UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

^{______________}

FORM 10-Q

^{______________}

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~July~~January 31, ~~2010~~2011

[ ] TRANSITION REPORT ~~PURSUANT~~PERSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to____________

Commission File No. 000-27011

ALPINE AIR EXPRESS, INC.

(Exact name of registrant as specified in its charter)


Delaware	33-0619518
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

1177 Alpine Air Way

Provo, Utah 84601

(Address of Principal Executive Offices)

(801) 373-1508

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year,

if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer ___

Accelerated filer ___

Non-accelerated filer ___

Smaller reporting company _X__

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Not applicable.

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No.

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~September~~March 714, ~~2010~~2011 - 3634,~~271~~475,~~461~~857 shares of common stock.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

The condensed consolidated financial statements of Alpine Air Express, Inc., a Delaware corporation, and its subsidiary Alpine Aviation, Inc., a Utah corporation, as required to be filed with this 10-Q Quarterly Report were prepared by management, and commence on the following page, together with related notes. In the opinion of management, the financial statements present fairly the consolidated financial condition, results of operations and cash flows of Alpine Air for the periods presented.

ALPINE AIR EXPRESS, INC.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~July~~January 31, ~~2010~~2011

ALPINE AIR EXPRESS, INC.

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

	PAGE
Condensed Consolidated Balance Sheets at July 31, 2010 (Unaudited) and October 31, 2009 (Audited)	5
Consolidated Balance Sheets at January 31, 2011 (Unaudited) and October 31, 2010 (Audited)	5
Unaudited Condensed Consolidated Statements of Operations for the three and nine Months ended July 31, 2010 and 2009	6
Unaudited Condensed Consolidated Statements of Income for the three Months ended January 31, 2011 and 2010	6
Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended July 31, 2010 and 2009	7-8
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended January 31, 2011 and 2010	7-8
Condensed Notes to Unaudited Consolidated Financial Statements	9-13
Notes to Unaudited Condensed Consolidated Financial Statements	9-12

ALPINE AIR EXPRESS, INC.

CONSOLIDATED BALANCE SHEETS

	July 31, 2010 Unaudited			October 31, 2009 Audited
		January 31, 2011		October 31, 2010
ASSETS CURRENT ASSETS:
		(Unaudited)		(Audited)
Cash and cash equivalents	$	506,523		$ 992,241
ASSETS
Trade accounts receivable, net Note receivable		1,435,019 48,822		1,468,854 -
CURRENT ASSETS:
Inventories		2,334,205		1,850,486
Cash and cash equivalents	$	1,076,510	$	1,129,890
Prepaid expenses		697,626		253,399
Trade accounts receivable, net		1,940,216		1,601,287
Deposits Cash value life insurance Income taxes receivable		38,575 85,572 -		64,549 80,550 324
Inventories		2,457,358		1,899,293
Deferred tax asset, current		322,000		271,000
Prepaid expenses		409,596		423,001
Total current assets		5,468,342		4,981,403
Deposits		38,575		38,575
PROPERTY AND EQUIPMENT, NET RESTRICTED CASH		21,614,234 204,946		21,235,497 200,695
Cash value life insurance		85,572		85,572
OTHER ASSETS, NET		133,642		142,629
Income taxes receivable		0		16,100
Total assets	$	27,421,164		$ 26,560,224
Deferred tax asset, current		144,000		138,000
Total current assets		6,151,827		5,331,718
PROPERTY AND EQUIPMENT, NET		21,792,837		22,125,782
RESTRICTED CASH		0		206,433
OTHER ASSETS, NET		105,340		119,491
Total assets	$	28,050,004	$	27,783,424
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade accounts payable	$	582,695	$	506,673
Income taxes payable		50,000		0
Accrued liabilities		974,358		1,143,751
Dividends payable		39,526		41,212
Deferred revenue		290,797		98,457
Current portion of long-term debt		1,274,000		1,286,000
Total current liabilities		3,211,376		3,076,093
DEFERRED TAX LIABILITY		2,255,000		1,947,000
LONG-TERM DEBT, net of current portion		6,979,891		7,283,335
Total liabilities		12,446,267		12,306,428
PREFERRED STOCK		7,101,120	[1]	7,465,280	[2]
STOCKHOLDERS' EQUITY:
Common stock		35,989	[3]	36,130	[4]
Additional paid-in capital		2,434,836		2,446,080
Retained earnings		6,031,792		5,535,239
Treasury stock		0	[5]	(5,733)	[6]
Total stockholders’ equity		8,502,617		8,011,716
Total liabilities and stockholders' equity	$	28,050,004	$	27,783,424

~~LIABILITIES~~[1] ~~AND~~$0.001 ~~STOCKHOLDERS'~~par ~~EQUITY~~value, $9.104 stated value, 1,000,000 shares authorized, 780,000 shares issued and outstanding.

CURRENT LIABILITIES:
Trade accounts payable	$	642,106	$ 991,513
Accrued liabilities Dividends payable Income taxes payable		1,042,293 41,212 37,900	837,229 244,616 -
Deferred revenue		99,395	120,037
Line of credit		-	276,021
Current portion of long-term debt		1,400,000	1,842,000
Total current liabilities		3,262,906	4,311,416
DEFERRED TAX LIABILITY LINE OF CREDIT		1,580,000 -	620,000 472,854
LONG-TERM DEBT, net of current portion		7,571,819	7,147,937
Total liabilities		12,414,725	12,552,207
PREFERRED STOCK, $.001 par value, $9.104 stated value, 1,000,000 shares authorized, 820,000 shares issued and outstanding.		7,465,280	7,465,280
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value, 100,000,000 shares authorized, 36,271,461 shares issued and outstanding.		36,271	36,271
Additional paid-in capital		2,491,868	2,457,550
Retained earnings		5,064,682	4,094,845
		7,592,821	6,588,666
Less treasury stock, 211,980 and 141,320 shares at cost, respectively		(51,662)	(45,929)
Total stockholders’ equity		7,541,159	6,542,737
Total liabilities and stockholders’ equity	$	27,421,164	$ 26,560,224

[2] $0.001 par value, $9.104 stated value, 1,000,000 shares authorized, 820,000 shares issued and outstanding.

~~The~~[3] ~~accompanying~~$0.001 ~~notes~~par ~~are~~value, an100,000,000 ~~integral~~shares ~~part~~authorized, of35,988,821 ~~these~~shares ~~condensed~~issued ~~consolidated~~and ~~financial statements~~outstanding.

[4] $0.001 par value, 100,000,000 shares authorized, 36,130,141 shares issued and outstanding.

[5] Less treasury stock, 0 shares at cost.

[6] Less treasury stock, 70,660 shares at cost.

The accompanying notes are an integral part of these condensed consolidated financial statements

ALPINE AIR EXPRESS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

		For the Three Months Ended July 31,						For the Nine Months Ended July 31,
				Nov. 1, 2010 to January 31, 2011				Nov. 1, 2009 to January 31, 2010
			2010			2009			2010		2009
	OPERATING REVENUE:
OPERATING REVENUE:
	Operations		$	5,475,047	$		5,063,407
Operations		$	4,802,568		$	4,817,312		$	14,904,885	$	15,377,033
	Public services			6,527			6,919
Public services			20,519			6,090			41,563		134,292
	Total operating revenues			5,481,574			5,070,326
Total operating revenues			4,823,087			4,823,402			14,946,448		15,511,325
	Direct costs - Operations			3,864,109			3,612,411
DIRECT COSTS:
	Direct costs - Public services			47,509			40,814
Operations			3,356,789			3,742,150			10,554,802		11,924,615
	Total direct costs			3,911,618			3,653,225
Public services			48,945			44,075			122,312		175,252
	Gross profit			1,569,956			1,417,101
Total direct costs			3,405,734			3,786,225			10,677,114		12,099,867
	OPERATING EXPENSES:
Gross profit			1,417,353			1,037,177			4,269,334		3,411,458
	General and administrative			448,446			441,709
OPERATING EXPENSES:
	Total operating expenses			448,446			441,709
General and administrative			724,774			441,040			1,570,842		1,602,110
	Operating income			1,121,510			975,392
Total operating expenses			724,774			441,040			1,570,842		1,602,110
	OTHER INCOME (EXPENSE):
Operating income			692,579			596,137			2,698,492		1,809,348
	Interest income			3,910			3,811
OTHER INCOME (EXPENSE):
	Interest expense			(140,153)			(202,745)
Interest income			2,816			2,395			9,259		10,660
	Loss on disposal of assets			0			(958)
Interest expense			(381,483)			(215,939)			(766,807)		(660,690)
	Total other income (expense)			(136,243)			(199,892)
Gain on disposal of assets			425,044			-			423,828		-
	INCOME BEFORE TAXES AND PREFERRED STOCK DIVIDEND			985,267			775,500
Gain (Loss) on investments			-			57,158			-		(76,343)
	Current income tax expense			67,000			0
Total other income (expense)			46,377			(156,386)			(333,720)		(726,373)
	Deferred income tax expense			302,000			289,000
INCOME BEFORE TAXES AND PREFERRED STOCK DIVIDEND Current income tax expense			738,956 122,850			439,751 -			2,364,772 123,000		1,082,975 -
	NET INCOME			616,267			486,500
Deferred income tax expense			297,000			180,000			909,000		441,000
	Preferred stock dividend declared			(119,714)			(122,308)
NET INCOME			319,106			259,751			1,332,772		641,975
	NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	496,553	$		364,192
Preferred stock dividend declared and amortization of preferred stock discount analogous to a preferred stock dividend.			(122,308)			(122,307)			(362,935)		(453,104)
	NET INCOME PER COMMON SHARE
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	196,798		$	137,444		$	969,837	$	188,871
	Basic		$	0.01	$		0.01
NET INCOME PER COMMON SHARE
	Diluted		$	0.00	$		0.00
Basic		$	.00		$	.00		$	.03	$	.01
Diluted		$	.00		$	.00		$	.01	$	.00

The accompanying notes are an integral part of these condensed consolidated financial statements.

ALPINE AIR EXPRESS, INC.

UNAUDITED CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CASH FLOWS

Nine Months Ending July 31, 2010 and 2009


		Nov. 1, 2010 to January 31, 2011		Nov. 1, 2009 to January 31, 2010

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	616,267	$	486,500
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on disposal of assets		0		958
Deferred tax expense		302,000		289,000
Depreciation and amortization		919,248		853,399
Stock based compensation		0		12,992
Provision for losses on accounts receivable		27,224		28,110
Provision for inventory obsolescence		3,000		2,505
(Increase) decrease in trade accounts receivable		(366,153)		(77,326)
(Increase) decrease in other assets		7,500		7,500
(Increase) decrease in inventories		(561,065)		(287,011)
(Increase) decrease in income taxes receivable		16,100		324
(Increase) decrease in prepaid expenses		85,528		1,237
(Increase) decrease in deposits		0		50,462
Increase (decrease) in trade accounts payable		76,022		(12,344)
Increase (decrease) in accrued liabilities		(169,393)		(133,238)
Increase (decrease) in deferred revenue		192,340		(117,019)
Increase (decrease) in income taxes payable		50,000		0
Net cash provided by operating activities		1,198,618		1,106,049

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(579,652)		(1,762,712)
Net cash used in investing activities		(579,652)		(1,762,712)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on long-term debt		(387,567)		(1,244,921)
Payment on dividends payable		(121,400)		(325,712)
Payment for redemption of preferred stock		(364,160)		0
Proceeds from long-term debt		0		1,854,243
Change in line of credit		0		(472,854)
Common stock purchased and retired		(5,652)		0
Net cash used in financing activities		(878,779)		(189,244)

Net change in cash and cash equivalents		(259,813)		(845,907)

BEGINNING CASH AND CASH EQUIVALENTS		1,336,323		1,192,936

ENDING CASH AND CASH EQUIVALENTS	$	1,076,510	$	347,029

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest		140,153		202,745
Income taxes		0		0

	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,332,772	$		641,975
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on disposal of assets Loss on investment Deferred gain amortization		(423,828) - -			- 1,059 (95,997)
Deferred tax expense		909,000			405,111
Depreciation and amortization		2,508,296			2,355,433
Stock based compensation		34,318			59,244
Provision for losses on accounts receivable Provision for inventory obsolescence		76,640 8,402			23,247 -
Changes in operating assets and liabilities:
Trade accounts receivable		(91,627)			363,405
Other assets		22,500			(24,192)
Inventories		(492,121)			(954,815)
Income taxes receivable Prepaid expenses Deposits		324 27,273 50,262			35,890 1,928 73,435
Trade accounts payable Accrued liabilities Income taxes payable		(349,407) 205,064 37,900			101,902 (266,911) -
Deferred revenue		(20,642)			(2,295)
Net cash provided by operating activities		3,835,126			2,718,419
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments Sale of investments		- -			(168,449) 225,434
Purchases of property and equipment Proceeds from sale of equipment Cash surrender value of life insurance		(3,512,478) 1,128,800 (5,022)			(3,362,857) - (10,545)
Net cash used in investing activities		(2,388,700)			(3,316,417)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on long-term debt Payment on dividends payable		(2,519,715) (566,339)			(1,622,114) (270,977)
Payment for redemption of preferred stock		-			(182,080)
Change in line of credit Proceeds from related party line of credit Purchase of treasury stock		(758,875) - (5,733)			748,875 50,000 -
Proceeds from long-term debt		1,922,769			1,200,000
Net cash used in financing activities		(1,927,893)			(76,296)
Net change in cash and cash equivalents		(481,467)			(674,294)
BEGINNING CASH AND CASH EQUIVALENTS		1,192,936			720,794
ENDING CASH AND CASH EQUIVALENTS	$	711,469	$		46,500

The accompanying notes are an integral part of these condensed consolidated financial statements.

ALPINE AIR EXPRESS, INC.

UNAUDITED CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CASH FLOWS

Nine Months Ending July 31, 2010 and 2009

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

		2010		2009
Cash paid during the period for:
Interest	$	766,807	$	660,690
Income taxes	$	85,000	$	-

Non-cash investing and financing activities:

For the ~~nine~~three months ended ~~July~~January 31, ~~2010~~2011, the Company:

~~Capitalized~~Applied ~~debt~~prepaid ~~issuance~~expenses ~~costs~~to notes payable of $9332,~~040~~283.

~~Refinanced~~Increased prepaid expenses by $4104,~~267,962~~406 ofthrough ~~long-term~~the issuance of debt.

~~Increased~~Retired ~~prepaid~~70,660 ~~aircraft~~shares ~~insurance~~of bytreasury ~~issuing~~stock ~~$471,500~~valued ofat ~~debt~~$5,733.

For the three months ended January 31, 2010, the Company:

~~Increased~~Capitalized ~~lease~~debt ~~deposit by $24,288 through the~~ issuance costs of ~~debt~~$44,278.

~~Exchanged~~Refinanced ~~accounts~~$1,204,803 ~~receivable for a note receivable~~ of ~~$48,822~~long-term debt.

For the nine months ended July 31, 2009, the Company:

Recorded the amortization of a preferred stock dividend and reduced retained earnings by $89,780.

The accompanying notes are an integral part of these condensed consolidated financial statements.

ALPINE AIR EXPRESS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Condensed Financial Statements – The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at ~~July~~January 31, ~~2010~~2011 and ~~2009~~2010 and for the periods then ended have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s October 31, ~~2009~~2010 audited financial statements. The results of operations for the periods ended ~~July~~January 31, ~~2010~~2011 and ~~2009~~2010 are not necessarily indicative of the operating results for the full year.

Recently Enacted Accounting Standards – InThe ~~April 2010,~~Company’s ~~the~~management ~~Financial~~has ~~Accounting~~evaluated ~~Standards~~the ~~Board~~recently ~~(“FASB”)~~ issued ~~Accounting~~accounting ~~Standards~~pronouncements ~~Update~~through ~~(“ASU”) No. 2010-13, “Effect of Denominating~~ the ~~Exercise~~filing ~~Price~~date of athese ~~Share-Based~~financial ~~Payment~~statements ~~Award~~and inhas ~~the~~determined Currency of the Market in Which the Underlying Equity Security Trades” (“ASU 2010-13”). ASU 2010-13 addresses the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. FASB Accounting Standards Codification (“ASC”) Topic 718 was amended to clarify that ~~a share-based payment award with an exercise price denominated in~~ the currency of a market in which a substantial portion of the entity’s equity securities trade shall not be considered to contain a market, performance or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies for equity classification. The amendments in ASU 2010-13 are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010, with early application ~~permitted. We do not anticipate that the adoption~~ of ~~this~~these ~~guidance~~pronouncements will have ano material impact on ~~our~~the Company’s financial position and results of operations.

In February 2010, the FASB issued ASU No. 2010-09, “Amendments to Certain Recognition and Disclosure Requirements” (“ASU 2010-09”), which amends ASC Topic 855, “Subsequent Events.” The amendments to ASC Topic 855 do not change existing requirements to evaluate subsequent events, but: (i) defines a “SEC Filer,” which we are; (ii) removes the definition of a “Public Entity”; and (iii) for SEC Filers, reverses the requirement to disclose the date through which subsequent events have been evaluated. ASU 2010-09 was effective for us upon issuance. This guidance did not have a material impact on our financial position and results of operations.

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”). ASU 2010-06 requires new disclosures for (i) transfers of assets and liabilities in and out of levels one and two fair value measurements, including a description of the reasons for such transfers and (ii) additional information in the reconciliation for fair value measurements using significant unobservable inputs (level three). This guidance also clarifies existing disclosure requirements including (i) the level of disaggregation used when providing fair value measurement disclosures for each class of assets and liabilities and (ii) the requirement to provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for level two and three assets and liabilities. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about activity in the roll forward for level three fair value measurements, which is effective for fiscal years beginning after December 15, 2010. The adoption of this guidance has not had a material impact on our financial position and results of operations.

Management believes the impact of other recently issued standards and updates, which are not yet effective, will not have a material impact on the Company’s consolidated financial position, results of operations or cash flows upon adoption.

ALPINE AIR EXPRESS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable consist of the following:

	July 31, 2010			October 31, 2009
	January 31, 2011			October 31, 2010
Trade accounts receivable Employee advances	$	12,~~577~~000,~~674~~700 ~~515~~316	$		1,~~535~~634,~~384~~205 -658
Less allowance for doubtful accounts		(~~143~~60,~~170~~800)			(6633,~~530~~576)
	$	1,~~435~~940,~~019~~216	$		1,~~468~~601,~~854~~287

NOTE 3 - ~~NOTE~~PREPAID ~~RECEIVABLE~~EXPENSES

The Company has a secured note receivable from a former equipment lessor, bearing interest at 3%. The terms require that the principal and accrued interest be paid upon maturity of the note, April 30, 2011. As of July 31, 2010 the outstanding balance is $48,822 and is secured by a second lien on a Beech 99 aircraft.

NOTE 4 - PREPAID EXPENSES

Prepaid expenses consist of the following:

	July 31, 2010			October 31, 2009
	January 31, 2011			October 31, 2010
Prepaid expenses and credits	$	~~245~~95,~~744~~572	$		84110,~~954~~493
Prepaid other taxes Prepaid insurance Prepaid training		4344,~~566~~231 ~~401~~263,~~289~~824 75,~~027~~969			8137,~~332~~197 80271,~~907~~797 63,~~206~~514
	$	~~697~~409,~~626~~596	$		~~253~~423,~~399~~001

NOTE 54 - INVENTORIES

Inventories consist of the following:

	July 31, 2010			October 31, 2009
	January 31, 2011			October 31, 2010
Aircraft parts	$	12,~~883~~155,~~294~~230	$		1,~~620~~660,~~614~~923
Work in process Fuel		~~476~~282,~~489~~173 3539,~~347~~564			~~247~~229,~~089~~235 3525,~~306~~744
Allowance for obsolescence		(6019,~~925~~609)			(5216,~~523~~609)
	$	2,~~334~~457,~~205~~358	$		1,~~850~~899,~~486~~293

~~NOTE 6 – PROPERTY AND EQUIPMENT~~9

Property and equipment consists of the following:

	Estimated life in years	July 31, 2010			October 31, 2009
Building and improvements	10 - 40	$	1,369,559	$	1,286,989
Aircraft	15		19,867,470		18,746,456
Engines	7 - 10		12,567,781		12,185,742
Equipment	3 - 10		309,002		306,655
Furniture and fixtures	3 - 10		324,606		329,029
Vehicles	5 - 7		128,413		140,540
			34,566,831		32,995,411
Less: accumulated depreciation and amortization			(12,952,597)		(11,759,914)
		$	21,614,234	$	21,235,497

ALPINE AIR EXPRESS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 75 – ~~LINE~~PROPERTY OFAND ~~CREDIT~~EQUIPMENT

~~The~~Property ~~Company has a $1,000,000 line of credit with a lending institution to help manage cash flow~~ and ~~day~~equipment toconsists ~~day operations. The line~~ of ~~credit has a variable interest rate, currently 6.5% and matures on February 23, 2011. The interest is payable each month on any outstanding balance. As of July 31, 2010~~ the ~~outstanding balance was $0. The line of credit is secured by two aircraft, Reg #N194GA and N955AA.~~following:

The Company also has a $100,000 line of credit with the same lending institution to help manage cash flow and day to day operations. The line of credit has a variable interest rate, currently at 6.5% and matures on August 25, 2016. The interest is payable each month on any outstanding balance. As of July 31, 2010 the outstanding balance was $0. The line of credit is secured by three aircraft, Reg #N194GA, N955AA, and N99GH.


	^{Estimated life in years}	^{January 31,} ²⁰¹¹			^{October 31,} ²⁰¹⁰
^{Building and improvements}	^{10 - 40}	^$	^1,369,559	^$	^1,369,559
^Aircraft	¹⁵		^20,617,438		^20,318,537
^Engines	^{7 - 10}		^13,278,864		^13,017,789
^Equipment	^{3 - 10}		^297,458		^295,758
^{Furniture and fixtures}	^{3 - 10}		^338,204		^338,204
^Vehicles	^{5 - 7}		^127,648		^126,913
			^36,029,171		^35,466,760
^{Less: accumulated depreciation and amortization}			^(14,236,334)		^(13,340,978)
		^$	^21,792,837	^$	^22,125,782

NOTE 86 – ~~LONG~~LINE ~~TERM~~OF ~~DEBT~~CREDIT

The Company has a $1,000,000 line of credit with a lending institution to help manage cash flow and day to day operations. The line of credit has a variable interest rate, currently 6.5% and matures on February 23, 2011. The interest is payable each month on any outstanding balance. As of January 31, 2011 the outstanding balance was $0. The line of credit is secured by two aircraft, Reg #N194GA and N955AA. Subsequent to January 31, 2011 this line of credit matured and the Company did not renew the line of credit.

The Company also has a $100,000 line of credit with the same lending institution to help manage cash flow and day to day operations. The line of credit has a variable interest rate, currently 6.5% and matures on August 25, 2016. The interest is payable each month on any outstanding balance. As of January 31, 2011 the outstanding balance was $0. The line of credit is secured by two aircraft, Reg #N194GA and N955AA. Subsequent to January 31, 2011 this line of credit was cancelled by the Company.

NOTE 7 – LONG TERM DEBT

Long term debt consists of the following:

		July 31, 2010		October 31, 2009
		January 31, 2011		October 31, 2010
Note payable with an interest rate of 8.75% at October 31, 2009. Secured by three aircraft, Reg #N17ZV, N955AA, and N194GA and personally guaranteed by an officer/shareholder. This note was refinanced.	$	-	$	815,083
Note payable issued on August 19, 2009 for $2,524,200 due August 19, 2012.Current interest rate of 6.5%. Secured by four aircraft Reg #N154GA, N99GH, N326CA, and N239AL and personally guaranteed by an officer/shareholder.		1,999,726		2,097,256
Note payable issued on August 19, 2009 for $2,524,200 due August 19, 2012. Current interest rate of 6.5%. Secured by four aircraft, Reg #N154GA, N99GH, N326CA, and N239AL and personally guaranteed by an officer/shareholder.		2,183,240		2,453,216

Note payable with interest only due at an interest rate of 4.75%. Personally guaranteed by an officer/shareholder. This note was refinanced.		-		1,200,500
Note payable issued on January 7, 2010 for $2,700,000 due January 7, 2016. Interest rate of 7.147%. Secured by four aircraft Reg #N172GA, N125BA, N219VP, and N198GA.		2,538,597		2,576,151
Note payable issued on January 7, 2010 for $2,700,000 due January 7, 2016. Interest rate of 7.147%. Secured by four aircraft, Reg #N172GA, N125BA, N219VP, and N198GA. Note payable issued on May 4, 2010 for $400,775 due February 1, 2011. Interest rate of 7.78%. Unsecured note used to finance aircraft insurance premium. Note payable issued on June 11, 2010 for $3,087,407 due June 11, 2015. Interest rate of 5.865%. Secured by four aircraft, Reg #N114AX, N127BA, N24BH, and N950AA.		2,613,011 269,765 3,054,452		- - -
Unsecured note payable issued on May 4, 2010 for $400,775 due February 1, 2011. Interest rate of 7.78%. Note payable issued on June 11, 2010 for $3,087,407 due June 11, 2015. Interest rate of 5.865%. Secured by four aircraft, Reg #N114AX, N127BA, N24BH, and N950AA.		- 2,873,674		136,190 2,964,757
Capital Lease Obligations		851,351		4,521,138
10
		8,971,819		8,989,937
ALPINE AIR EXPRESS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Less current portion		(1,400,000)		(1,842,000)
Unsecured note payable issued on December 16, 2010 for $104,406 due August 1, 2011. Interest rate of 7.98%.		104,406		-
Long-term portion	$	7,571,819	$	7,147,937
Capital Lease Obligations		737,488		794,981
		8,253,891		8,569,335
Less current portion		(1,274,000)		(1,286,000)
Long-term portion	$	6,979,891	$	7,283,335

NOTE 8 – PREFERRED STOCK

The Company is authorized to issue 1,000,000 shares of Series A $.001 par value preferred stock. The preferred

stock provides for monthly dividends at an annual rate of 6.5%. As of January 31, 2011 and October 31, 2010 there were 780,000 and 820,000 shares, respectively, issued and outstanding. This preferred stock is convertible at any time by the holder until December 1, 2011 based on the current market price of the Company’s stock. The Company can redeem the preferred stock any time and the Holder can call for redemption of the preferred stock any time after December 1, 2011 at a liquidation value of $9.104 per share.

During the period ending January 31, 2011, the Company redeemed 40,000 shares of the preferred stock at its stated value of $9.104 per share for a total of $364,160.

NOTE 9 - INCOME (LOSS) PER COMMON SHARE

The following data show the amounts used in computing net income per common share, for the three months ended January 31:


		2011		2010
Net income available to common shareholders	$	496,553	$	364,192

Weighted average number of common shares used in basic EPS		36,060,249		36,271,461

Dilutive effect of preferred stock		85,213,440		60,203,871

Dilutive effect of stock options		-		-

Weighted average number of common shares and dilutive potential common stock used in diluted EPS		121,273,689		96,475,332

NOTE 10 – CONCENTRATIONS

U.S. Postal Service Contracts - The Company receives the majority of its revenues from contracts with the U.S. Postal Service (USPS). For the three months ended January 31, 2011 and 2010, the revenues from contracts with the USPS represented 63% and 69% of total revenues, respectively. At January 31, 2011 and October 31, 2010, accounts receivable from the USPS totaled $1,073,183 and $966,855, or 54% and 60%, respectively. The contracts currently in effect for USPS routes will expire in September 2015 for mainland US operations. The loss of contracts with this customer would have a material negative effect on the operations of the Company.

ALPINE AIR EXPRESS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 911 – ~~PREFERRED~~COMMITMENTS ~~STOCK~~AND CONTINGENCIES

The Company is authorized to issue 1,000,000 shares of Series A $.001 par value preferred stock. The preferred stock provides for monthly dividends at an annual rate of 6.5%. As of July 31, 2010 and October 31, 2009 there were 820,000 shares issued and outstanding. This preferred stock is convertible at any time by the holder until December 1, 2011 based on the current market price of the Company’s stock. The Company can redeem the preferred stock any time and the Holder can call for redemption of the preferred stock any time after December 1, 2011at a liquidation value of $9.104 per share.

Previous Company financial statements issued after July 31, 2007 classified this preferred stock as an equity instrument. Following recent consultations with the Securities and Exchange Commission, the Company is reclassifying this preferred stock as a mezzanine item outside of the Equity section of the consolidated balance sheets.

NOTE 10 - INCOME PER COMMON SHARE

The following data show the amounts used in computing net income per common share:

	For Three Months Ended July 31,				For Nine Months Ended July 31,
		2010		2009		2010		2009
Net income available to common shareholders	$	196,798	$	137,445	$	,837	$	188,871
Weighted average number of common shares used in basic EPS		36,271,461		36,271,461		36,271,461		36,271,461
Dilutive effect of preferred stock Dilutive effect of stock options		79,985,143 -		74,652,800 -		71,628,486 -		46,658,000 -
Weighted average number of common shares and dilutive potential common stock used in diluted EPS		116,256,604		110,924,261		107,899,947		82,929,461

NOTE 11 – CONCENTRATIONS

U.S. Postal Service Contracts - The Company receives the majority of its revenues from contracts with the U.S. Postal Service (USPS). For the nine months ended July 31, 2010 and 2009, the revenues from contracts with the USPS represented 69% and 64% of total revenues, respectively. At July 31, 2010 and October 31, 2009, accounts receivable from the USPS totaled $876,576 and $759,109, or 57% and 49%, respectively. The contracts currently in effect for USPS routes will expire in September 2015. The loss of contracts with this customer would have a material negative effect on the operations of the Company.

ALPINE AIR EXPRESS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – COMMITMENTS AND CONTINGENCIES

The Company operates its aircraft under a certificate which allows it to accumulate time between overhauls (TBO) in excess of manufacturer's recommendations. The Company regularly inspects its engines. A majority of the engines used by the Company have accumulated TBO in excess of manufacturer's recommendations.

Two allegations and one proposed penalty have been put forth by the Federal Aviation Administration (FAA) ~~Matters-~~and ~~Several~~are ~~allegations~~currently being reviewed by the Company. Management has assessed the probability and ~~proposed~~has estimated and accrued a reasonable amount to cover any penalties the Company may incur. None of these assertions have ~~been~~resulted ~~put~~in ~~forth~~any byenforcement action against the Company, nor does the Company expect any actions as a result of the allegations.

~~the~~NOTE ~~FAA~~12 ~~and~~– ~~are~~SUBSEQUENT currently being reviewed by the Company. Management has assessed the probability and has estimated and accrued a reasonable amount to cover any penalties the Company may incur. None of these assertions have resulted in any enforcement action against the Company, nor does the Company expect any actions as a result of the allegations.EVENTS

~~NOTE~~During 13January –2011 ~~SUBSEQUENT~~a ~~EVENTS~~company that leases an aircraft from Alpine Air returned a Beechcraft 1900D aircraft back to Alpine Air and chose not to renew its lease. Alpine Air has leased this aircraft and a second Beechcraft 1900D to another lessee commencing March 2011.

~~Alpine~~On ~~Air~~February ~~Express~~23, ~~has~~2011 ~~evaluated~~a ~~subsequent~~line ~~events~~of ~~through~~credit with a lending institution for $1,000,000 matured and the ~~date~~Company chose not to renew the ~~financial~~line ~~statements~~of ~~were~~credit. ~~issued~~In addition, ~~and~~the ~~concluded~~Company ~~there~~also cancelled a $100,000 line of credit with the same institution. These lines of credit were nosecured ~~events~~by ortwo ~~transactions~~aircraft, ~~during~~Reg ~~this~~#N194GA ~~period~~and ~~that~~N955AA ~~required~~and ~~recognition~~the orlender ~~disclosure~~is inreleasing ~~its~~liens ~~financial~~on ~~statements~~both aircraft.

On February 24, 2011 the Company entered into an agreement with a shareholder to repurchase 1,512,964 shares of Common Stock for $150,000.

In February 2011 the Company signed an agreement to lease a Beechcraft 99 aircraft to a third party and the lease begins April 1, 2011 for a term of 24 months.

On March 1, 2011 the Company Board of Directors approved a one-time redemption of 20,000 shares of Series A 6.5% Preferred Stock of Alpine Air held by Mallette Holdings, LLLP to be redeemed at its stated value of $9.104 per share.

On March 7, 2011 a financial institution agreed to loan an additional $500,000 to the Company on an existing loan dated January 7, 2010. The terms and collateral remain the same as the existing loan.

Alpine Air Express has evaluated subsequent events through the date the financial statements were issued, and concluded there were no other events or transactions during this period that required recognition or disclosure in its financial statements.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

General.

Alpine Aviation Inc. operates two business ~~segments~~divisions. The operations ~~segment~~division provides air cargo transportation services in the United States in Montana, North Dakota, and South Dakota (6963% of revenue). In addition to air cargo transportation, the Company flies charters for other cargo carriers (2325% of revenue), and leases passenger aircraft to other air carriers (812% of revenue). The public ~~services~~division segment provides maintenance service on aircraft owned and operated by third parties (less than 1% of revenue), and operates a First Officer training program (less than 1% of revenue).

During the three months ended ~~July~~January 31, ~~2010~~2011, cargo volumes were slightly lower (1%) when compared to the same period last year. The Company carried 2,~~100~~058 tons of cargo this quarter in ~~2010~~2011 compared to 2,~~130~~086 tons in the same quarter in ~~2009~~2010.

In 2009 the Company was successful in its attempts to renew the Montana/South Dakota/North Dakota contract with the US Postal Service. The contract began in 2009 and runs for six years through 2015. In the future, if the Company were unable to renew this contract, it would have a significant impact on earnings and revenues. However, management has had substantial success in renewing contracts with the USPS over the past 20 years. The Company is also under contract with a major US cargo carrier until 2013.

The current US Postal Service contract includes a significant per pound rate increase over previous contracts. The Company continues to experience moderate rising costs. Fuel, insurance, aircraft maintenance, and repairs place a demand on the Companies cash resources, however, management has been exceptionally proactive in containing and reducing operating costs in order to better maximize the use of cash resources.12

with the US Postal Service. The contract began in 2009 and runs for six years through 2015. In the future, if the Company were unable to renew this contract, it would have a significant impact on earnings and revenues. However, management has had substantial success in renewing contracts with the USPS over the past 20 years. The Company is also under contract with a major US cargo carrier until 2013.

The current US Postal Service contract includes a per pound rate increase over previous contracts. The Company continues to experience moderate rising costs. Fuel, insurance, aircraft maintenance, and repairs place a demand on the Company’s cash resources, however, management has been exceptionally proactive in containing and reducing operating costs in order to better maximize the use of cash resources.

Liquidity and Capital Resources

~~July~~January 31, ~~2010~~2011 and October 31, ~~2009~~2010.

Historical Source of Cash and Capital Expenditures:

The Company has a working capital position on ~~July~~January 31, ~~2010~~2011 of $2,~~205~~990,~~436~~451, as compared to working capital on October 31, ~~2009~~2010, of $~~669~~2,~~987~~255,625. The increase in working capital has been the direct result of aan $~~486~~820,~~939~~109 increase in current assets coupled with aan ~~decrease~~increase of $185,~~048,510~~283 in current liabilities. The Company presently has no material off-balance sheet financing arrangements.

13 Total assets increased to $28,050,004 on January 31, 2011 from $27,783,424 on October 31, 2010. Total liabilities increased to $12,446,267 from $12,306,428 during the same period. Stockholders' equity has also increased a total of $490,901, from $8,011,716 to 8,502,617 for October 31, 2010 and January 31, 2011, respectively.

~~Total~~ For ~~assets~~the ~~increased~~three tomonths ~~$27,421,164~~ended onJanuary ~~July~~ 31, ~~2009~~2011 the Company had a net profit from ~~$26,560,224~~operations onbefore ~~October~~income ~~31,~~taxes ~~2009.~~and ~~Total~~preferred ~~liabilities~~stock ~~decreased~~dividends toof $12985,~~414,725~~267. ~~from~~This ~~$12,552,207~~is ~~during~~an ~~the~~increase ~~same~~of ~~period. Stockholders'~~$209,767 ~~equity~~from ~~has~~the ~~also~~previous ~~increased~~year’s anet ~~total~~income of $~~998~~775,~~422,~~500. ~~from~~Depreciation ~~$6,542,737~~and toamortization ~~7,541,159~~expense for ~~October~~the ~~31,~~three ~~2009~~months ~~and~~ending ~~July~~January 31, ~~2010~~2011 was $919,248 ~~respectively~~for an increase of $65,849 over last year.

~~For~~ During the ~~nine~~three months ended ~~July~~January 31, ~~2010~~2011, the Company’s ~~had~~tax a net ~~profit~~operating ~~from~~loss ~~operations~~carryforward ~~before~~decreased ~~income~~by ~~taxes and preferred stock dividends of~~ $21,~~364~~012,~~772~~000. ~~This~~There iswas an increase ofin ~~$1,281,797 from~~ the ~~previous~~deferred ~~year’s~~tax ~~net~~accounts ~~income~~ of $1302,~~082,975~~000. ~~Depreciation and amortization expense for the nine months ending July 31, 2010 was $2,508,296 for an increase of $152,863 over last year.~~

~~During~~ Investing activities for the ~~nine~~three months ended ~~July~~January 31, ~~2010~~2011, ~~the~~consisted ~~Company~~of ~~decreased~~ the ~~tax~~purchases ~~net~~of ~~operating~~property ~~loss~~and ~~carryforward~~equipment ~~by $2,234,661. There was an increase in the deferred tax accounts~~ of $~~909~~579,~~000~~652.

~~Investing~~For ~~activities for~~ the ~~nine~~three months ended ~~July~~January 31, 2010, ~~consisted~~net ~~mainly~~cash ofused ~~the~~in ~~purchase~~financing activities was $878,779. The subsequent use of ~~one~~these ~~additional~~funds ~~aircraft~~was the retiring of $387,567 ~~engine~~of ~~overhauls~~long-term debt, ~~and~~the ~~capital~~payment ~~improvements~~of topreferred ~~aircraft~~stock ~~totaling~~dividends of $3121,~~512~~400,~~478.~~ ~~The~~the ~~Company~~redemption ~~also~~of ~~received~~$5,652 ~~proceeds~~of Common Stock of $1the Company,~~128,800~~ ~~from~~and the ~~sale~~redemption of ~~one~~$364,160 ~~Beechcraft~~of ~~1900~~Preferred ~~aircraft~~Stock ~~and~~of ~~other~~the ~~equipment~~Company.

For the ~~nine~~three months ended ~~July~~January 31, ~~2010,~~2011 ~~net~~and ~~cash~~January ~~used~~31, ~~in financing activities was $1~~2010,~~927,893,~~ ~~which~~net ~~included~~decreases ~~new~~in ~~funds~~cash ~~made~~and ~~available~~cash ~~from~~equivalents ~~notes~~were ~~payable of~~ $1259,~~922,769.~~813 ~~The~~and ~~subsequent use of these funds was primarily towards reducing notes payable by~~ $2845,~~519~~907,~~715,~~ ~~payoff~~and ofending acash ~~line~~and ofcash ~~credit~~equivalents ofwere $~~758~~1,~~875~~076,510 and ~~the payment of preferred stock dividends of~~ $~~566~~347,~~339~~029, respectively.

For the nine months ended July 31, 2009, net cash used from financing activities was $76,296, which included a new capital lease of $1,200,000, a new line of credit of $748,875 and $50,000 loan from a related party. The subsequent use of these funds was primarily used towards reducing notes payable by $1,622,114, the payment of preferred stock dividends of $270,977 and the redemption of $182,080 of Preferred Stock in the Company.

For the nine months ended July 31, 2010 and July 31, 2009, net uses in cash and cash equivalents were $481,467 and $674,294, and ending cash and cash equivalents were $711,469 and $46,500, respectively.

Cash Requirements:

The following table summarizes the Company’s contractual obligations as of ~~July~~January 31, ~~2010~~2011:

Total

One Year

2-5 Years

After 5 Years

Long-term debt principal

87,~~120~~516,~~468~~403

1,~~168~~032,~~000~~978

56,~~229~~483,~~863~~425

~~1,722,605~~-

Capital leases principal

~~851~~737,~~351~~488

~~232~~241,~~000~~670

~~619~~495,~~351~~818

Interest payments

1,~~832~~545,~~201~~269

~~555~~513,~~987~~813

1,~~224~~031,~~970~~456

~~51,244~~-

Operating leases

~~350~~306,~~054~~395

3933,~~342~~211

9268,~~950~~687

~~217~~204,~~762~~497

Dividend payment of preferred shares

~~687~~2,~~428~~269,400

~~485~~461,~~243~~573

~~202~~1,~~185~~807,827

Total

1112,~~841~~374,~~502~~955

2,~~480~~283,~~572~~245

79,~~369~~887,~~319~~213

1204,~~991,611~~497

Future Capital Expenditures:

The Company, as of ~~July~~January 31, ~~2010~~2011, had no open commitments to purchase additional aircraft.

Results of Operations.

Three months ended ~~July~~January 31, ~~2010~~2011 and ~~2009~~2010.

Operating Revenue

During the three months ended ~~July~~January 31, ~~2010~~2011 total operating revenues were $45,~~823~~481,~~087~~574, representing aan ~~less than 1~~8% ~~decrease~~increase over ~~2009~~2010 revenues for the same period of $45,~~823~~070,~~402~~326. The following tables summarize Alpine Air’s operating revenue and associated percentage-of-change for the periods indicated.


		Three months ended January 31, 2011		Three months ended January 31, 2010	2011 over 2010 Change
Operating Revenue:
Operations
Mail revenue	$	3,428,176	$	3,499,395	(2)%
Contract cargo revenue and ad-hoc charters		1,388,942		1,222,505	14%
Aircraft leasing		657,929		341,507	93%
Total operations		5,475,047		5,063,407	8%
Public services
First officer		3,689		4,133	(11)%
Maintenance		2,838		2,786	2%
Total public services		6,527		6,919	(6)%
Total operating revenue	$	5,481,574	$	5,070,326	8%

		Three months ended July 31, 2010		Three months ended July 31, 2009		2010 over 2009 Change
		Three months ended January 31, 2011	Three months ended January 31, 2010		2011 over 2010 Change
Operating Revenue:
Operations
Mail revenue	$	~~3,285,367~~63%	$69%	~~3,134,589~~	(6)%	5%
Contract cargo revenue and ad-hoc charters		~~1,171,101~~25%	24%	~~1,384,708~~	1%	~~(15)%~~
Aircraft leasing		~~346,100~~12%	7%	~~298,015~~	5%	~~16%~~
Total operations		~~4,802,568~~100%	100%	~~4,817,312~~	-	~~Less than 1%~~
Public services
First officer		~~14,779~~<1%	<1%	~~2,808~~	-	~~426%~~
Maintenance		~~5,740~~<1%	<1%	~~3,282~~	-	~~75%~~
Total public services		~~20,519~~<1%	<1%	~~6,090~~	-	~~237%~~
Total operating revenue	$	~~4,823,087~~100%	$100%	~~4,823,402~~	-	~~Less than 1%~~

	Three months ended July 31, 2010	Three months ended July 31, 2009	2010 over 2009 Change
Operating Revenue:
Operations
Mail revenue	68%	65%	3%
Contract cargo revenue and ad-hoc charters	24%	28%	(4)%
Aircraft leasing	7%	6%	1%
Total operations	99%	99%	-
Public services
First officer	Less than 1%	Less than 1%	-
Maintenance	Less than 1%	Less than 1%	-
Total public services	1%	1%	-
Total operating revenue	100%	100%	-

Direct Costs

Total direct costs ~~decreased~~increased to $3,~~405~~911,~~734~~618 from $3,~~786~~653,225 for the three months ending ~~July~~January 31, ~~2010~~2011 and ~~2009~~2010, respectively. This ~~decrease~~increase is mainly due to aan ~~decrease~~increase of $~~276~~181,~~397~~221 in ~~labor~~fuel ~~and benefits expenses, a decrease of $118,743 in aircraft lease~~ expense~~, and a decrease of $112,372 in aircraft insurance expense~~. ~~Labor~~This ~~and~~increase ~~benefits~~was ~~expenses decreased~~ due to ~~the~~an ~~ceasing~~increase ~~of operations~~ in ~~Hawaii,~~overall ~~aircraft~~fuel ~~lease~~prices ~~expenses decreased due to the ending of several sale/leaseback agreements,~~ and ~~aircraft~~additional ~~insurance~~charter ~~expense~~flights ~~decreased~~flown ~~due~~during toDecember ~~a premium decrease with a new insurance company~~2011. Depreciation and amortization expense for the three months ended ~~July~~January 31, ~~2010~~2011 increased to $~~784~~919,~~661~~248 from $~~750~~853,~~885~~399 during the same period in ~~2009~~2010. This increase was due to ~~additional~~an ~~depreciation~~increase onin ~~one~~engine ~~new~~times for aircraft ~~acquired~~leases ~~during~~to ~~2010~~third parties and ~~from~~depreciation on major engine and airframe component overhauls capitalized in 2010 and 2011. The following table summarizes ~~Alpine~~the ~~Air~~Company’s direct costs and the associated percentages-of-change for the periods indicated.

		Three months ended July 31, 2010		Three months ended July 31, 2009	2010 over 2009 Change
Direct Costs:
Operations
Depreciation and amortization	$	784,661	$	750,885	4%
Other direct costs		2,572,128		2,991,265	(14)%
Total operations		3,356,789		3,742,150	(10)%
Public services
Total public services		48,945		44,075	11%
Total direct costs	$	3,405,734	$	3,786,225	(10)%


		Three months ended January 31, 2011		Three months ended January 31, 2010	2011 over 2010 Change
Direct Costs:
Operations
Depreciation and amortization	$	919,248	$	853,399	8%
Other direct costs		2,944,861		2,759,012	7%
Total operations		3,864,109		3,612,411	7%
Public services
Total public services		47,509		40,814	16%
Total direct costs	$	3,911,618	$	3,653,225	7%

Operating Expenses

Operating expenses increased to $~~724~~448,~~774~~446 from $441,~~040~~709 for the three months ended ~~July~~January 31, ~~2010~~2011 and ~~2009~~2010, respectively. This small increase was due mainly to an increase in ~~bad~~labor ~~debt expense~~ and ~~the~~wages ~~accrual of fines and penalties~~expense. The following table summarizes Alpine Air’s operating expenses and the associated percentages-of-change for the periods indicated.

		Three months ended July 31, 2010		Three months ended July 31, 2009	2010 over 2009 Change
		Three months ended January 31, 2011		Three months ended January 31, 2010	2011 over 2010 Change
Operating Expenses:
General and administrative	$	~~724~~448,~~774~~446	$	441,~~040~~709	642%
Total operating expenses		~~724~~448,~~774~~446		441,~~040~~709	642%

Interest Income

Interest income for the three months ended ~~July~~January 31, ~~2010~~2011 increased to $23,~~816~~910 from the amount at ~~July~~January 31, ~~2009~~2010 of $23,~~395~~811. This increase in interest income is due to an increase of cash in interest bearing accounts.

Interest Expense

Total interest expense for the three months ended ~~July~~January 31, ~~2010~~2011 and ~~2009~~2010 was $~~381~~140,~~483~~153 and $~~215~~202,~~939~~745, respectively. This ~~increase~~decrease in interest expense is due to a refinance of a capital lease to a note payable ~~and subsequent pre-payment penalties associated~~ with ~~this~~more ~~early~~favorable ~~termination of the lease~~terms.

Gain on Disposal of Assets

Gain on disposal of assets for the three months ended ~~July~~January 31, ~~2010~~2011 increased to $~~425,044~~0 from $0(958) as of ~~July~~January 31, ~~2009~~2010. ~~The~~This ~~gain~~increase onis ~~disposal~~due ofto ~~assets~~no issales ~~due~~or todispositions ~~the~~of ~~difference~~assets inoccurring during the ~~cost~~current ~~basis~~quarter versus ~~the~~a ~~net~~small ~~book~~loss ~~value~~ on aasset ~~sale~~sales offor athe ~~Beechcraft~~same ~~1900~~quarter ~~aircraft~~last year.

Income Tax Expense

The provision for income tax expense for the three months ended ~~July~~January 31, ~~2010~~2011 and ~~2009~~2010 was $~~419~~369,~~850~~000 and $~~180~~289,000, respectively. The small increase in income taxes as a percentage of income before taxes of 5637.85% in ~~2010~~2011 and 4037.93% in ~~2009~~2010 was due to astate ~~non-deductible~~income ~~fines and penalties~~taxes.

Net Income

For the three months ended ~~July~~January 31, ~~2010~~2011 and ~~2009~~2010, income before preferred dividends was $~~319~~616,~~106~~267 and $~~259~~486,~~751~~500, or $0.01 per share and $0.01 per share, respectively. For the same periods net income available to shareholders was $~~196~~496,~~798~~553 and $~~137~~364,~~444~~192, or $0.0001 per share and $0.0001 per share, respectively. The difference for both years presented is approximately $~~122~~119,~~308~~714 and $122,~~307~~308, respectively ($0.00 and $0.00 per share, respectively), which is related to dividends declared on preferred stock.

~~Nine months ended July 31, 2010 and 2009.~~15

Operating Revenue

During the nine months ended July 31, 2010 total operating revenues were $14,946,448, representing a 4% decrease over 2009 revenues for the same period of $15,511,325. This decrease in revenue is attributed to decrease in contract cargo revenue and ad-hoc charters. The following tables summarize Alpine Air’s operating revenue and associated percentage-of-change for the periods indicated.

		Nine months ended July 31, 2010		Nine months ended July 31, 2009	2010 over 2009 Change
Operating Revenue:
Operations
Mail revenue	$	10,253,693	$	9,882,936	4%
Contract cargo revenue and ad-hoc charters		3,491,817		4,589,586	(24)%
Aircraft leasing		1,159,375		904,511	28%
Total operations		14,904,885		15,377,033	(3)%
Public services
First officer		28,080		15,369	83%
Maintenance		13,483		118,923	(89)%
Total public services		41,563		134,292	(69)%
Total operating revenue	$	14,946,448	$	15,511,325	(4)%

	Nine months ended July 31, 2010	Nine months ended July 31, 2009	2010 over 2009 Change
Operating Revenue:
Operations
Mail revenue	68%	64%	4%
Contract cargo revenue and ad-hoc charters	23%	29%	(6)%
Aircraft leasing	8%	6%	2%
Total operations	99%	99%	-
Public services
First officer	Less than 1%	Less than 1%	-
Maintenance	Less than 1%	Less than 1%	-
Total public services	1%	1%	-
Total operating revenue	100%	100%	-

Direct Costs

Total direct costs decreased to $10,677,114 from $12,099,867 for the nine months ending July 31, 2010 and 2009, respectively. This decrease is mainly due to a decrease of $862,367 in labor and benefits expense, a decrease of $665,653 in aircraft lease expense, and a decrease of $100,073 in aircraft insurance expense. Labor and benefits expenses decreased due to the ceasing of operations in Hawaii, aircraft lease expenses decreased due to the ending of several sale/leaseback agreements, and aircraft insurance expense decreased due to a premium decrease with a new insurance company. Depreciation and amortization expense for the nine months ended July 31, 2010 increased to $2,428,769 from $2,355,433 during 2009. This increase was due to additional depreciation on one new aircraft acquired during 2010 and from major engine and airframe component overhauls capitalized in 2010. The following table summarizes Alpine Air’s direct costs and the associated percentages-of-change for the periods indicated.

		Nine months ended July 31, 2010		Nine months ended July 31, 2009	2010 over 2009 Change
Direct Costs:
Operations
Depreciation and amortization	$	2,428,769	$	2,355,433	3%
Other direct costs		8,126,033		9,569,182	(15)%
Total operations		10,554,802		11,924,615	(11)%
Public services
Total public services		122,312		175,252	(30)%
Total direct costs	$	10,677,114	$	12,099,867	(12)%

Operating Expenses

Operating expenses decreased to $1,570,842 from $1,602,110 for the nine months ended July 31, 2010 and 2009, respectively. This decrease was due mainly to an overall reduction in labor and benefits expense and a decrease in bad debt expense, coupled with an increase in fines and penalties. The following table summarizes Alpine Air’s operating expenses and the associated percentages-of-change for the periods indicated.

		Nine months ended July 31, 2010		Nine months ended July 31, 2009	2010 over 2009 Change
Operating Expenses:
General and administrative	$	1,570,842	$	1,602,110	(2)%
Total operating expenses		1,570,842		1,602,110	(2)%

Interest Income

Interest income for the nine months ended July 31, 2010 decreased to $9,259 from the amount at July 31, 2009 of $10,660. This decrease in interest income is due to a reduction of cash in interest bearing accounts.

Interest Expense

Total interest expense for the nine months ended July 31, 2010 and 2009 was $766,807 and $660,690, respectively. This increase in interest expense is due to a refinance of a capital lease to a note payable and subsequent pre-payment penalties associated with this early termination of the lease.

Gain on Disposal of Assets

Gain on disposal of assets for the nine months ended July 31, 2010 increased to $423,828 from $0 as of July 31, 2009. The gain on disposal of assets is due to the sale of one Beechcraft 1900 aircraft

Income Tax Expense

The provision for income tax expense for the nine months ended July 31, 2010 and 2009 was $1,032,000 and $441,000, respectively. The increase in income taxes as a percentage of income before taxes of 43.6% in 2010 and 40.7% in 2009 was due to non-deductible fines and penalties.

Net Income

For the nine months ended July 31, 2010 and 2009, income before preferred dividends was $1,332,772 and $641,975, or $0.04 per share and $0.02 per share, respectively. For the same periods net income available to shareholders was $969,837 and $188,871, or $0.03 per share and $0.01 per share, respectively. The difference in net income available to common shareholders for both years presented is $362,935 and $453,104, respectively ($0.01 and $0.01 per share, respectively), which is related to dividends declared on preferred stock and $89,780 amortization of preferred stock discount for the nine months ended July 31, 2009.

Off-balance sheet arrangements

We have no off balance sheet arrangements during the quarter ended ~~July~~January 31, ~~2010~~2011.

Forward Looking Statements.

Statements made in this Form 10-Q which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of the Company, including, without limitation, (i) our ability to retain existing commercial relationships and to obtain additional profitable sources of revenue, and (ii) statements preceded by, followed by or that include the words "may", "would", "could", "should", "expects", "projects", "anticipates", "believes", "estimates", "plans", "intends", "targets" or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond the Company's control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, in addition to those contained in the Company's reports on file with the SEC: general economic or industry conditions, nationally and/or in the communities in which the Company conducts business, legislation or regulatory requirements, the economic condition of the U.S. Postal Service, changes in the air cargo, charter and leasing industries, demand for air cargo, charter and leasing services, competition, changes in the quality or composition of the Company's services, our ability to develop profitable new sources of revenue, changes in accounting principals, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting the Company's operations, services and prices.

forth in the forward-looking statements, including the following, in addition to those contained in the Company's reports on file with the SEC: general economic or industry conditions, nationally and/or in the communities in which the Company conducts business, legislation or regulatory requirements, the economic condition of the U.S. Postal Service, changes in the air cargo, charter and leasing industries, demand for air cargo, charter and leasing services, competition, changes in the quality or composition of the Company's services, our ability to develop profitable new sources of revenue, changes in accounting principals, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting the Company's operations, services and prices.

Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. The Company does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable to smaller reporting companies.

Item 4.4T Controls and Procedures.

Management’s report on disclosure controls and procedures.

As of the end of the period covered by this Quarterly Report, we carried out an evaluation, under the supervision and with the participation of our CEO and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our CEO and Principal Financial Officer concluded that information required to be disclosed is recorded, processed, summarized and reported within the specified periods and is accumulated and communicated to management, including our CEO and Principal Financial Officer, to allow for timely decisions regarding required disclosure of material information required to be included in our periodic Securities and Exchange Commission reports. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our CEO and Principal Financial Officer have concluded that our disclosure controls and procedures are effective to a reasonable assurance level of achieving such objectives. However, it should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. In addition, we reviewed our internal controls over financial reporting, and there have been no changes in our internal controls or in other factors in the last fiscal quarter that has materially affected our internal controls over financial reporting.

Changes in internal control over financial reporting

We had no changes in our internal control over financial reporting during the quarter ended ~~July~~January 31, ~~2010~~2011.

~~PART II - OTHER INFORMATION~~16

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Not applicable.

Item 1A. Risk Factors.

Not applicable to smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Sales of Unregistered Securities

During the quarter ended ~~July~~January 31, ~~2010~~2011, we did not issue any unregistered securities.

Use of Proceeds of Registered Securities

We had no proceeds from the sale of registered securities during the quarter ended ~~July~~January 31, ~~2010~~2011.

Purchases of Equity Securities by Us and Affiliated Purchasers

SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased Under the Plans or Programs
Month #1 May 1, 2010 through May 31, 2010	None	None	None	None
Month #1 November 1, 2010 through November 30, 2010	None	None	None	None
Month #2 June 1, 2010 through June 30, 2010	None	None	None	None
Month #2 December 1, 2010 through December 31, 2010	None	None	None	None
Month #3 July 1, 2010 through July 31, 2010	None	None	None	None
Month #3 January 1, 2011 through January 31, 2011	70,660 shares of Alpine Air Express, Inc. from General Manager, Bill Distefano	$.08 per share, $5,652 total purchase value	None	None
Total	~~None~~70,660	~~None~~$.08	None	None

Item 3. Defaults Upon Senior Securities.

None; not applicable.

Item 4. (Removed and Reserved).

Item 5. Other Information.

(a)

None; not applicable.

(b)

~~Nominating~~During ~~Committee~~the quarterly period ended January 31, 2011, there were no changes in the procedures by which security holders may recommend nominees to the Company’s Board of Directors.

~~During the quarterly period ending July 31, 2010, there were no changes in the procedures by which security holders may recommend nominees to the Company’s Board of Directors.~~17

Item 6. Exhibits

(a) Exhibits and index of exhibits.

31.1 302 Certification of Eugene R. Mallette

31.2 302 Certification of Rick C. Wood

32 906 Certification

2018

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this ~~Quarterly~~report ~~Report~~ to be signed on its behalf by the undersigned, thereunto duly authorized.

ALPINE AIR EXPRESS, INC.

Date:	0903/1015/1011	By:	/s/Eugene R. Mallette
			Eugene R. Mallette
			Chief Executive Officer and Director
Date:	0903/1015/1011	By:	/s/Rick C. Wood
			Rick C. Wood
			Principal Financial Officer
Date:	0903/1015/1011	By:	/s/Max A. Hansen
			Max A. Hansen
			Secretary/Treasurer and Director
Date:	0903/1015/1011	By:	/s/Joseph O. Etchart
			Joseph O. Etchart
			Chairman
Date:	0903/1015/1011	By:	/s/Ronald L. Pattison
			Ronald L. Pattison
			Director

2119

Filing Compare · ALPINE AIR EXPRESS INC/DE