nFPABTMENTOF, •,;, -r] I 5 P U: 10 BEFORE THE … · BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY ... I. Aplication Form 3 ... Britten-Nomian BN-2 Islander and

BEFORE THE DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

nFPABTMENTOF,

•,;, - r ] I 5 P U: 10

Application of

Air Charter, Inc. dba Air Flamenco

for authority to conduct scheduled passenger operations as a commuter air carrier under 49 U.S.C. 41738

DOCKET

APPLICATION OF Air Charter, Inc. dba Air Flamenco

Communications with rcspect to tliis document should be sent to:

Francisco Torres PO Box 810352 Carolina, PR 00981 Telephone(s): (787)724-1105 office

(787) 405-1592 cell Fax: (787) 724-6345 Email; [email protected]

Date of Application: October 15, 2010

Notice: Any person who wishes to support or oppose this application must file an answer within 21 days after receipt of the application by the Department of Transportation and serve that answer on all persons served with this application.

mailto:[email protected]

CERTIFICATE OF SERVICE

I hereby certify that I have on this day served the foregoing application for commuter air carrier authority by first class mail, postage prepaid, upon the persons shown in the following service list.

Air Charter, Inc. dba Air Flamenco Francisco Torres President

Date of Service: November 30,2010

SERVICE LIST

FAA Flight Standard District OfTice POI: Radames Naveira Address; La Torre de Plaza las Ameritas

525FD Roosevelt Ave. Suite 901 San Juan, P.R. 00918

Puerto Rico Ports Authorithy P.O. Box 362829 San Juan, P.R. 00936-2829

Isla Grande Airport (SIG) Manager: Jose O. Gandia Phone: (787) 729-8790

Ceiba Airport (CBA) Managaer: Sigfredo Rivera Phone:(787)534-4101

Vieques Airport (VQS) Manager: Domingo Rivera Phone: (787) 741-8358 or (787) 741-0515

Culebra Airport (CPX) Manager: Sigfredo Rivera Phone: (787) 742-0022

Table of Content

Table of Content 2

I. Aplication Form 3

II. General Information 4

A. Applicant's Information 4

1. Address and Contact information 4

2. Applicant's History 5

3. Applicant's Fleet 6

4. Applicant's Authorities History 7

Ill.Corporate Structure and Ownership 8

A. Applicant's organization 8

IV.Management Expertise and Technical Ability 9

A. Organization Chart 9

B. Key Personnel Information 10

V. Financial Position and Operating Plans 15

Vl.Compliance Disposition 16

VII. Certification 17

VIII. Other Requirements 18

A. Insurance and Limits of Liability 18

B, Name/Tradename Registration 18

IX.Exhibits 19

Exhibit I - Safety Standard Affidavit 20

Exhibit 2 Air Cam'er Certificate 21

Exhibit 3 FAA Pre-Application Statement of Intent 22

Exhibit 4 Corporate Good Standing Certification 23

Exhibit 5 Sworn Affidavit of Citizenship for Francisco Torres 24

Exhibit 6 Sworn Affidavit of Citizenship for Ruben Torres 25

Exhibit 7 Sworn Affidavit of Citizenship for Cayetano Rodriguez 26

Exhibit 8 Resumes of Francisco Torres, Ruben Torres, and Cayetano Rodriguez 27

Exhibit 9 Financial Statemente as ofDecember 31,2007 28

Exhibit 10 Financial Statements as ofDecember 31,2008 29

Exhibit 11 Financial Statements as of December 31,2009 30

Exhibit 12 Financial Statements as of August 31,2010 31

Exhibit 13 Forecast Financial Statements for the Month Ending November 30,2010-October 31,2011 32

Exhibit 14 Certificate of Insurance 33

Exhibit 15 Interim Agreement 34

Exhibit 16 State Department Certification for Air Flamenco 35

Exhibit 17 Proposed Schedule Flights 36

I. Aplication Form

See attachment Application form GST 4507.

II. General Information

A. Applicant's Information

1. Address and Contact Information

Air Charter, Inc. dyT)/a Air Flamenco Physical Address: Mailing Address: Lindbergh Street Lot 7, South PO Box 224 Ramp Culebra, PR 00775 Isla Grande, PR 00907

Company phone (787) 724-1105 Company fax (787) 724-6345 Contact Person: Francisco Toires Position: President Phone:(787)405-1592 Email: airflamenco(S),yahoo.com

11. General Information (continued)

A. Applicant Information (continued)

2. Applicant's History Air Charier, Inc. d/b/a Air Flamenco (hereinafter refen-ed as Air Flamenco) was incorporated under the laws of the commonwealth of Puerto Rico on June 1,1987 by Mr. Edwin Tabales and Ms. Noemi Gonzalez. Mr. Tabales was then elected President and Ms. Gonzalez was elected Vice-President each acquiring 50% of the shares. On August 25, 1993, Air Flamenco was certified as an Air Carrier under the Federal Air Regulations Part 135 ON- Demand Passenger and On-Demand Cargo Operations. Air Flamenco had a fleet of six (6) aircraft consisting of Douglas DC-3, Britten-Nomian BN-2 Islander and Piper Cherokee Six PA-32. These aircrafts were used for charters and on-demand flights. On May 19,1998 Ms. Gonzalez acquired Mr. Tabales shares of Air Charter, Inc. corporate shares. In May 19, 1998 Ms. Gonzalez donated her Air Charter, Inc. corporate shares to her sons Ruben Torres and Francisco Torres, with 50% of the shares each and with one aircraft, a Piper Cherokee Six PA-32. Under the by-laws of the corporation a meeting was held and Mr. Francisco Torres was elected President-Treasurer and also Resident Agent, Mr. Ruben Torres was elected Vice-President- Secretary of the corporation. In March 15, 2000 and by corporate resolution resolved that the Corporation will also do business under the commercial name of Air Flamenco.

Soon after the transfer of Air Flamenco a contract was negotiated with UPS to fly their cargo to the islands of Vieques and Culebra. That same year (1999) the United States Postal Service put out bids in which Air Flamenco was awarded a contract to transport the U.S. mail from the San Juan, Puerto Rico hub to the islands of Vieques and Culebra which are located eleven and eighteen nautical miles fioni the eastern part of the main land of Puerto Rico, respectively. Due to the lack of a reliable ferry system (which is operated by the Puerto Rico Port Authority) to Vieques and Culebra Islands, in the subsequent years the volume of passengers and cargo has increased to a level that the company has had to acquired additional aircrafts of a higlier capacity (such as the Britten-Norman BN-2 Islander) to support the demands of the region particularly the San Juan, Vieques, Culebra and now Ceiba formerly Roosevelt Roads Naval Air Station. During the months of November thru February and May thru August the volume of passengers and cargo also increases. Therefore, during these high seasons the numbers of flints also increases. A continued and reliable service from Air Flamenco has connected the resident, businesses, government agencies, tourism(internal and external) making it an essential and much needed services which provide for the residents to commute to attend medical appointments and treatments(such as dialysis, chemotherapy and military veterans that attend the Veterans Hospital which is located on the main land in San Juan, Puerto Rico), government transactions and other family matters. Tourism is one of the primary sources of employment and economic impact in these islands of Vieques and Culebra. Our services is an important link to the economy of the islands since it is the feeder for hotels, guest houses, restaurants, taxis, car rentals, weekend rental houses and many other areas. These activities will be covered with 8 flights on schedule daily from Isla Grande to Culebra and 9 flights on schedule daily from Ceiba and Culebra.

To meet the business requirements Air Flamenco cun-ent facilities include a 22,665.32 sq/ft hangar with 24,197.18 sq/ft of ramp space in Isla Grande Airport at San Juan, Puerto Rico. All corporate and management offices are located within the hangar. All aircraft heavy maintenance and inspections are performed by qualified FAA Certified Airframe and Power Plant Mechanics with the exception of tlie avionics, engine overhauls and propellers which are subcontracted to FAA Certified Repair Stations. A stock of common and frequently used maintenance components and parts are maintained in a stockroom inside the hangar.

II. General Information (continued)

1. Applicant Information (continued)

3. Applicant's Fleet

Air Flamenco is conducting operations under 14 CFR Part 135 using the fleet listed in the following table:

AIRCRAFT §

moiGD

m03GD

N904GD

N90SGD

N906GD

m07GD

N908GD

N909GD

N913GD

N82JRR

SEATTim

9 Seats

9 Seats

9 Seats

9 Seats

9 Seats

9 Seats

9 Seats

9 Seats

9 Seats

9 Seats

CAPACITY

CARGO(POVNDS)

AVGISOO

AVGISOO

AVGISOO

AVGISOO

AVGISOO

AVGISOO

AVGISOO

AVGISOO

AVGISOO

AVGISOO

TYPE

Islander

Islander

Islander

Islander

Islander

Islander

Islander

Islander

Islander

Islander

MODEL

BN-2A

BN-2A

BN~2A

BN-2A

BN-2A

BN-2A

BN'2A

BN-2A

BN-2A

BN-2B

OWNED OR

LEASE

Owned

Owned

Owned

Owned

Owned

Owned

Owned

Owned

Owned

Owned

IF LEASED LESSOR

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Exliibit I is the sworn affidavit stating that the aircrafts listed as current fleet comply with the FAA safefy standards.

II. General Information (continued)

B. Applicant Information (continued)

4. Applicant's Authorities History

Air Flamenco is authorized to conduct operations under the provisions of Title 14 CFR Part 135. The following is the descriptions of special authorizations and limitations;

• Conduct Part 135 aircraft operations without a deicing/anti-icing procedure.

• Accept, handle, and carry materials regulated as Hazardous Materials (HazMat).

• Use only actual passenger and baggage weight (no combinations of average and actual weights) for all its aircrafts.

• Issue an International Civil Aviation Organization (ICAO) air operator certificate (AOC) through the Operation Safety System (OPSS).

• Use an approved Minimum Equipment List (MEL).

• Use an aircraft witli nine passenger seats witli the additional maintenance requirements of 14 CFR Section 135.421 applicable for aircraft engine, propeller and propeller control (governor).

• Use an aircraft with nine passenger seats with the additional maintenance requirements of 14 CFR Section 135.421 applicable emergency equipment.

• Use weight and balance control procedures.

Air Flamenco is authorized to conduct en route operations in the areas specified in the following list:

• Caribbean - Islands and Countries of the Caribbean Sea in the Eastern Caribbean (Lesser Antilles).

• Caribbean - Islands and Countries of the Caribbean Sea in the Greater Antilles Area, except the island of Cuba.

• Caribbean - Islands and Countries of the Caribbean Sea in the Northern Caribbean Sea, except the

island of Cuba,

• Caribbean - Islands and Countries of the Caribbean Sea in the Southern Cai'ibbean area.

• USA - The 48 contiguous United States and the District of Colombia.

The FAA Air Carrier Certificate number UOIA83IU reissued in April 16, 2009; refer to Exhibh 2 Air Carrier Certificate.

Air Flamenco has already sent a Pre-Application Statement of Intent (Exhibit 3) to FAA to change current registration to Commuter Air Carrier as per FAR 119.3. The request was issued to FAA Principal Operations Inspector Mr. Radames Naveira on October 6, 2010. Mr. Naveira reports to FAA/South Florida FSDO-19 Office which offices are located at 525 FD Roosevelt Ave., La Torre de Plaza Las Americas, Suite - 901, San Juan, PR 00918; telephone number (787) 764-6345, extension 254. Air Flamenco is also registered as approved effective date April 21, 2010 to perform air taxi operation on-demand passenger/ on demand caigo under the Pait 298 of tlie United States Department of Transportation.

III. Corporate Structure and Ownership

A. Applicant's organization

Air Flamenco is a closed corporation formed in the Commonwealth of Puerto Rico on June 6, 1987. The Exhibit 4 is a statement from the Office of the Secretaiy of State where the agency states that Air Flamenco is a company in good standing.

Air Flamenco partners (Francisco Torres and Ruben Torres) are citizen of the United States as shown in the sworn affidavits Exhibits 5 and 6 respectively.

Air Flamenco has authorized the issue of 1, 000,0000 common stocks with a par value of $1.00. Air Flamenco has issued 1,000 common stocks to Francisco Torres and Ruben Torres (shareholders) in equal portions $500.00 each.

The following table is the information of the Air Flamenco shareholders:

Name and Address

Francisco Tones Address: 400 Bo. Tortugo Apt #36 San Juan, PR 00926

Ruben Torres Address: Urb. Mansiones Reales Calle Principe de Asturias Guaynabo, PR 00969

Voting Shares

500

500

% of Total Shares OutstandinR

50%

50%

The blood relationship of brothers of Francisco Torres and Ruben Tories was established in the Section 11(A)(2) of this document.

IV. Management Expertise and Technical Ability

A. Organization Chart

AIR FLAMENCO ORGANIZATION CHART

legal Depstmenl ! 'i

VfcePreskteil

Optfafons-OliMtorof

: : . • •

I

Accninting Oopaitmeni

Administrate | Asttstail 1

Gensral Manager

Sa tes lMaMing

AirCogo

f!e»ivatian$

CaiflOHmdler

^ r

^?r

FSghlCVMiation OiiorPilot

PiMs

Station Manager

«sss

U e d h m s

Helpert

PuUicRalatlon

tela Grande SIQ

CeAie CBA

COMKB CPX

1. ONE MECHANIC FOR EVERY TWO (2) AIRCRAFTS

2, ONEANDHALFd.S jCRGWKERAlRCRArT

) . ONE (1) AGENT 1T.R COUNTER, ONE (]) BAGGAGE HANDLEIt ?ER COUNTER AGENT

IV. Management Expertise and Technical Abilit}' (continued)

B. Key Personnel Information

This section contains information of the key personnel positions and responsibilities such as Director of Operations, Chief Pilot, and Director of Maintenance of Air Flamenco. The key pereonnel performing these positions are Fi-ancisco Torres, Ruben Torres and Cayetano Rodriguez respectively who are US citizens. Please refer to Exhibit 5, 6, 7 for the sworn affidavits of citizenship. Furthermore, the Director of Operations and Director of Maintenance qualifications meet the requirement set forth in the sections 119.69 and 119.71 of the Federal Aviation Regulation (14 CFR 119.69 and 119.71), the Chief Pilot currently meets the requirement of sections 119.69 and the 119.71(d) and 119.71(d)(1) of the Federal Aviation Regulation (14 CFR 119.69, 119.71(d), 119.71(d)(1). However, it is expected that the Chief Pilot completes die FAA requirements for Air Transport Pilot within the course of evaluation of this application. Air Flamenco will notify the Department of Transportation upon completion. Their resumes are included in the Exhibit 8.

Francisco Torres Position: President Hired Date July 1,1998 Stocks: 50% Citizenship: USA Responsibilities:

1. Responsible for the total company operation. Management personnel which prior to the Company conduct a flight or a series of flights, must deteitnine if the flight can be conducted safely and in accordance with the regulations, the operations specifications, and Air Flamenco Standards, procedures and policies contauied in this Company Operations Manual (C.O.M.) and supported by the Training Manual. Although he may delegate this responsibility to other personnel, the ultimate responsibility is his.

2. If an emergency involving the safety of passengers and a pilot deviates from any rule in FAR Part 135, it will be the responsibility of the President to send to the nearest FAA District Office a complete report of the aircraft operation involved within 10 days, including a description of the deviation and the reasons for it. The President will be responsible for notification of overdue aircraft as outline in this manual and he will also be responsible for accident notification as per NTSB 830.

3. The President shall be responsible for recruiting and terminating all company personnel. He may delegate this responsibility to other persons with management responsibilities. The President will be highly knowledgeable of the company manual, FAA Regulations, state and government laws and regulations pertaining to tiie duties of his position.

4. The President shall be responsible for:

• Safe employees environment, training

• Good Business practice

• Equipments (aircraft) availability us business. Needs or development

• Investment & Expansion

• Marketing

5. Interaction with local Government Agency Port Authority, Health Dpt. Municipals, etc.

6. Establish current and long range goals, objective, plan and policies.

10

IV. Management Expertise and Technical Ability (continued)


7. Review Activity Reports and Financial Statements to determine progress and status in attaining objective and revise objectives and plans in accordance with current conditions.

8. Plans, coordinates and controls the Daily Operations of tlie Organizations manager.

9. Plans and develops market, labor and public relations policies designed to improve Company's image and relations witli Customer, Employees, Government Agencies and Public.

10. Evaluate performance of subordinate for compliance with regulatory agencies, policies and objectives.

11. Establish and maintain an effective system of communication throughout the organization

12. Ensures a safe working throughout the environment for all level

13. Will establish and supervise Training Program for Regulation Compliance and tliose related general business activities.

Francisco Torres Position: Director of Operations Date Hired: September I'", 2003 Stocks: 0% Citizenship: USA Responsibilities:

1. Responsible for overall operational functions of tlie Company.

2. Prior to conducting a part 135 Flight, must determine that the Flight or series of flight can be initiated, conducted or terminates safely in accordance with regulations, operations specifications, C.O.M. and supported by the training program.

3. Maintaining liaison with the FAA, coordinating and implementing additions, renewals and amendments to the Operation Specifications, and directing and coordinating the writing and revisions of the Operation Manual.

4. Operational responsibility for Company Aircraft accident reporting to appropriate government, industry and community groups,

5. Constantly being on alert for discrepancies and hazaixis of any nature observed or reported which might have an adverse effect on safe operations,

6. Shall formulate policies and practices for maintaining a high degree of proficiency and professionalism to ensure flight and ground safety are never jeopardized.

7. Will establish and supervise a ground and flight training program for the initial, recurrent and others type of training on company documentation of flight Crew Personnel.

8. Will be responsible for the correct maintaining of records reports and check rides under the current FARs are including all company documentation of flight Crew Personnel.

9. Qualifications and training of all crewmembers, including check rides and ascertains that Flight Crew Members maintaining proficiency, and maintaining all Fliglit Crew Record.

11



10. Furnishing all aircrafts with navigational aids, Route Charts and any necessaiy manual to conduct a safe flight.

11. Furnishing flight personnel witli information or instructions on flight procedures and pmctice.

Position: Pilot in Command Date Hired: September 1"', 2003 Stocks: 0% Citizenship: USA

1. Use good Judgment in any situations

2. Keep his medical certificate current and funiish a copy to the President

3. Report fully prepared for any ground and flight training schedule by the Company

4. Not consume any alcohol beverages including beer for a period of at least 8 hours before the time he/she is to report for duty

5. Comply with all duty and flight limitations of FAR's

Ruben Torres Position: Vice-President Date Hired: September 1**, 2003 Stocks: 50% Citizenship: USA Responsibilities:

1. Coordinates Operational Policies and Procedures with the President and assist in executing those policies and procedures.

2. Ensures proper report structure within the Company.

3. Help identify opportunities and areas for improvements within the Company.

4. Advise the President of the Company on Strategic Business Development and key Corporate planning issues that relate and impact the operations.

• Determine resources allocation.

• Keep the President informed about Business activities, performance, opportunities and recommended course of action.

5. Set performance goals tai lored to each activity.

• Maintenance Schedules

6. Implements productivity / quality metrics designed to minimize costs and enhance safety and efficiency.

7. Plan layouts workflow aircraft maintenance procedures.

8. Recruits, hires, coaches and develops staff.

12



9. Assist tlie President of the Company in budget preparation, short term and long term goals with overall corporate objective.

10. Ensures that working areas comply with OSHA, PROSHA, EPA and any otlier regulation agency.

11. Ensures that operations are conducted under FAR 13 5/119 for commuter Air Charter,

12. Performs additional assignments as required by the needs of the Company, or as Directed by the President.

Ruben Torres

Position: Chief Pilot Date Hired: September 1% 2003 Stocks: 0% Citizenship: USA Responsibilities:

1. Maintains familiarity with the operation of ail stations and report's findings and recommendations to the Director of Operations/ President.

2. Will be responsible for the Correct Maintaining of Pilot Records and check rides under the current FAR are including all company documentation of Flight Crew Personnel.

3. Review reports on pilots performance and reports to Federal Aviations Administration any circumstantial of non-conformances to FAR's.

4. Conducts Company crew member training and standardization and pilot training.

5. Monitors airplane flight manual crew activities, track crew cunency and ensures "AFM" currency,

6. Furnishing Flight Personnel witli navigational aids, Route Charts and issuing instruction, bulletin on flight procedures and practices.

7. As one of the management personnel he must determine and have sufficient knowledge of the following:

8. Whether a part 135 flight or series of flights can be initiated, conducted, or terminates safely and procedures approved in Air Flamenco operations specifications, company operations manual and the appropriate regulations.

9. Pilot in Command


11. Keep his medical certificate current and furnish a copy to the Director of Operation

Position: Pilot in Command Date Hired: September l'^, 2003 Stocks: 0% Citizenship: USA Responsibilities:


13



2. Keep his medical certificate current and furnish a copy to the President

3. Report fully prepared for any ground and flight training schedule by the Company

4. Not consume any alcohol beverages including beer for a period of at least 8 hours before tlie time he/she is to report for duty

5. Comply with all dufy and flight limitations of FAR's

Cayetano Rodriguez Position: Director of Maintenance Date Hired: July 15,2002 Stocks: 0% Citizenship: USA Responsibilities:

1. Responsibility to see that the Company's aircraft are maintained in accordance with airworthiness standards prescribed by applicable regulations. Airworthiness Directive (AD's) and standard aviation practice. Will be responsible to complete all required reports.

2. His duties consist of ensuring that the approved aircraft inspection program is current for all aircraft; ensuring tliat all applicable AD's are complied within the specified time, and retaining a chronological listing, devising a system for retaining the aircraft's time in service, ensuring compliance with reweighing multiengine aircraft for every 36 months, and certifying list of equipment installed for establishing empty weight and balance.

3. He monitors aircraft empty weight and balance revising the equipment list and empty weight and balance data when required. He ensures that an accurate record is retained for all maintenance performed on company aircraft. He ensures that all discrepancies area corrected or deferred by appropriately certified persons.

4. He may delegate the authority to perform his duties, but retains the responsibility.

5. The Director of Maintenance shall be an employee of the company. If maintenance is contracted out, the Director of maintenance shall provide the person(s) performing maintenance and inspections with appropriate company forms and manual. The Director of maintenance reports to the President.

Position: Mechanic Date Hired: September 1'*, 2003 Stocks: 0% Citizenship: USA Responsibilities:

1. Perform 50, 100, 500 and 1000 hrs inspection and line checks including troubles hooting

2. Perform line maintenance

3. MEL Management Program

4. Weigli and Balance Program

5. Suspect Unapproved Parts

14

V. Financial Position and Operating Plans

Air Flamenco financial statements for the years 2007,2008, and 2009 are part of .Exhibit 9,10, and 11 respectively. Statements corresponding 2010 are part of Exhibit 12. The forecast financial statements are shown in Exhibit 13 which contains Air Flamenco Forecast financial information under the commuter air carrier operations.

15

VI. Compliance Disposition

Air Flamenco has an excellent compliance records with the law, rales, and regulations of the FAA, DOT and local government agencies. Tliere is neither pending enforcement action nor formal complaints on file that involves Air Flamenco it Statures or Directive. However, the FAA has issued an investigation letter dated August 23, 2010 stating FAA discovered that Air Flamenco may have been conducting scheduled, or a commuter operation which is outside the scope of their carrier certificate and authority contrary to Federal Aviation Regulation (FAR) 14 CFR 135.3 (a) 1,135.243 (a). 119.3, 119.5 (g), (i), (k), (1). The investigation is ongoing, at the present time, the FAA has not taken legal actions to revoke or cancel Air Flamenco certificate.

However, Air Flamenco directives are taking actions to request both the FAA and Department of Transportation for a new certificate and autliority respectively to comply with FAR 135,119 and DOT Part 298.

16

VII. Certification

Pursuant to Title 18 United States Code Section 1001,1 [Francisco Torres], in my individual capacity and as the authorized representative of the applicant, have not in any manner knowingly and willfully falsified, concealed or failed to disclose any material fact or made any false, fictitious, or fraudulent statement or knowingly used any documents which contains such statements in connection with preparation, filing or prosecution of the application. I understand that an individual who is found to have violated the provisions of 18 USC section 1001 shall be fined or imprisoned not more than five years, or both.

'^!t<&9^LiSk..<0^ y^^ - ' -Q - - y c > l / ' l ^ o i o

Francisco Torres

President

Air Flamenco

17

VIII. Other Requirements

A. Insurance and Limits of Liability See Exhibit 14 and 15 for Certificate of Insurance (OST Form 6410) and the Interim Agreement (OST Fonn 4523).

B. Name/Tradename Registration

In March 15, 2000 and by corporate resolution resolved "That the Corporation will also do business under die commercial name of Air Flamenco. Air Flamenco will not be a separate entity from Air Charter, Inc. The use of the commercial name will only be for the purpose of marketing and publicity". The registration of Air Flamenco was certified by the Government of Puerto Rico Department of State in San Juan on April 3,2000 as stated in the certificate shown in Exhibit 16.

In addition, the Federal Aviation Administration had issued and approved the Operations Specification to Air Flamenco

18

IX. Exhibits

All Exhibits start in next page.

19

Exhibit 1- Safety Standard Affidavit

20

AFFIDAVIT OF SAFETY COMPLIANCE

STATE OF PUERTO RICO

COUNTY OF SAN JUAN

Francisco Torres, being first duly sv rom, deposes and says:

1. That he is duly elected, qualified and serving as President, of Air Charter. Inc. d/b/a Air

Flamenco, and that he is authorized to and does make this affidavit for it.

2. That all aircraft owned by Air Charter, Inc., d/b/a Air Flamenco have been certified by the

Federal Aviation Administration and currently comply with all applicable Federal Aviation and

Administration safety standards imder parts [ 121 ] [ 135], as well as the noise standards of Part 36 of

the Federal Aviation regulations.

".^•l-'tCtHsS^^

AfFidavit:529

Subscribed and sworn to before me by Francisco Torres, of legal age, single and resident of San Juan, Puerto Rico. In San Juan, Puerto Rico, this 28* day of September, 2010.

\ ^ ^ - :X

Exhibit 2 Air Carrier Certificate

21

USOeponment CTronsportOtion

Air Carrier Certificate

This certifies that Air Charter, Inc.

Lindberg Street South Ramp Lot 7 Fernando Luis Ribas Dominicci Airport

San Juan, P.R. 00907

has met the requirements of the Federal Aviation Act of 1958. as amended, and ttw rules. regulations, and standards prescribed thereunder for the issuance of this certificate and is hereby authorized to operate as an air carrier and conduct common carriage operations in accordance with said Act and the rules, regulations, and standards prescribed thereunder and the terms, conditions, and limitations contained in the approved operations specifications.

This certlticate is not transferable and, unless sooner surrendered, suspended, or revoked, shall continue in effect indefinitely.

By Direction of the Admini^rator

Certificate number: UOIASSIU ^ t*- Sergio Lopez

Effective date: August 2 5 . 1993 R e i s s u e d : A p r i l 16 , 2009 Issued at. SO-19

(Signature)

Manager SF FSDO (Tiile)

Southern Region/FSDO-19 (Region/Office)

FAA Form 843018 (6S7)

Exhibit 3 FAA Pre-Application Statement of Intent

22

Foriri Approved 0MB No. 2120-0593

01/31/2008

^ PREAPPLICATION STATEMENT OF INTENT

u s Department of Transportation Federal Aviation Adnînistratlon

P i f t m o t k Reduc t ion Ac t Stalemant; Tllle 49 U.S.C., Section 44702 empowers the Secrel«jy of Transportaiion to is iue air carter opereting certificates and to »tat>lteh minimum eafety standards for l i ie operation of the air cait iar (o whom sucli certiticatos are issued. The eompleted Proapplicalion Stalemom of Intent (PASI) denotes an Intent tiy the applicanl lo continue tfte cortirffiallon process. Ttie local FAA Ftisi i l Standards Oistticl Office (FSDO) uses Die PASI ID eia luate the compiexity of the proposed operation. The FAA will use the Infomatlon it oolleots arsi reviews to ensure complianoe and adherence to regulallans and. if necessary, take enloroemenl action on violntois of the regulations. Ttie FAA estimates the average tHiiden for this oeniricale application process, to include pnxessing of this form, is 96 hours. Respondents have been given no assurance of ccmttdentlalily. An agency may mjt conduct or sponsor, and a person Is not required to respon to a collection of information unless It displays a curaentiy valid 0 M B control number. Tl ie OMD control number associated with this collection is 2120-0593. Comments oonoemino the accuracy of this bunlen and sugassliofts tor reducing the burden should De dirapted to the FAA at: 800 Irrieoendence Ave SW. Washinoton. DC 205^1. Attn: Information ColiedJon Clearance OHie^. ABA-20.

Section 1A. To Be Completed By All Applicants 1. Name and mailing address of company

Air Charter, Inc dba Air Flamenco P.O. Box 810352 Caroiina, P.R. 00981-0352

2. Address of principal base iwhere operations will be conducted (do not USB post office box)

Lindberght street south ramp lot 7 Isla Grande Airport San Juan. P.R. 00907

3. proposed Startup d^te November 15. 2010

A. Requested three-letter company Identifier In order of preference 1. W 2. A 3. F

5. flilanagement Personnel

Name (Last, first, middle) Title Telephone (including area code)

Torres. Francisco

Torres, Ruljen

Rodriguez. Cayetano

Director of Operatio'i

Chief Pilot

Director of IMaintenance

787-405-1592

787-403-6231

787-923-3911

Section IB . To Be Completed By Air Operators 6. Proposed type of operation (check as many as

S I Air terr ier Ceitificate D Part 121

C J Operatins Certificate O Part 125

E Part 135

applicable)

u i l PassertgNs and Cargo

O Cargo Only

l £ l Scheduled Operatioi^

i H i Non$cheduled Operations

Q Single Pilot Operator

L J Single Pilot4n-ConDmand Operator

O Basic part 135 Openator

Section 10. To Be Completed By Air Agencies

7. Proposed type of agency and ratlng(s)

O Part 145 Impair Station

L i Domestic

L H Foreign L J ^ e w L J Renew

D Satellite

G Airfranie Q Inatniment

L J Powerplant

L J Propeller

D Radio

Siwi Junn Facility LJ Part 147 Maintenance Technical School LJ Airframe LJ PowBiplant Death OCT 0 6 2010

L J Accassory

L J Specialized Service

Part 149 Parachute Loft 'rime:. / i f : r

INT ^

^ Section ID. To fie Completed By Air Opwatars

8. Aircraft Data Numbers and types of aircraft (t>y make, model, and

NQOIGD Islander N903GD Islander N904GD Islander N905GD Islander Ng06GD Islander N9076O Islander NdOSGD Islander N909GO Islander tvt913G0 Islander N821RR Islander

BN-2A-26 BN-2A-8 BN-2B-26 BN-2A-9 BN-2A-26 BN-2A-26 BN-2A-26 BN-2A-8 aN-2A-8 BN-2A-9

S/N 855 S/N 625 S/N 2128 S/N 339 S/N 3008 S/N 340 S/N 2040 S/N 239 S/N 198 S/N 338

Number of passenger seats or

cargo payload caoacity

9 seat or ISOOIbs 9 seat or ISOOIbs 9 seat or ISOOIbs 9 seat or 1500lbs 9 seat or ISOOIbs 9 seat or ISOOIbs 9 seat or ISOOIbs 9 seat or ISOOIbs 9 seat or ISOOIbs 9 seat or ISOOIbs

9. Geographic area of Intended operations Caribbean- islands and Countries of the Caribbean Sea in the Eastern CarJbbean(Lesser Antilles) area. Caribbean- Islands and Countries of the Caribbean Sea in the Grater Antilles area.except the island of Cuba. Caribbean- Islands and Countries of the Caribbean Sea in the Northern Caribbean area, except the island of

Cuba. Caribbean- islands and Countries of the Caribbean Sea in ttie Southern Cartt>bean area. JSA- The 48 contiguous United State and the District of

Columbia.

FAA Form 8400-6 <6-95) Supen»tlee Pravloue Edition NSN00S2-00ree9-4002

Sectiffn tF, To Be Complete By All Applicants

10. Additional information that provides a t)etter understanding of the proposed operation or business (attach additional s/>eefs, if necessaiy)

Air Charter, Inc. is applying for the FAR 135 Commuter Air Carrier to support the demand of passengers and cargo to/from the region of San Juan, Vieques, Culebra and Ceiba. The increase in demand is due to an unreliable ferfy system operated by the Puerto Rico Port Authority and the need of the population of Vieques and Culebra lo access to medical services, appointments, and treatments (including and not limited to cancer and diabetes patients and veterans); universities and colleges; and government agencies. In addition, tourism is one of the primary sources of employment in Vieques and Culebra. Areas such as hotels, guess houses, restaurants, taxis, car rentals, weel<end rental houses, and many more business are fed by Air Charter, Inc dba Air Flamenco.

11. The statements and information contained on this form denote an Intent to apply for FAA certification. Signature 3^ - ^ Date

October 06 ,2010

Natne and Title

Francisco Torres Director of Operations

Section 2. To Be Completed By FAA District Office

Received by (district office): Date forwarded to Region:

Date: For: Q Action D Infotmation only

Remarks

San Juan Facility

OCT ft 6 2010

Time:

INT_

J ^ Mf

Section 3. To Be Completed By Regional Office

Received i>y: Precertlfication Number:

Date: Date coordinated with AVN-120:

District office assigned responsibility: Date fonwanied to district oftice;

Rennarks

F A A F o r m 6400-6 <S.9S) supersedes Previous Edition N8N: 0052-00-889.4002

Exhibit 4 Corporate Good Standing Certiflcation

23

Gobierno de Puerto Rico DEPARTAMENTO DE ESTADO

San Juan, Puerto Rico

CERTIFICADO DE CUMPLIMIENTO ("GOOD STANDING")

Yo, KENNETH McCLINTOCK HERNANDEZ, Secretario de Estado del Estado Libre

Asociado de Puerto Rico,

CERTIFICO: Que, a tenor con las disposiciones de la Ley General de Corporaciones,

"AIR CHARTER, INC.", registro 66559 una corporacion con fines de lucro organizada

bajo las leyes del Estado Libre Asociado de Puerto Rico ha cumplido con la radicacion

de Informes Anuales.

EN TESTIMONIO DE LO CUAL, firmo la

presente y hago estampar en ella el Gran Sello

del Estado Libre Asociado de Puerto Rico, en

la ciudad de San Juan, hoy 6 de octubre de

2010.

^-QALQiuAoi KENNETH McCLINTOCK HERNANDEZ Seoretario de Estado

KfAH/mara 0830643/0711 $30.00

Exhibit 5 Sworn Affidavit of Citizenship for Francisco Torres

24

AFFIDAVIT OF CITIZENSHIP


COUNTY OF SAN JUAN

Francisco Torres, being first duly sworn, deposes and says:

1. That hg/she is duly elected, qualified and serving as Director of Operations, of Air Charter. Inc. d/b/a Air Flamenco, and that jjp/she is authorized to and does make this affidavit for it.

2, That Francisco Torres, is a citizen of the United States within the meaning of 49 U.S.C. 4012(a)(15).

Affidavit:527

Subscribed and sworn to before me by Francisco Torres, of legal age,single and resident of San Juan, Puerto Rico. In San Juan, Puerto Rico, this 28* day of September, 2010.

• w . / / / .

Exhibit 6 Sworn Affidavit of Citizenship for Ruben Torres

25



COUNTY OF SAN JUAN

Rub^n Torres, being first duly sworn, deposes and says:

1. That iie/she is duly elected, qualified and serving as Chief Pilot, of Air Charter. Inc d/ba Air Flamenco, and thatijg/she is authorized to and does make this affidavit for it.

2. That Ruben Torres, is a citizen of the United States within the meaning of 49 U.S.C. 4012(a)(15).

. / ^ ^

AfGdavit:528

Subscribed and sworn to before me by Ruben Torres, of legal age, married and resident of San Juan, Puerto Rico. In San Juan, Puerto Rico, this 28* day of September, 2010.

Exhibit 7 Sworn Affidavit of Citizenship for Cayetano Rodriguez

26



COUNTY OF SAN JUAN

Cayetano Rodriguez, being first duly sworn, deposes and says:

1. That hg/she is duly elected, qualified and serving as Director of Maintenance, of Air Charter Inc. d/b/a Air Flamenco, and that Jie/she is authorized to and does make this affidavit for it.

2. That Cayetano Rodriguez, is a citizen of the United States withm the meaning of 49 U.S.C.4012(a)(15).

$ ^ < ^ ^

Affidavit:526

Subscribed and sworn to before me by Cayetano Rodriguez, of legal age, single and resident of Toa Alta, Puerto Rico. In San Juan, Puerto Rico, this 28* day of September, 2010.

mM. .r - '!:\

Exhibit 8 Resumes of Francisco Torres, Ruben Torres, and Cayetano Rodriguez

27

400 BO. Tortugo Apt. 36 San Juan, PR 00926

761.787-724-1106 Gel. 787-405-1562

FRANCISCO TORRES GONZALEZ

Objective

Accomplishmîts:

To obtain my professional skill as President and Director of Operations on the Company.

• Increase aircraft fleet since acquired the position as a President • Increase revenues acquired by cargo contact. " Expanding Charter routes throughout different destinations. • Develop business relationship, with Government Municipalities of Vieques

and Culebra

Experience J i i ly 1,1998-Present Air Line San Juan, PR

President

Air Cliarter, inc

July 1,1998-Present Air Charter, Inc Air Line San Juan, PR

Pilot in Command

• Air (barter, Inc d/b/a Air Flamenco is part 135 on demand operator. • The Caribbean FSDO 21 holds the Air Canier Certificate.

October 25.1996 to April 1,1998 Flamenco Airways San Juan, PR Airline

LdOader Supervisor

" Flamenco Airways {no longer in existence), was apart 135 commuter Air Carrier whose certificate was held by the Caribbean FSDO 21.

November 20,1995 to March 10,1996 West Atlantic Air San Juan, PR Airline

Station IWanager

• West Atlantic (on longer in existence), was a part 125 Mr Cam'er whose certificate was held by the Caribbean FSDO 21.

Education 1993-1997 Universidad Metnspolitan San Juan, PR « B.A., Business Administration.

1994-1994 Caribe Aviation • Private Aviation

San Juan, PR

1995-1995 Caribbean Flight Training • Instalment Pilot

San Juan, PR

1996-1996 CaribeAwation • Commercia! and Mutfi-Engine

San Juan, PR

400 Bo. Tortugo Apt. 36 Tel. 787-724-1105 San Juan, PR 00926 Ce). 787-405-1592

FRANCISCO TORRES GONZALEZ

Filght Qualifications Airline Transport Pilot Total Time: 2515.3 P.I.C: 2467.2

Single Engine: 573.7 Airplane Multiengine Land Muiti-Engine: 1893.5 Commercial Privilege Night Flight: 280.4 Airplane Single Engine land & Sea Cross Country: 2212.7

Reference Upon Request.

1**

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Ruben Torres Gonzalez P.O. Box 810352, Carolina, PR 00981-0352

Mobile Phone: (787)403-6231 email: rtorresn901 @gmail.com

FLIGHT TIME TOTAL 4,560 Multi Engine 3,220 PIC 4,445 Single Engine 1,340 Cross Country 3,290 NightFIight 418 Flight Simulator 21.9 Totallnstrument (Hood) 86

RATINGS & CERTIFICATES • Commercia! Pilot: Instrument Airplane, Single Engine Land

and Sea and Multi Engine Land. • FAA Second Class Medical • FCC Radio Operator Certificate

EMPLOYMENT EXPERIENCE

2004 to Present

August 1998

October 1997

February 1997

September 1994

EDUCATION

December 1997

July 1997

April] 997

September 1994

Air Charter, Inc. Chief Pilot, Vice President

Air Charter, Inc. Pilot, Vice President

Aerial Imagine Pilot

Aerial Architectural Photography, Inc. Pilot

Flamenco Airways, Inc. Loader

Caribbean FlightTrainmig • Instrument Pilot(ASFJ AMEL)

Jack Brown's Seaplanes Base • Single Engine Sea Rating

Caribe Aviation • Commercial Pilot

Caribe Aviation

San Juan, PR

San Juan, PR

Bayam6n, PR

San Juan, PR

San Juan, PR

San Juan, PR

Winter Haven, FL

San Juan, PR

San Juan, PR • Private Pilot

SKILLS Pilot Expirience in C-150/C>210/C-206/Pa-32-260/Pa-28-140/ Pa-23-160/Pa-23-I50/Pa-23-150/Pa-23-300/BN-2A/PJ3-S.

AMERICA » J>% JWMniMABNMMMiMM y j ^

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CAYETANO RODRIGUEZ DIAZ

OBJECTIVE

EXPERIENCE

To offer the best of my knowledge and experience in a challenging position in a progressive enterprise where the opportunity of professional gro-wing, human enhancement and a attractive working environment motivate me every day to work toward tlie goals of die institution, marking it through my dedication and ability to be successful.

July 15,2002-PresentAir Charter, Inc dba Air Flamenco San Juan, PR

Director ofMaitiUtJance • Provide gridance, direction and training to personnel under my supervision.

• Ensure all maintenance inspections, part handlings and record keeping is coarried out in accordance with die procedures set forth in Company Manuals and Appropriates fars.

• Monitor Aircraft empty weight and balance revise the equitpment list and empty or operate weight and balance data when required.

• Approved ale inspection program is current for aB aircraft ensuring that all applicable AD'S are complied witiiin the specified time, and retaining a chronological listing.

Jan 17, 2001 to July 13,2002 (Part Time)

Aircraft Mechanic

• Perform 50 and 100 hrs inspection

• Perform line maintenance

June 3,1998 to July 22,2002 Isla Nena Air Service, Inc Vieques, PR

Aircraft Mechanic. Airline

« Perform 50 and 100 hrs mspecrion

• Perform line maintenance.

May 10,1992 to Jun 14,1998 Tol Air, International Airport of Puerto Rico San Juan, PR

Aircraft Mechanic Airline

• Perform 100 hrs inspection and line checks including trebles hooding.

Aug 29,1987 to May 11,1992 Flamenco Air Ways

Aircraft Mechanic Airline

• Perform 50-100-500-1,000 hrs inspections

• Perform line maintenance

San juan, PR

ADITINAL EXPERIENCE

EDUCATION

Piper Cheroike, PA-300, Piper A:êcPA-23-250, Cessna 152, 172, Cessna 402, Cesna Caraban, Britten Norman Islander, Beech Craft Super 18 Twin Engine (Twin Beech), Douglas DC-3, Convair 240,340,440.

1987-1989 Miguel Such. Vocational School • Airframe, Power Plant, curriculum certificates and ratings

« FAA Airframe / PP certificate

» FAA Inspection Certificate authorization (lA).

San juan, PR

OVERVIEW

Highly motivate individual with a special talent for working with people from all walks of life. Quick to learn new tasks and adapt to dynamic environments. Disciplined in the procedural aspects of a job, while independent minded in order to ensure die flexibiltity to understand and apply new concepts and ideas. Effective in the set-up of priorities and establishing objectives, excellent interpersonal relations within the organization and with outsiders alike. Strong leadership and communication skills. Computer oriented. Good presentation skills.

REFERENCES

Will be fiitnished upon request.

FAX (123) 098-7fi54 - E - M A I L [email protected]

BO. O n r i Z SECTOR V E L I L L A ' T O A A L T A , P R 0095.^ • P H O N E (787) 92.')-.'i911

mailto:[email protected]

mpp^m!fr'.J:^'^WM

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:e^. . l^l 'Slv! - ' r i f e - ! •:.J-?v.J)'j'J...-'-.'^.-"j|.4 I =

Exhibit 9 Financial Statements as ofDecember 31,2007

28

AIR CHARTER, INC. FINANCUL STATEMENTS

DECEMBER 31,2007 TOGETHER WITH INDEPENDENT

AUDITOR'S REPORT

DiAZ B E R C N E S / H M.\fniL\ DiA/ |ill!<;Nti. (:.P.A.

J A C O B O i J B m PiDRo F. M<(>oo. c:.PA., CKP.

CON2ALE2 / M m (una OONXAU/, CPA w,^.f. i j^^m MANimvioTA, c.f'.A., c.v.A. xCo.

'CBlTinBlFtlBlG ACCOUNTANrs

INDEPENDENT AUDITOR'S REPORT

To: The Board of Directors of Air Charter, Inc. Carolina, Puerto Rico

We have audited the accompanying balance sheet of Air Charter, I|tic. as ofDecember 31,2007, and the related statements of income and retained ^mings, and cash flows for the year then ended. These financial statements are the responsibility of the Company'smanagement. Our responsibility is to express and opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whe&er die financial statements are free of material misstatement. An audh includes examining, on a test basis, evidence supporting the amouttts and disclosures in the fmancial statements. An audit also includes assessing the acoountmg principles used and significiant estimates made by management, as well as evaluating the overall financial staitement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to in the first par^rpph present fairly, in all material respects, the financial position of Air Charter, Inc. as of Decembeij 31,2007, and the results of its operations and its cash flows for the year then ended in confornjity with accountmg principles generally accepted in the United States of America. ^ ^ ^ ^ ^

Januaiy 31,2008 . . .^K«S^CO"^'Si&^^ StN*^

San Juan, Pit&0^^\^ '^fi• '" ': • ,,.x.v' License #22 Expiring cg^ i^ t^ ' i \ 7p3&^

\)&(Ti V y o POBOX 361401, SANIUAN, PUERTO RICO 00M6-1401 • TEL. 787 77.3 0101 • FAX 787 77:10115

CURRENT ASSETS

AIR CHARTER, INC. BALANCE SHEET DECEMBER 31,2007

ASSETS

Cash Accounts receivable Prepaid income tax Prepayments

125,220 825

10,459 82.143

218,647

PROPERTY AND EQUIPMENT

Aircraft Leasehold improvements Vehicles Office OfBce equipment Computers

Accumulated depreciation and amortizatHnfob.«f"^fet^Wi^ '' ji? / ,.

1,976,904 54,490 42,515

450,000 58,842 15,995

2,598,746 (1>400,571)

198,175

" ^ ^ ^ ^ 16,822

The accompanying notes are an integral part of this balance sheet.

CURRENT LIABILITIES

Current portion of: Loans payable Notes payable Accrued interest payable

Accounts payable Accrued expenses payable

LONG TERM DEBT

Loans payable Notes payable Accrued interest payable

AIR CHARTER, INC. BALANCE SHEET

DECEMBER 31,2007

LIABILITIES

STOCKHOLDERS' EQUITY J ^

Common stock of $ 1 par valu§ i M j s g ^ k ^ l l j g ^ ^^^Tter^ authorized; 1000 shares issued a & t e j ^ | ^ 9 ^ ' a < ? > 4 ^ J V ? s ^

Additional paid in capital Pn^y^^Â?¥^^& Retained earnings

6,

$

' ' ' ^ ^ ^ ? 2 ^ ^ -

51,015 88,900 55,438 25,475 12,703

233,531

572,729 305,800 72,264

950,793

IJH324

1,000 110,000 121,498

$ 1,416.822


AIR CHARTER, INC. STATEMENT OF INCOME AND RETAINED EARNINGS

FOR THE YEAR ENDED DECEMBER 31,2007

REVENUES

Service income $ 3,001.503

OPERATING EXPENSES

Salaries and payroll taxes 516,727 Gasoline and oil 595,766 Depreciation and amortization 330,652 Repairs and maintenance 536,377 Professional fees 250,552 Insurance 175,180 Landing and passenger fees 204,536 Rent 88,574 Utilities 46,545 Credit card commissions 28,662 Office expenses 32,511 Vehicles 15,734 Representation and travel 1,770 Other taxes 14,525 Advertising 4,745 Other expenses Tftpot, 237

Income fmm operations ^ Q k ^ ^ ' ^ S s ^ ^ ^ ^ ^ ^ ^ ^

The accompanying notes are an integral part of this financial statement.



OTHER INCOME (EXPENSES)

Interest income Gain on disposal of property and equipment Interest expense and bank charges

Income before income tax

Income tax

NET INCOME

Retained earnings, beginning of the year

1,578

(114.942)

(113,364)

45,046

(11,381)

33,665

R«.ta«)«.™i,.g,,«ioftoyca, t B E S E W W ^ ^ ^ ' ; ^ ^ ^ ^ ! ^

««>-SSv^fef^ 'S^TOAlÔ vos


AIR CHARTER, INC. STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31,2007 Increase (Decrease) in Cash and Cash Equivalents

CASH FLOWS FROM OPERATING ACTIVITIES Net income

Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Change in assets and liabilities:

Increase in: Prepayments Accounts payable Accrued expenses

Decrease in: Accounts receivable Accrued interest payable Due to officers

Income tax paid Income tax expense

Total adjustments

33,665

330,652

(704) 3.085 4,897

8,277 (10,254) (29,970) (27,604)

11.381

289.760

Net cash provided by operating activities S d ^ ^ i F - S T A T B M E N T X J ». . . . -• 323.425

CASH FLOWS FROM INVESTING J ^ C T i y i T J ^ ^ ' ^ ^ J ^ r H ^ i ^ f ^ ^ ^ i ^ ^ C B S S A ^ ^ , ^ ^ Purchase of property and equipment THB?JERrox) UND£



FOR THE YEAR ENDED DECEMBER 31,2007 Increase (Decrease) in Cash and Cash l^quivalents

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loans payable Principal payments of loans payable Payments of notes payable

36,250 (84,018)

(140.400)

Net cash used by financing activities

Net increase in cash Cash, at beginning of year

Cash, at end of year

A1V > s

n^^.'or- (188,168)

' - - * ^g^^g . .


AIR CHARTER, INC. NOTES TO FINANCUL STATEMENTS

DECEMBER 31,2007

NOTE A - OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

OPERATIONS

Air Charter, Inc. was incorporated on June 1,1987, in the Commonwealth of Puerto Rico.

SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accountii^ policies consistently applied in the preparation of the accompanying financial statements follows.

i) Use of estimates -

In preparing the Company's financial statements, management is required to make estimates and assumptions that affect the reportediamounts of assets and liabilities, the disclosure of contingent assets and liabih'ties at the date of the financial statements, and the reported amounts of revenues d expenses during the reporting period. Actual results could differ from those estimates.

ii) Property and equipment -

Property and equipment are stated at cost, less; accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assetjs.

As of December 31,2007, e JImated useful live of property and equipment was as follows: ^ ^^"S^^^lAT ^rU

Leasehold improvements 5 years Vehicles 3 to 5 years Office 30 years ; Office equipment 3 to 5 years i Computers 3 years i

i (

At the time property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the books and the resulting gain or loss, if any, is credited or charged to operations.

ill) Cash and cash equivalents -

The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be casli equivalents.

NOTE B - LOANS PAYABLE

As ofDecember 31,2007, the Company had the following loans payable:

Description Amount

8.25% loan payable to bank, secured with office, due in monthly installments of $3,881 through June, 2021 $ 385,368

7.50% unsecured loan payable due in yearly installments of $42,682 through August 1,2014 226,068

7.80% vinsecured loan payable to financing institution,

due in monthly installments of %6fi 18 through May, 2007 12.308

Total 623,744

Less current portion (51,015)

Long term portion $ 572.729

Principal payments of loans payable for the next five and later years following December 31,2007 are as follows:

Year Amount

2008 $67,027

Later years 416.972

Total $671.152

NOTE C - NOTES PAYABLE

At December 31,2007 the Company had the following notes payable:

Description „______ „ Amoqnt

9.75 % note payable secured with aircraft due in annual principal installments of $30,000 due in August 1,2007 through 2010.

Interest is paid on a yearly basis every August 1 as follows: $ 90,000

Year Amount ,

2008 $ 14.625 2009 . 17,550 2010 20,475

9.75 % note payable secured with aircraft due in annual principal installments of $ $20,000 due in May 1,2007 through 2009. hiterest is paid on a yearly basis every May 1 as follows: 40,000

Year Amount

2009 $11,700 2010 13,650

9.75 % note payable secured with aircraft due in annual principal installments of $ $21,400 due in June 1,2007 through 2012, Interest is paid on a yearly basis every June 1 as follows: 107,200

Year Amount THiiSB 3?rNANClA.L STA'nSMENTS HAVE BEEN PREPARED

-inMO^'A THE COMPANY (CX)MRAMeS) BOOKS AND R K r M " « AFTER UAKMO ALLNB(3jg8XRY .ADJfUSTMENTS

rnHmHTâ-© msYBEP^SENi'THffi-3i!tfoL. STAI:EMENTS

2010 FORTKBf!E»i)ODUNDBieW83ilT. 2011 12,519 2012 14,742

JDescm !tion

i ffifiunt

9.75 % note payable secured with aircraft due in annual principal installments of $ $17,500 due in Februaiy 1,2007 through 2016. Interest is paid on a yearly basis every February I as follows:

Year

2008 2009 2010 2011 2012 2013 2014 2015 2016

$3,413 5,119 6,825 8,531

iO.238 n,944 13,650 15,356 17,063

NOTE D - RELATED PARTY TRANSACTION!

THESE FIN/*" During the year ended December 3ir®0i $47,700.

rs

iS7,S00

THESE FINANCIAL STATEMENTS HAVE BEEN PREPARED iber 3 Ifg0i|SMHRCOMPANy (COMlVJffliS) BOOKS

AM-} RTJCOitDS AMmEcu!SS^jaaid>!«(atejrMW *. TtmiiETO AND Tl-ffiY KBPRESK ' 'Hf I ., .MAL STA

FOR r m PERIOD UNDSR AUDIT, 'Anting to


29

AIR CHARTER, INC. FINANCIAL STATEMENTS

DECEMBER 31, 2008 TOGETHER WITH INDEPENDENT

AUDITOR'S REPORT

DiAZ BERGMEy

jACOBO

GONZALEZ

ViOTA

&Co.

MANUEI D I « BERCNES, C.P.A.

PfORO E JACOBO, C P A , C.F.P.

J0RCEGbNZAli2,CPA. MANUEI VioyA, C.P.A., C.V.A.



We have audited the accompanying balance sheet of Air Charter, Inc. as ofDecember 31,2008, and the related statements of income and retained earnings, and cash flows for the year then ended. These fmancial statements are the responsibility of the Company's management. Our responsibility is to express and opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in tiie financial statements. An audit also includes assessing the accounting principles used and significant ^Ptimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements refeired to in the first paragraph present fairly, in all material respects, the fmancial position of Air Charter, Inc. as of December 31,2008, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Januaiy 31,2009

San Juan, Puerto Rico License ?^20 Expiring on December 1,2010

536257_1

' v^ fo^

PO BOX 361401, SAN JUAN, PUERTO RiCO 00936-1401 • TEL. 787 773 0101 • FAX 787 773 0115

CURRENT ASSETS


DECEMBER 31,2008

ASSETS

Cash Accounts receivable Prepayments

111,251 825

69.305

RECEIVABLE FROM RELATED PARTY

181,381

90,000


Aircraft Leaiichold improvements Vehicles Hangar Office equipment Computers

2,113,950 56,990 74,139

450.000 68,801 17.330

Accumulated depreciation and amortization 2,731,210

(1,691.797)

1.089.413

$ 1,360,794



DECEMBER 31,2008

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Current portion of: Loans payable Notes payable Accrued interest payable

Accounts payable Accrued expenses payable Due to related party Income tax payable

28,729 li6,556 44,841 34,354 22,607 12,610

581

LONG TERM DEBT

260.278


366.548 389,586 79,334


335.468

STOCKHOLDERS' EQUITY

1,095,746

Common stock of $1 par value 1,000,000 shares authorized; 1000 shares issued and outstanding

Additional paid in capital Retained earnings

1,000 110,000 154,048

265,048

$ 1,360,794


FOR THE YEAR ENDED DECEMBER 31, 2008

REVENUES

Service income $ 2,594,724

OPERATING EXPENSES

Salaries and payroll taxes Gasoline and oil Repairs and maintenance Depreciation and amortization Professional fees Landing and passenger fees Insurance Rent Utilities Office expenses Credit card commissions Representation and travel Vehicles Other taxes Advertising Other expenses

503,643 561,586 310,592 291,224 175,984 158,843 151.753 114,043 56.400 43,884 37,723 20,293 i 7,575 17,201 5,219

754

(2,466,717)

Income from operations 128.007





Interest income Interest expense and bank charges

479 (83,371)

Tlie accompanying notes are an integral part of this financial statement.

(82,892)

Income before income tax

Income tax

45,115

(12.565)

NET INCOME 32,550

Retained earnings, beginning of the year 121,498

Retained earnings, end of the year $ 154,048


FOR THE YEAR ENDED DECEMBER 31, 2008 Increase (Decrease) in Cash and Cash Equivalents

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization Change in assets and liabilities: Increase in;

Receivable from related party Accounts payable Accrued expenses payable

Decrease in: Accounts receivable Prepayments Prepaid income tax Accrued interest payable

Income tax paid Income tax expense

32,550

291,224

(90,000) 8,879

19,514

12.838 10,459 (3,527)

(11,984) 12,565

Total adjustments 249.968

Net cash provided by operating activities 282,518

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment (164,679)



FOR THE YEAR ENDED DECEMBER 31, 2008 Increase (Decrease) in Cash and Cash Equivalents

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from loans payable Principal payments of loans payable Payments of notes payable

25,963 (43,145)

(114,626)

Net cash used by financing activities (131.808)

Net decrease in cash Cash, at beginning of year

(13.969) 125.220

Cash, at end of year $ 111,251


AIR CHARTER, INC. NOTES TO FINANCIAL STATEMENTS

DECEMBER 31,2008

(1) Operations and summary of significant accounting policies -

(A) Operations -

Air Charter, Inc. was incorporated on June 1,1987, in the Comrnonwealth of Puerto Rico.

(B) Summary of significant accounting policies -

A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements follows.

0 Property and equipment -

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets.

As ofDecember 31,2008, estunated useful live of property and equipment was as follows;

Estimated Description Useful Live

Aircraft 5 years Leasehold improvements 5 years Vehicles 3 to 5 years Hangar 30 years Office equipment 3 to 5 years Computers 3 years

At the time property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed fi*om the books and the resulting gain or loss, if any, is credited or charged to operations.

ii) Cash and cash equivalents -

The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

iii) Use of estimates -

In preparing the Company's financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(2) Loans payable -

As of December 31,2008, the Company had the following loans payable:

Description Amount

8.25% loan payable to bank, secured with office, due in monthly installments of $3,881 through July, 2011 $ 370,224

1.99% loan payable to financing institution, secured with vehicle, due in monthly installments of $259 through June, 2013 13,369

7.46% unsecured loan payable to financing institution,

due in monthly installments of $2,967 through April. 2009 11.684

Total 395,277

Less current portion (28.729)

Long term portion $ 366.548 Principal payments of loans payable for the next five years following December 31,2008 are as follows;

Year Amount

2009 $28,729 2010 18,638 2011 342,998 2012 3,045 2013 1.867

Total £ 395.277

(3) Notes payable -

At December 31, 2008, the Company had the following notes payable:

Description Amount

7,50% unsecured note payable due in yearly installments of $42,682 through August 1.2014 $ 200.342

9.75 % note payable secured with aircraft due in annual principal installments of $30,000 due in August 1, 2O07 through 2010. Interest is paid on a yearly basis every August 1 as follows: 60,000

Year Amount

2009 $ 17,550 2010 20,475

9.75 % note payable secured with aircraft due in annual principal installments of $ $20,000 due in May 1.2007 through 2009. Interest is paid on a yearly basis every May 1 as follows: 20,000

Year Amount

2009 $ 13,650

9.75 % note payable secured with aircraft due in annual principal installments of $ $21,400 due in June 1,2007 through 2012. Interest is paid on a yearly basis every June 1 as follows: 85,800

Year Amount

2008 $ 8,346 2009 10,433 2010 12,519 2011 14.742

Description Amount

9.75 % note payable secured with aircraft due in annual principal installments of $ $17,500 due in February 1,2007 through 2016. Interest is paid on a yearly basis every February 1 as follows; 140,000

Year Amount

2009 $5,119 2010 6,825 2011 8.531 2012 10.238 2013 11.944 2014 13.650 2015 " 15.356 2016 17.063

S! 506.142

(4) Related party transactions -

During the year ended December 31,2008, the Company paid salaries to officers an.o?:nting to $54,092.


30


DECEMBER 31, 2009 TOGETHER WITH INDEPENDENT

AUDITOR'S REPORT

DfAZ BEkCNES 1

JACOUO

CONZALE/.

ViCTA

&Co.

• > -

MANUfl D IA ; ; lifKCNdb, C.P.A.

I'|;DI»!:. JACOliO, C.P.A., C.F.P.

lOKCi CONZAlti, CP.A.

M A N U B VIOTA, C,P.A,, C.V.A.


To: TheBoardofDirectorsof Air Charter, Inc.' Carolina, Puerto Rico

We have audited the accompanying balance sheet of Air Charter, Inc., as ofDecember 31, 2009, and the related statements of loss and retained earnings, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express and opinion on these financial statements based on our audit.

We conducted our audit in accordance witli auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall fmancial statement presentation. We beheve that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to in the first paragiaph present fairly, in a? material respects, the fmancial position of Air Charter, Inc., as of December 31, 2009, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Januaiy 31, 2010

San Juan, Puerto Rico License #220 Expiring on December 1, 2010

E5D7S7E

MJ^[/ y w !-'0 (sOX îVUJyi ':.v.f.i m.^:-.; r';.![;l?1<t K l C O i);|t;36-1'^01 ' 11:1 ?B7 773 0101 » FAX 787 773tn ' |K

CURRENT ASSETS


DECEMBER 31, 2009

ASSETS


92,640 825

12,564 73,561



17^590

RECEIVABLE FROM RELATED PARTY 90,000

Aircraft Leasehold improvements Vehicles Hangar Office equipment Comptiters

2,408,145

56,990

74,139

450,000

69,428

17,331


(l,9g7,943)

1,088,090

$ 1,357,680


DECEMBER 31, 2009


CURRENT LIABILITIES

Cun-ent portion of: Loans payable Notes payable Accrued interest payable

Accounts payable Accrued expenses payable Due to related party

24',860 120,971 34,219 2,820

19,069 12,610

LONG TERM DEBT

214,549


345,751 558,615 68,876

STOCICHOLDERS' EQUITY

97:\242

l,lb'7,791

Common stock of $1 par value 1,000,000 shares authorized; 1000 shares issued and outstanding

Additional paid in capital Retained earnings

1,000 110,000 58,889


169,889

$ 1,357,680

AIR CHARTER, INC. STATEMENT OP LOSS AND RETAINED EARNINGS


REVENUES


OPERATING EXPENSES

Salaries and payroll taxes Gasoline and oil Repairs and maintenance Depreciation and amortization Professional fees Landing and passenger fees Insurance Rent Utilities Office expenses Credit card commissions Representation and travel Vehicles Other taxes Advertising Other expenses

620,633 668,575 330,544 296,146 217,361 134,692 142,203 116,804 47,989 48,269 44,872 4:,571 12,440 1.4,980 5,890

190

(2,745,159)

Loss from operations (24,884)

The accompanying notes are an integral part of this fmancial statement.

AIR CHARTER, INC. STATEMENT OF LOSS AND RETAINED EARNINGS

FOR THE YEAR ENDED DECEMBER 31, 2009


Interest income Interest expense and bank chai-ges

515 (70,790)

The accompanying notes ai-e an integral part of this fmancial statement.

(70,275)

NET LOSS

Retained earnings, beginning of the year

(95,159)

154,048

Retained earnings, end of the year 58,889


FOR THE YEAR ENDED DECEMBER 31, 2009 Increase (Decrease) in Cash aad Cash Equivalents

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization Change in assets and liabiHties: Inci'ease in:

Prepayments Prepaid income tax

Decrease in: Accrued interest payable Accounts payable Accrued expenses payable

Income tax paid

$ (95,159)

296,146

(;.256) (12,564)

(21,080) (31,534) (3,538)

(581)

Total adjustments 222,593

Net cash provided by operating activities 127,434

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment il^?23}



FOR THE YEAR ENDED DECEMBER 31, 2009 Increase (Decrease) in Cash aad Cash Equivalents

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from loan payable 13,564 Principal payments of loans payable (38,230) Payments of notes payable (116,556)

Net cash used by financing activities (141,222)

Net decrease in cash (13,611) Cash, at beginning of year IU,2S1

Cash, at end of year $ 92,640

Supplemental schedule of non-cash investing and financing activities:

Aircrafts purchased with note payable $ 290,000



DECEMBER 31, 2009


(A) Operations -

Air Chaiter, Inc. was incoiporated on June 1,1987, in the Commonwealth of Puerto Rico.

(B) Summary of significant accounting policies -


i) Property and equipment -

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are computed using the sti'aight-line method over the estimated useful lives of the assets.

As of December 31.2009, estimated useful live of property and equipment was as follows:

Estimated Description . Useful Live


At the time property and equipment are sold or otlierwise disposed of, the cost and related accumulated depreciation and amortization are removed from the books and the resulting gain or loss, if any, is credited or charged to operations.


Tlie Company considers all highly liquid debt instniments purchased with a maturity of three months or less to be cash equivalents,


In preparing the Company's financial statements, management is required to malce estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the vlate of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those ei.:iraates.

(2) Loans payable -

As ofDecember 31,2009, the Company had the following loans payable:

Description \ Amount

8.25% loan payable to bank, secured with office, due in monthly installments of $3,881 through July, 2011 $ 354,004


6.21% unsecured loan payable to financing institution, due in niontlily installments of $1,546 through April, 2010 6.IO0

Total 370,611

Less cuiTcnt portion (24.860)

Long tenn portion $ 345.751

Principal payments of loans payable for the next four yeai's following December 31,2009 are as follows:

Year Amount

2010 $ 24,860 2011 341,161 2012 3,045 2013 1.545

Total 3; 370.611

(3) Notes payable -

At December 3 i, 2009, the Company had the following notes payable:

Description Amount

7.45 % note payable secured with aircraft due in yearly installment of $37,133 due in May 1, 2010 and anotlier six yearly installments of $49,511 due in May 1, 2011 through 2016 and final installment of $61,889 due in May 1, 2017. $ 290,000

7.50% unsecured note payable due in yearly installments of $42,682 through August 1, 2014 172,686

9.75 % note payable secured with aircraft due in annual principal installments of $30,000 due in August 1, 2O07 thi-ough 2010. Interest is paid on a yearly basis every August 1 as follows; 30,000

Year Amount

2010 $ 20,475

9.75 % note payable secured with aircraft due in annual principal installments of $ $21,400 due in June 1,20O7 through 2012. Interest is paid on a yearly basis eveiy June 1 as follows: 64,400

Year Amount

2009 $ 10,433 2010 12,519 2011 14,742

9.75 % note payable secured with aircraft due in annual principal installments of $ $17,500 due inFebmary 1, 2007 through 2016. Interest is paid on a yearly basis every February 1 as follows; 122,500

Year Amount

2010 $ 6,825 2011 8,531 2012 10,238 2013 11,944 2014 13;650

2015 15,356 2016 17,063

^ 679.586


During the year ended December 31,2009, the Company paid salaiies to officers amounting to $62,800.

(5) Operating loss carry forward -

At December 31, 2009, tlie Company had a net operating loss carry foi-ward availaf'le to offset future taxable income as follows:

Year Amount Expiration Date

2009 $ 80,325 2017

Exhibit 12 Financial Statements as of August 31,2010

31


AUGUST 31,2010 TOGETHER WITH ACCOUNTANT'S

COMPILATION REPORT

DfAZ BFKCNES i JACOBO GONZALEZ VioiA / / -&Co.

MANUa 0(A2 BfKONtS.C.P.A.

PtORO t . JACOSO. C.fiA, C.F.P,

JO(!CtCON2Att2,C.P.A,

W^W£t VlOT\ CP.A., C.V.A,

ACCOUNTANT'S COMPILATION REPORT


We have compiled the accompanying balance sheet of Air Charter, Inc. ("the Company") as of August 31,2010, and the related statement of loss and retained earnings for the eight months period ended August 31,2010, in accordance with Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants.

A compilation is limited to presenting in the form of financial statements information that is the representation of management. We have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or any other form of assurance on them.

The statement of cash flows for the eight months period ended August 31, 2010, has not been presented. The accounting principles generally accepted in the United States of America require that such a statement be presented when financial statements purport to present financial position and results of operations.

September 24, 2010

San Juan, Puerto Rico License #220 Expiring on December 1,2010

_ESSgiDS„

PO BOX 361401, SAN JUAN, PUERTO RICO 00936-1401 • TEL. 787 773 0101 • FAX 787 773 0115

CURRENT ASSETS

AIR CHARTER, INC. BALANCE SHEET AUGUST 31,2010

ASSETS


90,146 825

12,564 125,741



229,276

RECEIVABLE FROM RELATED PARTY 90,000

Aircral^ Leasehold improvements Vehicles Hangar Office equipment Security equipment Computers

2,477,617 56,990 81,549

450,000 69,428 7,275

17,331


(2,204.136)

956.054

$ 1,275,330

AIR CHARTER, INC BALANCE SHEET AUGUST 31, 2010


CURRENT LIABILITIES

Current portion of; Loans payable Notes payable Accrued interest payable

Accounts payable Accrued expenses payable Due to related party

27,309 97,491 34,219 9,494

14,152 12.610

LONG TERM DEBT

195.275


365,785 490,854 68,876

925,515

STOCKHOLDERS' EQUITY

1,120.790

Common stock of $1 par value 1.000,000 shares authorized; 1,000 shares issued and outstanding

Addhional paid in capital Retained earnings

1,000 110.000 43,540

154,540

$ 1,275,330



FOR THE EIGHT MONTHS PERIOD ENDED AUGUST 31, 2010

REVENUES


OPERATING EXPENSES

Salaries and payroll taxes Gasoline and oil Repairs and maintenance Depreciation and amortization Professional fees Landing and passenger fees Insurance Rent Utilities Office expenses Credit card commissions Representation and travel Vehicles Other taxes Advertising

489,279 624,678 257,143 216,193 211,943 102,828 95M3 67,331 32,687 36,287 43,023 41,342 17,562 9,211 6,330

(2,251.500)

Income fi-om operations 57,533



FOR THE EIGHT MONTHS PERIOD ENDED AUGUST 31, 2010


Interest income 85 Interest expense and bank charges (72.967)

(72,882)

NET LOSS (15,349)

Retained earnings, beginning of the period 58,889

Retained earnings, end of the period $ 43,540



AUGUST 31, 2010


(A) Operations -

Air Charter, Inc. was incoiporated on June 1,1987, in the Commonwealth of Puerto Rico.

(B) Summary of sjgnificaut accounting policies -


i) Property and equipment -


As of August 31,2010, estimated useful live of property and equipment was as follows:

Estimated Useful Live

Aircraft Leasehold improvements Vehicles Hangar Office equipment Security equipment Computers

5 years 5 years

3 to 5 years 30 years

3 to 5 years 5 years 3 years

At the time property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the books and tlie resulting gain or loss, if any, is credited or charged to operations.


The Company considers all highly liquid debt instmments purchased with a maturity of three months or less to be cash equivalents.


In preparing the Company's financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ fi*om those estimates.

(2) Loans payable -

As of August 31,2010, the Company had the follovwng loans payable:

Description Amount

8.25% loan payable to bank, secured with office, due in monthly installments of $3,881 tlu-ough July, 2011 when remaining principal balance will be due. $ 342,387


6.21% unsecured loan payable to financing institution, due in monthly installments of $ 1,546 through April, 2010 42.395

Total 393,094

Less current portion (27.309)

Long term portion $ 365^78^

Principal payments of loans payable for the current year 2010 and the next three years following August 31,2010 are as follows:

Year Amount

2010 $ 27,309 2011 361,446 2012 3,050 2013 1.289

Total $ 393.094

(3) Notes payable -

At August 31,2010, the Company had the following notes payable;

DescriptJop ; Amount

7.45 % note payable secured with aircraft due in yearly installment of $37,133 due in May 1,2010 and another six yearly installments of $49,511 due in May 1,2011 through 2016 and final installment of $61,889 due in May I, 2017. $ 267,660

7.50% unsecured note payable due in yearly installments of $42,682 through August 1,2014 172,685

9.75 % note payable secured with aircraft due in annual principal instalhnents of $ $21,400 due in June 1,2007 through 2012. Interest is paid on a yearly basis every June 1 as follows: 43,000

Year Amount

2010 $ 12,519 2011 14,742

9.75 % note payable secured with aircraft due m annxial principal installments of $ $17,500 due in Febmary 1,2007 through 2016. Interest is paid on a yearly basis every February 1 as follows; 105.000

Year Amount

2011 $ 8,531 2012 10,238 2013 11,944 2014 13,650 2015 15,356 2016 17,063

l i iSJî


During the eight months period ended August 31,2010, the Companypaid salaries to officers amounting to $66,923.

(5) Operating loss carry forward -

At August 31.2010, the Company had a net operating loss carry forward available to offset future taxable income as follows:

Year Amount Expiration Date

2009 $ 80,325 2017

Exhibit 13 Forecast Financial Statements for the Month Ending November 30,2010 - October 31,2011

32

AIR CHARTER, INC. FORECASTED FINANCIAL STATEMENTS

MONTHS ENDING NOVEMBER 30,2010 TO OCTOBER 31,2011 TOGETHER WITH ACCOUNTANT'S

COMPILATION IMPORT

D(AZ BERCNES i

JACOBO

CONZAlEZ ViOTA &Co.

M A N U E I D(AZ BfRCNES, C.P.A.

PtDRo E, JACOBO, C.P.A, C.F.P.

JORCt GONZALtZ, C.P.A.

MANUtl VIOTA, C.P.A., C.V.A.

CEmiREDPUBUC ACCOUMTANTS

ACCOUNTANT'S COMPILATION REPORT

To; The Board of Directors of An- Charter, Inc. Carolina, Puerto Rico

We have compiled the accompanying forecasted balance sheets and the related statements of income, retained earnings and cash flows of Air Charter, Inc., as of November 30,2010 to October 31,2011, and for the months then ending, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants.

A compilation is limited to presenting in the form of forecast information that is the representation of management and does not include evaluation of the support for the assumptions underlying the forecast. We have not examined the forecast, and. accordingly, do not express an opinion or any other form of assurance on the accompanying statements or assumptions. Furthermore, there will usually be differences between the forecasted and actual results because events and circumstances fi^quently do not occur as expected, and the differences may be material. We have no responsibility to update this report for events and circumstances occiuring after the date of this report.

October 5,2010

San Juan. Puerto Rico License #220 Expirmg in December 1,2010

ESS^llE

D6(rî/j-Q^ POBOX 361401, SAN JUAN, PUERTO RICO 00936-1401 • TEL 787 773 0101 • FAX 787 773 0115

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AIR CHARTER, INC. DETAIL OF ADMINISTRATIVE AND MAINTENANCE SALARIES

Administrative

Employee Position

President and D. 0. Vice President and Chief Pilot Director of Maintenance Secretary

Salary per Month

$ 4,500 4,500 3,500 2,000

Subtotal 14,500

Payroll Taxes

Total

2.175

16,675

Maintenance

Mechanical Mechanic #2 Mechanic #3 Assistant mechanic Helper

Subtotal

Payroll Taxes

$ 2,600 1,647 1,387 1,300

755

7.689

1,153

Total 8,842

AIR CHARTER, INC. NOTES TO THE FORECASTED FINANCIAL STATEMENTS

MONTHS ENDING NOVEMBER 30,2010 TO OCTOBER 31,2011

OPERATIONS AND SUMMARY OF SIGNIFICANT FORECAST ASSUMPTIONS

NOTE A - OPERATIONS

Air Charter, Inc. was incorporated on June 1,1987, in the Commonwealth of Puerto Rico. Actually the Company is engaged in mail, charter and cargo operations; and has contracts with the Municipalities of Culebra and Vieques for airline transportation services. Management is currently working to obtain necessaiy licenses and certifications to start commuter operations. Normally the Company prepares its financial statements on a calendar year basis. The accompanying forecasted balance sheets and statements of income and retained earnings were prepared for the twelve months period from November 1,2010 (expected commencement date of commuter operations) to October 31,2011.

NOTE B - SUMMARY OF SIGNIFICANT FORECAST ASSUMPTIONS

This financial forecast presents, to the best of management's knowledge and belief, the Company's expected financial position, results of operations for the forecast period. Accordingly, the forecast reflects management's judgment as of October 5, 2010, the date of this forecast, of the expected conditions and its expected course of action. The forecast is designed to present the forecasted financial position and results of operations of Air Charter, Inc., as of November 30,2010 to October 31, 2011, and for the months then ending. The assumptions disclosed herein are those that the management believes are significant to the forecast. There will usually be differences between the forecasted and actual results, because events and circimistances fiêquently do not occur as expected, and those differences may be material.

1. Revenues -

The Company operates in various business segments as explained below:

i) Mail, Charter and Cargo Operations -

a. Charter -

The Company is mainly engaged in airline charter services in Puerto Rico between the Mimicipalities of Vieques and Culebra and the main island airports of Ceiba and Isla Grande. Also the Company flights to and from the above airports and Tortola, ST. Thomas and St. Croix. Revenue on Charter operations were estimated as follows:

# of Flights Per Month

8 12 8 6 2 2 2 2 2 2

Fee per Flight

$1,200 600

1,300 700

1,400 2,000 1,400

800 1,300 1,400

Market (Round Trip)

Isla Grande to Vieques Ceiba to Vieques Isla Grande to Culebra Ceiba to Culebra Isla Grande to St. Thomas Isla Grande to Tortola Ceiba to St. Croix Culebra to St. Thomas Vieques to St. Thomas Vieques to St. Croix

b. US Mail -

The Company has a contract with US Mail for the cargo of mail to the Municipalities of Culebra and Vieques. The contract expires on April, 2012. Revenue was estimated based on prior experience to be $5,500 per week except for the months fi-om November through January for which estimated revenue per week is $ 12,000.

c. United Farce! Service (UPS) -

The Company has an open contract with UPS for cargo services for a flat fee per month of $5,720.

d. Sea World, Inc. -

The Company has an open contract with Sea World, Inc. for cargo transportation services which include two weekly flights to St. Thomas for a fee per flight of $700 and one weekly flight to Tortola for a fee per flight of $1.050.

ii) Contracts with the Municipalities of Culebra and Vieques -

The Company has contracts with the Municipalities of Culebra and Vieques for airline transportation services. Revenue was estimated based on prior experience at $13,500 and $6,000 for Culebra and Vieques, respectively. Contracts expire on June 30, 2011 and are expected to be renewed for an additional year- on the same terms.

iii) Commuter services -

Management is currently working to obtain necessary licenses and certifications to start commuter operations to and from Ceiba and Isla Grande to and from Culebra and Vieques. This operation is expected by management to start on November 1, 2010. Refer to Forecasted Revenue by Market Schedule for computation of monthly revenues from this segment of operations.

2. Direct expenses -

i) Pilot salaries and payroll taxes -

a. Mail, charter and cargo operations -

Salaries were estimated at $100 per day per pilot (1 pilot per day for the months of February through October and 2 pilots for the months of November through January). Payroll taxes were estimated at 15% of salaries.

b) Contracts with the Municipalities of Culebra and Vieques -

Salaries were estimated at $100 per day per pilot (1 pilot per day). Payroll taxes were estimated at 15% of salaries.

c. Commuter services -

Salaries were estimated at $100 per day per pilot (2 pilots per day). Payroll taxes were estimated at 15% of salaries.

ii) Gasoline and oil -

a« Mail, charter and cargo operations -

- Charter operations Estimated flight time per month will be 39 hours at 30 gallons per hour at $5

- u s MAIL November through Januaiy 51 flights per week at 1.6 hours flight time at 30 gallons per hour at $5 per gallon February through October 31 flights per month at 1.6 flight time at 3 0 gallons per hour at $5 per gallon

-UPS 8 flights per month at 1.6 flight time at 30 gallons per horn- at $5 - Sea World, Inc. 2 flights per week at .8 flight time at 30 gallons per hour at $5 plus 1 flight per week at 1.6 flight time at 30 gallons per hour at $5

b. Contracts with the Municipalities of Culebra and Vieques -

16 flights per week at .6 block time at 30 gallons per hour at $5


7.8 flight time per day at 30 gallons at $5

iii) Landing and passenger fees -

a. Mail, charter and cargo operations -

- Charter operations: Isia Grande to Vieques 8 flights at $48; Vieques to St. Thomas 2 flights at $73

- US MAIL and UPS $37.96 per day per aircraft (1 plane fi-om February to October and 2 planes from November to January

- Sea World, Inc.

$33 in San Juan, $15 in St. Thomas and $25 in Tortola per flight

b. Contracts with the Municipalities of Culebra and Vieques -

16 flights per month at $11.48 per flight


$129.32 per day

3. Indirect expenses, other income (expenses) and income tax -

Indirect expenses, other income (expenses) and income tax were allocated to business segments using the gross to gross revenue method and the following percentages:

Mail, charter and cargo operations 27% Contiacts with the Municipalities of Culebra and Vieques 6% Commuter services 67%

i) Administrative and maintenance salaries and payroll taxes -

Refer to Detail of Administrative and Maintenance Salaries for more details.

ii) Other indirect expenses -

Were estimated based on 2009 audited expenses adjusted to the number of airplanes expected to be flown during the forecast period

iii) Other income (expenses) -

Were estimated based on 2009 income and expenses

iv) Income tax -

Was estimated at 33% of taxable income

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company's accounting policies conform to predominant practices followed by the industry and are in accordance with accounting principles generally accepted in the United States of America.

1. Property and equipment -


As of October 31,2010, estimated useful live of property and equipment will be as follows:

Estimated Description Useful Live


At the time property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the books and the resulting gain or loss, if any, is credited or charged to operations.

2. Cash and cash equivalents -

The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

3. Use of estimates -

In preparing the Company's financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

NOTE D - LOAN PAYABLE

As of October 31.2011, the Company expects to have a 1.99% loan payable to financing institution, secured with vehicle, due in monthly installments of $259 through June, 2013.

NOTE E - NOTES PAYABLE

At October 31,2011, the Company expects to have the following notes payable:

Description Amount

7.45 % note payable secured with aircraft due in yearly installments of $49,511 due in May 1,2012 through 2016 and final installment of $61,889 due in May 1,2017. $ 238,799

7.50% unsecured note payable due in yearly installments of $42,682 through August 1,2014 110,995

9.75 % note payable secured with aircraft due in June 1,2012 Interest is paid on a yearly basis every June 1 as follows: 21,600

9.75 % note payable secured with aircraft due in annual principal installments of $ $17,500 due in February 1. 2012 through 2016. Interest is paid on a yearly basis every February 1 as follows:

Year Amount

2012 $10,238 2013 11,944 2014 13,650 2015 15,356 2016 17,063

87.500

$ 458.894

NOTE F - RELATED PARTY TRANSACTIONS

During the twelve months period ending October 31,2011, the Company expects to pay salaries to officers amounting to $108,000.

Exhibit 14 Certificate of Insurance

33

e AGEMCY DISPLAY OF ESTIMATED BURDEN

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(»<8 No. 210C^)03Q.Ei(Cii.iii 5-30-200?

U.S. AIR CARRIERS - CERTIFICATE OF INSURANCE

POLICIES OF INSURANCE FOR AIRCRAFT ACCIDENT BODILY INJURY AND PROPERTY DAMAGE UABILITY

FILING IMSTRUCTIONS: Filo a sjgnecl origins! of tnis form wish (he Fedei^l Awabon AdmirestraHon. AFS-260,800 Independence Ave . SVi/., WasHreiton. DC. SaWI (See EXCEPTIONS '• aiKJ 2 below)

EXCEPTtOM 1: II Block 2B on Ihe reverse is h'ted in IsecauEe ttie insuied is »iaaiT<i7n4eiair carrier. Be a signed origtnal of this form vwlh the Depanrnenl of Transportalioiv Aif Camer Fitness Division. X-56. 4(« ' "S i . . SW, Washinglon, DC 20590. EXCEPTION 2: For ar i i insured that is located m (fie Steie of Alaska (regansess as to vvhethet Blodt 2A 2B. or 2C is tilled itil file a sigrc-d original d tins (omi wWi the Federal Awafcon Administraton. Alaskan Region HO.. AAL-230.222 W 7" Ave., r i i . l Anchorajje. Alasl<s 99513.

IPiiteae type inloiinaU-Ki. exani>i .^.grialurcsi

THIS CERTIF IES T H A T : H o u s t o n Casua l t y C o m p a n y (Name ol Insurer)

has issued a policy or policies of Aircraft Liability Insurance to Ai r Charter, Inc. dba Air Flamct^co

A M F Fac i l i t y P.O. S o x 810352 Caro l i na , PR 00981-0352 FAA Cer t i f i ca te N o : UOtA831U (Name and address of Insured U S Air Carner)

effect ive f rom J u l y 14. 2010 until ten (10) days after wr i t ten notice f rom the insurer or carrier of the intent to terminate coverage is received by the Department of Transportat ion.

; NOTE: Part 205 of ihi; Oepartmeni s Regulalions does not allow for a predetermined termiiialiori date, and a certificate showina such a dale is unacceptable

: 1. The Insurer (OVrprt Orte;.'

D is l icensed to issue aircraft insurance policies in the United States;

D is l icensed or approved by the government of to issue aircraft insurance pol icies: or

is an approved surplus line insurer in the State(s) of P u e r t o R i c o fU.S. Ter r i to ry )

2 . 1 he insurer assumes, under ihe policy of policies feied below, aircraft aijcideni liabilily insured lo minimums at least equal to the following during operabons. rnaintenance, QI use of aiicrafi in air lisnsportsiiori' as that term is defined in ilH LJ S O 40102 iCompieli! apfilicabtf! seaii.>ii(n} belw/ j :

A. U.S. AIR TAXI OPERATORS WITH PART 298 AUTHORITY ONLY The aircraft covered by this policy are SMALL AIRCRAFT (i.e., with 60 or fewer passenger seals or with a maximum payload capacity of 18.1)00 pounds or less). lO'ook separate or cornDiiwd coverage as aftprofiriatel

Separate Coverages:

Hjtinimum Limit

Policy No. Type of Liability £ach person Eacfi Occurrence

Sodily Injury Liability (Excluding Passengers) $75,000

$75,000 X 75% of Passenger 8oclil;^)njury ^ total number of

' " ' ~~ passenger seats iristalled in aircraft

.._ _ , , Properly Damage $100,000

Kg Combined Ci>verage: This combined coverage is a single limit of liability for each occurrence ai least equal to Hie required tninimoms stated ' ^ above for bodily injury (excluding passengers), property damaged, and passenger tiodily injury.

Poi icy No. Amount of Coverage *1,000,000 each occurrence I 014667^114 $100,000 each passenger

n This policy covers CARGO operations only and excludes passenger liability insurance

OST Form 6410 " ' " " CERTIFICATE MO. 1

B. U.S. COMMUTER AND CERtrRCATED AIR CARRIERS OPERATING SMALL AIRCRAFT"

D

The aircraft cowred by tiiis policy are SM.ML AIRCflAFr f i.e . Willi tjO or feiver passenger seats or w \h » niaximuni pf ^-foad capacily o( 18,000 rounds or less) {Chpck sofjarnl/i a comixneO mvemsf ' 9 ' anptOf)tiat(>t.

Separate Coverages

Policy No

Minimum Limil

Type oi Liability Eacii person Each Occurrence

Combined Bodily Injury (Excluding Passer>gers other than cargo atteiKfants) and Property Damage Liability

Passeiiget Bodily Injury ___ S.300.000 S300.000 X 75% of tola! number of passenger scats installed in aircraft

r—I Ckimbined Coverage; This comtiined coverage is 3 single limit of liability for each occurrence at least equal lo Ihe required minimums slated above '—' for bodily injury (excluding passengers), properly damaged, and passenger bodily injury.

Policy No. Amount of Coverage

• This policy covers CARGO operations only and excludes passenger liability insurance.

C.

D

U.S. CERTIFJCATED AIR CARRIERS OPERATING LARGE AIRCRAFT The aircraft covered by it (Criw.A SftiKViile or coirti:

Separate Coverages

The aircraft covered by itiis policy are LARGE AIRCRAFI (i,e . with more Ihan GO passenger seats or with a itiaxirrium payload capscny of rnore than 16,000 pounds) (Criw.A SftiKViile or coirtlunea covsraitvs us apittoimtitel:

Minimum Limit

Policy Ato. Type of Liability Eacti person Eac/) Occuirence

Combined Bodily Injury (Excluding Passengers other ihan cargo S3OO.0D0 attendants) and Property Damage Liability

Passenger Bodily injury $300,000

$20,000,000

$300 ,000 X 7 5 % of total numtier ol passenger seats installed in aircraft

p-j Combined Coverage; This combintid coverage is a single limit ol liability for each occurrence at least equal to the required rtiinimums stated above '—' tor bodily Injury (excluding passengers), property damaged, and passenger bodily injury.

Policy No. Amount of Coverage

D This policy covers CARGO operations only and Bxdudes passenger liability insurance

the policy ai policies Hsted in ihis certificate msurcfs) (CliL'ck O w ) ' Make and liôdei FAA or Foreign (-lag

Regislrstion No

E l Operalions conducted wiib all aircraft operate? by the'lnsiired

D Operalions conducted wilb ihe following types ol aircraft

D Operalions vnlh the following aircraft: iUst ^nniiKtimi f * ie rt necesaiy)

4 Each policy listed in this certificjate meets or exceeds Ihe reqitirements in 14 CFR Part 205.

Houston Casualty Company (Naina of Imorei)

13403 Ivtorthwest Freeway (Adiitftsa)

Hous ton , TX 77040

(Name o l Btaker. if aftiilicgble)

(Aiklrcss)

lCity.Slnle.2ip Code)

Chr is topt ier D, Bennet t

(CJy. Stale. Zip Coele]

Ctvitaa Iperson who can venty l/ie filfCK:livimg.<!S of l l ie ixwirags)

713-462-1000 713-744-9666 \Atp.H C«i^^ r-Vwri'? IJfjtritjf.ft iA'<vi Cciitt*.' r-.-tx ivtimvm]

tOHicer or aulhonxcn rdpiesentatiwe)

t»jea Coiic. Piione NturAter' Antit C<>f.V /.')> NuriiUfx)

^—?" — r — - S T t n — — — —

....-.-.'•.;i^.L_-—_ iSiifititltifv it {^.iffâirM

(Oali'i

http://lCity.Slnle.2ip

ExWW ibit 15 interim Agreement

34

& Docket OST 95-236 U.S. Department of Transportation Office of the Secretary of Transportation AGREEMENT

The undersigned caniers (hereinafter referred to as 'the Carriers") hereby agree as follows:

1. Each of «ie Carriers shall, effective May 16,1966, include the fcdiowing in its conditions of carriage, including tariffs emt)odying conditions of carriage filed Ijy it with any govemntent;

"Tfie Canier shall avail itself of the limitation of liability provided in the Convention for the Unification of Certain Rules Relating to International Carriage by Air signed at Warsaw October 12tfi, 1929, or provided in the said Convention as amended by the Protocol signed at The Hague September 28th, 1955. However, in accordance with Article 22(1) of said Convention, or said Convention as amended by said Protocol, ttie Camer agrees that, as to all international transportation by the Canier as defined in the said Convention or said Convention as amended tiy said PrcAocol, wtuch, accordng to the contract of Carr»ge. includes a point in the United States of America as a point of origin, pdnt of destination, or agreed stopping place

(1) The limit of liability for each passenger for death, wounding, or other bodily i ûty shall be the sum of US $75,000 inclusive of legal fees and costs, ôept that, in case of a daim brought in a State where provision is made for separate award of legal fees and coste. the limit shall be the sum of US $58,0CX) exclusive of legal fees and costs.

(2) The Carrier shall not with respect to any claim arising out of the death, wounding, or other bodily irijury of a passenger, avail itself of any defense under Article 20(1) of said Convention or said Convention as amended by said Protocol.

Nothing herein shall be deemed to affect the rights and liabilities of the Canier with regard to any claim btou^t by, on behalf of, or in respect of any person wtm has willfully caused damage which resulted in death, wounding, or other bodily irijury of a passenger.'

2. Each Canier shall, at the time of delivery of the ticket, furnish to each passenger whose transportation is governed by the Convention, or the Convention as amended by the Hague Protocol, and by the special oontitict described in paragraph 1, the following notice, which shall be printed in type at least as la-ge as 10 point modem type and in ink contrasting with the stock on (i) each ticket; (ii) a piece of paper either placed in the ticket erwetope with the ticket or attached to the ticket; or (iii) on the ticket envelope:

"ADVICE TO irrrERNATIONAL PASSENGER ON LIMITATION OF LIABILITY

Passengers on a Journey involving an uttimate destination or a stop in a country other than ttie country of origin are advised that the provistons of a treaty known as ttie Warsaw Convention may be applicable to tiie entire journey, including any portion entirely within the country of origin or destination. For such passengers on a journey to, from, or with an agreed stopping place in the IMted States of Amertea, the Convention and special conbBcts of carriage embodied in applicable tariff provide ttiat the liability of [certain J* [(name of canier) and certain (fther] caniers parties to such special contracts for deatti of or personal injury to passengers is limited in most cases to proven damages not to exceed US $75,000 per passenger, and ttiat this liability up to such limit shall not depend on negligence on ttie part of the canier. For such passengers traveling by a earner not a party to such special contracts or on a journey not to, fi-om, or having an agreed stopping place in ttie United States of America, liability of the canier for deatti or personal injuiy to passengers is limited in most cases to approximately US $10,000 or US $20,000.

The names of Carriers parties to such special contracts are available at all ticket offices of such carriers and may be examined on request.

Additional protection can usually be cd>tained by purchasing insurance fi-om a private company. Such insurance is not affected by any limitation of the carrier's Hability under ttie Warsaw Convention or such special contiacts of carriage. For further information please consult your airiine or insurance company representative."

3. [TfHS Agreement was filed with ttie Civil Aeronautics Board of ttie United States. The Board approved it by Onjer E-23680. adopted May 13,1966. The Agreement (Agreement 18900) became effective May 16,1966. On January 1.1985, ttifs Agreement became the rraponsibility of ttie Department of TransportatkMi (DOT) by operation of law.]

4. This Agreement may be signed in any numt>er of counterparts, all of which shall constitute one Agreement Any Canier may become a party to ttiis Agreement by signing a counterpart hereof and depositing it wnth DOT.

5. Any Canier party hereto may wittidraw from this Agreement by giving twelve (12) m o i ^ ' written notice^wittidrawal to DOT and the other Carriers parties to ttie Agreement - ^ / ^ ^ ^ ' • c ^ , ^ ^

(Signature and Date> ^g&t^><*<»g^ y ' ^ * ^ — * •EHheraHematlve may t)e used. Francisco Torres Pres ident

(Pnnted Name and Title) Air Char ter , Inc (Name and Address of Canriei)

08TFonn4823(Form.rtyCABForm263) Lindbergh s t r e e t south ra«p Ixit 7 I s l a Grande Airport San Juan, P.R. 00907

Exhibit 16 State Department Certification for Air Flamenco

35

GOVERMENIT OF PUERTO RICO DEPARTMENT OF STATE

SAN JUAN, PUERTO RICO

CERTinCATION

I, Gricel Falgks Rodriguez, Director Acting Corporate and Trademarks

Registries of State, of the Commonwealth of Puerto Rico.

DO HEREBY CERTIFY: That according to the records of this Office an

application to the tradename "AIR FLAMENCO", was filed in this Department on

Api'il 3, 2000, belonging to Sr. Francisco Torres Gonzalez, for '*Transporte

aereo comercial" .

AND I FURTHER CERTIFY: The document is pending for evaluation.

IN WITNESS WHEREOF, the

undersigned, by virtue of the

authority vested by law, hereby issues

this Certificate and affixes the Great

Seal of the Commonwealth of Puerto

Rioo at the City of San Juan, this

third day of april, of tbe year two-

thousand.

Gricel F^gas ftbdriguez - ^ Acting Director

Corporate and Trademarks Registries 12142725 - $10,00

Exhibit 17 Proposed Schedule Flights

36

Proposed Flight Schedules

ISLA GRANDE (SIG) TO CULEBRA (CPX) r:Fl ightSiBheaaie-t i ' • • '»- : -;.,:^^^.: - W-^ ^ f : . f cg t Vy ': ;;;...,•:.• .;^^^. •- ^ ..^.- '-ff i^tv/;*,, =:,;:-;. y'-Vi;;.. --:;;,,,.:., i,;:. , : fy . .^ : T ' | ^

Flight Segment #

1 2 3 4 5 6 7 8

Number 101 103 105 107

Origin SIG SIG SIG SIG

Destination CPX CPX CPX CPX

Depart 8:00:00

13:00:00 16:30:00

18:00:00

Arrive 8:30:00

13:30:00 17:00:00

18:30:00

Days of Operation (1=Segment Flown, fVlon

1 1 1 1

Tues 1 1 1 1

Weds 1 1 1 1

Thurs 1 1 1 1

FrI 1 1 1 1

a=Not Flown) Sat

1 1 1

Sun 1 1 1

Miles 48 48 48 48

CULEBRA (CPX) TO ISLA GRANDE (SIG) &PlightSchedule2''^.-J^, ; : .. !\':y-l: ^ :,^.;tj j;;o •, ,: v;./' ;; ^ ,: •sf ;. •-^ p,:, •

Flight Days of Operation (1=Seqment Flown, 0=Not Flown) Segment #

1 2 3 4 5 6 7 8

Number 102 104 106 108

Origin CPX CPX CPX CPX

Destination SIG SIG SIG SIG

Depart 7:00:00

11:30:00 15:30:00 17:20:00

Arrive 7:30:00

12:00:00 16:00:00 17:50:00

Mon 1 1 1 1

Tues 1 1 1 1

Weds 1 1 1 1

Thurs 1 1 1 1

Fri 1 1 i i

Sat 1 1 1 1

Sun

1 1 1

Miles 48 48 48 48

CEIBA (CBA) TO CULEBRA (CPX) . . . F i f e h t s e h e a u i e i ••-•-:•; ' " V - • • - r j c . •./<..>••,-^ s^;-, :-viv;. : ^ ' - • ^ - • .•.it^vA-,:v;,./,^': ;^;-- ,:. ?-^

Flight Segment #

1 2 3 4 5 6 7 8

Number 201 203 205 207

Origin CBA CBA CBA CBA

Destination CPX CPX CPX CPX

Depart 07:00:00

09:00:00 12:00:00

16:00:00

Arrive 07:15:00 09:15:00 12:15:00

16:15:00

Days of Operation (1=Segment Mon

1 1 1 1

Tues t

1 1

1

Weds 1 1 1 1

Thurs 1 1 1 1

Flown, Fri

1 1 1 1

0=Not Flown) Sat

1 1 1 1

Sun 1 1 1 1

Miles 22 22 22 22

CULEBRA (CPX) TO CEIBA (CBA) FltghtSCh«aule2^'-->-.v;:-^'=.sS,.;,- :.,*,: ^,M,«;A;vr/:;' ^ -:,:•• ••.:>% v';.. .-y:&ra;t;-;:-.v , :',„;>:: . •.•;,:;-.:•; B::;

Flight Segment #

1 2 3 4 5 6 7 8

Numtser 202 204 206 208

Origin CPX CPX CPX CPX

Destination CBA CBA CBA CBA

Depart 07:30:00 10:00:00 13:00:00 17:30:00

Arrive 07:45:00 10:15:00 13:15:00

17:45:00

Days of Operation (1=Segment Flown, 0=Not Flown) Mon

1 1 1 1

Tues 1 1 1 1

Weds 1 1 1 1

Thurs 1 1 1 1

Fri Sat 1 1 1 1

Sun 1 1 1 1

Miles 22 22 22 22

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