INTRODUCTION AND CERTAIN CAUTIONARY STATEMENTS

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this quarterly report on Form 10-Q. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under ''Risk Factors'' and elsewhere in our annual report on Form 10-KSB, filed on May 15, 2008 with the SEC.

OVERVIEW

Our discussion and analysis of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from these estimates under different assumptions or conditions.

We have identified the policies below as critical to our business operations and the understanding of our financial results. The impact and any associated risks related to these policies on our business operations is discussed throughout management's discussion and analysis or plan of operations where such policies affect our reported and expected financial results. For a detailed discussion on the application of these and other accounting policies see Note 2 to the consolidated financial statements included elsewhere in this Annual Report.

We began our operations in late March 2007, and have not as yet attained a level of operations which allows us to meet our current overhead. We do not contemplate attaining profitable operations within our first few business operating cycles, nor is there any assurance that such an operating level can ever be achieved. We will be dependent upon obtaining additional financing in order to adequately fund working capital, infrastructure and significant marketing/investor related expenditures to gain market recognition, so that we can achieve a level of revenue adequate to support our cost structure, none of which can be assured. While we have funded our initial operations through private placements of equity and bridge loans, there can be no assurance that adequate financing will continue to be available to us and, if available, on terms that are favorable to us. These factors raise substantial doubt about our ability to continue as a going concern and the accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should we be unable to continue as a going concern.

Passenger revenue is the gross amount charged to customers and is recognized when the charter services are provided. Other revenues such as catering or ground arrangements are also recognized when the services are provided based upon the gross amount billed to customers. We have evaluated the provisions of EITF 99-19 and have concluded that we should report revenues gross with a separate display of the cost of sales while acting as an agent or broker since we take on the credit risk associated with the receivable and are primarily obligated to the supplier.

We used the Black-Scholes option pricing model to determine the fair value of stock options in connection with stock based compensation charges. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends.

Due to our limited history as a public company, we have estimated expected volatility based on the historical volatility of certain companies as determined by management. The risk-free rate for the expected term of each option is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield assumption is based on our intent not to issue a dividend as a dividend policy. Due to our limited operating history, management estimated the term to equal the contractual term or a maximum of five years.

If factors change and we employ different assumptions for estimating stock-based compensation expense in future periods or if we decide to use a different valuation model, the future periods may differ significantly from what we have recorded in the current period and could materially affect our operating income, net income and net income per share.

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that are fully transferable. In addition, option-pricing models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion the existing models may not necessarily provide a reliable single measure of the fair value of its employee stock options.

                             Results of Operations

Comparison of the three months ended April 30, 2008 and April 30, 2007

The following table sets forth our results of operations for the three months
ended April 30, 2008 and 2007 expressed as a percentage of total revenues:

                                  Three Months Ended April 30,
                                    2008              2007
                                          (unaudited)

Revenues                                100.0 %            100.0 %

Operating Costs and Expenses
Charter costs                            83.4               89.0
Compensation and benefits                14.3               47.1
Other operating costs                     7.9               24.5
Depreciation and amortization             0.4                1.2
                                        106.0              161.8

Operating loss                           (6.0 )            (61.8 )

Other expenses - net                      0.9                  -

Net loss                                (6.9% )           (61.8% )

Our operations began in the last week of March 2007 and, accordingly, since inception our operations consisted principally of developing a business plan; seeking capital; establishing headquarters in New York, as well as additional offices in Boca Rotan, FL and Beverly Hills, CA; and recruiting staff and other representation. Revenues were the result of 341and 17 trips in the three month period ended April 30, 2008 and 2007, respectively. The operating margin during the 2008 period improved to 16.6 % from 11 % from the year earlier period. However, these margins reflect our start-up stage and the competitive methods it has taken to enter into this market. Compensation and benefits expense includes a non-cash charge of $305,000 in the 2008 period principally resulting from the reduction in the option exercise price of option previous granted to employees and consultants. However, it is also anticipated that our operating costs and expenses will continue to increase to support a higher level of revenues but should continue to decline as a percentage of revenues. Increased costs will be attributable to increased head counts, principally sales personnel and support staff for our multi-office infrastructure and increased marketing expenditures to promote our services. In addition, as a public reporting entity, compliance with Securities and Exchange Commission regulations will increase general and administrative costs substantially.

Our operating loss for the three months ended April 30, 2008 was $612,000 as compared to $227,000 in the 2007 period however as a percent of revenues the operating loss declined to 6.0% from 61.8% in the prior year period which was principally the result of the $9.8 million increase in revenues and the increase in the operating margin of 5.5%.

During the three months 2008 "other expenses, net" included costs totaling $102,000 related to an abandoned proposed acquisition. A strategic initiative of the Company is to acquire profitable competitors to expand operations, expand the size of high-end clientele and gain access to an ever larger pool of private aircraft.

Net loss for the three months ended April 30, 2008 increased from $227,000 in the 2007 period to $706,000 in the current three month period but declined to 6.9 % of revenues as compared to 61.8% which was principally the result the of the $9.8 million increase in revenues and the increase in the operating margin of 5.5%.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Our operations began in March 2007, and have not as yet attained a level of operations which allows us to meet our current overhead. We do not contemplate attaining profitable operations within our first few operating cycles, nor is there any assurance that such an operating level can ever be achieved. We will be dependent upon obtaining additional financing in order to adequately fund working capital, infrastructure expenses and significant marketing/investor related expenditures to gain market recognition, so that we can achieve a level of revenue adequate to support our cost structure, none of which can be assured. While we have funded our initial operations with private placements of equity and bridge loans, there can be no assurance that adequate financing will continue to be available to us and, if available, on terms that are favorable to us. These factors raise substantial doubt about our ability to continue as a going concern and the accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should we be unable to continue as a going concern.

As of April 30, 2008, our cash balance was $410,000 versus our January 31, 2008 year end balance of $495,000.

Cash Flow Used in Operating Activities: Our principal operating source of cash is revenues from our flight arrangements. During the three months ended April 30, 2008 our cash usage in operating activities declined to $73,000 from $220,000 in the prior year quarter. During the 2008 period our operating use of cash was to fund the net loss of $358,000, after reduction for non-cash charges of $348,000 and the buildup of net working capital items by $285,000, excluding cash. Halcyon's first quarter of operations in 2007resulted in negative cash flows of $220,000, which was the result of a net loss of $212,000, after reduction for non-cash charges and the buildup of net working capital items by $8,000, excluding cash.

Cash Flow Used in Investing Activities: In the three month period ended April 30, 2008 and 2007, the Company used cash to acquire property and equipment of $12,000 and $190,000, respectively.

Cash Flow from Financing Activities: The Company's initial funding was derived from equity investors ($485,000, net of expenses) during the first quarter of operations in 2007.

We entered into employment agreements with our President and Chief Operating Officer. The initial term of the agreement is three years, with automatic one-year renewals following this three-year period. Pursuant to the agreement, he was to receive an annual base salary of $500,000, $525,000 and $550,000, respectively, for the first three years, and then an agreed upon salary (of not less than the amount of their third year's salary) for all future years of employment. Pursuant to an amendment to his agreement in December, 2007, his base salary was reduced to $350,000 per year. If his employment is terminated without cause or if either resigns for good reason, we will be obligated to pay him, as severance, his then current annual base salary and annual bonuses (as such is defined within the agreement) for one year (or for the remainder of the term, if longer than one year).

Shortly after our engagement of our President, Blue Star Jets, our competitor and our President's former employer, filed a lawsuit against us. See Item 3 "Legal Proceedings" for a description of the current status of this litigation. His employment agreement provides for advancement and indemnification of costs and expenses in connection with litigation related to his former employment.

During 2008,we entered into 2 other agreements with our Chairman and CEO and a consultant which require annual payments for services of $300,000 each for a term of 2 years and which also provide for other benefits including options for one million shares each.

Except as set forth Item 3 - Legal Proceedings, there are no pending or threatened legal proceedings against the Company. In the opinion of management, on the advice of counsel, we have made adequate provision for potential liabilities, if any, arising from potential claims arising from litigation, governmental investigations, legal and administrative cases and proceedings.

We lease our headquarters and sales facilities in New York and additional sales offices in Boca Rotan, Florida and Beverly Hills, California. Minimum annual lease payments are approximately $294,000 for 2009 and $136,000 for 2010 (aggregating $430,000).

In February and May 2008, we retained 2 sales representative companies under five year arrangements. Compensation is based upon a percentage of the gross profits earned by us. The agreements provides for performance standards for the sales representatives which if not achieved can result in early termination of the agreement. The sales representatives were advanced $195,000. The advances are to be repaid from the representatives earnings; however, if certain performance levels are achieved within the first fourteen months of the contract, a portion of the advance will be forgiven. In addition, if during the first fourteen months of the contract, the sales representative generates gross profits of $2 million the sales representative will be granted 300,000 options to purchase shares of the Company's common stock and for each additional $1 million of gross profit (a maximum of $10,000,000) during the period the sales representative will receive 100,000 options.

Recently Issued Accounting Pronouncements In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (''SFAS
141(R)''), which establishes principles and requirements for how the acquirer:
(a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in an acquiree; (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) requires contingent consideration to be recognized at its fair value on the acquisition date and, for certain arrangements, changes in fair value to be recognized in earnings until settled. SFAS 141(R) also requires acquisition-related transaction and restructuring costs to be expensed rather than treated as part of the cost of the acquisition. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008 and will impact the Company's financial statements only in the event of such a business combination after this date.

In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements an Amendment of ARB No. 51 (''SFAS 160''), which establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 also requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. SFAS 160 also provides guidance when a subsidiary is deconsolidated and requires expanded disclosures in the consolidated financial statements that clearly identify and distinguish between the interests of the parent's owners and the interests of the non-controlling owners of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Management believes SFAS 160 will have no impact on the financial statements of the Company once adopted.

In March 2008, the FASB issued FASB Statement No. 161, Disclosures About Derivative Instruments and Hedging Activities ("SFAS 161"), which amends and expands the disclosure requirements of FASB Statement No. 133 with the intent to provide users of financial statements with an enhanced understanding of how and why an entity uses derivative instruments, how the derivative instruments and the related hedged items are accounted for and how the related hedged items affect an entity's financial position, performance and cash flows. This Statement is effective for financial statements for fiscal years and interim periods beginning after November 15, 2008. Based upon the Company's current operations, management believes SFAS 161 will have no impact on the financial statements of the Company once adopted.