UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-QSB

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|(Mark One)
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||X|       

For the Quarterly Period
ended June 30, 2006

OR

||_| | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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For the
transition period from ________ to ________

Commission File
Number 001-32580

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U.S. HELICOPTER CORPORATION(Name of Small Business Issuer in Its Charter)

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|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 HeliportNew York, NY 10004(Address of Principal Executive Offices) (Zip Code)

(212) 248-2002(Issuers Telephone Number, Including Area Code)

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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 þ   No o

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

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 o
   No o

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 7, 2006, 32,264,870
shares of common stock.

Transitional Small Business Disclosure Format (check
one):   Yes o   No þ

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U.S. HELICOPTER CORPORATIONFORM
10-QSB
FOR THE PERIOD ENDED JUNE 30, 2006

INDEX

|                             |  |                                                                                                  |  | PAGE
|---------------------------- |  | ------------------------------------------------------------------------------------------------ |  | ----
|                            
|PART 1FINANCIAL INFORMATION
|                            
|ITEM 1.                      |  | FINANCIAL STATEMENTS                                                                             |  |     
|                            
|                             |  | Balance Sheet                                                                                    |  | 1   
|                            
|                             |  | Statements of Operations                                                                         |  | 2   
|                            
|                             |  | Statements of Cash Flows                                                                         |  | 3   
|                            
|                             |  | Notes to Financial Statements                                                                    |  | 4   
|                            
|ITEM 2.                      |  | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS                                       |  | 13  
|                            
|ITEM 3.                      |  | CONTROLS AND PROCEDURES                                                                          |  | 39  
|                            
|PART IIOTHER INFORMATION   
|                            
|ITEM 1.                      |  | LEGAL PROCEEDINGS                                                                                |  | 39  
|                            
|ITEM 2.                      |  | UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS; USE OF PROCEEDS FROM REGISTERED SECURITIES |  | 39  
|                            
|ITEM 3.                      |  | DEFAULTS UPON SENIOR SECURITIES                                                                  |  | 39  
|                            
|ITEM 4.                      |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                              |  | 39  
|                            
|ITEM 5.                      |  | OTHER INFORMATION                                                                                |  | 39  
|                            
|ITEM 6.                      |  | EXHIBITS AND REPORTS ON FORM 8-K                                                                 |  | 40  

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PART I - FINANCIAL
INFORMATIONITEM 1. FINANCIAL STATEMENTS

U.S. HELICOPTER CORPORATION

BALANCE SHEETS

June 30,2006[Unaudited]Assets:Current Assets:Cash
     
     
     $
     3,104,918Restricted Cash
     
     
     
     53,402Accounts Receivable
     
     
     
     88,903Inventory
     
     
     
     11,710Prepaid Expenses
     
     
     
     376,455Other Current Assets
     
     
     
     193,585Total Current Assets
     
     
     
     3,828,973Property and Equipment:Leasehold Improvements
     
     
     
     956,439Office Equipment
     
     
     
     77,764Less: Accumulated Depreciation
     
     
     
     (77,242
     )Property and Equipment - Net
     
     
     
     956,961Other Assets:Deferred Financing Costs, Net of Accumulated Amortizationof $54,750
     
     
     
     1,040,250Deferred Offering Costs
     
     
     
     215,136Deposits
     
     
     
     767,350Total Other Assets
     
     
     
     2,022,736Total Assets
     
     
     $
     6,808,670Liabilities and Stockholders Equity:Current Liabilities:Current Maturities of Long-Term Debt, Net of Discount of $16,630
     
     
     $
     591,371Accounts Payable and Accrued Expenses
     
     
     
     750,664Deferred Salary and Taxes Payable
     
     
     
     Deferred Payroll Taxes
     
     
     
     2,530Accrued Salary and Taxes Payable
     
     
     
     52,135Air Traffic Liability
     
     
     
     39,375Derivative Liability
     
     
     
     236,401Total Current Liabilities
     
     
     
     1,672,476Long-Term Debt  Net of Discount of $3,501,749
     
     
     
     2,498,251Long-Term Derivative Liability
     
     
     
     3,131,217Deferred Charges
     
     
     
     559,439Total Liabilities
     
     
     
     7,861,383Commitments and Contingencies
     
     
     
     Stockholders Equity (Deficit):Convertible Series A Preferred Stock, $0.001 Par Value; 1,500,000Shares Authorized; 47,000 Shares Issued and Outstandingat June 30, 2006
     
     
     
     47Common Stock, $0.001 Par Value; 95,000,000 Shares Authorized;32,264,870 Issued and Outstanding, at June 30, 2006
     
     
     
     32,265Additional Paid In Capital
     
     
     
     8,290,996Deferred Equity Compensation
     
     
     
     (1,470,761
     )Accumulated Deficit
     
     
     
     (7,905,260
     )Total Stockholders Equity (Deficit)
     
     
     
     (1,052,713
     )Total Liabilities and Stockholders Equity (Deficit)
     
     
     $
     6,808,670


The Accompanying
Notes Are An Integral Part of These Financial Statements.

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U.S. HELICOPTER CORPORATION

STATEMENTS OF OPERATIONS[UNAUDITED]

Six months endedJune 30,
     
     Three months endedJune 30,2006
     
     2005
     
     2006
     
     2005Revenues
     
     
     $
     304,852
     
     $
     
     
     $
     290,975
     
     $
     Expenses:Payroll
     
     
     
     1,286,406
     
     
     388,540
     
     
     929,763
     
     
     206,117Payroll Taxes and Benefits
     
     
     
     130,075
     
     
     33,025
     
     
     75,918
     
     
     16,637Crew Costs and Other
     
     
     
     53,023
     
     
     
     
     
     25,042
     
     
     Maintenance
     
     
     
     360,273
     
     
     
     
     
     284,694
     
     
     Fuel
     
     
     
     138,502
     
     
     
     
     
     104,207
     
     
     Aircraft and Traffic Servicing
     
     
     
     68,687
     
     
     
     
     
     57,929
     
     
     State Minimum Taxes
     
     
     
     844
     
     
     800
     
     
     194
     
     
     Professional Fees
     
     
     
     797,923
     
     
     192,460
     
     
     570,459
     
     
     84,305Insurance
     
     
     
     241,823
     
     
     39,084
     
     
     174,623
     
     
     24,499Office Expense
     
     
     
     84,815
     
     
     33,318
     
     
     53,003
     
     
     24,756Website and Website Design
     
     
     
     18,231
     
     
     9,490
     
     
     10,593
     
     
     9,490Travel
     
     
     
     32,556
     
     
     17,229
     
     
     11,032
     
     
     9,970Rent
     
     
     
     128,937
     
     
     9,821
     
     
     93,657
     
     
     4,910Lease Expense  equipment
     
     
     
     595,018
     
     
     
     
     
     354,657
     
     
     Reservation Expense
     
     
     
     96,507
     
     
     29,450
     
     
     50,768
     
     
     12,249Advertising
     
     
     
     812,777
     
     
     
     
     
     364,352
     
     
     Licenses and Fees
     
     
     
     10,943
     
     
     4,124
     
     
     5,758
     
     
     871Depreciation and Amortization
     
     
     
     79,069
     
     
     1,199
     
     
     66,208
     
     
     611Total Expenses
     
     
     
     4,936,409
     
     
     758,540
     
     
     3,232,857
     
     
     394,415Net (Loss) before Interest Incomeand Financing Expense
     
     
     
     (4,631,557
     )
     
     (758,540
     )
     
     (2,941,882
     )
     
     (394,415
     )Interest Income
     
     
     
     72,374
     
     
     
     
     
     45,037
     
     
     Interest Expense
     
     
     
     (154,533
     )
     
     (29,968
     )
     
     (133,458
     )
     
     (16,202
     )Amortization of Deferred Financing Costs
     
     
     
     (228,188
     )
     
     (62,342
     )
     
     (54,750
     )
     
     (33,658
     )Gain from Derivative Liabilities
     
     
     
     382,046
     
     
     
     
     
     624,791
     
     
     Amortization of Debt Discount
     
     
     
     (231,284
     )
     
     
     
     
     (229,205
     )
     
     Deduct: Preferred Stock Dividend
     
     
     
     
     
     
     
     
     
     
     
     
     Net (Loss) Applicable to Common Shareholders
     
     
     $
     (4,791,142
     )
     $
     (850,850
     )
     $
     (2,689,467
     )
     $
     (444,275
     )Net (Loss) Per Common Share:Basic and Diluted
     
     
     $
     (.15
     )
     $
     (.03
     )
     $
     (.08
     )
     $
     (.02
     )Weighted Average Number of Shares
     
     
     
     31,478,963
     
     
     24,545,723
     
     
     32,154,635
     
     
     24,545,723


The Accompanying
Notes Are An Integral Part of These Financial Statements.

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U.S. HELICOPTER CORPORATION

STATEMENTS OF CASH FLOWS[UNAUDITED]

Six months endedJune 30,2006
     
     2005Operating Activities:Net (Loss)
     
     
     $
     (4,791,142
     )
     $
     (850,850
     )Adjustments to Reconcile Net (Loss)to Net Cash Provided By (Used for)Operating Activities:Depreciation Expense
     
     
     
     79,069
     
     
     1,199Amortization of Deferred Financing
     
     
     
     228,188
     
     
     62,342Amortization of Deferred Income
     
     
     
     (40,561
     )
     
     Gain from Derivative Liabilities
     
     
     
     (382,046
     )
     
     Amortization of Debt Discount
     
     
     
     231,284
     
     
     Fees paid to Directors  Noncash
     
     
     
     170,599
     
     
     Amortization of Deferred Equity Compensation
     
     
     
     279,156
     
     
     Fees paid to Placement Agent  Noncash
     
     
     
     10,000
     
     
     Changes in Assets and Liabilities:Accounts Receivable
     
     
     
     (88,903
     )
     
     Prepaid Expenses and Other Current Assets
     
     
     
     (116,345
     )
     
     (3,154
     )Restricted Cash
     
     
     
     (53,403
     )
     
     Accounts Payable and Accrued Liabilities
     
     
     
     277,969
     
     
     166,071Deposits
     
     
     
     (564,585
     )
     
     Deferred Charges
     
     
     
     600,000
     
     
     Net Cash - Operating Activities
     
     
     
     (4,160,720
     )
     
     (624,392
     )Investing Activities:Acquisition of Property and Equipment
     
     
     
     (913,411
     )
     
     (725
     )Financing Activities:Proceeds From Long-Term Debt
     
     
     
     6,000,000
     
     
     335,424Payment of Short-Term Debt
     
     
     
     (1,507,834
     )
     
     Release of Restricted Cash
     
     
     
     250,000
     
     
     Payment of Financing Costs
     
     
     
     (1,022,514
     )
     
     (65,385
     )Net Cash - Financing Activities
     
     
     
     3,719,652
     
     
     270,039Net Increase (Decrease) in Cash
     
     
     
     (1,354,479
     )
     
     (355,078
     )Cash - Beginning of Periods
     
     
     
     4,459,397
     
     
     501,533Cash - End of Periods
     
     
     $
     3,104,918
     
     $
     146,455Supplemental Disclosures of Cash Flow Information:Cash paid during the periods for:Interest
     
     
     $
     2,096
     
     $
     223Income 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 10].

The Accompanying
Notes Are An Integral Part of These Financial Statements.

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U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

(1) Basis of
Presentation

U.S. Helicopter Corporation, (U.S.
Helicopter, the Company, we or us) began flight operations on March
27, 2006 commencing between the Downtown Manhattan Heliport and John F. Kennedy International Airport
(Kennedy). Prior to that date, we were a development stage company that had devoted most of its
efforts to activities such as financial planning, capital raising, and the development of a business plan. The
Compay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 intend to introduce our service, which we call
Metro-hop Airport Shuttle Service (MASS), in the New York City market with frequent
service between Kennedy, Newark Liberty and LaGuardia airports and the New York metropolitan area heliports
located at Wall Street, East 34 thStreet, and West 30 th 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 months ended June 30, 2006 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2006. 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, 2005.
Prior year amounts have in some cases been reclassified to conform to the current years
presentation.

(2) Summary of Significant
Accounting Policies

In the opinion of management, the accompanying
unaudited consolidated financial statements reflect all adjustments (consisting only of normal adjustments and
recurring accruals) which are necessary to present a fair statement of the results for the interim periods
presented and do not include all of the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements. The consolidated financial
statements and notes thereto should be read in conjunction with the consolidated financial statements and
notes for the quarter ended June 30, 2006 as filed with the Securities and Exchange Commission in the
Companys Annual Report on Form 10-Q. The significant accounting policies followed by the Company are set
forth in Note (2) to the Companys consolidated financial statements in the June 30, 2006 Form
10-Q.

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.

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 a major financial institution 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, 2006 we had approximately $3,080,000 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.

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U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

(2) Summary of Significant
Accounting Policies (Continued)

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,
2006.

Cash Equivalents  We consider all
highly liquid investments with original maturities of six months or less when purchased to be cash
equivalents. We had no cash equivalents at June 30, 2006 and December 31, 2005.

Restricted Cash  We had restricted
cash of $53,402 at June 30, 2006. Our restricted cash at June 30, 2006
related to a cash deposit required to secure a letter of credit we were required to post.

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 one and two years for other equipment. We use a 30% residual value in the calculation of
depreciation for our owned flight 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 expense totaled
$79,069, $1,199, $66,208 and $611 for the six months ended June 30, 2006 and 2005, and the three months ended
June 30, 2006 and 2005, respectively.

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

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

Advertising
Costs  We expense advertising costs as incurred.

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U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

(2) Summary of Significant
Accounting Policies (Continued)

Revenue Recognition  We recognize
revenue when transportation has been provided, including scheduled passenger and charter services. We
recognize amounts related to unused tickets when the contractual period allowing ticket changes has
expired.

We had revenue for the
three month periods ended June 30 and March 31, 2006 as follows:

Three months endedJune 30, 2006
     Three months endedMarch 31, 2006Scheduled Passenger
     
     
     
     $129,894
     
     
     $13,577Charter
     
     
     
     155,227
     
     
     0Miscellaneous
     
     
     
     5,854
     
     
     300Total
     
     
     
     $290,975
     
     
     $13,877


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.

(3) Deposits

We had deposits of $767,350 at June 30,
2006. 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.

(4) Accounts Payable and Accrued
Expenses

We had accounts payable and accrued expenses of
$750,664 at June 30, 2006, broken down as follows:

June 30,2006Professional Fees
     
     
     $
     92,051Reservations Service
     
     
     
     79,600Advertising
     
     
     
     79,738Maintenance
     
     
     
     198,434Interest
     
     
     
     140,078Other Accounts Payable and
     
     
     
     160,763Accrued ExpensesTotals
     
     
     $
     750,664


(5) Air Traffic
Liability

We had air traffic liability of $39,375 at June 30,
2006. Air traffic liability refers to tickets we have sold where the passenger
has not yet used the ticket to fly.

(6) Deferred
Salary and Taxes Payable

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 payment of 40% of his salary until 60 days after the
effectiveness of the Registration Statement for the New Debenture which was deemed effective by the SEC on
September 2, 2005. [Note 10]. One-third of the deferred amount of Mr. Murphy's salary was paid to him in
December 2005, an additional one-third was paid to him in March 2006 and the balance in April 2006.

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U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

(6) Deferred Salary and Taxes
Payable (Continued)

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 payment of 20% of his salary until 60 days after
the effectiveness of the Registration Statement which was deemed effective by the SEC on September 2, 2005
[Note 10]. One-third of the deferred amount of Mr. Mehm's salary was paid to him in December 2005, an
additional one-third was paid to him in March 2006 and the balance in April 2006

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 payment of 40% of his salary until 60
days after the effectiveness of the Registration Statement for the New Debenture which was deemed effective by
the SEC on September 2, 2005 [Note 10]. One-third of the deferred amount of Mr. McSullivan's salary was paid
to him in December 2005, an additional one-third was paid to him in March 2006 and the balance in April
2006.

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 payment of 20% of his salary
until 60 days after effectiveness of the Registration Statement for the New Debenture which was deemed
effective by the SEC on September 2, 2005 [Note 10]. One-third of the deferred amount of Mr. Roberts' salary
was paid to him in December 2005, an additional one-third was paid to him in March 2006 and the balance in
April 2006. Prior to the commencement of operations, Mr. Roberts was paid at the annual rate of
$90,000.

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. Payment of Mr. Dennison's salary commenced on September 1, 2004. Mr. Dennison deferred
payment of 20% of his salary until 60 days after effectiveness of the Registration Statement for the New
Debenture which was deemed effective by the SEC on September 2, 2005 [Note 10]. One-third of the deferred
amount of Mr. Dennison's salary was paid to him in December 2005, an additional one-third was paid to him in
March 2006 and the balance in April 2006. Prior to the commencement of operations, Mr. Dennison was paid at
the annual rate of $90,000.

(7) Stock-Based
Compensation

In December 2004, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 123R,
Share-Based Payment. SFAS No. 123R is a revision of SFAS No. 123, Accounting for Stock Based
Compensation, and supersedes 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 (i.e., Black-Scholes) 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.

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U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

(8) 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 the three ans six month periods ending June 30, 2006 and 2005, 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.

(9) 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, 2006 we had net deferred financing costs of
$1,040,250. These costs were related to the placement of an 8% convertible debenture [Note 10] and a 5%
convertible debenture [Note 10] and are being amortized on a straight-line basis over the life of the
debenture. We recorded amortization expense related to deferred financing totaling $228,188, $62,342, $54,750
and $33,658 for the six months ended June 30, 2006 and 2005 and for the three months ended June 30, 2006 and
2005, respectively.

At June 30, 2006, we had net
deferred offering costs of $215,136. These costs were primarily related to a
Standby Equity Distribution Agreement [Note 11] and will be offset against the proceeds of the offering, when
consummated.

(10)
Convertible Debt

Long-Term Convertible Debt On April
8, 2005, we entered into an Amended and Restated Secured Debenture (the New Debenture). The New
Debenture was issued in the face amount of $1,335,424 in exchange for the previously issued debentures, which
totaled $1,300,000, and accumulated interest through the date of the revision to the agreement. The New
Debenture accrues interest at a rate of 5%. Up to 10% of the debentures principal, plus interest, may be
converted at a price equal to $0.20 per share and we registered shares equal to the amount of shares which may
be converted under this agreement, pursuant to a registration statement declared effective by the Securities
and Exchange Commission (the SEC) on September 2, 2005.

On August 23, 2005, we issued a $220,000 5% interest
convertible debenture to the same investor to whom we sold the $1,335,424 New Debenture described in exchange
for $220,000 in cash (the August 2005 Debenture). The August 2005 Debenture accrues interest at a
rate of 5%. Up to 10% of the debentures principal, plus interest, may be converted at a price equal to
$0.20 per share and we are committed to register shares equal to the amount of shares which may be converted
under this agreement, pursuant to a registration statement declared effective by the SEC on June 13,
2006.

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 Partners LP. The February 2006 Note bears interest at 10% per annum and is repayable on
February 23, 2007 and may be extended to February 23, 2008. The February 2006 Note is 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 shall not be 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 a registration statement declared effective by the SEC on June 13, 2006.

On March 30, 2006 we issued a $6,000,000 8% interest
convertible debenture maturing March 31, 2009 (the 2006 Debenture) to the same investor we sold
the New Debenture and the August 2005 Debenture described above. Proceeds from the 2006 Debenture were used to
repay a majority of the New Debenture and the August 2005 Debenture such that a combined $113,497 was still
outstanding at June 30, 2006 and is eligible in full for conversion at a price of $0.20 per share. The balance
after repayment of the debentures and the payment of fees is being used for general working capital purposes.
We registered shares equal to the amount of shares which may be converted under this agreement pursuant to a
registration statement declared effective by the SEC on June 13, 2006.

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U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

(10) Convertible Debt
(Continued)

The above issued convertible notes and warrants (in
addition to the Short-Term Convertible Debt described below) required the Company to register the resale of
the shares of common stock upon conversion or exercise of these securities. The Company accounts for the fair
value of these outstanding warrants to purchase common stock and conversion feature of its convertible notes
in accordance with SFAS No. 133 Accounting For Derivative Instruments And Hedging Activities and
EITF Issue No. 00-19 Accounting For Derivative Financial Instruments Indexed To And Potentially Settled
In A Companys Own Stock which requires the Company to bifurcate and separately account for the
conversion feature and warrants as embedded derivatives contained in the Companys convertible notes.
Pursuant to SFAS No. 133, the Company bifurcated the fair value of the conversion feature from the convertible
notes, since the conversion features were determined to not be clearly and closely related to the debt host.
In addition, since the effective registration of the securities underlying the conversion feature and warrants
is an event outside of the control of the Company, pursuant to EITF Issue No. 00-19, the Company recorded the
fair value of the conversion feature and warrants as either short-term or long-term liabilities (based on the
underlying term of the notes) as it was assumed that the Company would be required to net-cash settle the
underlying securities. The Company is required to carry these embedded derivatives on its balance sheet at
fair value and unrealized changes in the values of these embedded derivatives are reflected in the
consolidated statement of operations.

In valuing the terms of the 2006 Debenture in
accordance with SFAS No. 133, we elected to value the debenture using the Black Scholes model. The effect of
this valuation was the creation of a long-term derivative liability of $3,724,718, which is also recorded as a
discount to the 2006 Debenture. This discount is being amortized over the 36 month life of the 2006 Debenture.
The long-term derivative liability is being valued using the Black Scholes model. During the second quarter,
we recorded a credit of $624,791 in the Statement of Operations.

Short-Term Convertible Debt  On
October 26, 2005, we entered into a definitive convertible note purchase agreement (Short-Term
Convertible Debt) with Portfolio Lenders II, LLC, pursuant to which we issued $250,000 in principal
amount of convertible notes, convertible by the holder into our common stock at the price of $0.50 per share.
The Short-Term Convertible Debt has an interest rate of 15% per annum, 120 days of which was paid at the time
of the closing. Additional consideration of $12,500 was paid at the time of closing. The Short-Term
Convertible Debt is not collateralized. We also issued Portfolio Lenders II, LLC a warrant to purchase up to
100,000 shares of our common stock as an inducement to enter into the transaction. The warrant is exercisable
at a price of $0.50 per share for a period of five years from its date of issuance. The Short-Term Convertible
Debt converted into 500,000 shares effective March 26, 2006.

(11) Securities
Offerings

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.

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U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

(11)
Securities Offerings (Continued)

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 committed to registering the SEDA shares under the
Securities Act of 1933. Proceeds of the SEDA will be offset against deferred offering costs [Note 9] 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.

(12) Commitments and
Contingencies

Operating Leases  To
establish our executive offices, we entered into a three year operating lease for real property, which expires
on August 16, 2007 (as amended), at a rate of approximately $780 per month. We lease additional space on a
$500 month-to-month basis for our operations base.

Effective February 1, 2006, we entered into an
agreement with the same entity to use an additional 1,590 square feet of space at the Downtown Manhattan
Heliport (DMH) as our passenger facility. The term of the agreement expires 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, based on the Gross Receipts we earn from DMH departing flights.

On February 8, 2006, we entered into a one year lease
agreement for office and hangar space. Monthly rent has increased steadily through the term of the lease from
approximately $6,300 per month at inception to approximately $16,000 after July 2006. We also issued 20,000
shares of our common stock to the lessor.

Total rental expense was $128,937 and $9,821 for the
six months ended June 30, 2006 and 2005, respectively. Total rental expense was $93,657 and $4,910 for the
three months ended June 30, 2006 and 2005, 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. We are in discussions with the lessor of this helicopter to extend the lease for an
additional two years [Note 10]

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 redelivery to the lessor. Rent on two of the helicopters is payable at
the monthly rate of $35,834 per month and at monthly rate of $45,417 for the third aircraft. Each lease
provides that the lessor will pay up to $200,000 per helicopter towards the costs of shipping and
modification; the amortization of this amount is included in the lease payment. There are no purchase or
renewal options. In connection with these leases, we entered into a Technical Support Agreement (Support
Agreement) where we will pay a set rate per flight hour, subject to price escalation, to cover all of
the helicopters major maintenance costs.

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U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

(12) Commitments and Contingencies
(Continued)

Minimum future lease rent payments as of December 31,
2005 were:

|Year endingDecember 31,             | 
|----------------------------------- | 
|2006                                | 
|2007                                | 
|2008                                | 
|2009                                | 
|2010                                | 
|Thereafter                          | 
|                                    | 
|Total Minimum Future Lease Payments | 
|                                    | 

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 have an
agreement with the Company 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 $732,500 of the
proceeds of the transactions with Cornell Capital and certain other investors plus warrants to purchase up to
100,000 shares of the Companys common stock. In addition, Mr. McSullivan and Mr. Capozzi are to receive
10% commissions relating to commuter flight pre-sell seats and scheduled service pre-sell seats pursuant to an
agreement dated April 15, 2004. In addition, Mr. Capozzi also has an agreement to provide ongoing marketing
consulting services to the Company at a cost of $5,000 per month.

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.

(13) Income Taxes

We have approximately $2,414,000 of capitalized
preoperating costs that have not been deducted for tax purposes at December 31, 2005. These deductions may be
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 $754,000 at December 31, 2005. As the
effective utilization of this deferred tax asset is dependant on future taxable profits, a valuation allowance
of approximately $754,000 was recorded at December 31, 2005,
leaving a net deferred tax asset of $-0- for all periods presented.

(14) Other Events

Restricted Common Stock and Options
and Incentive Payments:

In April, we issued a total of 1,000,000 shares of
common stock and options to purchase an additional 150,000 shares of common stock to employees, officers and
directors in connection with our 2004 Stock Incentive Plan (the Restricted Stock Awards). The
Restricted Stock Awards have a restriction on transferability and sale for a period of 18 months from and
after the issuance date.

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U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

(14) Other Events
(Continued)

In connection with the issuance of the common shares
above, we recorded a $1,450,000 Deferred Equity Compensation account in the Stockholders Equity section
of our financial statements. This amount is being amortized over a period of 18 months from the issuance date.
During the second quarter, we recorded payroll expense and amortization of $241,667.

In connection with the issuance of the options to
purchase 150,000 of common stock described above, we recorded $170,599 of payroll expense in the second
quarter of 2006 to reflect the fair value of the options granted.

During the second quarter, the Company paid cash
incentive payments of $25,000 (in addition to 75,000 restricted shares) each to George Mehm, Terence O.
Dennison, Gabriel Roberts and Donal McSullivan. Mr. Murphy received a cash incentive payment of $150,000 but
did not receive any restricted stock grant. The incentive payments and restricted stock awards are in
consideration of managements efforts during the Companys start-up phase and in recognition of
their efforts in commencing flight operations by May 31, 2006.

North Coast
Securities:

In connection with an agreement with a second Financial
Advisory and Investment Banking Agreement with North Coast Securities Corporation (North Coast)
dated as of April 1, 2006, we paid North Coast a fee of warrants to purchase 350,000 shares of the
Companys common stock. The Company retained the right to cancel a total of 25% of these warrants in the
event that it is not reasonably satisfied with North Coasts performance under the agreement as of
October 1, 2006. We registered the shares issuable under the warrants pursuant to a registration statement
declared effective by the SEC on June 13, 2006.

In connection with the issuance of the North Coast
warrants, we recorded $299,918 to the Deferred Equity Compensation account in the Stockholders Equity
section of our financial statements. This amount is being amortized over a period of 24 months from the
issuance date. During the second quarter, we recorded amortization of $37,490 and recorded the same amount as
consulting fees.

IGAS Enterprises,
LLC:

In connection with an agreement with consulting
services with IGAS Enterprises, LLC (IGAS), dated as of March 1, 2006, we agreed to issue IGAS
200,000 shares of the Companys common stock.

In connection with the issuance of the IGAS common
shares, we recorded the value of the shares of $290,000 in the Stockholders Equity section of our
financial statements. This amount is being amortized over a period of 24 months from the issuance date. During
the second quarter, we recorded amortization of $36,250 and recorded the same amount as consulting
fees.

Conversion of Preferred
Stock:

During the second quarter of 2006, 20 holders of our
Preferred Stock converted 269,000 shares into common stock at prices ranging from $0.98 to $1.44. In
accordance with the provision of this stock agreement, warrants to purchase shares of our common stock were
priced at 125% and 150% of the conversion price.

Term-Sheet for Leasing of Five
Helicopters  On February 26, 2006, we executed a non-binding term sheet for the leasing of five
additional helicopters and the provision of a Support Agreement for major maintenance items. Terms of both
agreements are substantially similar to our existing agreements.

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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 new Metro-hop Airport Shuttle Service. Our MASS
service will provide regular, scheduled passenger helicopter service between many of the nations larger
metropolitan airports and surrounding city-based heliports. 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, will be willing to pay fares between $139 and $159. 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 end of the 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 will stand 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 will be available to the general public including corporate CEOs and affluent leisure travelers, we
believe our service will have 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 will
be 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 expects to
offer and achieve.

Our flight operations commenced
on March 27, 2006 with the start of scheduled flights between the Downtown Manhattan Heliport and Kennedy
Airport. We intend to expand our MASS service initially in the Metro New York City market with additional
scheduled service between John F. Kennedy, Newark Liberty, and La Guardia Airports and the Downtown Manhattan,
East 34th Street, and West 30th Street Heliports. Our flight operations commenced on
March 27, 2006 between the Downtown Manhattan Heliport and Kennedy Airport. 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 in the island of
Manhattan.

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On June 26, 2006, the Company
commenced a new service consisting of two routes in addition to its existing scheduled service. Originating at
Connecticuts Bridgeport Sikorsky Airport, the routes include direct flights to and from the Downtown
Manhattan Heliport in New York City and connecting service to and from John F. Kennedy International
Airport.

The Company also operates
on-demand charter service utilizing our fleet of helicopters. We operate this service principally on weekends,
as a commuter operation for weekend travelers and when the aircraft are not otherwise required in our
scheduled service.

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 comprised 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 unique 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.

Since inception, we have
incurred substantial operating losses and expect to incur additional operating losses over the remainder of
the pre-operating period and the first full year of operations. As of June 30, 2006, we had an accumulated
deficit of $(7,905,260). 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
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.

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 filed a registration statement including the resale of these shares, along with the 100,000 shares
of common stock issuable upon exercise of the Portfolio Lenders Warrant pursuant to a registration statement
declared effective by the SEC on June 13, 2006 (the June 2006 Registration Statement).

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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 June 2006 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 June 2006 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 June 2006
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 June 2006 Registration
Statement.

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 June 2006
Registration Statement.

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 have 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 issuable upon the conversion of the Series A Preferred Stock and the warrants issued in the 2004
Private Placement in the June 2006 Registration Statement.

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In addition to the transactions
described above, we sold a total of $7.52 million of our convertible debentures pursuant to three Securities
Purchase Agreements with Cornell Capital Partners, LP (Cornell Capital) in April, 2004, August,
2005, and March, 2006, respectively. We have registered a total of 7,344,830 shares of our common stock
issuable upon conversion of the April 2004 Debenture in the June 2006 Registration Statement. In addition, we
filed a separate registration statement including the resale of a total of 10,879,661shares issuable in
connection with the August 2005 Debenture and the March 2006 Debenture (as defined below), as well as the
5,150,000 shares of common stock issuable upon the exercise of warrants issued to Cornell Capital in
connection with the March 2006 Debenture.

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 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. 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 4.9% 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. This restriction may significantly limit and delay our ability to access
funds under the SEDA (as described below). 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.

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 debenture issued by us to Cornell
Capital.

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 in the June 2006 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. We registered these
shares with the Securities and Exchange Commission in the June 2006 Registration Statement.

In addition to the March 2006
Debenture, 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). As of the date of this report, a total of $114,900
remained due under these debentures combined after repayments of approximately $1,028,000 made by the Company
on March 31, 2006.

RESULTS OF OPERATIONS

Since inception on March 4, 2003
through March 27, 2006, the Company has had no revenues from operations and did not generate any revenues from
operations until March 27, 2006. For the six months ended June 30, 2006 and for the period from inception
(March 4, 2003) through June 30, 2006, total revenues were $304,852.

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

Since inception, the Company has
incurred operating losses. For the six months ended June 30, 2006, our accumulated deficit was
$(4,791,142).

LIQUIDITY AND FINANCIAL CONDITION

We have financed our operations
since inception primarily through private placement financings with Cornell Capital, a private placement of a
convertible note with Portfolio Lenders II, LLC, 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, of which the Company has received gross proceeds of $1.3 million to
date. 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 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 bears interest at 10% per annum and is repayable on February 23,
2007 and may be extended to February 23, 2008. The note is 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 shall not be less than $0.50 per share.

We plan to acquire through lease
or mortgage, and put into service, up to eight (8) 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. However, we hope to be in a position to negotiate a renewal at the end of the term of the
lease.

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 for the purchase of four aircraft to be
delivered in late 2008. The Company has made a deposit with Sikorsky in the amount of $400,000, or $100,000
per aircraft. The Company and Sikorsky are in the process of negotiating 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 will need approximately $16.0
million of helicopter lease/debt financing for our next four 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 five aircraft will be approximately $0.3 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 or the financing source, along with the engine manufacturer, 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.

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In addition to the lease
financing described above, it is currently anticipated that the Company would place an order by December 31,
2006 for delivery in late 2008 of an additional four new aircraft at an average purchase price of $8.0
million, and an additional fourteen (14) aircraft after 2007 at the same average purchase price. The current
anticipated delivery schedule for the initial and additional aircraft for the first year of operations is as
follows:

| |  | November
2, 2005: Received Delivery of one S76B aircraft
| | - | --------------------------------------------------------

| |  | December
1, 2005: Received Delivery of one S76B aircraft
| | - | --------------------------------------------------------

| |  | February
14, 2006: Received Delivery of one S76B aircraft
| | - | ---------------------------------------------------------

| |  | May
15, 2006: Received Delivery of one S76B aircraft
| | - | ----------------------------------------------------

| |  | October
2006: Delivery of one S76B aircraft
| | - | -------------------------------------------

| |  | November
2006: Delivery of one S76B aircraft
| | - | --------------------------------------------

| |  | December
2006: Delivery of two S76B 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 45 days per aircraft.
The Company signed a term sheet on February 26, 2006 for the financing of five 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 $7.52 million of convertible debentures, $0.3 million in private placement proceeds in the
2004 Private Placement, $0.25 million from the sale of a convertible note 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 SEDA). We anticipate that we will not need to
raise additional capital to finance operations through year-end 2006, assuming that our results of operations
reasonably correspond to our current business plan. If results of operations fail to meet our reasonable
expectations, we may need to raise additional capital to finance operations.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial
Accounting Standards Board, or FASB, issued SFAS No. 153, Exchanges of Nonmonetary Assets, (SFAS
No. 153). SFAS No. 153 amends Accounting Principles Board (APB) Opinion No. 29, Accounting
for Nonmonetary Transactions, to require exchanges of nonmonetary assets be accounted for at fair value,
rather than carryover basis. Nonmonetary exchanges that lack commercial substance are exempt from this
requirement. SFAS 153 is effective for nonmonetary exchanges entered into in fiscal years beginning after June
15, 2005. We do not routinely enter into exchanges that could be considered nonmonetary, accordingly we do not
expect the adoption of SFAS 153 to have a material impact on our financial statements.

In December 2004, the FASB
issued Statement of Financial Accounting Standards No. 123R), Share-Based Payment. (SFAS No. 123R)
SFAS 123R is a revision of SFAS No. 123, Accounting for Stock Based Compensation, and supersedes
APB 25. Among other items, SFAS 123R eliminates 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. The
effective date of SFAS 123R is the first reporting period beginning after December 15, 2005, although early
adoption is allowed. SFAS 123R requires companies to adopt its requirements using a modified
prospective method. Under the modified prospective method, 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. The modified retrospective method also
permits entities to restate financial statements of previous periods based on proforma disclosures made in
accordance with SFAS 123.

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We have adopted SFAS 123R
effective January 1, 2006. We currently utilize a standard option pricing model (i.e., Black-Scholes) to
measure the fair value of stock options granted to employees. SFAS 123R permits us to continue to use such a
model.

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.

In March 2005, the FASB issued
Interpretation No. 47 (FIN 47), Accounting for Conditional Asset Retirement Obligationsan
interpretation of FASB Statement No. 143. FIN 47 clarifies that an entity is required to recognize a
liability for the fair value of a conditional asset retirement obligation when incurred if the
liabilitys fair value can be reasonably estimated. FIN 47 also clarifies when an entity would have
sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 was
adopted in the fourth quarter of 2005 and has had no significant impact on our financial position, results of
operations or cash flows.

In May 2005, the FASB issued
SFAS No. 154, Accounting Changes and Error Correctionsa replacement of APB Opinion No. 20 and FASB
Statement No. 3 (SFAS No. 154). SFAS No. 154 requires retrospective application as the required method
for reporting a change in accounting principle, unless impracticable or a pronouncement includes specific
transition provisions. SFAS No. 154 also requires that a change in depreciation, amortization or depletion
method for long-lived, nonfinancial assets be accounted for as a change in accounting estimate effected by a
change in accounting principle. This statement carries forward the guidance in APB Opinion No. 20,
Accounting Changes, for the reporting of the correction of an error and a change in accounting
estimate. SFAS No. 154 is effective beginning January 1, 2006. SFAS No. 154 is not expected to have a
significant impact on our financial position, results of operations or cash flows.

In June 2005, the Emerging
Issues Task Force (EITF) reached a consensus on EITF Issue No. 05-6, Determining the
Amortization Period for Leasehold Improvements Purchased after Lease Inception or Acquired in a Business
Combination (EITF 05-6). EITF 05-6 requires that leasehold improvements that are placed in service
significantly after and not contemplated at or near the beginning of the lease term be amortized over the
shorter of the useful life of the assets or a term that includes required lease periods and renewals that are
deemed to be reasonably assured at the date the leasehold improvements are purchased. EITF 05-6 was adopted in
the fourth quarter of 2005. EITF 05-6 did not have a significant impact on our financial position, results of
operations or cash flows.

In February 2006, FASB issued
FASB 155, Accounting for Certain Hybrid Financial Instruments an amendment of FASB 133, Accounting
for Derivative Instruments and Hedging Activities, and FASB 140, Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities. FASB 155, provides the framework for fair value
remeasurement of any hybrid financial instrument that contains an embedded derivative that otherwise would
require bifurcation as well as establishes a requirement to evaluate interests in securitized financial assets
to identify interests. FASB 155 further amends FASB 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. The guidance FASB 155 also clarifies which interest-only
strips and principal-only strips are not subject to the requirements of FASB 133 and concentrations of credit
risk in the form of subordination are not embedded derivatives. This Statement is effective for all financial
instruments acquired or issued after the beginning of an entitys first fiscal year that begins September
15, 2006. FASB 155 is not expected to have a material impact on the Companys consolidated financial
statements.

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In March 2006, FASB issued FASB
156, Accounting for Servicing of Financial Assetsan amendment of FASB Statement No. 140. FASB 156
requires the recognition of a servicing asset or servicing liability under certain circumstances when an
obligation to service a financial asset by entering into a servicing contract. FASB 156 also requires all
separately recognized servicing assets and servicing liabilities to be initially measured at fair value
utilizing the amortization method or fair market value method. FASB 156 is effective at the beginning
of the first fiscal year that begins after September 15, 2006. FASB 156 is not expected to have a material
impact on the Companys consolidated financial statements.

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, 2006 and 2005. 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).

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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 four additional
12-seat used, low-time helicopters roughly through and including fourth quarter 2006. 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 $1.75 million). With respect to changes in number of
employees, we have 35 full time employees and nine part-time employees as of June 30, 2006 and expect to have
approximately 85 full-time and 20 part-time employees at the end of fourth quarter 2006.

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

PLAN OF OPERATION

Overview

U.S. Helicopter
Corporation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. The Company intends to
introduce its service  called Metro-hop Airport Shuttle Service or MASS 
in the New York City market with 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 Companys MASS service is intended to provide a fast, reliable, and safe
alternative for airline passengers who wish to avoid the uncertainties and frequent delays associated with
depending upon surface-based transportation to and from airports.

As the Company completes its
first year of operations and the introduction of its MASS service in New York City, it intends to phase-in
similar service during the following four years in other major U.S. metropolitan markets such as Washington,
D.C., Chicago and Los Angeles.

In addition to the
airport-focused MASS shuttle service, the Company also intends to develop and introduce other regularly
scheduled helicopter services (as differentiated from charter flights) including: commuter service between
suburban helipads and New York City metropolitan heliports; weekend service between New York City metropolitan
heliports and weekend/vacation retreat destinations such as the Hamptons, Cape Code and Marthas
Vineyard; scheduled service to and from entertainment and resort destinations such as casinos based in
Atlantic City and Connecticut; and utilizing aircraft at night or on weekends when aircraft are not flying the
MASS shuttle service.

U.S. Helicopter must raise
additional capital in the next 12 months in order to purchase aircraft. Management currently plans to acquire
through lease or mortgage up to four additional helicopters during the Companys first year of
operations, for which approximately $16 million in lease/debt financing will be needed. The Company acquired
its first four aircraft pursuant to leases on November 1, 2005, December 1, 2005, February 14, 2006 and May
15, 2006. The Company is currently in negotiations with a number of potential financing sources for its
startup and aircraft acquisition costs; however, there can be no assurances that a transaction with any of
these potential financing sources will be completed.

The Company has 35 full-time
employees and nine part-time employees as of August 9, 2006and expects to have a total of
approximately 85 full-time and 20 part-time employees as of the end of fourth quarter 2006. As of the end of
fourth quarter 2007, the Company expects to have approximately 170 full time and 40 part-time
employees.

In August 2004, we received our
first tranche of $1.0 million ($772,500 net of expenses) from a financing transaction with Cornell Capital
pursuant to the terms of a Securities Purchase Agreement (the SPA). In February 2005, we received
our second tranche of $300,000 ($270,000 net of expenses) pursuant to the SPA. In exchange for financing under
the SPA, we agreed to issue to Cornell Capital $1,300,000 of our 5% secured, convertible debentures. 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 prior debentures as of such
date. The April 2005 Debentures conversion provision entitles Cornell Capital at any time, and from time
to time, to convert up to 10% of the principal plus accrued interest into U.S. Helicopters $0.001 par
value common stock, at a price of $0.20 per share. In the event of a default under the April 2005 Debenture,
Cornell Capital may convert up to 100% of all sums due and payable under the April 2005 Debenture. To date, we
have used the proceeds from these transactions for general working capital purposes and startup costs. As of
June 30, 2006, a total of approximately $101,000 remained due under the April 2005 Debenture after deduction
of repayments made in March 2006 with proceeds received in connection with the March 2006
Debenture.

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In addition, we entered into an
Amended and Restated Standby Equity Distribution Agreement with Cornell Capital in April 2005 (the
SEDA) whereby we may, at our discretion, periodically sell to Cornell Capital shares of our common
stock for a total purchase price of $11.0 million. For each share of common stock purchased under the SEDA,
Cornell Capital will pay U.S. Helicopter 99% of the volume weighted average price on the Over-the-Counter
Bulletin Board or other principal market on which our common stock is traded for the 5 days immediately
following the notice date. Further, Cornell Capital will retain a fee of 5% of each advance under the SEDA. In
connection with the SEDA, Cornell Capital received a commitment fee of 2,472,527 shares of our common
stock.

In addition, on August 23, 2005,
we received net proceeds of $190,000 from an additional financing transaction with Cornell Capital pursuant to
the terms of a new Securities Purchase Agreement with Cornell Capital, whereby $220,000 of 5% secured
convertible debentures were issued (the August 2005 Debenture). Since January 1, 2006, we have
been required to make monthly payments of $40,000 until all amounts under the August 2005 Debenture are repaid
in full. The August 2005 Debenture bears interest at 5% per annum and is secured by the Amended and Restated
Security Agreement under identical terms as the April 2005 Debenture. Up to 10% of all sums due and payable
under the August 2005 Convertible Debenture may be converted at Cornell Capitals option, into shares of
our common stock at a price of $0.20 per share. All other material terms of the August 2005 Convertible
Debenture are identical to the April 2005 Debenture. As of June 30, 2006, a total of approximately $14,700
remained due under the August 2005 Debenture after deduction of repayments made in March 2006 with proceeds
received in connection with the March 2006 Debenture.

On March 31, 2006, we received
net proceeds of $5,505,000 from an additional financing with Cornell Capital pursuant to the terms of a new
Securities Purchase Agreement with Cornell Capital, whereby $6,000,000 of 8% secured convertible debentures
were issued (the March 2006 Debenture). 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.

We began operations on March 27,
2006 and will ramp up our New York operations throughout 2006 and the first half of 2007. On November 2, 2005,
we took delivery of our first helicopter pursuant to a lease dated as of November 1, 2005. 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,
respectively.

The executive offices of U.S.
Helicopter are located at the 6 East River Piers, Suite 216, Downtown Manhattan Heliport, New York, New York
10004; telephone number 212-248-2002. Our operations base is located at 1000 Great Meadow Road, Suite 200,
Sikorsky Memorial Airport, Stratford, Connecticut 06615; telephone number 203-378-2002.

Business Strategy

U.S. Helicopter was founded to
provide the most efficient and cost effective alternative to existing transportation problems, by initiating
scheduled short-hop helicopter service into and around metropolitan areas utilizing new, dual
engine, dual pilot helicopters. We believe this type of service represents the future of transportation in
major metropolitan areas. Currently there is no scheduled helicopter service in any of our targeted markets.
The sole competition comes from surface-based transportation alternatives such as rail, bus, taxi, and limo
allowing U.S. Helicopter to gain the first mover advantage in each of its target
markets.

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In addition to continued
ground-based traffic congestion problems and delays, there have been significant increases in crowds and wait
times associated with check-in and security at airports due to the terrorist attacks of September 11, 2001.
Airlines have been trying to find new and better ways to attract business travelers back to flying. They have
spent significant time and money figuring out ways to get passengers through this process in less time. U.S.
Helicopters service will offer our passengers an alternative solution because we will provide check-in
and full security screening at each heliport. After passengers are cleared for boarding our helicopter at the
heliport (where passenger volumes are significantly lower than at major airports), they will be delivered by
U.S. Helicopter to the secure side of their destination airport. The overall process time for passengers will
be greatly reduced as they will move through security with just six to twelve people on their helicopter
flight instead of the crowds of hundreds or thousands at major airport.

Roll-Out Plan

While there are numerous
metropolitan areas throughout the world that currently need U.S. Helicopters service, management of U.S.
Helicopter has made the decision to launch our service in New York City. New York is one of the countrys
most densely populated metropolitan areas, with a highly congested ground-based transportation system. It is
almost impossible to travel into, out of, and throughout the city without encountering major time-consuming
traffic. New York has also reached its limit in infrastructure development because of the restriction on real
estate due to the waterways surrounding the city. This traffic congestion problem has even spread to many of
New York Citys access highways and throughout the northeast corridor, spanning from Boston to Washington
DC. U.S. Helicopter has identified the need for a helicopter based transportation service, which would
directly target several of the citys high demand travel routes thereby alleviating some of the
congestion.

Currently New York has the most
developed helicopter infrastructure in the world with three strategically located public access heliports, a
published and certified network of helicopter navigational routes, and a mayor who has expressed an
understanding of helicopters and the value they offer corporations. Other cities such as Washington DC,
Chicago and Los Angeles are not far behind. Management believes that by executing a strategy to provide the
first scheduled helicopter service in each of its target markets, U.S. Helicopter will be able to leverage its
first mover advantage to maintain a strong-hold in each market.

Getting from Manhattan to
Kennedy, LaGuardia, or Newark Liberty airports can be inefficient from a travel time perspective, and in many
cases, can take hours door to door. This is due to traffic congestion in the city as well as on each of the
roadways that service the airports. This is especially true during peak flight hours, which happen to coincide
with rush hour traffic. For each airport, peak flight times occur in the morning between 7:00 am and 10:00 am
and in the afternoon between 3:00 pm and 7:00 pm. The cost of a corporate limo service to the airport can cost
between $75 and $125 and take anywhere from 1 to 2 plus hours travel time. At an average flight time of 10
minutes and an initial fare between $139-159, U.S. Helicopters helicopter services will provide a quick
and cost effective alternative to ground transportation. The Companys travel time estimates are derived
from a number of sources including travel data from the Port Authority of New York and New Jersey, surveys of
business persons working and/or traveling to/from Manhattan via the airports, and management team experience.
Recently, the Company confirmed helicopter travel times through actual flights conducted by United
Technologies, an entity affiliated with Sikorsky Aircraft, on two separate occasions.

The highest demand in the New
York City market is expected to come from the Downtown Wall Street and East 34th Street Heliports
and from Kennedy and LaGuardia or Newark Liberty Airports. Each of these destinations currently supports the
highest amount of traffic, making success at these locations the easiest to achieve. U.S. Helicopters
initial service will support this high demand for scheduled helicopter service, and we believe will provide
the quickest acceptance and commensurate growth rates. As our services gain acceptance, we intend to acquire
additional aircraft and larger aircraft to support flights between each Manhattan heliport and all three major
New York City airports.

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The best way to demonstrate the
time savings that U.S. Helicopters service will provide is to compare the total Elapsed Time
that passengers would experience from the moment they step out of their front door until the time they reach
their airport departure gate using each transportation alternative. This comparison is shown in the following
table:

|Elapsed Travel Time Comparison Sheet (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
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|TravelMethod                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
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|Ground                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Ground                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Helicopter                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|Ground                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Ground                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Ground                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Helicopter                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|Ground                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Ground                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Ground                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Helicopter                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|(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.

We anticipate that within
approximately 12 months after launching our shuttle service in New York, we will have completed initiation of
the Metro-hop Airport Shuttle Service in that market and established the platform for optimum development of
our business model. We will then position the company for expansion into other markets both domestically and
internationally. Management plans to enter three additional markets after the initial introduction of services
in New York, within the five-year timeframe which commenced on March 27, 2006. Washington DC, Chicago, and Los
Angeles, along with New York represent the top four markets that we plan to service in the United States. The
Washington DC, Chicago, and Los Angeles markets have been identified because they have transportation and
congestion problems similar in scope to New York Citys.

We plan to acquire through lease
or mortgage and put into service up to four additional helicopters during our first year of flight operations
which commenced on March 27, 2006. We received delivery of our initial aircraft on November 2, 2005 pursuant
to a lease agreement dated November 1, 2005 for the lease of one Sikorsky S-76B Helicopter. The lease term is
for three years with no renewals. 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 during the Term. On December 1, 2005, February 14, 2006 and May 15, 2006,
respectively, we took delivery of three additional aircraft pursuant to respective lease agreements with a
third party dated December 1, 2005, February 10, 2006 and April 26, 2006.

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We will need to secure
approximately $16 million of helicopter debt/lease financing for our additional aircraft. We have also signed
a term sheet on February 26, 2006 for the lease of the next five helicopters. We have not completed the
financing arrangements necessary for the leasing of these aircraft. Pursuant to the term sheet, we anticipate
entering into a five-year lease with monthly payments. The lessor has proposed to pay or reimburse the Company
for the cost of transporting the aircraft and all necessary maintenance and inspection work up to $200,000 per
aircraft. The lessor will require a security deposit of two months of monthly rent at the time the lease is
entered into. In addition, the Company will contract with the lessor for standard power by the
hour (PBH) arrangements covering all major airframe and engine components and parts. The
Company will be required to insure the aircraft hull value and passenger liability. The lessor will have a
right of first refusal for the next ten helicopters which must be offered at competitive market rates for rent
and PBH charges.

We need to obtain financing in
order to pay owners or the aircraft manufacturers for the acquisition of the helicopters that we will operate.
In connection with these financing arrangements potential financers have advised us that they may require the
aircraft manufacturer to provide financial and performance guarantees. We may be required to issue some
combination of our common stock, options and/or warrants to one or more financiers for our additional
helicopters. Notwithstanding a successful grant of our common stock, options and/or warrants, we may not be
able to obtain the necessary helicopter financing on favorable terms and we may not be able to get our
aircraft manufacturer to provide the necessary guarantees. We are in negotiations with a number of potential
financing sources; however, there can be no assurance that a transaction with any of these lenders will be
completed.

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.

RISKS RELATED
TO OUR BUSINESS AND AVIATION INDUSTRY

We
Need to Maintain Numerous Regulatory Permits, Certificates, Licenses, etc. from
Governmental  Authorities. Our Ability to Continue Operations Will Be Adversely Affected
if Any of Our Authorizations are  Suspended or Revoked.

We
are subject to a wide range of governmental regulation by U.S. Federal,
regional, state and local governmental agencies. Our ability to continue
operations will be adversely affected if any of the entities described below
modifies, suspends or revokes our authorizations for failure to maintain
compliance with applicable rules and regulations. Our business requires permits,
licenses, operating approvals, and various other authorizations by, among
others, the following authorities:

| |  | U.S. Department of Transportation
(DOT): We received an Effective certificate from the DOT on February 17,
2006.
| | - | --------------------------------------------------------------------------------------------------------------------

| |  | U.S. Federal Aviation Administration
(FAA): We received an Air Carrier Certificate from the FAA on February 13, 2006.
| | - | -----------------------------------------------------------------------------------------------------------------------

| |  | U.S. Transportation Security
Administration (TSA): USH is an approved TSA Part-1544 Air Carrier/Aircraft Operator. The TSA has
been providing screening for USH passengers at the Downtown Manhattan Heliport since our start-up of
operations on March 27, 2006. USH is now planning to launch scheduled service from New York Citys East
34th Street Heliport by the end of the third quarter 2006. The Company is working with the TSA to
determine a definitive date to start service.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | U.S. Federal Communication Commission
(FCC): We have received FCC approval to establish radio frequencies and communications between our
operating helicopters and operations facilities.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Port Authority of New York and New Jersey:
We have signed agreements with the Port Authority for operation and fees at JFK International Airport. We
signed agreements for space and bulk take-off fees with the Port Authority for the Downtown Manhattan
Heliport. We will need to sign agreements with the Port Authority for LaGuardia and Newark
airports.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

We plan to acquire through lease
or mortgage and put into service up to four additional helicopters during our first year of flight operations
which commenced on March 27, 2006. To accomplish this we will need to secure approximately $16 million of
helicopter debt/lease or mortgage financing. We entered into an aircraft lease for our first helicopter on
November 1, 2005 and received delivery of the aircraft on November 2, 2005. 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. On January 9, 2006, we executed
a Deposit Agreement with Sikorsky Aircraft Corporation for the purchase of four Sikorsky S76 C++ helicopters
in late 2008. In accordance with the Deposit Agreement, we paid Sikorsky a $400,000 deposit, which became
non-refundable upon our Board of Directors approval. In addition, we have signed two term sheets (see below);
however, there can be no assurances that a transaction with this or any other potential sources will be
completed at all, or on terms favorable to us.

We need to obtain financing in
order to pay the aircraft manufacturers or owners for the acquisition and/or construction of the helicopters
that we will operate beginning in late 2008. In connection with these financing arrangements, there is a
potential that we may require the aircraft manufacturer to provide financial and performance guarantees. In
addition, potential financiers may require an equity position in us if such guarantees are required.
Accordingly, we may be required to issue some combination of our common stock, options and/or warrants to one
or more financiers for our helicopters. On February 26, 2006, we signed a term sheet with a potential lessor
to lease us helicopters in 2006. Notwithstanding a successful grant of our common stock, options and/or
warrants, we may not be able to obtain the necessary helicopter financing on favorable terms and we may not be
able to get our aircraft manufacturer to provide the necessary guarantees.

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 have 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 $7.52
million of convertible debentures ($7.52 million funded to date), $6.25 million in private placement proceeds
from the sale of our common stock, $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, assuming that our results of
operations reasonably correspond to our business plan. If results of operations fail to meet our reasonable
expectations, we may need to raise additional capital to finance operations. We must also raise $16 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 and a net loss of $(4,791,142)
for the six months ended June 30, 2006.

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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 prospectus, although discussions are being
held.

We Need to Obtain
Contracts for Operating and Landing Facilities.

During the balance of 2006, we
must enter into operating/rental agreements with one remaining heliport facility in New York City, and two of
the three major airports servicing the New York area. Beginning in 2007, we must enter into operating
agreements with facilities of other cities as our operations expand into other target markets throughout the
United States. We have obtained operating agreements with the Port Authority of New York and New Jersey for
the Downtown Manhattan Heliport and John F. Kennedy Airport. We will need to enter into agreements with the
Port Authority with respect to operations at LaGuardia and Newark Liberty Airports. We have entered into an
agreement with the FAA-Air Traffic Control Manager for Kennedy, La Guardia and Newark/Liberty Airports. In
addition, we must enter into an operating agreement with the East 34th Street Heliport which is currently
owned by the City of New York and operated by MacQuery Aviation North America. A similar arrangement will be
needed later in the first year of operations for the West 30th Street Heliport owned by the State
of New York and operated by Air Pegasus. There can be no guarantee that we will be able to obtain such
agreements.

We Need to Obtain
Contracts with Major Airlines.

In order to conduct our
business, we need to enter into contracts with major airlines regarding airport services and processing for
our passengers, cross-marketing, airline interline and, in some cases, code sharing. We have entered into an
Interline Agreement and ground handling agreement with American Airlines as of the date of this prospectus.
The Interline Agreement governs the procedures for passenger traffic handling and settlement of fees between
the parties. There can be no assurances that we will be able to obtain agreements with other airlines on terms
favorable to us or at all.

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.

Since the terrorist attacks of
September 11, 2001, the air transportation industry has experienced fundamental and lasting changes, including
substantial revenue declines and cost increases, which have resulted in industry-wide liquidity issues. The
terrorist attacks significantly reduced the demand for air travel, and additional terrorist activity involving
the airline industry could have an equal or greater impact. Although global economic conditions have improved
from their depressed levels after September 11, 2001, the airline industry has continued to experience a
reduction in high-yield business travel and increased price sensitivity in customers purchasing
behavior. In addition, aircraft fuel prices are at or near historically high levels. The airline industry has
continued to add or restore capacity despite these conditions. We expect all of these conditions will
continue.

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.

Our operating results will be
significantly impacted by changes in the availability and to a lesser extent by increases in the price of
aircraft fuel. Fuel prices increased substantially in 2004, 2005 and 2006. Aircraft fuel prices remain at near
historically high levels. Due to the competitive nature of the air transportation industry, we may not be able
to pass on any increases in fuel prices to our customers by increasing our fares. Political disruptions or
wars involving oil-producing countries, changes in government policy concerning aircraft fuel production,
transportation or marketing, changes in aircraft fuel production capacity, environmental concerns, natural
events such as hurricanes and other unpredictable events may result in fuel supply shortages and additional
fuel price increases in the future.

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Our Failure to
Successfully Implement our Growth Strategy Could Harm our Business.

Our growth strategy involves the
initial launch of our service on March 27, 2006, a gradual phase-in of expanded service in our first market,
and expanding the number of markets served. Achieving our growth strategy is critical in order for our
business to achieve economies of scale and to achieve profitability. Increasing the number of markets we serve
depends on our ability to access suitable heliport and airports located in our targeted geographic markets in
a manner that is consistent with our cost strategy. Any condition that would deny, limit or delay our access
to heliport and airports we seek to serve in the future will constrain our ability to grow. Opening new
markets requires us to commit a substantial amount of resources, even before the new services commence.
Expansion is also dependent upon our ability to maintain a safe and secure operation and will require
additional personnel, equipment and facilities as well as obtaining approval from the applicable regulatory
agencies.

An inability to hire and retain
personnel, timely secure the required equipment and facilities in a cost-effective manner, efficiently operate
our expanded facilities, or obtain the necessary regulatory approvals may adversely affect our ability to
achieve our growth strategy. We cannot assure you that we will be able to successfully establish new markets
and our failure to do so could harm our business.

Expansion of our markets and
services may also strain our existing management resources and operational, financial and management
information systems to the point that they may no longer be adequate to support our operations, requiring us
to make significant expenditures in these areas. We expect that we will need to develop further financial,
operational and management controls, reporting systems and procedures to accommodate future growth. We cannot
assure you that we will be able to develop these controls, systems or procedures on a timely basis, and the
failure to do so could harm our business.

We Have a Lack of
Operating History.

U.S. Helicopter is a start-up
company. Our business plan is focused on entry into the regularly scheduled passenger helicopter industry. Our
company had no operating history prior to March 27, 2006. This industry has been dormant in New York since the
1980s. Our efforts in this regard are recent and in varying stages of development. There can be no assurance
that successful entry into the regularly scheduled passenger helicopter industry will occur or that we will be
able to develop our business plan as a new line of business. Moreover, our lack of an operating history in the
passenger helicopter industry makes it impossible to predict whether or not the company will operate
profitably. While our management collectively possesses substantial experience in the aviation industry, and
certain experience in taking start-up companies from formation to an operational stage, there can be no
assurances that U.S. Helicopter will be able to locate, hire and retain the necessary personnel to manage and
operate the business, develop and implement necessary systems, obtain contracts and obtain financing as
contemplated in our business plan.

The Air Transportation
Industry is Subject to Extensive Government Regulation, and Changes in or New Regulations may Increase our
Operating Costs.

Air carriers are subject to
extensive regulatory and legal compliance requirements that result in significant costs. For instance, the FAA
from time to time issues directives and other regulations relating to the maintenance and operation of
aircraft that necessitate significant expenditures. We expect to continue incurring expenses to comply with
the FAAs regulations. In addition, Congress has passed laws in the past several years, and the DOT and
the TSA have issued regulations relating to the operation of airlines that have required significant
expenditures. We have not yet received approvals from these governmental agencies; however, we will be
obligated to comply with the regulations established by these agencies if and when we do receive such
authorizations.

Other laws, regulations, taxes
and airport rates and charges have also been imposed from time to time that significantly increase the cost of
air transportation operations or reduce revenues. For example, the Aviation and Transportation Security Act,
which became law in November 2001, mandates the federalization of certain airport security procedures and
imposes additional security requirements on airports and airlines, most of which are funded by a per-ticket
tax on passengers and a tax on airlines.

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We expect to continue to incur
expenses in connection with complying with government regulations. Federal agencies other than the FAA, DOT
and TSA also govern other aspects of airline operations, which may require changes to current operating
procedures and thereby impact our future economic or operating performance. Additional laws, regulations,
taxes and airport rates and charges have been proposed from time to time that could significantly increase the
cost of airline operations or reduce the demand for air travel. If adopted, these measures could have the
effect of raising ticket prices, reducing revenue and increasing costs. We may not be able to increase our
fares to pass these fees on to our customers. We cannot assure you that these and other laws or regulations
enacted in the future will not harm our business.

Risk
of Competition Could Impact our Growth Potential Within a Market or In Expansion Cities.

If our business is successful in
the New York market, our success may prompt a helicopter operator (sightseeing or charter) to inaugurate
scheduled service in New York or another city. Our projected passenger load factors in our first year of
operations will be readily available to helicopter operators in cities across the US. Should potential
competitors decide to start scheduled service, such providers could upgrade their operating certification with
the FAA and DOT and potentially become operators of scheduled service within a minimal timeframe. Such a
development could impact our operations or expansion timetable.

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.

The New York market for our
business has not been served on a scheduled basis since Pan Am and New York Airways offered scheduled
helicopter service in the 1980s. The success of our passenger service in a market that was exited by all
carriers in the 1980s cannot be guaranteed or accurately predicted. The number of potential passengers cannot
be predicted with any degree of certainty and there can be no assurance that we will operate in a profitable
manner.

Former helicopter operators
exited the market for a number of reasons that included: high maintenance costs on old helicopter
technologies; lack of maintenance reliability; lack of subsidies; poor overall financial conditions of the
operators and their accordant inability to support such an operation; lack of helicopter availability at
affordable prices; poor schedule reliability; adverse publicity stemming from a helicopter accident on top of
the Pan Am Building in New York City in 1977; less than adequate heliports and facilities; lack of back-up
helicopters to support performance reliability; and lack of dedicated helicopter route networks to avoid
inclement weather holding patterns with fixed wing aircraft. These prior operators operated in an era prior to
helicopter GPS enabled navigation. Having such technology available would have allowed such operators to
operate flights to and from New York City airports independent of the arrival and departure activities of
fixed wing aircraft.

In January 2005, we received
full approval from the FAA  Air Traffic Control for a series of helicopter-only Special Visual Flight
(SVFR) routes between Manhattan and each of the three New York City-area airports. We developed these routes
for use with the aircrafts Global Positioning System (GPS) navigation system. Each route makes use of
the helicopters flight capability, including hover-and-hold and low level of speed approaches, which
fixed wing aircraft cannot do. By making use of the helicopters flexibility, we were able to develop
these routes, which do not intersect or interfere with any of the active fixed wing flight routes at the
airports, and thus are not subject to delays associated with the fixed wing flight patterns.

Interruptions or
Disruptions in Service at One of our Hub Heliports and/or Hub Airports Could Have a Material Adverse Impact on
our Operations.

Our business during our first
year of flight operations will be heavily dependent on our operations at the Downtown Manhattan and East
34th Street Heliports and at Kennedy, Newark and LaGuardia airports. Each of these hub operations
includes flights that gather and distribute traffic from markets in the geographic region surrounding the hub
to other major cities. A significant interruption or disruption in service at any of these airports could have
a serious impact on our business, financial condition and operating results. We will have facility lease and
operating agreements permitting us to use the landing facilities at the various heliports in our markets,
however, the owners and operators of these heliports are subject to the risks inherent in their own businesses
which could in turn adversely impact on us including the risks that the heliports could close, reduce
operating hours or services, increase their fees, or be adversely affected by litigation or regulatory
matters.

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|29
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Helicopter Operations
Involve Risk that may not be Covered by our Insurance or may Increase the Cost of our
Insurance.

The operation of helicopters
inherently involves a degree of risk. Hazards such as aircraft incidents (including incidents due to
mechanical failure, human error, and other causes), collisions, fire and adverse weather and marine conditions
are part of the business of providing helicopter services and may result in personal injury, loss of life,
damage to property and equipment and suspension or reduction of operations. Any loss of our liability
insurance coverage, once obtained, or the loss, expropriation or confiscation of, or severe damage to, a
material number of our helicopters could adversely affect our operations or financial condition. We cannot
assure you that we will be able to maintain adequate insurance coverage in the future at commercially
reasonable rates or that it will be available to us.

In addition, as a result of the
terrorist attacks on September 11, 2001, aviation insurers significantly reduced the maximum amount of
insurance coverage available to commercial air carriers for liability to persons (other than employees or
passengers) for claims resulting from acts of terrorism, war or similar events. At the same time, aviation
insurers significantly increased the premiums for such coverage and for aviation insurance in general. Without
governmental support, we will have to obtain insurance coverage commercially, which could have substantially
less desirable coverage, may not be adequate or available to protect our risk of loss from future acts of
terrorism and may result in a material increase to our operating expenses.

We are at Risk of Losses
and Adverse Publicity Stemming from Any Accident Involving our Helicopters.

If one of our helicopters were
to be involved in an accident, we could be exposed to significant tort liability. The insurance we plan to
carry to cover damages arising from any accidents may be inadequate. In the event that our insurance is not
adequate, we may be forced to bear substantial losses from an accident. In addition, any accident involving a
helicopter that we operate could create a public perception that our helicopters are not safe or reliable,
which could harm our reputation, result in air travelers being reluctant to fly on our helicopters and harm
our business. Customers consider safety and reliability as primary concerns in selecting a provider of
helicopter transportation services. If we fail to maintain a record of safety and reliability that is
satisfactory to our customers, our ability to retain customers and attract new customers may be adversely
affected.

Seasonality
and other Factors Impact Demand for Air Travel.

Demand for air travel is
affected by factors such as seasonality, economic conditions, war or the threat of war, fare levels and
weather conditions. In addition, demand for air travel at particular airlines may be impacted from time to
time by, among other things, actual or threatened disruptions to operations due to labor issues. Due to these
and other factors, operating results for an interim period are not necessarily indicative of operating results
for an entire year.

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.

We will have a significant
amount of fixed obligations under leases/mortgages related to our aircraft, heliport space, airport terminal
space, other facilities and office space. Our debt and fixed obligations could:

| |  | 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;
| | - | ---------------------------------------------------------------------------------------------------------------

|  
|--
|30
|  

| |  | 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.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------

Our ability to make scheduled
payments on our debt and fixed obligations will depend on our future operating performance and cash flow,
which in turn will depend on prevailing economic and political conditions and financial, competitive,
regulatory, business and other factors, many of which are beyond our control. We cannot assure you that we
will be able to generate sufficient cash flow from our operations to pay our debt and fixed obligations as
they become due, and our failure to do so could harm our business. If we are unable to make payments on our
debt and fixed obligations, we could be forced to renegotiate those obligations or obtain additional equity or
debt financing. To the extent we finance our activities with additional debt, we may become subject to
financial and other covenants that may restrict our ability to pursue our growth strategy. We cannot assure
you that our efforts would be successful or timely or that we could refinance our obligations on acceptable
terms, if at all.

Our
Maintenance Costs will Increase as our Fleet Ages.

History has shown that
maintenance costs will increase over time. We will incur lower maintenance expenses during the first few years
of operations. As equipment ages, the cost to maintain it naturally increases. For example, it costs more to
maintain an aircraft that is 15 to 20 years old than one that is five years old. In addition, the costs of
maintenance increase each year due to increases in parts prices from manufacturers and increases in labor
rates for mechanics. Ongoing manufacturer and FAA directives also increase maintenance costs. We are
negotiating multi-year maintenance contracts which anticipate cost increases of approximately four percent per
year. Our maintenance costs will increase both on an absolute basis and as a percentage of our operating
expenses, 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 business plan is labor
intensive, with labor costs representing a significant percentage of our anticipated operating expenses. We
expect salaries, wages and benefits to increase on a gross basis and these costs could increase as a
percentage of our overall costs. Since we will compete against the major U.S. airlines and other helicopter
operators for pilots, mechanics and other skilled labor and many of them offer wage and benefit packages that
will exceed ours, we may be required to increase wages and/or benefits in order to attract and retain
qualified personnel or risk considerable employee turnover. If we are unable to hire, train and retain
qualified employees at a reasonable cost, our business could be harmed and we may be unable to complete our
expansion plans.

Our Failure to
Successfully take Delivery of, Place into Service and Integrate into our Operations the Aircraft we Intend to
Lease/Purchase could Harm our Business.

We have received our initial
four aircraft between November 2005 and May 2006. Our estimated delivery of eight aircraft over the first 12
months as follows:

| |  | November 2, 2005: Received Delivery of one
S76B aircraft
| | - | --------------------------------------------------------

| |  | December 1, 2005: Received Delivery of one
S76B aircraft
| | - | --------------------------------------------------------

| |  | February 14, 2006: Received Delivery of
one S76B aircraft
| | - | ---------------------------------------------------------

| |  | May 15, 2006: Received Delivery of one
S76B aircraft
| | - | ----------------------------------------------------

| |  | October 2006: Delivery of one S76B aircraft
| | - | -------------------------------------------

| |  | November 2006: Delivery of one S76B
aircraft
| | - | --------------------------------------------

| |  | December 2006: Delivery of two S76B aircraft
| | - | --------------------------------------------

|  
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|31
|  

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 45 days per
aircraft. These acquisitions would require financing in the amount of $16
million. Acquisition of aircraft involves a variety of risks relating to its
ability to be successfully placed into service, including:

| |  | 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.
| | - | ------------------------------------------------------------------------------------------------------------------------

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.

We will Rely on
Maintaining a High Daily Aircraft Utilization Rate to Keep our Costs Low, which Makes us Especially Vulnerable
to Delays.

One of our key competitive
strengths will be maintaining a high daily aircraft utilization rate, which is the amount of time that our
aircraft will spend in the air carrying passengers. High daily aircraft utilization will allow us to generate
more revenue from our aircraft and will be achieved in part by reducing turnaround times at heliports and
airports so we can fly more hours on average in a day. The expansion of our business to include new markets
and destinations, more frequent flights on current routes and expanded facilities could increase the risk of
delays. Aircraft utilization is reduced by delays and cancellations from various factors, many of which are
beyond our control, including adverse weather conditions, security requirements, air traffic congestion and
unscheduled maintenance. Reduced aircraft utilization may limit our ability to achieve and maintain
profitability as well as lead to customer dissatisfaction.

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.

Our plan for market entry
contemplates phased-in growth focused on adding flights in New York City at the Downtown Manhattan Heliport,
East 34th Street Heliport and the West 30th Street Heliport following our initial launch
of New York service out of the Downtown Manhattan and East 34th Street Heliports.

Our business would also be
harmed by any circumstances causing a reduction in demand for air transportation in the New York metropolitan
area, such as adverse changes in local economic conditions, negative public perception of the city, additional
terrorist attacks, security concerns or significant price increases linked to increases in airport access
costs and fees imposed on passengers.

We
May be Subject to Unionization, Work Stoppages, Slowdowns or Increased Labor Costs.

Unlike most airlines, we have a
non-union workforce. Not all established airlines are unionized, such as JetBlue Airways. Without
extraordinary efforts between management and all levels of employees to provide consistent two-way
communications, employees have a tendency to seek union representation so that their needs and quality of life
issues are addressed.

|  
|--
|32
|  

Startup to mid-size airlines are
less likely to be unionized primarily because of two main factors: (1) such companies are more capable than
larger airlines of properly managing communications between management and employees and attend to quality of
life issues; and (2) employee groups remain comparatively small, which makes union representation less
economically beneficial from the standpoint of both the employee groups and the applicable unions.

We do not anticipate that our
employees will seek union representation because we maintain a philosophy of open communication and integrity,
and we anticipate having a comparatively small number of employees during our first few years of operations.
However, there can be no assurances that once we hire more employees, any of our different employee groups
will not unionize and require separate collective bargaining agreements. If any group of our employees were to
unionize and we were unable to reach agreement on terms of their collective bargaining agreement, or if we
were to experience widespread employee dissatisfaction, we could be subject to difficulties encountered by
other air carriers such as work slowdowns or stoppages. In addition, we may be subject to disruption by
organized labor groups protesting our non-union status. Any of these events would be disruptive to our
operation and could harm our business.

Our Results of Operations
will Depend in part on Factors Beyond our Immediate Control, such as the Price of Fuel, Weather and
Seasonality.

We expect our quarterly
operating results to fluctuate due to changes in aircraft fuel and security costs as well as to the timing and
amount of maintenance and advertising expenditures. Seasonality will also impact our operations. We are
susceptible to adverse weather conditions, including snow storms and hurricanes, as a result of our operations
being concentrated on the East Coast. As we enter new markets, we could be subject to additional seasonal
variations along with any potential competitive responses to our entry. As a result of these factors,
quarter-to-quarter comparisons of our operating results may not be a good indicator of our future performance.
In addition, it is possible that in any future quarter our operating results could be below the expectations
of investors and any published reports or analyses regarding U.S. Helicopter. In that event, the price of our
common stock could decline, perhaps substantially.

We are Subject to the
Risks of Having a Limited Number of Suppliers for our Aircraft and Engines.

One of the elements of our
business strategy is to operate only one general type of aircraft equipped with one or possibly two types of
engines. Our dependence on a single type of aircraft and engine for all of our flights makes us particularly
vulnerable to any problems associated with the manufacturers airframe and engines, including design
defects, mechanical problems, contractual performance by the manufacturers, or adverse perception by the
public that would result in customer avoidance or in actions by the FAA resulting in an inability to operate
our aircraft. Even though a single-manufacturer fleet is easier and more cost effective to maintain since
employees will only have to be trained to service one type of engine, a more diversified fleet would make us
better positioned than we will be to manage such events.

We Rely Heavily on
Automated Systems to Operate our Business and Any Failure of These Systems could Harm our
Business.

We will depend on automated
systems to operate our business, including a computerized reservation system, a telecommunication systems and
a website. Our website and reservation system must be able to accommodate a substantial volume of traffic and
deliver important flight information. Substantial or repeated website, reservations system or
telecommunication systems failures could reduce the attractiveness of our services and could cause customers
dissatisfaction. Any disruption in these systems could result in the loss of important data, increase our
expenses and generally harm our business.

Our Business could be
Harmed if We Lose the Service of our Key Personnel.

Our business depends upon the
efforts of our Chief Executive Officer, John G. Murphy, and Chief Operating Officer, Terence O. Dennison and a
number of management and operating personnel. We do not maintain key-man life insurance on Messrs. Murphy and
Dennison. The loss of the services of any of these executives could materially harm our business because of
the cost and time necessary to replace and train a replacement. Such a loss would also divert management
attention away from operational issues. We may have difficulty replacing management or other key personnel who
leave and, therefore, the loss of the services of any of these individuals could harm our business.

|  
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|33
|  

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.

Provisions in our amended
certificate of incorporation, our bylaws, and under Delaware law could make it more difficult for other
companies to acquire us, even if doing so would benefit our stockholders. Our certificate of incorporation and
bylaws contain the following provisions, among others, which may inhibit an acquisition of our company by a
third party:

| |  | 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.
| | - | --------------------------------------------------------------------------------------------------------------------

We are also subject to
provisions of Delaware law that prohibit us from engaging in any business combination with any
interested stockholder, meaning generally that a stockholder who beneficially owns more than 15%
of our stock cannot acquire us for a period of three years from the date this person became an interested
stockholder, unless various conditions are met, such as approval of the transaction by our board of directors.
In addition, United States laws and the regulations of the DOT will require that United States citizens must
effectively control us. As a result, our president and at least two-thirds of our board of directors must be
United States citizens and not more than 24.9% of our voting stock may be owned by non-U.S. citizens (although
subject to DOT approval, the percent of foreign economic ownership may be as high as 49%). Any of these
restrictions could have the effect of delaying or preventing a change in control.

We may be Unable to
Protect our Intellectual Property Against Unauthorized Use by Third Parties.

Our success and ability to
compete depends in part upon our proprietary rights and intellectual property. On March 21, 2006, we obtained
registration of the mark U.S. Helicopter from the United States Patent and Trademark Office.
However, existing laws afford only limited protection for our intellectual property. Despite our efforts to
protect our intellectual property, a third party could utilize our corporate name without authorization. Our
means of protecting our proprietary rights may not be adequate and our competitors may use our corporate name
to our disadvantage. If we are unable to adequately protect our intellectual property or become subject to
intellectual property infringement claims, we could incur costly and time-consuming litigation.

If We were to Determine
that our Aircraft, Parts or Inventory were Impaired, it would have a Significant Adverse Effect on our
Operating Results.

We plan to periodically perform
impairment reviews in order to determine whether we need to reduce the carrying value of our aircraft and
related assets with a related charge to earnings. In addition to the fact that the value of our fleet will
decline as it ages, the potential for industry excess capacity could evolve and other factors beyond our
control, may further contribute to the decline of the fair market value of our aircraft and related parts and
inventory. If such an impairment does occur, Statement of Financial Accounting Standards No. 144 (FAS
144), Accounting for the Impairment or Disposal of Long-Lived Assets, would require us to write down
these assets to their estimated fair market value through a charge to earnings. A significant charge to
earnings would adversely affect our financial condition and operating results.

|  
|--
|34
|  

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.

The airline industry as a whole,
and scheduled service in particular, are characterized by low gross profit margins and high fixed costs. Fixed
costs include, but are not limited to, aircraft, facilities, flight crews, fuel and customer service staff.
Existing shuttle services between cities provided by established airlines such as Delta and US Air have
demonstrated a broad range of occupancy on their flights based on the time of day.

Shuttle service airlines believe
the marketing benefits of operating hourly flights provide an airline with the maximum potential of revenue
recognition. However, the fixed costs of dedicating specific resources do not vary significantly with the
number of passengers carried. Therefore, the risk of a relatively small change in the number of passengers, or
in fare pricing, or traffic mix could, in the aggregate, have a significant effect on operating and financial
results.

We May Need Agreements
with a Clearinghouse Settlement Plan.

If we enter into an agreement
with an airline that requires it, we may need agreements with one of several airline clearinghouses to
facilitate the processing of our tickets issued by such airline on their ticket stock and paid to such airline
for travel provided by us. If we fail to obtain such an agreement, our overall ticket sales may be adversely
affected, since the vast majority of our passengers will be traveling to an airport to make a connecting
flight. An airline clearinghouse agreement will facilitate ticket purchases with passengers who buy tickets
for an airline on the airlines website. There can be no assurance these agreements will be reached or
what deposits may be required by the clearinghouses.

Significant Foreign
Ownership may Affect our Ability to Retain our Air Carrier Certificate and will Constitute a Default under our
Loan Agreements.

Federal law requires that United
States air carriers be citizens of the United States. For a corporation to qualify as a United States citizen,
the President and at least two-thirds of the directors and other managing officers of the corporation must be
United States citizens and at least 75% of the voting interest of the corporation must be owned or controlled
by United States citizens. Voting interest is represented by direct ownership of our common stock.
If we are unable to satisfy these requirements, our operating authority from the Department of Transportation
may be revoked. Because we are unable to control the transfer of our stock, we are unable to assure that we
can remain in compliance with these requirements in the future. In October, 2005, we amended our Bylaws to
provide for the automatic suspension of voting rights of foreign stockholders who hold shares of our common
stock in excess of 24.99% of the issued and outstanding shares of our common stock. We may in the future seek
to adopt additional measures that will provide some protection against a foreign person acquiring more than a
25% voting interest. Such could require stockholder approval and there is no assurance that such approval can
be obtained.

We will be Dependent on
Third Party Suppliers for Helicopter Parts and Components.

Frequent maintenance will be
required for our aircraft, and maintenance costs will likely comprise a significant portion of our operating
costs. Failure or significant delay by potential vendors in providing necessary parts could, in the absence of
alternative sources of supply, have a material adverse effect on our operations. If we are dependent on a
small number of suppliers for helicopter parts, we may also be subject to adverse impacts from unusually high
price increases which are greater than overall inflationary trends.

Our Common Stock May be
Affected by Limited Trading Volume and May Fluctuate Significantly.

There can be no assurance that
an active trading market for our common stock will develop. An absence of an active trading market could
adversely affect our shareholders ability to sell our common stock in short time periods, or possibly at
all. Our common stock may experience in the future significant price and volume fluctuations that could
adversely affect the market price of our common stock without regard to our operating performance. In
addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the
overall economy or the condition of the financial markets could cause the price of our common stock to
fluctuate substantially.

|  
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|35
|  

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.

Our common stock is deemed to be
penny stock as that term is defined in Rule 3a51-1 promulgated under the Securities Exchange Act
of 1934. These requirements may reduce the potential market for our common stock by reducing the number of
potential investors. This may make it more difficult for investors in our common stock to sell shares to third
parties or to otherwise dispose of them. This could cause our stock price to decline. Penny stocks are
stock:

| |  | 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.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Broker/dealers dealing in penny
stocks are required to provide potential investors with a document disclosing the risks of penny stocks.
Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable
investment for a prospective investor.

|  
|--
|36
|  

RISKS RELATED TO
CORNELL CAPITAL FINANCING

We are party to certain
agreements with Cornell Capital relating to the issuance of approximately $7.52 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.

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.

In addition to the Convertible
Debentures, the Company has entered into a Standby Equity Distribution Agreement with Cornell Capital on
August 4, 2004, which was amended and restated on April 8, 2005 (the SEDA). The SEDA and
Convertible Debentures contain covenants that restrict the following activities:

| |  | 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.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The existence of these covenants
may severely limit U.S. Helicopters ability to borrow money or raise capital from the sale of stock or
convertible securities because any potential lender will likely require collateral in the form of a security
interest on U.S. Helicopters assets to secure a loan and purchasers of our stock or convertible
securities may want to pay a discount to the market price of our stock.

Cornell Capital Could
Acquire a Significant Amount of Our Common Stock and, if it Does So, Could Exercise Significant Influence Over
Us.

Based upon the conversion rights
under the March 2006 Convertible Debenture, Cornell Capital could acquire up to approximately 11.57% of our
common stock based on a conversion price of $1.45 per share, or an estimated 15.94% if the conversion price is
assumed to be $1.00 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 4.9% of our issued and outstanding common stock. If Cornell Capital acquired such 11.57%-15.94% 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.

There may be No Remaining
Proceeds for Stockholders in the Event of Our Dissolution.

In the event of our dissolution,
the proceeds from the liquidation of our assets, if any, will be first used to satisfy the claims of
creditors. Only after all outstanding debts are satisfied will the remaining proceeds, if any, be distributed
to our stockholders. Accordingly, the ability of any investor to recover all or any portion of an investment
in our securities under such circumstances will depend on the amount of funds so realized and claims to be
satisfied therefrom.

|  
|--
|37
|  

If We Default under the
Convertible Debentures, Cornell Capital may Convert All Amounts Due into Shares of Our Common
Stock.

Cornell Capital is restricted
from converting more than 10% of all amounts due and owing under the Convertible Debentures issued in April
2005 (in the total remaining principal amount of approximately $100,000) and August 2005 (in the total
remaining principal amount of approximately $15,000) into shares of our common stock. In addition, Cornell
Capital is restricted from converting more than 4.9% of all amounts due and owing under the Convertible
Debenture issued in March, 2006 (in the principal amount of $6,000,000) into shares of our common stock. In
the event of a default under the terms of the Convertible Debentures, however, Cornell Capital may convert all
amounts due and owing thereunder without regard to such restrictions and may sell or transfer any such shares
without any contractual restriction whatsoever. The issuance of shares pursuant to the Convertible Debentures
under such circumstances and the subsequent sale could lower the market price of our common stock.

Existing Shareholders will
Experience Significant Dilution from our Sale of Shares under the Standby Equity Distribution
Agreement.

The sale of shares pursuant to
the Standby Equity Distribution Agreement will have a dilutive impact on our stockholders. As a result, our
net income per share could decrease in future periods, and the market price of our common stock could decline.
In addition, the lower our stock price is, the more shares of common stock we will have to issue under the
SEDA to draw down the full amount. If our stock price is lower, then our existing stockholders would
experience greater dilution. We are obligated to file a registration statement for the shares issuable
pursuant to the SEDA. The shares underlying the SEDA are not being registered pursuant to this registration
statement.

The Investor under the
SEDA Will Pay One Percent Less than the Then-Prevailing Market Price of our Common Stock.

The common stock to be issued
under the SEDA will be issued at a 1% discount to the volume weighted average price for the 5 days immediately
following the notice date of an advance. These discounted sales could cause the price of our common stock to
decline.

The Sale of our Stock
under our SEDA Could Encourage Short Sales by Third Parties, which could Contribute to the Future Decline of
our Stock Price.

The significant downward
pressure on the price of our common stock caused by the sale of material amounts of common stock under the
SEDA could encourage short sales by third parties. In a short sale, a prospective seller borrows stock from a
shareholder or broker and sells the borrowed stock. The prospective seller hopes that the stock price will
decline, at which time the seller can purchase shares at a lower price to repay the lender. The seller profits
when the stock price declines because it is purchasing shares at a price lower than the sale price of the
borrowed stock. Such sales could place further downward pressure on the price of our common stock by
increasing the number of shares being sold.

Restrictions Under the
Convertible Debentures and the SEDA Could Significantly Limit Our Ability to Access Funds Under the
SEDA.

We are prohibited from issuing
shares to Cornell Capital upon conversion of the Convertible Debenture issued in March, 2006 which would
result in Cornell Capital holding in excess of 4.9% of our common stock, or pursuant to the SEDA and the April
2005 and August 2005 Debentures which would result in Cornell Capital holding in excess of 9.9% and 9.99%,
respectively, of our issued and outstanding common stock. Pursuant to the terms of the Convertible Debentures,
this restriction may only be waived by Cornell Capital either in its sole discretion with 60 days notice
or without notice upon an event of default. This restriction may significantly limit and delay our ability to
access funds under the SEDA and, accordingly, may affect our ability to implement our business
plan.

|  
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|38
|  

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, 2006. 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 2006 or subsequent to the date of the evaluation by
its management thereof.

PART IIOTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. UNREGISTERED SALES OF
SECURITIES AND USE OF PROCEEDS; USE OF PROCEEDS FROM REGISTERED SECURITIES

In April 2006, we issued a total
of 1,000,000 shares of common stock and options to purchase an additional 150,000 shares of common stock to
employees, officers and directors in connection with our 2004 Stock Incentive Plan (the Restricted Stock
Awards). The options included in the Restricted Stock Awards contain exercise prices of $0.50 per share
and are exercisable for a period of ten years from the date of issuance. The Restricted Stock Awards have a
restriction on transferability and sale for a period of 18 months from and after the issuance date.

ITEM 3. DEFAULTS UPON SENIOR
SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS

None.

ITEM 5. OTHER
INFORMATION

None.

|  
|--
|39
|  

ITEM 6. EXHIBITS AND REPORTS ON FORM
8-K

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

|Exhibit No. |  | Document Description                                                                                                                                          |  | Location
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|           
|10.71       |  | Financial Advisory and Investment Banking Agreement dated as of April 1, 2006 between U.S.
     Helicopter Corporation and North Coast Securities Corporation |  | (1)     
|           
|10.72       |  | Form of Restricted Stock Award                                                                                                                                |  | (1)     
|           
|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.
|- | -----------------------

|(1) | Incorporated by reference to U.S.
Helicopters Registration Statement on Form SB-2 dated May 12, 2006.
|--- | ------------------------------------------------------------------------------------------------------

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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 14, 2006 | By:                                                                                                                  
|                      | John G. MurphyChief Executive Officer and
     President(Principal Executive Officer)                                
|                     
|                      | By:                                                                                                                  
|                      | George J. Mehm, Jr.Chief Financial Officer
     and Senior Vice President(Principal Financial and Accounting Officer)

|  
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|41
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