On October 16, 2010, at 0737 mountain standard time, N807PW, a Lindstrand 90A balloon, sustained substantial damage following a midair collision with a single-seat unregistered powered paraglider near Cottonwood Airport, Cottonwood, Arizona. The pilot was operating the hot air balloon under the provisions of Title 14 Code of Federal Regulations Part 91. The balloon pilot sustained minor injuries and his two passengers sustained serious injuries. The pilot of the paraglider sustained serious injuries. Visual meteorological conditions prevailed and no flight plan was filed. Both aircraft departed from Cottonwood Airport. According to the balloon pilot, he was on a local area flight during Airport Appreciation Day. There were multiple hot air balloons flying in the area at the time. He saw the paraglider pilot maneuvering close to the balloon envelope. The balloon pilot waived his arms and shouted at the paraglider pilot that he was too close; however, the paraglider approached the balloon and descended. The paraglider flew into the side of the envelope, penetrating it. As the balloon and paraglider descended, they remained attached; the balloon pilot tried to decrease the rate of descent as much as possible. During the descent, the balloon pilot provided an emergency briefing to his passengers, and directed one of the passengers to transmit a distress call. At 100 feet, the pilot turned off the pilot lights and closed the fuel tank valves. The basket then impacted the top of a fence and came to rest in an asphalt parking lot. Following the accident, the paraglider pilot told the balloon pilot that he was taking photographs. According to the Cottonwood Police Department report, the paraglider pilot was interviewed at a medical center by a deputy. The paraglider pilot reported that he and his son had departed from cottonwood in their respective paragliders. The pilot was going to take pictures of a friend who was in one of the hot air balloons flying in the area. As he approached the hot air balloon that his friend was in, he noted another hot air balloon below him about 200 to 300 feet; this other balloon was the one that he eventually collided with. He took a picture of his friend, and saw the accident hot air balloon was 30 feet below and 50 feet in front of him. The paraglider pilot attempted to perform an evasive maneuver, but the paraglider impacted the envelope of the balloon.