AVTEAM INC, POS AM, 1996-07-12

AVTEAM INC
POS AM, 1996-07-12
INDUSTRIAL MACHINERY & EQUIPMENT

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<PAGE> 1

AS FILED WITH THE

SECURITIES AND EXCHANGE COMMISSION ON JULY 12, 1996.

REGISTRATION NO. 333-04426
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

POST-EFFECTIVE AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

AVTEAM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

FLORIDA
(State or other jurisdiction of incorporation or organization)

5088
(Primary Standard Industrial Classification Code Number)

65-0313187
(I.R.S. Employer Identification Number)

3230 Executive Way
Miramar, Florida 33025
(954) 431-2359
(Address, including zip code, and telephone number, including area code, or
registrant's principal executive offices)

Donald A. Graw
3230 Executive Way
Miramar, Florida 33025
(954) 431-2359
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:

<TABLE>
<S> <C>
SETH P. JOSEPH, ESQ. ANDREW HULSH, ESQ.
BAKER & MCKENZIE GREENBERG, TRAURIG, HOFFMAN,
BARNETT TOWER, SUITE 1600 LIPOFF, ROSEN & QUENTEL, P.A.
701 BRICKELL AVENUE 1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131-2827 MIAMI, FLORIDA 33131
(305) 789-8960 (305) 579-0832
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
promptly as practicable after this Post-Effective Amendment to Registration
Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, please check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

---------------------

THE REGISTRANT HEREBY AMENDS THIS POST-EFFECTIVE AMENDMENT TO REGISTRATION
STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES
THAT THIS POST-EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT SHALL THEREAFTER
BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(C) OF THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNTIL THIS POST-EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(C), MAY DETERMINE.

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<PAGE> 2

AVTEAM, INC.

CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K

<TABLE>
<CAPTION>
ITEM FORM S-1 ITEM NUMBER AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
<C> <S> <C> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................ Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus.................................... Inside Front and Outside Back Cover Pages of
Prospectus
3. Summary Information, Risk Factors............... Prospectus Summary; Risk Factors
4. Use of Proceeds................................. Use of Proceeds
5. Determination of Offering Price................. Outside Front Cover Page of Prospectus;
Underwriting
6. Selling Security Holders........................ Principal and Selling Stockholders
7. Plan of Distribution............................ Outside Front Cover Page of Prospectus;
Underwriting
8. Description of Securities to be Registered...... Description of Capital Stock; Shares Eligible
for Future Sale; Dilution; Dividend Policy
9. Information with Respect to the Registrant
(a) (1) Description of Business................ Prospectus Summary; Management's Discussion and
Analysis of Financial Condition and Results of
Operations; Industry Overview; Business;
Certain Transactions; Financial Statements
(including the Notes thereto)
(2) Description of Property................ Business -- Facilities
(3) Legal Proceedings...................... Business -- Legal Proceedings
(4) Common Shares Price Range and
Dividends............................ Risk Factors; Underwriting; Dividend Policy
(6) Taxation............................... Prior S Corporation Status and Planned
Distributions; Certain Transactions
(7) Selected Financial Data................ Prospectus Summary -- Summary Financial Data;
Selected Financial Data
(8) Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... Management's Discussion and Analysis of
Financial Condition and Results of Operations
(9) Directors and Officers of Registrant... Management -- Executive Officers and Directors
(10) Compensation of Directors and
Officers............................. Management -- Executive Compensation
(11) Security Ownership of Certain
Beneficial Owners and Management..... Principal and Selling Stockholders
(12) Interest of Management in Certain
Transactions......................... Management; Certain Transactions
(b) Financial Statements................... Financial Statements (including the Notes
thereto)
10. Disclosure of Commission Position on
Indemnification for Securities Act Not Applicable
Liabilities...................................
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JULY 12, 1996

2,750,000 SHARES

AVTEAM, INC.

[LOGO] AVTEAM COMMON STOCK
------------------------

OF THE 2,750,000 SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE
"COMMON STOCK"), OFFERED HEREBY, 2,250,000 SHARES ARE BEING OFFERED BY AVTEAM,
INC. (THE "COMPANY") AND 500,000 SHARES ARE BEING OFFERED BY THE SELLING
STOCKHOLDERS. SEE "PRINCIPAL AND SELLING STOCKHOLDERS." THE COMPANY WILL NOT
RECEIVE ANY OF THE PROCEEDS FROM THE SALE OF SHARES BY THE SELLING STOCKHOLDERS.
FOLLOWING THE OFFERING, DIRECTORS AND OFFICERS OF THE COMPANY WILL OWN
APPROXIMATELY 62% OF THE COMMON STOCK.

PRIOR TO THIS OFFERING THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON
STOCK. IT IS CURRENTLY ESTIMATED THAT THE INITIAL PUBLIC OFFERING PRICE WILL BE
BETWEEN $10.00 AND $11.00 PER SHARE. SEE "UNDERWRITING" FOR THE FACTORS THAT
WILL BE CONSIDERED IN DETERMINING THE INITIAL PUBLIC OFFERING PRICE. THE COMMON
STOCK HAS BEEN APPROVED FOR LISTING ON THE NASDAQ NATIONAL MARKET UNDER THE
SYMBOL "AVTM."

FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE SHARES OF COMMON
STOCK OFFERED HEREBY, SEE "RISK FACTORS" ON PAGES 7-14.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS* COMPANY+ STOCKHOLDERS
<S> <C> <C> <C> <C>
PER SHARE......................... $ $ $ $
TOTAL++........................... $ $ $ $
</TABLE>

- ---------------

* THE COMPANY AND THE SELLING STOCKHOLDERS HAVE AGREED TO INDEMNIFY THE
UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE
SECURITIES ACT OF 1933. SEE "UNDERWRITING."
+ BEFORE DEDUCTING EXPENSES OF THE OFFERING PAYABLE BY THE COMPANY, ESTIMATED TO
BE $1,050,000.

++ THE COMPANY AND A SELLING STOCKHOLDER HAVE GRANTED THE UNDERWRITERS A 30-DAY
OPTION TO PURCHASE UP TO 412,500 ADDITIONAL SHARES OF COMMON STOCK ON THE
SAME TERMS PER SHARE SOLELY TO COVER OVER-ALLOTMENTS, IF ANY. IF SUCH OPTION
IS EXERCISED IN FULL, THE TOTAL PRICE TO PUBLIC WILL BE $ , THE TOTAL
UNDERWRITING DISCOUNTS AND COMMISSIONS WILL BE $ , TOTAL PROCEEDS TO
COMPANY WILL BE $ AND TOTAL PROCEEDS TO SELLING STOCKHOLDERS WILL BE
$ . SEE "UNDERWRITING."

--------------------------

THE COMMON STOCK IS BEING OFFERED BY THE UNDERWRITERS AS SET FORTH UNDER
"UNDERWRITING" HEREIN. IT IS EXPECTED THAT DELIVERY OF CERTIFICATES THEREFOR
WILL BE MADE AT THE OFFICES OF DILLON, READ & CO. INC., NEW YORK, NEW YORK, ON
OR ABOUT JULY , 1996. THE UNDERWRITERS INCLUDE:

DILLON, READ & CO. INC. ALEX. BROWN & SONS
INCORPORATED

THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 4

JT8D AIRCRAFT ENGINE

As a result of the Offering, the Company will be subject to the
informational and reporting requirements of the Securities Exchange Act of 1934
and in accordance therewith will file periodic reports, proxy statements and
other information with the Commission. The Company intends to furnish its
stockholders annual reports containing audited financial statements and an
opinion expressed thereon by independent certified public accountants and
quarterly reports for the first three quarters of each fiscal year.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

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<PAGE> 5

PROSPECTUS SUMMARY

The following information should be read in conjunction with, and is
qualified in its entirety by, the more detailed information and Financial
Statements of the Company, including the Notes thereto, appearing elsewhere in
this Prospectus. Unless otherwise indicated, all information in this Prospectus
assumes (i) no exercise of the Underwriters' over-allotment option and (ii) the
conversion on March 21, 1996 of each outstanding share of the Company's Common
Stock into 4,000 shares of Common Stock.

THE COMPANY

AVTEAM, Inc. is an international aftermarket supplier of JT8D aircraft
engines and engine components as well as airframe and other aircraft material to
commercial passenger and cargo aircraft operators, aircraft engine repair and
engine component overhaul facilities and other aftermarket suppliers of aircraft
engines and engine components. The JT8D is the most widely used aircraft engine
in the world and is estimated to power approximately 40% of the world's
commercial jet powered aircraft including Boeing 727/100/200, Boeing 737/100/200
and McDonnell Douglas DC-9-10/20/30/40/50 aircraft. First tier aircraft
operators (consisting of the ten largest carriers in the United States, which
account for approximately 85% of the available seat miles flown domestically,
and the flag carriers in the international markets) have reduced the percentage
of their fleets which is powered by the JT8D engine by selling older aircraft to
second tier, start-up and cargo aircraft operators and replacing them with new
aircraft. As a result, a substantial number of JT8D engines have migrated to
aircraft operators which the Company believes are more likely to outsource their
maintenance and inventory management requirements. During 1995, the Company
supplied over 500 customers with over 40,000 aircraft engine and airframe
components and 22 aircraft engines. The Company has increased net sales at a
compound annual growth rate of 117% from $3.9 million in 1993 to $18.3 million
in 1995. The Company currently estimates that it has less than a 2% share of the
worldwide JT8D aircraft engine and engine component aftermarket.

The Company began its operations as a value-added reseller of aircraft
engines, engine components and airframe material and based its operations in
Southeast Florida to access major aviation services companies. The Company
implemented business practices based upon senior management's extensive
experience to position the Company to serve its customers efficiently and allow
for substantial growth. These practices include targeted inventory sourcing and
marketing, use of a state-of-the-art, interactive management information system,
and operation of an efficient disassembly facility and a warehouse and
distribution facility that permits rapid turnaround between customer order and
product delivery. In recognition of the Company's capabilities, in June 1995,
Pratt & Whitney, the original equipment manufacturer ("OEM") of the JT8D
aircraft engine, selected the Company to be its worldwide, sole-source supplier
of JT8D aftermarket engine components pursuant to a Surplus Parts Supply
Agreement. See "Business -- Customers -- Pratt & Whitney." The combination of
the net proceeds from the Offering and anticipated increases in its revolving
line of credit will provide the Company with additional financial resources to
expand its inventory and capitalize on the trends in the aftermarket supply
industry.

The JT8D aftermarket is over $1 billion annually, which consists of the
sale and lease of aftermarket JT8D aircraft engines and engine components. The
JT8D aftermarket is highly fragmented, consisting of a limited number of
suppliers selling a broad range of aircraft engines and engine components
(including AAR, Inc., Dallas Aerospace, a division of Banner Aerospace ("Dallas
Aerospace") and AGES, L.P.) and numerous smaller competitors serving specialized
niche markets. The aftermarket consists of sales or leases of aircraft engines,
engine components and airframe components in new and used condition as
distinguished from new aviation materials sold directly by an OEM. The
aftermarket for aircraft engines and engine components has been growing as a
result of several trends affecting the industry, including an overall growth in
air transit activity, improved cost management by aircraft operators and
significant differences between the cost of new aviation materials sold directly
by OEMs and aftermarket aviation materials, increased reliance by existing and
new

3
<PAGE> 6

aircraft operators on outsourcing maintenance and inventory management functions
and increased frequency of maintenance for aging aircraft and aircraft engines.

COMPETITIVE ADVANTAGES

The key components of the Company's competitive advantages are:

Successful Buying Practices. The Company focuses on the appropriate
and timely purchase of aircraft engines for disassembly or resale. There is
no consistent, reliable and organized source of supply of surplus aircraft
engines. The Company utilizes extensive market knowledge, disciplined
sourcing and prudent due diligence procedures and offers cash consideration
for its purchases of aircraft engines. Through its entrepreneurial
approach, the Company has been able to make its purchase decisions more
quickly than larger competitors and does not depend on contingent financing
which hampers smaller competitors.

State-of-the-Art Management Information Systems. The Company utilizes
a real-time, state-of-the-art customized information technology system,
which enables management to track, price, sort and determine sales
profitability for the aftermarket engine components maintained in the
Company's inventory. Through this integrated system, each sales
representative of the Company can provide immediate and reliable responses
to customer inquiries, delivering superior service over smaller,
under-capitalized, paper-based competitors.

Broad Range of Product Offerings. The Company provides one of the
most extensive product lines, consisting of over 4,000 aftermarket engine
components of the JT8D aircraft engine. The Company's customers demand a
broad range of engine and airframe components often in substantial volumes
and on an expedited basis.

Tailored Customer Support. The Company provides tailored customer
support with an emphasis on quality, timely shipping, real-time, reliable
pricing and availability and full traceability of the products sold by the
Company. The Company offers flexible solutions designed to fulfill specific
customer needs, combined with guarantees of high quality component
delivery, electronic data interface ("EDI"), financing arrangements and
packaging components or services for volume and attractive pricing.

Capacity for Growth. The Company's management structure and
facilities have been designed with capacity for substantial growth in
volume and range of products. The Company's distribution facility is
structured to allow for efficient processing, warehousing and inventory
management of substantially greater volumes than currently handled. In
early 1996, the Company added an aircraft engine disassembly facility which
allows it to reduce the time required to make available engine components
for sale or repair.

GROWTH STRATEGY

Elements of the Company's growth strategy include:

Enter CFM56 Market. The Company plans to enter the engine components
aftermarket in newer, higher thrust aircraft engine types, such as the
CFM56, which is manufactured by CFM International, Inc., a consortium of
General Electric Corporation and SNECMA. The CFM56, with an installed base
of over 5,000 aircraft engines, is expected to become the dominant aircraft
engine early in the next century and has been operating for a sufficient
period for an active aftermarket in aircraft engines and engine components
to emerge. The Company believes that its expertise

4
<PAGE> 7
derived from servicing the JT8D market, including its business practices
and its information technology system, are readily transferable to
supporting CFM56 customers.

Implement Engine Management and Leasing Programs. As aircraft
operators seek to outsource the repair of aircraft engines as well as
inventory management, the Company believes that there is an opportunity to
offer its customers complementary services to manage various aspects of
their engine maintenance and acquisition needs. These services include: (i)
engine leasing; (ii) providing services involving obtaining aircraft engine
repair quotations from a variety of FAA certificated repair facilities, the
specification of particular FAA certificated repair facilities to perform
aircraft engine repairs and the scheduling of delivery of the aircraft
engines to be repaired and their return to the aircraft operator following
the completion of the work by the FAA certificated repair facility; (iii)
designing aircraft engine repair workscopes; (iv) borescoping services; and
(v) providing aircraft engines. By offering a total engine and inventory
management solution to aircraft operators and lessors, the Company seeks
the sale of engine components for maintenance service to the aircraft
engines, acquisition of the aircraft engines after lease terms and the
strengthening of customer relationships.

The Company is located at 3230 Executive Way, Miramar, Florida 33025, and
its telephone number is (954) 431-2359.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company................... 2,250,000 shares
Common Stock offered by the Selling Stockholders...... 500,000 shares
------------------------------------

Total Common Stock offered.................. 2,750,000 shares
===================================
Common Stock to be outstanding after the Offering..... 7,250,000 shares(1)

Use of proceeds by the Company........................ To repay bank debt and advances from
the current stockholders, to pay an
S Corporation distribution to the
current stockholders, to acquire
certain engine component inventory
and for general corporate purposes,
including the purchase of aircraft
engines, engine components and
airframe materials. The Company will
receive no proceeds from the sale of
Common Stock offered by the Selling
Stockholders. See "Use of Proceeds."

NASDAQ National Market Symbol......................... AVTM
</TABLE>

- ---------------

(1) Does not include 600,000 shares of Common Stock reserved for issuance
upon the exercise of stock options which may be granted under the Company's 1996
Stock Option Plan. See "Management -- 1996 Stock Option Plan."

5
<PAGE> 8
SUMMARY FINANCIAL DATA

The summary financial data set forth below should be read in conjunction
with the Financial Statements of the Company and Notes thereto included
elsewhere in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." Operating results for the three
months ended March 31, 1996 are not necessarily indicative of the results that
may be expected for the entire year ending December 31, 1996.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------- -----------------------
1993 1994 1995 1995 1996
------ ------ ---------- ---------- ----------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales.............................. $3,891 $9,062 $18,299 $3,758 $7,843
Gross profit........................... 402 2,689 6,451 1,449 2,499
Income (loss) from operations.......... (186) 748 1,289 670 1,496
Net income (loss)...................... $ (50) $ 754 $ 1,098 $ 667 $1,358
------ ------ -------- ------- -------
------ ------ -------- ------- -------
PRO FORMA STATEMENTS OF OPERATIONS
DATA:
Pro forma net income(1)................ $ 1,581 $ 414 $ 773
-------- ------- -------
-------- ------- -------
Pro forma net income per share......... $ 0.33 $ 0.09 $ 0.15
Weighted average shares outstanding.... 4,861,543 4,861,543 5,000,000
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
-----------------------------------
PRO PRO FORMA
ACTUAL FORMA(2) AS ADJUSTED(3)
------- -------- --------------
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................................ $ 3,625 $ $ 17,710
Inventory.............................................. 9,878 10,878
Total assets........................................... 16,770 28,650
Total debt............................................. 5,037 120
Total stockholders' equity............................. 3,972 2,172 23,683
</TABLE>

- ---------------

(1) Reflects the effect on historical statements of operations data,
assuming as of January 1, 1995: (i) a change in the compensation levels of
Donald A. Graw and Jaime J. Levy pursuant to new three-year employment
agreements which will be in force upon the effectiveness of the Offering; and
(ii) the Company had been treated as a C Corporation rather than an S
Corporation for federal and state income tax purposes. See "Prior S Corporation
Status and Planned Distributions," "Management -- Employment Agreements" and
Note 11 of Notes to Financial Statements.
(2) Reflects the effect on stockholders' equity of a planned distribution of
approximately $1.8 million based on undistributed S corporation earnings
allocable to the period from January 1, 1996 through March 31, 1996.

(3) Adjusted to give effect to (i) the sale of 2,250,000 shares of Common
Stock offered by the Company hereby at an assumed offering price of $10.50 per
share after deduction of estimated underwriting discounts and commissions and
the payment by the Company of the estimated offering expenses, (ii) the
application of the net proceeds to the Company as set forth herein including,
among other things, the payment of an assumed $1.8 million of estimated S
Corporation distributions and (iii) a change in the compensation levels of
Donald A. Graw and Jaime J. Levy and the change in the Company's S Corporation
status to C Corporation status as if such events had occurred as of January 1,
1995. See "Prior S Corporation Status and Planned Distributions," "Use of
Proceeds" and "Management -- Employment Agreements."

6
<PAGE> 9

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. The discussion in this Prospectus contains certain statements
regarding future trends which are subject to various risks and uncertainties.
Such trends, and their anticipated impact on the Company, could differ
materially from those discussed in this Prospectus. Prospective investors should
consider carefully the following factors in evaluating an investment in the
Common Stock.

INFLUENCE OF PRATT & WHITNEY

The Company's business, financial condition and results of operations are
substantially influenced by Pratt & Whitney, a substantial customer of the
Company. Approximately 21% and 25% of the Company's net sales during 1995 and
the three months ended March 31, 1996, respectively, were made to Pratt &
Whitney. The Company anticipates that Pratt & Whitney's recent decision to enter
the aircraft engine maintenance business may result in increased concentration
of the Company's net sales to Pratt & Whitney.

The Company's worldwide, sole-source supply agreement with Pratt & Whitney
(the "Pratt & Whitney Agreement") expires in June 1998. In addition, Pratt &
Whitney has the right to terminate the Pratt & Whitney Agreement on six months'
advance notice. Pratt & Whitney has recently significantly expanded its presence
in the aftermarket. Pratt & Whitney may in the future seek to perform internally
certain or all of the services which the Company performs, which could have a
material adverse effect upon the Company's business, financial condition, and
results of operations. Although the Company has not received any indication from
Pratt & Whitney that it intends to terminate the Pratt & Whitney Agreement, the
failure to renew such agreement upon its expiration or the termination of such
agreement by Pratt & Whitney could have a material adverse effect upon the
Company's business, financial condition and results of operations. There can be
no assurance that the Pratt & Whitney Agreement will not be terminated or that
the Company will be successful in negotiating a renewal of such agreement on
acceptable terms.

The prices for engine components sold to Pratt & Whitney are fixed
percentages of catalog prices of new engine components. The Company does not
have the unilateral right to change this pricing even if the market supply of a
given engine component tightens and the Company's cost for such engine component
increases. However, there can be no assurance that the Company will be able to
secure a mutually agreeable adjustment in pricing even if market conditions so
warrant. In addition, the aftermarket for JT8D aircraft engines and engine
components is substantially influenced by new engine component prices. Pratt &
Whitney has raised new engine component prices by an average of approximately 5%
annually for the past several years. However, there can be no assurance
concerning the level of new engine component prices established from time to
time by Pratt & Whitney in the future. See "Business -- Customers -- Pratt &
Whitney."

DEPENDENCE ON THE JT8D AIRCRAFT ENGINE AFTERMARKET

The Company's business, financial condition and results of operations are
substantially influenced by the aftermarket for JT8D aircraft engines and engine
components. Approximately 91% and 95% of the Company's net sales during 1995 and
the three months ended March 31, 1996, respectively, consisted of sales of JT8D
aircraft engines and engine components and 97% of the Company's inventory at
March 31, 1996 consisted of JT8D aircraft engines and engine components.
Accordingly, in the event that the aftermarket for JT8D aircraft engines
declines, the Company's business, financial condition and results of operations
could be materially adversely affected.

The aftermarket for JT8D aircraft engines and engine components is
substantially influenced by supply and demand. A significant increase in supply,
as a result of an unanticipated wind-down or liquidation of an air carrier
operating a large number of JT8D aircraft engines, or a reduction of demand, as
a result of a change in preferences, loss of consumer confidence in, or the
imposition of

7
<PAGE> 10

regulations affecting the use of JT8D aircraft engines, could have a material
adverse effect on the Company's business, financial condition and results of
operations. For example, the FAA and the European Union have implemented noise
reduction regulations which reduce the number of older model JT8D aircraft
engines which may be operated in the United States and the member nations of the
European Union, respectively, unless noise reduction equipment, known as
"hush-kits," are added to the aircraft engines. Additional noise restriction
quotas imposed by communities surrounding certain major European cities further
restrict the operation of hush-kitted aircraft engines in those markets. Failure
to hush-kit JT8D aircraft engines could significantly reduce the demand for JT8D
aircraft engines, resulting in an oversupply of JT8D aircraft engines and engine
components which could decrease the value of the Company's inventory and have a
material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that aircraft operators will
hush-kit their remaining older model JT8D aircraft engines rather than replace
them with newer, quieter aircraft engines. Furthermore, other regulations in
both the United States and the European Union impose more stringent inspection,
upgrading, maintenance and retrofit requirements on aging aircraft and aircraft
engines which increase the cost of operating older model aircraft and aircraft
engines. In addition, the United States Environmental Protection Agency (the
"EPA") and various agencies of the European Union have sought the adoption of
stricter standards limiting the emissions of nitrous oxide from aircraft
engines. If such measures are adopted, the utilization of JT8D aircraft engines
could become substantially more costly in the event modifications must be made
to bring aircraft engines into compliance. See "Business -- Regulation."

The JT8D aircraft engine aftermarket may also be affected by a decline in
passenger confidence in the older model aircraft and aircraft engines as a
result of apparent fatigue or otherwise. Recently, negative attention has been
focused on the JT8D aircraft engine as a result of the highly publicized crash
of ValuJet Flight 592 in the Florida Everglades on May 11, 1996 and a JT8D
engine component failure during the takeoff of a Delta Airlines aircraft in
Pensacola, Florida on July 6, 1996 which projected an engine fan through the
fuselage resulting in the death of two passengers. In the aftermath of these
catastrophic events, significant public comment has been made concerning the
service records of the JT8D aircraft engine. To the extent that passenger
confidence in the JT8D engine declines as a result of such events and public
attention, the business, financial condition and results of operations of the
Company could be materially adversely affected.

As a result of its focus on the JT8D aircraft engine, the Company has
limited experience with the supply of aftermarket aircraft engines and engine
components for other aircraft engine types. It will be necessary for the Company
to expand its business to other aircraft engine types in preparation for the
eventual decline in the JT8D aircraft engine aftermarket. There can be no
assurance that the Company will be able to develop technical capabilities with
other aircraft engine types or that structural differences in those emerging
aftermarkets will allow the Company to acquire sufficient inventories or achieve
acceptable levels of net sales and gross profit.

UNCERTAIN SUPPLY OF INVENTORY

The Company's net sales have been dependent upon its level of inventory. As
a result, the lack of or a significant reduction in the level of the Company's
inventory would have a material adverse effect on the Company's business,
financial condition and results of operations.

The Company obtains its inventories of aftermarket whole aircraft engines
and engine components by purchasing surplus aircraft engines. There is no
organized market for surplus aircraft engines and the Company must rely on field
representatives and personnel, advertisements and its reputation as a buyer of
surplus aircraft engines in order to generate opportunities to purchase these
materials. The market for bulk sales of surplus aircraft engines is highly
competitive, in some instances involving a bidding process. While the Company
has been able to purchase surplus aircraft engines in this manner successfully
in the past, there can be no assurance that surplus aircraft engines of the type
containing engine components required by the Company's customers will be
available on acceptable terms when

8
<PAGE> 11

needed in the future or that the Company will continue to compete effectively in
the purchase of surplus materials. See "Business -- Purchasing."

DEPENDENCE ON CREDIT FACILITY

The Company finances a substantial amount of its working capital
requirements through a credit facility (the "Credit Facility") provided by
Barnett Bank of South Florida, N.A. (the "Bank") in the maximum principal amount
of $10 million. The Credit Facility may be terminated at any time upon demand by
the Bank. In the event that the Credit Facility is terminated earlier than the
scheduled expiration date, the Company would be required to promptly refinance
the Credit Facility. There can be no assurance that the Company would be able to
refinance the Credit Facility under such circumstances. The Company in the past
obtained significant liquidity from non-interest bearing advances from the
current stockholders which are not expected to be available in the future. As a
result, the Company will be increasingly dependent on the Credit Facility and
can be expected to incur greater interest expense on its financing transactions
than in the past.

DEPENDENCE ON THIRD-PARTY AIRCRAFT ENGINE REPAIR FACILITIES

The Company is dependent on third-party FAA certificated repair facilities
to perform repair services to bring surplus aircraft engines held for resale and
certain engine components into a condition of airworthiness so that the Company
can then sell such equipment to its customers. The Company does not have direct
control over any FAA certificated repair facility. Third-party repair facilities
may allocate their resources to customers with which they have entered into
long-term, regularly scheduled aircraft engine and airframe maintenance
agreements and thereby delay the services to be provided to the Company. The
Company has in the past experienced, and can be expected to continue to
experience, long turnaround times for repair of aircraft engines and overhaul of
engine components needed by its customers. The inability to supply its customers
with critical engine components on a timely basis may adversely affect the
Company's relationships with its customers and have a material adverse effect on
its business, financial condition and results of operations. See
"Business -- Disassembly and Servicing of Aircraft Engines."

CUSTOMER CONCENTRATION

The Company's net sales to its five largest customers accounted for 52% and
59% of total net sales during 1995 and the three months ended March 31, 1996,
respectively. Certain significant customers vary from period to period as a
result of the large unit prices associated with whole aircraft engine sales. In
addition to Pratt & Whitney, Dallas Aerospace has been a recurring significant
purchaser of engine components, accounting for 13% and 5% of net sales during
1995 and the three months ended March 31, 1996, respectively. The loss of, or
significant curtailments of purchases by, the Company's significant customers
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Customers."

DEPENDENCE ON AVIATION INDUSTRY

Because the Company's customers consist of aircraft operators, repair and
overhaul facilities that service aircraft operators and other aftermarket
suppliers, the Company's business is impacted by the economic factors which
affect the aviation industry. When such factors adversely affect the aviation
industry, they tend to reduce the overall demand for aircraft engines and engine
components, causing downward pressure on pricing and increasing the credit risk
associated with doing business with industry participants. Additionally, factors
such as fuel prices affect the aftermarket for older model aircraft engines and
engine components, because older, typically more fuel-inefficient aircraft (into
which the Company's inventory is most often placed) become less valuable as fuel
prices increase. However, the Company has not, to date, experienced a
significant change in the value of its inventory as a result of any fluctuations
in fuel prices. There can be no assurance that economic and other factors

9
<PAGE> 12

which affect the aviation industry will not have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Industry Overview."

CUSTOMER CREDIT RISKS

A number of the Company's existing and prospective customers are smaller
domestic and foreign passenger airlines, freight and package carriers and
aircraft leasing companies, or service providers to such companies, all of which
may suffer from the factors which adversely affect the aviation industry. As a
result, certain of these customers may pose credit risks to the Company. The
Company's inability to collect receivables from a substantial sale could
adversely affect the Company's financial position and results of operations for
a particular period. Although the Company's bad debt loss was less than 1% of
sales for the year ended December 31, 1995 and for the three months ended March
31, 1996, the Company anticipates that it may incur greater bad debt losses in
the future as its customer base grows and the Company experiences greater
exposure to its customers as a result, in part, of the implementation of a
program for the leasing of aircraft engines. There can be no assurance that the
Company will not incur significant bad debt losses in the future. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

COMPETITION

The aviation aftermarket supply industry is highly fragmented, has several
highly visible leading companies and is characterized by intense competition.
Certain of the Company's competitors have substantially greater name
recognition, inventories, range of material, complementary lines of business and
financial, marketing and other resources than the Company. In addition, OEMs,
aircraft maintenance providers, leasing companies and FAA certificated repair
facilities may vertically integrate into the supply industry, thereby
significantly increasing industry competition. Moreover, smaller competitors of
the Company may be in a position to offer more attractive pricing of components
as a result of lower labor costs or other factors. A variety of potential
actions by any of the Company's competitors, including a reduction of product
prices or the establishment by competitors of long-term relationships with new
or existing customers, could have a material adverse effect on the Company's
business, financial condition and results of operations. There can be no
assurance that the Company will continue to compete effectively against present
and future competitors or that competitive pressures will not have a material
and adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Competition."

MANAGEMENT OF POTENTIAL GROWTH

The Company believes that its rapid growth to date has resulted from the
entrepreneurial focus and hands-on involvement of senior management in the
purchasing of surplus aircraft engines, structuring arrangements with customers
and reacting to perceived opportunities in the market for aviation material and
complementary services. In the event that the Company increases inventory
levels, expands its inventories to include other aircraft engine types and
airframe materials or increases its levels of sales, including through the
contemplated entry into the CFM56 aftermarket, it will be necessary to recruit
additional senior executives. There can be no assurance that the Company will be
able to maintain its entrepreneurial focus, timeliness and quality as the
Company grows larger.

The rapid growth experienced by the Company to date has placed, and could
continue to place, significant demands on the Company's administrative,
operational and financial resources. There can be no assurance that the Company
will be able to anticipate business demand accurately or obtain the personnel
and facilities required for future operations. There can be no assurance that
the Company will be able to achieve growth effectively or manage any such growth
successfully, and the failure to do so could have a material adverse effect on
the Company's business, financial condition and results of operations.

10
<PAGE> 13

The Company may in the future undertake acquisitions that could present
challenges to the Company's management, such as integrating new operations and
personnel. If the Company's management is unable to manage these challenges, the
Company's business, financial condition or results of operations could be
materially adversely affected. Any acquisition, depending on its size, could
result in the use of a significant portion of the Company's available cash, or
if such acquisition is made utilizing the Company's securities, could result in
significant dilution to the Company's stockholders. There are no current
agreements or negotiations with respect to any such acquisitions.

DEPENDENCE ON KEY PERSONNEL

The Company's success is substantially dependent on the performance,
contributions and expertise of its executive officers and key employees. The
Company's success to date has been significantly dependent on the contributions
of Donald A. Graw, its Chief Executive Officer, and Jaime J. Levy, its Executive
Vice President, each of whom has entered into an employment agreement with the
Company for a term of three years following the Offering. The Company does not
carry substantial key man insurance for its executive officers. The Company is
also dependent on its ability to attract, retain and motivate high quality
personnel, especially in management. Competition for such personnel is intense
and there can be no assurance that the Company will be successful in attracting,
retaining and motivating the personnel that its business requires. The loss of
the services of any of its executive officers or other key employees or the
Company's inability to attract, retain or motivate the necessary personnel could
have a material adverse effect on the business, financial condition and results
of operations of the Company. See "Management."

LIMITED OPERATING HISTORY; POTENTIAL FLUCTUATIONS IN OPERATING RESULTS

The Company was founded in October 1991 and first acquired inventory in
April 1992. Accordingly, the Company has only a limited operating history upon
which an evaluation of the Company and its prospects can be based. Although the
Company has historically experienced increasing net sales, the Company may
experience significant fluctuations in its gross margins and operating results
in the future, both on an annual and a quarterly basis, caused by various
factors, including general economic conditions, specific economic conditions in
the commercial aviation industry, the availability, package size and price of
surplus aviation material, the size and timing of customer orders, the pattern
and seasonality of customer purchasing cycles, the mix of whole aircraft
engines, engine components and airframe material sold and services provided by
the Company, returns by and allowances to customers and the cost of capital to
the Company. Expenditures are based primarily on forecasts of net sales. If net
sales do not meet the Company's expectations in any given period, operating
results could be adversely affected. In addition, as a strategic response to a
changing, competitive environment, the Company may elect from time to time to
make certain pricing, product or marketing decisions, and any such decisions
could have a material adverse effect on the Company's periodic results of
operations, including net sales and net income from quarter to quarter.
Therefore, comparisons of recent net sales and operating results of the Company
should not be taken as indicative of the results of operations that can be
expected in the future. There can be no assurance that the net sales and
operating results of the Company will continue at their current levels or will
grow, or that the Company will be able to achieve sustained profitability on a
quarterly or annual basis. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Results of Operations."

GOVERNMENT REGULATION; EFFECT OF CRASH OF VALUJET FLIGHT 592

The aviation industry is highly regulated in the United States by the FAA
and the equivalent regulatory agencies in other countries. While the Company's
business is not regulated, the aircraft engines, engine components and airframe
material which the Company sells to its customers must be accompanied by
documentation which enables the customer to comply with applicable regulatory
requirements. There can be no assurance that new and more stringent government
regulations will not

11
<PAGE> 14

be adopted in the future or that any such new regulations, if enacted, would not
have an adverse impact on the Company.

On June 17, 1996, in connection with the evaluation of the policies and
procedures employed by ValuJet following the crash of Flight 592 in the Florida
Everglades on May 11, 1996, the FAA Administrator announced a series of changes
in the FAA's inspection policies to enhance the FAA's oversight of aircraft
operators that rely on contract maintenance, including increased inspection by
the FAA of such aircraft operators' audit, inspection and retention of outsource
suppliers of aircraft and engine maintenance. These new procedures can be
expected to increase the overall cost of outsourcing maintenance and may reduce
the level of operations of outsource maintenance providers which are customers
of the Company. To the extent these requirements have the effect of shifting
aftermarket engine component purchase decisions from those FAA certificated
repair facilities which are customers of the Company to other providers, there
could be a material adverse effect on the business, financial condition and
results of operations of the Company.

Before engine components may be installed in an aircraft engine, they must
meet certain standards of airworthiness established by the FAA or the equivalent
regulatory agencies in other countries. Specific regulations vary from country
to country, although regulatory requirements in other countries are generally
satisfied by compliance with FAA requirements. Engine components must also be
traceable to sources deemed acceptable by such agencies. Engine components owned
or acquired by the Company may not meet applicable standards or standards may
change in the future, requiring engine components already contained in the
Company's inventory to be scrapped or modified. Aircraft engine manufacturers
may also develop new engine components to be used in lieu of engine components
already contained in the Company's inventory. In all such cases, to the extent
that the Company has such engine components in its inventory, their value may be
reduced. See "Business -- Products and Services" and "Business -- Regulation."

PRODUCT LIABILITY

The Company provides its customers with limited warranties as to
workmanship. The Company currently has in force aviation products insurance,with
coverage limits for each occurrence and in the aggregate which it believes to be
in amount and on terms that are generally consistent with industry practice. To
date, the Company has not experienced any significant uninsured or insured
aviation-related claims, and has not experienced any material product liability
claims related to its products or business operations. However, an uninsured or
partially insured claim, or a claim for which third-party indemnification is not
available, could have a material adverse effect upon the Company. The commercial
aviation industry is prone to catastrophic losses which often exceed policy
limits. Such a loss involving an aircraft engine, engine component or other
aircraft material supplied by the Company could have a material adverse effect
on the Company's business, financial condition and results of operations. There
can be no assurance that the Company can maintain appropriate insurance coverage
in the future at an acceptable cost. See "Business -- Insurance."

POTENTIAL EXPOSURE TO ENVIRONMENTAL LIABILITIES

The Company's business operations and facilities are subject to a number of
federal, state and local environmental laws and regulations. Although management
believes that the Company's operations and its facilities are in material
compliance with such laws and regulations, there can be no assurance that future
changes in such laws, regulations or interpretations thereof and the nature of
the Company's operations will not require the Company to make significant
additional capital expenditures in order to effect compliance in the future. See
"Business -- Environmental Matters."

CONTROL BY CURRENT STOCKHOLDERS

After the Offering, approximately 62% of the outstanding shares of Common
Stock will be owned by the current stockholders (the "Current Stockholders") of
the Company (58% if the Underwriters'

12
<PAGE> 15

over-allotment option is exercised in full). Accordingly, they will have the
power to elect all of the members of the Company's Board of Directors, amend the
Company's Amended and Restated Articles of Incorporation (the "Articles") and
Amended and Restated Bylaws (the "Bylaws") and effect or preclude fundamental
corporate transactions involving the Company, including the acceptance or
rejection of proposals relating to a merger of the Company or the acquisition of
the Company by another entity. The Current Stockholders are therefore able to
exert significant influence over the Company, including the ability to control
decisions on all matters on which stockholders are entitled to vote. See
"Principal and Selling Stockholders" and "Description of Capital Stock."

FACTORS INHIBITING TAKEOVER

Certain provisions of the Company's Articles and Bylaws may be deemed to
have anti-takeover effects and may delay, defer or prevent a takeover attempt
that a stockholder might consider in its best interest. These provisions
establish certain advance notice procedures for stockholder proposals to be
considered at the stockholders' meetings and provide that only the Company's
Board of Directors (the "Board") may call special meetings of the stockholders.
In addition, the Articles authorize the Board to determine the rights,
preferences, privileges and restrictions of unissued series of Preferred Stock
and the designation of any such series, without any vote or action by the
Company's stockholders. Thus, the Board can authorize and issue shares of
Preferred Stock with voting or conversion rights that could adversely affect the
voting or other rights of holders of the Common Stock. In addition, the issuance
of Preferred Stock may have the effect of delaying, deferring or preventing a
change of control of the Company, because the terms of the Preferred Stock that
might be issued could potentially prohibit the Company's consummation of any
merger, reorganization, sale of substantially all of its assets, liquidation or
other extraordinary corporate transaction without the approval of the holders of
the outstanding shares of the Preferred Stock. Furthermore, certain provisions
of the Florida Business Corporation Act may have the effect of delaying,
deferring or preventing a change in control of the Company. See "Description of
Capital Stock."

NO PRIOR PUBLIC MARKET; DETERMINATION OF INITIAL PUBLIC OFFERING PRICE;
VOLATILITY OF COMMON STOCK PRICE

Prior to the Offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market will develop
or be sustained. The initial public offering price of the Common Stock has been
determined by negotiations among the Company, the Selling Stockholders and the
Managing Underwriters (as defined herein) and may not be indicative of the
market price of the Common Stock after the Offering. See "Underwriting." The
price of the Common Stock in the future may be volatile. A variety of events,
including quarter-to-quarter variations in operating results, news
announcements, trading volume, general market trends and other factors, could
result in wide fluctuations in the price of the Common Stock.

DILUTION

Purchasers of the Common Stock offered hereby will experience immediate
dilution in the pro forma net tangible book value per share of their investment
of $7.23 per share, calculated as if the Offering had been consummated at an
assumed initial public offering price of $10.50 per share on March 31, 1996. See
"Dilution."

SHARES ELIGIBLE FOR FUTURE SALE; POTENTIAL ADVERSE IMPACT ON MARKET PRICE

Sales of substantial amounts of Common Stock in the public market following
the Offering could have an adverse effect on the price of the Common Stock and
may make it more difficult for the Company to sell shares of Common Stock in the
future at times and for prices that it deems appropriate. The Company and the
current stockholders of the Company have agreed, subject to certain exceptions,
not to offer, sell, contract to sell, transfer or otherwise encumber or dispose
of, directly or indirectly, any shares of Common Stock, for a period of 180 days
from the date of this Prospectus

13
<PAGE> 16

without the prior written consent of Dillon, Read & Co. Inc. which may, in its
sole discretion and at any time without prior notice, release all or any portion
of the shares of Common Stock subject to the lock-up agreements. At this time,
Dillon, Read & Co. Inc. has not received inquiries from any stockholder with
respect to a future release from the lock-up and it has no current intention to
release any shares subject to the lock-up agreements.

Following the Offering, the Company will have outstanding 7,250,000 shares
of Common Stock (7,456,250 shares if the Underwriters' over-allotment option is
exercised in full). Of such shares, the 2,750,000 shares of Common Stock offered
hereby (3,162,500 shares if the Underwriters' over-allotment option is exercised
in full) will be freely tradeable and 4,500,000 shares of Common Stock
(4,293,750 shares if the Underwriters' over-allotment option is exercised in
full) will be subject to 180-day lock-up agreements with the Underwriters.
Following the expiration of such 180-day period, 3,500,000 of such shares
(3,293,500 shares if the Underwriters' over-allotment option is exercised in
full) will be immediately available for sale in the public market subject to
compliance with Rule 144 ("Rule 144") promulgated under the Securities Act of
1933, as amended (the "Securities Act"). See "Shares Eligible for Future Sale"
and "Underwriting."

PRIOR S CORPORATION STATUS AND PLANNED DISTRIBUTIONS

From inception, the Company has elected to operate as an S Corporation
under the Internal Revenue Code and comparable provisions of Florida income tax
laws. As a result of its S Corporation status, the Current Stockholders have
been taxed directly on the Company's income, whether or not such income was
distributed, and the Company has not been subject to federal and state income
tax. In connection with the consummation of the Offering, the Company's S
Corporation status will terminate and the Company will be subject to federal and
state income tax. The Company's earnings through the date of termination of its
S Corporation status will be taxed for federal and state income tax purposes,
with certain exceptions, directly to the Current Stockholders.

PLANNED STOCKHOLDER DISTRIBUTIONS

Pursuant to S Corporation Tax Allocation and Indemnification Agreements
(the "Tax Indemnification Agreements") between the Company and each of the
Current Stockholders, the Company will declare a distribution to the Current
Stockholders (the "Stockholder Distribution") in an estimated aggregate amount
equal to approximately $3.9 million. Such amount represents an estimate of the
Company's undistributed S Corporation earnings utilizing the per diem method
(which allocates full calendar year earnings among the portion of the year
during which the Company was an S Corporation and the portion of the year during
which the Company was a C Corporation for federal and state income tax purposes,
based upon the number of calendar days elapsed) allocable to the period from
January 1, 1996 through the date preceding the consummation of the Offering on
which the Company's S Corporation status will terminate. If the Company's S
Corporation status had terminated as of March 31, 1996, the estimated
Stockholder Distribution would have been approximately $1.8 million. See
"Certain Transactions."

ACCOUNTING EFFECT

It is not anticipated that the Company will incur any charge to earnings in
connection with the termination of its S Corporation status because the Company
has utilized the accrual method of accounting for tax reporting purposes.
Accordingly, it is anticipated that the Company will not have a net deferred tax
liability as of the date of termination of the Company's S Corporation status.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,250,000 shares of
Common Stock offered by the Company hereby (at an assumed initial public
offering price of $10.50 per share) are estimated

14
<PAGE> 17

to be approximately $20.9 million (approximately $22.9 million if the
Underwriters' over-allotment option is exercised in full). The Company intends
to use approximately $4.9 million to repay amounts outstanding under its
revolving line of credit, approximately $3.9 million to pay the Stockholder
Distribution, approximately $2.3 million to repay advances from the Current
Stockholders, approximately $1.0 million to pay the purchase price of engine
component inventory pursuant to an existing agreement and the balance of
approximately $8.8 million for general corporate purposes including, among other
things, the purchase of aircraft engines, engine components and airframe
materials for resale. See "Prior S Corporation Status and Planned
Distributions," "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" and "Certain
Transactions." The Company will not receive any of the net proceeds from the
sale of shares of Common Stock by the Selling Stockholders in the Offering. See
"Principal and Selling Stockholders."

Pending application of the net proceeds to the Company as described above,
the Company intends to invest such proceeds in investment grade,
interest-bearing securities.

DIVIDEND POLICY

The Company anticipates that following the completion of the Offering,
except for the Stockholder Distribution and otherwise as provided in the Tax
Indemnification Agreements, earnings will be retained for the development of its
business and will not be distributed to stockholders as dividends. The
declaration and payment by the Company of any future dividends and the amount
thereof will depend upon the Company's results of operations, financial
condition, cash requirements, future prospects, limitations imposed by credit
agreements and senior securities, if any, and other factors deemed relevant by
the Board of Directors. The Company's Credit Facility prohibits the payment of
dividends which have not been approved by the lender.

15
<PAGE> 18

CAPITALIZATION

The following table sets forth the outstanding balance of notes payable to
bank and the capitalization of the Company at March 31, 1996: (i) on an actual
basis, (ii) on a pro forma basis to reflect the effect on stockholders' equity
of a planned stockholder distribution of approximately $1.8 million based on
undistributed S corporation earnings allocable to the period from January 1,
1996 through March 31, 1996 and, (iii) on an as adjusted basis to give effect to
(A) the sale of 2,250,000 shares of Common Stock offered by the Company hereby
(at an assumed initial public offering price of $10.50 per share), (B) the
application of the estimated net proceeds to the Company therefrom, including an
assumed Stockholder Distribution in an estimated aggregate amount of
approximately $1.8 million as of March 31, 1996, and (C) a change in the
compensation levels of Donald A. Graw and Jaime J. Levy and the change in the
Company's S Corporation status to C Corporation status as if such events had
occurred as of January 1, 1995. See "Prior S Corporation Status and Planned
Distributions," "Use of Proceeds" and Note 11 of Notes to Financial Statements.

<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------ --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Notes payable to bank and short-term portion of capital
lease obligation........................................ $4,967 $ $ 49
====== =========== ============
Capital lease obligation.................................. 70 70
Stockholders' equity:
Preferred stock, $.01 par value per share:
20,000,000 shares authorized; no shares
outstanding........................................ -- -- --
Common stock, $.01 par value per share:
80,000,000 shares authorized; 5,000,000 shares
outstanding (actual); 7,250,000 shares outstanding
(pro forma as adjusted)(1)......................... 50 50 73
Additional-paid in capital.............................. 3,272 2,830 23,610
Retained earnings....................................... 1,358 -- --
Notes receivable from officers.......................... (708) (708) --
------ --------- -----------
Total stockholders' equity...................... 3,972 2,172 23,683
------ --------- -----------
Total capitalization............................ 4,042 23,753
====== =========== ============
</TABLE>

- ---------------

(1) Does not include 600,000 shares of Common Stock issuable upon exercise
of stock options which may in the future be granted to employees and
non-employee directors of the Company under the Company's 1996 Stock Option
Plan. See "Management -- 1996 Stock Option Plan."

16
<PAGE> 19

DILUTION

The net tangible book value of the Company at March 31, 1996 was $4.0
million, or $0.79 per share of Common Stock outstanding. Net tangible book value
per share of Common Stock represents the total tangible assets of the Company
less total liabilities, divided by the total number of shares of the Company's
Common Stock outstanding at that date. After giving effect to the estimated
Stockholder Distributions in an aggregate amount of $1.8 million (assuming the
termination of the Company's S Corporation status as of March 31, 1996), but not
giving effect to the sale of the shares of Common Stock offered by the Company
hereby, the pro forma net tangible book value as of March 31, 1996 would have
been $2.2 million, or $0.43 per share. After giving effect to the Offering
(assuming an initial public offering price of $10.50 per share) and the
application of the net proceeds to the Company therefrom, the pro forma net
tangible book value of the Company at March 31, 1996 would have been $23.7
million, or $3.27 per share. This amount represents an immediate increase in pro
forma net tangible book value per share of $2.84 to the Current Stockholders and
an immediate dilution in net tangible book value per share of $7.23 to new
investors purchasing shares of Common Stock in the Offering. The following table
illustrates the per share dilution as of March 31, 1996:

<TABLE>
<S> <C> <C>
Assumed public offering price per share.............................. $10.50
Pro forma net tangible book value per share as of March 31, 1996... $0.43
Increase in pro forma net tangible book value per share
attributable to the Offering.................................... 2.84
-----
Pro forma net tangible book value per share as of March 31, 1996
after giving effect to the Offering................................ 3.27
------
Dilution per share to new investors.................................. $ 7.23
======
</TABLE>

The following table summarizes, on a pro forma basis as of March 31, 1996,
the number of shares of Common Stock purchased from the Company, the total net
consideration paid and the average price per share paid by the Current
Stockholders and by new investors purchasing shares of Common Stock in the
Offering (without giving effect to underwriting discounts and estimated expenses
of the Offering, and assuming an initial public offering price of $10.50 per
share):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------- --------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Current Stockholders(1)............. 5,000,000 69% $ 3,321,629 12% $ 0.66
New Investors(1).................... 2,250,000 31 23,625,000 88 10.50
--------- ------- ----------- -------
Total..................... 7,250,000 100% $26,946,629 100%
========= ====== =========== ======
</TABLE>

- ---------------

(1) Sales by the Current Stockholders in the Offering will reduce the
number of shares held by the Current Stockholders to 4,500,000 shares or 62%
(4,293,750 shares or 58% if the Underwriters' over-allotment option is exercised
in full) of the total number of shares of Common Stock to be outstanding after
the Offering, and will increase the number of shares held by new investors after
the Offering to 2,750,000 shares or 38% (3,162,500 shares or 42% if the
Underwriters' over-allotment option is exercised in full) of the total number of
shares of Common Stock outstanding after the Offering. See "Principal and
Selling Stockholders."

17
<PAGE> 20
SELECTED FINANCIAL DATA

The following selected financial data for the years ended December 31,
1993, 1994, 1995 and as at December 31, 1994 and 1995 are derived from the
Financial Statements of the Company, which have been audited by Ernst & Young
LLP, independent certified public accountants. The selected financial data for
the year ended December 31, 1992 and for the three months ended March 31, 1995
and 1996 and as at December 31, 1992 and 1993 and March 31, 1995 and 1996 are
derived from unaudited Financial Statements prepared by the Company. The
unaudited financial statements include all adjustments, consisting of normal
recurring accruals, which the Company considers necessary for a fair
presentation of the financial position and the results of operations for these
periods. Operating results for the three months ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 1996. The selected financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Financial Statements of the Company and Notes
thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------- -----------------------
1992 1993 1994 1995 1995 1996
----------- ------ ------ ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales......................................... $ 2,166(1) $3,891 $9,062 $18,299 $3,758 $7,843
Cost of sales..................................... 1,558 3,489 6,373 11,848 2,309 5,344
-------- ------ ------ ------- ------ ------
Gross profit...................................... 608 402 2,689 6,451 1,449 2,499
Operating expenses:
Selling, general and administrative(2).......... 599 588 1,081 2,601 502 841
Officers' compensation.......................... -- -- 860 2,560 277 162
-------- ------ ------ ------- ------ ------
Total operating expense........................... 599 588 1,941 5,162 779 1,003
-------- ------ ------ ------- ------ ------
Income (loss) from operations..................... $ 9 $ (186) $ 748 $ 1,289 $ 670 $1,496
Net income (loss)................................. $ 9 $ (50) $ 754 $ 1,098 $ 667 $1,358
-------- ------ ------ ------- ------ ------
-------- ------ ------ ------- ------ ------
PRO FORMA STATEMENTS OF OPERATIONS DATA:
Pro forma net income(3)........................... $ 1,581 $ 414 $ 773
------- ------ ------
------- ------ ------
Pro forma net income per share.................... $ 0.33 $ 0.09 $ 0.15
Weighted average shares outstanding............... 4,861,543 4,861,543 5,000,000
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
DECEMBER 31, ---------------------------------------
---------------------------------- PRO PRO FORMA
1992 1993 1994 1995 ACTUAL FORMA(4) AS ADJUSTED(5)
------ ------ ------ ------- ------- -------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).................... $1,010 $ (40) $2,433 $ 2,313 $ 3,625 $ $ 17,710
Inventory.................................... 3,866 3,519 2,771 8,563 9,878 10,878
Total assets................................. 4,334 4,149 6,439 13,794 16,770 28,650
Total debt................................... 1,000 -- 350 3,287 5,037 120
Total stockholders' equity (deficit)......... 10 (40) 2,634 2,614 3,972 2,172 23,683
</TABLE>

- ---------------

(1) Includes certain net sales from a joint venture.
(2) From inception and until July 21, 1994, the Company consigned all of its
inventory to Turbine Engine Sales Group, Inc. ("Turbine"), and paid Turbine
compensation equal to one half of the gross profit on consigned materials sold.
The Company had no facilities and limited staffing during this period.
Accordingly, income (loss) from operations prior to 1995 may not reflect the
full level of operating expenses necessary to support the Company's operations
during such periods.
(3) Reflects the effect on historical statements of operations data,
assuming as of January 1, 1995: (i) a change in the compensation levels of
Donald A. Graw and Jaime J. Levy pursuant to new three-year employment
agreements which will be in force upon the effectiveness of the Offering; and
(ii) the Company had been treated as a C Corporation rather than an S
Corporation for federal and state income tax purposes. See "Prior S Corporation
Status and Planned Distributions," "Management -- Employment Agreements" and
Note 11 of Notes to Financial Statements.
(4) Reflects the effect on stockholders' equity of a planned distribution of
approximately $1.8 million based on undistributed S corporation earnings
allocable to the period from January 1, 1996 through March 31, 1996.

(5) Adjusted to give effect to (i) the sale of 2,250,000 shares of Common
Stock offered by the Company hereby at an assumed offering price of $10.50 per
share after deduction of estimated underwriting discounts and commissions and
the payment by the Company of the estimated offering expenses, (ii) the
application of the net proceeds to the Company as set forth herein including,
among other things, the payment of an assumed $1.8 million of estimated S
Corporation distributions and (iii) a change in the compensation levels of
Donald A. Graw and Jaime J. Levy and the change in the Company's S Corporation
status to C Corporation status as if such events had occurred as of January 1,
1995. See "Prior S Corporation Status and Planned Distributions," "Use of
Proceeds" and "Management -- Employment Agreements."

18
<PAGE> 21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following should be read in conjunction with the Financial Statements
of the Company and the Notes thereto, and the other financial information
included elsewhere in this Prospectus. This Prospectus contains certain
statements regarding future trends which are subject to various risks and
uncertainties. Such trends, and their anticipated impact on the Company, could
differ materially from those discussed in this Prospectus. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed in "Risk Factors" and elsewhere in this Prospectus.

OVERVIEW

The Company is an aftermarket supplier of JT8D aircraft engines, engine
components and airframe material. The aftermarket for JT8D aircraft engines and
engine components is highly competitive, with name recognition, range and depth
of inventories, full traceability of materials, product knowledge, quality,
service and price being key factors in distinguishing between suppliers.

Until July 21, 1994, the Company consigned all of its inventory to Turbine
Engine Sales Group, Inc. ("Turbine") which procured, managed, warehoused and
sold such inventory and collected a fee equal to 50% of the Company's gross
profit on the material. On July 21, 1994, the Company acquired all of the assets
and retained certain personnel formerly employed by Turbine and Turbine was
subsequently dissolved. Accordingly, the Company's operating expenses for years
prior to 1995 may not be comparable to operating expenses in 1995.

The Company's business consists of the sale of the Company's inventory of
engine components and whole aircraft engines, airframe material on consignment,
and field services, including engine inspections such as borescoping.

The Company's net sales are substantially affected by levels of its
inventory. The Company acquires whole aircraft engines and makes a determination
either to disassemble the aircraft engine for engine components or repair the
aircraft engine for sale. Engine component sales have historically risen more
consistently on a quarter to quarter basis due to the following factors: (i)
there has been larger and more consistent market demand for engine components,
and a lower price per unit; (ii) the Company has committed a greater amount of
working capital to aircraft engines purchased for disassembly; and (iii) the
Company has maintained closer relationships with engine component purchasers.
Whole aircraft engine sales are anticipated to continue to increase annually but
may experience fluctuations during the year, as customer demand for whole
aircraft engines is seasonal. The Company anticipates that the Offering will
increase the Company's financial resources available to build its inventory to
support increased net sales.

The Company does not provide warranties in addition to those provided by
the independent overhaul facilities which service its products. The Company has
established programs regarding acceptance of products returned by its customers.
A reserve for such returns is estimated based on the level of sales and the
Company's historical experience.

To date, airframe material sales have been derived from consigned surplus.
The Company held consigned airframe materials with an estimated realizable value
of $1.5 million as of March 31, 1996. The Company believes that sales of
airframe materials can be significantly increased through the purchase of
surplus inventories of such material. To the extent the Company purchases
airframe material inventory, its working capital requirements will increase and
its gross margin on such sales will be affected by market factors rather than,
as has historically been the case, contractual provisions.

The Company records whole aircraft engines held for resale at the lower of
cost or market. Gross profit on whole aircraft engine sales has fluctuated
significantly from period to period as a result, among other things, of the
circumstances under which whole engines are sold. The Company has paid higher
prices for whole aircraft engines for resale when the Company has simultaneously
arranged a sale of the same aircraft engine at an even greater price, than it
customarily pays for aircraft engines purchased for

19
<PAGE> 22

disassembly. Because the amounts committed to such inventory are returned
relatively quickly, the Company has been willing on various occasions to
undertake such transactions even though they generate a substantially lower
gross margin than aircraft engines held for resale for longer periods or
aircraft engines purchased for disassembly. Such whole engine sales have had the
effect of causing gross margin on whole aircraft engine and engine component
sales to fluctuate significantly in the past and can be expected to do so in the
future.

Engine component inventories are initially recorded at cost. Cost of sales
relative to engine components shipped are recorded during the first three to six
months following disassembly of the related whole aircraft engine at the
Company's standard ratio of cost of sales to net sales for engine components
from such aircraft engine types. Thereafter, management evaluates the remaining
engine components, estimates future sales and related overhaul costs and, if
necessary, adjusts the ratio of costs of sales to net sales on a prospective
basis. Thereafter, the Company records the cost of each engine component sold at
the time the related net sales are recognized, based on such ratios.

During 1995, the Company entered into an agreement with Parati Corporation
("Parati") relating to Parati's acquisition of new and surplus aircraft engines
for resale and disassembly (the "Parati Agreement"). The Parati Agreement
provided for an equal sharing of gross profits between the Company and Parati
following the recovery by Parati of all costs borne by Parati. Accordingly, cost
of sales in the historical financial statements of the Company contained herein
include costs associated with the portion of the gross profit due Parati from
the sale of engine components of the two disassembled aircraft engines subject
to the Parati Agreement. Parati and the Company have agreed to terminate the
Parati Agreement prior to the Offering and for the Company to purchase at cost
Parati's remaining engine component inventory at such time. See "Certain
Transactions -- Parati Agreement."

Effective on and after January 1, 1996, the Company amended its employment
agreements with two senior executive officers in order, among other things, to
reduce the rate of compensation from the prior level of an aggregate of 40% of
adjusted net income, as defined in such agreements, to an aggregate of 10% of
adjusted net income. Such amended agreements provided for an additional bonus
accrued on December 31, 1995 in the amount of $1.2 million. New three-year
employment agreements, which fix the rate of compensation payable to such
officers to an aggregate annual salary of $480,000 and the right to participate
in the Company's Incentive Plan, become effective on the effective date of the
Registration Statement of which this Prospectus forms a part. See
"Management -- Employment Agreements."

The Company has in the past obtained non-interest bearing advances from the
current stockholders. Such non-interest advances are not expected to be
available to the Company in the future. As a result, the Company anticipates
that all of its borrowings will bear interest and that, as a result, interest
expense is likely to increase during the balance of 1996. The non-interest
bearing advances of the Company to its stockholders were $1,620,324 as of both
December 31, 1995 and March 31, 1996.

TERMINATION OF S CORPORATION STATUS

Prior to the Offering, the Company intends to terminate its status as an S
Corporation and will become subject to federal and state income taxes.
Historically, the Company has not recorded a provision for income taxes as a
result of its S Corporation status for the prior periods shown. See "Prior S
Corporation Status and Planned Distributions."

20
<PAGE> 23
RESULTS OF OPERATIONS

The following table sets forth for the periods indicated certain items
contained in the Company's statements of operations expressed as a percentage of
net sales:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------- -------------
1993 1994 1995 1995 1996
----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales:
Aircraft engines and engine components................. 100 % 95 % 91 % 83 % 96 %
Other(1)............................................... -- 5 9 17 4
---- ---- ---- ---- ----
Total net sales................................. 100 100 100 100 100
Cost of sales:
Aircraft engines and engine components................. 90 67 59 50 65
Other.................................................. -- 3 6 11 3
---- ---- ---- ---- ----
Total cost of sales............................. 90 70 65 61 68
Gross profit:
Aircraft engines and engine components................. 10 28 32 33 31
Other.................................................. -- 2 3 6 1
---- ---- ---- ---- ----
Total gross profit.............................. 10 30 35 39 32
Operating expenses:
Selling, general and administrative.................... 15 12 14 13 11
Officers' compensation................................. -- 10 14 8 2
---- ---- ---- ---- ----
Total operating expenses........................ 15 22 28 21 13
---- ---- ---- ---- ----
Income (loss) from operations............................ (5) 8 7 18 19
Interest (expense) income, net........................... -- -- (1) -- (2)
Extraordinary item....................................... 4 -- -- -- --
---- ---- ---- ---- ----
Net income (loss)........................................ (1)% 8 % 6 % 18 % 17 %
===== ===== ===== ===== =====
</TABLE>

- ---------------

(1) Includes airframe materials and field services sales.

Three Months Ended March 31, 1996 Compared to Three Months Ended March 31,
1995

Net sales. Net sales increased 109% to $7.8 million during the three
months ended March 31, 1996 from $3.8 million during the three months ended
March 31, 1995.

Aircraft engines and engine components -- Aircraft engines and engine
component sales increased 141% to $7.5 million during the three months ended
March 31, 1996 from $3.1 million during the three months ended March 31, 1995.
This increase is primarily due to an increase in engine component sales related
to a $5.8 million increase in available inventory for sale on December 31, 1995
as compared to December 31, 1994. A substantial portion of the increased sales
were made to Pratt & Whitney, as a result of the Pratt & Whitney Agreement
entered into during June 1995, while sales to Dallas Aerospace declined as a
result of the reduced number of whole aircraft engines sold in the three months
ended March 31, 1996 compared to the three months ended March 31, 1995.

Other -- Other sales decreased 52% to $301,000 during the three months
ended March 31, 1996 from $628,000 during the three months ended March 31, 1995.
The decrease is due to a reduced level of consigned airframe material available
for sale.

Gross profit. Gross profit increased 72% to $2.5 million in the three
months ended March 31, 1996 from $1.4 million in the three months ended March
31, 1995 as a result of increased net sales. Gross margin decreased from 39%
during the three months ended March 31, 1995 to 32% during the three months
ended March 31, 1996 due to the sale of fewer whole aircraft engines and the
effect of sales of engine components owned by Parati.

Aircraft engines and engine components -- Gross profit on aircraft engine
and engine component sales increased 92% to $2.4 million in the three months
ended March 31, 1996 from $1.2 million in the

21
<PAGE> 24

three months ended March 31, 1995. Gross margin decreased from 39% during the
1995 period to 32% during the 1996 period as a result of the sale of fewer whole
aircraft engines in the first quarter of 1996 and the effect of sales of engine
components owned by Parati.

Other -- Gross profit on other sales declined 50% to $100,000 in the three
months ended March 31, 1996 from $201,000 in the three months ended March 31,
1995 due to the decreased sales volume. Gross margin on other sales increased
slightly to 33% in the three months ended March 31, 1996 from 32% in the three
months ended March 31, 1995.

Selling, general and administrative expense. Selling, general and
administrative expense increased 68% to $841,000 in the three months ended March
31, 1996 from $502,000 in the three months ended March 31, 1995, while such
expense declined as a percentage of net sales from 13% to 11%, respectively. The
increase in the amount of such expense is primarily attributable to increased
personnel expense resulting from additional staffing, increased facility expense
associated with the May 1995 relocation to the 50,000 square foot operations
center and the inauguration of the disassembly facility during the early part of
the first quarter of 1996.

Officers' compensation. Officers' compensation decreased 42% to $162,000
in the three months ended March 31, 1996 from $277,000 in the three months ended
March 31, 1995, and such expense declined as a percentage of net sales to 2%
from 8%, respectively. These savings resulted from an amendment to the
employment agreements of the two senior executives of the Company effective for
periods subsequent to January 1, 1996.

Net interest expense. Net interest expense increased to $138,000 during
the three months ended March 31, 1996 from $3,000 during the three months ended
March 31, 1995, and such expense increased as a percentage of net sales from 0%
to 2%, as a result of the Company's increased borrowing to support the higher
level of inventory.

Year Ended December 31, 1995 compared to Year Ended December 31, 1994

Net sales. Net sales increased 102% to $18.3 million during 1995 from $9.1
million during 1994.

Aircraft engines and engine components -- Aircraft engines and engine
component sales increased 93% to $16.7 million in 1995 from $8.6 million in
1994. This increase resulted from an increase in inventory levels as a result of
the credit facilities established in December 1994, the commencement of the
Pratt & Whitney relationship and a 57% increase in whole aircraft engine sales,
coupled with sales of more expensive, higher thrust aircraft engines. Sales to
Dallas Aerospace in 1995 declined by approximately 20%. The reserve for sales
allowances in 1995 increased due to an increase in the total sales and to a
return accepted from a customer of materials, most of which were resold by the
Company during the three months ended March 31, 1996.

Other -- Other sales increased as a result of the commencement of borescope
service sales in January 1995 and a full year of sales of Boeing 727 rotable and
expendable components.

Gross profit. Gross profit increased 140% to $6.5 million during 1995 from
$2.7 million during 1994. Gross margin increased to 35% during 1995 from 30%
during 1994 primarily due to an increase in gross margins on aircraft engines
and engine components.

Aircraft engines and engine components -- Gross profit on aircraft engines
and engine components increased 132% to $5.9 million in 1995 from $2.6 million
in 1994. Gross margins increased from 30% in 1994 to 36% in 1995 primarily as a
result of the sale of a greater proportion of higher margin whole aircraft
engines during 1995.

Other -- Gross profit on other sales increased 305% to $522,000 from
$129,000 in 1994 due to the commencement of borescope services and increased
sales of airframe material. Gross margin increased slightly from 30% to 32%.

Selling, general and administrative expense. Selling, general and
administrative expense increased 141% to $2.6 million in 1995 from $1.1 million
in 1994, and such expense increased as a percentage of net sales from 12% during
1994 to 14% during 1995. This increase resulted primarily from the full year

22
<PAGE> 25

effect during 1995 of initiating direct operations (previously performed by
Turbine until July 21, 1994), including increases in personnel costs of $1.0
million and facility expense of $496,000.

Officers' compensation. Officers' compensation increased 198% from
$860,000 in 1994 to $2.6 million in 1995, and such expense increased as a
percentage of net sales from 10% during 1994 to 14% during 1995. This increase
primarily resulted from increased net income which was the basis for determining
the compensation of the two senior executives under the employment agreements
then in effect and a one-time bonus in the fourth quarter of 1995 of $1.2
million in consideration of the reduction of the rate of compensation for future
periods.

Net interest expense. Net interest expense in 1995 was $191,000 as
compared to $6,000 of interest income in 1994 due to the borrowing to support
inventory growth under the Company's credit facilities established in December
1994.

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

Net sales. Net sales increased 133% to $9.1 million during 1994 from $3.9
million during 1993.

Aircraft engines and engine components -- Aircraft engines and engine
component sales increased 122% to $8.6 million in 1994 from $3.9 million in
1993. This increase was a result of the substantial increase of JT8D aircraft
engine and engine component inventory available for sale.

Other -- Other sales, derived from airframe material consignment sales
which commenced in 1994, were approximately $431,000.

Gross profit. Gross profit increased 569% to $2.7 million during 1994 from
$402,000 during 1993. Gross margin increased from 10% during 1993 to 30% during
1994.

Aircraft engines and engine components -- Gross profit on aircraft engine
and engine component sales increased 537% to $2.6 million in 1994 from $402,000
in 1993. Gross margin on such sales increased to 30% in 1994 from 10% in 1993.
These increases resulted primarily because of the incurrence in 1993 of an
inventory write-down and a loss on the sale of certain non-JT8D aircraft
engines, both of which severely impacted gross margin.

Other -- Airframe material sales, which commenced in 1994, were $431,000.

Selling, general and administrative expense. Selling, general and
administrative expenses increased 84% to $1.1 million in 1994 from $588,000 in
1993, and such expense decreased as a percentage of net sales from 15% in 1993
to 12% in 1994. The increase in the amount of this expense is primarily due to
the establishment during the third quarter of 1994 of the Company's operations
(formerly performed by Turbine).

Officers' compensation. Officers' compensation was incurred for the first
time in 1994 as a result of the retention during 1994 of the Company's two
senior executives.

Net interest income. Net interest income in 1994 was $6,000 compared to
net interest expense of $14,000 in 1993.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company's primary source of cash has been from financing
activities and cash flow generated by operations. Net cash provided by financing
activities, derived primarily from bank lines of credit and advances from
stockholders, was $2.3 million and $1.8 million during 1995 and the three months
ended March 31, 1996, respectively. The Company has also obtained aircraft
material on consignment and may enter into other consignment agreements in the
future. The Company's principal working capital requirements relate to the
acquisition of inventory and carrying of receivables. The Company generally
extends 30-day payment terms to its customers, other than new customers and
purchasers of whole aircraft engines, who are charged cash on delivery. The
Company extends 120-day payment terms to Pratt & Whitney. The Company is
planning to launch a program in conjunction with

23
<PAGE> 26
third-party financing sources for leasing whole aircraft engines which may
increase its working capital requirements.

The Company presently has a revolving credit facility (the "Credit
Facility") with Barnett Bank of South Florida, N.A. (the "Bank") which provides
working capital of up to $10.0 million with interest at the Bank's base rate
plus 0.75%, subject to an availability calculation based on the eligible
borrowing base. The eligible borrowing base includes certain receivables and
inventories of the Company. The Company is in compliance with all of its
requirements under the Credit Facility. The Credit Facility is due on demand and
is reviewed annually. At March 31, 1996, the Company had outstanding
approximately $4.9 million and additional availability of approximately $1.1
million under the Credit Facility.

Following the Offering, the Company has received a commitment from the Bank
to amend the Credit Facility to provide for maximum borrowing of up to $20.0
million, with interest at the Bank's base rate plus a range from 0.25% to 1.50%
based upon the Company's financial performance (the "Amended Credit Facility").
The Amended Credit Facility is expected to contain financial and other covenants
of the Company and is expected to be secured by a lien on substantially all of
the assets of the Company.

The Company entered into a Limited Recourse Receivable Discount Facility
("Discount Facility") with Citibank, N.A. providing a facility for sales of
receivables from Pratt & Whitney to Citibank, N.A. at a discount rate of LIBOR
plus 1/4%. The Company paid a significant facility fee at the commencement of
the Discount Facility and may discount an aggregate of $10 million of
receivables prior to paying additional fees to extend the Discount Facility. The
Company sold an aggregate of $3.9 million in receivables pursuant to the
Discount Facility through March 31, 1996. The Company anticipates that following
the commencement of the Amended Credit Facility and the full utilization of the
initial $10 million of the Discount Facility, the Company will cause the
Discount Facility to terminate.

The Company has established a capital expenditure budget of approximately
$2.9 million during 1996, including approximately $2.2 million for additional
tooling in the Company's disassembly operations relating to JT8D aircraft
engines, approximately $300,000 for planned additional enhancements to the
Company's information technology systems, approximately $200,000 to complete
warehouse improvements, approximately $150,000 for additional leasehold
improvements related to planned increases in personnel and approximately $50,000
for additional borescoping equipment. The Company presently plans additional
capital expenditures of approximately $2.2 million in 1997, primarily for
tooling associated with the disassembly of CFM56 aircraft engines.

The Company believes that current levels of working capital, the proceeds
to the Company of the Offering and amounts available under the Credit Facility
will enable it to meet its liquidity requirements for the next twelve months.

SEASONALITY

The Company believes that the aftermarket for whole aircraft engines is
seasonal, with increased demand for whole aircraft engines during the summer
months. This seasonality exists because aircraft engine performance is directly
related to ambient temperature (as temperatures rise it is more difficult for
aircraft engines to perform properly). As a result, certain aircraft engines are
removed from service during the summer months due to failure of those particular
aircraft engines to comply with exhaust gas temperature limitations. Aircraft
engines of the same type and model can have different performance capabilities.
The summer months also include peak travel periods during which aircraft
utilization levels are high. There can be no assurance that the Company will not
experience substantial quarterly fluctuations of sales in the future as a result
of the seasonal effect of aircraft engine sales. See "Risk Factors -- Limited
Operating History; Potential Fluctuations in Operating Results."

24
<PAGE> 27

INDUSTRY OVERVIEW

GENERAL

According to Boeing's 1996 Market Outlook, the annual worldwide market for
aircraft, aircraft engines and engine components is approximately $10.0 billion,
of which over $1 billion annually consists of sales and leases of aftermarket
JT8D aircraft engines and engine components. The aftermarket supplies aircraft
engines, engine components and airframe components in new and used condition as
distinguished from new aviation materials sold directly by an OEM. There are
currently over 13,000 JT8D aircraft engines in service, estimated to power
approximately 40% of the world's commercial jet powered aircraft including
Boeing 727/100/200, Boeing 737/100/200 and McDonnell Douglas DC-9-10/20/30/40/50
aircraft. First tier aircraft operators (consisting of the ten largest carriers
in the United States, which account for approximately 85% of the available seat
miles flown domestically, and the flag carriers in the international markets)
have reduced the percentage of their fleets which is powered by the JT8D engine
by selling older aircraft to second tier, start-up and cargo aircraft operators
and replacing them with new aircraft. As a result, a substantial number of JT8D
engines have migrated to aircraft operators which the Company believes are more
likely to outsource their maintenance and inventory management requirements.
Activity in the aftermarket is linked to aviation activity. The aftermarket is
highly fragmented, consisting of a limited number of suppliers selling a broad
range of aircraft engines and engine components, and numerous smaller
competitors serving specialized niche markets. Aftermarket resellers compete on
availability, breadth of product offering, service and price. The Company
estimates that the largest three suppliers of the JT8D aircraft engine and
engine component aftermarket, AAR, Inc., Dallas Aerospace and AGES, L.P., have
an aggregate 29% market share.

Aviation aftermarket aircraft engines, engine components and airframe
materials are regulated by the FAA with supplemental guidelines issued by the
OEMs which govern the use and overhaul of aviation components based upon damage,
flight hours and cycle times (take-off and landings). The condition of
aftermarket engine components are determined by a third-party repair facility
certificated by the FAA which classifies components as "serviceable"
(immediately available for use), "overhauled" (the engine component is
"serviceable" and further specified repair procedures which enhance value have
been performed) and "scrap" (must be destroyed).

INDUSTRY TRENDS

The Company believes that the significant trends impacting the aftermarket
will continue to increase its overall size while reducing the number of
competitors. These trends include the following:

Growth in Air Transit. According to Boeing's 1996 Market Outlook,
global air travel will increase by 70% through 2005, and the number of
passenger and cargo delivery aircraft in service will increase by 47%. The
Company believes that growth in air transit activity has increased the
demand for aircraft engine, engine component and airframe material
purchases from the aftermarket.

Increased Outsourcing of Inventory and Engine Repair Management
Function. Aircraft operators have come under increasing pressure during
the last decade to reduce both operating and capital costs associated with
providing air transportation services. While several of the expenditures
incurred by aircraft operators are beyond their direct control (i.e., fuel
prices and labor costs), the Company believes that obtaining replacement
engine components from the aftermarket and outsourcing inventory management
functions represent cost reduction opportunities for aircraft operators.
Aircraft engines and engine components sold by aftermarket suppliers are
substantially less expensive than new aircraft engines and components sold
by OEMs. In addition, inventory management typically is more inexpensively
and efficiently provided by a third-party like the Company that can achieve
economies of scale unavailable to individual aircraft operators. Several
smaller and start-up airlines and air cargo operators do not presently own
an inventory of engine

25
<PAGE> 28

and airframe components, but rather have entered into agreements with
suppliers for all or a portion of their requirements for engine and
airframe components. Additionally, other airlines, including several large
airlines, have begun to outsource portions of their purchasing services,
repair management and warehouse management. The Company believes that its
broad array of JT8D engine components and its reputation for timely and
reliable delivery and complementary engine management services will
position the Company to compete effectively for long-term supply
relationships. The Company anticipates that the increased reliance on
outsourcing will cause consolidation in the aftermarket, because only those
suppliers with extensive inventories and adequate capital will secure such
agreements with aircraft operators.

Maintenance Requirements. Under regulations promulgated by the FAA
and the European Union and similar agencies of other countries, as well as
guidelines established by aircraft engine OEMs, when the performance of an
aircraft engine falls outside prescribed limits and after a specific number
of flight hours or take-offs and landings an aircraft engine must be
brought into a repair facility certificated by the FAA or a similar agency
of a foreign nation for various types of designated service. Depending on
the model, aircraft engines require regular maintenance and inspection and
replacement of "life-limited" components. The FAA and similar agencies of
other countries subject aircraft and engines with hours and cycles above
certain limits to inspection and servicing on increased frequencies. The
trend towards increasing maintenance requirements for aging aircraft (which
generally include those models powered by the JT8D aircraft engine) has
increased the size of the aftermarket for engine components since
replacement engine components are generally required in connection with the
repair of aircraft engines and the use of new engine components for these
purposes is not cost effective.

Increasing Emphasis on Traceability. The sale of engine and airframe
components must be accompanied by documentation which allows the customer
to demonstrate compliance with applicable FAA requirements. The
sophistication required to track the history of an engine or airframe
component is considerable and involves an investment in information systems
technology and the implementation of substantial quality assurance regimes.
The cost of investment in technology and human resources to compete
effectively in the aftermarket has become increasingly expensive.

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BUSINESS

GENERAL

AVTEAM, Inc. is an international aftermarket supplier of JT8D aircraft
engines and engine components as well as airframe and other aircraft material to
commercial passenger and cargo aircraft operators, aircraft engine repair and
engine component overhaul facilities and other aftermarket suppliers of aircraft
engines and engine components. The JT8D is the most widely used aircraft engine
in the world and is estimated to power approximately 40% of the world's
commercial jet powered aircraft including Boeing 727/100/200, Boeing 737/100/200
and McDonnell Douglas DC-9-10/20/30/40/50 aircraft. First tier aircraft
operators (consisting of the ten largest carriers in the United States, which
account for approximately 85% of the available seat miles flown domestically,
and the flag carriers in the international markets) have reduced the percentage
of their fleets which is powered by the JT8D engine by selling older aircraft to
second tier, start-up and cargo aircraft operators and replacing them with new
aircraft. As a result, a substantial number of JT8D engines have migrated to
aircraft operators which the Company believes are more likely to outsource their
maintenance and inventory management requirements. During 1995, the Company
supplied over 500 customers with over 40,000 engine and airframe components and
22 aircraft engines. The Company has increased net sales at a compound annual
growth rate of 117% from $3.9 million in 1993 to $18.3 million in 1995. The
Company currently estimates that it has less than a 2% share of the worldwide
JT8D aircraft engine and engine component aftermarket.

The Company began its operations as a value-added reseller of aircraft
engines, engine components and airframe material and based its operations in
Southeast Florida to access major aviation services companies. The Company
implemented business practices based upon senior management's extensive
experience to position the Company to serve its customers efficiently and allow
for substantial growth. These practices include targeted inventory sourcing and
marketing, use of a state-of-the-art, interactive management information system,
and operation of an efficient disassembly facility and a warehouse and
distribution facility that permits a rapid turnaround between customer order and
product delivery. In recognition of the Company's capabilities, in June 1995,
Pratt & Whitney, the OEM of the JT8D aircraft engine, selected the Company to be
its worldwide, sole-source supplier of JT8D aftermarket engine components. The
combination of the net proceeds from the Offering and the Credit Facility will
provide the Company with additional financial resources to expand its inventory
and capitalize on the trends in the aftermarket supply industry.

COMPETITIVE ADVANTAGES

The key components of the Company's competitive advantages are:

Successful Buying Practices. The Company focuses on the appropriate
and timely purchase of aircraft engines for disassembly or resale. The
worldwide aftermarket for JT8D aircraft engines and engine components is
estimated at over $1 billion annually, which provides a large and liquid
market for aircraft engines and engine components. However, there is no
consistent, reliable and organized source of supply of surplus aircraft
engines. The Company utilizes extensive market knowledge, disciplined
sourcing and prudent due diligence procedures and offers cash consideration
for its purchases of aircraft engines. The Company maintains an internally
generated database of JT8D aircraft engines by owner based on extensive
research and market expertise which it utilizes to target purchase
opportunities. Through its entrepreneurial approach, the Company has been
able to make its purchase decisions more quickly than larger competitors
and does not depend on contingent financing which hampers smaller
competitors.

State-of-the-Art Management Information Systems. The Company utilizes
its information technology system in order to track, price, sort and
determine sales profitability for the aftermarket engine components
maintained in the Company's inventory. Through this integrated system, each
sales representative of the Company can provide immediate and reliable
responses to customer

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inquiries, delivering superior service over smaller, under-capitalized,
paper-based competitors. In addition, management can target its purchasing
decisions, focus overhaul expenditures on higher demand, higher margin
components and monitor its inventory turnover ratio. The information
technology system can interact with the Inventory Locator Service ("ILS")
to provide certain pricing and availability information to potential
customers.

Broad Range of Product Offerings. The Company provides one of the
most extensive product lines, consisting of over 4,000 aftermarket engine
components, of the JT8D aircraft engine. The Company's customers demand a
broad range of engine and airframe components, often in substantial volumes
and on an expedited basis.

Tailored Customer Support. The Company provides tailored customer
support with an emphasis on quality, timely shipping, real-time, reliable
pricing and availability and full traceability of the products sold by the
Company. The Company offers flexible solutions designed to fulfill specific
customer needs, combined with guarantees of high quality component
delivery, EDI, financing arrangements and packaging components or services
for volume and attractive pricing. The Company believes that, through these
services, it can become the priority or sole supplier to its customers.

GROWTH STRATEGY

The Company seeks to maximize revenues and profitability through a
combination of appropriate purchases of surplus aircraft engines and superior
customer support to compete more on product offerings and relatively less on
price. As a result of the Offering and the Credit Facility, the Company will
have the working capital to increase its purchase of aircraft engines, engine
components and airframe material. Elements of the Company's growth strategy
include:

Increase JT8D Market Penetration. The Company seeks to increase its
presence in the JT8D aftermarket and capitalize on the outsourcing trends
within the industry by providing a broad range of aircraft engines and
engine components, timely and reliable delivery and comprehensive customer
support and by targeting its marketing efforts. The Company believes that
it can capitalize on the outsourcing trends within the industry by
supplying third-party repair facilities and aircraft operators. In
addition, the Company seeks to increase volume and frequency of sales
through its use of a technical salesforce to market its products and
services to new and existing customers, many of which rely on the Company's
greater technical expertise.

Enter CFM56 Market. The Company plans to enter the engine components
aftermarket in newer, higher thrust aircraft engine types, such as the
CFM56, which is manufactured by CFM International, Inc. The CFM56, with an
installed base of over 5,000 aircraft engines, is expected to become the
dominant aircraft engine early in the next century and has been operating
for a sufficient period for an active aftermarket in aircraft engines and
engine components to emerge. The Company believes that its expertise
derived from servicing the JT8D market, including its business practices
and its information technology system, are readily transferable to
supporting CFM56 customers. The CFM56 is still being sold by its OEM and
the market should continue to grow in the near term as more aircraft
engines come into service and others extend their operating life past their
respective warranty periods. Because higher thrust aircraft engines and
engine

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components command a higher price per unit, expansion to this aircraft
engine type may serve to increase the Company's revenues.

Implement Engine Management and Leasing Programs. As aircraft
operators seek to outsource the repair of aircraft engines as well as
inventory management, the Company believes that there is an opportunity to
offer its customers complementary services to manage various aspects of
their engine maintenance and acquisition needs. These services include: (i)
aircraft engine leasing;(ii) providing services involving obtaining
aircraft engine repair quotations from a variety of FAA certificated repair
facilities, the specification of particular FAA certificated repair
facilities to perform aircraft engine repairs and the scheduling of
delivery of the aircraft engines to be repaired and their return to the
aircraft operator following the completion of the work by the FAA
certificated repair facility; (iii) designing aircraft engine repair
workscopes; (iv) borescoping services; and (v) providing aircraft engines.
By offering a total engine and inventory management solution to aircraft
operators and lessors, the Company seeks the sale of engine components for
maintenance service to the aircraft engines, acquisition of the aircraft
engines after lease terms and the strengthening of customer relationships.

Strengthen Key Customer Relationships. The Company seeks to form
close relationships with existing and new customers by providing a
"one-stop shop" for JT8D customers with a broad range of high quality
product offerings, reliable and timely customer support and flexible and
customized solutions for customers' needs. The Company's emphasis on
customer support, combined with its information technology system, assists
the Company in delivering engine components and services efficiently to
customers on a cost-effective basis. By providing the required services and
engine components within the JT8D aftermarket, the Company seeks to
increase its customers' purchasing frequency and expand its customer base.

PRODUCTS AND SERVICES

The Company's net sales over the past three years have been derived from
the sale of engine components, whole aftermarket aircraft engines, airframe
material and complementary services.

Engine Components. The Company maintains inventory of and sells over 4,000
engine components for JT8D aircraft engines. Aftermarket engine components are
generally held by the Company in "overhauled," "serviceable," "repairable" or
"as removed" conditions. The Company acquires surplus aircraft engines for
disassembly following its review of maintenance records relating to such
aircraft engines. Although the Company must rely on such maintenance records and
cannot independently verify the accuracy of the entries, the Company performs
various tests of internal consistency in such records and has developed a
knowledge of the particular recordkeeping methods of various prior owners of
aircraft engines. In general, the FAA and international regulatory authorities
impose substantial criminal and civil sanctions for the making of false entries
in the maintenance records of aircraft engines. Following disassembly of an
aircraft engine, the "as removed" engine components required to replenish
saleable inventory must be inspected and classified by a third-party facility
certificated by the FAA to perform such work. Engine components determined to be
"scrap" are destroyed and "repairable" engine components may be brought to
"serviceable" or "overhauled" condition depending upon the OEM's designation of
the engine component. Prices for the individual engine components are determined
by their classification, condition and general level of availability in the
aftermarket at the time of sale. The Company has experienced greater sales
volume in the following types of engine components, which account for
approximately 80% of the Company's net sales of engine components:

Disks -- The disks are the rotors which hold and turn the blades
within the aircraft engine. As "life-limited" components, the FAA requires
that disks may only be flown a certain number of cycles and/or hours before
replacement. A typical aircraft engine contains 13 compressor disks and
four turbine disks. The price for a disk ranges from $1,000 to $75,000.

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<PAGE> 32

Blades and Vanes -- Blades are moving parts which direct the air flow
through an aircraft engine and are generally sold in sets. The quantities
of blades included in a complete set vary in the different stages of the
aircraft engine. The Company does not typically recover full, usable sets
of blades from the disassembly of used aircraft engines, but rather
partial, repairable sets. An individual blade typically sells for $50 to
$1,200 depending on the stage and condition of the blade. Vanes are
stationary air foils which also direct the air flow through an aircraft
engine. Different aircraft engine stages may contain from 46 to 95 vanes
which range in price from $25 to $3,500 per vane depending on the stage of
the aircraft engine in which they are located. Most blades and vanes are
unique to a specific aircraft engine type, although some are
interchangeable.

Stators -- Stators serve to direct the air flow through an aircraft
engine at the optimum desired angle. The Company sells 11 of the 12 stators
typically contained in an aircraft engine. The resale price of a stator
ranges from $1,000 to $70,000 depending on its condition and the aircraft
engine stage.

Cases -- Cases contain and separate various assemblies within the
aircraft engine. A JT8D aircraft engine typically has approximately 20
cases, both internal and external. The price of a case ranges from $500 to
$150,000 depending on its function, condition and location.

Seals, Housings, Bevels, Bearings, Fuel Nozzles and Spacers -- These
engine components comprise the bulk of the remaining items included within
an aircraft engine and typically range in price from $500 to $25,000.

Whole Aftermarket Aircraft Engines. The Company sold five, 14 and 22 whole
aircraft engines in 1993, 1994 and 1995, respectively. The prices for
aftermarket aircraft engines depend on the thrust of the aircraft engine, the
availability of the aircraft engine type at the time of sale and the buyer's
circumstances. In the event that an aircraft requires a replacement aircraft
engine, customers may be willing to pay a premium for a serviceable aircraft
engine which can be delivered immediately.

Airframe Components. The Company's airframe component sales have resulted
from sales of new and used rotable and expendable spare parts for Boeing 727 and
707 series aircraft, consisting of approximately 45,000 line items. Sales of
rotable airframe components include avionics equipment (for example, fuel and
altitude indicators) and actuators (for example, devices that perform certain
mechanical functions). The airframe components currently held for sale by the
Company are divided 60% among expendable and 40% among rotable airframe
components.

Borescoping Services. The Company offers engine borescoping services, a
diagnostic procedure utilizing a video camera attached to the end of a thin tube
which is inserted into various sections of an aircraft engine to analyze its
condition without disassembly. The Company also utilizes its borescoping
capabilities to evaluate substantially all aircraft engines which the Company
has the opportunity to purchase.

Engine Management Services. The Company offers engine management services
to its customers, which include arranging for volume discounts and competitive
bids to service aircraft engines, preparing workscopes for the repair of
aircraft engines, monitoring aircraft engines through the entire repair process
and providing cost-effective replacement engine components for the aircraft
engines.

Engine Leasing Services. In response to various requests from customers,
the Company is planning to launch a lease program whereby the Company will offer
to lease new or used aircraft engines to aircraft operators under terms which
provide for the Company to provide engine management services during the term of
the lease and to own the aircraft engine at the end of the lease term.

PURCHASING

The Company's business is substantially dependent on its purchasing
activities because its net sales are substantially influenced by inventory. The
Company acquires its inventories primarily through the purchase of surplus
aircraft engines or engine component inventories from owners. Senior manage-

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ment's first priority is the identification, negotiation and completion of
surplus aircraft engine and engine component purchases. The Company has created
a reputation in the aviation aftermarket supply industry as a purchaser of JT8D
aircraft engines as a result of its many purchases of these aircraft engines.
Because the size of its inventory is critical to results of operations and
because there is no organized market for surplus JT8D aircraft engines, the
Company's operations are materially dependent on the techniques employed by
management to identify potential sources of material and to effect timely
purchases at acceptable prices. In order to acquire surplus aircraft engines
effectively, the Company's purchasing procedures include:

- Deploy field personnel to identify potentially available aircraft
engines;

- Appoint representatives domestically and abroad to identify purchase
opportunities;

- Offer cash purchase prices rather than seek extended payment terms;

- Maintain a streamlined aircraft engine review process in order to make
timely offers; and

- Dispatch senior management to potential vendors to negotiate and close
purchases.

Prior to the Offering, the Company utilized consignments to obtain airframe
material to increase sales without committing capital. Following the Offering,
the Company may elect to obtain airframe component inventory by direct purchase
but may also continue to obtain airframe material through consignments.
Consignment agreements typically require the Company to store the consigned
materials in dedicated warehouse space at the Company's facilities, use its best
efforts to sell the consigned materials at market prices and provide the
consignor with regular sales reports. The Company is typically obligated under
consignment arrangements to pay the consignor an agreed percentage of the prices
of the consigned materials sold on a monthly basis.

INFORMATION SYSTEMS

The Company utilizes a customized inventory information technology system
which is fully integrated with the Company's customized accounting and
management information systems to assist management in planning, operating and
controlling its business activities. This information technology system has
internal security and check and balance functions which allow substantially all
employees to access information relevant to their functions but restricts the
ability of unauthorized users to alter sensitive data.

The information technology system contains information regarding each item
in the Company's inventory at any given time. By accessing the information
technology system through a bar coded scanner, the Company can: (i) document,
for any engine component, full traceability to the FAA approved point of origin
(whether the OEM, an approved agent of the OEM or a certificated FAA repair
facility); (ii) the aircraft engine from which an engine component is
originated; (iii) various identifying codes for the engine component; (iv) the
condition of the engine component; (v) the on-line availability of other engine
components of the same type in inventory; (vi) the location of all other similar
engine components and, if at an FAA certificated repair facility, when such
engine components are due to be returned; (vii) the history of the sales
regarding the type of engine component to the Company's customers (including
dates and sales prices); (viii) the Company's other sales commitments; and (ix)
any relevant purchase commitments. The information technology system also
provides time and usage cycles for life-limited components.

The information technology system has an automatic interface that transfers
purchase and sales commitment data, real-time perpetual inventory levels,
recording of inventory movements, current assessment of supply and demand for
various engine components and complete daily reports to the accounting and
management information systems maintained by the Company.

DISASSEMBLY AND SERVICING OF AIRCRAFT ENGINES

Prior to mid-December 1995, third-party facilities disassembled the surplus
aircraft engines purchased by the Company to stock the Company's engine
component inventory. The Company often

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experienced long delays in receiving the disassembled components. During January
1996, the Company retained qualified personnel, designed a disassembly facility
with flexibility to accommodate substantial growth in volume and expansion into
other aircraft engine types and developed internal capabilities to disassemble
JT8D aircraft engines. The Company transports surplus aircraft engines which it
has purchased for disassembly directly to this facility. Engine components are
removed from such aircraft engines and are stored at the Company's warehouse
facility until they are sent to FAA certificated repair facilities for
inspection and overhaul. As a result, the Company significantly improved
aircraft engine disassembly turnaround time. The Company does not perform
disassembly of aircraft engines for third parties and does not intend to do so
in the future. The Company is not required to obtain FAA certification to
conduct such disassembly operations.

Whole aircraft engines held for resale require repair and certain
disassembled engine components require inspection and overhaul. Certain FAA
certificated repair and overhaul facilities specialize in different inspection
and overhaul procedures and the Company attempts to locate the appropriate
facility for particular procedures or projects. The Company utilized over 22
different FAA certificated repair and overhaul facilities in 1995. The Company
sometimes experiences substantial delays, however, in the servicing of aircraft
engines and engine components. See "Risk Factors -- Dependence on Third-Party
Aircraft Engine Repair Facilities."

SALES AND MARKETING

The Company's sales and marketing organization is comprised of four groups:
(i) aircraft engine sales; (ii) engine component sales; (iii) airframe material
sales; and (iv) field services. The Executive Vice President of the Company is
responsible for the coordination and overall performance of each group. These
groups employ various sales and marketing efforts to service and expand upon the
Company's existing customer base.

The Company's senior management, outside consultants and representatives
are all vital to the support of the sales and marketing efforts. The Company
believes that direct relationships are crucial to establishing and maintaining a
strong customer base. It is the Company's experience that business is primarily
generated by direct contact with those who are the decision-makers. In addition
to the direct relationships that are developed and maintained by senior
management, the Company uses the services of experienced outside consultants and
representatives to further expand its market presence. The Company works with
three consultants and six domestic and international representatives who have
extensive knowledge of the Company's products and services and established
business relationships. The Company is also a member of various trade and
business organizations related to the commercial aviation industry.

The Company subscribes to the ILS, an aviation components information
network. This service is specifically used to support the sales and marketing of
engine and airframe components. The ILS is an electronic marketplace that
enables over 2,300 active buyers to access the Company's inventory of engine and
airframe components. The Company is able to market all available engine and
airframe components noting their quantities, part numbers and condition.
Customers can locate the Company's engine and airframe components inventory and
request quotes for any specific part numbers directly from the Company.

CUSTOMERS

General. The Company sells primarily to Pratt & Whitney, repair and
overhaul facilities, other aftermarket suppliers of aircraft engine and airframe
materials, aircraft operators and others. Other aftermarket suppliers purchase
inventory from the Company in order to meet their own specific supply
requirements. Repair and overhaul facilities purchase aftermarket engine
components for their customers' aircraft engines. To date, the Company's sales
to aircraft operators have consisted primarily of sales of whole aircraft
engines. While the Company sold aircraft engines, engine components and airframe
materials to over 500 different customers during 1995, sales of products
representing 21% and

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13% of 1995 net sales were made to Pratt & Whitney and Dallas Aerospace,
respectively. Sales to Dallas Aerospace during 1995 declined as a percentage of
total sales principally due to an increase in the Company's sales volumes and a
20% decline in sales to Dallas Aerospace. In addition, the Company's five
largest customers accounted for 67% and 52% of the Company's net sales during
1994 and 1995, respectively. During the three months ended March 31, 1996, sales
to Pratt & Whitney and Integrated Technology Corp. represented 25% and 13% of
net sales, respectively. Due to the substantial unit price of a whole aircraft
engine and fluctuations in the availability of aircraft engines in the Company's
inventory, certain customers may account for a significant portion of the
Company's revenues from period to period and a significant portion of the
Company's sales are expected to continue to be concentrated in a small number of
customers.

Pratt & Whitney. On June 12, 1995, the Company entered into a Surplus
Parts Supply Agreement (the "Pratt & Whitney Agreement"), which is a three year
agreement which designates the Company as the worldwide sole-source of Pratt &
Whitney's requirements of aftermarket engine components for JT8D aircraft
engines. The Company believes that Pratt & Whitney entered into the Pratt &
Whitney Agreement in order to pursue a strategy of increasing its presence in
the JT8D aftermarket. Pratt & Whitney has established a division to sell
aftermarket JT8D engine components directly to airline operators, overhaul
facilities and other customers of Pratt & Whitney. On April 2, 1996, Pratt &
Whitney announced that it would enter into the aircraft engine maintenance
business with a new facility dedicated to the repair of JT8D aircraft engines
commencing in late 1996. This new 100,000 square foot facility is expected to
have a capacity of repairing 200 JT8D aircraft engines per year. The Pratt &
Whitney Agreement established pricing at specified percentages of the catalog
price for new engine components, subject to adjustment for cycles expended on
life-limited engine components. Payment for materials sold under the Pratt &
Whitney Agreement is on net 120-day terms. The Pratt & Whitney Agreement is
subject to termination by either party on six months' prior written notice or
upon notice of an event of default. See "Risk Factors -- Influence of Pratt &
Whitney."

BACKLOG

The Company's backlog of unfilled orders at March 31, 1996 was
approximately $4.2 million compared to approximately $1.8 million at March 31,
1995. A substantial portion of the Company's backlog is typically scheduled for
delivery within 60 days. Moreover, variations in the size and delivery dates of
orders received by the Company, as well as changes in customers' delivery
requirements, may result in substantial backlog fluctuations from period to
period. Accordingly, the Company believes that backlog cannot be considered a
meaningful indicator of future financial results.

COMPETITION

The aftermarket aviation supply industry is highly fragmented with a small
number of well known companies generating substantial revenues from the supply
of aftermarket aviation material and a large number of small suppliers selling
less than a total of $5 million each in engine components per year. Based upon
the January 1996 issue of the ILS Supplier Directory, there are approximately
2,000 aftermarket suppliers of commercial aviation material in the United
States.

Management believes that the primary competitive factors in the aftermarket
aviation supply business are product quality and traceability, overall customer
service, availability of product, delivery time, quality of customer
relationships, name recognition and price. The aftermarket aviation supply
industry is characterized by intense competition and certain competitors of the
Company have substantially greater name recognition, inventories, complementary
product and service offerings, financial, marketing and other resources than the
Company. As a result, such competitors may be able to respond more quickly to
customer requirements than the Company. Smaller competitors may be in a position
to offer more attractive pricing of engine components as a result of lower labor
costs and other factors. Any expansion of the Company's existing products or
services could expose the Company to new competition. See "Risk
Factors -- Competition."

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FACILITIES

The Company's corporate headquarters occupy a facility containing office,
warehouse and other operational space in Miramar, Florida with an aggregate of
50,000 square feet under a lease with an initial term expiring in December 2000,
extendible until December 2005. The Company's disassembly operations are located
at another facility in the same office park containing 18,500 square feet of
office and warehouse space under a lease with substantially similar terms as the
lease for the Company's corporate headquarters. The second lease may be extended
for an additional term which expires in July, 2005. Rent of $23,700 and $10,050
per month is payable under the leases for the Company's headquarters and
disassembly facilities, respectively. See Note 5 of Notes to Financial
Statements.

In addition, the Company leases certain warehouse and office space which it
no longer occupies under a noncancelable operating lease which expires in April
1997. In June 1995, the Company sublet such space under a noncancelable sublease
agreement which expires in April 1997.

REGULATION

While the operations of the Company currently are not regulated by the FAA,
the Company must consider the requirements of its customers and provide them
with materials which comply with the use of aircraft engines and engine
components in commercial flight operations and the documentation which
demonstrates the airworthiness of such materials. Commercial flight operations
are heavily regulated by the FAA which requires all aircraft engines, engine
components and airframe materials to meet stringent airworthiness standards
established by the FAA and the OEMs. Aircraft operators must maintain logs
concerning the utilization and condition of aircraft engines, life-limited
engine components and airframes. Consequently, the Company offers its customers
data concerning the utilization of the Company's inventory of aircraft engines
and life-limited engine components from the time such equipment was initially
sold by the OEM. The Company reviews maintenance logs of surplus aircraft
engines offered for sale to the Company prior to making a purchase and
integrates the data into the Company's information technology system following
the purchase. The Company can then present such data to new and existing
customers.

In addition, the FAA requires that various maintenance routines be
performed on aircraft engines, certain engine components and airframes at
regular intervals based on cycles or flight time. Engine maintenance must also
be performed upon the occurrence of certain events, such as foreign object
damage in an aircraft engine or the registry of a hot section event (which
generally occurs more frequently in the summer months) or the replacement of
life-limited engine components. Such maintenance usually requires that an
aircraft engine be taken out of service.

On May 11, 1996, ValuJet Flight 592 crashed in the Florida Everglades. As a
result of the crash, the FAA widened its ongoing review of the overall
operations of ValuJet. On June 17, 1996, the FAA announced the voluntary
suspension of ValuJet's operations and articulated a series of changes in the
FAA's inspection policies to enhance its oversight of aircraft operators that
rely on contract maintenance. These measures include the imposition of
requirements: (i) on the FAA's senior inspectors to examine the oversight by
aircraft operators of regulatory compliance with respect to each of their
contract maintenance programs; (ii) on aircraft operators to demonstrate that
each FAA certificated repair facility performing substantial maintenance or
repairs for such aircraft operator performs in accordance with the aircraft
operator's approved maintenance program and that the aircraft operators provide
adequate quality assurance oversight on the work performed by the FAA
certificated repair facilities; (iii) on aircraft operators to list all
outsource maintenance providers in the aircraft operator's operating
specifications; (iv) on aircraft operators to obtain approval of the FAA
inspector prior to adding a new outsource maintenance provider to the aircraft
operator's operating specifications and to perform an audit of the proposed
additional outsource maintenance provider; and (v) on inspectors of FAA
certificated repair facilities to examine whether such facilities are performing
repairs and maintenance in accordance with the programs of their customers. The
effect of such series of changes may be to reduce the overall level of
outsourced maintenance and to reduce the overall volumes of

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<PAGE> 37

particular outsource maintenance providers that are customers of the Company.
See "Risk Factors -- Government Regulations; Effect of Crash of ValuJet Flight
592."

Because the Company's inventory largely consists of older model JT8D
aircraft engines and engine components, the FAA's noise regulations also have a
substantial impact upon the Company. The ability of aircraft operators to
utilize such JT8D aircraft engines in domestic flight operations is
significantly influenced by regulations promulgated by the FAA governing, among
other things, noise emission standards. Pursuant to the Aircraft Noise and
Capacity Act, the FAA has required all aircraft operating in the United States
with a maximum weight of more than 75,000 pounds to meet Stage 2 noise
restriction levels. The FAA has mandated that all such Stage 2 aircraft (such as
the non-hush-kitted Boeing 727-200s, Boeing 737-200s and McDonnell Douglas
DC-9-30/40/50s) must be phased out of operation in the contiguous United States
by December 31, 1999. This ban on operation in the United States of
non-hush-kitted Stage 2 aircraft applies to both domestic and foreign aircraft
operators. The European Union has adopted similar restrictions for the operation
of Stage 2 aircraft within member nations of the European Union subject to a
variety of exemptions. Various communities surrounding the larger European
cities also have adopted more stringent local regulations which restrict the
operation of hush-kitted aircraft in such jurisdictions. See "Risk
Factors -- Dependence on the JT8D Aircraft Engine Aftermarket."

In addition to aircraft noise limits, there are other regulatory
considerations which affect the cost of the continued operation of JT8D-powered
aircraft. Among these are requirements to install traffic alert and collision
avoidance systems and wind shear detection devices, to conduct airframe
structural inspections and modifications and to implement corrosion prevention
and control programs in connection with the FAA's Aging Airplane Program Plan
(the "Aging Airplane Program"). As part of the Aging Airplane Program, the FAA
has identified eleven wide and narrow-bodied aircraft as aging transport
airplanes, which include all of the aircraft types and models powered by JT8D
aircraft engines (that is, Boeing 727-100/200, Boeing 737-100/200 and McDonnell
Douglas DC-9-10/20/30/40/50). The Aging Airplane Program is implemented through
periodic airworthiness directive actions requiring aircraft operators to (i)
perform structural modifications and inspections to address airframe fatigue
problems, and (ii) implement corrosion prevention and control programs. Each of
these programs in the United States, and similar aging aircraft and equipment
upgrade requirements in the European Union and other countries, increase the
operating and maintenance costs of JT8D-powered aircraft. In addition, under the
Aging Airplane Program, each aircraft type is determined to have an operational
limit expressed in terms of total flight hours, landings and pressurization
cycles. As an aircraft approaches its operational limit, additional significant
maintenance actions are required to permit continued operation of the aircraft
and assure the continued airworthiness of the aircraft's principal structural
elements. Furthermore, the EPA and various agencies of the European Union have
sought the adoption of stricter standards limiting the emission of nitrous oxide
from aircraft engines. The Company is not aware of any proposed regulations
promulgated by the FAA to implement any such proposals to increase limitations
on nitrous oxide emissions.

The Company believes that notwithstanding the substantial costs of
hush-kitting and refurbishing older aircraft which are powered by JT8D aircraft
engines, estimated by the Company to average $4 million per aircraft, certain
aircraft operators will continue to utilize the older aircraft due to the
substantially greater cost of acquiring new replacement aircraft.

ENVIRONMENTAL MATTERS

The Company has registered its aircraft engine disassembly facility at
Miramar, Florida with the EPA and the State of Florida Department of
Environmental Protection as a potential small quantity generator of hazardous
materials. Following the disassembly of used aircraft engines, the Company
cleans engine components with a mineral spirits based solvent, resulting in the
generation of certain waste materials which require disposal. An EPA approved
laboratory has reviewed the Company's cleaning operations and determined that
the cleaning solvent and the waste materials generated during the cleaning
operations are non-hazardous substances. The Company is therefore not required
to obtain

35
<PAGE> 38

permits for the generation, handling, storage, transportation or disposal of the
cleaning solvent or the waste materials. The Company intends to institute a new
cleaning system which utilizes a filtering process and reduces the need to use
the cleaning solvents. The Company believes it is in material compliance with
applicable environmental laws and regulations.

INSURANCE

The Company is a named insured under policies which include the following
coverage: (i) products liability, including grounding, up to $100 million
(combined single limit and in the annual aggregate); (ii) personal property,
inventory and business income at the Company's two principal facilities with
blanket coverage up to $10 million; (iii) commercial general liability coverage
up to $5 million (combined single limit and in the aggregate); (iv)
hangarkeepers liability (damages due to loss of aircraft occurring while such
aircraft is in the care, custody or control of the Company for safekeeping,
storage, service or repair) up to $5 million per aircraft or per occurrence; (v)
comprehensive general liability up to $2 million; (vi) employee benefit
liability up to $1 million for each claim and in the aggregate; (vii)
international commercial liability (including contractual liability) for bodily
injury or property damage up to $1 million; (viii) umbrella liability coverage
up to $4 million for each occurrence and in the aggregate; and (ix) various
other activities or items subject to certain limits and deductibles. The Company
believes that these coverages are adequate to insure against the various
liability risks of its business. See "Risk Factors -- Product Liability."

EMPLOYEES

As of March 31, 1996, the Company had 37 full-time employees. None of its
employees are represented by a union. The Company has not experienced any
labor-related work stoppage and considers its relations with employees to be
good.

LEGAL PROCEEDINGS

The Company is not a party to any material legal proceedings.

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<PAGE> 39

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning each of the
executive officers and directors of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
Leon Sragowicz............................ 66 Chairman of the Board
Donald A. Graw............................ 41 President, Chief Executive Officer and Director
Jaime J. Levy............................. 40 Executive Vice President and Director
Bryan Thomas McFarland.................... 42 Vice President -- Technical Operations
Mark S. Koondel........................... 49 Chief Financial Officer and Treasurer
Richard Preston........................... 50 Secretary and Director
Robert Munson............................. 61 Director
</TABLE>

Leon Sragowicz is a co-founder of the Company and has served as its
Chairman of the Board and as a Director since its inception in October 1991. For
more than the past five years, he has been an investor in a significant number
of closely held companies with businesses ranging from the export of
transportation equipment to Latin America to ownership of real estate.

Donald A. Graw joined the Company in January 1994 and has served as its
Chief Executive Officer, President and a member of its Board of Directors since
that time. From February 1991 to November 1993, Mr. Graw served as Vice
President and Chief Operating Officer of Scamp Auto Rental I, Inc., a subsidiary
of Dollar Rent-A-Car System, Inc. with 42 retail locations throughout Florida.
From July 1982 to October 1990, Mr. Graw began as the Chief Financial Officer
and was eventually named the Executive Vice President in February 1989 of
Diversified Services, Inc., a franchisee of Budget Rent-A-Car.

Jaime J. Levy joined the Company in July 1994 and has served as its
Executive Vice President and a member of the Company's Board of Directors since
that time. From February 1991 to July 1994, he served as President of Turbine
Engine Technology Corp., an aircraft engine surplus parts company ("Turbine")
which was acquired by the then stockholders of the Company in July 1994. From
March 1986 to January 1991, he served as Director of Sales and Marketing for BET
Air, Inc., an aviation surplus parts company.

Bryan Thomas McFarland joined the Company in July 1994 in his present
capacity as Vice President -- Technical Operations. From August 1992 to July
1994, he served as Vice President -- Technical Operations of Turbine. Prior
thereto, Mr. McFarland served as the Manager-Quality for International Aircraft
Associates, a customer sales manager for Aerothrust Corp. and a purchasing agent
for Eastern Airlines. He holds an Airframe and Powerplant license issued by the
FAA.

Mark S. Koondel joined the Company in April 1996 in his present capacity as
Chief Financial Officer and Treasurer of the Company. From November 1995 to
April 1996, he served as the Controller of AEC One Stop Group, Inc., a
pre-recorded music distributor. Prior thereto, Mr. Koondel served as Vice
President of Finance of Buenos Aires Embotelladora, S.A., a publicly-traded
Pepsi Cola franchisee, from November 1992 to October 1995. He also served as the
Controller of Florida Coca-Cola Bottling Co., Inc., from January 1985 to
November 1992. Prior thereto, Mr. Koondel worked in public accounting with Main
Hurdman and Coopers & Lybrand for an aggregate of seven years.

Richard Preston is a co-founder of the Company and has served as the
Company's Secretary and a member of its Board of Directors since October 1991
and until April 1996 as its Treasurer. For more than the past 20 years, he has
served as a partner in the public accounting firm of Gerson, Preston & Company,
P.A., Miami, Florida.

Robert Munson joined the Company's Board of Directors in January 1996. From
1992 to the present, Mr. Munson has been an independent consultant to various
companies in the commercial

37
<PAGE> 40

aviation industry. Mr. Munson served 33 years at Pratt & Whitney, and was a Vice
President of Pratt & Whitney during the period from 1980 to 1992.

Directors are elected annually to serve until the next annual meeting of
stockholders and until their successors are elected and qualified. Executive
officers are elected by and serve at the discretion of the Board of Directors.

OTHER KEY PERSONNEL

In addition to the executive officers and directors named above, certain
key personnel also contribute significantly to the management of the Company.

Dallas Cobb joined the Company in July 1995 in his present capacity as
Director of Airframe Material. From February 1980 to July 1995, Mr. Cobb served
in various capacities with BET Air, Inc., including Marketing Manager, Vice
President, General Manager and President. From April 1968 to February 1980, Mr.
Cobb served as Purchasing Agent for Eastern Airlines, Inc.

John Wachter joined the Company in August 1995 in his present capacity as
Director of Powerplant Sales. From March 1993 to August 1995, Mr. Wachter served
as Sr. Account Executive for the AGES Group, L.P., a provider of aircraft,
engine and support services to the aviation industry. From November 1985 to
February 1993, Mr. Wachter served as Sales Account executive for the Airline
Services Division of Ryder System, Inc. He holds an Airframe and Powerplant
license issued by the FAA.

Efrain Salazar joined the Company in January 1994 in his present position
as Director of Finance. From October 1993 to July 1994, Mr. Salazar served as
Director of Finance of Turbine. From March 1991 to July 1993, Mr. Salazar served
as Business Manager for the Latin American Division of Harper Collins Publishing
Co.

Rana Siddabattuni joined the Company in March 1994 in his present capacity
as Quality Control Manager. From December 1992 to January 1994, he served as
Quality Control Manager for International Airline Support Group, Inc., a
provider of aircraft, engine and support services to the aviation industry. From
January 1983 to November 1992, he served as Quality Control Supervisor for the
Airline Services Division of Ryder System, Inc. Mr. Siddabattuni holds an
Airframe and Powerplant license issued by the FAA.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company's Board of Directors has established an Executive Committee, an
Audit Committee and a Compensation Committee. The Executive Committee is
authorized, subject to Florida law, to exercise the power and authority of the
Board in the management of the business and affairs of the Company between
meetings of the full Board of Directors. The members of the Executive Committee
are Messrs. Graw, Levy and Preston.

The Audit Committee is responsible for nominating the Company's independent
auditors for approval by the Board of Directors, reviewing the scope, results
and costs of the audit with the Company's independent auditors, and reviewing
the financial statements and audit practices of the Company. The members of the
Audit Committee are Messrs. Munson and Sragowicz.

The Compensation Committee is responsible for recommending compensation
decisions to the Board of Directors. The Members of the Compensation Committee
are Messrs. Munson and Sragowicz.

COMPENSATION OF DIRECTORS

During 1995, directors did not receive compensation for serving as members
of the Board of Directors. Directors of the Company who are not officers or
employees of the Company ("Non-Employee Directors") will receive an annual fee
of $10,000. Directors are reimbursed for travel and other expenses relating to
attendance at meetings of the Board of Directors or committees.

38
<PAGE> 41

EXECUTIVE COMPENSATION

The following table sets forth a summary of compensation rendered in all
capacities to the Company by the Chief Executive Officer and all other employees
who received aggregate compensation in excess of $100,000 during 1995.

1995 SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION STOCK
----------------------- OPTION OTHER
NAME AND PRINCIPAL POSITION(S) SALARY BONUS AWARD COMPENSATION
- -------------------------------------------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Donald A. Graw.............................. $ 136,000 $1,074,218 -- --
President and Chief Executive Officer
Jaime J. Levy............................... $ 136,000 $1,074,218 -- --
Executive Vice President
Bryan Thomas McFarland...................... $ 80,000 $ 89,000 -- --
Vice President -- Technical Operations
</TABLE>

EMPLOYMENT AGREEMENTS

Effective January 1, 1994, Turbine and the Company entered into employment
agreements (collectively, the "Employment Agreements") with each of Donald A.
Graw and Jaime J. Levy, pursuant to which Turbine and the Company (collectively,
the "Employer") hired Messrs. Graw and Levy as executives of Employer. The
Employment Agreements provided that each of Messrs. Graw and Levy would receive
annual compensation in an amount equal to 20% of the Adjusted Net Income (as
defined therein). Under the Employment Agreements, each of Messrs. Graw and Levy
was entitled to draw $100,000 in 1994 and $130,000 in 1995 in semi-monthly
installments against his annual compensation. Within 90 days after the end of a
year, each of Messrs. Graw and Levy or Employer would pay to the other any
deficit. If the Board of Directors determined that insufficient cash flow was
available to pay the annual compensation, the shortfall in compensation would
accrue to Messrs. Graw and Levy. The Employment Agreements also granted to each
of Messrs. Graw and Levy an option to purchase up to 10% of the Company's
outstanding stock at an option price equal to book value. The respective
Employment Agreements were terminable at will by Employer and upon 90 days'
written notice by Messrs. Graw and Levy. Upon termination for other than cause
(as defined therein), each of Messrs. Graw and Levy was entitled to receive a
month's average draw for each year that the respective Employment Agreements had
been in effect.

Messrs. Graw and Levy and the Company entered into an Amendment No. 1 to
the respective Employment Agreements which amended certain provisions of the
Employment Agreements (each an "Amendment No. 1"). Under each Amendment No. 1,
compensation to each of Messrs. Graw and Levy was reduced as of January 1, 1996
from 20% to 5% of Adjusted Net Income (as defined in the respective Employment
Agreements) and each of Messrs. Graw and Levy was awarded effective December 31,
1995 a non-recurring bonus in the amount of $589,718 to be paid on May 31, 1996.
The option price for the shares remaining to be purchased under the respective
Employment Agreements was amended to be the fair market value of the shares
subject to the option as determined by an appraiser selected by the Company. In
the event that the employment of Messrs. Graw or Levy was terminated for other
than cause, he would be entitled to receive a lump sum severance payment in the
amount of $130,000.

On April 12, 1996, Messrs. Graw and Levy entered into an Amendment No. 2 to
the respective Employment Agreements (each a "Final Employment Agreement") with
the Company, which amended and restated the respective Employment Agreements and
the corresponding Amendments No. 1, and will become effective upon the Offering.
The Final Employment Agreements provide that Messrs. Graw and Levy will receive
an annual base salary of $260,000 and $220,000, respectively, for an initial
term of three years following the Offering, as well as the right to participate
in the Company's

39
<PAGE> 42

Incentive Plan. See "-- Incentive Plan." Under the Final Employment Agreements,
Messrs. Graw and Levy have no entitlement to bonuses or compensation expressed
as a percentage of net income. Upon termination without cause, each Employee
will be entitled to receive two years' annual base salary paid in one lump sum.
Each Final Employment Agreement also entitles each of Messrs. Graw and Levy to
participate in the Company's 1996 Stock Option Plan.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Until April 12, 1996, Donald A. Graw and Jaime J. Levy, executive officers
and directors of the Company were involved in setting executive officer
compensation. On April 12, 1996, the Compensation Committee of the Board,
consisting of Messrs. Sragowicz and Munson, was created. The Compensation
Committee recommends to the Board of Directors compensation decisions for the
Company's executive officers.

1996 STOCK OPTION PLAN

The Company's 1996 Stock Option Plan (the "Option Plan") became effective
on April 15, 1996. As of the date of this Prospectus, no options had been
granted. The purpose of the Option Plan is to attract and retain qualified
personnel, to provide additional incentives to employees, officers and
consultants of the Company and to promote the success of the Company's business.
A reserve of 600,000 shares of the Company's Common Stock has been established
for issuance under the Option Plan. The Option Plan is administered by the
Compensation Committee of the Board of Directors. The Compensation Committee has
complete discretion to determine which eligible individuals are to receive
option grants, the number of shares subject to each such grant, the status of
any granted option as either an incentive stock option or a non-statutory
option, the vesting schedule to be in effect for the option grant and the
maximum term for which any granted option is to remain outstanding.

Each option granted under the Option Plan has a maximum term of ten years,
subject to earlier termination following the optionee's cessation of service
with the Company. Options granted under the Option Plan may be exercised only
for fully vested shares. The exercise price of incentive stock options and
non-statutory stock option granted under the Option Plan must be at least 100%
and 85% of the fair market value of the stock subject to the option on the date
of grant, respectively (or 110% with respect to incentive stock options granted
to holders of more than 10% of the voting power of the Company's outstanding
stock). The Board or, when appointed, such committee has the authority to
determine the fair market value of the stock. The purchase price is payable
immediately upon the exercise of the option. Such payment may be made in cash,
in outstanding shares of Common Stock held by the participant, through a
promissory note payable in installments over a period of years or any
combination of the foregoing.

The Board of Directors may amend or modify the Option Plan at any time,
provided that no such amendment or modification may adversely affect the rights
and obligations of the participants with respect to their outstanding options or
vested shares without their consent. In addition, no amendment of the Option
Plan may, without the approval of the Company's stockholders: (i) modify the
class of individuals eligible for participation; (ii) increase the number of
shares available for issuance, except in the event of certain changes to the
Company's capital structure; or (iii) extend the term of the Option Plan. The
Option Plan will terminate on March 1, 2006, unless sooner terminated by the
Board.

INCENTIVE PLAN

The Company has adopted a Key Executive Annual Incentive Plan ("Incentive
Plan"), pursuant to which key executives of the Company may receive bonus
compensation based on the Company's performance during any fiscal year ending
after the Offering, as determined by the Compensation Committee of the Board of
Directors (the "Committee"). Under the Incentive Plan, the Company's President
and Executive Vice President and other executives designated by the Committee
are assigned a target award expressed as a percentage of base salary in varying
amounts (not to exceed

40
<PAGE> 43

100% of base salary). The actual award is subject to achievement by the Company
of minimum levels of operating income. The Committee has the authority to select
participants other than the President and Executive Vice President, to establish
target awards and to determine final awards in the event that the Company's
operating income is less than the levels established under the Incentive Plan
during any year the Incentive Plan remains in effect.

CERTAIN TRANSACTIONS

PARATI AGREEMENT

On September 5, 1995, the Company entered into an agreement (the "Parati
Agreement") with Parati Corporation, a Florida corporation ("Parati") owned by
Leon Sragowicz, the majority stockholder and the Chairman of the Company,
pursuant to which Parati, among other things, was to purchase surplus aircraft
engines for disassembly. The Company handled all of the operational and
administrative aspects of the agreement and Parati remained the owner of the
engine components from the disassembled aircraft engines purchased by Parati.
Any profit remaining after recovery by Parati of its cost of sales were to be
divided equally by Parati and the Company. The term of the Parati Agreement was
to expire on December 31, 1996. On April 12, 1996, the Company and Parati agreed
to terminate the Parati Agreement effective upon the Offering. At such time,
Parati will sell all of its remaining engine component inventory to the Company
at cost (estimated at $1.0 million).

Management believes that the agreements with Parati are on terms which are
no less favorable to the Company than those which would have been obtained from
independent third parties.

STOCKHOLDER AND EXECUTIVE OFFICER LOANS AND ADVANCES

As of March 31, 1996, the Company had outstanding non-interest bearing
advances from Leon Sragowicz, the Chairman of the Board of the Company, in the
amount of $1,322,479. Mr. Sragowicz has advanced money to the Company on several
occasions for general corporate purposes. Most recently, in December 1995, Mr.
Sragowicz advanced $981,000 to the Company.

As of March 31, 1996, the Company had outstanding non-interest bearing
advances from Richard Preston, a stockholder and a director of the Company, in
the amount of $188,783. Mr. Preston has advanced money to the Company on several
occasions for similar purposes as Mr. Sragowicz.

As of December 31, 1995, the Company had outstanding non-interest bearing
advances from each of Jaime J. Levy, the Executive Vice President and a director
of the Company, and Donald A. Graw, the President, Chief Executive Officer and a
director of the Company, in the amount of $588,839. Such amounts were advanced
to the Company for general corporate purposes. As of December 31, 1995, each of
Messrs. Levy and Graw also had outstanding non-interest bearing indebtedness to
the Company in the amount of $809,638 pursuant to certain promissory notes in
connection with each of their purchases of 500,000 shares of the Company's
Common Stock. Also, as of December 31, 1995, the Company was obligated to pay a
bonus of $589,718 to each of Messrs. Graw and Levy. On December 31, 1995,
$455,808 of the advances to the Company from each of Messrs. Graw and Levy was
offset against the balances due to the Company.

Each of Messrs. Levy and Graw remain obligated to pay to the Company
$353,830 on May 31, 1996. Such loans do not bear interest and may be offset
against a deferred bonus (the expense associated with which was accrued in 1995)
in the amount of $589,718 payable to each of them in cash on May 31, 1996. In
addition the Company remains obligated to each Messrs. Graw and Levy for non-
interest bearing advances in the amount of $133,032 not previously offset.

Furthermore, on April 15, 1996, the Company advanced non-interest bearing
advances to Messrs. Graw and Levy of $107,140 and $100,700, respectively.

41
<PAGE> 44

None of the stockholders, directors or officers of the Company have loaned
any amounts to the Company during 1996.

GUARANTEES

The Current Stockholders of the Company are joint and several guarantors in
connection with the Credit Facility. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

TAX INDEMNIFICATION AGREEMENT

On April 12, 1996, the Company entered into Tax Allocation and
Indemnification Agreements (the "Tax Indemnification Agreements") with each of
the Current Stockholders relating to their respective income tax labilities and
certain related matters. The Tax Indemnification Agreement generally provides
that the Current Stockholders will be indemnified by the Company with respect to
federal and state income taxes (plus interest and penalties) arising due to
taxable income shifted from a C Corporation taxable year to a taxable year in
which the Company was an S Corporation, and that the Company will be indemnified
by the Current Stockholders with respect to federal and state income taxes (plus
interest and penalties) arising due to taxable income shifted from an S
Corporation taxable year to a C Corporation taxable year; provided, however,
that only in the case of the Current Stockholders' obligation to indemnify the
Company, such obligation shall be limited to the tax benefit (if any) derived by
the Current Stockholders due to the shift of taxable income from a taxable year
in which the Company was an S Corporation to a C Corporation taxable year. Any
payment made by the Company to the Current Stockholders pursuant to the Tax
Indemnification Agreement may be considered by the Internal Revenue Service or
the state taxing authorities to be nondeductible by the Company for income tax
purposes.

In addition to the foregoing, the Tax Indemnification Agreements
contractually confirm the Company's obligations to make the Stockholder
Distribution and to satisfy, or to provide for the satisfaction of, certain
related obligations. See "Prior S Corporation Status and Planned Distributions."

Following the Offering, the Company does not intend to enter into any
material transaction with officers or directors, or their family members,
without the approval of a majority of the non-employee directors.

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<PAGE> 45
PRINCIPAL AND SELLING STOCKHOLDERS

As of April 30, 1996, the Company had four holders of record of an
aggregate of 5,000,000 shares of Common Stock. The following table sets forth
certain information with respect to the ownership of Common Stock of the Company
prior to the Offering and as adjusted to give effect to the sale of shares of
Common Stock in the Offering, by (i) each person who is known by the Company to
beneficially own more than 5% of the outstanding Common Stock, (ii) each of the
Company's directors, (iii) each executive officer named in the Summary
Compensation Table and (iv) all directors and officers of the Company as a
group.

<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL
OWNERSHIP OWNERSHIP
PRIOR TO OFFERING AFTER OFFERING
------------------- NUMBER OF SHARES -------------------
NAME NUMBER PERCENT OFFERED HEREBY NUMBER PERCENT
- -------------------------------------- --------- ------- ---------------- --------- -------
<S> <C> <C> <C> <C> <C>
Leon Sragowicz(1)..................... 3,500,000 70.0% 465,000 3,035,000 42.0%
Chairman of the Board
Richard Preston(1).................... 500,000 10.0% 35,000 465,000 6.4%
Director
Donald A. Graw(1)..................... 500,000 10.0% -- 500,000 6.9%
President, Chief Executive Officer,
Director
Jaime J. Levy(1)...................... 500,000 10.0% -- 500,000 6.9%
Executive Vice President, Director
Directors and officers of the Company
as a group (10 persons)............. 5,000,000 100.0% 500,000 4,500,000 62.0%
</TABLE>

- ---------------

(1) The business address of such stockholder for these purposes is c/o
AVTEAM, Inc., 3230 Executive Way, Miramar, Florida 33025.

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<PAGE> 46

DESCRIPTION OF CAPITAL STOCK

The following summary description relating to the Company's capital stock
does not purport to be complete and is qualified in its entirety by reference to
the Company's Amended and Restated Articles of Incorporation (the "Articles")
and Amended and Restated By-Laws (the "By-Laws") which have been filed as
exhibits to the Registration Statement of which this Prospectus is a part.

The Company is authorized to issue 100,000,000 shares of capital stock,
including 80,000,000 shares of Common Stock and 20,000,000 shares of Preferred
Stock, $.01 par value per share (the "Preferred Stock"). Immediately prior to
the Offering, 5,000,000 shares of Common Stock were issued and outstanding. No
shares of Preferred Stock have been issued.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share on all matters
submitted to a vote of stockholders, including the election of directors. Since
the Common Stock does not have cumulative voting rights, the holders of a
majority of the outstanding shares voting for election of directors can elect
all members of the Board. A majority vote is also sufficient for other actions
that require the vote or concurrence of stockholders. See "Principal and Selling
Stockholders." Dividends may be paid to holders of Common Stock when and if
declared by the Board out of funds legally available therefor. See "Dividend
Policy." Holders of Common Stock will be entitled to share ratably in the assets
of the Company legally available for distribution to stockholders in the event
of liquidation or dissolution. The holders of Common Stock have no preemptive or
conversion rights.

Prior to the Offering, there has been no established public trading market
for the Common Stock. See "Risk Factors -- No Prior Public Market; Determination
of Initial Public Offering Price; Volatility of Common Stock Price."

The Company's transfer agent and registrar is American Stock Transfer &
Trust Company.

PREFERRED STOCK

The Board is authorized, without any action of the stockholders, to provide
for the issuance of one or more series of Preferred Stock and to fix the
designation, preferences, powers and relative, participating, optional and other
rights, qualifications, limitations and restrictions thereof, including, without
limitation, the dividend rate, conversion rights, voting rights, redemption
price and liquidation preference per series of Preferred Stock. Any series of
Preferred Stock so issued may rank senior to the Common Stock with respect to
the payment of dividends or amounts upon liquidation, dissolution or winding up.

The Company does not have any shares of Preferred Stock outstanding and the
Board has no present intent to issue Preferred Stock. The ability to issue
Preferred Stock will provide the Company with flexibility in connection with
possible acquisitions and other corporate purposes. Such issuances, however,
could adversely affect the rights of the holders of Common Stock. See "Risk
Factors -- Factors Inhibiting Takeover."

ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF FLORIDA LAW

The Company is subject to (i) the Florida Control Share Act, which
generally provides that shares acquired in excess of thresholds equalling 20%,
33% and more than 50% of a corporation's voting power will not possess any
voting rights unless such voting rights are approved by a majority vote of the
corporation's disinterested stockholders, and (ii) the Florida Fair Price Act
which generally requires approval by disinterested directors or supermajority
approval by stockholders for certain specified transactions between a
corporation and a holder of more than 10% of the outstanding shares of the
corporation (or their affiliates).

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<PAGE> 47
CERTAIN NOTICE AND VOTING PROVISIONS CONTAINED IN THE COMPANY'S ARTICLES OF
INCORPORATION AND BYLAWS

Certain provisions of the Articles and Bylaws of the Company summarized in
the following paragraphs may be deemed to have an anti-takeover effect and may
delay, defer or prevent a tender offer or takeover attempt that a stockholder
might consider in its best interest, including those attempts that might result
in a premium over the market price for the shares held by stockholders.

Special Meeting of Stockholders. The Articles provide that special
meetings of stockholders of the Company may be called only by the Board or upon
the written demand of the holders of not less than fifty percent of all votes
entitled to be cast on any issue proposed to be considered at a special meeting.
This provision will make it more difficult for stockholders to take actions
opposed by the Board and cannot be amended without the approval of less than
2/3 of the outstanding shares entitled to be cast on the issue.

Advance Notice Requirements for Stockholder Proposals and Director
Nominations The Articles provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for election
as directors at an annual meeting of stockholders, must provide timely notice
thereof in writing. To be timely, a stockholder's notice must be delivered to or
mailed and received at the executive offices of the Company not less than 120
days nor more than 180 days prior to the first anniversary of the date of the
Company's notice of annual meeting provided with respect to the previous year's
annual meeting. The Articles also state that no stockholder actions may be taken
by written consent and specify certain requirements for a stockholder's notice
to be in proper written form. These provisions may preclude some stockholders
from bringing matters before the stockholders at an annual meeting or from
making nominations for directors at an annual meeting and cannot be amended
without the approval of less than 2/3 of the outstanding shares entitled to be
cast on the issue.

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<PAGE> 48

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding a total
of 7,250,000 shares of Common Stock (7,456,250 shares if the Underwriters'
over-allotment option is exercised in full). All 2,750,000 of the shares of
Common Stock (3,162,500 shares of Common Stock if the Underwriters'
over-allotment options are exercised in full) sold in the Offering will be
freely transferable by persons other than "affiliates" of the Company without
restriction or registration under the Securities Act of 1933, as amended (the
"Act"), except for shares of Common Stock purchased by "affiliates" of the
Company within the meaning of the rules and regulations under the Act, which may
be sold in the public market in accordance with Rule 144 under the Act ("Rule
144").

The remaining 4,500,000 outstanding shares of Common Stock (4,293,750
shares if the Underwriters' over-allotment option is exercised in full) will be
deemed restricted securities within the meaning of Rule 144 ("Restricted
Shares"). Restricted Shares may not be sold unless they are registered under the
Act or are sold pursuant to an applicable exemption from registration, including
an exemption under Rule 144.

Even if such exemptions are available, the Company and the Current
Stockholders have agreed with the Underwriters not to offer, sell or otherwise
publicly dispose of any shares of Common Stock and the Company has also agreed
with the Underwriters not to offer, sell or otherwise dispose of any other
shares of capital stock for a period of 180 days after the date of this
Prospectus without the prior written consent of Dillon, Read & Co. Inc., except
that the Company may, without such consent, grant options pursuant to stock
option plans and the Current Stockholders may make gifts of such stock to
persons who agree to comply with the lock-up agreements.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including any person who may be deemed an
"affiliate" of the Company, is entitled to sell within any three-month period, a
number of Restricted Shares that does not exceed the greater of one percent of
the then outstanding shares of Common Stock and the average weekly trading
volume in the over-the-counter market during the four calendar weeks preceding
each such sale, provided that at least two years have elapsed since such
Restricted Shares were acquired from the Company or any "affiliate" and certain
manner of sale, notice requirements and requirements as to availability of
current public information about the Company are satisfied. Any person who is
deemed to be an affiliate of the Company must comply with the provisions of Rule
144 (other than the two-year holding period requirement) in order to sell shares
of Common Stock which are not Restricted Shares (such as shares of Common Stock
acquired by "affiliates" in the Offering). In addition, under Rule 144(k), a
person who is not an affiliate of the Company, and who has not been an affiliate
of the Company at any time during the 90-days preceding any sale, is entitled to
sell Restricted Shares without regard to the foregoing limitations, provided
that at least three years have elapsed since the Restricted Shares were acquired
from the Company.

Prior to the Offering, there has been no market for the Common Stock, and
no prediction can be made as to the effect, if any, that public sales of shares
of Common Stock or the availability of shares of Common Stock for sale will have
on the market price prevailing from time to time. Nevertheless, sales of
substantial amounts of Common Stock in the public market, or the perception that
such sales could occur, could adversely affect the market prices.

46
<PAGE> 49

UNDERWRITING

The names of the Underwriters of the shares of Common Stock offered hereby
and the aggregate number of shares which each has severally agreed to purchase
from the Company and the Selling Stockholders, subject to the terms and
conditions specified in the Underwriting Agreement, are as follows:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
------------------------------------------------------------------------- ---------
<S> <C>
Dillon, Read & Co. Inc...................................................
Alex. Brown & Sons Incorporated..........................................

---------
Total.......................................................... 2,750,000
=========
</TABLE>

The Managing Underwriters are Dillon, Read & Co. Inc. and Alex. Brown &
Sons Incorporated.

The Underwriters are committed to purchase all of the shares of Common
Stock offered hereby, if any are so purchased. The Underwriting Agreement
contains certain provisions whereby, if any Underwriter defaults in its
obligation to purchase such shares, and the aggregate obligations of the
Underwriters so defaulting do not exceed ten percent of the shares offered
hereby, some or all of the remaining Underwriters must assume such obligations.

The Underwriters propose to offer the shares of Common Stock directly to
the public initially at the offering price per share set forth on the cover page
of this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow, and such dealers may
re-allow, concessions not in excess of $ per share to certain other
dealers. The offering of the shares is made for delivery when, as and if
accepted by the Underwriters and subject to prior sale and withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares. After the
public offering of the Common Stock, the public offering price and the
concessions may be changed by the Managing Underwriters.

The Company and Mr. Sragowicz have each granted to the Underwriters an
option for 30 days from the date of this Prospectus to purchase up to 206,250
and 206,250 additional shares of Common Stock, respectively, at the initial
public offering price less the underwriting discount set forth on the cover page
of this Prospectus. The Underwriters may exercise such option only to cover
over-allotment of the Common Stock offered hereby. To the extent the
Underwriters exercise this option, each Underwriter will be obligated, subject
to certain conditions, to purchase the number of additional shares of Common
Stock proportionate to such Underwriter's initial commitment.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities under the Securities Act, or to
contribute to payments the Underwriters may be required to make in respect
thereof.

The Company and the Selling Stockholders have agreed, subject to certain
exceptions, that they will not offer, sell, contract to sell, transfer or
otherwise encumber or dispose of any shares of Common Stock, or securities
convertible into or exchangeable for Common Stock, for a period of 180 days from
the date of this Prospectus, without the prior written consent of Dillon, Read &
Co. Inc.

47
<PAGE> 50

Prior to the Offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price for the Common Stock has
been determined by negotiation among the Company, the Selling Stockholders and
the Managing Underwriters. Factors considered in determining the initial public
offering price were prevailing market conditions, the state of the Company's
development, recent financial results of the Company, the future prospects of
the Company and its industry, market valuations of securities of companies
engaged in activities deemed by the Managing Underwriters to be similar to those
of the Company and other factors deemed relevant.

The Underwriters do not intend to confirm sales to accounts over which they
exercise discretionary authority.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Baker & McKenzie. Certain legal matters will be passed upon for the
Underwriters by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.,
Miami, Florida.

EXPERTS

The financial statements of the Company at December 31, 1994 and 1995, and
for each of the three years in the period ended December 31, 1995, appearing in
this Prospectus and Registration Statement, have been audited by Ernst & Young
LLP, independent certified public accountants, as set forth in their report
thereon appearing elsewhere herein and in the Registration Statement, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (together with all amendments
and exhibits thereto, the "Registration Statement") under the Securities Act
with respect to the shares of Common Stock offered by this Prospectus. This
Prospectus, which constitutes part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain parts of which have been omitted as
permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the shares of Common Stock offered
hereby, reference is hereby made to such Registration Statement, including the
exhibits and schedules thereto. Statements contained in this Prospectus as to
the contents of any contract, agreement or other document referred to herein are
not necessarily complete and, where such contract, agreement or other document
is an exhibit to the Registration Statement, reference is made to such exhibit
for a complete description of the matter involved, and each such statement is
qualified in all respects by the provisions of such exhibit. Copies of the
Registration Statement, including the exhibits and schedules thereto, may be
inspected without charge at the public reference facilities maintained by the
Securities and Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, or obtained from the Commission upon payment of the fees
prescribed by the Commission. The Registration Statement may also be obtained
through the Commission's Internet address at "http://www.sec.gov."

48
<PAGE> 51

AVTEAM, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Certified Public Accountants.................................... F-2
Balance Sheets........................................................................ F-3
Statement of Operations............................................................... F-4
Statement of Changes in Stockholders' Equity.......................................... F-5
Statement of Cash Flows............................................................... F-6
Notes to Financial Statements......................................................... F-7
Report of Independent Certified Public Accountants Concerning Turbine's Financial
Statements.......................................................................... F-14
Statement of Operations of Turbine.................................................... F-15
Statement of Cash Flow of Turbine..................................................... F-16
Notes to Financial Statements of Turbine.............................................. F-17
</TABLE>

F-1
<PAGE> 52

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
AVTEAM, Inc.

We have audited the accompanying balance sheets of AVTEAM, Inc. (the
"Company") as of December 31, 1995 and 1994, and the related statements of
operations, stockholders' equity, and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of AVTEAM, Inc. at December 31,
1995 and 1994, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.

ERNST & YOUNG LLP

Miami, Florida
January 30, 1996, except for the first paragraph
of Note 13 as to which the date is March 21, 1996
and the second, third and fourth paragraphs of
Note 13 as to which the date is April 12, 1996

F-2
<PAGE> 53
AVTEAM, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
EQUITY AT
DECEMBER 31 MARCH 31
------------------------ MARCH 31 1996
1994 1995 1996 (NOTE 2)
---------- ----------- ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash..................................... $ 751,357 $ -- $ 546,774
Trade accounts receivable, less allowance
for doubtful accounts of $52,500 and
$114,000, and allowance for sales
returns of $161,767 and $669,458, in
1994 and 1995, respectively........... 2,694,429 4,661,567 5,460,535
Inventory................................ 2,770,897 8,562,679 9,878,357
Prepaid expenses......................... 21,303 184,782 466,817
---------- ----------- -----------
Total current assets............. 6,237,986 13,409,028 16,352,483
Property and equipment, net................ 142,700 298,367 307,881
Deposits and other assets.................. 57,823 86,119 110,037
---------- ----------- -----------
$6,438,509 $13,793,514 $16,770,401
========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to bank.................... $ 350,000 $ 3,155,811 $ 4,917,756
Accounts payable......................... 1,739,823 4,448,716 3,134,556
Accrued expenses......................... 124,840 487,214 938,223
Current portion of capital lease
obligations........................... -- 47,623 49,235
Due to stockholders and affiliates....... 1,589,830 2,956,760 3,687,918
---------- ----------- -----------
Total current liabilities........ 3,804,493 11,096,124 12,727,688
Capital lease obligations, net of current
portion.................................. -- 83,422 70,495
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value,
20,000,000 shares authorized, no
shares issued or outstanding.......... -- -- -- $ --
Common stock, $.01 par value, 80,000,000
shares authorized, 4,000,000 issued
and outstanding in 1994, 5,000,000
shares issued and outstanding in 1995
and 1996.............................. 40,000 50,000 50,000 50,000
Additional paid-in capital............... 2,594,016 3,271,629 3,271,629 2,829,879
Retained earnings........................ -- -- 1,358,250 --
Notes receivable from officers........... -- (707,661) (707,661) (707,661)
---------- ----------- ----------- ------------
Total stockholders' equity....... 2,634,016 2,613,968 3,972,218 $ 2,172,218
---------- ----------- -----------
$6,438,509 $13,793,514 $16,770,401
========== =========== ===========
</TABLE>

See accompanying notes.

F-3
<PAGE> 54

AVTEAM, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31 MARCH 31
------------------------------------- -----------------------
1993 1994 1995 1995 1996
---------- ---------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales....................... $3,890,985 $9,061,785 $18,298,849 $3,757,924 $7,843,517
Cost of sales................... 3,489,042 6,372,615 11,848,217 2,308,789 5,344,020
---------- ---------- ----------- ---------- ----------
401,943 2,689,170 6,450,632 1,449,135 2,499,497
Operating expenses:
Selling, general, and
administrative............. 588,256 1,081,213 2,601,249 501,564 841,127
Officers' compensation........ -- 859,830 2,560,435 277,250 161,693
---------- ---------- ----------- ---------- ----------
588,256 1,941,043 5,161,684 778,814 1,002,820
---------- ---------- ----------- ---------- ----------
Income (loss) from operations... (186,313) 748,127 1,288,948 670,321 1,496,677
Interest (expense) income,
net........................... (13,800) 5,719 (190,611) (2,879) (138,427)
---------- ---------- ----------- ---------- ----------
(Loss) income before
extraordinary item............ (200,113) 753,846 1,098,337 667,442 1,358,250
Extraordinary item -- gain on
extinguishment of debt due to
related party................. 150,000 -- -- -- --
---------- ---------- ----------- ---------- ----------
Net income (loss)............... $ (50,113) $ 753,846 $ 1,098,337 $ 667,442 $1,358,250
========== ========== =========== ========== ==========
UNAUDITED PRO FORMA INFORMATION
Income before income taxes...... $ 1,098,337 $ 667,442 $1,358,250
Pro forma decrease (increase) in
compensation expense.......... 1,442,435 (2,250) (117,807)
----------- ---------- ----------
Pro forma income before income
taxes......................... 2,540,772 665,192 1,240,443
Pro forma (credit) provision for
income taxes:
Current....................... 1,586,522 282,194 428,714
Deferred...................... (627,072) (31,043) 39,218
----------- ---------- ----------
959,450 251,151 467,932
----------- ---------- ----------
Pro forma net income............ $ 1,581,322 $ 414,041 $ 772,511
=========== ========== ==========
Pro forma net income per common
share......................... $ .33 $ .09 $ .15
=========== ========== ==========
Weighted average number of
common shares outstanding..... 4,861,543 4,861,543 5,000,000
=========== ========== ==========
</TABLE>

See accompanying notes.

F-4
<PAGE> 55

AVTEAM, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
RETAINED
COMMON ADDITIONAL EARNINGS NOTES
STOCK PAID-IN (ACCUMULATED RECEIVABLE
SHARES AMOUNT CAPITAL DEFICIT) FROM OFFICERS TOTAL
--------- ------- ---------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993...... 4,000,000 $40,000 $ (39,000) $ 9,083 $ -- $ 10,083
Net loss...................... -- -- -- (50,113) -- (50,113)
--------- ------- ---------- ------------ ------------- ----------
Balance at December 31, 1993.... 4,000,000 40,000 (39,000) (41,030) -- (40,030)
Stockholder advances
contributed to capital...... -- -- 3,040,200 -- -- 3,040,200
Net income.................... -- -- -- 753,846 -- 753,846
Distributions................. -- -- (407,184) (712,816) -- (1,120,000)
--------- ------- ---------- ------------ ------------- ----------
Balance at December 31, 1994.... 4,000,000 40,000 2,594,016 -- -- 2,634,016
Shares issued in connection
with stock option plan...... 1,000,000 10,000 1,609,276 -- (707,661) 911,615
Net income.................... -- -- -- 1,098,337 -- 1,098,337
Distributions................. -- -- (931,663) (1,098,337) -- (2,030,000)
--------- ------- ---------- ------------ ------------- ----------
Balance at December 31, 1995.... 5,000,000 50,000 3,271,629 -- (707,661) 2,613,968
Net income.................... -- -- -- 1,358,250 -- 1,358,250
--------- ------- ---------- ------------ ------------- ----------
Balance at March 31, 1996
(unaudited)................... 5,000,000 $50,000 $3,271,629 $1,358,250 $(707,661) $3,972,218
========== ======== =========== ============= ============ ===========
</TABLE>

See accompanying notes.

F-5
<PAGE> 56

AVTEAM, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------ -------------------------
1993 1994 1995 1995 1996
-------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss).................................... $(50,113) $ 753,846 $ 1,098,337 $ 667,442 $ 1,358,250
Adjustments to reconcile net income (loss) to net
cash (used in) provided by operating activities:
Depreciation and amortization...................... -- 31,244 100,750 14,639 34,962
Bad debt expense................................... -- 69,065 145,177 -- --
Gain on extinguishment of debt due to related
party............................................ (150,000) -- -- -- --
Changes in operating assets and liabilities net of
effects from purchase of Turbine:
Trade accounts receivable........................ (185,151) (2,345,827) (2,112,315) (15,360) (798,968)
Inventory........................................ 381,741 746,768 (5,791,782) (1,271,348) (1,315,678)
Prepaid expenses................................. -- (12,126) (163,479) (65,514) (282,035)
Deposits and other assets........................ -- (39,991) (28,296) -- (23,918)
Accounts payable................................. (133,390) 1,591,302 2,708,893 132,872 (1,314,160)
Accrued expenses................................. -- 124,840 362,374 (84,584) 451,009
Due to stockholders and affiliates............... -- 589,830 746,605 98,699 731,158
-------- ----------- ----------- ----------- -----------
Net cash (used in) provided by operating
activities......................................... (136,913) 1,508,951 (2,933,736) (523,154) (1,159,380)
INVESTING ACTIVITY
Purchases of property and equipment.................. -- (7,792) (103,350) (12,266) (44,476)
-------- ----------- ----------- ----------- -----------
Net cash used in investing activity.................. -- (7,792) (103,350) (12,266) (44,476)
FINANCING ACTIVITIES
Payments on note payable to related party............ -- (1,000,000) -- -- --
Payments on capital leases........................... -- -- (22,022) -- (11,315)
Net proceeds from (payments on) notes payable........ -- 350,000 (350,000) -- --
Net proceeds from short-term line of credit.......... -- -- 3,155,811 -- 1,761,945
Advances from stockholders........................... 660,000 1,467,000 4,202,494 1,377,505 --
Payments of stockholders' advances................... (512,000) (467,000) (2,670,554) (1,481,545) --
Distributions........................................ -- (1,120,000) (2,030,000) (30,000) --
-------- ----------- ----------- ----------- -----------
Net cash provided by (used in) financing
activities......................................... 148,000 (770,000) 2,285,729 (134,040) 1,750,630
-------- ----------- ----------- ----------- -----------
Net (decrease) increase in cash...................... 11,087 731,159 (751,357) (669,460) 546,774
Cash at beginning of period.......................... 9,111 20,198 751,357 751,357 --
-------- ----------- ----------- ----------- -----------
Cash at end of period................................ $ 20,198 $ 751,357 $ -- $ 81,897 $ 546,774
======== =========== =========== =========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid........................................ $ -- $ 845 $ 145,451 $ 8,541 $ 167,742
======== =========== =========== =========== ===========
SCHEDULE OF NONCASH FINANCING AND INVESTING
ACTIVITIES
Transfer of assets from consignee as repayment of
receivable:
Inventory.......................................... $ -- $ 213,907 $ -- $ -- $ --
Property and equipment............................. -- 166,152 -- -- --
Prepaid expenses................................... -- 9,177 -- -- --
Deposits and other assets.......................... -- 17,832 -- -- --
-------- ----------- ----------- ----------- -----------
$ -- $ 407,068 $ -- $ -- $ --
======== =========== =========== =========== ===========
Notes receivable from officers offset against amounts
due to stockholders................................ $ -- $ -- $ 911,615 $ -- $ --
======== =========== =========== =========== ===========
Stockholder advances contributed to capital.......... $ -- $ 3,040,200 $ -- $ -- $ --
======== =========== =========== =========== ===========
Office furniture and equipment acquired under capital
leases............................................. $ -- $ -- $ 153,067 $ -- $ --
======== =========== =========== =========== ===========
</TABLE>

See accompanying notes.

F-6
<PAGE> 57

AVTEAM, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

(Information pertaining to the three months ended
March 31, 1995 and 1996 is unaudited)

1. BUSINESS

AVTEAM, Inc., formerly known as Interstar Trading Corporation, (the
"Company") was incorporated in Florida in 1992. The Company is a value-added
reseller of aftermarket aircraft engines, engine components and airframe
material to other suppliers, aircraft maintenance providers, airlines and
others.

Prior to July 21, 1994, pursuant to a consignment agreement with Turbine
Engine Sales Group, Inc. ("Turbine"), Turbine disassembled engines purchased by
the Company and warehoused, managed and sold the components in exchange for a
commission equal to 50% of the gross profit on the components sold. On July 21,
1994, the Company's stockholders acquired all of the capital stock of Turbine
and the consignment agreement was terminated.

On June 12, 1995, the Company entered into a three year surplus parts
supply agreement (the "Supply Agreement") with the Pratt & Whitney division of
United Technologies Corporation ("Pratt & Whitney"). Under the terms of the
Supply Agreement, the Company became the worldwide sole-source supplier to Pratt
& Whitney of components for a specific line of aircraft engines. Also on July
21, 1994, in a purchase transaction, the Company forgave $407,068 due from
Turbine in exchange for substantially all of Turbine's assets consisting of
inventory ($213,907); property and equipment ($166,152); prepaid expenses
($9,177); and deposits and other assets ($17,832), at net book value, which
approximated fair market value. Turbine was subsequently dissolved. Turbine's
results of operations are included in the accompanying statement of operations
beginning July 22, 1994. Pro forma results of operations are not materially
different from reported results.

2. SIGNIFICANT ACCOUNTING POLICIES

INVENTORY

Inventory of aircraft engines is stated at the lower of specific cost
(including overhaul costs) or market. Initially, cost of sales of engine
components from disassembled engines are recognized based on margins realized
from recently sold, similar groups of engine components. Once the remaining
components have been fully inspected and their condition is determined, the cost
of subsequent sales of engine components from that engine are determined using
the relationship of costs and anticipated overhaul costs from that engine to
estimated sales. Cost of sales for individual components purchased for resale
are reflected based on the specific identification method.

REVENUE RECOGNITION

Sales are recognized when aircraft engines, engine components and airframe
materials are shipped or a service is performed.

The Company enters into consignment arrangements in which it warehouses
items, determines sales prices, arranges for shipment to customers, and collects
accounts receivable. The Company reflects sales under such arrangements in net
sales and the cost of such sales in cost of sales, since the Company bears the
risk of ownership once the items are sold.

WARRANTIES AND PRODUCT RETURNS

The Company does not provide service warranties in addition to those
provided by overhaul facilities and as a result does not record accruals for
warranties. The Company has established

F-7
<PAGE> 58

AVTEAM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

programs which, under specific conditions, enable its customers to return
inventory. The effect of these returns is estimated based on a percentage of
sales and historical experience and sales are recorded net of a provision for
estimated returns.

PROPERTY AND EQUIPMENT

Property and equipment (including assets under capital leases) is carried at
cost and is depreciated using accelerated methods over the estimated useful
lives of the assets. The lives used are as follows:

<TABLE>
<S> <C>
Office furniture and equipment............................................ 3-7 years
Warehouse and transport equipment......................................... 5-7 years
Leasehold improvements.................................................... 5 years
</TABLE>

CONCENTRATION OF CREDIT RISK

Accounts receivable are primarily from domestic and foreign passenger
airlines, freight and package carriers, charter airlines, aircraft leasing
companies and service providers to such companies. The Company performs ongoing
evaluations of its trade accounts receivable customers, monitors its exposure
for credit losses and sales returns and does not require collateral.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
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.

INCOME TAXES

PRO FORMA BALANCE SHEET INFORMATION

Pro forma stockholders' equity reflects a planned distribution of
approximately $1,800,000 based on undistributed S Corporation earnings allocable
to the period from January 1, 1996 through March 31, 1996.

PRO FORMA STATEMENT OF OPERATIONS INFORMATION

Pro forma income before income taxes reflects adjustments for the change in
compensation levels arising from the employment agreements with current
stockholders which will become effective as of the completion of the proposed
offering of common stock (see Note 13).

PRO FORMA NET INCOME PER SHARE

In conjunction with the closing of the proposed public offering of its
common stock, the Company will terminate its status as an S corporation. Pro
forma net income reflects adjustments for income taxes which would have been
recorded if the Company had not been an S corporation (see Note 11).

Pro forma net income per share is calculated using the weighted average
number of common shares outstanding during the respective periods. Pursuant to
the requirements of the Securities and

F-8
<PAGE> 59
AVTEAM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Exchange Commission, common shares and common equivalent shares issued at prices
below the estimated public offering price during the 12 months immediately
preceding the date of the initial filing of the registration statement have been
included in the calculation of common shares, using the treasury stock method,
as if they were outstanding for all periods presented.

INTERIM FINANCIAL DATA

In the opinion of the management of the Company, the accompanying unaudited
financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position of the
Company as of March 31, 1996, and the results of operations for the three months
ended March 31, 1995 and 1996.

3. ACCOUNTS RECEIVABLE

On November 8, 1995, the Company entered into a Limited Recourse Receivable
Discount Facility Agreement with a bank (the "Agreement") under which the bank
agreed to purchase certain trade receivables older than 30 days, with a maximum
maturity of 100 days, for the principal amount of the trade receivables less a
discount rate of LIBOR plus 1/4% (5.88% at December 31, 1995). The Agreement
provides that the aggregate principal amount of uncollected purchased
receivables can not exceed $10,000,000 at any one time, provides for the
purchase of a maximum of $60,000,000 of receivables over the term of the
agreement and includes certain recourse provisions related to returned inventory
only. The Agreement expires on November 1, 1996 or earlier upon notice by the
Company.

In 1995, the Company sold trade receivables under the Agreement with a
carrying amount of $713,910 for $704,090. During the three month period ended
March 31, 1996, the Company sold trade receivables under the Agreement with a
carrying amount of $3,129,612 for $3,086,577.

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 1996
1994 1995 (UNAUDITED)
-------- --------- ----------
<S> <C> <C> <C>
Office furniture and equipment..................... $ 60,720 $ 183,799 $ 196,748
Warehouse and transport equipment.................. 82,656 209,200 237,232
Leasehold improvements............................. 27,405 34,199 37,694
-------- --------- ----------
170,781 427,198 471,674
Less accumulated depreciation and amortization..... (28,081) (128,831) (163,793)
-------- --------- ----------
$142,700 $ 298,367 $ 307,881
======== ========= =========
</TABLE>

5. LEASES

On April 1, 1995, the Company entered into a lease agreement for new
warehouse and office space under an operating lease which expires on June 30,
2000. In addition, effective January 1, 1996, the Company signed a lease
agreement for additional warehouse and office space under an operating lease

F-9
<PAGE> 60

AVTEAM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

which expires on December 31, 2000. Future minimum lease payments by year and in
the aggregate under operating leases are as follows:

Rent expense for the years ended December 31, 1994, and 1995 and the three
month period ended March 31,1996 was $35,000, $266,000 and $99,000 respectively.

During 1995, the Company entered into various capital leases for office
furniture, computer equipment, and warehouse and transportation equipment
expiring in various years through 1999. Equipment under capitalized lease
obligations had an original cost of $153,067 and at December 31, 1995
accumulated amortization was $25,894.

Future minimum lease payments by year and in the aggregate under these
capital leases were as follows at December 31, 1995:

<TABLE>
<S> <C>
1996...................................................................... $ 61,450
1997...................................................................... 55,845
1998...................................................................... 31,015
1999...................................................................... 5,960
--------
Total minimum lease payments.................................... 154,270
Less amounts representing interest at 13.5%............................... (23,225)
--------
Present value of net minimum lease payments under capital leases
(including current portion of $47,623)......................... $131,045
========
</TABLE>

6. RELATED PARTY TRANSACTIONS

On September 5, 1995, the Company entered into an agreement (the "Parati
Agreement") with Parati, Inc. ("Parati"), a corporation wholly-owned by the
Chairman of the Board of the Company, which provides that Parati will purchase
up to $10 million of certain aftermarket engines and up to $40 million of new
engines and that the Company will oversee, disassemble and handle all of the
operational and administrative aspects related to such engines. The Parati
Agreement further provides that all proceeds from the sale of engines or
components will be divided equally between Parati and the Company after payment
to Parati of amounts equal to Parati's investment in such engines less overhaul
costs incurred by the Company on behalf of Parati. Overhaul costs are incurred
on a component basis and are not incurred until a customer is interested in
purchasing a component upon its overhaul. The Company is reimbursed for overhaul
costs through a reduction of the Company's payable to Parati regardless of
whether such components have been sold. In 1995 and the three month period ended
March 31, 1996, the Company recorded sales under this agreement of $223,600 and
$725,838 with a net profit of $44,720 and $97,035, respectively. At December 31,
1995 and March 31, 1996, accounts payable included $168,800 and $725,838,
respectively, due to Parati. As of March 31, 1996, the cost of the engines owned
by Parati totaled $1,111,578. See Note 13.

The Company purchased accounting services totaling $38,000 for each of the
three years ending December 31, 1993, 1994 and 1995 from a firm that is owned in
part by a stockholder of the Company.

F-10
<PAGE> 61

AVTEAM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Management believes that compensation received from or paid to related
parties under the Parati Agreement and in connection with purchased accounting
services, described above, materially approximate those which would have been
received from or paid to non-affiliated third parties.

In 1994, the Company paid an outstanding note payable to a non stockholder
related party of $1,000,000. Unpaid interest of $150,000 related to this note
was forgiven in 1993 and is included in the statement of operations as
extraordinary gain on extinguishment of debt due to related party.

At December 31, 1994 and 1995 and March 31, 1996, due to stockholders and
affiliates represents the outstanding balance of non-interest bearing advances,
with no fixed or determinable due dates, from the stockholders of $1,000,000,
$1,620,324 and $1,620,324, accrued bonuses payable to officer's (see Note 8) of
$589,830, $1,336,436 and $1,411,670, respectively, and $655,924 due to Parati at
March 31, 1996.

7. NOTES PAYABLE

On December 20, 1994, the Company executed a note payable to a bank in the
amount of $350,000, bearing interest at prime plus 1%, which was paid in full in
1995. The note was collateralized by substantially all of the assets of the
Company.

On May 12, 1995, the Company executed a revolving line of credit agreement
with a bank. This line of credit was amended on September 29, 1995 to increase
the borrowing base as a result of the supply agreement with Pratt & Whitney and
to continue the term of the agreement until all indebtedness has been paid in
full and the parties terminate the agreement in writing. The available borrowing
base is generally based upon 75% to 85% of eligible accounts receivable
(depending on age of accounts receivable and the Company's net worth) and 25% to
50% of eligible inventory (depending on age of inventory), up to the maximum
borrowing facility of $6,000,000. Principal payments are made upon collection of
accounts receivable, which are primarily due within 30 days, and interest is
payable monthly at prime plus 3/4% (9.5% at December 31, 1995). The loan is
guaranteed by the stockholders and is secured by substantially all of the assets
of the Company. At December 31, 1995 and March 31, 1996, $2,561,000, and
$1,082,000 was available under this revolving line of credit agreement,
respectively.

8. EMPLOYMENT AGREEMENTS

Effective January 1, 1994, the Company entered into employment agreements
with two key employees which were amended on December 31, 1995, as described in
the following paragraph. Under the terms of the original agreements, each
employee received through December 31, 1995 compensation equal to 20% of
Adjusted Net Income, as defined. Additionally, each of these key employees were
granted options to purchase shares equivalent to up to 10% of the Company's
outstanding common shares at a price equal to the Company's book value on the
last day of the month subsequent to the exercise of such options. On January 1,
1995, 33% of the options were exercised in exchange for noninterest bearing
notes receivable from the officers totaling $259,097.

On December 31, 1995, the employment agreements' terms were amended to (1)
reduce, effective January 1, 1996, the amount of Adjusted Net Income each of
these two officers may receive as compensation from 20% to 5% effective January
1, 1996; (2) to pay an additional, one time, bonus of $1,179,435 to these
officers on December 31, 1995 and (3) to change the exercise price of the
unexercised options to the fair market value of the Company's common stock as of
the exercise date (see Note 13). The employees exercised their remaining options
on December 31, 1995 in return for noninterest bearing notes receivable from the
officers payable on demand at any time after May 31, 1996, totaling $1,360,179.
On the same day, $911,615 of these notes from officers were offset against
amounts due to the officers for the December 31, 1995 bonus, discussed above.

F-11
<PAGE> 62
AVTEAM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

9. SIGNIFICANT CUSTOMERS

Pratt & Whitney accounted for 25% and 21% of the Company's sales for the
three month period ended March 31, 1996 and the year ended December 31, 1995,
respectively. Accounts receivable from Pratt & Whitney accounted for 16% and 28%
of total accounts receivable at March 31, 1996 and December 31, 1995,
respectively.

Dallas Aerospace accounted for 13% and 32% of sales for the years ended
December 31, 1995 and 1994, respectively and 24% and 42% of total accounts
receivable at December 31, 1995 and 1994, respectively.

A third customer accounted for 13% of total sales for the three month
period ended March 31, 1996 and 23% of total accounts receivable at March 31,
1996.

10. CONSIGNMENT SALES

The Company has an agreement with an airline to sell certain consigned
inventory. Net sales include $732,501 and $2,032,002 in 1994 and 1995,
respectively, related to this agreement.

11. PRO FORMA INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's pro forma deferred tax assets as of December 31, 1994 and 1995 are
as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------ MARCH 31,
1994 1995 1996
------- -------- ---------
<S> <C> <C> <C>
Allowance for doubtful accounts....................... $19,755 $ 42,898 $ 42,898
Allowance for sales returns........................... 60,876 157,583 118,364
Depreciation.......................................... 2,797 7,117 7,117
Accrued compensation.................................. -- 502,900 502,900
------- -------- ---------
$83,428 $710,498 $ 671,279
======= ======== ========
</TABLE>

The unaudited pro forma income tax provision (credit) differs from the
amounts computed by applying the federal statutory rate of 34% to income (loss)
before income taxes as follows:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
<S> <C> <C>
Tax at federal statutory rate.................... 34.00% 34.00%
State income taxes, net of federal benefit....... 3.63 3.63
Permanent differences............................ .13 .09
------------ ------------
37.76% 37.72%
============= ===========
</TABLE>

Immediately prior to the Company's anticipated initial public offering of
its common stock, the Company plans to declare a cash distribution to the
stockholders. The distribution, which will be paid within seven months of
declaration, will be determined based on the Company's accumulated adjustment
account, as defined in the Internal Revenue Code, calculated through the date of
termination of the Company's S corporation status.

F-12
<PAGE> 63

AVTEAM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

12. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash, accounts receivable and short-term borrowings
in the accompanying financial statements approximate their fair value because of
the short-term maturity of these instruments, and in the case of notes payable
because such instruments bear variable interest rates which approximate market.

13. SUBSEQUENT EVENTS

On March 21, 1996, the Company amended and restated its Articles of
Incorporation pursuant to which each $1 par value outstanding share of common
stock was converted to 4,000 shares of common stock at a per share par value of
$.01. In addition, the Company authorized 20,000,000 shares of $.01 per share
par value preferred stock and increased the number of authorized common stock to
80,000,000 shares. All references in the financial statements to number of
shares, per share amounts and market prices, of the Company's common stock have
been retroactively restated to reflect the effect of the stock conversion and
the newly authorized preferred and common stock.

On April 12, 1996, the employment agreements described in Note 8 were
further amended to provide that the two key employees will receive annual base
salaries of $260,000 and $220,000, respectively, plus annual bonuses of up to
100% of their base salaries, for an initial term of three years, which will
become effective upon the completion of the Company's proposed offering of
common stock.

On April 12, 1996, the Company entered into an agreement with Parati
providing for the Company's purchase of all components of the engines owned by
Parati which remain unsold upon the effectiveness of a public offering, at
Parati's cost payable in cash 30 days after the effective date of the offering,
and for the termination of the Parati Agreement at such time.

On April 12, 1996, the Company adopted the 1996 Stock Option Plan (the
"Option Plan") which allows a maximum of 600,000 shares of the Company's Common
Stock to be available to provide incentives to employees, officers and
consultants of the Company. The exercise price of incentive stock options and
non-statutory stock options are to be determined by the Compensation Committee
of the Board of Directors but will be at least 100% and 85% of the fair market
value of the stock subject to the option on the date of grant, respectively (or
110% with respect to incentive stock options granted to holders of more than 10%
of the voting power of the Company's outstanding stock). As of April 12, 1996,
no options have been issued under the Option Plan.

14. GEOGRAPHIC AREA INFORMATION

The Company had export sales for the year ended December 31, 1995 and the
three month period ended March 31, 1996 of approximately $2,422,000 and
$114,000, respectively, primarily to customers in Latin America.

F-13
<PAGE> 64

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
AVTEAM, Inc.

We have audited the accompanying statements of operations and cash flows of
Turbine Engine Sales Group, Inc. ("Turbine") for the year ended December 31,
1993 and the period from January 1, 1994 through July 21, 1994. These financial
statements are the responsibility of Turbine's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the result of operations and cash flows of Turbine
Engine Sales Group, Inc. for the year ended December 31, 1993 and the period
from January 1, 1994 through July 21, 1994, in conformity with generally
accepted accounting principles.

ERNST & YOUNG LLP

Miami, Florida
January 30, 1996

F-14
<PAGE> 65

TURBINE ENGINE SALES GROUP, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1,
YEAR ENDED 1994 THROUGH
DECEMBER 31, JULY 21,
1993 1994
------------ ------------
<S> <C> <C>
Net sales........................................................... $2,147,332 $845,966
Cost of sales....................................................... 2,417,510 574,428
------------ ------------
(270,178) 271,538
Commission revenues................................................. 558,887 479,738
------------ ------------
288,709 751,276
Operating expenses:
Selling, general, and administrative.............................. 933,087 664,575
Officers' compensation............................................ 134,800 84,000
------------ ------------
1,067,887 748,575
------------ ------------
Income (loss) from operations....................................... (779,178) 2,701
Interest expense, net............................................... (63,579) (29,001)
------------ ------------
Net loss............................................................ $ (842,757) $(26,300)
========== ==========
</TABLE>

See accompanying notes.

F-15
<PAGE> 66

TURBINE ENGINE SALES GROUP, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1,
YEAR ENDED 1994 THROUGH
DECEMBER 31, JULY 21,
1993 1994
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss............................................................ $ (842,757) $ (26,300)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization..................................... 39,642 22,545
Bad debt expense (recovery)....................................... 26,904 (1,222)
Changes in operating assets and liabilities:
Trade accounts receivable...................................... 197,282 (489,210)
Inventory...................................................... 151,445 204,607
Prepaid expenses............................................... 32,234 7,565
Accounts payable............................................... 570,509 311,462
Accrued expenses............................................... 13,156 1,950
------------ ------------
Net cash provided by operating activities........................... 188,415 31,397
INVESTING ACTIVITY
Purchases of property and equipment................................. (21,629) (18,391)
------------ ------------
Net cash used in investing activity................................. (21,629) (18,391)
FINANCING ACTIVITIES
Payments on note payable to stockholders............................ (20,000) (49,081)
Payments on notes payable........................................... -- (119,000)
------------ ------------
Net cash used in financing activities............................... (20,000) (168,081)
Net (decrease) increase in cash..................................... 146,786 (155,075)
Cash at beginning of period......................................... 35,913 182,699
------------ ------------
Cash at end of period............................................... $ 182,699 $ 27,624
========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid....................................................... $ 3,015 $ 31,920
========== ==========
</TABLE>

See accompanying notes.

F-16
<PAGE> 67

TURBINE ENGINE SALES GROUP, INC.

NOTES TO FINANCIAL STATEMENTS
JULY 21, 1994

1. BUSINESS

Turbine Engine Sales Group, Inc. ("Turbine" or the "Company") was
incorporated in Florida in 1992 and dissolved prior to 1995. Turbine was an
after market supplier of aircraft engines, engine components and aircraft
material to aircraft maintenance providers, manufacturers and airlines.

On May 4, 1992, Turbine entered into a consignment agreement (the
"Consignment Agreement") with an unrelated company, AVTEAM, Inc., formerly known
as Interstar Trading Corporation, ("AVTEAM"). Under the terms of the agreement,
AVTEAM would purchase aircraft engines and deliver them to Turbine on a
consignment basis and Turbine would disassemble the aircraft engines and sell
the components. Profits were divided 50% to AVTEAM and 50% to Turbine after
repayment to AVTEAM of its total investment.

On July 21, 1994, the two stockholders of AVTEAM purchased all of the
outstanding common stock of Turbine and Turbine transferred all assets and
liabilities to AVTEAM as repayment of amounts due.

2. SIGNIFICANT ACCOUNTING POLICIES

INVENTORY

Inventory of aircraft engines is stated at the lower of specific cost
(including overhaul costs) or market. Cost of sales for engine components and
aircraft materials are determined based on a ratio of expected sales per engine
to the purchase cost of the used engines plus overhaul costs.

REVENUE RECOGNITION

Sales are recognized when aircraft engines, engine components and aircraft
materials are shipped or a service is performed.

PROPERTY AND EQUIPMENT

Property and equipment is carried at cost and is depreciated using
accelerated methods over the estimated useful lives of the assets. The lives
used are as follows:

<TABLE>
<S> <C>
Office furniture and equipment............................................ 5-7 years
Warehouse and transport equipment......................................... 5-7 years
Leasehold improvements.................................................... 5 years
</TABLE>

INCOME TAXES

The Company is organized as an S Corporation under the provisions of the
Internal Revenue Code, which provides that the corporation's taxable income is
taxable to the stockholders rather than at the corporate level. Had the Company
been subject to income taxes during the periods presented, no income tax benefit
for the losses incurred would have been reported in any of these periods since
realization of the related deferred tax asset would not have been reasonably
assured. Accordingly, a pro forma provision for income taxes has not been
presented for the periods presented.

CONCENTRATION OF CREDIT RISK

Accounts receivable are primarily from aircraft maintenance providers,
manufacturers and airlines. The Company performs ongoing evaluations of its
trade accounts receivable customers and monitors its exposure for credit losses
and sales returns and does not require collateral.

F-17
<PAGE> 68

TURBINE ENGINE SALES GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. LEASES

In April 1993, the Company entered into a lease agreement for warehouse and
office space under an operating lease which expires in April 1997. Rent expense
for the year ended December 31, 1993 and the period ended July 21, 1994 was
$91,843 and $46,803, respectively.

4. NOTES PAYABLE TO RELATED PARTIES

Interest expense of $63,579 and $31,587 for the year ended December 31,
1993 and the period ended July 21, 1994, respectively, represents interest on
notes due to stockholders bearing interest at 10% per annum payable
semi-annually.

F-18
<PAGE> 69

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 70

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 71
- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, SHARES OF
COMMON STOCK IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE
ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Prior S Corporation Status and Planned
Distributions....................... 14
Use of Proceeds....................... 14
Dividend Policy....................... 15
Capitalization........................ 16
Dilution.............................. 17
Selected Financial Data............... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 19
Industry Overview..................... 25
Business.............................. 27
Management............................ 37
Certain Transactions.................. 41
Principal and Selling Stockholders.... 43
Description of Capital Stock.......... 44
Shares Eligible For Future Sale....... 46
Underwriting.......................... 47
Legal Matters......................... 48
Experts............................... 48
Additional Information................ 48
Index to Financial Statements......... F-1
</TABLE>

---------------------

UNTIL , 1996, (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------

[LOGO] AVTEAM

AVTEAM, INC.

---------------------

2,750,000 SHARES

COMMON STOCK

PROSPECTUS

, 1996

----------------------

DILLON, READ & CO. INC.

ALEX. BROWN & SONS
INCORPORATED
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 72

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth an itemized statement of certain estimated
expenses incurred in connection with the issuance and distribution of the
securities being registered, other than underwriting discounts and commissions:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee..................... $ 20,522
NASD filing fee......................................................... 6,452
Nasdaq National Market listing fee...................................... 34,500
Blue Sky fees and expenses.............................................. 15,000
Printing and engraving expenses......................................... 100,000
Legal fees and expenses................................................. 450,000
Accounting fees and expenses............................................ 220,000
Registrar and Transfer Agent's fees and expenses........................ 3,500
Miscellaneous........................................................... 200,026
----------
Total......................................................... $1,050,000
==========
</TABLE>

All amounts except the Securities and Exchange Commission registration fee,
the NASD filing fee and NASDAQ National Market listing fee are estimated. The
Company intends to pay all expenses of registration with respect to shares being
sold by the Selling Stockholders hereunder, with the exception of underwriting
discounts and commissions.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company has authority under the Florida General Corporation Act to
indemnify all directors and officers to the extent provided in such statute. The
Company's Amended and Restated Articles of Incorporation provide that the
Company shall indemnify its directors to the fullest extent permitted by law
either now or hereafter. The Company has also entered into an agreement with
each of its directors and certain of its officers wherein it has agreed to
indemnify each of them to the fullest extent permitted by law.

At present, there is no pending litigation or proceeding involving a
director or officer of the Company as to which indemnification is being sought,
nor is the Company aware of any threatened litigation that may result in claims
for indemnification by any officer or director.

Pursuant to the Underwriting Agreement filed as Exhibit 1.01 to this
Registration Statement, the Underwriters have agreed to indemnify the directors,
officers and controlling persons of the Company against certain civil
liabilities that may be incurred in connection with this offering, including
certain liabilities under the Securities Act of 1933, as amended (the
"Securities Act").

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On January 1, 1995, pursuant to the terms of certain stock options granted
by the Company, certain executive officers of the Company acquired an aggregate
of 71.35 shares of the then outstanding class of common stock, par value $1.00
per share, for an aggregate as evidenced by certain promissory notes each in the
amount of $259,097. Such securities were issued pursuant to exemptions set forth
in Section 3(b) of the Securities Act.

On December 31, 1995, pursuant to the terms of certain stock options
granted by the Company, certain executive officers of the Company acquired an
aggregate of 178.65 shares of the then outstanding class of common stock, par
value $1.00 per share, as evidenced by certain promissory notes in the aggregate
amount of $1,120,245. Such securities were issued pursuant to exemptions set
forth in Section 3(b) of the Securities Act.

II-1
<PAGE> 73

In March 1996, the Company amended and restated its Articles of
Incorporation, pursuant to which each share of the then outstanding class of
common stock, par value $1.00 per share, was converted into 4,000 shares of the
currently outstanding class of Common Stock, par value $.01 per share. The
Company issued an aggregate of 5,000,000 shares of Common Stock to the
stockholders of the Company for no additional consideration in connection with
such share conversion.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- ---------------------------------------------------------------------------
<C> <C> <S>
1.01 -- Form of Underwriting Agreement*
3.01 -- Amended and Restated Articles of Incorporation of Registrant*
3.02 -- Amended and Restated By-Laws of Registrant*
4.01 -- Specimen Certificate for the Common Stock*
5.01 -- Opinion of Baker & McKenzie*
10.01 -- Loan Agreement dated September 29, 1995 between Registrant and Barnett Bank
of South Florida, N.A.*
10.02 -- Surplus Parts Supply Agreement dated June 12, 1995 between Registrant and
United Technologies Corporation (confidential treatment of certain portions
of Exhibit 10.02 has been requested)*
10.03 -- Letter Agreement dated September 5, 1995 between Registrant and Parati
Corporation*
10.04 -- Letter Agreement Amendment dated April 12, 1996 between Registrant and
Parati Corporation*
10.05 -- Employment Agreement effective as of January 1, 1994 between Registrant,
Turbine Engine Technology Corporation and Donald A. Graw*
10.06 -- Amendment No. 1 to the Employment Agreement effective as of December 31,
1995 between Registrant and Donald A. Graw*
10.07 -- Amendment No. 2 to the Employment Agreement effective as of April 12, 1996
between Registrant and Donald A. Graw*
10.08 -- Employment Agreement effective as of January 1, 1994 between Registrant,
Turbine Engine Technology Corporation and Jaime J. Levy*
10.09 -- Amendment No. 1 to the Employment Agreement effective as of December 31,
1995 between Registrant and Jaime J. Levy*
10.10 -- Amendment No. 2 to the Employment Agreement effective as of April 12, 1996
between Registrant and Jaime J. Levy*
10.11 -- Form of S Corporation Tax Allocation and Indemnification Agreement dated
April 12, 1996 between Registrant and each of the current stockholders.*
10.12 -- Lease Agreement dated December 28, 1994 between Registrant and Sunbeam
Properties, Inc.*
10.13 -- Lease Agreement dated November 13, 1995 between Registrant and Sunbeam
Properties, Inc.*
10.14 -- Form of Indemnification Agreement between Registrant and officer and
directors of Registrant*
10.15 -- Amended and Restated Loan Agreement, dated June 13, 1996, between
Registrant and Barnett Bank of South Florida, N.A.*
23.01 -- Consent of Baker & McKenzie (included in Exhibit 5.01)*
23.02 -- Consent of Ernst & Young LLP
</TABLE>

- ---------------

* Previously filed.

II-2
<PAGE> 74

(b) Financial Statement Schedules:

<TABLE>
<CAPTION>
SCHEDULE
NUMBER SCHEDULE
- ------------ ----------------------------------------------------------------------
<S> <C> <C>
Schedule II -- Valuation and Qualifying Accounts for the Years Ended December 31,
1993, 1994 and 1995
</TABLE>

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.

The undersigned Registrant hereby undertakes:

(1) That for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed
as part of the registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of the registration statement as of the time it was declared
effective.

(2) That for the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(3) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt delivery to
each purchaser.

(4) That insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14 hereof, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

II-3
<PAGE> 75
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the Registrant has caused this Post-Effective Amendment No. 1
to Form S-1 Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Miami, Florida, on the
12th day of July, 1996.

AVTEAM, INC.

By: /s/ DONALD A. GRAW
------------------------------------
Donald A. Graw,
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act, this Post-Effective
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
<C> <S> <C>
/s/ LEON SRAGOWICZ* Chairman of the Board, Director July 12, 1996
- ---------------------------------------------
Leon Sragowicz

/s/ DONALD A. GRAW* President, Chief Executive July 12, 1996
- --------------------------------------------- Officer, Director (Principal
Donald A. Graw Executive Officer)

/s/ MARK S. KOONDEL* Chief Financial Officer, July 12, 1996
- --------------------------------------------- Treasurer (Principal Financial
Mark S. Koondel and Accounting Officer)

/s/ JAIME J. LEVY* Executive Vice President, July 12, 1996
- --------------------------------------------- Director
Jaime J. Levy

/s/ BRYAN THOMAS MCFARLAND* Vice President -- Technical July 12, 1996
- --------------------------------------------- Operations
Bryan Thomas McFarland

/s/ RICHARD PRESTON* Secretary, Director July 12, 1996
- ---------------------------------------------
Richard Preston

/s/ ROBERT MUNSON* Director July 12, 1996
- ---------------------------------------------
Robert Munson

*By: Donald A. Graw
- ---------------------------------------------
Donald A. Graw, Attorney-in-Fact.
</TABLE>

II-4

<PAGE> 1
Exhibit 23.02

Consent of Independent Certified Public Accountants
Ernst & Young LLP

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated January 30, 1996, except for the first
paragraph of Note 13 as to which the date is March 21, 1996, and the second,
third and fourth paragraphs of Note 13 as to which the date is April 12, 1996,
with respect to the financial statements of AVTEAM, Inc. as of December 31,
1995 and 1994, and for each of the three years in the period ended December 31,
1995, and our report dated January 30, 1996, with respect to the statements of
operations and cash flows of Turbine Engine Sales Group, Inc. for the year
ended December 31, 1993 and the period from January 1, 1994 through July 21,
1994, in Post-Effective Amendment No. 1 to the Registration Statement (Form S-1
No. 333-04426) and related Prospectus of AVTEAM, Inc. for the registration of
2,750,000 shares of its common stock.

/s/ ERNST & YOUNG LLP

Miami, Florida
July 11, 1996