##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-QSB
 
 (Mark One)
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
 For the Quarterly Period ended September 30, 2005
 OR
 o
    
    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
(State or Other Jurisdiction of
Incorporation or Organization)
    
    27-0096927
(I.R.S. Employer
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)
 
  ̈ þ
  ̈ þ
   ̈  ̈
    ̈ þ




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U.S. HELICOPTER CORPORATION
FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 2005
 INDEX
 PAGEPART 1FINANCIAL INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTSBalance Sheets
    
    
    2Statements of Operations
    
    
    3Statements of Stockholders Equity (Deficit)
    
    
    4Statements of Cash Flows
    
    
    5Notes to Financial Statements
    
    
    6ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
    
    
    16ITEM 3.
    
    CONTROLS AND PROCEDURES
    
    
    52PART IIOTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    53ITEM 2.
    
    UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS; USE
OF PROCEEDS FROM REGISTERED SECURITIES
    
    
    53ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    56ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    56ITEM 5.
    
    OTHER INFORMATION
    
    
    56ITEM 6.
    
    EXHIBITS AND REPORTS ON FORM 8-K
    
    
    57AMENDED AND RESTATED BYLAWSHELICOPTER LEASE AGREEMENT DATED AS OF NOVEMBER 1, 2005EMPLOYMENT AGREEMENT DATED SEPTEMBER 16, 2005CONVERTIBLE NOTE PURCHASE AGREEMENT DATED OCTOBER 26, 2005CONVERTIBLE PROMISSORY NOTE DATED OCTOBER 26, 2005WARRANT TO PURCHASE UP TO 100,000 SHARESCOMMON STOCK PURCHASE AGREEMENT DATED OCTOBER 19, 2005WARRANT TO PURCHASE UP TO 750,000 SHARES OF COMMON STOCKCOMMON STOCK PURCHASE AGREEMENTCOMMON STOCK PURCHASE AGREEMENTCOMMON STOCK PURCHASE AGREEMENTCOMMON STOCK PURCHASE AGREEMENTCOMMON STOCK PURCHASE AGREEMENTCERTIFICATION OF CHIEF EXECUTIVE OFFICERCERTIFICATION OF CHIEF FINANCIAL OFFICERCERTIFICATION OF CHIEF EXECUTIVE OFFICERCERTIFICATION OF CHIEF FINANCIAL OFFICER




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##### Table of Contents



PART IFINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 U.S. HELICOPTER CORPORATION
(A DEVELOPMENT STAGE COMPANY)
 
 BALANCE SHEETS
 September 30,
    
    
    December 31,2005
    
    
    2004(Unaudited)Assets:Current Assets:Cash
    
    $
    73,337
    
    
    $
    501,533Prepaid Expenses
    
    
    13,728
    
    
    
    26,500Other Current Assets
    
    
    4,020
    
    
    
    4,240Total Current Assets
    
    
    91,085
    
    
    
    532,273Property and Equipment:Office Equipment
    
    
    8,906
    
    
    
    8,181Less: Accumulated Depreciation
    
    
    (2,359
    )
    
    
    (549
    )Property and Equipment  Net
    
    
    6,547
    
    
    
    7,632Other Assets:Deferred Financing Costs, Net of Accumulated Amortization
of $141,192 and $42,288
    
    
    178,808
    
    
    
    167,712Deferred Offering Costs
    
    
    153,936
    
    
    
    148,551Total Other Assets
    
    
    332,744
    
    
    
    316,263Total Assets
    
    $
    430,376
    
    
    $
    856,168Liabilities and Stockholders Equity:Current Liabilities:Accounts Payable and Accrued Expenses
    
    $
    360,320
    
    
    $
    132,045Deferred Salary and Taxes Payable
    
    
    252,125
    
    
    
    87,420Accrued Salary and Taxes Payable
    
    
    39,847
    
    
    
    11,233Total Current Liabilities
    
    
    652,292
    
    
    
    230,698Long-Term Debt  Net of Discounts of $-0-, and $250,000
    
    
    1,555,424
    
    
    
    750,000Total Liabilities
    
    
    2,207,716
    
    
    
    980,698Commitments and Contingencies
    
    
    
    
    
    
    Stockholders Equity (Deficit):Convertible Series A Preferred Stock, $0.001 Par Value; 1,500,000
Shares Authorized; 316,000 Shares Issued and Outstanding
    
    
    316
    
    
    
    316Common
Stock, $0.001 Par Value; 95,000,000 Shares Authorized; 24,545,723 Issued and Outstanding
    
    
    24,546
    
    
    
    24,546Additional Paid In Capital
    
    
    548,434
    
    
    
    418,434Deficit Accumulated During the Development Stage
    
    
    (2,350,636
    )
    
    
    (567,826
    )Total Stockholders Equity (Deficit)
    
    
    (1,777,340
    )
    
    
    (124,530
    )Total Liabilities and Stockholders Equity (Deficit)
    
    $
    430,376
    
    
    $
    856,168
  2




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##### Table of Contents



U.S. HELICOPTER CORPORATION
(A DEVELOPMENT STAGE COMPANY)
 
 STATEMENTS OF OPERATIONS
 Cumulativefrom Inception(March 4, 2003) to
    
    
    Nine months ended
    
    
    Three months endedSeptember 30,
    
    
    September 30,
    
    
    September 30,2005
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Expenses:Payroll
    
    
    881,646
    
    
    
    600,806
    
    
    
    93,859
    
    
    
    212,266
    
    
    
    93,859Payroll Taxes
    
    
    73,821
    
    
    
    49,844
    
    
    
    9,056
    
    
    
    16,819
    
    
    
    9,056State Minimum Taxes
    
    
    800
    
    
    
    800
    
    
    
    
    
    
    
    
    
    
    
    Professional Fees
    
    
    452,231
    
    
    
    305,844
    
    
    
    57,576
    
    
    
    113,384
    
    
    
    52,748Interest
    
    
    69,107
    
    
    
    47,990
    
    
    
    8,204
    
    
    
    18,022
    
    
    
    8,204Insurance
    
    
    79,062
    
    
    
    63,114
    
    
    
    6,244
    
    
    
    24,030
    
    
    
    6,244Office Expense
    
    
    104,311
    
    
    
    85,264
    
    
    
    5,590
    
    
    
    51,946
    
    
    
    5,590Website Design
    
    
    18,726
    
    
    
    18,726
    
    
    
    
    
    
    
    9,236
    
    
    
    Travel
    
    
    38,916
    
    
    
    24,530
    
    
    
    4,241
    
    
    
    7,301
    
    
    
    4,241Rent
    
    
    18,018
    
    
    
    14,731
    
    
    
    550
    
    
    
    4,910
    
    
    
    550Reservation Expense
    
    
    79,450
    
    
    
    79,450
    
    
    
    
    
    
    
    50,000
    
    
    
    Licenses and Fees
    
    
    10,997
    
    
    
    10,997
    
    
    
    
    
    
    
    6,873
    
    
    
    Depreciation
    
    
    2,359
    
    
    
    1,810
    
    
    
    104
    
    
    
    611
    
    
    
    104Amortization of Beneficial Conversion
Feature of Long-Term Debt
    
    
    380,000
    
    
    
    380,000
    
    
    
    
    
    
    
    380,000
    
    
    
    Amortization of Deferred Financing
Costs
    
    
    141,192
    
    
    
    98,904
    
    
    
    16,397
    
    
    
    36,562
    
    
    
    16,397Total Expenses
    
    
    (2,350,636
    )
    
    
    (1,782,810
    )
    
    
    (201,821
    )
    
    
    (931,960
    )
    
    
    (196,993
    )Net (Loss)
    
    
    (2,350,636
    )
    
    
    (1,782,810
    )
    
    
    (201,821
    )
    
    
    (931,960
    )
    
    
    (196,993
    )Deduct: Preferred Stock Dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (Loss) Applicable to Common
Shareholders
    
    $
    (2,350,636
    )
    
    $
    (1,782,810
    )
    
    $
    (201,821
    )
    
    $
    (931,960
    )
    
    $
    (196,993
    )Net (Loss) Per Common Share:Basic and Diluted
    
    
    
    
    
    $
    (.07
    )
    
    $
    (.01
    )
    
    $
    (.04
    )
    
    $
    (.01
    )Weighted Average Number of Shares
    
    
    
    
    
    
    24,545,723
    
    
    
    21,980,170
    
    
    
    24,545,723
    
    
    
    23,355,625
  3




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##### Table of Contents



U.S. HELICOPTER CORPORATION  (A DEVELOPMENT STAGE COMPANY)
 
 STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
 Additional
    
    Stock
    
    Deficit Accumulated
    
    TotalPreferred Stock
    
    Common Stock
    
    Paid-in-
    
    Subscription
    
    During Development
    
    StockholdersShares
    
    Amount
    
    Shares
    
    Amount
    
    Capital
    
    Receivable
    
    Stage
    
    Equity (Deficit)Issuance of common stock at inception -
March 4, 2003
    
    
    
    
    
    $
    
    
    
    
    1,000
    
    
    $
    1
    
    
    $
    499
    
    
    $
    (500
    )
    
    $
    
    
    
    $
    Common Stock Split (21,300:1)  July 22, 2004
    
    
    
    
    
    
    
    
    
    
    21,299,000
    
    
    
    21,299
    
    
    
    (21,299
    )
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,865
    )
    
    
    (17,865
    )Balance at December 31, 2003
    
    
    
    
    
    
    
    
    
    
    21,300,000
    
    
    
    21,300
    
    
    
    (20,800
    )
    
    
    (500
    )
    
    
    (17,865
    )
    
    
    (17,865
    )Issuance of Common Shares for financing
costs at par of $0.001 per share  August 4,
2004
    
    
    
    
    
    
    
    
    
    
    3,245,723
    
    
    
    3,246
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,246Intrinsic value of beneficial conversion
feature of debenture  August 4, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    
    
    
    
    
    
    
    
    250,000Stock subscription payment received -
October 15, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    
    
    
    
    500Issuance of Preferred Shares from private
placement at par of $0.001 per share -
November 23, 2004
    
    
    105,000
    
    
    
    105
    
    
    
    
    
    
    
    
    
    
    
    104,895
    
    
    
    
    
    
    
    
    
    
    
    105,000Offering costs associated with private
placement of preferred shares  November 23,
2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76,675
    )
    
    
    
    
    
    
    
    
    
    
    (76,675
    )Issuance of Preferred Shares from private
placement at par of $0.001 per share -
December 14, 2004
    
    
    191,000
    
    
    
    191
    
    
    
    
    
    
    
    
    
    
    
    190,809
    
    
    
    
    
    
    
    
    
    
    
    191,000Offering costs associated with private
placement of preferred shares  December 14,
2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,575
    )
    
    
    
    
    
    
    
    
    
    
    (40,575
    )Issuance of Preferred Shares from private
placement at par of $0.001 per share -
December 22, 2004
    
    
    20,000
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    19,980
    
    
    
    
    
    
    
    
    
    
    
    20,000Offering costs associated with private
placement of preferred shares  December 22,
2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,200
    )
    
    
    
    
    
    
    
    
    
    
    (9,200
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (549,961
    )
    
    
    (549,961
    )Balance at December 31, 2004
    
    
    316,000
    
    
    
    316
    
    
    
    24,545,723
    
    
    
    24,546
    
    
    
    418,434
    
    
    
    
    
    
    
    (567,826
    )
    
    
    (124,530
    )Intrinsic value of beneficial conversion
feature of debenture  February 25, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,000
    
    
    
    
    
    
    
    
    
    
    
    75,000Intrinsic value of beneficial conversion
feature of debenture  August 24, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,000
    
    
    
    
    
    
    
    
    
    
    
    55,000Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,782,810
    )
    
    
    (1,782,810
    )Balance at September 30, 2005 (Unaudited)
    
    
    316,000
    
    
    $
    316
    
    
    
    24,545,723
    
    
    $
    24,546
    
    
    $
    548,434
    
    
    $
    
    
    
    $
    (2,350,636
    )
    
    $
    (1,777,340
    )
  4




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##### Table of Contents



U.S. HELICOPTER CORPORATION
(A DEVELOPMENT STAGE COMPANY)
 
 STATEMENTS OF CASH FLOWS
 Cumulativefrom Inception(March 4, 2003) to
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2005
    
    
    2005
    
    
    2004(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Operating Activities:Net (Loss)
    
    $
    (2,350,636
    )
    
    $
    (1,782,810
    )
    
    $
    (201,821
    )Adjustments to Reconcile Net Income
to Net Cash Provided By (Used for)
Operating Activities:Depreciation Expense
    
    
    2,359
    
    
    
    1,810
    
    
    
    104Amortization of Deferred Financing
    
    
    141,192
    
    
    
    98,904
    
    
    
    16,397Accrued Interest on Convertible Debentures
    
    
    35,424
    
    
    
    35,424
    
    
    
    Amortization of Beneficial Conversion
Feature of Long-Term Debt
    
    
    380,000
    
    
    
    380,000
    
    
    
    Changes in Assets and Liabilities:Increase (Decrease) inPrepaid Expenses and OtherCurrent Assets
    
    
    (17,748
    )
    
    
    12,991
    
    
    
    (17,859
    )Accounts Payable and Accrued Liabilities
    
    
    652,292
    
    
    
    421,594
    
    
    
    149,723Net Cash  Operating Activities
    
    
    (1,157,118
    )
    
    
    (832,087
    )
    
    
    (53,456
    )Investing Activities:Acquisition of Property and Equipment
    
    
    (8,906
    )
    
    
    (725
    )
    
    
    (5,005
    )Financing Activities:Proceeds From Long-Term Debt
    
    
    1,520,000
    
    
    
    520,000
    
    
    
    1,000,000Proceeds From Sale of Stock
    
    
    316,500
    
    
    
    
    
    
    
    Payment of Financing Costs
    
    
    (597,141
    )
    
    
    (115,384
    )
    
    
    (382,632
    )Net Cash  Financing Activities
    
    
    1,239,361
    
    
    
    404,616
    
    
    
    617,368Net Increase (Decrease) in Cash
    
    
    73,337
    
    
    
    (428,196
    )
    
    
    558,907Cash  Beginning of Periods
    
    
    
    
    
    
    501,533
    
    
    
    Cash  End of Periods
    
    $
    73,337
    
    
    $
    73,337
    
    
    $
    558,907Supplemental Disclosures of Cash Flow Information:Cash paid during the periods for:Interest
    
    $
    1,204
    
    
    $
    635
    
    
    $
    258Income Taxes
    
    $
    
    
    
    $
    
    
    
    $
    
 Supplemental Disclosures of Non-Cash Investing and Financing Activities:
   5




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##### Table of Contents



U. S. HELICOPTER CORPORATION
(A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO FINANCIAL STATEMENTS
 (1) Business
 th th
   (2) Summary of Significant Accounting Policies
 Unaudited Interim Statements 
 Use of Estimates 
 Concentrations of Credit Risk 
   Fair Value of Financial Instruments 
 Cash Equivalents 
 Property and Equipment 
 6




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##### Table of Contents



U. S. HELICOPTER CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
  (2) Summary of Significant Accounting Policies (Continued)
 Impairment of Long-Lived Assets 
 Deferred Salary and Taxes Payable
     Stock-Based Compensation 
  7




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##### Table of Contents



U. S. HELICOPTER CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
     Stockholders Equity 
 Revenue Recognition 
 Income Taxes 
 Earnings (Loss) Per Share 
 Deferred Offering Costs 
 Advertising Costs 
 Recent Accounting Pronouncements 
 8




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##### Table of Contents



U. S. HELICOPTER CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
 (2) Summary of Significant Accounting Policies (Continued)
    (3) Deferred Offering Costs and Deferred Financing Costs
     9




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##### Table of Contents



U. S. HELICOPTER CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
 (4) Convertible Debt
 Long-Term Convertible Debt
        Short-Term Convertible Debt
 10




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##### Table of Contents



U. S. HELICOPTER CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
 (5) Securities Offerings
 Standby Equity Distribution Agreement 
    Private Placement 
  11




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##### Table of Contents



U. S. HELICOPTER CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
 Private Placements of Common Stock 
   (6) Commitments and Contingencies
 Operating Leases 
 Year ending December 31,2005
    
    $
    13,6422006
    
    
    13,6422007
    
    
    12,505Thereafter
    
    
    Total Minimum Future Rental Payments
    
    $
    39,789
 (7) Income Taxes
   12




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##### Table of Contents



U. S. HELICOPTER CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
 (8) Employee Stock Options
  Cumulativefrom Inception(March 4, 2003) to
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2005
    
    
    2005
    
    
    2004(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Net (Loss):As Reported
    
    $
    (2,350,636
    )
    
    $
    (1,782,810
    )
    
    $
    (201,821
    )Pro Forma
    
    $
    (2,350,636
    )
    
    $
    (1,782,810
    )
    
    $
    (201,821
    )Basic and Diluted (Loss) Per Share:As Reported
    
    $
    (.11
    )
    
    $
    (.07
    )
    
    $
    (.01
    )Pro Forma
    
    $
    (.11
    )
    
    $
    (.07
    )
    
    $
    (.01
    )
  Weighted AverageNumber of Shares
    
    
    Exercise PriceOutstanding at March 4, 2003
    
    
    
    
    
    $
    Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding at December 31, 2003
    
    
    
    
    
    
    Granted
    
    
    812,000
    
    
    
    0.50Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding at December 31, 2004
    
    
    812,000
    
    
    $
    0.50Granted
    
    
    70,000
    
    
    
    0.50Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding at September 30, 2005
    
    
    882,000
    
    
    $
    0.50
 13




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U. S. HELICOPTER CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
 (8) Employee Stock Options (Continued)
 At
    
    AtSeptember 30, 2005
    
    December 31, 2004Options Exercisable:
    
    
    882,000
    
    
    
    812,000
 PeriodFrom Inception[March 4, 2003]through
    
    Year endedDecember 31, 2003
    
    December 31, 2004Weighted Average Fair Value of Options
Granted During the Periods
    
    
    
    
    
    
    
  PeriodFrom Inception[March 4, 2003]through
    
    Year endedSeptember 30, 2005
    
    December 31, 2004Dividend Yield
    
    
    
    %
    
    
    
    %Risk-Free Interest Rate
    
    
    4.75
    %
    
    
    4.75
    %Expected Life
    
    
    N/A
    
    
    2.5 yearsExpected Volatility
    
    
    N/A
    
    
    
    N/A
 (9) Subsequent Events
 Convertible Note Purchase Agreement
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Private Placement of Common Stock
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Private Placement of Common Stock
     
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
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General
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Additional Year 1 Information.
 Off-Balance Sheet Arrangements.
  Overview
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Business Strategy
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Roll-Out Plan
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Elapsed Travel Time Comparison Sheet (1)
 Average Travel TimeDeparture Zone to Destination
    
    
    Travel Time
    
    
    TotalTravel
    
    Departure
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Check-in &
    
    
    Elapsed
    
    
    US HelicopterMethod
    
    Zone
    
    
    Destination
    
    
    in Manhattan
    
    
    outside Manhattan
    
    
    Security
    
    
    Travel Time
    
    
    Time SavingsGround
    
    Downtown
    
    JFK
    
    20 min
    
    90 min
    
    45 min
    
    155 min
    
    120 minGround
    
    Downtown
    
    EWR
    
    15 min
    
    75 min
    
    45 min
    
    135 min
    
    100 minGround
    
    Downtown
    
    LGA
    
    20 min
    
    60 min
    
    45 min
    
    125 min
    
    90 minHelicopter
    
    Downtown
    
    All
    
    10 min
    
    10 min
    
    15 min
    
    35 minGround
    
    East Side
    
    JFK
    
    15 min
    
    90 min
    
    45 min
    
    150 min
    
    110 minGround
    
    East Side
    
    EWR
    
    25 min
    
    75 min
    
    45 min
    
    145 min
    
    105 minGround
    
    East Side
    
    LGA
    
    15 min
    
    60 min
    
    45 min
    
    120 min
    
    80 minHelicopter
    
    East Side
    
    All
    
    15 min
    
    10 min
    
    15 min
    
    40 minGround
    
    West Side
    
    JFK
    
    25 min
    
    90 min
    
    45 min
    
    160 min
    
    115 minGround
    
    West Side
    
    EWR
    
    15 min
    
    75 min
    
    45 min
    
    135 min
    
    90 minGround
    
    West Side
    
    LGA
    
    25 min
    
    60 min
    
    45 min
    
    130 min
    
    85 minHelicopter
    
    West Side
    
    All
    
    20 min
    
    10 min
    
    15 min
    
    45 min
 
 (1)  The travel time estimates used in this table were taken from several different
reliable sources. First, travel data from the Port Authority of New York and New Jersey was used to
establish the existing methods of travel and the published elapsed time for each of those travel
methods. This included the amount of time a passenger would have to plan to travel to/from each
airport. Second, informal management surveys were taken of business persons working and/or
traveling to/from Manhattan via the airports, which data correlated very well with Port Authority
data. Third, the Companys management team has thorough knowledge of the New York City area with
respect to transportation and airline service, which was relied upon to separate the data into the
different segments as shown in the above table. In addition, the Company has confirmed travel times
through actual flights provided by United Technologies (an entity affiliated with Sikorsky
Aircraft) on two recent occasions. In all scenarios, the elapsed time of ground based travel is
significantly higher than that of the helicopter.   30




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RISK FACTORS
  RISKS RELATED TO OUR BUSINESS AND AVIATION INDUSTRY
 We Need to Obtain Numerous Regulatory Permits, Certificates, Licenses, etc. from Governmental
Authorities which We could Fail to Obtain or which could Take Longer or be More Costly To Obtain
Than We Have Planned.
  
    
    U.S. Department of Transportation (DOT): We filed our application
for a Certificate of Public Convenience and Necessity with the DOT on
February 14, 2005. On October 17, 2005, we received an Order to Show
Cause from the DOT, which permits us to commence promotion of our
scheduled services. On November 1, 2005 we received a Final Order
from the DOT. We expect to receive an Effective certificate from
the DOT at around the same time as approval is received by the FAA,
assuming our application is approved by the FAA.
    
    U.S. Federal Aviation Administration (FAA): We filed a
Pre-Application Statement of Intent with the FAA on February 14, 2005.
On March 14, 2005, we filed a formal application with supporting
manuals and documentation to obtain a FAR Part-135 Air Carrier
Certificate. The FAA has conducted a conformity check of our first
helicopter. We anticipate that the FAA will complete its review and
render a final decision by approximately December 1, 2005.
    
    U.S. Transportation Security Administration (TSA): We have been
working with personnel of the TSA in Washington, D.C. and New York
City to meet TSA guidelines for security operations at the New York
City heliports in connection with TSA Part-1542 Airport/Heliport
Facility policies and Part-1544 Air Carrier/Aircraft Operator
regulations. On June 1, 2005, the TSA issued and approved our security
plan under TSA Part-1544. The TSA has assigned a Principal Security
Inspector to facilitate the TSA compliance process. We anticipate that
the TSA will issue a final approval in concert with the FAAs
certification. Once approved, it is expected that the TSA will
conduct all security procedures at the governments expense at
the Companys locations.
    
    U.S. Federal Communication Commission (FCC): We must obtain FCC
approval to
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establish radio frequencies and communications between our
operating helicopters and operations facilities. The Company is in the
process of seeking all necessary FCC approvals.
    
    U.S. Environmental Protection Agency and similar state and local
authorities, primarily with respect to the use, discharge and disposal
of hazardous materials at or from our maintenance and airport
facilities.
    
    Port Authority of New York and New Jersey: We have reached agreements
with the Port Authority for operation locations and plans at JFK
International Airport, LaGuardia Airport and Newark Liberty
International Airport. We are currently in negotiations for an
operating agreement and plans with the Port Authority at the Downtown
Manhattan Heliport. We anticipate that all contractual agreements will
be in place prior to our commencement of operations.
  We Need to Obtain Equipment and Equipment Financing in a Compressed Timeframe with Limited Manpower
and Limited Resources. We Could Fail. Certain Financiers May Require an Equity Position in Us in
Exchange for Providing Financial and Performance Guarantees.
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We Have No Revenue from Operations and Must Raise Additional Capital To Finance Operations. Our
Operations since Inception have not Generated a Profit.
    We Need to Obtain Contracts for Operating and Landing Facilities.
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th th
 We Need to Obtain Contracts with Major Airlines.
  The Air Transportation Industry has Changed Fundamentally since the Terrorist Attacks on September
11, 2001, and our Business, Financial Condition And Operating Results could be Materially Adversely
Affected as a Result.
  Our Business is Dependent on the Availability and Price of Aircraft Fuel. Significant Disruptions
in the Supply of Aircraft Fuel or Continued Periods of Historically High Fuel Costs Could
Materially Adversely Affect our Operating Results.
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Our Failure to Successfully Implement our Growth Strategy Could Harm our Business.
    We Have an Absence of Operating History.
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Changes in our Governmental Authorizations, Permits or Certificates Could Adversely Impact our
Business.
   The Air Transportation Industry is Subject to Extensive Government Regulation, and Changes in or
New Regulations may Increase our Operating Costs.
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Risk of Competition Could Impact our Growth Potential Within a Market or In Expansion Cities.
  The Market we Anticipate for our Helicopter Service Might Not Develop or Take Longer to Develop or
be More Costly to Develop than we Anticipate or the Market May be Unreceptive to our Service.
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Interruptions or Disruptions in Service at One of our Hub Heliports and/or Hub Airports Could Have
a Material Adverse Impact on our Operations.
 th
 Helicopter Operations Involve Risk that may not be Covered by our Insurance or may Increase the
Cost of our Insurance.
   We are at Risk of Losses and Adverse Publicity Stemming from Any Accident Involving our
Helicopters.
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Seasonality and other Factors Impact Demand for Air Travel.
  We will have a Significant Amount of Debt and Fixed Obligations which could Harm Our Ability to
Meet our Growth Strategy and Impair our Ability to Service our Fixed Obligations.
  
    
    impact our ability to obtain additional financing to support capital
expansion plans and for working capital and other purposes on
acceptable terms or at all;
    
    divert substantial cash flow from our operations and expansion plans
in order to service our fixed obligations;
    
    require us to incur significantly more interest or rent expense than
we currently do; and
    
    place us at a possible competitive disadvantage compared to less
leveraged competitors and competitors that have better access to
capital resources.
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Our Maintenance Costs will Increase as our Fleet Ages.
  If We are Unable to Attract and Retain Qualified Personnel at Reasonable Costs or Fail to Maintain
our Company Culture, our Business Could be Harmed.
  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.
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
    
    difficulties or delays in obtaining the necessary certification from
aviation regulatory authorities and validation from the FAA as to the
aircrafts airworthiness;
    
    delays in meeting the aircraft delivery schedule;
    
    difficulties in obtaining financing on acceptable terms; and
    
    inability of the aircraft and all of its components to comply with
agreed upon specifications and performance standards.
  We will Rely on Maintaining a High Daily Aircraft Utilization Rate to Keep our Costs Low, which
Makes us Especially Vulnerable to Delays.
  Our Business is Highly Dependent on the New York Market and Increases in Competition or a Reduction
in Demand for Air Travel in this Market would Harm our Business.
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We May be Subject to Unionization, Work Stoppages, Slowdowns or Increased Labor Costs.
    Our Results of Operations will Depend in part on Factors Beyond our Immediate Control, such as the
Price of Fuel, Weather and Seasonality.
  We are Subject to the Risks of Having a Limited Number of Suppliers for our Aircraft and Engines.
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We Rely Heavily on Automated Systems to Operate our Business and Any Failure of These Systems could
Harm our Business.
  Our Business could be Harmed if We Lose the Service of our Key Personnel.
  Other Companies may have Difficulty Acquiring Us, Even if Doing So would Benefit our Stockholders,
due to Provisions under our Corporate Charter and Bylaws, as well as Delaware Law.
  
    
    advance notification procedures for matters to be brought before
stockholder meetings;
    
    a limitation on who may call stockholder meetings; and
    
    the ability of our board of directors to issue up to 5,000,000 shares
of preferred stock without a stockholder vote.
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We may be Unable to Protect our Intellectual Property Against Unauthorized Use by Third Parties.
  If We were to Determine that our Aircraft, Parts or Inventory were Impaired, it would have a
Significant Adverse Effect on our Operating Results.
  Because the Airline Industry is Characterized by Low Gross Profit Margins and High Fixed Costs, a
Minor Shortfall from Expected Revenue could have a Significant Impact on Earnings.
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We Will Need to Secure Agreements with Credit Card Companies and Processors .
  We May Need Agreements with a Clearinghouse Settlement Plan.
  Significant Foreign Ownership may Affect our Ability to Retain our Air Carrier Certificate and will
Constitute a Default under our Loan Agreements.
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We will be Dependent on Third Party Suppliers for Helicopter Parts and Components.
  Our Common Stock May be Affected by Limited Trading Volume and May Fluctuate Significantly.
  Our Common Stock is Deemed to be Penny Stock, which May Make it More Difficult for Investors to
Sell their Shares due to Suitability Requirements.
  
    
    With a price of less than $5.00 per share;
    
    That are not traded on a recognized national exchange;
    
    Whose prices are not quoted on the NASDAQ automated quotation system
(NASDAQ listed stock must still have a price of not less than $5.00
per share); or
    
    In issuers with net tangible assets less than $2.0 million (if the
issuer has been in continuous operation for at least three years) or
$5.0 million (if in continuous operation for less than three years),
or with average revenues of less than $6.0 million for the last three
years.
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RISKS RELATED TO CORNELL CAPITAL FINANCING
  The Convertible Debentures and the SEDA Contain Certain Covenants Prohibiting Us from Raising
Capital at Less than the Market Price or Pledging Assets to Other Lenders.
  
    
    Raising capital from the sale of stock or other securities convertible
into stock at a price less than the market price of U.S. Helicopters
common stock on the date of issuance; or
    
    Granting a security interest in U.S. Helicopters assets, which
security interest may be needed in order to obtain borrowings or
capital from a lender, except that the secured party is obligated to
subordinate the priority of its security interest under certain
circumstances.
  Cornell Capital Could Acquire a Significant Amount of Our Common Stock and, if it Does So, Could
Exercise Significant Influence Over Us.
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There may be No Remaining Proceeds for Stockholders in the Event of Our Dissolution.
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If We Default under the Convertible Debentures, Cornell Capital may Convert All Amounts Due into
Shares of Our Common Stock.
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The August 2004 Convertible Debenture Requires Us to Pay 10% of the Gross Proceeds to be Received
Pursuant to Advances Under the SEDA Until January 1, 2006.
  Existing Shareholders will Experience Significant Dilution from our Sale of Shares under the
Standby Equity Distribution Agreement.
  The Investor under the Amended and Restated Standby Equity Distribution Agreement Will Pay One
Percent Less than the Then-Prevailing Market Price of our Common Stock.
  The Sale of our Stock under our Standby Equity Distribution Agreement could Encourage Short Sales
by Third Parties, which could Contribute to the Future Decline of our Stock Price.
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Restrictions Under the Convertible Debenture and the SEDA Could Significantly Limit Our Ability to
Access Funds Under the SEDA.
  
 ITEM 3. CONTROLS AND PROCEDURES
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PART II.
 OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS; USE OF PROCEEDS FROM REGISTERED
SECURITIES
 (a) Convertible Note Purchase Agreement
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(b) Private Placement of Common Stock
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(c) Private Placement of Common Stock
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(d) Registration Statement Declared Effective on September 2, 2005
    
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
  3.4
    
    Amended & Restated Bylaws+10.1
    
    Helicopter Lease Agreement dated as of November 1, 2005+ (Portions of this exhibit have been
omitted pursuant to a request for confidential treatment.)10.2
    
    Employment Agreement between U.S. Helicopter Corporation and John Fagan dated September 16,
200510.3
    
    Convertible Note Purchase Agreement dated October 26, 2005 between U.S. Helicopter
Corporation and Portfolio Lenders II, LLC+10.4
    
    Convertible Promissory Note in the amount of $250,000 dated October 26, 2005 payable to
Portfolio Lenders II, LLC+10.5
    
    Warrant to Purchase up to 100,000 shares of Common Stock issued to Portfolio Lenders II, LLC+10.6
    
    Common Stock Purchase Agreement
dated October 26, 2005 between U.S. Helicopter Corporation
and International Financial Advisors, K.S.C. (exhibits and schedules omitted)+10.7
    
    Warrant to Purchase up to 750,000 shares of Common Stock issued to International Financial
Advisors, K.S.C.+10.8
    
    Common Stock Purchase Agreement dated October 26, 2005 between U.S. Helicopter Corporation
and Ahmad Abdulwahab Al-Nakib (exhibits and schedules omitted)+10.9
    
    Common Stock Purchase Agreement
dated October 26, 2005 between U.S. Helicopter Corporation
and Abdulwahab A. Al-Nakib (exhibits and schedules omitted)+10.10
    
    Common Stock Purchase Agreement
dated October 26, 2005 between U.S. Helicopter Corporation
and Peter Londa (exhibits and schedules omitted)+10.11
    
    Common Stock Purchase Agreement
dated October 26, 2005 between U.S. Helicopter Corporation
and Khaled Magdy El-Marsafy (exhibits and schedules omitted)+10.12
    
    Common Stock Purchase Agreement
dated October 26, 2005 between U.S. Helicopter Corporation
and Samama Global Corporation (exhibits and schedules omitted)+31.1
    
    Certification of Chief Executive
Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002+31.2
    
    Certification of Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002+32.1
    
    Certification of Chief Executive
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002+32.2
    
    Certification of Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002+
 
 +
    
    Exhibit filed herewith in this Report.(b)
    
    Reports on Form 8K. During the quarter ended September 30, 2005, the
Company filed the following Reports on Form 8-K:None. 57




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SIGNATURES
  U.S. HELICOPTER CORPORATIONDate:
November 14, 2005
    
    BY:
    
    /s/ John G. MurphyJohn G. MurphyChief 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)
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