On August 31, 1994 at 1830 Alaska daylight time, a wheel equipped Cessna Caravan, C-208, N9825F, registered to and operated by Alaska Island Air, Inc., of Kotzebue, Alaska, dragged a wing during landing at Cape Sabine, Alaska. The Air Taxi Flight, operating under 14 CFR Part 135, departed Kotzebue and the destination was the accident site. A VFR flight plan was filed and visual meteorological conditions prevailed. The pilot and the passenger were not injured and the airplane was substantially damaged. According to the pilot's statement, he was landing on runway 20 at Cape Sabine and there was a 15 knot crosswind. He applied full flaps on short final and "about 200 feet down the runway I experienced a wind shear and the right wing stalled. There was no indication prior to the wing stalling and the stall warning horn sounded just as the wing stalled due to the shear. The right wing was already low for the crosswind correction, it dropped away and made contact with the runway." During a telephone conversation with Mike Spisak on September 1, 1994, owner of Alaska Island Air, he stated there was no one else on board the airplane and that this was only a positioning flight. The pilot was supposed to pick up passengers at Cape Sabine. Mr. Spisak stated that the pilot only dragged the wing on the runway, "dinged the right wing," and that the airplane was still flyable. A statement from Mr. Bruce A. Ream, Cultural Resources Specialist for HartCrouser Inc., who was a passenger on the flight from Kotzebue to Cape Sabine, is included in this report. Mr. Ream states that upon his arrival in Kotzebue, the weather was poor. He discussed various charter operations with Alaska Island Air personnel and was informed that the Cessna Caravan could fly IFR to Point Lay and get past the bad weather. Alaska Island Air does not have an operations specification authorizing IFR operations in instrument meteorological conditions (IMC) for the Cessna 208 airplane. In accordance with 14 CFR Part 135, an operator is allowed to fly a single engine airplane in IMC from his departure point for 15 minutes provided he will reach visual meteorological conditions (VMC) within 15 minutes and can proceed to the destination under VFR. The passenger stated that they departed and climbed to 9500 feet, passing through some icing conditions. He said he was holding a handheld GPS unit for the pilot so the pilot could navigate using the GPS. There is no information in the company manual authorizing the use of GPS as a primary means for navigation. The training manual does not contain any information relating to GPS training. The passenger's statement continues, "I believe that we descended over the ocean northwest of Point Lay about 6:15 pm, leveling out at about 750 ft just beneath the clouds. Flew eastward until we saw the coast off the starboard side, circled back and followed the coastline to the southwest staying about one-quarter mile offshore. Distance and direction to Cape Sabin were provided by the GPS." The passenger stated they departed Kotzebue at 1715 hours and they descended and became VFR at 1815 hours. This does not meet the requirement under 14 CFR Part 135 which allows IFR flight for 15 minutes. Mr. Ream stated, "the pilot saw the airstrip off to starboard and made a sharp banking turn to the right. The plane began to settle and banked more steeply. I believe that the pilot applied power at this point and attempted to level the plane, but I was watching the ground come up at this point. We were crossing the airstrip at about a 45-degree angle (northwest), heading back out to sea. I felt the plane strike the ground hard and bounce back into the air. My first impression was that the plane was struggling to fly and we would pancake onto the tundra between the airstrip and the bluff. As we passed the bluff the nose pitched down and then up. We began to climb and started to execute a slow turn to the left back toward land. The plane was flying irregularly and I observed that the pilot was fighting the controls. It was at this point that I looked for wing damage, but couldn't see past the radar pod. The pilot stated that we needed to land the plane right away. We completed the turn west of the runway and tried to make an approach from that end, but couldn't get the plane to line up or stay level. My impression is that we were all over the sky at that point. He was having a difficult time working both the engine and flight controls by this time." "We sank close to the runway, but the plane turned to the right and dipped at the last moment. The pilot powered up to pull out of the approach and drifted southward back toward the camp. I was instructed to get on the controls with the pilot as he was getting tired and running out of strength. We passed by the camp, gained altitude, and made another wide left turn over the water. I held the yoke to the left and tried to help keep the nose level. We came out of the turn northeast of the camp and drifted diagonally southwest toward the airstrip. The pilot instructed me to hold the yoke as far left as I could. Using the engine and prop he maneuvered in low, parallel to the south side of the runway. As soon as we drifted back over the strip we set down hard, using full reverse prop and brakes to stop."