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

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

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

(MARK ONE)

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

      FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007


                                       OR


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

               FOR THE TRANSITION PERIOD FROM ________ TO ________


                        COMMISSION FILE NUMBER 001-32580

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

                           U.S. HELICOPTER CORPORATION
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

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


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

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


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

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

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


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


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

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


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


                      APPLICABLE ONLY TO CORPORATE ISSUERS


State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of November 16, 2007, 44,887,936
shares of common stock.


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



<PAGE>


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


                                      INDEX

                                                                           PAGE
                          PART 1--FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

            Balance Sheet (Unaudited)                                        1

            Statements of Operations (Unaudited)                             3

            Statements of Stockholders Equity (Unaudited)                    4

            Statements of Cash Flows (Unaudited)                             5

            Notes to Financial Statements (Unaudited)                        6

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS       25

ITEM 3.     CONTROLS AND PROCEDURES                                          43

                           PART II--OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS                                                43

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K                                 44





<PAGE>

<TABLE>
<CAPTION>


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

ASSETS:
CURRENT ASSETS:
<S>                                                                 <C>
  Cash                                                              $    31,166
  Restricted Cash                                                       180,071
  Accounts Receivable                                                   356,409
  Inventory                                                              45,276
  Prepaid Expenses                                                      212,022
  Other Current Assets                                                   89,099
                                                                    -----------

    TOTAL CURRENT ASSETS                                                914,043
                                                                    -----------

PROPERTY AND EQUIPMENT:
  Leasehold Improvements                                              1,272,356
  Office Equipment                                                      150,377
  Less: Accumulated Depreciation                                       (562,127)
                                                                    -----------

  PROPERTY AND EQUIPMENT - NET                                          860,606
                                                                    -----------

OTHER ASSETS:
  Deferred Financing Costs,
    Net of Accumulated Amortization of $1,909,173                       229,009
  Deferred Offering Costs                                               398,257
  Deposits                                                              893,506
                                                                    -----------

    TOTAL OTHER ASSETS                                                1,520,772
                                                                    -----------
                                                                    $ 3,295,421
    TOTAL ASSETS
                                                                    ===========

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



                                      -1-
<PAGE>

<TABLE>
<CAPTION>

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

LIABILITIES AND STOCKHOLDERS' [DEFICIT]:
CURRENT LIABILITIES:
<S>                                                                   <C>
  Accounts Payable and Accrued Expenses                               $  4,610,471
  Note Payable, net of discount of $145,756                              2,907,576
  Deferred Salary and Taxes Payable                                         15,182
  Accrued Salary and Taxes Payable                                         218,860
  Air Traffic Liability                                                    172,859
                                                                      ------------
                                                                         7,924,948
  TOTAL CURRENT LIABILITIES

LONG-TERM DEBT - NET OF DISCOUNT OF $4,068,218                           4,581,782

LONG-TERM DERIVATIVE LIABILITY                                           1,860,247

DEFERRED CHARGES                                                           407,586
                                                                      ------------

  TOTAL LIABILITIES                                                     14,774,563
                                                                      ------------

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

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

  Common Stock, $0.001 Par Value; 95,000,000 Shares Authorized;
    36,737,939 Issued and Outstanding                                       36,738

  Additional Paid In Capital                                            12,677,829

  Deferred Equity Compensation                                             (74,980)

  Accumulated Deficit                                                  (24,118,729)
                                                                      ------------

  TOTAL STOCKHOLDERS' [DEFICIT]                                        (11,479,142)
                                                                      ------------
                                                                      $  3,295,421
  TOTAL LIABILITIES AND STOCKHOLDERS' [DEFICIT]
                                                                      ============

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


                                      -2-
<PAGE>

<TABLE>
<CAPTION>

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

                                                        THREE MONTHS ENDED               NINE MONTHS ENDED
                                                          SEPTEMBER 30,                    SEPTEMBER 30,
                                                     2 0 0 7         2 0 0 6        2 0 0 7         2 0 0 6
                                                     -------         -------        -------         -------


<S>                                              <C>             <C>             <C>             <C>
REVENUES                                         $  1,589,494    $    817,109    $  2,769,422    $  1,121,961
                                                 ------------    ------------    ------------    ------------

EXPENSES:
  Payroll                                             985,788         742,786       2,971,321       2,029,193
  Payroll Taxes and Benefits                          131,721          66,112         411,842         196,187
  Crew Costs and Other                                  8,023          30,030         228,066          83,053
  Substitute Service/Interrupted Passenger             10,624          12,865          11,959          12,865
  Maintenance                                         490,097         545,150       1,248,502         905,423
  Fuel                                                215,016         186,023         484,704         324,525
  Aircraft and Traffic Servicing                      232,921         111,839         627,219         180,526
  Other Taxes                                           2,090           7,465           6,374           8,309
  Professional Fees                                   414,398         426,528       1,391,905       1,224,451
  Insurance                                           167,327         230,329         570,444         472,152
  Office Expense                                       60,459          69,338         175,879         154,153
  Website and Website Design                            1,700           2,625           9,755          20,856
  Travel                                                8,553          16,062          31,458          48,618
  Rent                                                143,539         117,160         406,280         246,097
  Lease Expense - equipment                           471,723         415,585       1,424,711       1,010,603
  Reservation Expense                                  79,442          44,198         208,440         140,704
  Advertising                                          60,740         237,983         420,126       1,050,761
  Licenses and Fees                                       224             125           5,789          11,068
  Depreciation and Amortization                        96,553          82,012         311,592         161,081
                                                 ------------    ------------    ------------    ------------

  TOTAL EXPENSES                                    3,580,938       3,344,215      10,946,366       8,280,625
                                                 ------------    ------------    ------------    ------------
  OPERATING (LOSS)                                 (1,991,444)     (2,527,106)     (8,176,944)     (7,158,664)
                                                 ------------    ------------    ------------    ------------

OTHER INCOME (EXPENSE):
  Interest Income                                       1,472          23,220          15,485          95,593
  Interest Expense                                   (291,110)       (133,704)       (733,508)       (288,237)
  Amortization of Deferred Financing Costs         (1,467,506)        (54,750)     (1,728,491)       (282,938)
  Change in Fair Value of Derivative                2,775,433       2,612,854       2,821,430       2,994,900
  Amortization of Debt Discount                    (3,103,228)       (289,790)     (3,582,824)       (521,074)
                                                 ------------    ------------    ------------    ------------
  NET OTHER INCOME (EXPENSE)                       (2,084,939)      2,157,830      (3,207,908)      1,998,244
                                                 ------------    ------------    ------------    ------------
   Deduct: Preferred Stock Dividend                      --              --             --             --
                                                 ------------    ------------    ------------    ------------
  NET (LOSS) APPLICABLE TO COMMON SHAREHOLDERS     (4,076,383)       (369,276)   $(11,384,852)   $ (5,160,420)
                                                 ============    ============    ============    ============

  NET (LOSS) PER COMMON SHARE:
    BASIC AND DILUTED                            $       (.11)   $       (.01)   $       (.32)   $       (.16)
                                                 ============    ============    ============    ============

  WEIGHTED AVERAGE NUMBER OF SHARES                36,681,497      32,435,074      35,955,892      31,801,169
                                                 ============    ============    ============    ============

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


                                      -3-
<PAGE>

<TABLE>
<CAPTION>

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

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

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

Conversion of Amir Elbaz's
  stock to convertible note -
  February 23, 2006                            --              --          (494,505)           (495)       (494,010)
Conversion of Portfolio Lenders
  promissory note - March 26, 2006             --              --           500,000             500         249,500
Issuance of Restricted Stock              1,000,000           1,000       1,449,000      (1,450,000)           --
                                       ------------    ------------    ------------    ------------    ------------
Issuance of common stock to
  Newbridge Securities for
  services rendered                            --              --             5,556               6           9,994
                                       ------------    ------------    ------------    ------------    ------------
Issuance of common stock to
  IGAS for services rendered                   --              --           200,000             200         289,800
                                       ------------    ------------    ------------    ------------    ------------
Issuance of shares to Three Wing
  Flying Services for services
  rendered                                     --              --            20,000              20          28,980
                                       ------------    ------------    ------------    ------------    ------------
Conversion of preferred stock
  into common stock                        (269,000)           (269)        238,096             238              31
                                       ------------    ------------    ------------    ------------    ------------
Issuance of warrants for
  payment of services                          --              --              --              --           120,000
                                       ------------    ------------    ------------    ------------    ------------
Issuance of warrants for
  payment of services                          --              --              --              --           299,918
                                       ------------    ------------    ------------    ------------    ------------
Issuance of options for
  payment of services                          --              --              --              --           170,598
                                       ------------    ------------    ------------    ------------    ------------
Conversion of long term debt into
  common stock - August 15, 2006               --              --            50,126              50          49,950
                                       ------------    ------------    ------------    ------------    ------------
Conversion of long term debt into
  common stock - August 31, 2006               --              --            50,347              50          49,950
                                       ------------    ------------    ------------    ------------    ------------
Conversion of short term debt
  into common stock -
  September 11, 2006                           --              --           584,588             585         116,328
                                       ------------    ------------    ------------    ------------    ------------
Amortization of deferred
  equity compensation                          --              --              --              --              --
                                       ------------    ------------    ------------    ------------    ------------
Net loss                                       --              --              --              --              --
                                       ------------    ------------    ------------    ------------    ------------
Balance at
  September 30, 2006                         47,000    $         47      32,949,931    $     32,950    $  8,507,224
                                       ============    ============    ============    ============    ============

Balance at January 1, 2007                   47,000              47      35,449,931          35,450      11,531,008
Issuance of common stock
  to IGAS for services                         --              --            75,000              75          52,425
Issuance of options for
   payment of services - Breaux                --              --              --              --            23,934
Issuance of options for payment
  of services - IGAS                           --              --              --              --            23,934
Conversion of debt and accrued
  interest - A. Elbaz                          --              --           999,897           1,000         558,942
                                       ------------    ------------    ------------    ------------    ------------
Conversion of preferred
  stock into common stock                   (47,000)            (47)         61,951              62             (15)
                                       ------------    ------------    ------------    ------------    ------------
Issuance of common stock
  upon exercise of warrants                    --              --            55,000              55             445
                                       ------------    ------------    ------------    ------------    ------------
Issuance of convertible debt
  with beneficial conversion feature           --              --              --              --           209,934
                                       ------------    ------------    ------------    ------------    ------------
Amortization of deferred
  equity compensation                          --              --              --              --              --
                                       ------------    ------------    ------------    ------------    ------------
Issuance of shares for cash                    --              --            96,160              96          49,904
                                       ------------    ------------    ------------    ------------    ------------
Issuance of debt with beneficial
  conversion feature and warrants              --              --              --              --           127,410
                                       ------------    ------------    ------------    ------------    ------------
Beneficial conversion feature
  from debt modification                       --              --              --              --            83,397

Value of Warrants issued
  to North Coast                               --              --              --              --            16,511
                                       ------------    ------------    ------------    ------------    ------------
Net Loss                                       --              --              --              --              --
                                       ------------    ------------    ------------    ------------    ------------
Balance at
  September 30, 2007                           --              --        36,737,939          36,738      12,677,829





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

Balance at January 1, 2006             $       --      $ (3,114,117)   $  3,084,180

Conversion of Amir Elbaz's
  stock to convertible note -
  February 23, 2006                            --              --          (494,505)
Conversion of Portfolio Lenders
  promissory note - March 26, 2006             --              --           250,000
Issuance of Restricted Stock
                                       ------------    ------------    ------------
Issuance of common stock to
  Newbridge Securities for
  services rendered                            --              --            10,000
                                       ------------    ------------    ------------
Issuance of common stock to
  IGAS for services rendered                   --              --           290,000
                                       ------------    ------------    ------------
Issuance of shares to Three Wing
  Flying Services for services
  rendered                                     --              --            29,000
                                       ------------    ------------    ------------
Conversion of preferred stock
  into common stock                            --              --              --
                                       ------------    ------------    ------------
Issuance of warrants for
  payment of services                                                       120,000
                                       ------------    ------------    ------------
Issuance of warrants for
  payment of services                      (299,918)           --              --
                                       ------------    ------------    ------------
Issuance of options for
  payment of services                          --              --           170,598
                                       ------------    ------------    ------------
Conversion of long term debt into
  common stock - August 15, 2006               --              --            50,000
                                       ------------    ------------    ------------
Conversion of long term debt into
  common stock - August 31, 2006               --              --            50,000
                                       ------------    ------------    ------------
Conversion of short term debt
  into common stock -
  September 11, 2006                           --              --           116,913
                                       ------------    ------------    ------------
Amortization of deferred
  equity compensation                       558,312            --           558,312
                                       ------------    ------------    ------------
Net loss                                       --        (5,160,420)     (5,160,420)
                                       ------------    ------------    ------------
Balance at
  September 30, 2006                   $ (1,191,605)   $ (8,274,537)   $   (925,921)
                                       ============    ============    ============

Balance at January 1, 2007                 (912,449)    (12,733,877)     (2,079,821)
Issuance of common stock
  to IGAS for services                         --              --            52,500
Issuance of options for
   payment of services - Breaux                --              --            23,934
Issuance of options for payment
  of services - IGAS                           --              --            23,934
Conversion of debt and accrued
  interest - A. Elbaz                          --              --           559,942
                                       ------------    ------------    ------------
Conversion of preferred
  stock into common stock                      --              --              --
                                       ------------    ------------    ------------
Issuance of common stock
  upon exercise of warrants                    --              --               500
                                       ------------    ------------    ------------
Issuance of convertible debt
  with beneficial conversion feature           --              --           209,934
                                       ------------    ------------    ------------
Amortization of deferred
  equity compensation                       558,313            --           558,313
                                       ------------    ------------    ------------
Issuance of shares for cash                    --              --            50,000
                                       ------------    ------------    ------------
Issuance of debt with beneficial
  conversion feature and warrants                              --           127,410
                                       ------------    ------------    ------------
Beneficial conversion feature
  from debt modification                                                     83,397

Value of Warrants issued
  to North Coast                               --              --            16,511
                                       ------------    ------------    ------------
Net Loss                                                (11,384,852)    (11,384,852)
                                       ------------    ------------    ------------
Balance at
  September 30, 2007                        (74,979)   (24,118,729)    (11,479,141)



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


                                      -4-
<PAGE>

<TABLE>
<CAPTION>

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

                                                           NINE MONTHS ENDED
                                                            SEPTEMBER 30,
                                                        2 0 0 7         2 0 0 6
                                                        -------         -------
OPERATING ACTIVITIES:
<S>                                                  <C>            <C>
  Net (Loss)                                        $(11,384,852)   $(5,160,420)
  Adjustments to Reconcile Net (Loss)
    to Net Cash (Used for) Operating Activities:
      Depreciation Expense                               311,592        161,081
      Amortization of Deferred Financing Costs         1,728,491        282,938
      Recognition of Deferred Income                                    (70,731)
      Change in Fair Value of Derivative Liability    (2,821,430)     (2,994,900)
      Amortization of Debt Discount                    3,582,824        521,074
      Amortization of Deferred Equity Compensation       837,469        558,312
      Fees paid for Services - Noncash                   100,638        180,599
    Changes in Assets and Liabilities:
      (Increase) Decrease in:
        Accounts Receivable                             (315,815)      (123,465)
        Prepaid Expenses, and Other Current Assets       230,885       (217,676)
        Restricted Cash                                     (629)       (53,671)
         Deposits                                        (60,467)       202,765
      Increase (Decrease) in:
        Accounts Payable and Accrued Liabilities       2,851,146        826,566
        Deferred Charges                                (91,514)        600,000
                                                     -----------    -----------
  NET CASH - OPERATING ACTIVITIES                     (5,031,929)    (6,109,878)
                                                     -----------    -----------

INVESTING ACTIVITIES:
  Acquisition of Property and Equipment                 (196,171)    (1,029,269)
                                                     -----------    -----------

FINANCING ACTIVITIES:
  Proceeds From Short-Term Debt                        2,977,537      6,000,000
  Payment of Short-Term Debt                                --       (1,507,834)
  Release of Restricted Cash                                --          250,000
  Proceeds from Sale of Common Stock                      50,500           --
  Payment of Financing Costs                            (389,311)    (1,022,514)
                                                     -----------    -----------
  NET CASH - FINANCING ACTIVITIES                      2,638,726      3,719,652
                                                     -----------    -----------

  NET (DECREASE) INCREASE IN CASH                     (2,589,374)    (3,419,495)
                                                     -----------

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

  CASH - END OF PERIODS                              $    31,166    $ 1,039,902
                                                     ===========    ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the periods for:
    Interest                                         $    36,684    $    2,096
    Income Taxes                                     $      --      $      --

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

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


                                      -5-
<PAGE>

                      U.S. HELICOPTER CORPORATION NOTES TO
                              FINANCIAL STATEMENTS


(1) BASIS OF PRESENTATION

U.S. Helicopter Corporation ("U.S. Helicopter," the "Company," "we" or "us")
began flight operations on March 27, 2006 between the Downtown Manhattan
Heliport ("DMH") and John F. Kennedy International Airport ("Kennedy"). Prior to
that date we were a development stage company that devoted most of our efforts
to activities such as financial planning, capital raising, and the development
of a business plan. The Company's core business will be providing regularly
scheduled helicopter shuttle service between many of the nation's larger
metropolitan airports and surrounding city-based heliports. U.S. Helicopter was
incorporated in the State of Delaware on March 4, 2003. We have introduced, and
intend to expand our service, which we call "Metro-hop Airport Shuttle Service"
("MASS"), in the New York City market. When fully implemented, our plan in the
New York City-area market is to offer frequent service between Kennedy, Newark
Liberty and LaGuardia airports and the New York metropolitan area heliports
located at Wall Street, East 34th Street, and West 30th Street.


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


(2) GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming
that we will continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. We
have incurred substantial net operating losses and used substantial amounts of
cash in our operating activities. Since our inception, we have incurred losses,
have an accumulated deficit, and have experienced negative cash flows from
operations. The expansion and development of our business will likely require
additional capital. This condition raises substantial doubt about our ability to
continue as a going concern. We expect cash flows from operating activities to
improve, primarily as a result of an increase in revenue, although there can be
no assurance thereof. The accompanying consolidated financial statements do not
include any adjustments that might be necessary should we be unable to continue
as a going concern. If we fail to generate positive cash flows or obtain
additional financing when required, we may have to modify, delay or abandon some
or all of our business and expansion plans.

Our operating plan seeks to minimize our capital requirements, but expansion of
our flight services in the New York market and other markets will require
additional capital. As of September 30, 2007, we had $31,166 in cash. We believe
that additional capital is required to satisfy our cash requirements for the
following 12 months with our current cash and expected revenues from operations.
We have recently entered into a number of financing transactions (see Notes 10
and 11 to our Financial Statements), and we are continuing to seek other
financing initiatives and have had, and continue to have, discussions with a
number of potential investors concerning investments in our securities.

On October 17, 2007 we closed on an equity financing with one of our current
investors (Note 17 - Subsequent Events.

We are presently working to raise additional capital to meet our working capital
needs, for the repayment of debt and for capital expenditures. During the next
twelve months, we anticipate that we will need approximately $10.0 million of
working capital (inclusive of capital expenditures), $12.0 million of lease
financing, and $0.8 million to repay debt.

Such capital is expected to come from helicopter lease financing and the sale of
equity or debt securities, which may include the sale of common stock under our
existing $11 million Standby Equity Distribution Agreement ("SEDA") (Note 12).
As of the date of this report, we are in discussions with financing sources for
helicopter operating lease financing. We believe that if we are successful in
raising approximately



                                      -6-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(2) GOING CONCERN (CONTINUED)

$22 million through $12 million of operating lease financing and $10 million
of some combination of debt, equity or SEDA draws, we would have sufficient
funds to meet our needs for working capital, repayment of debt and for capital
improvements over the next 12 months. There can be no assurances, however, that
we will be able to complete such financings on terms favorable to us or at all.

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements, as well as reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.

CASH EQUIVALENTS - We consider all highly liquid investments with original
maturities of three months or less when purchased to be cash equivalents. We had
no cash equivalents at September 30, 2007.

RESTRICTED CASH - We had restricted cash of $180,071 at September 30, 2007. Our
restricted cash at September 30, 2007 related to a cash deposit securing a
letter of credit we were required to post.

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

We maintain our cash and cash equivalents in accounts with major financial
institutions in the United States in the form of demand deposits and money
market accounts. Deposits in these banks may exceed the amounts of insurance
provided on such deposits. As of September 30, 2007, we had approximately
$147,880, in deposits subjected to such risk. We have not experienced any losses
on our deposits of cash and cash equivalents.

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

Concentrations of credit risk with respect to trade accounts receivable are
limited due to the fact that most customers pay for the flights in advance of
the flights. The allowance for doubtful accounts as of September 30, 2007 was
$0. We routinely assess the financial strength of customers and, based upon
factors concerning credit risk, we establish an allowance for doubtful accounts.
Management believes that accounts receivable credit risk exposure beyond such
allowance is limited.

FAIR VALUE OF FINANCIAL INSTRUMENTS - Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosure about Fair Value of Financial
Instruments," require the disclosure of fair values for all financial
statements, both on- and off-balance-sheet, for which it is practicable to
estimate fair value. We estimate that there are no material variations between
fair value and book value of our financial assets or liabilities as of September
30, 2007.

PROPERTY AND EQUIPMENT - We record our property and equipment at cost less
accumulated depreciation. For financial reporting purposes, we use the
straight-line method to compute depreciation based upon estimated useful lives
of two to five years for flight equipment and one to seven years for other
equipment. Leasehold improvements are amortized over the shorter of the related
lease term or the estimated life of the improvements. Equipment under capital
leases are amortized over the lease term and such amortization is included in
the depreciation of property and equipment. Upon selling or otherwise disposing
of property and equipment, we remove cost and accumulated depreciation from the
accounts and reflect any resulting gain or loss in earnings. Depreciation and
amortization totaled $311,592 and $161,081 for the nine months ended September
30, 2007 and 2006 and $96,553 and $82,012 for the three months ended September
30, 2007 and 2006, respectively.

IMPAIRMENT OF LONG-LIVED ASSETS -We review our long-lived assets and
identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. When such factors and circumstances exist, we compare the projected
undiscounted future cash flows associated with the future use and disposal of
the related asset or group of assets to their respective carrying amounts.
Impairment, if any, is measured as the excess of the carrying amount over the

                                      -7-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

fair value based on market value (when available) or discounted expected cash
flows of those assets, and is recorded in the period in which the determination
is made.

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

ADVERTISING COSTS - We expense advertising costs as incurred.

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

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

                                THREE MONTHS                    NINE MONTHS
                                SEPTEMBER 30,                  SEPTEMBER 30,

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

Scheduled Passenger       $1,175,838   $  132,461        $1,935,696   $  275,932
Charter                      403,207      681,400           809,690      836,627
Miscellaneous                 10,449        3,248            24,036        9,402
                          ----------   ----------        ----------   ----------

Totals                    $1,589,494   $  817,109        $2,769,422   $1,121,961
                          ==========   ==========        ==========   ==========

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

RECENT ACCOUNTING PRONOUNCEMENTS - In December 2006, the Financial Accounting
Standards Board ("FASB") issued FASB Staff Position EITF 00-19-2 ("FSP EITF
00-19-2") that addresses an issuer's accounting for registration payment
arrangements. FSP EITF 00-19-2 specifies that the contingent obligation to make
future payments or otherwise transfer consideration under a registration payment
arrangement, whether issued as a separate agreement or included as a provision
of a financial instrument or other agreement, should be separately recognized
and measured in accordance with FASB Statement No. 5, "ACCOUNTING FOR
CONTINGENCIES". The guidance in FSP EITF 00-19-2 amends FASB Statements No. 133,
"ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, No. 150,
ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY, and FASB Interpretation No. 45, GUARANTOR'S ACCOUNTING
AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT GUARANTEES OF
INDEBTEDNESS OF OTHERS, to include scope exceptions for registration payment
arrangements. This pronouncement further clarifies that a financial instrument
subject to a registration payment arrangement should be accounted for in
accordance with other applicable generally accepted accounting principles (GAAP)
without regard to the contingent obligation to transfer consideration pursuant
to the registration payment arrangement. Under FSP EITF 00-19-2, the contingent
obligation to make future payments or otherwise transfer consideration under a
registration payment arrangement shall be recognized and measured separately in
accordance with Statement 5 and FASB Interpretation No. 14, REASONABLE
ESTIMATION OF THE AMOUNT OF A LOSS. FSP EITF 00-19-2 is effective immediately
for registration payment arrangements entered into after December 21, 2006 and
for financial statements issued for fiscal years beginning after December 15,
2006, and interim periods within those fiscal years.


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

                                      -8-
<PAGE>


U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures" ("SFAS
157"). SFAS 157 defines fair value and establishes a framework for measuring
fair value in accordance with generally accepted accounting principles. This
Statement also applies to other accounting pronouncements that require or permit
a fair value measure. As defined by this Statement, the fair value of an Asset
or Liability would be based on an "exit price" basis rather than an "entry
price" basis. Additionally, the fair value should be market-based and not an
entity-based measurement. SFAS 157 is effective for fiscal years beginning after
November 15, 2007. We are still evaluating the effects, if any, SFAS No. 157 may
have on our financial position, results of operations or cash flows.

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

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

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

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

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

In December 2006 the FASB issued FSB No. AUG AIR-1, "Accounting for Major
Maintenance Activities". This FSP prohibits the use of the accrue-in-advance
method of accounting for planned major

                                      -9-
<PAGE>


U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

maintenance activities in annual and interim financial reporting periods. The
guidance in the FSP is applicable to entities in all industries and must be
applied to the first fiscal year beginning after December 15, 2006.

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

(4) DEPOSITS

We had deposits of $893,506 at September 30, 2007. Deposits are principally
related to our leasing of four helicopters and a deposit we placed with a
manufacturer for the purchase of four new helicopters.

(5) ACCOUNTS PAYABLE AND ACCRUED EXPENSES

We had accounts payable and accrued expenses of $4,610,468 at September 30,
2007, broken down as follows:


Professional Fees                                             $    639,899
Reservations Service                                               159,044
Advertising                                                        117,914
Maintenance                                                        896,889
Insurance                                                          279,200
Interest                                                         1,044,592
Deferred Financing Costs                                           287,390
Training                                                           165,600
Lease Expense                                                      770,762
Other Accounts Payable and Accrued Expenses                        249,180
                                                              -------------
    TOTALS                                                    $  4,610,470
                                                              =============

(6) AIR TRAFFIC LIABILITY

We had air traffic liability of $172,859 at September 30, 2007. Air traffic
liability refers to tickets we have sold where the passenger has not yet used
the ticket to fly.

(7)OFFICERS PAYROLL

Effective April 16, 2004, U.S. Helicopter entered into a five-year employment
agreement with John G. Murphy. Mr. Murphy is employed as the President and Chief
Executive Officer of U.S. Helicopter. Mr. Murphy's annual salary is $225,000.
Payment of Mr. Murphy's salary commenced on August 9, 2004. Mr. Murphy deferred
two weeks salary during the second quarter of 2007 and an additional four weeks
in the third quarter of 2007. These deferred amounts were repaid in October
2007. As an additional condition to closing the August 2007 Debenture [Note 11],
our five most senior executive officers (collectively, "Management") agreed to
reduce their salaries by 20% until such time as the August 2007 Debenture and
debentures previously issued by us to YA in the aggregate principal amount of
$1,600,000 are repaid in full (collectively, the "YA Bridge Loans"). After we
make such repayments, Management's salaries will be reinstated in full, and all
unpaid salary amounts will be issued to Management in the form of shares of our
common stock at a price equal to the greater of the volume weighted average
price of our common stock as

                                      -10-
<PAGE>


U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(7)OFFICERS PAYROLL (CONTINUED)

quoted by Bloomberg, LP on the day prior to the repayment date of the YA Bridge
Loans or $0.50 per share. Each Management member has the option, however, to
receive payment of such unpaid salary in cash to the extent of such Management
member's contribution to the Common Stock Purchase [Note 11] once the total
indebtedness owed by us to YA is $5.0 million or less.

George J. Mehm, Jr. is employed as the Senior Vice President, Treasurer and
Chief Financial Officer of U.S. Helicopter. Mr. Mehm's annual salary is
$130,000. Payment of Mr. Mehm's salary commenced on August 9, 2004. Mr. Mehm
deferred two weeks salary during the second quarter of 2007 and an additional
four weeks in the third quarter of 2007. These deferred amounts were repaid in
October 2007. As an additional condition to closing the August 2007 Debenture
[Note 11], Mr. Mehm, as one of our five most senior executive officers, agreed
to reduce his salary by 20% until the YA Bridge Loans are repaid in full (see
above).

Donal McSullivan is employed as the Senior Vice President and Chief Marketing
Officer of U.S. Helicopter. Mr. McSullivan's annual salary is $130,000. Payment
of Mr. McSullivan's salary began on August 9, 2004. Mr. McSullivan deferred two
weeks salary during the second quarter of 2007 and an additional four weeks in
the third quarter of 2007. These deferred amounts were repaid in October 2007.
As an additional condition to closing the August 2007 Debenture [Note 11], Mr.
McSullivan, as one of our five most senior executive officers, agreed to reduce
his salary by 20% until the YA Bridge Loans are repaid in full (see above).

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

Terence O. Dennison is employed as the Senior Vice President and Chief Operating
Officer of U.S. Helicopter. Mr. Dennison is currently being paid at the annual
rate of $130,000. Mr. Dennison deferred two weeks salary during the second
quarter of 2007 and an additional four weeks in the third quarter of 2007. These
deferred amounts were repaid in October 2007. As an additional condition to
closing the August 2007 Debenture [Note 11], Mr. Dennison, as one of our five
most senior executive officers, agreed to reduce his salary by 20% until the YA
Bridge Loans are repaid in full (see above).

(8) STOCK-BASED COMPENSATION

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

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


On March 30, 2006 we issued a total of 1,000,000 shares of common stock to
various directors, officers, employees and consultants of the Company in
connection with our 2004 Stock Incentive Plan ("Restricted


                                      -11-
<PAGE>


U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(8) STOCK-BASED COMPENSATION (CONTINUED)

Stock Awards") as Deferred Equity Compensation. The Restricted Stock Awards have
a restriction on transferability and sale for a period of 18 months from and
after the issuance date. We expensed $725,000 for these Restricted Stock Awards
in the first nine months of 2007. There are no further expenses under the
Restricted Stock Awards for the balance of 2007.

In 2006, we issued an additional 226,000 shares of common stock and options to
purchase an additional 576,000 shares of common stock to employees, officers and
directors, which have various restrictions on transferability and sale for
periods after the issuance date.In the first quarter of 2007, we issued an
additional 75,000 shares of common stock and 600,000 options to purchase shares
of common stock to non-employees for services, which have various restrictions
on transferability and sale for periods after the issuance date.

(9) EARNINGS (LOSS) PER SHARE

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

(10) DEFERRED OFFERING COSTS AND DEFERRED FINANCING COSTS

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

At September 30, 2007, we had net deferred financing costs of $229,009. During
the third quarter of 2007 we expensed the remaining costs related to the
placement of the March 2006 Debenture, the November 2006 Debenture, the March
2007 Debenture and the May 2007 Debenture as a result of the debenture and
warrant modifications under the August 2007 Debenture Transaction [Note 11]. The
balances of the New Debenture and the August 2005 Debenture were converted on
September 11, 2006 and all deferred financing costs related to that issuance
were written off at that time. We recorded amortization expense related to
deferred financing totaling $1,728,491 and $282,938 for the nine month periods
ended September 30, 2007 and 2006, respectively and $1,467,506 and $54,750 for
the three month periods ended September 30, 2007 and 2006, respectively.

At September 30, 2007, we had net deferred offering costs of $398,257. These
costs were primarily related to our Standby Equity Distribution Agreement [Note
12] and will be offset against the proceeds of the offering, when consummated
and the common stock purchase completed in October 2007 [Note 17], which will be
offset against the proceeds of the stock purchase in October 2007.

(11) CONVERTIBLE DEBT

LONG-TERM CONVERTIBLE DEBT -

On March 30, 2006 we issued a $6,000,000, 8% interest convertible debenture
maturing March 31, 2009 (the "March 2006 Debenture") to Cornell Capital.
Proceeds from the March 2006 Debenture were used to repay prior loans from
Cornell Capital such that a combined $113,497 was still outstanding. This amount
was converted on September 11, 2006 at a price of $0.20 per share. We registered
shares equal to the amount of shares which may be converted under the March 2006
Debenture pursuant to an amended registration statement declared effective by
the SEC on May 14, 2007. Upon issuance, the March 2006 Debenture was convertible
at the option of Cornell Capital any time up to maturity at a conversion price
equal to the lesser of $1.45 or 95% of the lowest volume weighted average price
of our common stock

                                     -12-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(11) CONVERTIBLE DEBT (CONTINUED)

during the thirty trading days immediately preceding the conversion date or the
interest payment date, as applicable, as quoted by Bloomberg, LP, but in no
event less than $.001. The March 2006 Debenture has a three-year term and
accrues interest at 8% per year payable in our common stock at the rate equal to
the conversion price of the March 2006 Debenture in effect at the time of
payment. Interest and principal payments on the March 2006 Debenture are due on
the maturity date of March 31, 2009. To date, we have issued a total of 100,473
shares to Cornell Capital pursuant to conversion notices of a total of $100,000
under the March 2006 Debenture. In connection with this financing, we issued to
Cornell Capital five year warrants with the following exercise prices: 1,250,000
at $1.00 per share, 1,250,000 at $1.15 per share, 1,250,000 at $1.30 and
1,250,000 at $1.45. The two warrants with exercise prices of $1.00 and $1.25
were converted on October 20, 2006 [Note 12]. We later reduced the exercise
prices of the remaining two warrants to $0.50 per share in August 2007 as
described below. We have separately filed a registration statement including
these shares with the Securities and Exchange Commission.

On November 10, 2006, we entered into a Securities Purchase Agreement (the
"November SPA") with Cornell Capital pursuant to which we issued a secured
convertible debenture to Cornell Capital in the principal amount of $2,750,000
(the "November 2006 Debenture"). The November 2006 Debenture matures 36 months
after issuance and accrues interest at 8% per year which is payable in shares of
our common stock at the lower of $0.50 per share or 95% of the lowest daily
volume weighted average price of our common stock ("Fair Market Value") for the
30-day period prior to the interest payment due date.

Upon issuance, the November 2006 Debenture was convertible at Cornell Capital's
option into shares of our common stock at a price per share equal to the lower
of $1.45 per share or 95% of the fair market value of our common stock for the
30 days prior to the notice of exercise, as adjusted in accordance with the
terms of the November 2006 Debenture. We are required to register the shares
issuable upon conversion of the November 2006 Debenture and the warrants issued
in connection therewith within 45 days of our receipt of a written request from
Cornell Capital to register such shares. Cornell Capital's conversion right
under the November 2006 Debenture is subject to certain limitations including
that Cornell Capital may not convert the November 2006 Debenture for a number of
shares in excess of that number of shares which, upon giving effect to such
conversion, would cause the aggregate number of shares of our common stock
beneficially held by Cornell Capital to exceed 4.99% of our then outstanding
common stock. Effective May 10, 2007, Cornell Capital agreed to limit its
resales of our common stock acquired under the November 2006 Debenture to no
more than $250,000 for a period of 30 days if our common stock falls below $1.45
per share for five consecutive trading days (the "Resale Limitation"). The
Resale Limitation would not apply upon an event of default as defined in the
November 2006 Debenture, if waived in writing by us, or to private resales by
Cornell Capital. We are required pursuant to the November 2006 Debenture to
reserve a total of 20% of the maximum number of shares that may be owned by
persons who are not U.S. citizens as determined in accordance with U.S.
Department of Transportation regulations for issuance pursuant to the November
2006 Debenture. Pursuant to the November SPA, we issued to Cornell Capital
warrants to purchase a total of 2,000,000 shares of our common stock with the
following exercise prices: $1.20 per share (as to 500,000 warrants); $1.35 per
share (as to 500,000 warrants); $1.50 per share (as to 500,000 warrants); and
$1.65 per share (as to 500,000 warrants). We later reduced the exercise prices
of these warrants to $0.50 per share in August 2007 as described below.

In addition, in the event we close on any debt or equity financing after the
issuance date of the November 2006 Debenture, we will be required to use 50% of
the net proceeds of such financings to prepay outstanding amounts outstanding
under the November 2006 Debenture or any other debenture issued by us to Cornell
Capital. If amounts to be prepaid by us do not total at least the equivalent of
$70,000 per month beginning on April 1, 2007, we must prepay the difference to
match such amount up to $2,000,000. No further prepayments will be required once
we prepay a total of $2,000,000.

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

On March 30, 2007, we entered into a Securities Purchase Agreement (the "March
2007 SPA") with Cornell Capital pursuant to which we issued convertible
debentures in the principal amount of $1,100,000 (the "March 2007 Debenture").
The March 2007 Debenture is convertible at the option of Cornell Capital any
time up to maturity at a conversion price equal to the lesser of $1.45 or 95% of
the lowest volume weighted average price of our common stock during the thirty
trading days immediately preceding the conversion date or the interest payment
date, as applicable, as quoted by Bloomberg, LP, but in no event

                                      -13-
<PAGE>


U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(11) CONVERTIBLE DEBT (CONTINUED)

less than $.001. The March 2007 Debenture was repayable as of June 30, 2007;
however, if we were not successful in completing a financing of at least $1.1
million at such time and no event of default occurs under the debentures, the
maturity date will be extended until September 30, 2007. The debentures accrue
interest at 12% per year payable in our common stock at the rate equal to the
conversion price of the debentures in effect at the time of payment. In the
event that the maturity date for the March 2007 Debenture is extended, the
interest rate under the debentures will increase by two percent per month
through and until September 30, 2007. We used the proceeds received in this
financing for working capital. On October 17, 2007, we repaid a total of
$255,162 in principal, plus $85,710 of accrued interest payable under the
March 2007 Debenture.

Pursuant to the March 2007 SPA, we issued warrants to Cornell Capital to
purchase a total of 155,481 shares of our common stock with the following
exercise prices: $1.15 per share (as to 47,827 warrants); $1.35 per share (as to
40,741 warrants); $1.55 per share (as to 35,484 warrants); and $1.75 per share
(as to 31,429 warrants). We later reduced the exercise prices of these warrants
to $0.50 per share in August 2007 as described below. The warrants are
exercisable for a period of five years. We entered into an amended security
agreement with Cornell Capital pursuant to which we continued the security
interest of Cornell Capital in all our assets which we granted in connection
with the original debentures issued by us to Cornell Capital.

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

Pursuant to the May 2007 SPA, we issued warrants to Cornell Capital to purchase
a total of 99,144 shares of our common stock with the following exercise prices:
$1.00 per share (as to 31,250 warrants); $1.20 per share (as to 26,042
warrants); $1.40 per share (as to 22,321 warrants); and $1.60 per share (as to
19,531 warrants). The warrants are exercisable for a period of five years. We
later reduced the exercise prices of these warrants to $0.50 per share in August
2007 as described below. We entered into an amended security agreement with
Cornell Capital pursuant to which we continued the security interest of Cornell
Capital in all our assets which we granted in connection with the original
debentures issued by us to Cornell Capital.

On August 24, 2007, we entered into a Securities Purchase Agreement with YA
Global Investments, L.P., formerly known as Cornell Capital Partners, LP ("YA")
(the "August 2007 SPA") pursuant to which we issued convertible debentures in
the principal amount of $800,000 (the "August 2007 Debenture"). The August 2007
Debenture is convertible at the option of YA any time up to maturity at a
conversion price equal to the lesser of $0.50 or 80% of the lowest closing bid
price of our common stock during the 15 trading days immediately preceding the
conversion date. The August 2007 Debenture was repayable as of October 24, 2007
and accrued interest at 18% per year payable in cash. We repaid the August 2007
Debenture in full on October 17, 2007.

Pursuant to the Securities Purchase Agreement, we issued warrants to YA to
purchase a total of 2,745,375 shares of our common stock with the exercise
prices of $0.50 per share (as to 1,045,375 warrants) and $0.01 per share (as to
1,700,000 warrants). The warrants are exercisable for a period of five years. We
entered into an amended security agreement with YA pursuant to which we
continued the security interest of YA in all our assets which we granted in
connection with the original debentures issued by us to YA.

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

                                      -14-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(11) CONVERTIBLE DEBT (CONTINUED)

As an additional condition to closing the August 2007 Debenture transaction, our
five most senior executive officers (collectively, "Management") purchased
shares of our common stock at a purchase price of $0.52 per share (the "Common
Stock Purchase"). In addition, Management agreed to reduce their salaries by 20%
until such time as the August 2007 Debenture and debentures previously issued by
us to YA in the aggregate principal amount of $1,600,000 are repaid in full
(collectively, the "YA Bridge Loans"). After we make such repayments,
Management's salaries will be reinstated in full, and all unpaid salary amounts
will be issued to Management in the form of shares of our common stock at a
price equal to the greater of the volume weighted average price of our common
stock as quoted by Bloomberg, LP on the day prior to the repayment date of the
YA Bridge Loans or $0.50 per share. Each Management member has the option,
however, to receive payment of such unpaid salary in cash to the extent of such
Management member's contribution to the Common Stock Purchase once the total
indebtedness owed by us to YA is $5.0 million or less.

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

In valuing the terms of the March 2006 Debenture, the November 2006 Debenture,
the March 2007 Debenture, the May 2007 Debenture and the August 2007 Debenture
in accordance with SFAS No. 133, we elected to value the debenture using the
Black Scholes-Merton model. The effect of this valuation was the creation of a
long-term derivative liability of $3,724,718 for the March 2006 Debenture,
$80,140 for the November 2006 Debenture, $5,449 for the March 2007 Debenture,
$5,271 for the May 2007 Debenture and $1,215,504 related to the August 2007
Debenture, which was recorded as a long-term derivative liability and as
discounts to the corresponding debt. These discounts are being amortized over
the respective 36 month lives of the March 2006 Debenture and the November 2006
Debenture, the six month life of the March 2007 Debenture and the two month life
of the May 2007 Debenture and August 2007 Debenture. The long-term derivative
liability is periodically revalued using the Black-Scholes-Merton model. For the
nine month periods ended September 30, 2007 and 2006 we recorded changes in fair
value of derivative liability of $2,821,430, and $2,994,900, respectively, in
the Statement of Operations. For the three month periods ended September 30,
2007 and 2006 we recorded changes in fair value of derivative liability of
$2,775,433 and $2,612,854, respectively, in the Statement of Operations.

On August 24, 2007, we amended the terms of four secured convertible debentures
previously issued to YA on March 31, 2006 (in the principal amount of $5.9
million), November 3, 2006 (in the principal amount of $2.75 million), March 30,
2007 (in the principal amount of $1.1 million) and May 14, 2007 (in the
principal amount of $.5 million) (collectively, the "Prior Debentures"). The
Prior Debentures contained conversion prices equal to the lesser of $1.45 per
share or 95% of the lowest daily volume weighted average price of our common
stock for the 30 days prior to the notice of exercise ("Fair Market Value"), as
adjusted in accordance with the terms of the Prior Debentures, and provided for
an adjustment in the conversion price in the event that we issued shares of our
common stock for a price per share less than the conversion price of the Prior
Debentures.

In addition, on August 24, 2007, we amended eighteen warrants previously issued
to YA in connection with certain convertible debenture financings (the "Prior
Warrants"). The Prior Warrants provided YA with the right to purchase an
aggregate of 5,254,625 shares of our common stock at exercise prices ranging
from



                                      -15-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(11) CONVERTIBLE DEBT (CONTINUED)

$1.00 per share to $1.75 per share. The Prior Warrants provided for an
adjustment in the exercise price and the number of shares issuable under the
Prior Warrants in the event that we issued shares of our common stock for a
price per share less than the exercise price of the applicable Prior Warrant.

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

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

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

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

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

On June 15 and June 20, 2007, respectively, we entered into Convertible Note
Purchase Agreements with two investors (the "Investors"), pursuant to which we
issued a total of $250,000 in principal amount of convertible notes (the
"Notes"). In connection with these financings, we also issued to the Investors
warrants (the "Warrants") to purchase an aggregate of 312,500 shares of our
common stock as an inducement to enter into the transactions. The Warrants
contain an exercise price of $0.50 per share and are exercisable for a period of
five years. In October 2007, we received notice that one Investor elected to
convert its Note in full, plus accrued interest totaling $157,644 into a
total of 525,480 shares of common stock, and we repaid the other Note in full.

The Notes accrued interest at the rate of 15% per annum, of which 30 days worth
of interest was paid in advance on the respective closing dates. We also paid
origination fees totaling $12,500 to the Investors upon the closings of the
Notes. The Notes, together with accrued and unpaid interest, were convertible at
the option of the holders into shares of our common stock at a conversion price
equal to $0.50 per share. The Notes, along with all accrued and unpaid interest,
were repayable on the earlier of (a) the first closing of a private placement of
our debt or equity securities, or (b) 120 days after the closing of the Notes.
Repayment of the Notes was secured by certain of our assets and we were
obligated to prepay the Notes out of certain revenues to be received by us. The
proceeds of these financings were used for general working capital purposes.

Between July and August 2007, we completed bridge loan transactions with certain
investors pursuant to which we issued promissory notes totaling $522,000 in
principal that are convertible into shares of our common stock at a price of
$0.50 per share (the "2007 Bridge Loans"). In light of these transactions and in
accordance with the terms of the Prior Debentures, we amended the terms of the
Prior Debentures to provide for a conversion price equal to the lesser of $0.50
per share or 95% of the Fair Market Value of our common stock. We repaid the
2007 Bridge Loans on October 17, 2007.

                                      -16-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(11) CONVERTIBLE DEBT (CONTINUED)

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

YEAR ENDING
DECEMBER 31,
    2007                                                  $   3,053,332
    2008                                                              --
    2009                                                      8,650,000
    Thereafter                                                        --
                                                          --------------
    TOTAL                                                 $  11,703,332
                                                          ==============

(12) SECURITIES OFFERINGS

EXERCISE OF WARRANTS BY CORNELL CAPITAL - On October 20, 2006, the Company and
Cornell Capital amended the terms of two warrant agreements (the "Cornell
Warrants") relating to the issuance of 1,250,000 shares of the Company's common
stock each. The Cornell Warrants contained exercise prices of $1.00 and $1.15,
respectively. To induce Cornell Capital to make an additional investment in the
Company via the cash exercise of the Cornell Warrants, the Company agreed to
reduce the exercise price of each Cornell Warrant to $0.70 per share. We
received proceeds of $1,750,000 from the exercise of these warrants on October
20, 2006.

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

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

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

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

Under the terms of the SEDA, the investor will receive a fee equal to 5% of the
gross proceeds received by us pursuant to the SEDA. The SEDA has a term of 2
years from the Effectiveness of the SEDA registration. We are required to
register the SEDA shares under the Securities Act of 1933 prior to any sales of
our common stock under the SEDA. Proceeds of the SEDA will be offset against
deferred offering costs [Note 10] until those amounts are extinguished.

                                      -17-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(12) SECURITIES OFFERINGS (CONTINUED)

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

(13) COMMITMENTS AND CONTINGENCIES

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

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

On February 8, 2006, we entered into a one year lease agreement for office and
hangar space for our operations base. Monthly rent is approximately $16,000. We
accounted for this rent expense as paid, since the difference in accounting on a
straight-line basis is immaterial. We also agreed to issue 20,000 shares of our
common stock to the lessor. We renewed this lease with the lessor for one year,
with renewal options, at a monthly rent of approximately $17,000 per month.

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

Total rental expense was $406,280 and $246,097 for the nine months ended
September 30, 2007 and 2006 and $143,539 and $117,160 for the three months ended
September 30, 2007 and 2006, respectively.

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

In 2005 and 2006, we entered into separate five year operating leases for three
Sikorsky S-76 helicopters with a different lessor. These leases expire five
years after the commencement of the leases or upon redelivery to the lessor.
Rent on two of the helicopters is payable at the monthly rate of $35,834 per
month and at a monthly rate of $45,417 for the third helicopter. Each lease
provides that the lessor will finance up to $200,000 per helicopter towards the
costs of shipping and modification; the amortization of this amount is included
in the lease payment. The net effect of this is the Deferred Charges balance of
$499,100, which amount will be amortized as a reduction in the rental expense
over the life of each lease. There are no 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.

                                      -18-
<PAGE>


U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(13) COMMITMENTS AND CONTINGENCIES (CONTINUED)

Minimum future lease rent payments as of December 31, 2006 were:

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

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

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

(14) RELATED PARTY TRANSACTIONS

Donal McSullivan, Senior Vice President and Chief Marketing Officer, and John
Capozzi, Marketing and Business Development Advisor and Director, have provided
certain consulting services to the Company from its inception. In connection
with the provision of such consulting services, they had an agreement with the
Company (the "Marketing Services Agreement") to jointly receive 10% of the
proceeds of any financings arranged with Cornell Capital and certain other
investors. As of the date of this report, they have received $832,500 of the
proceeds of the transactions with Cornell Capital and certain other investors
plus warrants to purchase up to 600,000 shares of the Company's common stock. On
January 17, 2007, we entered into a Settlement Agreement and Release with
respect to the Marketing Services Agreement. In exchange for a full termination
of the Marketing Services Agreement, we agreed to the following: (i) a payment
of $50,000 to each of Mr. Capozzi and Mr. McSullivan upon the signing of the
settlement agreement; (ii) a payment of $99,985 to each of Mr. Capozzi and Mr.
McSullivan as of March 15, 2007; and (iii) the issuance of warrants to purchase
300,000 and 200,000 shares to Mr. Capozzi and Mr. McSullivan, respectively, with
an exercise price of $0.05 per share and a term of five years. As of the date of
this report, we have not made the payment described in (ii). In connection with
the May 2007 Debenture financing, we have agreed to not make such payment until
we receive at least $10 million in financing transactions and our Board
reasonably believes we will have sufficient capital to finance operations for
the 12 months following such financing.

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

                                      -19-
<PAGE>


U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(15) INCOME TAXES

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

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

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

(16) STOCK OPTIONS ISSUED UNDER 2004 STOCK INCENTIVE PLAN

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

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

                                      -20-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(16) STOCK OPTIONS ISSUED UNDER 2004 STOCK INCENTIVE PLAN (CONTINUED)

The following is a summary of options outstanding:

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

Outstanding at December 31, 2004               812,000     $         0.50

Granted                                         70,000               0.50
Exercised                                         --                 --
Forfeited                                         --                 --
                                             ---------     --------------

Outstanding at December 31, 2005               882,000     $         0.50
                                             =========     ==============
                                               576,000     $ 0.50 - $1.40
Granted
Exercised                                         --                 --
Forfeited                                      (70,000)              0.50
                                             ---------     --------------
Outstanding at December 31, 2006             1,388,000     $ 0.50 - $1.40
                                             =========     ==============


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

                                                At                  At
                                                                DECEMBER 31,
                                        SEPTEMBER 30, 2007           2006
                                        ------------------      -------------
Options Exercisable                          1,425,500            1,225,500
                                            ==========            =========

                                         Nine Months Ended        Year Ended
                                            SEPTEMBER 30,         DECEMBER 31,
                                                2007                 2006
                                                ----                 ----

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

As of September 30, 2007 the weighted average exercise price of all of our
employee stock options is $0.853. The weighted average remaining contractual
life is approximately 6.82 years.

As of September 30, 2007, the weighted average exercise price for our employee
stock options which have vested is $0.736. The weighted average contractual life
is approximately 7.22 years.

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

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

(17) SUBSEQUENT EVENTS

On October 17, 2007, U.S. Helicopter Corporation ("we") received gross proceeds
of $6,600,000 in a private placement transaction with International Financial
Advisors, K.S.C.C. ("IFA") pursuant to a Securities Purchase Agreement dated
October 15, 2007 (the "SPA") and entered into on October 17, 2007. In accordance
with the terms of the SPA, we issued to IFA 8,000,000 shares of our common
stock, par value $0.001 per share ("Common Stock"), plus warrants to purchase an
additional 14,000,000 shares of



                                      -21-
<PAGE>

U.S. HELICOPTER CORPORATION
NOTES TO FINANCIAL STATEMENTS

(17) SUBSEQUENT EVENTS (CONTINUED)

Common Stock, which have an exercise price of $0.01 per share and a term of five
years from the date of issuance. As an inducement to enter into the SPA, we also
agreed to issue to IFA warrants to purchase an additional 14,700,000 shares of
Common Stock, which have an exercise price of $0.01 per share and a term of five
years from the date of issuance. The 8,000,000 shares of common stock issued to
IFA are non-voting due to U.S. Department of Transportation regulations limiting
the amount of ownership of U.S. Helicopter (a domestic airline) by foreign
persons. To the extent that the shares may become voting shares in the future,
they will not become so if it would result in non-U.S. citizens holding more
than 24.99% of the voting stock or 49.9% of our total outstanding shares.

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

                                      -22-
<PAGE>




U.S. HELICOPTER CORPORATION NOTES TO FINANCIAL STATEMENTS

(17) SUBSEQUENT EVENTS (CONTINUED)

The following pro forma balance sheet takes into account the effects of our
October 2007 financing with IFA as described above.

<TABLE>
<CAPTION>

U.S. HELICOPTER CORPORATION
PRO FORMA BALANCE SHEET AS OF SEPTEMBER 30, 2007
(UNAUDITED)


                                                          PRO FORMA
                                           AS REPORTED    ADJUSTMENTS   AS ADJUSTED


Assets:
<S>                                      <C>             <C>            <C>
Current Assets:
  Cash                                    $    31,166    $ 3,816,850    $ 3,848,016
  Restricted Cash                             180,071                       180,071
  Accounts Receivable                         356,409                       356,409
  Inventory                                    45,276                        45,276
  Prepaid Expenses                            212,022                       212,022
  Other Current Assets                         89,099                        89,099

     Total Current Assets                     914,043      3,816,850      4,730,893

Property and Equipment:
  Leasehold Improvements                    1,272,356                     1,272,356
  Office Equipment                            150,377                       150,377
  Less: Accumulated Depreciation             (562,127)                     (562,127)

     Property and Equipment - Net             860,606              0        860,606

Other Assets:
  Deferred Financing Costs - Net              229,009                       229,009
  Deferred Offerings Costs                    398,257       (398,257)             0
  Deposits                                    893,506                       893,506

     Total Other Assets                     1,520,772       (398,257)     1,122,515

     Total Assets                           3,295,421      3,418,593      6,714,014


                                      -23-
<PAGE>



Liabilities and Stockholders' Deficit:
Current Liabilities:
  Accounts Payable and Accrued Expenses     4,610,471       (613,854)     3,996,617
  Notes Payable, Net of Discount            2,907,576     (2,085,022)       822,554
  Current Maturities of Long-Term Debt              0                             0
  Deferred Salary and Taxes Payable            15,182                        15,182
  Accrued Salary and Taxes Payable            218,860                       218,860
  Air Traffic Liability                       172,859                       172,859

     Total Current Liabilities              7,924,948     (2,698,876)     5,226,072

Long-Term Debt - Net of Discount            4,581,782                     4,581,782

Long-Term Derivative Liability              1,860,247           (182)     1,860,065

Deferred Charges                              407,586                       407,586

     Total Liabilities                     14,774,563     (2,699,058)    12,075,505

Commitments and Contingencies

Stockholders' Deficit:
  Convertible Series A Preferred Stock              0                             0
  Common Stock                                 36,738          8,522         45,260
  Additional Paid in Capital               12,677,829      6,109,129     18,786,958
  Deferred Equity Compensation                (74,980)                     (74,980)
  Accumulated Deficit                     (24,118,729)                 (24,118,729)

     Total Stockholders' Deficit          (11,479,142)     6,117,651    (5,361,491)

     Total Liabilities and
     Stockholders' Deficit                  3,295,421      3,418,593      6,714,014

</TABLE>


                                      -24-
<PAGE>



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

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


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


GENERAL


         We believe the timing is favorable, particularly in light of traffic
congestion problems affecting many of the nation's highways serving major
metropolitan areas during peak traffic hours (especially direct and connecting
routes to major airports where gridlock has become the norm), to introduce our
"Metro-Hop" Airport Shuttle Service. Our MASS service will provide regular,
scheduled passenger helicopter service between many of the nation's larger
metropolitan airports and surrounding city-based heliports. On March 27, 2006,
we commenced regularly scheduled flight operations between the Downtown
Manhattan Heliport and JFK International Airport. We expanded service to Newark
Liberty Airport in December 2006. We further expanded service from the East 34th
Street Heliport to Kennedy Airport and Newark Liberty Airport in February 2007.
On July 6, 2007, we commenced weekend service through September between
Manhattan and East Hampton, New York on a seasonal basis. We estimate that there
are annually over 29 million air passengers traveling in and out of Manhattan
who could utilize a regularly scheduled helicopter service to access major
airports, when it becomes available.


         Our principal target market is the business traveler who, we believe,
are willing to pay fares between $129 and $169. Individual travelers will
purchase tickets at the higher price range. Large corporate travel management
companies or corporations will purchase volume sales, which will be negotiated
at a "per-ticket-price" at the lower price range and will be based upon large
ticket commitments. Our approximate 8-minute regularly scheduled U.S. Helicopter
flight from Manhattan to Kennedy Airport stands in contrast to paying $850 to
$2,770 for the same flight offered by a charter helicopter service or paying
fares from $75-$125 plus tolls and tips for 65-125 minutes of travel time (or
longer) via taxi or limousine airport ride. While our service is available to
the general public including corporate CEOs and affluent leisure travelers, we
believe our service has the greatest appeal to the segment of the business
traveler market (like managers, directors, etc.) who use town car/executive car
services, limos or taxi transportation, travel 2-3 times per month and recognize
the true time-saving value offered via helicopter. We believe our service is
highly attractive (for personal reasons as well as business reasons) compared to
ground-based travel when the helicopter connection is reasonably and moderately
priced in the range that U.S. Helicopter offers.

                                      -25-
<PAGE>



         During 2006, we introduced our MASS service in the Metro New York City
market with service between Kennedy Airport and Newark Liberty Airport and the
Downtown Manhattan Heliport. In June 2006, we also commenced service between
Sikorsky Memorial Airport in Stratford, Connecticut and the Downtown Manhattan
Heliport. Beginning in February 2007 we expanded our service between Kennedy
Airport and Newark Liberty Airport to the East 34th Street Heliport. We intend
to expand our service to LaGuardia International Airport and the West 30th
Street Heliport in Manhattan during the next 12 months. Subsequently we intend
to introduce our airport shuttle service in the metropolitan Washington DC,
Chicago and Los Angeles markets, with further expansion into other major U.S.
metro-markets. The number of passengers who originate or terminate their travel
from within close proximity to one of these cities' heliports is estimated at
over 200 million annually. Over 29 million passengers originate or terminate
their trips from the island of Manhattan.


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


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


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


FINANCING TRANSACTIONS


         Since inception, we have incurred substantial operating losses. As of
September 30, 2007, we had an accumulated deficit of $(24,118,729). We did not
receive any revenues from inception until the start of operations on March 27,
2006. Our operations have been financed primarily through the sale of secured
convertible debentures, the cash exercise of outstanding warrants, the private
placement of our equity securities, 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.


OCTOBER 2007 PRIVATE PLACEMENT

         On October 17, 2007, U.S. Helicopter Corporation ("we") received gross
proceeds of $6,600,000 in a private placement transaction with International
Financial Advisors, K.S.C.C. ("IFA") pursuant to a Securities Purchase Agreement
dated October 15, 2007 (the "IFA SPA") and entered into on October 17, 2007. In
accordance with the terms of the IFA SPA, we issued to IFA 8,000,000 shares of
our Common Stock, plus warrants to purchase an additional 14,000,000 shares of

                                      -26-
<PAGE>

Common Stock, which have an exercise price of $0.01 per share and a term of five
years from the date of issuance. As an inducement to enter into the SPA, we also
agreed to issue to IFA warrants to purchase an additional 14,700,000 shares of
Common Stock, which have an exercise price of $0.01 per share and a term of five
years from the date of issuance. The 8,000,000 shares of common stock issued to
IFA are non-voting due to U.S. Department of Transportation regulations limiting
the amount of ownership of U.S. Helicopter (a domestic airline) by foreign
persons. To the extent that the shares may become voting shares in the future,
they will not become so if it would result in non-U.S. citizens holding more
than 24.99% of the voting stock or 49.9% of our total outstanding shares.

         In accordance with the terms of the IFA SPA, we agreed to increase the
number of our directors to nine and granted IFA the right to appoint one
additional director. As a result, IFA presently maintains the right to appoint
two directors to our Board, after taking into account IFA's right to appoint a
director in connection with a previous financing transaction between IFA and us
on October 26, 2005.

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

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

         We did not pay any commissions in accordance with this transaction.

AUGUST 2007 CONVERTIBLE DEBENTURE FINANCING

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

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

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

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

                                      -27-
<PAGE>


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

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

         As an additional condition to closing the August 2007 Debenture
transaction, our five most senior executive officers (collectively,
"Management") purchased shares of our common stock at a purchase price of $0.52
per share (the "Common Stock Purchase"). In addition, Management agreed to
reduce their salaries by 20% until such time as the August 2007 Debenture and
debentures previously issued by us to YA in the aggregate principal amount of
$1,600,000 are repaid in full (collectively, the "YA Bridge Loans"). After we
make such repayments, Management's salaries will be reinstated in full, and all
unpaid salary amounts will be issued to Management in the form of shares of our
common stock at a price equal to the greater of the volume weighted average
price of our common stock as quoted by Bloomberg, LP on the day prior to the
repayment date of the YA Bridge Loans or $0.50 per share. Each Management member
has the option, however, to receive payment of such unpaid salary in cash to the
extent of such Management member's contribution to the Common Stock Purchase
once the total indebtedness owed by us to YA is $5.0 million or less.

AMENDMENT OF PRIOR DEBENTURES AND WARRANTS

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

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

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

                                      -28-
<PAGE>


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

JUNE - AUGUST 2007 CONVERTIBLE NOTE FINANCINGS


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

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

MAY 2007 CONVERTIBLE DEBENTURE FINANCING


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


         Pursuant to the May 2007 SPA, we also agreed to issue to Cornell
Capital warrants to purchase a total of 99,144 shares of our common stock with
the following exercise prices: $1.00 per share (as to 31,250 warrants); $1.20
per share (as to 26,042 warrants); $1.40 per share (as to 22,321 warrants); and
$1.60 per share (as to 19,531 warrants). The warrants are exercisable for a
period of five years. In accordance with the terms and conditions of such
warrants, we reduced the exercise price of these warrants in August 2007 to
$0.50 per share as described above.


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


MARCH 2007 CONVERTIBLE DEBENTURE FINANCING


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

                                      -29-
<PAGE>



         The March 2007 Debenture is convertible at Cornell Capital's option
into shares of our common stock at a price per share equal to the lower of $0.50
per share or 95% of the lowest daily volume weighted average price of our common
stock ("Fair Market Value") for the 30 days prior to the notice of exercise, as
adjusted in accordance with the terms of the March 2007 Debenture. Cornell
Capital's conversion right under the March 2007 Debenture is subject to certain
limitations including that Cornell Capital may not convert the March 2007
Debenture for a number of shares in excess of that number of shares which, upon
giving effect to such conversion, would cause the aggregate number of shares of
our common stock beneficially held by Cornell Capital to exceed 4.99% of our
then outstanding common stock. In addition, Cornell Capital has agreed to not
sell any shares that may be acquired under the March 2007 Debenture until March
31, 2008; provided, however, that such limitation does not apply in the event
that the closing bid price of our common stock is greater than $1.75 for five
consecutive trading days, upon the occurrence of an event of default under the
March 2007 Debenture, if waived by Cornell Capital or to private resales by
Cornell Capital.


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


         We have agreed to grant a security interest to Cornell Capital covering
substantially all of our assets to secure our obligations under the March 2007
Debenture pursuant to an Amended and Restated Security Agreement. Pursuant to
the March 2007 SPA, we also agreed to issue to Cornell Capital warrants to
purchase a total of 155,481 shares of our common stock with the following
exercise prices: $1.15 per share (as to 47,827 warrants); $1.35 per share (as to
40,741 warrants); $1.55 per share (as to 35,484 warrants); and $1.75 per share
(as to 31,429 warrants). The warrants are exercisable for a period of five
years. In accordance with the terms and conditions of such warrants, we reduced
the exercise price of these warrants in August 2007 to $0.50 per share as
described above.


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


NOVEMBER 2006 CONVERTIBLE DEBENTURE FINANCING


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


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


                                      -30-
<PAGE>


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


         We have agreed to grant a security interest to Cornell Capital covering
substantially all of our assets to secure our obligations under the November
2006 Debenture pursuant to an Amended and Restated Security Agreement. Pursuant
to the November SPA, we also agreed to issue to Cornell Capital warrants to
purchase a total of 2,000,000 shares of our common stock with the following
exercise prices: $1.20 per share (as to 500,000 warrants); $1.35 per share (as
to 500,000 warrants); $1.50 per share (as to 500,000 warrants); and $1.65 per
share (as to 500,000 warrants). In accordance with the terms and conditions of
such warrants, we reduced the exercise price of these warrants in August 2007 to
$0.50 per share as described above.


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


OCTOBER 2006 WARRANT AMENDMENTS AND EXERCISE


         On October 20, 2006, Cornell Capital and we amended the terms of two
warrant agreements (the "Cornell Warrants") relating to the issuance of
1,250,000 shares of common stock each that were issued in connection with the
March 2006 Debenture (defined below). The Cornell Warrants contained exercise
prices of $1.00 and $1.15, respectively. To induce Cornell Capital to make an
additional investment in us via the cash exercise of the Cornell Warrants, the
Company agreed to reduce the exercise price of each Cornell Warrant to $0.70 per
share. On October 20, 2006, we issued a total of 2,500,000 shares of common
stock in connection with a notice of exercise of the Cornell Warrants received
from Cornell Capital on such date. In connection with this agreement, we also
agreed to issue additional warrants to purchase up to 500,000 shares of our
common stock with the following exercise prices: $1.20 per share (as to 125,000
warrants); $1.35 per share (as to 125,000 warrants); $1.50 per share (as to
125,000 warrants); and $1.65 per share (as to 125,000 warrants). In accordance
with the terms and conditions of such warrants, we reduced the exercise price of
these warrants in August 2007 to $0.50 per share as described above.


MARCH 2006 CONVERTIBLE DEBENTURE FINANCING


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

                                      -31-
<PAGE>



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


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


         In connection with this financing, we issued to Cornell Capital five
year warrants with the following exercise prices: 1,250,000 at $1.00 per share,
1,250,000 at $1.15 per share, 1,250,000 at $1.30 and 1,250,000 at $1.45. The
warrants containing exercise prices of $1.15 and $1.00 were amended in October
2006 as described above. We registered the shares issuable upon conversion of
the remaining 2,500,000 warrants (as well as the 2,500,000 shares issued upon
exercise of the amended warrants, as described above) in the May 2007
Registration Statement. We reduced the exercise price of 3,750,000 of these
warrants in August 2007 to $0.50 per share as described above.


OCTOBER 2005 CONVERTIBLE NOTE FINANCING


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


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


OCTOBER 2005 PRIVATE PLACEMENTS


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


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

                                      -32-
<PAGE>



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


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


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


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


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


PRIOR CORNELL CAPITAL FINANCINGS


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


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


2004 PRIVATE PLACEMENT


         In addition, in November and December 2004, U.S. Helicopter issued a
total of 63,200 of our Units to a limited number of accredited investors
pursuant to a private placement offering during 2004 (the "2004 Private
Placement"), in which we received $316,000 before payment of expenses associated
with the offering. In connection with the 2004 Private Placement, 20 persons
received a total of 316,000 shares of our Series A Convertible Preferred Stock

                                      -33-
<PAGE>

and 126,400 warrants to purchase our common stock, of which 63,200 warrants have
an exercise price equal to 125% of the conversion price of the Series A
Preferred Stock and the remaining 63,200 warrants have an exercise price equal
to 150% of the conversion price of the Series A Preferred Stock. We registered
the shares of common stock issued and issuable upon the conversion of the Series
A Preferred Stock and the warrants issued in the 2004 Private Placement in the
May 2007 Registration Statement. Between April 18, 2006 and May 18, 2007, the
holders of all shares of Series A Convertible Preferred Stock converted such
shares into a total of 300,048 shares of our common stock.


RESULTS OF OPERATIONS


NINE MONTHS ENDED SEPTEMBER 30, 2007 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 2006


         From inception on March 4, 2003 through March 27, 2006, the Company had
no revenues from operations and did not generate any revenues from operations
until March 27, 2006. For the nine months ended September 30, 2007, total
revenues increased to $2,769,422. For the nine months ended September 30, 2006,
our total revenues were $1,121,961.


         Payroll expenses increased to $2,971,321 for the nine months ended
September 30, 2007 from $2,029,193 for the nine months ended September 30, 2006.
The increase in payroll expense is due to the start of operations in March 2006
and a higher number of employees as we expanded operations in 2007.


         For the nine months ended September 30, 2007, the Company has incurred
professional fees totaling $1,391,905, compared to $1,224,451 for the nine
months ended September 30, 2006. These fees are comprised of legal fees for
general matters, accounting and audit fees, other consulting fees, transfer
agent fees and registered agent fees.


         Equipment lease expenses increased to $1,424,711 for the nine months
ended September 30, 2007 from $1,010,603 for the nine months ended September 30,
2006.


         Advertising expenses decreased to $420,126 for the nine months ended
September 30, 2007 from $1,050,761 for the nine months ended September 30, 2006.


         We reported an operating loss of $(8,176,944) for the nine months ended
September 30, 2007 compared to a net loss of $(7,158,664) for the nine months
ended September 30, 2006. The increase in operating loss is due to higher
revenue levels offset by an increase in expenses as we expanded our operation
significantly in the first nine months of 2007.


         We reported a net loss of $(11,384,852) for the nine months ended
September 30, 2007 compared to a net loss of $(5,160,420) for the nine months
ended September 30, 2006. The increase in loss is due to higher expense levels
offset partially by an increase in revenue as we expanded our operation
significantly in the first nine months of 2007. Net loss was also impacted by
significantly higher other income and (expenses) of $(3,207,908) for the nine
months ended September 30, 2007 compared to other income/(expenses) of
$1,988,244 for the nine months ended September 30, 2006. The difference in other
income/expense is due to higher interest expense, a gain from derivative
liability calculation in the first nine months of 2006 and a significantly
higher amortization of debt discount in the third quarter of 2007 as a result of
reducing the prices of our existing warrants.


         Basic and diluted net loss per common share was $(.32) for the nine
months ended September 30, 2007 compared to a $(.16) loss for the nine months
ended September 30, 2006.

                                      -34-
<PAGE>



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


         From inception on March 4, 2003 through March 27, 2006, the Company had
no revenues from operations and did not generate any revenues from operations
until March 27, 2006. For the three months ended September 30, 2007, total
revenues were $1,589,494. For the three months ended September 30, 2006, our
total revenues were $817,109.


Payroll expenses increased to $985,788 for the three months ended September 30,
2007 from $742,786 for the three months ended September 30, 2006. The increase
in payroll expense is due to the higher number of employees in the third quarter
as we expanded our operations. For the three months ended September 30, 2007,
the Company has incurred professional fees totaling $414,398, compared to
$426,528 for the three months ended September 30, 2006. These fees are comprised
of legal fees for general matters, accounting and audit fees, other consulting
fees, transfer agent fees and registered agent fees.


         Equipment lease expenses increased to $471,723 for the three months
ended September 30, 2007 from $415,585 for the three months ended September 30,
2006.


         Advertising expenses decreased to $60,740 for the three months ended
September 30, 2007 from $237,983 for the three months ended September 30, 2006.


         We reported an operating loss of $(1,991,444) for the three months
ended September 30, 2007 compared to an operating loss of $(2,527,106) for the
three months ended September 30, 2006. The decrease in operating loss is due to
higher revenue levels offset partially by an increase in expenses as we expanded
our operation significantly in the first nine months of 2007.


         We reported a net loss of $(4,076,383) for the three months ended
September 30, 2007 compared to a net loss of $(369,276) for the three months
ended September 30, 2006. The increase in net loss was impacted by significantly
higher other income/(expenses) of $(2,084,939) for the three months ended
September 30, 2007 compared to other income of $2,157,830 for the three months
ended September 30, 2006. The difference in other income expense is due to
higher interest expense, significantly higher amortization of debt discount and
amortization of deferred financing costs in the third quarter of 2006.


         Basic and diluted net loss per common share was $(.11) for the three
months ended September 30, 2007 compared to a $(.01) loss for the three months
ended September 30, 2006.


         Since inception, the Company has incurred operating losses. As of
September 30, 2007, our accumulated deficit was $(24,118,729).


LIQUIDITY AND FINANCIAL CONDITION


         We have financed our operations since inception primarily through
private placement financings with IFA and YA/Cornell Capital, private placements
of convertible notes with certain accredited investors, private placements of
common stock conducted in October and November 2005 and the 2004 Private
Placement. In August 2004, the Company closed on a $1.3 million convertible
debenture financing with Cornell Capital, which was funded in August 2004 (in
the amount of $1 million) and February 2005 (in the amount of $300,000). In
November and December of 2004, the Company closed on a private placement
offering of 63,200 Units to a limited number of accredited investors, pursuant
to which we received $316,000 before payment of expenses associated with the
offering. U.S. Helicopter received net proceeds of $206,300 in the 2004 Private
Placement, which was used for general working capital purposes and startup
costs. The Company closed on an additional $220,000 convertible debenture
financing with Cornell Capital in August, 2005. On October 26, 2005, the Company
closed on a $250,000 convertible note offering with Portfolio Lenders II, LLC.
In addition, in November, 2005, the Company closed on six common stock private
placement transactions with six investors for a total of $6,250,000, pursuant to

                                      -35-
<PAGE>

which the Company issued a total of 6,250,000 shares of its common stock. In
March 2006, we closed on an additional $6.0 million convertible debenture
financing with Cornell Capital. In October 2006, we received $1,750,000 in
connection with the cash exercise of two amended warrant agreements issued to
Cornell Capital. In November 2006, we closed on an additional $2.75 million
convertible debenture financing with Cornell Capital. In March 2007, we closed
on an additional $1.1 million convertible debenture financing with Cornell
Capital. In May 2007, we closed on an additional $500,000 convertible debenture
financing with Cornell Capital. Between June and August 2007, we closed on 15
convertible note financings in an aggregate amount of $772,000 in principal with
15 accredited investors. In August 2007, we closed on an additional $800,000
convertible debenture financing with YA. In October 2007, we closed on a private
placement transaction with IFA for a total of $6,600,000, pursuant to which we
issued a total of 8,000,000 shares of common stock and warrants to purchase an
aggregate of 28,700,000 additional shares of 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 bore interest at 10% per annum, was due
on February 23, 2007 and was convertible into shares of our common stock at the
lesser of $1.00 per share or 100% of the fair market value of our common stock
for the ten trading days prior to the conversion date, provided that the
conversion price was not less than $0.50 per share. As of June 21, 2007, the
holder of this note converted all sums due and payable into a total of 999,897
shares of our common stock.


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


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


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


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


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

                                      -36-
<PAGE>

will record deposits made to the manufacturer(s) as Deposits on our Balance
Sheet. These deposits could be used by the manufacturer(s) if there is an event
of default by us.


         In addition to the lease financing described above, it is currently
anticipated that the Company would place an order by March 31, 2008 for delivery
in late 2009 of four new aircraft at an average purchase price of $9.0 million,
and an additional fourteen (14) aircraft after 2009. The current anticipated
delivery schedule for the initial and additional aircraft for the balance of
2007 and 2008 as follows:

     o    November 2, 2005: Received one Sikorsky S-76B aircraft
     o    December 1, 2005: Received one Sikorsky S-76B aircraft
     o    February 14, 2006: Received one Sikorsky S-76B aircraft
     o    May 15, 2006: Received one Sikorsky S-76B aircraft
     o    December, 2007: Anticipated delivery of one Sikorsky S-76B aircraft
     o    March, 2008: Anticipated Delivery of one Sikorsky S-76B aircraft o
          May, 2008: Anticipated delivery of one Sikorsky S-76B aircraft

         The above dates for delivery of aircraft we have not yet received
represent the anticipated delivery to us. The aircraft will require
modifications to bring them to our standards, which we estimate will take
approximately 60 days per aircraft.


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


         To date our financing has come from the sale of $12.45 million of
convertible debentures, $1.75 million of warrant exercises, $0.3 million in
private placement proceeds in the 2004 Private Placement, $1.02 million from the
sale of convertible notes in 2005 and 2007 and $12.85 million in private
placement proceeds from the sale of our equity securities in 2005 and 2007. We
also have the ability to sell up to $11 million of our common stock to Cornell
Capital pursuant to an Amended and Restated Standby Equity Distribution
Agreement with Cornell Capital in April 2005 (the "New SEDA").


MANAGEMENT'S PLAN TO OVERCOME OPERATING AND LIQUIDITY MATTERS


         Our operating plan seeks to minimize our capital requirements, but
expansion of our flight services in the New York market and other markets will
require additional capital. As of September 30, 2007, we had $31,166 in cash. As
of October 31, 2007, we had $2.3 million in cash. As of the date of this report,
we believe that we will be able to satisfy our cash requirements through March
31, 2008, assuming no additional financing is completed. We believe that
additional capital is required to satisfy our cash requirements for the
following 12 months with our current cash and expected revenues from operations.
We have recently entered into a number of financing transactions (see Notes 11,
12 and 17 to our Financial Statements), and we are continuing to seek other
financing initiatives and have had, and continue to have, discussions with a
number of potential investors concerning investments in our securities.


         We are presently working to raise additional capital to meet our
working capital needs, for the repayment of debt and for capital expenditures.
During the next twelve months, we anticipate that we will need approximately
$10.0 million of working capital (inclusive of capital expenditures), $12.0
million of lease financing, and $0.8 million to repay debt.


         Such capital is expected to come from helicopter lease financing and
the sale of equity or debt securities, which may include the sale of common
stock under our existing $11 million New SEDA. As of the date of this report, we
are in discussions with financing sources for helicopter operating lease

                                      -37-
<PAGE>

financing. We believe that we will need to raise approximately $22 million
through $12 million of operating lease financing and $10 million of some
combination of debt, equity or New SEDA draws, we would have sufficient funds to
meet our needs for working capital, repayment of debt and for capital
improvements over the next 12 months. There can be no assurances, however, that
we will be able to complete such financings on terms favorable to us or at all.


GOING CONCERN MATTERS


         The accompanying consolidated financial statements have been prepared
assuming that we will continue as a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. We have incurred substantial net operating losses and used
substantial amounts of cash in our operating activities. Since our inception, we
have incurred losses, have an accumulated deficit, and have experienced negative
cash flows from operations. The expansion and development of our business will
likely require additional capital. This condition raises substantial doubt about
our ability to continue as a going concern. We expect cash flows from operating
activities to improve, primarily as a result of an increase in revenue, although
there can be no assurance thereof. The accompanying consolidated financial
statements do not include any adjustments that might be necessary should we be
unable to continue as a going concern. If we fail to generate positive cash
flows or obtain additional financing when required, we may have to modify, delay
or abandon some or all of our business and expansion plans.


RECENT ACCOUNTING PRONOUNCEMENTS


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


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


         In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures"
("SFAS 157"). SFAS 157 defines fair value and establishes a framework for
measuring fair value in accordance with generally accepted accounting
principles. This Statement also applies to other accounting pronouncements that
require or permit a fair value measure. As defined by this Statement, the fair
value of an Asset or Liability would be based on an "exit price" basis rather
than an "entry price" basis. Additionally, the fair value should be market-based
and not an entity-based measurement. SFAS 157 is effective for fiscal years
beginning after November 15, 2007. We are still evaluating the effects, if any,
SFAS No. 157 may have on our financial position, results of operations or cash
flows.

                                      -38-
<PAGE>



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


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


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


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


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


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

                                      -39-
<PAGE>



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


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.

                                      -40-
<PAGE>



         DEFERRED OFFERING COSTS AND DEFERRED FINANCING COSTS. We incurred
certain costs related to financing activities during the three-month periods
ended September 30, 2007 and 2006. These costs consisted primarily of legal
fees, placement agent fees and commissions which are related to the placement of
debt securities (deferred financing costs) and equity securities (deferred
offering costs).


         Additional Information. With respect to our cash requirements and
sources during the next 12 months, see Management's Discussion and
Analysis--Liquidity and Financial Condition. We will lease or purchase
approximately one additional used, low-time helicopter during the fourth quarter
of 2007. During that time period, we expect that our most significant
equipment-related and plant-related expenses will be a combination of helicopter
lease and/or debt payments (approximately $0.12 million). With respect to
changes in number of employees, we have 46 full time employees and 25 part-time
employees as of September 30, 2007 and expect to have approximately 50 full-time
and 25 part-time employees at the end of 2007.


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


                                  RISK FACTORS


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


         IN ADDITION TO THE RISK FACTORS SET FORTH IN OUR REPORT ON FORM 10-KSB
FOR THE YEAR ENDED DECEMBER 31, 2006, INVESTORS SHOULD BE AWARE OF THE FOLLOWING
RISKS:


RISKS RELATED TO OUR BUSINESS AND AVIATION INDUSTRY


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


         We began operations on March 27, 2006 but had no revenue from
operations prior to that date. We have relied on and will continue to rely on
significant external financing to fund our operations. To date our financing has
come from the sale of $12.45 million of convertible debentures, $12.85 million
in private placement proceeds from the sale of our common stock, $1.02 million
from the sale of our convertible notes, $0.3 million in private placement
proceeds from the 2004 Private Placement and $11.0 million that will be
available to us under a standby equity distribution agreement (the "SEDA funds")
upon the effectiveness of a related registration statement. We anticipate that
we will not need to raise additional capital to finance operations through
year-end 2007 but will need to raise additional capital to finance operations
through 2008, assuming that our results of operations reasonably correspond to
our business plan. We must also raise $12 million for the leasing of aircraft.


         Our operations since inception in March 2003 have not generated a
profit. We generated a net loss of $(17,865) during the period from inception in
March 2003 to December 31, 2003, a net loss of $(549,961) during the twelve
months ended December 31, 2004, a net loss of $(2,546,291) for the 12 months
ended December 31, 2005, a net loss of $(9,619,760) for the 12 months ended
December 31, 2006 and a net loss of $(11,384,852) for the nine months ended
September 30, 2007.


         We cannot assure you that financing, whether from external sources or
related parties, will be available on favorable terms. Our inability to obtain
adequate financing will result in the need to reduce or curtail business
operations. Any of these events would be materially harmful to our business and

                                      -41-
<PAGE>

may result in a lower stock price. We may need to raise additional capital to
fund our anticipated future expansion. No financing commitments for future
capital needs have been obtained as of the date of this report, although
discussions are being held.


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


         We have received our initial four aircraft between November 2005 and
May 2006. Our estimated delivery of seven aircraft through May 2008 is as
follows:

     o    November 2, 2005: Received one Sikorsky S-76B aircraft
     o    December 1, 2005: Received one Sikorsky S-76B aircraft
     o    February 14, 2006: Received one Sikorsky S-76B aircraft
     o    May 15, 2006: Received one Sikorsky S-76B aircraft
     o    December, 2007: Anticipated delivery of one Sikorsky S-76B aircraft
     o    March, 2008: Anticipated delivery of one Sikorsky S-76B aircraft
     o    May, 2008: Anticipated delivery of one Sikorsky S-76B aircraft

         The above dates for delivery of aircraft we have not yet received
represent the anticipated delivery to us. The aircraft will require
modifications to bring them to our standards, which we estimate will take
approximately 60 days per aircraft. These acquisitions would require financing
in the amount of $12 million. Acquisition of aircraft involves a variety of
risks relating to its ability to be successfully placed into service, including:

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

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


                   RISKS RELATED TO CORNELL CAPITAL FINANCING


         We are party to certain agreements with Cornell Capital relating to the
issuance of approximately $12.45 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). A total of approximately $9.6 million in principal of
convertible debentures are outstanding as of the date of this report. 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. Investors should take this into
account when considering the following risk factors.

                                      -42-
<PAGE>



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


         As of September 30, 2007, Cornell Capital held 3,198,935 shares of
common stock and, based upon the conversion rights under the March 2006,
November 2006 and March 2007 Convertible Debentures, could acquire up to
approximately 36.78% of our common stock based on a conversion price of $0.50
per share, or an estimated 52.08% if the conversion price is assumed to be $0.25
per share. The acquisition of such interest would be dependent upon the
occurrence of an event of default under the Convertible Debentures and a waiver
of Cornell Capital's restriction on owning more than 4.99% of our issued and
outstanding common stock. If Cornell Capital acquired such 36.78%-52.08% 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.

         WE DO NOT HAVE ENOUGH SHARES OF COMMON STOCK AUTHORIZED TO ISSUE SHARES
OF COMMON STOCK TO ALL HOLDERS OF CONVERTIBLE SECURITIES.

         As of the date of this report, we have a total of 44,887,936 shares of
common stock issued and outstanding, plus approximately an additional 72,000,000
shares of common stock issuable pursuant to outstanding warrants, options and
convertible debentures. Our Certificate of Incorporation currently authorizes
the issuance of up to 95,000,000 shares of common stock. As such, we currently
have an insufficient number of shares authorized to issue shares of common stock
assuming the full conversion of all outstanding convertible securities. We
intend to seek stockholder approval of an increase in the authorized number of
shares of our common stock to make available that number of shares of our common
stock as will be required for the issuance of all of our outstanding convertible
securities and equity securities to be issued as part of any new financing.
Although holders of a majority of shares of our common stock have indicated
their willingness to vote in favor of an increase in the authorized number of
shares of our common stock, no assurance can be given that we will be able to
obtain a stockholder vote in favor of such matters in a timely manner or at all.

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


                                     PART II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS


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

                                      -43-
<PAGE>



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


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

<TABLE>
<CAPTION>

EXHIBIT NO.     DOCUMENT DESCRIPTION                                                            LOCATION
---------------------------------------------------------------------------------------------------------
<C>             <S>                                                                             <C>
10.83           Form of Convertible Note Purchase Agreement                                       (1)

10.84           Form of Convertible Promissory Note                                               (1)

10.85           Form of Warrant                                                                   (1)

10.86           Securities Purchase Agreement between U.S. Helicopter Corporation and             (1)
                International Financial Advisors, K.S.C.C.

10.87           Warrant to Purchase 14,000,000 Shares of Common Stock Issued to International     (1)
                Financial Advisors, K.S.C.C.

10.88           Warrant to Purchase 14,700,000 Shares of Common Stock Issued to International     (1)
                Financial Advisors, K.S.C.C.

31.1            Certification of Chief Executive Officer pursuant to Section 302 of               (1)
                Sarbanes-Oxley Act of 2002

31.2            Certification of Chief Financial Officer pursuant to Section 302 of the           (1)
                Sarbanes-Oxley Act of 2002

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

32.2            Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,      (1)
                as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>


(1) Exhibit filed herewith.


         On August 30, 2007, we filed a Report on Form 8-K reporting on the
entry into a debenture purchase agreement with YA Global Investments, LP.


         On October 22, 2007, we filed a Report on Form 8-K reporting on the
entry into a securities purchase agreement and associated warrants with
International Financial Advisors, K.S.C.C.


                                      -44-
<PAGE>


                                   SIGNATURES


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

                                        U.S. HELICOPTER CORPORATION


Date:  November 19, 2007                By: /S/ JOHN G. MURPHY
                                           -------------------------------------
                                           John G. Murphy
                                           Chief Executive Officer and President
                                           (Principal Executive Officer)


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

                                      -45-