006.

                                      -9-
<PAGE>


U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

(4) DEPOSITS

We had deposits of $918,506 at June 30, 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 $3,771,178 at June 30, 2007,
broken down as follows:


Professional Fees                                             $  532,182
Reservations Service                                             121,383
Advertising                                                      179,395
Maintenance                                                      771,488
Insurance                                                        218,115
Interest                                                         768,036
Deferred Financing Costs                                         199,970
Crew Costs                                                       165,600
Lease Expense                                                    266,024
Other Accounts Payable and Accrued Expenses                      548,985
                                                              -------------
    TOTALS                                                    $  3,771,178
                                                              =============

(6) AIR TRAFFIC LIABILITY

We had air traffic liability of $215,713 at June 30, 2007. Air traffic liability
refers to tickets we have sold where the passenger has not yet used the ticket
to fly.

(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 two weeks
in the third quarter of 2007.

Effective July 14, 2004, U.S. Helicopter entered into a three-year employment
agreement with George J. Mehm, Jr. Mr. Mehm 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. Mr. Mehm deferred two weeks salary during the second quarter of 2007 and
an additional two weeks in the third quarter of 2007.

Effective July 14, 2004, U.S. Helicopter entered into a two-year employment
agreement with Donal McSullivan. Mr. 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. Mr. McSullivan deferred two weeks salary during the second quarter of 2007
and an additional two weeks in the third quarter of 2007.



                                      -10-
<PAGE>

U.S. HELICOPTER
CORPORATION NOTES TO FINANCIAL STATEMENTS

(7)OFFICERS PAYROLL (CONTINUED)

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 two weeks in the third quarter of 2007.

Effective August 24, 2004, U.S. Helicopter entered into a two-year employment
agreement with Terence O. Dennison. Mr. 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. Mr. Dennison deferred two
weeks salary during the second quarter of 2007 and an additional two weeks in
the third quarter of 2007.

(8) STOCK-BASED COMPENSATION

In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment". SFAS No.
123R is a revision of SFAS No. 123, "Accounting for Stock Based Compensation",
and supersedes Accounting Principles Board's ("APB")'s APB 25. Among other
items, SFAS 123R eliminated the use of APB 25 and the intrinsic value method of
accounting, and requires companies to recognize the cost of employee services
received in exchange for awards of equity instruments, based on the grant date
fair value of those awards, in the financial statements. We adopted SFAS 123R
effective January 1, 2006. We currently utilize a standard option pricing model
(the Black-Scholes-Merton Model) to measure the fair value of stock options
granted to employees. Under the "modified prospective" method, which the Company
has chosen to use, compensation cost is recognized in the financial statements
beginning with the effective date, based on the requirements of SFAS 123R for
all share-based payments granted after that date, and based on the requirements
of SFAS 123 for all unvested awards granted prior to the effective date of SFAS
123R.

SFAS 123R also requires that the benefits associated with the tax deductions in
excess of recognized compensation cost be reported as a financing cash flow,
rather than as an operating cash flow as required under current literature. We
have not yet determined what effect, if any, this change will have on future
periods.

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 have a restriction on
transferability and sale for a period of 18 months from and after the issuance
date. We expensed $483,333 for these Restricted Stock Awards in the first six
months of 2007 and will expense $241,667 ratably over the third quarter of 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 the first quarter of 2007, we issued an additional 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.

(9) EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) by the
weighted-average number of common shares outstanding for the period. Diluted
earnings (loss) per share is 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. These items could be dilutive in
the future.

                                      -11-
<PAGE>


U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(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 June 30, 2007, we had net deferred financing costs of $1,420,101. These costs
were related to the placement of various debentures issued between March 2006
and June 2007 and are being amortized over the lives of the debentures. The
balances of the New Debenture and the August 2005 Debenture were converted on
September 11, 2006 and all deferred financing costs related to that issuance
were written off at that time. We recorded amortization expense related to
deferred financing totaling $260,985 and $228,188 for the six month periods
ended June 30, 2007 and 2006, respectively and $159,993 and $54,750 for the
three month periods ended June 30, 2007 and 2006, respectively.

At June 30, 2007, we had net deferred offering costs of $220,806. These costs
were primarily related to our Standby Equity Distribution Agreement [Note 12]
and will be offset against the proceeds of the offering, when consummated.

(11) CONVERTIBLE DEBT

LONG-TERM CONVERTIBLE DEBT -

On March 30, 2006 we issued a $6,000,000, 8% interest convertible debenture
maturing March 31, 2009 (the "March 2006 Debenture") to Cornell Capital.
Proceeds from the March 2006 Debenture were used to repay prior loans from
Cornell Capital such that a combined $113,497 was still outstanding. This amount
was converted on September 11, 2006 at a price of $0.20 per share. 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. The March 2006 Debenture is 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 has a three-year term and
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. To date, we have issued a total of 100,473
shares to Cornell Capital pursuant to conversion notices of a total of $100,000
under the March 2006 Debenture. 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. We have separately 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 is payable in shares of
our common stock at the lower of $1.45 per share 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.

The November 2006 Debenture is 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



                                      -12-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(11) CONVERTIBLE DEBT (CONTINUED)

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).

In addition, in the event we close on any debt or equity financing after the
issuance date of the November 2006 Debenture, we will be required to use 50% of
the net proceeds of such financings to prepay outstanding amounts outstanding
under the November 2006 Debenture or any other debenture issued by us to Cornell
Capital. 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 will be required once
we prepay a total of $2,000,000.

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.

The above issued convertible notes and warrants (in addition to the Short-Term
Convertible Debt described below) 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.

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").
The March 2007 Debenture is 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 is repayable as of June 30, 2007; however, if we
are not successful in completing a financing of at least $1.1 million at such
time and no event of default occurs under the debentures, the maturity date will
be extended until September 30, 2007. 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. In the event that the maturity
date for the March 2007 Debenture is extended, the interest rate under the
debentures will increase by two percent per month through and until September
30, 2007. We plan to use the proceeds received in this financing for working
capital.

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



                                      -13-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(11) CONVERTIBLE DEBT (CONTINUED)

31,429 warrants). 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.

In valuing the terms of the March 2006 Debenture, the November 2006 Debenture
and the March 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 long-term derivative liability of $3,724,718 for
the March 2006 Debenture, $63,125 for the November 2006 Debenture, $5,449 for
the March 2007 Debenture and $5,271 for the May 2007 Debenture, which were also
recorded as discounts to each of the debentures. These discounts are being
amortized over the respective 36 month lives of the March 2006 Debenture and the
November 2006 Debenture, the 6 month life of the March 2007 Debenture and the
two month life of the May 2007 Debenture. The long-term derivative liability is
periodically revalued using the Black-Scholes-Merton model. For the six month
periods ended June 30, 2007 and 2006 we recorded changes in fair value of
derivative liability of $45,997, and $382,046, respectively, in the Statement
of Operations. For the three month periods ended June 30, 2007 and 2006 we
recorded changes in fair value of derivative liability of $22,070 and $624,791,
respectively, in the Statement of Operations.

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"). The May 2007
Debenture is 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 is repayable as of July 14, 2007. The debentures accrue 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. We plan to use the
proceeds received in this financing for working capital.

Pursuant to the Securities Purchase Agreement, 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 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.

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 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

                                      -14-
<PAGE>


U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(11) CONVERTIBLE DEBT (CONTINUED)

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.

The Notes accrue 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, are 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,
are 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 is secured by certain of our assets and we are 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.

Future principal repayment as of June 30, 2007 is as follows:

YEAR ENDING
DECEMBER 31,
    2007                                                  $       1,850,000
    2008                                                                  --
    2009                                                          8,650,000
    2010                                                                  --
    2011                                                                  --
    Thereafter                                                            --
                                                          ------------------
        TOTAL                                             $      10,500,000
                                                          ==================

(12) SECURITIES OFFERINGS

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.

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 the 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).

PRIVATE PLACEMENT - On October 27, 2004, we authorized for issuance up to
1,500,000 shares of our Series A Preferred Stock. We completed a private
placement offering of our equity securities at the end of December 2004. The
private placement offering was through the sale of equity units ("Units"), each
Unit consisting of five shares of our Series A Preferred Stock and two warrants,
each warrant exercisable to purchase one share of our common stock. The purchase
price per Unit was $5.00. We issued a total of 63,200 of our Units. Holders
received a total of 316,000 shares of our Series A Preferred Stock and 126,400
warrants to purchase our common stock, of which 63,200 warrants have an exercise
price equal to 125% of the conversion price of the Series A Preferred Stock and
the remaining 63,200 warrants have an exercise price equal to 150% of the
conversion price of the Series A Preferred Stock.

During 2006, holders of 53,800 Units converted their preferred shares into
238,096 of our common shares. During the second quarter of 2007, holders of
9,400 Units converted the preferred shares into 61,951 shares of our common
stock. At June 30, 2007, there were no preferred shares outstanding. Our Series
A Preferred Stock is the only class of preferred stock authorized for issuance
by us as of June 30, 2007.

                                      -15-
<PAGE>


U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(12) SECURITIES OFFERINGS (CONTINUED)

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. Proceeds of the SEDA will be offset against
deferred offering costs [Note 10] until those amounts are extinguished.

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.

(13) COMMITMENTS AND CONTINGENCIES

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

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 on August 16, 2007, which corresponds to the expiration of the
Port Authority's agreement with the City of New York for the DMH. 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. These leases are currently on a
month-to-month basis at the same lease rates.

On February 8, 2006, we entered into a one year lease agreement for office and
hangar space for our operations base. Monthly rent is approximately $16,000. We
also agreed to issue 20,000 shares of our common stock to the lessor. We are in
discussions with the lessor of this facility for a new agreement. While there
can be no assurances, we do expect that a new agreement will be signed in the
near future.

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 $262,741 and $128,937 for the six months ended June 30,
2007 and 2006 and $131,500 and $93,657 for the three months ended June 30, 2007
and 2006, 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. 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
$499,100, which amount will be amortized as a reduction in the rental expense
over the life of each lease. There are no



                                      -16-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(13) COMMITMENTS AND CONTINGENCIES (CONTINUED)

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, 2006 were:

YEAR ENDING
DECEMBER 31,
    2007                                                  $     1,938,092
    2008                                                        1,809,660
    2009                                                        1,459,547
    2010                                                        1,405,020
    2011                                                          253,336
    Thereafter                                                          --
                                                          ----------------

    TOTAL MINIMUM FUTURE LEASE PAYMENTS                   $     6,865,655
                                                          ================

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.

(14) 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.

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.

                                      -17-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(15) INCOME TAXES

We have approximately $4,340,000 of unamortized capitalized pre-operating costs
that have not been deducted for tax purposes at December 31, 2006. These
deductions are being applied against future taxable income in the sixty month
period following the commencement of operations.

These future deductions were recorded by us as deferred tax assets totaling
approximately $1,736,000 at December 31, 2006. As the effective utilization of
this deferred tax asset is dependant on future taxable profits, a valuation
allowance of approximately $1,736,000 was recorded at December 31, 2006, leaving
a net deferred tax asset of $-0- for all periods presented. The valuation
allowance decreased by $306,000 in 2006.

We have approximately $8,394,000 of net operating losses ("NOLS") that have not
been used for tax purposes as of December 31, 2006. These NOLS expire twenty
years following the year in which the loss occurred. Our NOLS begin expiring in
2023.

(16) STOCK OPTIONS ISSUED UNDER 2004 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.

We recorded $47,868 and $-0- in the six month periods ending June 30, 2007 and
2006, respectively in recognition of the cost of the options issued in 2006.

                                      -18-
<PAGE>


The following is a summary of options outstanding:

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

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                                     600,000           $        1.05
 Exercised                                        --                      --
 Forfeited                                        --                      --
                                         -------------         -------------
 Outstanding at June 30, 2007              1,988,000           $0.50 - $1.40
                                         -------------         -------------

                                               At                    At
                                             JUNE 30,             DECEMBER 31,
                                              2007                  2006
                                         -------------              ----

 Options Exercisable                       1,425,500               1,225,500
                                         =============         =============


                                         SIX MONTHS ENDED         YEAR ENDED
                                              JUNE 30,           DECEMBER 31,
                                               2007                 2006
                                               ----                 ----

Weighted Average Fair Value of Options
  Granted During the Periods             $    47,868           $     170,559
                                         =============         =============




As of June 30, 2007 the weighted average exercise price of all of our employee
stock options is $0.853. The weighted average remaining contractual life is
approximately 7.32 years.

As of June 30, 2007, the weighted average exercise price for our employee stock
options which have vested is $0.736. The weighted average contractual life is
approximately 7.73 years.

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

                                               YEARS ENDED DECEMBER 31,
                                               2006                 2005
                                               ----                 ----
Dividend Yield                                   --%                  --%
Risk-Free Interest Rate                        4.75%                4.75%
Expected Life                               10 years                  N/A
Expected Volatility                              N/A                  N/A

(17) SUBSEQUENT EVENTS

On April 2, 2007 we signed an Offer Letter with Electronic Data Systems
Corporation ("EDS") for the purchase of a Sikorsky S-76B helicopter. We paid a
refundable deposit to EDS pursuant to an Escrow Agreement dated April 9, 2007.
The deposit was returned to us in full on July 31, 2007.

Effective August 14, 2007, we entered into a Financial Advisory and Investment
Banking Agreement with North Coast Securities Corporation ("North Coast")
pursuant to which North Coast has agreed to provide certain services to us for
one year commencing September 1, 2007. In consideration for services to be
rendered to us, we agreed to issue warrants to purchase 100,000 shares to North
Coast at an exercise price of $0.50 per share, to adjust previously issued
warrants to North Coast and its designees to reflect an exercise price of $0.50
per share, to pay North Coast a fee of $22,500 upon execution of the agreement
and to pay North Coast a monthly fee of $7,500 beginning December 1, 2007
through August 1, 2008.

                                      -19-
<PAGE>



In addition, we entered into a Placement Agent Agreement with North Coast
Securities Corporation effective August 14, 2007 in connection with the private
placement of up to $500,000 worth of units consisting of a convertible
promissory note and three warrants for every $5.00 invested. The notes issued in
this offering are convertible at a price of $0.50 per share, and one-half ofthe
warrants are exercisable for a period of five years at an exercise price of
$0.50 per share and one-half of the warrants are exercisable at $0.01 per share.
A total of $250,000 in principal of the notes issued to date mature on November
7, 2007, and additional notes to be issued in this offering will mature 60 days
after the respective closing dates.





                                      -20-
<PAGE>



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

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


         This report contains certain forward-looking statements and information
that are based on the beliefs of management as well as assumptions made by and
information currently available to management. The statements contained in this
report relating to matters that are not historical facts are forward-looking
statements that involve risks and uncertainties including the Company,
including, but not limited to, the successful commercialization of our services,
future demand for our services, general economic conditions, government
regulation, competition and potential competitors' strategies, technological
innovations in the helicopter industry, changes in our business strategy or
development plans, capital deployment, business disruptions, our ability to
consummate future financings and other risks and uncertainties, certain of which
are beyond our control. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may differ materially from those described herein as anticipated, believed,
estimated or expected. Additional factors that could affect the Company's
forward-looking statements include, among other things: the impact and result of
any litigation (included private litigation), or of any investigation by the
Securities and Exchange Commission or any investigation by any other
governmental agency related to the Company; and the Company's ability to
successfully implement internal controls and procedures that remediate any
material weakness in controls and ensure timely, effective and accurate
financial reporting. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may differ materially from those described herein as anticipated, believed,
estimated or expected.


GENERAL


         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
"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 JFK International Airport. We expanded service to Newark
Liberty Airport in December 2006. We further expanded service from the East 34th
Street Heliport to Kennedy Airport and Newark Liberty Airport in February 2007.
On July 6, 2007, we commenced weekend service through September between
Manhattan and East Hampton, New York. We will review continuing this service
beyond September as demand for it warrants. 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,
are willing to pay fares between $139 and $169. Individual travelers will
purchase tickets at the higher price range. Large corporate travel management
companies or corporations will purchase volume sales, which will be negotiated
at a "per-ticket-price" at the lower price range and will be based upon large
ticket commitments. Our approximate 8-minute regularly scheduled U.S. Helicopter
flight from Manhattan to Kennedy Airport stands in contrast to paying $850 to
$2,770 for the same flight 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.) who use town car/executive car
services, limos or taxi transportation, travel 2-3 times per month and recognize
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 U.S. Helicopter offers.

                                      -21-
<PAGE>



         During 2006, we introduced our MASS service in the Metro New York City
market with service between Kennedy Airport and Newark Liberty Airport and the
Downtown Manhattan Heliport. In June 2006, we also commenced service between
Sikorsky Memorial Airport in Stratford, Connecticut and the Downtown Manhattan
Heliport. Beginning in February 2007 we expanded our service between Kennedy
Airport and Newark Liberty Airport to the East 34th Street 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. 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.


         U.S. Helicopter believes that there is significant unfulfilled demand
for scheduled, "Metro-Hop" airport helicopter shuttle services in the U.S.,
especially in its 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's, 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 taxi routes 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.


FINANCING TRANSACTIONS


         Since inception, we have incurred substantial operating losses. As of
June 30, 2007, we had an accumulated deficit of $(20,042,345). 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 sale of secured
convertible debentures, the cash exercise of outstanding warrants, the private
placement of Common Stock, the private placement of convertible notes, and a
sale of equity securities comprising 63,200 Units consisting of Series A
Preferred Stock and common stock purchase warrants. The terms of these debt and
equity financings are set forth below.


JUNE - JULY 2007 CONVERTIBLE NOTE FINANCINGS


         During June and July 2007, we entered into agreements pursuant to which
we issued convertible notes to three accredited investors in an aggregate amount
of $500,000 (the "2007 Convertible Notes"). In connection with these financings,
we also issued to the investors warrants to purchase an aggregate of 625,000
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.

                                      -22-
<PAGE>


         The 2007 Convertible Notes accrue 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, are 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, are 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 is secured by certain of our assets and we are obligated to prepay two
notes totaling $250,000 in principal out of certain revenues to be received by
us.

MAY 2007 CONVERTIBLE DEBENTURE FINANCING


         On May 14, 2007, we entered into a Securities Purchase Agreement (the
"May 2007 SPA") with Cornell Capital pursuant to which we agreed to issue a
secured convertible debenture to Cornell Capital 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 accrues
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.


         The May 2007 Debenture is 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 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 May 2007 Debenture. Cornell
Capital's conversion right under the May 2007 Debenture is subject to certain
limitations including that Cornell Capital may not convert the May 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 Cornell Capital to exceed 4.99% of our
then outstanding common stock. In addition, Cornell Capital has agreed to not
sell any shares that may be acquired under the May 2007 Debenture until May 14,
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
May 2007 Debenture, if waived by Cornell Capital or to private resales by
Cornell Capital.


         In addition, in the event we close on any debt or equity financing
after the issuance date of the May 2007 Debenture, we are required to use 100%
of the net proceeds of such financings to prepay outstanding amounts under the
May 2007 Debenture until the May 2007 Debenture is repaid in full.


         We have agreed to grant a security interest to Cornell Capital covering
substantially all of our assets to secure our obligations under the May 2007
Debenture pursuant to an Amendment No. 1 to Amended and Restated Security
Agreement. Pursuant to the May 2007 SPA, we also agreed to issue to Cornell
Capital 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 connection with the May 2007 SPA, we also agreed to register upon
written request from Cornell Capital the shares that may be acquired under the
May 2007 Debenture and the 99,144 shares that may be issued pursuant to the
warrants.

                                      -23-
<PAGE>


MARCH 2007 CONVERTIBLE DEBENTURE FINANCING


         On March 30, 2007, we entered into a Securities Purchase Agreement (the
"March 2007 SPA") with Cornell Capital pursuant to which we agreed to issue a
secured convertible debenture to Cornell Capital 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 will continue to do so through and until September 30, 2007.


         The March 2007 Debenture is convertible at Cornell Capital's option
into shares of our common stock upon the same terms and conditions as the May
2007 Debenture. In addition, Cornell Capital 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 Cornell Capital or to private resales by Cornell
Capital.


         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 Cornell Capital 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.


         We have agreed to grant a security interest to Cornell Capital 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 Cornell Capital 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 connection with the March 2007 SPA, we also agreed to register upon
written request from Cornell Capital the shares that may be acquired under the
March 2007 Debenture and the 155,481 shares that may be issued pursuant to the
warrants.


NOVEMBER 2006 CONVERTIBLE DEBENTURE FINANCING


         On November 10, 2006, we entered into a Securities Purchase Agreement
(the "November SPA") with Cornell Capital pursuant to which we agreed to issue a
secured convertible debenture to Cornell Capital 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 $1.45 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 Cornell Capital's option
into shares of our common stock upon the same terms and conditions as the May
2007 and March 2007 Debentures. Commencing May 10, 2007, Cornell Capital will
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
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.

                                      -24-
<PAGE>


         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 Cornell
Capital. 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 have agreed to grant a security interest to Cornell Capital 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 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).


         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 Cornell Capital 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.


OCTOBER 2006 WARRANT AMENDMENTS AND EXERCISE


         On October 20, 2006, Cornell Capital and we amended the terms of two
warrant agreements (the "Cornell 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 Cornell Warrants contained exercise
prices of $1.00 and $1.15, respectively. To induce Cornell Capital to make an
additional investment in us 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. 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 Cornell Warrants received
from Cornell Capital 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).


MARCH 2006 CONVERTIBLE DEBENTURE FINANCING


         On March 31, 2006, we entered into a Securities Purchase Agreement with
Cornell Capital 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 Cornell Capital any time up to
maturity upon the same terms as the May 2007, March 2007 and November 2006
Debentures. We are not permitted to issue such number of shares to Cornell
Capital upon conversion that would result in Cornell Capital owning in excess of
4.99% of our outstanding common stock, which may only be waived by Cornell
Capital 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 Cornell
Capital 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 Cornell
Capital in connection with the March 2006 Debenture pursuant to which we
continued the security interest of Cornell Capital in all our assets which we
granted in connection with the original debenture issued by us to Cornell
Capital in August 2004.

                                      -25-
<PAGE>



         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 Cornell Capital 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 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
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.


OCTOBER 2005 CONVERTIBLE NOTE FINANCING


         On October 26, 2005, we entered into an agreement with Portfolio
Lenders II, LLC whereby we issued a note (the "Portfolio Lenders Note") in the
principal amount of $250,000. We also issued to the investor a warrant to
purchase up to 100,000 shares of our common stock as an inducement to enter into
the transaction. The Portfolio Lenders Note accrued interest at the rate of 15%
per annum, of which 120 days worth of interest was paid in advance on the
closing date. An additional $12,500 origination fee was also paid to the
investor at closing. Interest at the rate of 20% per annum was payable upon the
occurrence of an event of default under the Portfolio Lenders Note. The
Portfolio Lenders Note, together with accrued and unpaid interest, was
convertible at the option of the holder into shares of our common stock at a
conversion price equal to $0.50 per share. The investor converted all sums due
and payable under the Portfolio Lenders Note as of March 26, 2006 into 500,000
shares of common stock.


         We registered the resale of these shares, along with the 100,000 shares
of common stock issuable upon exercise of the Portfolio Lenders Warrant in the
May 2007 Registration Statement.


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 $1.00
per 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.

                                      -26-
<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.


PRIOR CORNELL CAPITAL FINANCINGS


         In addition to the November 2006 and March 2006 Debentures, we have
also entered into Securities Purchase Agreements with Cornell Capital whereby we
previously issued a total of $1.52 million in principal of secured convertible
debentures in August 2004 ($1,000,000), February 2005 ($300,000) and August 2005
($220,000) (the "August 2005 Debenture"). On April 8, 2005, we entered into an
Amended and Restated Secured Debenture (the "April 2005 Debenture") in the
amount of $1,335,424, representing the principal and interest due under the
debentures issued in August 2004 and February 2005 as of such date. We repaid
all but $114,900 under the April 2005 Debenture and the August 2005 Debenture
with proceeds received in the March 2006 Debenture transaction. On September 11,
2006, Cornell Capital converted all remaining amounts due and owing under the
April 2005 Debenture and the August 2005 Debenture into a total of 584,588
shares of our common stock.


         We registered a total of 7,344,830 shares of our common stock issuable
upon conversion of the April 2005 Debenture in a registration statement declared
effective by the SEC on September 2, 2005, which was later amended via
post-effective amendments declared effective by the SEC on June 27, 2006 and May
14, 2007, respectively. We registered a total of 74,608 shares issued upon
conversion of the August 2005 Debenture in the May 2007 Registration Statement.


2004 PRIVATE PLACEMENT


         In addition, in November and December 2004, U.S. Helicopter issued a
total of 63,200 of our Units to a limited number of accredited investors
pursuant to a private placement offering during 2004 (the "2004 Private
Placement"), in which we received $316,000 before payment of expenses associated
with the offering. In connection with the 2004 Private Placement, 20 persons
received a total of 316,000 shares of our Series A Convertible Preferred Stock
and 126,400 warrants to purchase our common stock, of which 63,200 warrants have
an exercise price equal to 125% of the conversion price of the Series A
Preferred Stock and the remaining 63,200 warrants have an exercise price equal
to 150% of the conversion price of the Series A Preferred Stock. We registered
the shares of common stock issued and issuable upon the conversion of the Series
A Preferred Stock and the warrants issued in the 2004 Private Placement in the
May 2007 Registration Statement. Between April 18, 2006 and May 18, 2007, the
holders of all shares of Series A Convertible Preferred Stock converted such
shares into a total of 300,048 shares of our common stock.

                                      -27-
<PAGE>



RESULTS OF OPERATIONS


SIX MONTHS ENDED JUNE 30, 2007 COMPARED TO SIX MONTHS ENDED JUNE 30, 2006


         From inception on March 4, 2003 through March 27, 2006, the Company had
no revenues from operations and did not generate any revenues from operations
until March 27, 2006. For the six months ended June 30, 2007, total revenues
were $1,179,928. For the six months ended June 30, 2006, our total revenues were
$304,852.


         Payroll expenses increased to $1,985,533 for the six months ended June
30, 2007 from $1,286,406 for the six months ended June 30, 2006. The increase in
payroll expense is due to the start of operations in March 2006 and a higher
number of employees as we expanded operation in 2007.


         For the six months ended June 30, 2007, the Company has incurred
professional fees totaling $977,507, compared to $797,923 for the six months
ended June 30, 2006. These fees are comprised of legal fees for general matters,
accounting and audit fees, other consulting fees, transfer agent fees and
registered agent fees.


         Equipment lease expenses increased to $952,988 for the six months ended
June 30, 2007 from $595,018 for the six months ended June 30, 2006.


         Advertising expenses decreased to $359,386 for the six months ended
June 30, 2007 from $812,777 for the six months ended June 30, 2006.


         We reported an operating loss of $(6,182,555) for the six months ended
June 30, 2007 compared to a net loss of $(4,631,557) for the six months ended
June 30, 2006. The increase in operating loss is due to higher revenue levels
offset by an increase in expenses as we expanded our operation significantly in
the first six months of 2007.


         We reported a net loss of $(7,308,469) for the six months ended June
30, 2007 compared to a net loss of $(4,791,142) for the six months ended June
30, 2006. The increase in loss is due to higher expense levels offset partially
by an increase in revenue as we expanded our operation significantly in the
first six months of 2007. Net loss was also impacted by significantly higher
other income and expenses of $(1,125,914) for the six months ended June 30, 2007
compared to other income and expenses of $(159,585) for the six months ended
June 30, 2006. The difference in other income and expense is due to higher
interest expense, a gain from derivative liability calculation in the first six
months of 2006 and higher amortization of debt discount.


         Basic and diluted net loss per common share was $(.21) for the six
months ended June 30, 2007 compared to a $(.15) loss for the six months ended
June 30, 2006.


THREE MONTHS ENDED JUNE 30, 2007 COMPARED TO THREE MONTHS ENDED JUNE 30, 2006


         From inception on March 4, 2003 through March 27, 2006, the Company had
no revenues from operations and did not generate any revenues from operations
until March 27, 2006. For the three months ended June 30, 2007, total revenues
were $883,202. For the three months ended June 30, 2006, our total revenues were
$290,975.

                                      -28-
<PAGE>



Payroll expenses increased to $1,010,513 for the three months ended June 30,
2007 from $929,763 for the three months ended June 30, 2006. The increase in
payroll expense is due to the higher number of employees in the second quarter
as we expanded our operations. For the three months ended June 30, 2007, the
Company has incurred professional fees totaling $594,150, compared to $570,459
for the three months ended June 30, 2006. These fees are comprised of legal fees
for general matters, accounting and audit fees, other consulting fees, transfer
agent fees and registered agent fees.


         Equipment lease expenses increased to $478,215 for the three months
ended June 30, 2007 from $354,657 for the three months ended June 30, 2006.


         Advertising expenses decreased to $66,468 for the three months ended
June 30, 2007 from $364,352 for the three months ended June 30, 2006.


         We reported an operating loss of $(2,808,311) for the three months
ended June 30, 2007 compared to a net loss of $(2,941,882) for the three months
ended June 30, 2006. The decrease in operating loss is due to higher revenue
levels offset partially by an increase in expenses as we expanded our operation
significantly in the first six months of 2007.


         We reported a net loss of $(3,449,050) for the three months ended June
30, 2007 compared to a net loss of $(2,689,467) for the three months ended June
30, 2006. The increase in loss is due to higher expense levels offset partially
by an increase in revenue as we expanded our operation significantly in the
first six months of 2007. Net loss was also impacted by significantly higher
other income and expenses of $(640,739) for the six months ended June 30, 2007
compared to other income and expenses of $252,415 for the six months ended June
30, 2006. The difference in other income and expense is due to higher interest
expense and a large gain from derivative liability calculation in the first six
months of 2006.


         Basic and diluted net loss per common share was $(.10) for the three
months ended June 30, 2007 compared to a $(.08) loss for the three months ended
June 30, 2006.


         Since inception, the Company has incurred operating losses. As of June
30, 2007, our accumulated deficit was $(20,042,345).


LIQUIDITY AND FINANCIAL CONDITION


         We have financed our operations since inception primarily through
private placement financings with Cornell Capital, private placements of
convertible notes with certain accredited investors, private placements of
common stock conducted in October and November 2005 and the 2004 Private
Placement. In August 2004, the Company closed on a $1.3 million convertible
debenture financing with Cornell Capital, which was funded in August 2004 (in
the amount of $1 million) and February 2005 (in the amount of $300,000). In
November and December of 2004, the Company closed on a private placement
offering of 63,200 Units to a limited number of accredited investors, pursuant
to which we received $316,000 before payment of expenses associated with the
offering. U.S. Helicopter received net proceeds of $206,300 in the 2004 Private
Placement, which was used for general working capital purposes and startup
costs. The Company closed on an additional $220,000 convertible debenture
financing with Cornell Capital in August, 2005. On October 26, 2005, the Company
closed on a $250,000 convertible note offering with Portfolio Lenders II, LLC.
In addition, in November, 2005, the Company closed on six common stock private
placement transactions with six investors for a total of $6,250,000, pursuant to
which the Company issued a total of 6,250,000 shares of its common stock. In
March 2006, we closed on an additional $6.0 million convertible debenture
financing with Cornell Capital. In October 2006, we received $1,750,000 in
connection with the cash exercise of two amended warrant agreements issued to
Cornell Capital. In November 2006, we closed on an additional $2.75 million
convertible debenture financing with Cornell Capital. In March 2007, we closed
on an additional $1.1 million convertible debenture financing with Cornell
Capital. In May 2007, we closed on an additional $500,000 convertible debenture
financing with Cornell Capital. In June and July 2007, we closed on three
convertible note financings in an aggregate amount of $500,000 in principal with
three accredited investors.

                                      -29-
<PAGE>



         In addition, in February 2006, we issued a convertible note in the
amount of $494,505 to one investor in exchange for 494,505 shares of our common
stock held by this investor. This note bore interest at 10% per annum, was due
on February 23, 2007 and 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. As of June 21, 2007, the
holder of this note converted all sums due and payable into a total of 999,897
shares of our common stock.


         We acquired through lease, and put into service, four (4) helicopters
during our first year of flight operations which commenced on March 27, 2006. On
November 2, 2005, we took delivery of our first helicopter pursuant to a lease
dated as of November 1, 2005. At the time of entering into the lease, we paid
the lessor the first month's rent, in advance, and a security deposit, as
defined in the lease. Future rent payments are due on the first of each month
and continue during the term. The lease term is for three years with no renewals
or purchase options.


         On December 1, 2005, February 14, 2006 and May 15, 2006, respectively,
we took delivery of three additional aircraft pursuant to respective lease
agreements dated December 1, 2005, February 10, 2006 and April 26, 2006. The
lease terms are for five years each. At the time of entering into the leases, we
paid the lessor the first month's rent, in advance, and a security deposit, as
defined in the lease. Future rent payments are due on the first of each month
and continue during the term.


         In addition, the Company has entered into a Deposit and Advance Order
Agreement with Sikorsky, as amended, for the purchase of four aircraft to be
delivered in early 2009. The Company has made a deposit with Sikorsky in the
amount of $400,000, or $100,000 per aircraft. The Company and Sikorsky will need
to negotiate a formal sales agreement for the aircraft. No assurances can be
given that a formal sales agreement with Sikorsky will be completed on terms
favorable to us or at all.


         We plan to acquire, through lease or mortgage, and put into service,
three (3) additional helicopters during 2007.


         We will need approximately $12.0 million of helicopter lease/debt
financing for our next three helicopters, inclusive of deposits required in
connection with any financing transaction. It is anticipated that the purchase
price per aircraft for the next five used aircraft, including the cost of
refurbishment and re-configuration of interiors, will be approximately $3.8
million, which amount is included in the overall purchase price described
herein. It is anticipated that the security deposit for these three aircraft
will be approximately $0.2 million, with the balance of the purchase price to be
in the form of lease financing. It is anticipated that the manufacturers of
these aircraft, the engine manufacturer or a third party source will enter into
"power-by-the-hour" ("PBH") arrangements, whereby the Company would be allowed
to cover the cost of major maintenance items over a period of time, rather than
as the maintenance costs are specifically incurred. The Company will be required
to place deposits with the aircraft manufacturers for new aircraft to be
delivered in late 2008. Accounting for PBH arrangements will be accomplished
through our Statement of Operations, where we will expense in full the amount of
such costs at the rates in accordance with any contracts we have in place. We
will record deposits made to the manufacturer(s) as Deposits on our Balance
Sheet. These deposits could be used by the manufacturer(s) if there is an event
of default by us.


         In addition to the lease financing described above, it is currently
anticipated that the Company would place an order by October 30, 2007 for
delivery in early 2009 of four new aircraft at an average purchase price of $8.0
million, and an additional fourteen (14) aircraft after 2008. The current
anticipated delivery schedule for the initial and additional aircraft are 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

                                      -30-
<PAGE>

     o    May 15, 2006: Received one Sikorsky S-76B aircraft
     o    November, 2007: Anticipated delivery of one Sikorsky S-76B aircraft
     o    December, 2007: Anticipated Delivery of one Sikorsky S-76B aircraft
     o    January, 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.


         There can be no assurance that the Company will be successful in
entering into financing agreements for these aircraft. If these financings
cannot be consummated, the Company will assess all available alternatives.


         To date our financing has come from the sale of $10.77 million of
convertible debentures, $1.75 million of warrant exercises, $0.3 million in
private placement proceeds in the 2004 Private Placement, $0.5 million from the
sale of convertible notes in 2005 and 2007 and $6.25 million in private
placement proceeds from the sale of our common stock in 2005. We also have the
ability to sell up to $11 million of our common stock to Cornell Capital
pursuant to an Amended and Restated Standby Equity Distribution Agreement with
Cornell Capital in April 2005 (the "New SEDA").


MANAGEMENT'S PLAN TO OVERCOME OPERATING AND LIQUIDITY MATTERS


         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 June 30, 2007, we had $60,643 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
$5.0 million of working capital (inclusive of capital expenditures), $12.0
million of lease financing, and $3.1 million to repay debt.


         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 New 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 $20.1 million
through $12 million of operating lease financing and $8.1 million of some
combination of debt, equity or New 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.


         We have been seeking up to $25.0 million of long term equity financing
during the past several months and intend to conclude an interim financing of up
to $1.25 million in August 2007. We have met with a number of strategic
investors who have experience in long term aviation finance. We believe that we
will conclude such a financing on or before September 30, 2007. We cannot
provide assurance, however, that we will be successful in obtaining the required
long term equity financing that we are seeking on a timely basis 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

                                      -31-
<PAGE>

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.


         We have been seeking up to $25.0 million of long term equity financing
during the past several months and intend to conclude an interim financing of up
to $1.25 million in August 2007. We have met with a number of strategic
investors who have experience in long term aviation finance. We believe that we
will conclude such a financing on or before September 30, 2007. We cannot
provide assurance, however, that we will be successful in obtaining the required
long term equity financing that we are seeking on a timely basis or at all.



RECENT ACCOUNTING PRONOUNCEMENTS


         In December 2006, the Financial Accounting Standards Board ("FASB")
issued FASB Staff Position EITF 00-19-2 ("FSP EITF 00-19-2") that addresses an
issuer's accounting for registration payment arrangements. FSP EITF 00-19-2
specifies that the contingent obligation to make future payments or otherwise
transfer consideration under a registration payment arrangement, whether issued
as a separate agreement or included as a provision of a financial instrument or
other agreement, should be separately recognized and measured in accordance with
FASB Statement No. 5, "Accounting for Contingencies". The guidance in FSP EITF
00-19-2 amends FASB Statements No. 133, "Accounting for Derivative Instruments
and Hedging Activities, No. 150, Accounting for Certain Financial Instruments
with Characteristics of Both Liabilities and Equity, and FASB Interpretation No.
45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, to include scope exceptions for
registration payment arrangements. This pronouncement further clarifies that a
financial instrument subject to a registration payment arrangement should be
accounted for in accordance with other applicable generally accepted accounting
principles (GAAP) without regard to the contingent obligation to transfer
consideration pursuant to the registration payment arrangement. Under FSP EITF
00-19-2, the contingent obligation to make future payments or otherwise transfer
consideration under a registration payment arrangement shall be recognized and
measured separately in accordance with Statement 5 and FASB Interpretation No.
14, Reasonable Estimation of the Amount of a Loss. FSP EITF 00-19-2 is effective
immediately for registration payment arrangements entered into after December
21, 2006 and for financial statements issued for fiscal years beginning after
December 15, 2006, and interim periods within those fiscal years.


         In September 2006, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements" ("SAB 108"), which provides interpretive guidance on the
consideration of the effects of prior year misstatements in quantifying current
year misstatements for the purpose of a materiality assessment. SAB 108 is
effective for us as of December 31, 2007.


         In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures"
("SFAS 157"). SFAS 157 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 is effective for fiscal years
beginning after November 15, 2007. We are still evaluating the effects, if any,
SFAS No. 157 may have on our financial position, results of operations or cash
flows.


         In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting
for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109"
("FIN 48"), which clarifies the accounting for uncertainty in income taxes
recognized in an enterprise's financial statements. This Interpretation
prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. Specifically, FIN 48 requires the recognition in
financial statements of the impact of a tax position, if that position is more
likely than not of being sustained on audit, based on the technical merits of
the position. Additionally, FIN 48 provides guidance on the de-recognition of
previously recognized deferred tax items, classification, accounting for
interest and penalties, and accounting in interim periods related to uncertain
tax positions, as well as, requires expanded disclosures. FIN 48 is effective
for fiscal years beginning after December 15, 2006, with the cumulative effect
of the change in accounting principle recorded as an adjustment to opening
retained earnings.

                                      -32-
<PAGE>



         In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing
of Financial Assets - an amendment of FASB Statement No. 140" ("SFAS 156"). This
Statement amends FASB Statement No. 140, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities," with respect to
accounting for separately recognized servicing assets and servicing liabilities.
This Statement clarifies when servicing rights should be separately accounted
for, requires companies to account for separately recognized servicing rights
initially at fair value, and gives companies the option of subsequently
accounting for those servicing rights at either fair value or under the
amortization method. SFAS 156 is effective for fiscal years beginning after
September 15, 2006. The implementation of this standard did not have a material
impact on our financial position, results of operations or cash flows.


         In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
Hybrid Financial Instruments - an amendment to FASB Statements No. 133 and 140"
("SFAS 155"). SFAS155 simplifies the accounting for certain hybrid financial
instruments containing embedded derivatives. SFAS 155 allows fair value
measurement for any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation under SFAS 133. In addition,
it amends SFAS 140 to eliminate the prohibition on a qualifying special-purpose
entity from holding a derivative financial instrument that pertains to a
beneficial interest other than another derivative financial instrument. SFAS 155
is effective for all financial instruments acquired, issued, or subject to a
re-measurement (new basis) event occurring after the beginning of an entity's
first fiscal year that begins after September 15, 2006. The implementation of
this standard did not have a material impact on our financial position, results
of operations or cash flows.


         In October 2006 the FASB issued FSB No. FAS 123(R)-5, "Amendment of
FASB Staff Position FAS 123(R)-1". This FSP concluded that for instruments that
were originally issued as employee compensation and then modified, and for which
such modification is made to the terms of the instrument solely to reflect an
equity restructuring that occurs when the holders are no longer employees, no
change in the recognition or the measurement (due to a change in classification)
of those instruments will result if certain conditions are met. The FSP is to be
applied in the first reporting period beginning after October 10, 2006. The
implementation of this standard did not have a material impact on our financial
position, results of operations or cash flows.


         In October 2006 the FASB issued FSB No 123(R)-6, "Technical Corrections
of FASB Statement No. 123(R)". This FSP made four technical corrections to
eliminate certain inconsistencies in FASB Statement No. 123(R), Share-Based
Payment. This FSP should be applied in the first reporting period beginning
after October 20, 2006. The implementation of this standard did not have a
material impact on our financial position, results of operations or cash flows.


         In December 2006 the FASB issued FSB No. AUG AIR-1, "Accounting for
Major Maintenance Activities". This FSP prohibits the use of the
accrue-in-advance method of accounting for planned major maintenance activities
in annual and interim financial reporting periods. The guidance in the FSP is
applicable to entities in all industries and must be applied to the first fiscal
year beginning after December 15, 2006.


         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.

                                      -33-
<PAGE>



CRITICAL ACCOUNTING POLICIES.


         U.S. Helicopter's 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, U.S.
Helicopter views certain of these policies as critical. Policies determined to
be critical are those policies that have the most significant impact on U.S.
Helicopter's 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.


         USEFUL LIVES OF TANGIBLE AND INTANGIBLE ASSETS. Depreciation and
amortization of tangible and intangible assets are based on estimates of the
useful lives of the assets. We regularly review the useful life estimates
established to determine their propriety. Changes in estimated useful lives
could result in increased depreciation or amortization expense in the period of
the change in estimate and in future periods that could materially impact our
financial condition and results of operations.


         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 June 30, 2007 and 2006. 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 will lease or purchase
approximately three additional used, low-time helicopters roughly through and
including fourth quarter 2007. 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 $2.63 million). With
respect to changes in number of employees, we have 47 full time employees and 29
part-time employees as of June 30, 2007 and expect to have approximately 60
full-time and 30 part-time employees at the end of 2007.

                                      -34-
<PAGE>



Off-Balance Sheet Arrangements. U.S. Helicopter has no off-balance sheet
arrangements.


                                  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, 2006, 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 $10.77 million of convertible debentures, $6.25 million in
private placement proceeds from the sale of our common stock, $0.5 million from
the sale of our convertible notes, $0.3 million in private placement proceeds
from the 2004 Private Placement and $11.0 million that will be available to us
under a standby equity distribution agreement (the "SEDA funds") upon the
effectiveness of a related registration statement. We anticipate that we will
not need to raise additional capital to finance operations through year-end 2006
but will need to raise additional capital to finance operations through 2007,
assuming that our results of operations reasonably correspond to our business
plan. We must also raise $12 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 and a net loss of $(7,308,469) for the six months ended June
30, 2007.


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


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


         We have received our initial four aircraft between November 2005 and
May 2006. Our estimated delivery of seven aircraft through January 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

                                      -35-
<PAGE>

     o    May 15, 2006: Received one Sikorsky S-76B aircraft
     o    November, 2007: Anticipated delivery of one Sikorsky S-76B aircraft
     o    December, 2007: Anticipated delivery of one Sikorsky S-76B aircraft
     o    January, 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 $12 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    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.


                   RISKS RELATED TO CORNELL CAPITAL FINANCING


         We are party to certain agreements with Cornell Capital relating to the
issuance of approximately $10.77 million in convertible debentures and the sale
of up to $11.0 million worth of our common stock pursuant to the SEDA (as
defined below). 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 in the past 12 months, 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 the end of 2006. Investors should
take this into account when considering the following risk factors.


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


         As of June 30, 2007, Cornell Capital held 3,153,935 shares of common
stock and, based upon the conversion rights under the March 2006, November 2006,
March 2007 and May 2007 Convertible Debentures, could acquire up to
approximately 24.45% of our common stock based on a conversion price of $1.45
per share, or an estimated 43.17% if the conversion price is assumed to be $.50
per share. The acquisition of such interest would be dependent upon the
occurrence of an event of default under the Convertible Debentures and a waiver
of Cornell Capital's restriction on owning more than 4.99% of our issued and
outstanding common stock. If Cornell Capital acquired such 24.45%-43.17% 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 Cornell Capital may differ
from the interests of other stockholders.

                                      -36-
<PAGE>



ITEM 3. CONTROLS AND PROCEDURES


         The Company's Chief Executive Officer and Chief Financial Officer have
evaluated the effectiveness of the Company's disclosure controls and procedures
as of June 30, 2007. Based on that evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that disclosure controls and procedures
are effective to ensure that information required to be disclosed by the Company
in reports that the Company file or submit under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time periods
specified in SEC rules and forms. No changes in the Company's internal control
over financial reporting that have materially affected, or are reasonably likely
to materially affect, its internal control over financial reporting, including
any corrective actions with regard to significant deficiencies and material
weaknesses, occurred during the second quarter of fiscal 2007 or subsequent to
the date of the evaluation by its management thereof.


                                     PART II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS


         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. The parties have also initiated settlement discussions to
potentially resolve the claim on an amicable basis.


                                      -37-
<PAGE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


(a) Exhibits. The following Exhibits are filed as part of this report or
incorporated herein by reference:

<TABLE>
<CAPTION>

EXHIBIT NO.  DOCUMENT DESCRIPTION                                                            LOCATION
------------------------------------------------------------------------------------------------------
<C>           <S>                                                                          <C>
10.60        Convertible Note Purchase Agreement dated as of June 15, 2007                     (1)

10.61        Promissory Note dated as of June 15, 2007                                         (1)

10.62        Form of Warrant to Purchase 187,500 shares of Common Stock dated                  (1)
             as of June 15, 2007

10.63        Convertible Note Purchase Agreement dated as of June 20, 2007                     (1)

10.64        Promissory Note dated as of June 20, 2007                                         (1)

10.65        Form of Warrant to Purchase 125,000 shares of Common Stock dated                  (1)
             as of June 20, 2007

10.66        Convertible Note Purchase Agreement dated as of July 27, 2007                     (1)

10.67        Promissory Note dated as of July 27, 2007                                         (1)

10.68        Form of Warrant to Purchase 312,000 shares of Common Stock dated                  (1)
             as of July 27, 2007

31.1         Certification of Chief Executive Officer pursuant to Section 302 of               (1)
             Sarbanes-Oxley Act of 2002
31.2         Certification of Chief Financial Officer pursuant to Section 302 of the           (1)
             Sarbanes-Oxley Act of 2002
32.1         Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,      (1)
             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,      (1)
             as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1) Exhibit filed herewith.
</TABLE>


         On April 4, 2007, we filed a Report on Form 8-K reporting on the entry
into a debenture purchase agreement with Cornell Capital Partners, LP.


         On May 11, 2007, we filed a Report on Form 8-K reporting on the
commencement of our relationship with Delta Airlines.


         On May 16, 2007, we filed a Report on Form 8-K reporting on the entry
into a debenture purchase agreement with Cornell Capital Partners, LP.


         On June 21, 2007, we filed a Report on Form 8-K reporting on the entry
into certain convertible note purchase agreements.

                                      -38-
<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:  August 20, 2007               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)


                                      -39-