AMERICAN AIRCARRIERS SUPPORT INC, SB-2/A, 1998-05-28

AMERICAN AIRCARRIERS SUPPORT INC
SB-2/A, 1998-05-28
INDUSTRIAL MACHINERY & EQUIPMENT

Previous: YORKSHIRE CAPITAL TRUST I, 424B3, 1998-05-28

Next: TOUPS TECHNOLOGIES LICENSING INC /FL, 10SB12G/A, 1998-05-28

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1998.

REGISTRATION NO. 333-48497.
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------

AMENDMENT NO. 2

TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
AMERICAN AIRCARRIERS SUPPORT, INCORPORATED
(Name of small business issuer in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 5088 52-2081515
(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
KARL F. BROWN
3516 CENTRE CIRCLE DRIVE 3516 CENTRE CIRCLE DRIVE
FORT MILL, SOUTH CAROLINA 29715 FORT MILL, SOUTH CAROLINA 29715
TELEPHONE: (803) 548-2160 TELEPHONE: (803) 548-2160
(Address and telephone number of principal (Name, address and telephone number of agent
executive for service)
offices and principal place of business)
</TABLE>

Copies to:

<TABLE>
<S> <C>
ROBERT W. WALTER, ESQ. NOLAN S. TAYLOR, ESQ.
BERLINER ZISSER WALTER & GALLEGOS, P.C. THOMAS R. TAYLOR, ESQ.
SUITE 4700 LEBOEUF, LAMB, GREENE & MACRAE, L.L.P.
1700 LINCOLN STREET 136 SOUTH MAIN STREET, SUITE 1000
DENVER, COLORADO 80203 SALT LAKE CITY, UTAH 84101
TELEPHONE: (303) 830-1700 TELEPHONE: (801) 320-6700
</TABLE>

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

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the 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,
check the following box. [X]

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. [ ] __________

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ] __________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
==============================================================================================================================
AMOUNT PROPOSED PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE MAXIMUM OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock(2)................... 2,300,000 $8.50 $19,550,000 $5,767.25
- ------------------------------------------------------------------------------------------------------------------------------
Representative's Warrants for
Common Stock.................... 200,000 -- $100 $.03
- ------------------------------------------------------------------------------------------------------------------------------
Common Stock underlying
Representative's Warrants(3).... 200,000 $10.20 $2,040,000 $601.80
- ------------------------------------------------------------------------------------------------------------------------------
Total........................... $21,590,100 $6,369.08
==============================================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o).
(2) Includes 300,000 shares of Common Stock contained in the over-allotment
option.
(3) Pursuant to Rule 416, includes such indeterminate number of additional
shares of Common Stock as may be required for issuance upon exercise of the
Representative's Warrants as a result of any adjustment in the number of
shares of Common Stock issuable upon such exercise by reason of the
anti-dilution provisions of the Representative's Warrants.
---------------------

THE REGISTRANT HEREBY AMENDS THIS 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 REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2

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 MAY 28, 1998

PROSPECTUS

2,000,000 SHARES

[AMERICAN AIRCARRIERS LOGO]

COMMON STOCK
---------------------

All of the shares of Common Stock offered hereby are being sold by American
Aircarriers Support, Incorporated (the "Company"). Prior to this offering, there
has been no public market for the Common Stock of the Company. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price. The Common Stock has been approved for quotation
on the Nasdaq National Market under the symbol "AIRS."

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

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR INFORMATION
PROSPECTIVE INVESTORS SHOULD CONSIDER.
---------------------

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
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share......................... $6.25 $.4375 $5.8125
- -------------------------------------------------------------------------------------------------------------
Total(3).......................... $12,500,000 $875,000 $11,625,000
=============================================================================================================
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. The Company has also agreed to sell to the Representative of the
Underwriters warrants to purchase 200,000 shares of Common Stock
exercisable at $7.63 per share (the "Representative's Warrants"). See
"Underwriting."

(2) Before deducting expenses payable by the Company estimated at $875,000,
including the Representative's nonaccountable expense allowance.

(3) The Company has granted to the Underwriters a 45-day option to purchase an
aggregate of up to 300,000 additional shares of Common Stock solely to
cover over-allotments, if any. If this option is exercised in full, the
total Price to Public, Underwriting Discounts and Commissions, and Proceeds
to Company will be $14,375,000, $1,006,250 and $13,368,750, respectively.
See "Underwriting."

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

The shares of Common Stock are offered by the Underwriters subject to prior
sale when, as and if delivered to and accepted by them, and subject to the right
of the Underwriters to withdraw, cancel or modify such offer without notice and
reject orders in whole or in part. It is expected that delivery of the
certificates for the Common Stock will be made at the offices of Cruttenden Roth
Incorporated, Irvine, California or in book entry form through the book entry
facilities of The Depository Trust Company on or about June 2, 1998.

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

CRUTTENDEN ROTH
INCORPORATED
LAIDLAW GLOBAL SECURITIES, INC.

THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE> 3

[FOUR COLOR PICTURES TO COME]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OF THE
COMPANY. SUCH TRANSACTIONS MAY INCLUDE STABILIZING BIDS AND PURCHASES, THE
IMPOSITION OF PENALTY BIDS, THE PURCHASE OF SECURITIES TO COVER SYNDICATE SHORT
POSITIONS AND OVER-ALLOTMENTS IN CONNECTION WITH THE OFFERING. FOR A DISCUSSION
OF THESE ACTIVITIES, SEE "UNDERWRITING."

On the effective date of the Registration Statement of which this
Prospectus forms a part, the Company will become a "reporting company" under the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The Company
intends to register the Common Stock under the 1934 Act as of the effective date
of the Registration Statement. The Company is a "small business issuer" as
defined under Regulation S-B adopted under the Securities Act of 1933, as
amended, and will file reports with the Securities and Exchange Commission (the
"Commission") pursuant to the 1934 Act on forms applicable to small business
issuers.

The Company intends to furnish annual reports to stockholders containing
audited financial statements, quarterly reports and such other periodic reports
as it may determine to be appropriate or as may be required by law.
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus. Unless otherwise indicated, the information contained in this
Prospectus (i) assumes no exercise of the Underwriters' over-allotment option or
options granted or reserved under the Company's stock option plan, and (ii)
gives effect to a recapitalization in connection with the Company's
reincorporation in Delaware. Industry data used in this Prospectus was obtained
from industry publications that the Company believes to be reliable, but has not
independently verified. Unless otherwise stated in this Prospectus, references
to the "Company" shall mean American Aircarriers Support, Incorporated and its
predecessor.

THE COMPANY

The Company is a leading international supplier of primarily high-margin
aircraft components and spare parts to major commercial passenger and cargo
airlines, maintenance and repair facilities and other redistributors located
throughout the world. The Company's net sales are principally derived from the
redistribution of complete engines and engine components and spare parts for the
Pratt & Whitney JT8 series and, to a lesser extent, the General Electric CFM56,
as well as rotable, repairable and expendable airframe components and spare
parts for Boeing, McDonnell-Douglas and Airbus aircraft. The Company acquires
engine and airframe components and spare parts for redistribution through
purchases of surplus aircraft for disassembly, bulk purchases of components and
spare parts from aircraft operators, purchases of individual components and
spare parts from other redistributors, consignments from aircraft operators and
others, and exchanges of inventoried aircraft components and spare parts for
components and spare parts that require service or overhaul.

The Company's net sales increased 58.6% to over $13 million in 1997 and pro
forma net income increased approximately 110% to over $2.4 million in 1997. At
December 31, 1997, the Company's total assets exceeded $9.0 million and
stockholders' equity was $4.9 million. For the first three months of 1998, net
sales increased 57.4% to $3.7 million from $2.3 million for the comparable
period in 1997, while pro forma net income increased 64.2% to $669,000 from
$407,000 for the comparable period in 1997. The growth in net sales and net
income reflects (i) increases in sales of complete engines and engine components
and spare parts, which generally carry higher margins than airframe components
and spare parts, (ii) an increase in the average unit price per sale due to
changes in the Company's product mix to encompass higher priced engine and
airframe components and spare parts sales, (iii) diversification of the
Company's engine sales into new engine types such as the CFM56, and (iv)
increasing sales of complete engines and engine and airframe components and
spare parts to both domestic and international customers. The Company believes
it is one of the few aircraft component and spare part redistributors of its
size engaged in the sale of both engine and airframe components and spare parts
to a broad spectrum of domestic and international customers.

The Company believes that the annual worldwide market for aircraft
components and spare parts is approximately $10 billion, of which approximately
$1.3 billion reflects sales of aircraft components and spare parts in the
redistribution market. Since 1993, the airline industry has experienced rapid
growth in business and leisure air travel. The high demand for airline capacity
has increased utilization of aircraft, contributing to demand for aircraft
components and spare parts as aircraft operators must service or replace
aircraft components and spare parts at scheduled intervals. The world fleet of
aircraft is projected to increase from 11,500 aircraft in 1996 to 23,000
aircraft in 2016, according to Boeing's 1997 Current Market Outlook (the "Boeing
Report"). In addition, the average age of the world fleet of aircraft is
expected to increase in the near future, which may increase demand for
aftermarket aircraft components and spare parts. As airlines continue
outsourcing inventory management functions, leasing engines and aircraft
components and spare parts to reduce capital requirements, and limiting
components and spare parts purchases to a smaller number of approved suppliers
capable of providing improved documentation and traceability, larger inventories
and higher standards of quality control, the Company anticipates that a greater
percentage of sales in the aircraft components and spare parts redistribution
industry will become concentrated among a smaller number of larger,
strategically positioned participants.

3
<PAGE> 5

The Company attributes its success in the aircraft components and spare
parts redistribution industry and its significant opportunities for growth to
several competitive strengths, including the following:

- Experienced and Committed Management Team. The Company's management has
almost 100 years' combined experience in the aircraft components and
spare parts redistribution industry. In addition, the Chief Executive
Officer and each of the key employees has been employed by the Company
since its inception. The Company has experienced almost no employee
turnover since inception and seeks to provide an entrepreneurial culture
for its highly experienced, "hands-on" management team.

- Exploit Key Niches. Through the industry knowledge developed by its
management team, the Company has been successful in identifying areas of
demand for certain aircraft components and spare parts and has
aggressively acquired inventory of certain key aircraft components and
spare parts through purchase, disassembly of aircraft, and consignment
and exchange transactions. The Company's ability to responsively fill
customer requirements has been a cornerstone of the Company's strategy
since its inception, and has allowed the Company to differentiate itself
from certain of its competitors.

- Focus on Sales of High-Margin Components and Spare Parts. The Company has
increasingly focused on sales of high-margin engines and engine spare
parts in order to increase its net sales. Engine sales have enabled the
Company to realize higher margins, increase total sales, and develop
customer relationships with a wide variety of domestic and international
customers. Approximately 80% of the Company's net sales are derived from
sales of rotables, which tend to be higher-margin, higher demand spare
parts than repairables or expendables. As the Company continues its
efforts to increase sales of higher-margin engine and engine components
and rotable spare parts, the Company will strive to realize high margins
and increase stockholder value.

- Effectively Capitalize on Bulk Purchase Opportunities. The Company has
been successful in identifying and completing bulk purchases of aircraft
components and spare parts. Bulk inventory purchases allow the Company to
obtain large inventories of aircraft components and spare parts at a
lower cost than can ordinarily be obtained by purchasing aircraft
components and spare parts on an individual basis, resulting generally in
higher gross margins on sales of such spare parts. The Company believes
that, through management's extensive contacts with both passenger and
cargo carriers, the Company has access to bulk inventory purchase
opportunities that are not generally available to many aircraft
components and spare parts redistributors.

- Strong Commitment to Growth. The Company has developed a number of growth
strategies that are designed to broaden the Company's domestic and
international customer base, enhance the Company's margins, provide
improved customer service, and facilitate entry into new market niches as
the Company seeks to grow its business. The Company has formulated its
growth strategies to maintain a high-margin product mix to be offered to
a diverse base of domestic and international customers, thereby avoiding
reliance on a single product line, a single customer or a group of
customers in a particular geographic area.

- Aggressively Control Overhead. The Company is committed to aggressively
controlling overhead in order to maximize operating margins. With only 14
full-time employees in 1997, the Company achieved 1997 gross profit per
employee and pro forma net income per employee of approximately $379,000
and $175,000, respectively. Measured by these standards and sales per
employee, the Company believes it maintains a significantly lower
overhead structure, and achieves higher sales and margins, than many of
its competitors.

The Company's strategy is to enhance its position as a leading aircraft
components and spare parts redistributor in order to capitalize on the continued
expansion of the aircraft components and spare parts aftermarket and the
Company's growing customer base. The principal components of the Company's
strategy are to (i) expand the Company's existing business through entry into
the wide-body aircraft market for complete aircraft and engines to be
disassembled, obtaining additional sales agents in select international markets
and hiring additional management personnel experienced in sales of aircraft
components and spare

4
<PAGE> 6

parts, (ii) enhance the Company's relationship with key customers through
providing aircraft components and spare parts leasing and inventory management
services and through the purchase and lease of complete aircraft to third
parties, which aircraft will be disassembled for their components and spare
parts upon expiration of the lease term, (iii) undertake strategic acquisitions
in order to accelerate growth, leverage operating efficiencies and capitalize on
opportunities to vertically integrate aircraft components and spare parts
redistribution, repair and manufacturing activities, (iv) increase inventories
of aircraft components and spare parts, enhance management information systems
and continue the Company's commitment to customer service to even further
strengthen customer relationships, and (v) maintain a diversified domestic and
international customer base with continued emphasis on targeting sales
opportunities in both engine and airframe spare parts.

The Company was incorporated in the State of South Carolina under the name
Aviation Alloys, Inc. in June 1985 and commenced active operations under the
name American Aircarriers Support, Inc. in 1990. The Company was reincorporated
in the State of Delaware immediately prior to the date of this Prospectus. The
Company's principal executive offices are located at 3516 Centre Circle Drive,
Fort Mill, South Carolina 29715, and its telephone number is (803) 548-2160.

THE OFFERING

Common Stock offered................ 2,000,000 shares

Common Stock to be outstanding after
this offering....................... 6,100,000 shares(1)

Use of proceeds..................... To increase inventory of aircraft
components and spare parts, including
complete engines for disassembly;
reduce bank indebtedness; extinguish
related party indebtedness and fund S
Corporation distributions; to acquire
complementary businesses in the
aircraft components and spare parts
industry; and for general corporate
purposes. See "Use of Proceeds."

Nasdaq National Market symbol....... AIRS
- ---------------

(1) Excludes 263,600 shares of Common Stock issuable upon the exercise of
currently outstanding options (of which no options are currently
exercisable) with a weighted average exercise price of $6.14, and 200,000
shares of Common Stock issuable on full exercise of the Representative's
Warrants. See "Management -- Stock Option Plan" and "Underwriting."

5
<PAGE> 7

SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
----------------- ------------------
1996 1997 1997 1998
------ ------- ------- -------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................................ $8,352 $13,250 $2,337 $3,677
Gross profit......................................... 2,873 5,304 935 1,567
Income from operations............................... 1,945 4,037 676 1,174
Net income(1)........................................ 1,943 4,073 679 1,115
Pro forma net income(1).............................. 1,166 2,444 407 669
Pro forma basic earnings per share(2)(3)............. $ .28 $ .60 $ .10 $ .16
Pro forma diluted earnings per share(2)(3)........... $ .28 $ .59 $ .10 $ .16
Weighted average number of diluted shares(3)......... 4,108 4,108 4,108 4,108
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1998
DECEMBER 31, ------------------------
1997 ACTUAL AS ADJUSTED(4)
------------ ------ --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital....................................... $4,198 $4,864 $12,914
Inventory............................................. 5,625 9,205 9,205
Accounts receivable................................... 1,959 1,294 1,294
Total assets.......................................... 9,049 12,704 16,299
Total liabilities..................................... 4,180 6,720 2,220
Stockholders' equity.................................. 4,869 5,984 14,079
</TABLE>

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

(1) Until immediately prior to the date of this offering, the Company was an S
Corporation and not subject to federal or state corporate income taxes. In
connection with its reincorporation in the State of Delaware, the Company
terminated its S Corporation election and changed its tax status from an S
Corporation to a C Corporation and began providing for federal and state
corporate income taxes from and after that date. The statement of operations
data reflects a pro forma provision for income taxes as if the Company were
subject to federal and state corporate income taxes for all periods
presented. This pro forma provision for income taxes is computed using a
combined federal and state tax rate of 40%. See Note 13 to Financial
Statements.

(2) Supplemental pro forma basic and diluted earnings per share would each have
been $0.20, $0.41, $0.07 and $0.12 for the years ended December 31, 1996 and
1997, and the three months ended March 31, 1997 and 1998, respectively,
after giving effect to the use of a portion of the net proceeds of this
offering to repay indebtedness outstanding at January 1, 1996, and assuming
a 2,000,000 share increase in the weighted average number of shares
outstanding.

(3) The weighted average number of shares outstanding gives retroactive effect
to the shares issued immediately prior to the effective date of this
offering in connection with the reincorporation and the dilutive effect of
options granted prior to the effective date of this offering. See Notes 12
and 13 to Financial Statements.

(4) Adjusted to reflect the sale of 2,000,000 shares of Common Stock by the
Company at $6.25 per share, and the application of the estimated net
proceeds therefrom to reduce indebtedness and make S Corporation
distributions. See "Use of Proceeds."

6
<PAGE> 8

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully in evaluating the Company
and its business before purchasing shares of Common Stock offered hereby. This
Prospectus contains certain forward-looking statements that involve substantial
risks and uncertainties. When used in this Prospectus, the words "may," "will,"
"expect," "anticipate," "continue," "estimate," "project," "intend," "believe"
and similar expressions are intended to identify forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 (the "1933 Act")
and Section 21E of the Securities Exchange Act of 1934 (the "1934 Act")
regarding events, conditions and financial trends that may affect the Company's
future plan of operations, business strategy, operating results and financial
position. The safe harbor for forward-looking statements provided by Section 27A
of the 1933 Act and Section 21E of the 1934 Act is not applicable to limit the
Company's liability for sales made in this offering. Prospective investors are
cautioned that any forward-looking statements are not guarantees of future
performance and are subject to risks and uncertainties and that actual results
could differ materially from the results expressed in or implied by these
forward-looking statements as a result of various factors, many of which are
beyond the Company's control. These factors are described under the headings
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and in the risk factors set forth below.

CONCENTRATION ON BOEING 737 AIRCRAFT AND JT8 ENGINES

The Company's results of operations to date have depended substantially
upon aftermarket sales of airframe components and spare parts for Boeing 737
aircraft and engine components and spare parts for the Pratt & Whitney JT8
engine series. While the 737 has been in production since the early 1960s and
the JT8 series of engines is the most widely used engine in commercial aviation,
737s utilizing older engines are generally more expensive to maintain and
operate, due primarily to higher fuel usage. Noise and other regulations adopted
in the United States and the European Union will require most JT8 series engines
to be hush-kitted, relocated to other countries or removed from service by 2000
and 2002, respectively. A decline in the use of 737 aircraft or JT8 engines by
aircraft operators, a decrease in passenger confidence in older aircraft or the
grounding of 737 aircraft or the retirement of aircraft utilizing JT8 series
engines for any reason could have a material adverse effect on the Company's
results of operations. Although the Company believes that some 737-200 aircraft
have already been hush-kitted, disassembly of a significant number of such
aircraft could increase the availability of certain 737 components and spare
parts, some of which are interchangeable with 737-300, -400 and -500 model
aircraft. A significant increase in aircraft or engine components and spare
parts availability could reduce prices of aircraft components and spare parts
inventoried by the Company, with a corresponding material adverse effect on the
Company's financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business."

MANAGEMENT OF INVENTORY

Because the Company does not manufacture aircraft components and spare
parts and is dependent upon purchases from third parties to obtain components
and spare parts inventories, the Company's results of operations are
substantially dependent on its purchasing activities. Because the Company's
sales of aircraft components and spare parts are significantly influenced by the
nature and extent of its available inventory, the success of the Company depends
upon management identifying potential sources of inventory and effecting timely
purchases at acceptable terms and prices. There can be no assurance that
inventory will be available on acceptable terms and prices or at the times
required by the Company. Furthermore, there can be no assurance the Company will
accurately anticipate customer demand for certain types of engines, engine
components or aircraft components and spare parts or that the Company's results
of operations will not be adversely affected by writedowns associated with
excess inventory. See "Business."

EXPANSION OF AIRCRAFT COMPONENTS AND SPARE PARTS INVENTORY

The Company has in the past purchased and sold Airbus A300 aircraft
components and spare parts and has established a strategy for growth through
entry into the wide-body aircraft market, including the purchase and sale of
aircraft components and spare parts for the Boeing 767, the McDonnell-Douglas
DC-10 and the

7
<PAGE> 9

Airbus A300. The Company anticipates that, following the conclusion of this
offering, it will also enter the market for engines used to power wide-body
aircraft, including the General Electric CF6, the Pratt & Whitney JT9 and PW4000
engine series. The Company expanded its product line in 1995 to include the
CFM56 series of engines, which powers Boeing 737 aircraft as well as certain
Airbus aircraft. Although management believes its experience in managing
existing engine and aircraft components and spare parts inventories will enable
it to effectively manage such inventories for additional aircraft and engine
types, there can be no assurance the Company will be successful in managing
components and spare parts inventories for additional aircraft and engine types.
In particular, the Company's lack of prior experience in the market for
wide-body aircraft and engine components and spare parts may cause the Company
to misjudge market prices or demand for airframe or engine components and spare
parts. In such event, the Company could be forced to liquidate excess
inventories at prices that would have a material adverse effect on the Company's
financial condition and results of operations. See "Business."

REGULATION OF, AND DEPENDENCE ON, THIRD-PARTY REPAIR FACILITIES

The Company's inventory consists principally of engines and overhauled,
serviceable and repairable aircraft components and spare parts that have been
purchased from a variety of sources. Before components and spare parts may be
installed in an aircraft, they must meet certain standards of condition
established by the Federal Aviation Administration ("FAA") or equivalent
regulatory agencies in other countries. Specific regulations vary from country
to country, although regulatory requirements in certain other countries
generally coincide with FAA requirements. While the Company is not subject to
direct regulation by the FAA or comparable international agencies, aircraft
operators utilizing the Company's components and spare parts and independent
facilities that repair and overhaul such components and spare parts are subject
to extensive regulation. Aircraft and engine components and spare parts must
also be traceable to sources deemed acceptable by the FAA and comparable
international agencies.

The Company performs no repair or overhaul services itself, but rather
depends entirely on third-party licensed repair facilities to perform necessary
repair and overhaul services. The Company has no direct control over the quality
of repair performed by third-party repair facilities or the accuracy of
airworthiness conditions designated by such facilities. The limited number of
licensed repair facilities has on occasion resulted in long turnaround times for
the repair and overhaul of engines and aircraft components and spare parts. The
FAA has recently increased its scrutiny of third-party repair facilities, which
may result in fewer FAA-licensed repair facilities and longer turnaround times
in the future. It is possible that airframe or engine components and spare parts
could be designated as airworthy by a repair facility, be sold by the Company
and placed on an aircraft, and subsequently be determined to be unsafe or in
need of further repair. In such event, the FAA has the authority to take actions
which may include the grounding of the aircraft. In addition, a customer that
purchased defective airframe or engine components or spare parts from the
Company could demand a replacement component or spare part. Although the Company
has insurance coverage for product liability losses, the adverse effect on
customer relations and the Company's reputation from a parts-related incident
could materially adversely impact the Company's results of operations. See
"Business."

DEPENDENCE ON KEY EMPLOYEES

The continued success of the Company is dependent to a significant degree
upon the services of Karl F. Brown, Chairman of the Board, Chief Executive
Officer and President. The ability of the Company to operate successfully could
be jeopardized if Mr. Brown were unavailable to the Company for any reason and a
capable successor was not identified and hired. The Company maintains key-man
life insurance on the life of Mr. Brown in the amount of $1,000,000 as to which
the Company is the beneficiary and has a three-year employment agreement with
Mr. Brown. Mr. Brown receives benefits under his employment agreement including
an annual salary of $200,000, a discretionary bonus, use of a Company
automobile, participation in a split-dollar life insurance plan and change of
control compensation. The employment agreement is terminable by Mr. Brown upon a
change of control of the Company. The Company has also entered into a one-year
employment agreement with Elaine T. Rudisill, the Chief Financial Officer of the
Company, under which Ms. Rudisill will receive an annual salary of $65,000 and a
discretionary bonus. See "Management."

8
<PAGE> 10

FLUCTUATIONS IN OPERATING RESULTS

The Company's operating results are affected by many factors, including the
timing of orders from customers, the timing of engine purchases or sales, the
timing of expenditures to purchase inventory in anticipation of future sales,
the timing and availability of bulk inventory purchases, the mix of available
aircraft components and spare parts contained at any time in the Company's
inventory, and many other factors largely outside the Company's control. A
significant portion of the Company's operating expenses are relatively fixed.
Because the Company does not obtain long-term purchase orders or commitments
from its customers, it must anticipate future volume of orders based upon the
historic purchasing patterns of its customers and upon discussions with its
customers as to their future components and spare parts requirements.
Cancellations, reductions or delays in orders by a customer or group of
customers could have a material adverse effect on the Company's financial
condition and results of operations. In addition, due to the value of a single
engine sale relative to the value of components and spare parts typically sold
by the Company, the concentration of engine sales in a particular quarter may
obscure existing or developing trends in the Company's business, financial
condition and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business."

ACQUISITION STRATEGY

One of the Company's strategies for growth is to pursue acquisitions of
FAA-licensed repair facilities, aircraft components and spare parts
redistributors and small manufacturers of aviation products. Currently, the
Company has no acquisition agreements, understandings or commitments for any
acquisitions. There can be no assurance that any such acquisitions will be
completed on reasonable terms, if at all. Certain of the Company's competitors
may also seek to acquire the same companies that the Company seeks to acquire.
This may increase the price and related costs at which the Company could
otherwise have acquired such companies, perhaps materially. The Company's
inability to complete acquisitions on reasonable terms could limit the Company's
ability to grow its business.

The Company may expend significant funds to pursue and consummate
acquisitions. Such use of funds would reduce the Company's working capital. In
addition, the Company may fund acquisitions in whole or in part by issuing
equity securities, and any such issuances, individually or in the aggregate, may
be dilutive to holders of the Common Stock. Acquisitions also may result in the
Company incurring additional debt and amortizing costs related to goodwill and
other intangible assets, either of which could have a material adverse effect on
the Company's financial condition and results of operations.

The Company may experience difficulties in assimilating the operations,
services and personnel of acquired companies and may be unable to sustain or
improve the historical revenue and earnings levels of acquired companies, any of
which may materially adversely affect the Company's results of operations. In
addition, to the extent it becomes necessary for the Company to fund the working
capital requirements of acquired companies, the Company's working capital
available for its currently existing operations would decrease. Acquisitions
involve a number of risks, including the diversion of management's attention
from ongoing business operations and the potential loss of key employees of
acquired companies. Acquisitions of FAA-licensed repair facilities may pose
additional risks including, among others, the need to maintain FAA licensing to
conduct operations, liability associated with incorrect or inadequate repairs,
and required compliance with extensive FAA and other regulations. There can be
no assurance that the Company can successfully implement its acquisition
strategy. The failure to consummate acquisitions on reasonable terms or the
inability to successfully integrate and manage acquired operations and
assimilate personnel could have a material adverse impact on the Company's
business, financial condition and results of operations. See
"Business -- Business Strategy."

PROPOSED LEASING ACTIVITIES

One of the Company's strategies for growth is to increase market share
through engaging in aircraft components and spare parts leasing and through the
purchase of complete aircraft and engines that can be leased to third parties
and disassembled for components and spare parts or sold at the conclusion of the
lease

9
<PAGE> 11

term. Aircraft components and spare parts leases are typically used by smaller
passenger or cargo carriers to reduce capital expenditures, with the result that
the Company may be subject to an increased risk of financial default by the
lessee. The success of an operating lease depends in part upon having the
components and spare parts, aircraft or engines returned to the Company in
marketable condition as required by the lease. The financial return to the
Company from leased components and spare parts, aircraft or engines depends in
part on the re-lease of such components and spare parts, aircraft and engines on
favorable terms on a timely basis, the ability to sell the components and spare
parts, aircraft or engines at favorable prices, or the realization of sufficient
value from the disassembly for components and spare parts of aircraft or engines
at the end of the lease term. Numerous factors, many of which are beyond the
Company's control, may have an impact on the Company's ability to re-lease, sell
or disassemble aircraft or engines. These factors include general market
conditions, regulatory changes (particularly those imposing environmental,
maintenance and other requirements on the operation of aircraft and engines),
changes in the supply and cost of aircraft or engines and technological
developments. Consequently, there can be no assurance the Company's estimated
residual value for aircraft components and spare parts, complete aircraft or
engines will be realized. The inability to re-lease, sell components and spare
parts, aircraft or engines on favorable terms or to realize sufficient value
from the disassembly for components and spare parts of aircraft or engines on
expiration of a lease may have a material adverse effect on the Company's
financial condition and results of operations. Should the Company be unable to
collect lease payments when due or be required to repossess components and spare
parts, aircraft or engines in the event of a default by a lessee, the Company's
results of operations could also be adversely affected. See "Business."

DEPENDENCE ON INTERNATIONAL CUSTOMERS

The Company estimates that sales to international customers accounted for
approximately 30% and 13% of net sales in the fiscal year ended December 31,
1997 and the three months ended March 31, 1998, respectively. The Company
anticipates that international sales will continue to represent a material
portion of the Company's net sales in future periods. International sales are
subject to inherent risks, including variations in local economies, fluctuating
exchange rates, greater difficulty in accounts receivable collection, changes in
tariffs and other trade barriers, adverse foreign tax consequences, and burdens
of complying with a variety of foreign laws. There can be no assurance that
these factors will not have a material adverse impact on the Company's ability
to increase its international sales. Although the Company's international sales
are denominated in U.S. dollars, the Company may encounter exchange rate risk in
the event international sales are denominated in a currency other than U.S.
dollars in future periods. The Company does not presently hedge against adverse
foreign currency fluctuations and does not currently anticipate entering into
hedging transactions in the future. See "Business."

CUSTOMER CONCENTRATION

Although none of the Company's existing customers accounted for 10% or more
of the Company's net sales in 1997, three customers each accounted for between
5% and 10% of 1997 net sales. Sales to each of these three customers exceeded 5%
of 1997 net sales as a result of the customers each purchasing an engine from
the Company. In the three months ended March 31, 1998, one customer that
purchased an engine accounted for approximately 22% of net sales and sales to
two customers each accounted for between 5% and 10% of net sales. In a given
period, a substantial portion of the Company's net sales may be attributable to
engine sales. The sale of engines or aircraft components and spare parts during
a given period may result in a customer being considered a significant customer
of the Company for that period. While the Company believes it currently has no
customer the loss of which would have a material adverse effect on the Company's
results of operations, the loss of significant customers in future periods, or
an increased dependence on significant customers due to engine sales or other
transactions, may result in a material adverse effect on the Company's results
of operations. See "Business."

PRODUCT LIABILITY

10
<PAGE> 12

part sold or leased by the Company were installed in an incident-related
aircraft. The Company currently has in force product liability insurance with
coverage limits for each occurrence that it believes to be in a sufficient
amount and on terms that are generally consistent with industry practice. To
date, the Company has not experienced any aviation related claims, and has not
experienced any product liability claims related to its products. The risk of
such claims may increase in the event the Company acquires an FAA-licensed
repair facility. An uninsured or partially insured claim, or a claim for which
third-party indemnification is not available, could have a material adverse
effect on the Company's financial condition and results of operations and may
adversely affect the Company's reputation in the aircraft components and spare
parts industry. See "Business -- Product Liability."

COMPETITION

The international aircraft components and spare parts redistribution market
is highly competitive. The market consists of a limited number of
well-capitalized companies selling a broad range of products and numerous small
competitors serving distinct market niches. Certain of these competitors have
substantially greater financial, marketing and other resources than does the
Company. The Company believes that current industry trends will benefit larger,
well-capitalized companies. The Company believes that range and depth of
inventories, quality and traceability of products, service and price are the key
competitive factors in the industry. The principal companies with which the
Company competes are AAR Corp., The AGES Group, Aviation Sales Company, AVTEAM,
Inc., Banner Aerospace and The Memphis Group, all of which are significantly
larger than the Company. Customers in need of aircraft components and spare
parts have access, through computer-generated inventory catalogues, to a broad
array of suppliers, including aircraft manufacturers, airlines and aircraft
services companies, which may have the effect of increasing competition for, and
lowering prices on, aircraft components and spare parts. See
"Business -- Competition."

EFFECT OF GENERAL ECONOMIC CONDITIONS

The Company's business is directly related to economic factors that affect
the airline industry, including the price of aviation fuel, demand for air
travel, availability of new aircraft and general economic conditions. When these
factors adversely affect the airline industry, such factors tend to exert
downward pressure on prices for aircraft components and spare parts. In
addition, days in receivables and difficulties in collecting accounts receivable
could be expected to increase in an adverse economic environment. As the price
of aviation fuel increases, older aircraft become less competitive when compared
with newer, more fuel efficient aircraft, with the result that demand for older
aircraft, and their associated components and spare parts, may decrease.
Although the Company believes that current economic conditions favor continued
growth in the markets it serves, a future economic slowdown or recession could
adversely affect the Company's ability to maintain profitability. See
"Business."

OFFERING PRICE DETERMINATION; ABSENCE OF PUBLIC MARKET; PRICE FLUCTUATIONS

The public offering price of the Common Stock has been determined by the
Company and Cruttenden Roth Incorporated, the Representative of the Underwriters
(the "Representative") and does not necessarily bear any relationship to the
assets, book value, or earnings history of the Company or any other investment
criteria. Prior to this offering, there has been no public market for the
Company's Common Stock. Although the Common Stock has been approved for
quotation on the Nasdaq National Market upon notice of issuance, there can be no
assurance that an active trading market will develop. Factors such as quarterly
fluctuations in results of operations, the Company's ability to meet analysts'
expectations, changes in financial estimates by securities analysts or market
conditions in general may cause the market price of the Common Stock to
fluctuate, perhaps substantially. In addition, in recent years the stock market
has experienced significant price and volume fluctuations. These fluctuations,
which are often unrelated to the operating performance of specific companies,
have had a substantial effect on the market price of the stock of many small
capitalization companies such as the Company. Factors such as those cited above,
as well as other factors that may be unrelated to the operating performance of
the Company and may be beyond its control, could adversely affect the price of
the Company's Common Stock. See "Underwriting."

11
<PAGE> 13

SHARES ELIGIBLE FOR FUTURE SALE; RIGHTS TO ACQUIRE SHARES

Following this offering, 4,100,000 of the Company's outstanding shares of
Common Stock held by Messrs. Karl F. Brown and Herman O. Brown, Jr. (the
"Existing Common Stockholders") will be "restricted securities" and may in the
future be sold upon registration or in compliance with an exemption from
registration such as the exemption provided by Rule 144 adopted under the 1933
Act. Rule 144 as currently in effect generally provides that beneficial owners
of shares who have held such shares for one year may sell within a three-month
period a number of shares not exceeding the greater of 1% of the total
outstanding shares or the average trading volume of the shares during the four
calendar weeks preceding such sale. The outstanding restricted shares of Common
Stock are eligible to be sold in accordance with Rule 144 commencing 90 days
following the date of this Prospectus. Pursuant to the terms of the Underwriting
Agreement, the Representative has required that sales of the outstanding
restricted shares of Common Stock may not commence until 12 months following the
date of this Prospectus without the prior written consent of the Representative.
Future sales of restricted shares of Common Stock under Rule 144 or otherwise
could negatively impact the market price of the Common Stock. See "Shares
Eligible For Future Sale."

At the date of this Prospectus, the Company has reserved 450,000 shares of
Common Stock for issuance upon exercise of options granted under its 1998
Omnibus Stock Option Plan (the "Option Plan"), of which options to purchase
263,600 shares were outstanding as of April 30, 1998. The exercise prices of the
options outstanding are between $6.00 and $6.60 per share. At the completion of
this offering, the Representative will receive warrants (the "Representative's
Warrants") to purchase up to 200,000 shares of Common Stock at an exercise price
of $7.63 during a period of four years commencing one year following the date of
this Prospectus. During the terms of the outstanding options and the
Representative's Warrants, the holders thereof are given the opportunity to
profit from a rise in the market price of the Common Stock, and the exercise
thereof may dilute the ownership interests of existing stockholders, including
investors in this offering. The existence of options and the Representative's
Warrants may adversely affect the terms on which the Company may obtain
additional equity financing in the future. Moreover, the holders are likely to
exercise their rights to acquire Common Stock at a time when the Company would
otherwise be able to obtain capital on terms more favorable than through the
exercise of such options and warrants. See "Management -- Stock Option Plan" and
"Underwriting."

CONTROL BY PRINCIPAL STOCKHOLDERS; BENEFITS TO RELATED PARTIES

Upon consummation of this offering, the Existing Common Stockholders will
own 67.2% of the Company's outstanding Common Stock (64.1% if the over-allotment
option is fully exercised). Of such outstanding Common Stock, 1,025,000 shares
are the subject of a voting trust under which David M. Furr, a director of the
Company, has been vested with all voting rights relating to such Common Stock.
As a result, Messrs. Karl F. Brown and David M. Furr will, as a practical
matter, exercise control over the activities of the Company, including the
election of directors and other matters submitted to the stockholders for
approval such as acquisitions, mergers or changes in the capitalization of the
Company. The Existing Common Stockholders will receive S Corporation
distributions and will be repaid indebtedness owed by the Company to such
persons from a portion of the proceeds of this offering. The Company will also
reduce the outstanding balance of its bank credit facility using a portion of
the proceeds of this offering, as to which Karl F. Brown has provided a personal
guarantee. Such guarantee will be released upon completion of this offering. See
"S Corporation Distributions," "Management" and "Principal Stockholders."

ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER AND STATUTORY PROVISIONS

The Company's Certificate of Incorporation authorizes the issuance of up to
2,000,000 shares of Preferred Stock. The Preferred Stock may be issued in series
with the material terms of any series determined solely by the Board of
Directors. Such terms would likely include dividend rights, conversion features,
voting rights, redemption rights and liquidation preferences. The Company does
not currently anticipate that it will issue any Preferred Stock. However, if the
Company does issue any series of Preferred Stock in the future, it is likely
that such shares will have dividend privileges and liquidation preferences
superior to those of the Common Stock. Further, the Preferred Stock may be
issued with voting, conversion or other terms
12
<PAGE> 14

determined by the Board of Directors including, among others, dividend payment
requirements, redemption provisions, preferences as to dividends and
distributions, and preferential voting rights.

The Company's Certificate of Incorporation contains certain other
provisions that could have the effect of making it more difficult for a third
party to acquire, or discourage a third party from attempting to acquire,
control of the Company. Such provisions include a limitation on the ability of
stockholders to change the number of directors constituting the complete Board
of Directors without the affirmative vote of at least 66 2/3% of the outstanding
Common Stock and a limitation on the ability to amend either the Certificate of
Incorporation or By-Laws of the Company without the affirmative approval of
stockholders holding at least 75% of the outstanding shares of Common Stock. In
addition, in the event of certain change of control transactions, the vesting of
options and the expiration of any restriction periods on stock awards under the
Option Plan may be accelerated. These provisions could have the effect of
delaying, deferring or preventing a change in control of the Company. The
Company is also subject to the provisions of Section 203 of the General
Corporation Law of the State of Delaware ("Section 203") regulating corporate
takeovers. Section 203 prevents certain Delaware corporations from engaging,
under certain circumstances, in a "business combination" with an "interested
stockholder" (as defined) for three years following the date that such
stockholder became an "interested stockholder," unless the business combination
or interested stockholder is approved in a prescribed manner. Section 203 could
delay or make more difficult a merger, tender offer or proxy contest involving
the Company. See "Description of Securities."

ABSENCE OF DIVIDENDS

The Company does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future. The Company intends to retain profits, if any,
to fund growth and expansion. In connection with the Company's termination of
its S Corporation status, the Company agreed to distribute a total of
approximately $2.4 million, representing approximately 50% of the undistributed
accumulated taxable income and an amount equal to the estimated 1998 tax
liability of the Existing Common Stockholders through the date of termination of
the S Corporation election. See "Use of Proceeds," "S Corporation Distributions"
and "Dividend Policy."

DILUTION

This offering will result in immediate substantial dilution of $3.94
(63.0%) per share, which amount represents the difference between the pro forma
net tangible book value per share after the offering and the public offering
price of $6.25 per share. See "Dilution."

LIMITATION OF LIABILITY

The Company's Certificate of Incorporation provides that directors of the
Company shall not be personally liable for monetary damages to the Company or
its stockholders for a breach of fiduciary duty in their capacities as
directors, subject to limited exceptions. Although such limitation of liability
does not affect the availability of equitable remedies such as injunctive relief
or rescission, the presence of these provisions in the Certificate of
Incorporation could prevent the recovery of monetary damages against directors
of the Company. See "Management -- Limitation of Liability and Indemnification."

RISKS RELATING TO FORWARD-LOOKING STATEMENTS

This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the 1933 Act and Section 21E of the 1934 Act. Such
forward-looking statements include, but are not limited to, statements regarding
the Company's marketing plans, expectations concerning growth in the market, and
the planned use of proceeds. Actual results could differ from those projected in
any forward-looking statement. The forward-looking statements are made as of the
date of this Prospectus and the Company assumes no obligation to update such
forward-looking statements, or to update the reasons why actual results may
differ from those projected in the forward-looking statements. Numerous factors,
including without limitation those factors mentioned in this Risk Factors
section, could cause future results to differ substantially from those
contemplated in such forward-looking statements. A number of the factors that
may influence future results of operations are outside the Company's control.
The safe harbor for forward-looking statements provided by Section 27A of the
1933 Act and Section 21E of the 1934 Act is not applicable to limit the
Company's liability for sales made in this offering.

13
<PAGE> 15

USE OF PROCEEDS

The net proceeds from the sale of the 2,000,000 shares of Common Stock
offered hereby are estimated to be approximately $10.7 million ($12.4 million if
the Underwriters' over-allotment option is fully exercised).

The primary purpose of this offering is to provide additional capital
required to support the Company's continued growth and expansion. The Company
intends to use approximately $3.5 million to purchase additional inventory of
aircraft components and spare parts, including JT9 or CF6 engines in connection
with the Company's entry into the wide-body aircraft market. An additional $3.1
million will be used to repay indebtedness owed, and S Corporation distributions
payable, to the Existing Common Stockholders. Advances from the Existing Common
Stockholders, which totalled approximately $650,000 at April 30, 1998, bear
interest at rates between 6% and 8% per annum, are unsecured and mature on or
prior to June 30, 1998. See "S Corporation Distributions" for further
information concerning amounts to be distributed to the Existing Common
Stockholders in connection with the termination of the Company's S Corporation
status. An additional $3.0 million will be used to repay a portion of
indebtedness expected to be outstanding under a $10.0 million credit facility
maturing in September 1998 (the "Credit Facility") with NationsBank, N.A.
("NationsBank"), which currently bears interest at the London Interbank Offered
Rate ("LIBOR") plus an amount between 1.75% to 2.25%.

The balance of the net proceeds of this offering, or $1.1 million, together
with available borrowings under the Credit Facility, will be used to purchase
aircraft and engines for disassembly, sale or lease, to increase the Company's
inventory of aircraft components and spare parts, to fund strategic acquisitions
and for other working capital needs. The Company intends to use an undetermined
portion of the net proceeds of this offering and available borrowings to pursue
strategic acquisitions of FAA-licensed repair facilities, aircraft component and
spare part redistributors, and small manufacturers of aviation products.
Although the Company has identified a number of companies engaged in these
activities, the Company has no agreements, understandings or commitments with
respect to any acquisitions and there can be no assurance that any acquisitions
will be completed. Amounts allocated to working capital will also be used to
fund additional marketing activities, for the hiring of additional customer
support personnel and to hire additional personnel experienced in avionics and
instrumentation as the Company executes its strategy of expanding in this market
segment. See "Business -- Business Strategy."

The foregoing represents the Company's best estimate of the use of the net
proceeds to be received in this offering, based on current planning and business
conditions. However, the Company reserves the right to change such uses when and
if market conditions or unexpected changes in operating conditions or results of
operations occur. The amounts actually expended for each use may vary
significantly depending upon a number of factors including, but not limited to,
future growth and the amount of cash generated by the Company's operations. The
Company believes that its existing capital resources and the net proceeds of
this offering will be sufficient to maintain its current and planned operations
for a period of at least 18 months from the date of this Prospectus. Net
proceeds not immediately required for the purposes described above will be
invested principally in U.S. government securities, short-term certificates of
deposit, money market funds or other short-term, interest-bearing securities.

14
<PAGE> 16

S CORPORATION DISTRIBUTIONS

At all times immediately prior to this offering, the Company was treated
for federal and state income tax purposes as an S Corporation under the Internal
Revenue Code of 1986, as amended (the "Code"), and comparable state tax laws. As
a result, earnings of the Company were taxed for federal and state income tax
purposes directly to the Existing Common Stockholders, rather than to the
Company. In connection with its reincorporation in the State of Delaware, the
Company terminated its S Corporation election. In connection with the
termination of its S Corporation status, the Company will distribute
approximately $2.4 million to the Existing Common Stockholders. Had the Company
terminated its S Corporation status as of March 31, 1998, the Company estimates
the distribution would have totaled $2.7 million. The distribution is intended
to provide the Existing Common Stockholders with funds sufficient to pay
personal tax liabilities related to 1998 taxable income expected to be earned
prior to the date of the termination of the Company's S Corporation election,
together with an amount equal to approximately 50% of the previously
undistributed accumulated taxable income. A portion of the net proceeds to be
received by the Company from this offering will be used to pay such
distribution. See "Use of Proceeds." After the distribution, all remaining
undistributed accumulated taxable income will be reclassified to additional
paid-in capital.

The Company and the Existing Common Stockholders are parties to an S
Corporation Tax Allocation and Indemnification Agreement (the "Tax Agreement")
relating to their respective income tax liabilities. The Tax Agreement provides
for the indemnification by the Company of the Existing Common Stockholders for
any adjustments causing an increase in the Existing Common Stockholders' federal
and state income tax liability (including interest and penalties) related to the
Company's tax years prior to the termination of the S Corporation election,
unless such adjustments result in or are related to a corresponding decrease in
the Existing Common Stockholders' federal and state income tax liability with
respect to another S Corporation taxable year. Subject to certain limitations,
the Tax Agreement also provides that the Company will be indemnified by the
Existing Common Stockholders with respect to federal and state income taxes
(plus interest and penalties) shifted from an S Corporation taxable year to a
Company taxable year subsequent to the consummation of this offering. The
Existing Common Stockholders have given no security for their indemnification
obligation and, therefore, the Company's ability to collect such payments is
dependent upon the financial condition of the Existing Common Stockholders at
the time any such indemnification obligation arises, if ever. The Company is not
aware of any tax adjustments that may arise under the Tax Agreement. Any payment
made by the Company to the Existing Common Stockholders pursuant to the Tax
Agreement may be considered by the Internal Revenue Service or state tax
authorities to be non-deductible by the Company for income tax purposes. See
Note 13 to Financial Statements.

DIVIDEND POLICY

Except as described under "S Corporation Distributions," the Company has
never declared or paid any cash dividends or distributions on its capital stock.
The Company anticipates that for the foreseeable future all earnings will be
retained for use in the Company's business and no cash dividends will be paid to
stockholders. Any payment of cash dividends in the future on the Common Stock
will be dependent upon the Company's financial condition, results of operations,
current and anticipated cash requirements, plans for expansion, restrictions, if
any, under debt obligations, as well as other factors that the Board of
Directors deems relevant. The Company's current Credit Facility does not
prohibit or restrict the payment of cash dividends.

15
<PAGE> 17

DILUTION

As of March 31, 1998, the Company had a net tangible book value of $5.80
million or $1.41 per share based on 4,100,000 pro forma shares of Common Stock
outstanding. After giving effect to the sale of the 2,000,000 shares of Common
Stock offered hereby at $6.25 per share and the S Corporation distributions, the
pro forma net tangible book value of the Company as of March 31, 1998 would have
been $14.08 million, or $2.31 per share. This amount represents an immediate
increase in pro forma net tangible book value of $0.90 per share to the existing
holders of Common Stock and an immediate dilution of $3.94 per share to new
investors. "Dilution" is determined by subtracting pro forma net tangible book
value per share after the offering from the offering price per share of Common
Stock, as illustrated by the following table:

<TABLE>
<S> <C> <C>
Public offering price per share............................. $6.25
Pro forma net tangible book value per share as of March
31, 1998............................................... $1.41
Increase in pro forma net tangible book value per share
attributable to new investors.......................... 0.90
-----
Pro forma net tangible book value per share after the
offering.................................................. 2.31
-----
Dilution per share to new investors......................... $3.94
=====
</TABLE>

The following table sets forth as of March 31, 1998, the number of shares
of Common Stock purchased for cash, the total consideration paid and the average
cash price per share paid by the Existing Common Stockholders and by new
investors (assuming the sale of 2,000,000 shares of Common Stock at $6.25 per
share, before deduction of underwriting discounts and commissions and other
estimated offering expenses):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders....... 4,100,000 67.2% $ 3,329,000(1) 21.0% $0.81
New investors............... 2,000,000 32.8 12,500,000 79.0 $6.25
--------- ----- ----------- -----
Total.................. 6,100,000 100.0% $15,829,000 100.0%
========= ===== =========== =====
</TABLE>

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

(1) Includes Common Stock of $4,100, estimated undistributed accumulated taxable
income of $3,279,900 that will be reclassified to additional paid-in capital
upon termination of the Company's S Corporation status and a one-time
benefit for net deferred income tax assets of approximately $45,000.

The foregoing information assumes no exercise of the over-allotment option,
no exercise of outstanding options to purchase an aggregate of 263,600 shares of
Common Stock, and no exercise of the Representative's Warrants. See
"Management -- Stock Option Plan," "Description of Securities" and
"Underwriting." To the extent that currently outstanding options or warrants are
exercised, there will be further dilution to new investors.

16
<PAGE> 18

CAPITALIZATION

The following table sets forth the pro forma capitalization of the Company
as of March 31, 1998, and as adjusted to give effect to the reincorporation of
the Company in the State of Delaware and the sale of the 2,000,000 shares of
Common Stock offered at $6.25 per share (and after deducting underwriting
discounts and commissions and estimated offering expenses).

<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------------
PRO FORMA(1) AS ADJUSTED(2)
------------ --------------
(IN THOUSANDS)
<S> <C> <C>
Stockholders' equity:
Preferred Stock, par value $.01 per share; 2,000,000
shares authorized; no shares issued or outstanding,
as adjusted.......................................... $ -- $ --
Common Stock, par value $.001 per share; 20,000,000
shares authorized; 4,100,000 shares issued and
outstanding, 6,100,000 shares issued and outstanding,
as adjusted(2)....................................... 4 6
Additional paid-in capital(1)........................... 3,325 14,073
------ -------
Total stockholders' equity...................... $3,329 $14,079
====== =======
</TABLE>

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

(1) Pro forma information at March 31, 1998 has been presented as if the
reincorporation was completed on March 31, 1998 and gives effect to (i) a
one-time benefit for net deferred income tax assets of approximately
$45,000, (ii) the S Corporation distributions to the Existing Common
Stockholders, and (iii) the reclassification of $3,279,900 of undistributed
accumulated taxable income to additional paid-in capital upon termination of
the S Corporation election. See "S Corporation Distributions" and Note 13 to
Financial Statements.

(2) Gives effect to the reincorporation in the State of Delaware and excludes
(i) 300,000 shares of Common Stock issuable upon exercise of the
over-allotment option, (ii) 263,600 shares of Common Stock issuable upon
exercise of outstanding options at April 30, 1998, and (iii) 200,000 shares
of Common Stock issuable upon exercise of the Representative's Warrants.

17
<PAGE> 19

SELECTED FINANCIAL DATA

The selected financial data set forth below as of December 31, 1997 and for
the years ended December 31, 1996 and 1997 have been derived from the financial
statements of the Company included elsewhere herein, which have been audited by
Cherry, Bekaert & Holland, L.L.P., and should be read in conjunction with those
financial statements (including the Notes thereto) and with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" also
included elsewhere herein. The selected financial data as of March 31, 1998 and
for the three months ended March 31, 1997 and 1998 have been derived from the
unaudited financial statements of the Company for such periods and include, in
the opinion of management, all adjustments (consisting of normal recurring
adjustments) necessary for the fair presentation of the financial condition and
results of operations at and for such periods. The results of operations for the
three months ended March 31, 1998 are not necessarily indicative of results to
be expected for the year ending December 31, 1998.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
------------------ -----------------
1996 1997 1997 1998
------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................................. $8,352 $13,250 $2,337 $3,677
Cost of sales............................................. 5,479 7,946 1,402 2,110
------ ------- ------ ------
Gross profit.............................................. 2,873 5,304 935 1,567
Selling and marketing..................................... 551 703 125 231
General and administrative................................ 377 564 134 162
------ ------- ------ ------
Total expenses............................................ 928 1,267 259 393
------ ------- ------ ------
Operating income.......................................... 1,945 4,037 676 1,174
Interest and other, net................................... (2) 36 3 (59)
------ ------- ------ ------
Net income(1)............................................. $1,943 $ 4,073 $ 679 $1,115
====== ======= ====== ======
PRO FORMA DATA (UNAUDITED):
Historical net income..................................... $1,943 $ 4,073 $ 679 $1,115
Income taxes.............................................. 777 1,629 272 446
------ ------- ------ ------
Net income(1)............................................. $1,166 $ 2,444 $ 407 $ 669
====== ======= ====== ======
Basic earnings per share(2)(3)............................ $ .28 $ .60 $ .10 $ .16
Diluted earnings per share(2)(3).......................... $ .28 $ .59 $ .10 $ .16
Weighted average number of diluted shares(3).............. 4,108 4,108 4,108 4,108
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1998
DECEMBER 31, -----------------------
1997 ACTUAL AS ADJUSTED(4)
------------ ------ --------------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................................... $4,198 $4,864 $12,914
Inventory................................................. 5,625 9,205 9,205
Accounts receivable....................................... 1,959 1,294 1,294
Total assets.............................................. 9,049 12,704 16,299
Total liabilities......................................... 4,180 6,720 2,220
Stockholders' equity...................................... 4,869 5,984 14,079
</TABLE>

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

18
<PAGE> 20

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

OVERVIEW

The Company is a leading international supplier of aircraft components and
spare parts primarily to maintenance and repair facilities, major commercial
passenger and cargo airlines and other redistributors located throughout the
world. The Company's net sales are principally derived from the redistribution
of engine components and spare parts for the Pratt & Whitney JT8 series of
engines and, to a lesser extent, the General Electric CFM56, as well as rotable,
repairable and expendable airframe components and spare parts for Boeing,
McDonnell-Douglas and Airbus aircraft. The Company acquires engine and airframe
components and spare parts for redistribution through purchases of surplus
aircraft for disassembly, bulk purchases of aircraft components and spare parts
from aircraft operators, purchases of individual components and spare parts from
other redistributors, consignments from aircraft operators and others, and
exchanges of inventoried aircraft components and spare parts for components and
spare parts that require service or overhaul.

The Company's net sales increased 58.6% to over $13 million in 1997 and
increased 57.4% to $3.7 million in the three months ended March 31, 1998
compared to the same period in 1997. The Company believes the growth in net
sales reflects the broadening of the Company's customer base, emphasizing sales
of engines and engine components and spare parts for the JT8 and CFM56 series
engines, capitalizing on the Company's expertise in Boeing 737 and
McDonnell-Douglas MD-80 and DC-9 aircraft, and achieving diversity in sales to
both domestic and international customers of a balanced mix of engine and
airframe components and spare parts. In this regard, with the exception of the
largest participants in its industry, the Company believes it is one of the few
aircraft component and spare part redistributors of its size engaged in the sale
of both engine and airframe components and spare parts to a broad spectrum of
domestic and international customers.

The Company anticipates that the capital provided by this offering will
allow it to (i) expand its existing business through entry into the wide-body
aircraft market for engines and airframe components and spare parts, (ii)
increase inventories of components and spare parts and provide the Company with
financial flexibility to purchase additional engines for both narrow-body and
wide-body aircraft, (iii) enter the market for inventory management services and
increase leasing of engines and airframe components and spare parts, (iv) expand
its purchases of complete aircraft that can be leased to third parties and
which, upon expiration of the lease term, can be disassembled for their
components and spare parts, and (v) accelerate its market penetration in the
international market for complete engines and engine and airframe components and
spare parts. The Company also anticipates that a portion of the proceeds of this
offering will be utilized to acquire FAA-licensed repair facilities, aircraft
component and spare part redistributors, and small manufacturers of aviation
products. The Company believes that, through strategic acquisitions, it may be
successful in vertically integrating repair and manufacturing activities and
aircraft component and spare part redistribution. The Company expended over $3
million in repairs in 1997 and believes that acquisition of one or more repair
facilities will in particular offer synergistic benefits to the Company.
Although the Company has no agreements, understandings or commitments with
respect to potential acquisitions, the Company has identified a number of
industry participants with which it may initiate discussions following this
offering.

The Company records complete engines held for resale or lease at the lower
of cost or market. Engine and airframe components and spare parts are initially
recorded at cost. Cost of sales relative to bulk purchases of engine and
airframe components and spare parts are recorded for all components and spare
parts in the bulk purchase at a historical ratio of cost of sales to net sales.
The Company records the cost of each engine and airframe component and spare
part sold at the time the related sales are recognized, based on such ratio.
Revenue from the sale of aircraft components and spare parts is recognized when
products are shipped to the customer. Revenue from engine sales is recognized
when the Company has received all consideration and title and the risk of
ownership are transferred to the customer, which is generally upon delivery of
the engine.

Prior to this offering, the Company elected for federal and state income
tax purposes to be treated as an S Corporation under the Code and comparable
state tax laws. As a result, earnings of the Company were taxed for federal and
state income tax purposes directly to the Existing Common Stockholders, rather
than to the

19
<PAGE> 21

Company. Immediately prior to the date of this Prospectus, the Company
terminated its S Corporation election and converted from an S Corporation to a C
Corporation in conjunction with its reincorporation in the State of Delaware.
The statement of operations data for all periods includes a pro forma provision
for federal and state income taxes as if the Company were subject to federal and
state income taxes for all periods presented. This pro forma provision is
computed using a combined federal and state tax rate of 40%. See "S Corporation
Distributions" and Note 13 to Financial Statements.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
of net sales represented by certain items included in the Company's statements
of operations:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
-------------- --------------
1996 1997 1997 1998
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net sales.......................................... 100.0% 100.0% 100.0% 100.0%
Cost of sales...................................... 65.6 60.0 60.0 57.4
----- ----- ----- -----
Gross profit....................................... 34.4 40.0 40.0 42.6
Selling and marketing.............................. 6.6 5.3 5.3 6.3
General and administrative......................... 4.5 4.3 5.7 4.4
----- ----- ----- -----
Operating income................................... 23.3 30.4 29.0 31.9
Interest and other, net............................ -- .3 -- (1.6)
----- ----- ----- -----
Net income......................................... 23.3 30.7 29.0 30.3
Pro forma income taxes............................. 9.3 12.3 11.6 12.1
----- ----- ----- -----
Pro forma net income............................... 14.0% 18.4% 17.4% 18.2%
===== ===== ===== =====
</TABLE>

Comparison of Three Months Ended March 31, 1997 and 1998

Net sales increased $1.3 million, or 57.4%, from $2.3 million in the three
months ended March 31, 1997 to $3.7 million in the three months ended March 31,
1998. Substantially all of the increase in net sales was accounted for by higher
sales of aircraft components and spare parts. One complete engine was sold in
each of the three month periods ended March 31, 1997 and 1998, although the
price of the engine sold in 1998 was 17% higher than the price of the engine
sold in the comparable prior period. Sales to international customers remained
constant at $500,000 in each period. However, as a percentage of net sales,
international sales decreased from 21% of net sales in the 1997 period to 13% of
net sales in the 1998 period.

Cost of sales increased $708,000, or 50.5%, from $1.4 million in the three
months ended March 31, 1997 to $2.1 million in the three months ended March 31,
1998. Gross profit increased $632,000, or 67.7%, from $935,000 in the three
months ended March 31, 1997 to $1.6 million in the three months ended March 31,
1998. As a percentage of net sales, gross profit increased from 40.0% in the
three months ended March 31, 1997 to 42.6% in the comparable 1998 period. The
increase was due primarily to higher sales of aircraft components and spare
parts that were acquired in prior bulk purchases, with an associated lower cost
of sales, and higher sales of engine components and spare parts, which generally
have higher margins than airframe components and spare parts.

Selling and marketing expenses increased $106,000, or 84.7%, from $125,000
in the three months ended March 31, 1997 to $231,000 in the three months ended
March 31, 1998. This increase primarily reflects higher commissions paid to
sales agents, higher compensation to sales personnel and travel related sales
costs. As a percentage of net sales, selling and marketing expenses increased
from 5.3% in the three months ended March 31, 1997 to 6.3% in the comparable
1998 period.

General and administrative expenses increased $28,000, or 21.3%, from
$134,000 in the three months ended March 31, 1997 to $162,000 in the comparable
1998 period. This increase reflects additional staffing expense and a portion of
the increase in occupancy charges due to the Company's relocation of its

20
<PAGE> 22

headquarters facility. As a percentage of net sales, general and administrative
expenses decreased from 5.7% in the three months ended March 31, 1997 to 4.4% in
the three months ended March 31, 1998.

Net other income (expense) decreased from net other income of $3,000 in the
three months ended March 31, 1997 to net other expense of $59,000 in the three
months ended March 31, 1998. The increase in net other expense reflects higher
levels of indebtedness outstanding under the Credit Facility and a decrease in
interest income.

As a result of the above, net income increased $436,000, or 64.2%, from
$679,000 in the three months ended March 31, 1997 to $1.1 million in the three
months ended March 31, 1998. As the Company was not subject to federal and state
income taxes during either period, net income represents the difference between
gross profit and other expenses. To allow comparisons with C corporations, pro
forma federal and state income taxes have been assumed at a combined 40% rate.
Based on this assumption, the Company would have incurred pro forma income taxes
of $272,000 in the three months ended March 31, 1997 and $446,000 in the three
months ended March 31, 1998, resulting in pro forma net income of $407,000 and
$669,000 in the three months ended March 31, 1997 and 1998, respectively.

Comparison of Years Ended December 31, 1996 and 1997

Net sales increased $4.8 million, or 58.6%, from $8.4 million in 1996 to
$13.2 million in 1997. The increase in net sales primarily reflects the sale of
seven complete engines in 1997, as compared to three complete engines in 1996.
Sales of engines increased $2.3 million from $1.49 million in 1996 to $3.75
million in 1997. Average unit prices of the complete engines sold in 1997
increased by approximately 7.5% from 1996. Sales to international customers
increased $3.2 million, from $1.0 million in 1996 to $4.2 million in 1997, as
the Company obtained new customers in Europe and the Far East during 1997.

Cost of sales increased $2.4 million, or 45.0%, from $5.5 million in 1996
to $7.9 million in 1997. Gross profit increased from $2.9 million in 1996 to
$5.3 million in 1997, reflecting an increase in gross profit as a percentage of
net sales from 34.4% to 40.0%. The increase in gross profit was due primarily to
increased engine and engine component and spare part sales in 1997 as compared
to 1996, which generally carry higher margins than airframe components and spare
parts.

Selling and marketing expenses increased $152,000, or 27.6%, from $551,000
in 1996 to $703,000 in 1997. This increase primarily reflects commissions paid
to agents in 1997, higher compensation to sales personnel and travel related
sales costs. As a percentage of net sales, selling and marketing expenses
declined from 6.6% in 1996 to 5.3% in 1997.

General and administrative expenses increased $186,000, or 49.4%, from
$378,000 in 1996 to $564,000 in 1997. This increase reflects increased personnel
expense resulting from higher staffing levels, expenses associated with the
Company's relocation to its new headquarters facility, increased insurance
expense, and an increase in the Company's discretionary contribution to the
employee profit sharing plan. As a percentage of net sales, general and
administrative expenses declined from 4.5% in 1996 to 4.3% in 1997.

Net other income (expense) increased from net other expense of $1,000 in
1996 to net other income of $36,000 in 1997. While interest expense increased
from $74,000 in 1996 to $79,000 in 1997, interest income increased from $71,000
in 1996 to $81,000 in 1997 and other income increased from $1,000 in 1996 to
$35,000 in 1997.

As a result of the above, net income increased $2.1 million, or 109.6%,
from $1.9 million in 1996 to $4.1 million in 1997. As the Company was not
subject to federal and state income taxes, net income represents the difference
between gross profit and other expenses. To allow comparisons with C
Corporations, pro forma federal and state income taxes have been assumed at a
combined 40% rate. Based on this assumption, the Company would have incurred pro
forma income taxes of $777,000 in 1996 and $1.6 million in 1997, resulting in
pro forma net income of $1.2 million and $2.4 million in 1996 and 1997,
respectively.

21
<PAGE> 23

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of liquidity to date have been comprised of
cash flow from operating activities, borrowings under the Credit Facility and
advances from the Existing Common Stockholders. The Company requires capital for
the procurement of inventory, to fund the servicing and overhaul of engine and
airframe components and spare parts performed by third-party repair facilities,
for normal operating expenses and for general working capital purposes.

The Credit Facility was initially established with NationsBank in June
1995, and has been renewed annually through September 1998. The Credit Facility
currently permits borrowings of up to $10.0 million as a revolving credit, with
principal due on maturity and interest payable monthly commencing December 1997.
The Credit Facility bears interest at LIBOR plus an amount between 1.75% and
2.25% and is secured by accounts receivable, inventory and the personal
guarantee of Karl F. Brown. As of March 31, 1998, the Company had $3.5 million
outstanding under the Credit Facility, which amount increased to $5.9 million
outstanding at May 27, 1998. The personal guarantee of the Credit Facility by
Karl F. Brown will be released upon completion of this offering.

Since 1993, the Company has periodically received advances from the
Existing Common Stockholders, the proceeds of which were used for working
capital purposes. Advances received from the Existing Common Stockholders bear
interest at rates between 6% and 8% per annum and mature June 30, 1998. At March
31, 1998, amounts outstanding and owed to the Existing Common Stockholders
totalled approximately $1.5 million. The amounts outstanding were reduced to
$650,000 as of April 30, 1998. Upon completion of this offering, the Company
will apply an aggregate of approximately $3.7 million to the reduction of
indebtedness outstanding under the Credit Facility and repayment of advances
from the Existing Common Stockholders, which will reduce current liabilities by
an equal amount. In connection with the termination of its S Corporation
election, the Company also anticipates distributing approximately $2.4 million
to the Existing Common Stockholders from the proceeds of this offering. See "Use
of Proceeds" and "S Corporation Distributions."

As of March 31, 1998, the Company's principal sources of liquidity included
cash and cash equivalents of $1.0 million and net accounts receivable of $1.3
million. The Company had working capital of $4.9 million and no long-term debt
as of March 31, 1998.

For the three months ended March 31, 1998, operating activities used cash
of $1.2 million, primarily for increases in inventory, partially offset by net
income, decreases in trade and other receivables and increases in accounts
payable and accrued expenses. Net cash used in investing activities during the
three months ended March 31, 1998 was $245,000, reflecting the purchase of
investments and fixed assets. Net cash provided by financing activities during
the three months ended March 31, 1998 was $1.7 million, consisting of borrowings
under the Credit Facility partially offset by deferred offering costs.

For the year ended December 31, 1997, operating activities used cash of
$630,000, primarily for increases in trade receivables and inventory, partially
offset by net income. Net cash used in investing activities during the year
ended December 31, 1997 was $548,000, reflecting the purchase of certain fixed
assets and investments, while net cash provided by financing activities during
the same period was $155,000, consisting primarily of borrowings under the
Credit Facility and from the Existing Common Stockholders partially offset by S
Corporation distributions.

Historically, the Company's business has not required significant capital
expenditures. The Company's capital expenditures were approximately $40,000,
$263,000 and $70,000 in the years ended December 31, 1996 and 1997 and the three
months ended March 31, 1998, respectively. The increases in 1997 and the three
months ended March 31, 1998 primarily reflect capital expenditures on furniture
and fixtures installed in the new headquarters facility. The Company currently
has no material capital commitments.

The Company believes that existing cash balances, the Credit Facility and
the proceeds of this offering will be sufficient to meet the Company's capital
requirements for at least the next 18 months. Thereafter, if the Company's
capital requirements increase, the Company could be required to secure
additional sources of capital. There can be no assurance the Company will be
capable of securing additional capital or that the terms upon which such capital
will be available to the Company will be acceptable.

22
<PAGE> 24

INFLATION

Although the Company cannot accurately anticipate the effect of inflation
on its operations, the Company does not believe that inflation has had, or is
likely in the foreseeable future to have, a material effect on its results of
operations or financial condition. Increases in fuel costs due to inflation may
adversely affect demand for used aircraft that typically are less fuel
efficient, thereby decreasing demand for aircraft components and spare parts for
these aircraft.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 131, "Disclosure about Segments
of an Enterprise and Related Information" ("Statement 131"), which is effective
for financial statements with fiscal years beginning after December 15, 1997.
Statement 131 requires that public business enterprises report certain
information about operating segments in complete sets of financial statements of
the enterprise and in condensed financial statements of interim periods issued
to stockholders. Statement 131 also requires that public business enterprises
report certain information about their products and services, the geographic
areas in which they operate and their major customers.

In February 1998, the FASB issued Statement of Financial Accounting
Standards No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits" ("Statement 132"), which revises employers' disclosures
about pension and other postretirement benefit plans. Statement 132 does not
change the measurement or recognition of those plans, but requires additional
information on changes in benefit obligations and fair values of plan assets,
and eliminates certain disclosures previously required by SFAS Nos. 87, 88 and
106. Statement 132 is effective for financial statements with fiscal years
beginning after December 15, 1997.

The Company has not determined what additional disclosures, if any, may be
required by the provisions of Statements 131 and 132, but does not expect
adoption of either statement to have a material effect on its results of
operations.

YEAR 2000 ISSUE

The Company has reviewed all of its current computer applications with
respect to the year 2000 issue. The Company believes that certain of its
applications are substantially year 2000 compliant and that any additional costs
with respect to year 2000 compliance will not be material to the Company. The
Company is currently unable to determine the effect on it, if any, of year 2000
compliance by its customers or suppliers.

23
<PAGE> 25

BUSINESS

GENERAL

The Company's net sales increased 58.6% to over $13 million in 1997 and net
income increased approximately 110% to over $4 million in 1997. The growth in
net sales and net income reflects (i) increases in sales of complete engines and
engine components and spare parts, which generally carry higher margins than
airframe components and spare parts, (ii) an increase in the average unit price
per sale due to changes in the Company's product mix to encompass higher priced
engine and airframe component and spare part sales, (iii) diversification of the
Company's engine sales into new engine types such as the CFM56, and (iv)
increasing sales of complete engines and engine and airframe components and
spare parts to both domestic and international customers. The Company believes
it is one of the few aircraft component and spare part redistributors of its
size engaged in the sale of both engine and airframe components and spare parts
to a broad spectrum of domestic and international customers.

INDUSTRY OVERVIEW

The Company believes that the annual worldwide market for aircraft
components and spare parts is approximately $10 billion, of which approximately
$1.3 billion represents sales of aircraft components and spare parts to the
redistribution market. The Company believes that this market will continue to
grow due to the following factors:

Growth in Air Transit Activity. According to the Boeing Report, global air
travel is projected to increase approximately 75% by the year 2006, and the
number of passenger and cargo aircraft in service will increase approximately
48% to 17,000 from 11,500. While new aircraft sales remain strong, increased
demand for air travel is expected to cause aircraft operators to retain older
aircraft. As demand for air travel increases, demand for aircraft components and
spare parts is anticipated to grow as aircraft components and spare parts must
be serviced or replaced at specified intervals. The Boeing Report forecasts the
number of aircraft in the worldwide fleet will continue to increase, as
evidenced by the following chart:

24
<PAGE> 26
Line graph illustrating projected increase in number of aircraft in worldwide
fleet from 11,500 in 1996 to approximately 22,500 in year 2016. Side axis of
graph presents number of aircraft and bottom axis presents years.

[GRAPH]

Source: The Boeing Report

According to the Boeing Report, most of the aircraft delivered to cargo
carriers in the near future are expected to be used aircraft converted from
commercial passenger service. This expected trend appears to be materializing as
well-known cargo carriers have already expanded their fleets of wide-body
aircraft using the Boeing 767, the McDonnell-Douglas DC-10 and the Airbus A300.
In addition, the Boeing Report forecasts a shift to larger aircraft in the cargo
market, as evidenced by the following charts:

Pie chart graphs illustrating breakdown in small, medium and large cargo
aircraft in 1996 and 2006. Pie chart for 1996 sets forth breakdown of 43%, 37%
and 20% for small, medium and large cargo aircraft, respectively; pie chart
for 2006 sets forth breakdown of 38%, 34% and 28% for small, medium and large
cargo aircraft, respectively.

[PIE CHARTS]

<TABLE>
<CAPTION>
CARGO AIRCRAFT TYPE
--------------------------------------------------------
SMALL MEDIUM LARGE
(UNDER 30 TONNES) (30 TO 50 TONNES) (OVER 50 TONNES)
----------------- ----------------- ----------------
<S> <C> <C>
727 707 747
737 757 767
DC-9 DC-8 DC-10
BAe-146 A300 MD-11
BAC-111 A310
L-1011
</TABLE>

Source: The Boeing Report

25
<PAGE> 27

Increased Outsourcing of Inventory Management Function. As airlines have
come under increasing pressure to reduce the cost associated with air
transportation, airlines have made an effort to reduce their operating costs
where possible. While some operating costs are beyond an airline's direct
control, such as the price of aviation fuel, inventory outsourcing is one means
by which airlines can reduce their capital invested in inventory and achieve
certain economies of scale. A number of smaller and start-up airlines and air
cargo operators do not currently own an inventory of aircraft components and
spare parts, but rather have entered into agreements with redistributors to
supply all or a portion of their aircraft components and spare parts
requirements. Some airlines have also begun to outsource portions of their
purchasing services, repair and overhaul activities, and warehouse management.
The Company believes that the trend toward outsourcing of inventory management
services will offer opportunities for redistributors, such as the Company, to
expand their market share.

Increase in the Number of Older Commercial Aircraft. Increased demand for
air travel and air cargo deliveries, and the need for aircraft operators to
reduce operating and capital costs, have prompted many airlines to extend the
useful life of older aircraft. The installation of FAA-approved hush-kits and
extended life maintenance programs have also increased the useful life of many
older aircraft. As a result, most aircraft types have had a longer service life
than originally anticipated. The following chart illustrates the increase in the
worldwide aircraft fleet average age from 1965 through 1995:

Line graph illustrating historical increase in worldwide fleet average age from
less than 4 years in 1965 to 12 years in 1995. Side axis of graph presents
fleet average age expressed in years and bottom axis presents years.

[GRAPH]

Source: World Jet Inventory year-end 1996

Many foreign and domestic aircraft operators and cargo carriers are
increasing their fleets through the acquisition of less expensive used aircraft.
As older aircraft are transitioned from major domestic passenger airlines to
lower cost passenger airlines and cargo carriers, used aircraft have enjoyed
longer service lives than originally anticipated. Older aircraft generally
require more maintenance and replacement components and spare parts than new
aircraft. The FAA recently proposed significant reductions in the maximum
payloads on certain Boeing 727 aircraft modified from passenger to cargo
configurations due to concerns arising from safety and engineering tests. A
final decision on proposed rule changes by the FAA is not expected before April
1998. It is currently unclear what effect, if any, adoption of the proposed rule
changes relating to payloads on certain 727 aircraft would have on demand for
727 aircraft to be converted to cargo use.

Demand for Approved, Full Service Suppliers; Highly Fragmented
Industry. Cost considerations are causing many aircraft operators to reduce the
size of their aircraft component and spare part inventories. In addition,
efficiency and quality considerations are causing aircraft operators to maintain
relationships with a more limited number of approved, full service component and
spare part suppliers. The larger, better capitalized participants in the
components and spare parts redistribution industry have added a broad array of
products and services in order to provide aircraft operators with "one stop
shopping" for their components and spare parts and repair and maintenance
requirements. The Company believes that a majority of the

26
<PAGE> 28

redistribution market is currently divided among a significant number of small
and mid-sized redistributors and that these entities, together with a number of
maintenance and repair facilities and aircraft component and spare part
manufacturers, are viable candidates for acquisition. As airline operators
continue to reduce the number of their suppliers and as the capital required to
compete in the component and spare part redistribution industry increases, the
Company anticipates that the trend toward consolidation will accelerate and
provide industry consolidators with an opportunity to expand their market share.

Leasing. The Company believes that aircraft operators are increasingly
using engine and component and spare part leases in order to reduce working
capital requirements and control overhead expenses. Short-term engine leases are
used by a variety of carriers that do not maintain a pool of spare engines. The
Company believes that leasing of used commercial jet aircraft and complete
engines should grow due to the emphasis by airlines on cost reduction, the
desire of airlines for fleet flexibility and the growth in air travel.

Increased Regulatory Scrutiny and Importance of Capital. In September 1996,
the FAA issued an advisory circular recommending voluntary industry oversight
and accreditation of aircraft component and spare part suppliers. As a result of
heightened regulatory scrutiny, aircraft operators have increased the level of
documentation and traceability required from component and spare part
redistributors. The emphasis on documentation and traceability, which requires
more sophisticated inventory tracking systems, is expected to create additional
barriers to market entry and strain the resources of smaller, less
well-capitalized component and spare part redistributors.

BUSINESS STRATEGY

The Company's strategy is to enhance its position as a leading
redistributor of aircraft components and spare parts to customers worldwide and
to capitalize on the continued expansion of the aircraft components and spare
parts aftermarket. The principal components of the Company's strategy include:

Broaden Engine and Airframe Product Lines. The Company intends to
expand its complete engine and engine components and spare parts product
line by adding products such as the JT9D, CF6 and PW4000 engines used in
Boeing 747 and 767 aircraft, the McDonnell-Douglas DC-10 and the Airbus
A300. In addition, the Company expects to expand its product line to
include airframe components and spare parts for wide-body aircraft, such as
the Boeing 767, McDonnell-Douglas DC-10, and Airbus A300. Following this
offering, the Company also anticipates hiring additional personnel
experienced in avionics and instrumentation in order to allow the Company
to offer an expanded range of higher-margin avionics and instrumentation
products. The Company began purchasing higher thrust CFM56 engines in 1995
and intends to expand its complete engine and engine components and spare
parts inventory for this product. The CFM56 is the second most popular
engine worldwide based on the number of aircraft powered by this engine
type, and is considered likely to be in service for another 25 years. As
fleets of wide-body aircraft and their engines age and as air cargo
carriers transition larger portions of their fleets to widebody aircraft,
the Company will seek to capitalize on the demand for complete engines and
engine and airframe components and spare parts resulting from the aging and
continued use of these aircraft models.

Capitalize on Bulk Inventory Purchase Opportunities. The Company
expects to leverage its management expertise and contacts within the
aviation industry to obtain access to, and exploit, bulk inventory purchase
opportunities. These opportunities arise when aircraft operators, in order
to reduce capital invested in inventory, sell large amounts of inventory in
a single transaction due to the retirement of an aircraft type from their
fleets, inventory reduction programs to reduce costs, the downsizing of
operations or the dissolution of their businesses as a whole. Bulk
inventory purchases allow the Company to obtain large inventories of
aircraft components and spare parts at a lower cost than can ordinarily be
obtained by purchasing aircraft components and spare parts on an individual
basis, resulting generally in higher gross margins on sales of such
components and spare parts. In 1997, the Company successfully completed
three significant, and approximately five small, bulk inventory purchases.
Upon completion of this offering, the Company believes its increased
working capital will allow it to respond quickly to bulk inventory purchase
opportunities. The Company believes that its market presence, experience in

27
<PAGE> 29

evaluating bulk inventory purchases and capital strength will enable the
Company to quickly analyze and complete large bulk inventory purchase
opportunities if the economics of such purchases are favorable.

Pursue Strategic Acquisitions. The Company intends to implement a
consolidation strategy in the highly fragmented aircraft components and
spare parts industry designed to increase the Company's market share and to
achieve some degree of vertical integration through acquisitions of, among
others, FAA-licensed repair facilities. As a result of management's almost
100 years' combined experience in the aircraft components and spare parts
redistribution industry, the Company is familiar with a number of
FAA-licensed repair facilities, aircraft component and spare part
redistributors and small manufacturers of aviation products. The Company
intends, following this offering, to pursue acquisitions of selected
candidates that will complement the Company's existing business, leverage
operating efficiencies and capitalize on opportunities to vertically
integrate repair and maintenance activities and aircraft components and
spare parts redistribution operations. The Company expended over $3 million
in repairs in 1997 and believes that acquisition of one or more repair
facilities will in particular offer synergistic benefits to the Company.
The Company believes that small aftermarket component and spare part
redistributors, many of which are family-owned or capital constrained, may
be unable to provide the extensive inventory and quality control measures
necessary to comply with applicable regulatory and customer requirements,
and will provide acquisition opportunities for the Company. Acquisitions
are expected to increase the Company's customer base, expand its product
line (both with respect to aircraft and engines in which the Company
currently specializes and into new aircraft and engine types), and to
strengthen its relationships with existing customers through providing a
more extensive range of products and services.

Expand Leasing Activities and Penetrate Inventory Management
Market. As aircraft operators have sought to lower working capital
requirements and reduce overhead, a trend has developed among both large
and small carriers to lease complete engines in order to eliminate the need
to maintain spare engine pools. A number of international and regional
carriers have also implemented aircraft component and spare part leasing
programs as a means of preserving capital while maintaining adequate
aircraft components and spare parts support. The Company has from time to
time leased engines and select airframe components and spare parts to
aircraft operators, has entered into one joint venture to lease an engine
to a cargo carrier and another joint venture to convert eight engines into
a different configuration, and intends to further develop its leasing
activities by purchasing and leasing complete aircraft and engines to
aircraft operators and by expanding its engine and airframe component and
spare part leasing programs. The Company believes it can enhance its
customer relationships by offering a broad range of leasing services and,
as aircraft or engines come off-lease at the expiration of the lease term,
the Company will have a range of options for utilization of the asset,
including the re-lease, sale or disassembly of the aircraft or engines for
components and spare parts. The Company also believes that, through its
participation in the components and spare parts leasing market, the Company
will be able to more effectively utilize portions of its components and
spare parts inventory and capitalize on its experience and knowledge of the
market to maximize the residual value of such inventory upon the expiration
of leases. In addition to leasing, aircraft operators have attempted to
reduce overhead by outsourcing inventory management through consignment and
other arrangements. The Company has entered into consignment arrangements
in the past with selected aircraft operators and expects to offer
consignment services in the future to enhance its customer relationships.

Increase Business Through Inventory Expansion and Addition of Sales
Agents. The Company intends to expand its business with existing customers
and to secure new customers by continuing to increase the size and depth of
its inventory and by continuing to expand its marketing efforts to its
international customer base. Following completion of this offering, the
Company will attempt to increase inventory of high turnover engine and
airframe components and spare parts, undertake a targeted expansion of
inventory in additional product lines, and purchase complete aircraft and
engines for leasing that at lease termination will be available for
disassembly or sale. Additionally, the Company is currently seeking to add
sales agents in Central and South America and will seek to selectively
increase its base of international sales agents following this offering
through recruiting of qualified agents principally in

28
<PAGE> 30

Europe, the Middle East and select Asian markets. The Company believes that
the addition of more sales agents not only offers the opportunity to
increase customer sales, but also will assist in the identification of
available purchase opportunities for aircraft, engines and aircraft
components and spare parts on a worldwide basis.

AIRCRAFT COMPONENTS AND SPARE PARTS

Aircraft components and spare parts can be categorized by their ongoing
ability to be repaired and returned to service. The general categories are as
follows: (i) rotable; (ii) repairable; and (iii) expendable. A rotable is a part
which is removed periodically as dictated by the FAA, an original equipment
manufacturer ("OEM") or an operator's maintenance procedures or on an as-needed
basis and is typically repaired or overhauled and re-used an indefinite number
of times. An important subset of rotables is life-limited parts. A life-limited
rotable has a designated number of allowable flight hours and/or cycles (one
take-off and landing generally constitutes one cycle) after which it is rendered
unusable. A repairable is similar to a rotable except that it can only be
repaired a limited number of times before it must be discarded. An expendable is
generally a part which is used and not thereafter repaired for further use.

Aircraft components and spare parts' conditions are classified within the
industry as (i) factory new, (ii) new surplus, (iii) overhauled, (iv)
serviceable, and (v) "as removed". A factory new or new surplus part is one that
has never been installed or used. Factory new parts are purchased from OEMs or
their authorized distributors. New surplus parts are purchased from excess stock
of airlines, repair facilities or other redistributors. An overhauled part has
been completely disassembled, inspected, repaired, reassembled and tested by a
licensed repair facility. A part is classified serviceable if it is repaired by
a licensed repair facility but not completely disassembled as in an overhaul. A
part may also be classified serviceable if it is removed by the operator from an
aircraft or engine while operating under an approved maintenance program and is
functional and meets any manufacturer or time and cycle restrictions applicable
to the part. A factory new, new surplus, overhauled or serviceable part
designation indicates that the part can be immediately utilized on an aircraft.
A part in "as removed" condition requires functional testing, repair or overhaul
by a licensed repair facility prior to being returned to service on an aircraft.
The aircraft components and spare parts sold by the Company include rotable,
repairable and expendable airframe and engine components and spare parts for
commercial aircraft. The Company estimates that sales of rotable, repairable and
expendable components and spare parts accounted for approximately 80%, 19% and
1%, respectively, of the Company's 1997 net sales.

PRODUCTS

The Company's inventory of aircraft components and spare parts is comprised
primarily of JT8 series engines and engine components and spare parts and
airframe components and spare parts for all series of Boeing 737 aircraft. The
JT8D engine, certain models of which have not been in production since 1987, is
estimated to power approximately 40% of commercial aircraft worldwide,
consisting almost exclusively of narrow-body aircraft. The Company estimates,
based on publicly available information, that there are in excess of 10,000 JT8D
engines currently in service on Boeing 737-100 and -200 aircraft, 727 aircraft
and McDonnell-Douglas DC-9 aircraft. The Company expanded its components and
spare parts inventory in 1995 to include CFM56 engines and engine components and
spare parts. The CFM56 is a higher thrust engine that, in its three primary
configurations, is used to power the 737-300, -400 and -500 aircraft, the
McDonnell-Douglas DC-8 and a variety of Airbus aircraft.

Engine Components and Spare Parts. The Company's inventory of engine
components and spare parts consists primarily of components and spare parts for
the JT8D series of engines and, to a lesser degree, CFM56 series engines. At
December 31, 1997, the Company's inventory of engine components and spare parts
consisted of over 47,000 items, most of which were obtained by the purchase and
disassembly of complete engines. Generally, the Company's inventory of engine
components and spare parts is purchased in "as removed" condition and therefore
requires repair by a licensed repair facility. Similarly, the Company generally
purchases most of its engines in non-serviceable condition, commissions
necessary repairs by a licensed repair facility, and then resells or leases the
complete overhauled engines to its customers. Where possible, the Company uses
engine components and spare parts from its inventory in order to minimize
out-of-
29
<PAGE> 31

pocket repair cost and maximize inventory turnover. Due to the Company's
repeated use of licensed repair facilities, the Company believes it has
identified certain repair facilities that have developed specific areas of
expertise within the repair industry and that are capable of meeting the
Company's quality standards and scheduling requirements for repairs.

The Company generally begins marketing efforts related to the sale of an
engine as soon as the engine is purchased, and the Company has frequently been
successful in concluding engine sales, subject to repair completion, either
prior to or while repairs are ongoing. Prices for engines depend on the level of
thrust, the availability of the engine type at the time of repair, the
availability of alternative engine types that can be used in a customer's
application and whether an aircraft is "on the ground" awaiting installation of
an engine. The Company's results of operations have in the past, and will in the
future, be significantly impacted by the frequency of complete engine sales.
During 1996 and 1997, the Company completed three and seven complete engine
sales, respectively. The identity of the Company's largest customers will also
vary from period to period as the completion of an engine sale will frequently
place a customer among the largest customers in terms of dollar volume.

Airframe Components and Spare Parts. The Company's inventory of airframe
components and spare parts consists primarily of rotables for Boeing,
McDonnell-Douglas and Airbus aircraft. Airframe components and spare parts are
generally obtained from disassembly of aircraft and purchase of bulk inventory.
The Company's management personnel have considerable experience in the
disassembly of aircraft, having supervised or participated in the disassembly of
aircraft since the Company began active operations in 1990. The Company
typically disassembles aircraft at the aircraft's location when purchased, and
hires local crews to assist in the disassembly process. Components and spare
parts are then returned to the Company's facilities where evaluations are
undertaken and repairs are commissioned as required. The Company currently
maintains a broad selection of over 66,000 individual airframe components and
spare parts and anticipates expanding this inventory following completion of
this offering.

OPERATIONS OF THE COMPANY

The Company's core business is the buying and selling of engines, engine
components and spare parts and airframe components and spare parts. The Company
intends to expand its business following completion of this offering to include
the purchase and sale of engines and components and spare parts for a variety of
wide-body aircraft, and the leasing of aircraft, engines and components and
spare parts, as well as to increase its focus on sales of avionics and
instrumentation. The Company believes that the leasing of aircraft and complete
engines will become a more significant part of the Company's business in the
future and provide significant opportunities for expansion.

Inventory Acquisition. The Company obtains most of its components and spare
parts inventory by purchasing individual components and spare parts from
airlines, repair facilities or other redistributors, by purchasing excess
inventory from aircraft operators ("bulk inventory purchases") or by purchasing
aircraft and engines for disassembly. The Company may also fill a customer order
for a part not held in the Company's inventory by locating the part for the
customer from another vendor, purchasing the part and then reselling the part to
the customer. The Company makes bulk inventory purchases by bidding on the
inventory of companies that are eliminating certain portions of their components
and spare parts inventory due to the retirement of an aircraft type from their
fleets, inventory reduction programs to reduce costs, the downsizing of
operations or the dissolution of their businesses as a whole.

The Company acquires aircraft for disassembly if its initial estimate of
the timing and value of component and spare part sales from such aircraft would
allow the Company to recover the purchase price within one year through the sale
of a portion of the components and spare parts, and to sell the remaining
components and spare parts for amounts in excess of the previously recovered
purchase price over the subsequent five years. The Boeing Report notes that
approximately 1,900 aircraft will be removed from active commercial service
between 1996 and 2006. Many of these aircraft will be disassembled in order to
sell their components and spare parts. The seller of the aircraft will often
provide the Company with a computerized data base listing all the components and
spare parts on the aircraft which is verified by the Company. If a computerized
listing of

30
<PAGE> 32

components and spare parts is not available, the Company will conduct its own
inventory of the aircraft to be disassembled. The components and spare parts are
catalogued and all the relevant information regarding the components and spare
parts, including each part's repair history, is entered into the Company's
computer data base. Management believes that it is essential that such
information be immediately available in order to facilitate sales by the
Company's sales personnel. In certain instances, components and spare parts that
are in high demand are pre-sold prior to the delivery of the disassembled
aircraft to the Company. High value components and spare parts such as engines
and engine components and spare parts are also often pre-sold. Pre-selling
allows the Company to recover a significant amount of its investment within a
short time from the date of the aircraft purchase.

An aircraft purchased for disassembly is often in the same condition as the
aircraft that will utilize the components and spare parts. Sellers are usually
motivated to dispose of their aircraft at prices that justify disassembly for a
variety of reasons, including the seller's need for immediate liquidity or
inability to economically operate or lease the aircraft to a third party.
Additionally, such aircraft may require extensive maintenance or overhaul or may
require government-mandated improvements which are uneconomical for the seller
to perform. The Company has in the past occasionally been involved in the
salvage of aircraft and may engage in salvage operations in the future as
another means of inventory acquisition. The Company's sale of salvaged
components and spare parts is performed in accordance with its normal quality
control procedures and the Company does not provide non-incident certification
on components and spare parts removed from an incident-related aircraft. The
availability of aircraft for disassembly varies based on a number of factors,
including demand for older aircraft, the rate at which aircraft operators retire
older aircraft from their fleet, availability of new aircraft and decisions by
cargo carriers to standardize fleets of cargo aircraft that may formerly have
served as passenger aircraft.

In March 1998, the Company purchased two Boeing 737-200 aircraft from a
European passenger airline. The aircraft were sold by the airline after the
airline acquired other Boeing 737 aircraft with common avionics and
instrumentation. The Company purchased the two 737s for an aggregate purchase
price of $2.2 million, which was funded from borrowings under the Credit
Facility. The Company has retained a third party contractor to disassemble these
aircraft for parts and anticipates disassembly will be substantially completed
during the quarter ending June 30, 1998.

Aircraft and Engine Sales and Leasing. The Company has determined that its
component and spare part sales opportunities will be enhanced by providing
existing and new customers with complete aircraft and engines through lease
transactions. Such transactions will allow the Company to expand its customer
base for components and spare parts and, through leasing, reduce the cost basis
in its aircraft and engines. Once leased, the Company will derive revenue from
lease payments and will seek to sell components and spare parts to the lessee
from inventory both for the leased aircraft or engines as well as other aircraft
or engines in the lessee's fleet. Upon return of the aircraft or engines at the
expiration of the lease term, the Company will either re-lease, sell or
disassemble the aircraft or engines for components and spare parts in order to
achieve the highest utilization of the asset.

The Company's anticipated leasing activities are expected to be based on
operating leases with its customers. Under an operating lease, the Company will
retain title to the aircraft or engine, thereby retaining the potential benefits
and assuming the risk of the residual value of the aircraft or engine. Operating
leases allow aircraft operators greater fleet and financial flexibility due to
their shorter-term nature, the relatively small initial capital outlay necessary
to obtain use of the aircraft or engine and off-balance sheet accounting
treatment. The Company expects to focus on leasing to its customers older,
narrow-body aircraft and the engines they use and older, wide-body aircraft with
engines they use for periods between six months to three years. The Company
believes that there is an increasing demand by customers for operating leases,
which are being used as an alternative to traditional financing arrangements.

In January 1998, the Company entered into a joint venture that then
executed an operating lease for an engine with a cargo carrier. The lease
extends for a period calculated based upon flight cycles and/or 11,000 flight
hours. The joint venture also relates to two other engines that the Company and
its co-venturer intend to

31
<PAGE> 33

lease to customers following completion of overhaul. In addition, the Company
has entered into a second joint venture to convert eight engines into a
different configuration for a customer.

Exchange Transactions. An "exchange transaction" generally involves a high
value/high turnover rotable component or spare part which an operator frequently
replaces when performing aircraft maintenance. In an exchange transaction, a
customer pays an exchange fee and returns a "core" unit to the Company within 14
days. A "core" unit is the same part which is being delivered to the customer by
the Company, but in need of overhaul. The Company has the customer's core unit
overhauled and bills the customer for the overhaul charges and retains the
overhauled core unit in its inventory for re-sale. If the "core" unit cannot be
repaired, it is returned to the customer and the exchange transaction is
converted to an outright sale of the component or spare part that was previously
delivered or installed, at a sales price agreed upon at the time the exchange
transaction was negotiated. The Company estimates that exchanges accounted for
less than 2% of 1997 net sales. Because exchanges tend to be more labor
intensive than outright sale transactions, the Company does not expect to target
exchanges as a transaction type for future expansion.

SALES AND MARKETING; CUSTOMERS

The Company has developed a sales and marketing program which includes
well-trained and knowledgeable in-house sales personnel and commissioned
independent sales agents, computerized inventory management, listing of its
aircraft components and spare parts in two electronic industry data bank
catalogues and a home page on the Internet. The Company's Chief Executive
Officer, two key employees and a customer service specialist are currently
engaged in sales and marketing activities. The Company expects to hire two
additional in-house sales personnel prior to completion of this offering.
Crucial to the successful marketing of the Company's inventory is the Company's
ability to make timely delivery of components and spare parts in reliable
condition. The Company believes aircraft operators are more sensitive to
reliability and timely delivery than price.

In addition to directly marketing its inventory, the Company utilizes the
services of three independent sales agents, two of whom specialize in
international sales and one of whom specializes in domestic sales. Each of the
Company's sales agents has extensive experience with the requirements of
aircraft operators and other customers and, in addition to performing sales
activities, assist the Company in identifying opportunities to purchase
aircraft, engines and bulk components and spare parts inventories. The Company's
sales agents are paid on a commission basis and are retained under agency
agreements terminable at will by either party. The Company is currently seeking
to add two additional sales agents for Central and South America. The Company
expects to further expand its network of sales agents following this offering
and anticipates that most, if not all, of such expansion will be in the
international market.

As a means of generating exposure to existing and potential customers, the
Company lists its inventory in the Inventory Locator Service ("ILS") and the Air
Transport Association's ("AIRS") computerized data banks. Buyers of aircraft
components and spare parts can access the ILS or AIRS, as well as other spare
parts data bases, to determine the companies which have the desired inventory
available. Neither the ILS nor AIRS lists price information relating to
particular components and spare parts. In addition, the Company places
advertisements in select industry catalogues and attends a number of industry
conferences and tradeshows in order to acquaint potential customers with the
Company's redistribution capabilities.

Market forces establish the price for aircraft components and spare parts.
No pricing service or price catalogue exists for aftermarket components and
spare parts. Rather, aftermarket aircraft components and spare parts prices are
determined by referencing new parts catalogues with consideration given to
existing supply and demand conditions. Often, aircraft operators will opt for
quality aftermarket components and spare parts even when new components and
spare parts are still in production. Aftermarket aircraft components and spare
parts must meet the same FAA quality standards as new parts, but cost less than
the same new components and spare parts, and are often more readily available
than new components and spare parts.

The Company's customer base is comprised of approximately 70% domestic and
30% international customers. The Company's customers include a number of
domestic and international commercial passenger airlines, maintenance and repair
facilities and other redistributors. Management believes that its customer
32
<PAGE> 34

relationships are critical to the Company's operational success. The Company
maintains an adequate level of inventory in order to service its customers in a
timely manner. Management believes that availability and timely delivery of
quality components and spare parts are the primary factors considered by
customers when making a purchase decision. In 1997, none of the Company's
customers accounted for in excess of 10% of the Company's net sales, although
three customers each accounted for between 5% and 10% of the Company's 1997 net
sales. Sales to each of these three customers exceeded 5% of the Company's 1997
net sales as a result of each customer purchasing an engine from the Company. In
the three months ended March 31, 1998, sales to one customer that purchased an
engine accounted for approximately 22% of net sales and sales to two customers
each accounted for between 5% and 10% of net sales. In a given period, a
substantial portion of the Company's net sales may be attributable to the sale
of one or more engines. Sales of engines, the timing of aircraft component and
spare part sales or a lease transaction during a given period may result in a
customer being considered a significant customer of the Company for that period.
Currently, the Company believes that it has no customer, the loss of which would
have a material adverse effect on the Company's results of operations.

QUALITY ASSURANCE

The Company adheres to stringent quality control standards and procedures
in the purchase and sale of its products. The Company is a member of the Airline
Suppliers Association ("ASA") and is periodically audited by certain of its
customers to ensure compliance with such customer's quality standards. The
Company has applied for accreditation as an aftermarket aircraft components and
spare parts supplier by the ASA and is currently awaiting completion of an
on-site audit by the ASA. Components and spare parts procured from an accredited
supplier convey assurance to the purchaser that the quality is as stated and the
appropriate documentation is on file at the supplier's place of business.
Accreditation also provides assurance that the supplier has implemented an
appropriate quality assurance system and has demonstrated the ability to
maintain such system. Although the Company believes that accreditation is not
required in order to conduct its operations, the Company believes that
accreditation is consistent with the Company's long-term objectives as a
redistributor of aircraft components and spare parts.

Because aircraft operators require a readily available and identifiable
source of inventory meeting regulatory requirements, the Company has implemented
a total quality assurance program. This program consists of numerous quality
procedures, including (i) inspection procedures mandating that procured
aircraft, engines and components and spare parts be traceable to a source
approved by the Company, (ii) training and supervision of personnel to properly
carry out the total quality assurance program, and (iii) ongoing quality review
board meetings conducted by senior management to oversee the total quality
assurance program.

An important factor in the aircraft components and spare parts
redistribution market relates to the documentation and traceability of aircraft
components and spare parts. The Company requires all of its suppliers to provide
adequate documentation as dictated by the Company's customers. The Company
utilizes electronic data scanning and storage techniques to maintain complete
copies of all documentation. Documentation required includes, where applicable,
(i) a maintenance release from a licensed repair facility signed and dated by
the licensed airframe and/or power plant mechanic who repaired the aircraft
components and spare parts and an inspection to certify that the proper methods,
materials and workmanship were used, (ii) a "tear-down" report detailing the
discrepancies and corrective actions taken during the last shop repair, and
(iii) an invoice or purchase order from an approved source.

The Company provides no warranties with respect to the aircraft components
and spare parts it sells. Engine repairs are customarily warranted by
maintenance and repair facilities for a period of six months or 1,000 flying
hours and, upon resale of engines, the Company provides a pass-through to its
customers of all warranty rights it received from the maintenance and repair
facility. The Company generally accepts returns of aircraft components and spare
parts by its customers within a period of 45 days from the date of shipment.

33
<PAGE> 35

REGULATION

The aviation industry is highly regulated in the United States by the FAA
and in other countries by similar regulatory agencies. These regulations are
designed to ensure that all aircraft, engines and aircraft components and spare
parts are continuously maintained in proper condition for the safe operation of
aircraft. While the Company's operations are not currently regulated directly by
the FAA, the independent facilities that repair and overhaul the Company's
products and the aircraft operators that ultimately utilize the Company's
products are subject to extensive regulation. Accordingly, the Company must
consider the regulatory requirements of its customers and provide them with
aircraft components and spare parts that comply with airworthiness standards
established by the FAA and OEMs, together with required documentation that will
enable these customers to comply with other applicable regulatory requirements.
The inspection, maintenance and repair procedures and schedules for the various
types of aircraft, engines and aircraft components and spare parts are
prescribed by regulatory authorities and can be performed only by licensed
repair facilities utilizing licensed technicians. Compliance with applicable FAA
and OEM standards are required prior to installation of a component or spare
part on an aircraft. The Company only utilizes licensed repair facilities to
repair and certify the aircraft, engines and aircraft components and spare parts
it sells.

In June 1996, the FAA adopted a series of changes in the FAA's inspection
policies to enhance its oversight of aircraft operators that rely on third-party
repair and overhaul facilities. The effect on the Company of such changes to the
FAA's inspection policies may be to reduce the number of third-party maintenance
facilities that provide services to the Company. To date, the Company's
operations have not been materially adversely affected as a result of such
regulations.

In September 1996, the FAA issued an advisory circular to support the
implementation of a voluntary accreditation program for civil aircraft parts
suppliers. This accreditation program establishes quality standards applicable
to aftermarket suppliers, such as the Company, and designates FAA approved
organizations such as the ASA to perform quality assurance audits for initial
accreditation of aftermarket suppliers. The Company has an application pending
to become accredited by the ASA as an aircraft components and spare parts
supplier.

Because the Company's sales consist largely of engines, components and
spare parts for older aircraft, regulations promulgated by the FAA governing
noise emission standards for older aircraft and the FAA's Aging Aircraft Program
Plan (the "Aging Aircraft Program") have a material impact on the market for the
Company's products. All stage 2 aircraft must install hush-kits pursuant to such
noise emission standards or be phased out of operation in the United States by
December 31, 1999 and in the European Union by April 1, 2002. The Aging Aircraft
Program requires aircraft operators to perform structural modifications and
inspections to address airframe fatigue and to implement corrosion prevention
and control programs, which increase the operating and maintenance costs of
older aircraft. Furthermore, the U.S. Environmental Protection Agency and the
various environmental agencies of the European Union have sought the adoption of
stricter standards limiting the emission of nitrous oxide from aircraft engines.
The Company believes that notwithstanding the substantial costs imposed by noise
emission standards and the Aging Aircraft Program on older aircraft, estimated
by the Company to average less than $4 million per aircraft on aircraft such as
the DC-9, certain aircraft operators will continue to utilize older aircraft due
to the substantially greater cost of acquiring new replacement aircraft.

The core operations of the Company may in the future be subject to FAA or
other regulatory requirements. The Company closely monitors the FAA and industry
trade groups in an attempt to understand how possible future regulations might
impact the Company.

PRODUCT LIABILITY

The commercial aviation industry periodically experiences catastrophic
losses. As a redistributor, the Company may be named as a defendant in a lawsuit
as a result of a catastrophic loss if a part sold by the Company were installed
in an incident-related aircraft. In this regard, the Company maintains product
liability insurance in the amount of $25 million. While the Company believes
this amount to be adequate liability insurance to protect it from such claims,
and while no lawsuit has ever been filed against the Company based
34
<PAGE> 36

upon a product liability theory, no assurance can be given that claims will not
arise in the future or that such insurance coverage will be adequate.
Additionally, there can be no assurance that insurance coverages can be
maintained in the future at an acceptable cost, if at all. Any such liability
not covered by insurance could have a material adverse effect on the financial
condition of the Company.

COMPETITION

The aircraft component and spare part redistribution market is highly
competitive. The market consists of a limited number of well-capitalized
companies selling a broad range of products and numerous small competitors
serving distinct market niches. Certain of these competitors have substantially
greater financial, marketing and other resources than does the Company. The
Company believes that current industry trends will benefit larger,
well-capitalized companies. The Company believes that range and depth of
inventories, timeliness of parts delivery, quality and traceability of products,
service and price are the key competitive factors in the industry. The principal
companies with which the Company currently competes are AAR Corp., The AGES
Group, Aviation Sales Company, AVTEAM, Inc., Banner Aerospace and The Memphis
Group, all of which are significantly larger than the Company. Customers in need
of aircraft parts have access, through computer-generated inventory catalogues,
to a broad array of suppliers, including aircraft manufacturers, OEMs of
components and spare parts, airlines and aircraft services companies, which may
have the effect of increasing competition for, and lowering prices on, parts
sales.

EMPLOYEES

At March 31, 1998, the Company had 18 full-time employees and one part-time
employee. Of these, four are principally engaged in management, four are engaged
in sales and marketing and the remainder are engaged in operations, accounting
and administration. None of the Company's employees are subject to collective
bargaining agreements. The Company believes its employee relations are
excellent.

FACILITIES

The Company's offices are located in Fort Mill, South Carolina and consist
of approximately 25,000 square feet, of which approximately 6,000 square feet
are used for offices and approximately 19,000 square feet are used for shipping,
receiving and inventory storage. The offices are leased for an annual base rent
of $87,000 through July 31, 2002, subject to extension for an additional five
years at a rental rate that increases in accordance with the Consumer Price
Index. The Company also leases a 15,000 square foot warehouse facility located
in Fort Mill, South Carolina for an annual rental of approximately $50,000
through June 1998. The Company has an option to extend the lease on this
facility through 2002, but has not yet determined whether to extend the term.
The Company is also obligated to pay its pro rata share of taxes, assessments
and maintenance expenses attributable to each of its facilities. The Company
leases both of its facilities from two partnerships in which Herman O. Brown,
Jr., one of the Existing Common Stockholders and father of Karl F. Brown, is a
partner, and in one of which Karl F. Brown, an officer and director of the
Company, is a partner. See "Management -- Certain Transactions."

LITIGATION

The Company is not a party to any litigation and is not aware of any
threatened or pending legal proceeding which would have a material adverse
effect on the Company's business, operations or financial condition.

35
<PAGE> 37

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME(1) AGE POSITION
------- --- --------
<S> <C> <C>
Karl F. Brown(1)..................... 34 Chairman of the Board, Chief Executive Officer
and President
Elaine T. Rudisill................... 42 Chief Financial Officer
David M. Furr(2)..................... 40 Director
Pamela K. Clement(1)(2).............. 43 Director
James T. Comer, III(1)............... 49 Director
</TABLE>

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

(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

Officers are appointed by and serve at the discretion of the Board of
Directors. Each director holds office until the next annual meeting of
stockholders or until a successor has been duly elected and qualified. All of
the Company's officers devote full-time to the Company's business and affairs.

Karl F. Brown has served as President of the Company since 1990. Mr. Brown
has served as Chairman of the Board and Chief Executive Officer of the Company
since January 1, 1998. From 1986 to 1990, Mr. Brown served as a salesman for
U.S. Aviation, Inc., an aircraft components and spare parts redistributor
partially owned by Herman O. Brown, Jr., Mr. Brown's father. Mr. Brown attended
the University of North Carolina at Charlotte and received a Bachelor of Arts
degree in Business in 1986.

Elaine T. Rudisill has served as Chief Financial Officer of the Company
since December 1997. From 1987 through 1996, Ms. Rudisill served as assistant
controller and controller of IGI, Inc., Buena, New Jersey, a publicly-traded
diversified animal healthcare and human cosmetics manufacturer. In 1996, Ms.
Rudisill became chief financial officer and vice president of finance of
Novavax, Inc., Columbus, Maryland, which until late 1995 was a subsidiary of
IGI, Inc. Novavax, Inc. is engaged in the development of biopharmaceutical
products and, since its spin-off from IGI, Inc., has been publicly traded. In
her capacity as chief financial officer of Novavax, Inc., Ms. Rudisill was
responsible for financial reporting, human resources and management information
systems and was involved significantly in the spin-off from IGI, Inc. Ms.
Rudisill received a Bachelor of Science degree in Accounting from the University
of North Carolina in 1977.

David M. Furr has served as a director of the Company since January 1998.
Mr. Furr has been a partner in the law firm of Gray, Layton, Drum, Solomon,
Sigmon, Furr & Smith, P.A., Gastonia, North Carolina, and a partner of a
predecessor firm for in excess of five years. Mr. Furr has practiced corporate
and tax law since 1983 and has represented the Company with respect to corporate
and tax matters since 1990. Mr. Furr served as a director of Swisher
International, Inc., a publicly-traded hygiene service company, from 1991
through September 1995. Mr. Furr serves on the Board of Directors of Piedmont
Venture Partners, a Charlotte, North Carolina-based venture capital fund. Mr.
Furr received a Bachelor of Arts degree and his Juris Doctor degree from Wake
Forest University in 1980 and 1982, respectively, and a Master of Taxation
degree from the University of Florida in 1983. Mr. Furr is admitted to practice
before the United States Tax Court.

Pamela K. Clement has been a director of the Company since February 1998.
She is currently employed as a managing director of Piedmont Venture Partners, a
Charlotte, North Carolina-based venture capital fund which she cofounded in May
1996. Piedmont Venture Partners invests primarily in technology related private
concerns located in the southeastern United States. From April 1995 to May 1996,
Ms. Clement was engaged in investing for her own account. From September 1992 to
March 1995, she served as president, chief operating officer and a director of
Sovereign Advisers, Inc., a Charlotte, North Carolina-based investment advisory
firm. Ms. Clement sold her interest in Sovereign Advisers, Inc. to
Interstate/Johnson Lane Corporation in 1995. From 1976 through 1992, Ms. Clement
was employed in a variety of positions with a

36
<PAGE> 38

number of investment banking and money management firms. Ms. Clement received a
Bachelor of Arts degree in Economics from Cornell University in 1976.

James T. Comer, III has been a director of the Company since March 1998.
Since 1991, Mr. Comer has been the president of J.T. Comer Consulting, Inc. and
chairman of Southern Pension Services, Inc., both of which are wholly-owned by
Mr. Comer. J.T. Comer Consulting, Inc. provides employee benefit consulting
services and Southern Pension Services, Inc. provides pension administration
services. From 1979 to 1986, Mr. Comer served as president of J.T. Comer &
Associates, Inc., a pension administration and benefit consulting firm that was
sold to the D & B Plan Services Division of the Dunn & Bradstreet Corporation in
1986. Mr. Comer was employed as the president of the D & B Plan Services
Division from 1986 to 1991. Mr. Comer received a Bachelor of Arts degree in
Economics from the University of North Carolina at Charlotte in 1971.

KEY EMPLOYEES

William E. Werts has been employed by the Company since 1990 as Director of
Sales. Mr. Werts has been employed in the aircraft components and spare parts
redistribution industry for over 35 years, including five years at U.S.
Aviation, Inc. and 22 years at Charlotte Aircraft Corporation.

James E. Cauble has been the Company's Director of Quality Control since
1990. Mr. Cauble has been employed in the aircraft components and spare parts
redistribution industry for over 35 years, including eight years at U.S.
Aviation, Inc. and 22 years at Charlotte Aircraft Corporation. Mr. Cauble has
held an Airframe and Powerplant License since 1970 and an FAA Inspection
Authorization since 1975.

David B. Abbott has served as the Company's Director of Marketing since
1990. Prior to joining the Company, Mr. Abbott was employed in various sales and
marketing positions for over 14 years in the aviation industry.

BOARD COMMITTEES

The Board of Directors maintains a Compensation Committee and an Audit
Committee. The Compensation Committee is composed of Mr. Comer and Ms. Clement,
both non-management directors. The Audit Committee is composed of Messrs. Brown
and Comer and Ms. Clement. The primary function of the Compensation Committee is
to review and make recommendations to the Board with respect to the
compensation, including bonuses, of the Company's officers and to administer the
Option Plan. The function of the Audit Committee is to review and approve the
scope of audit procedures employed by the Company's independent auditors, review
and approve the audit reports rendered by the Company's independent auditors and
approve the audit fee charged by the independent auditors. The Audit Committee
reports to the Board of Directors with respect to such matters and recommends
the selection of the independent auditors.

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth the annual and
long-term compensation for services in all capacities to the Company in the
fiscal years ended December 31, 1995, 1996 and 1997 of Karl F. Brown, the only
executive officer of the Company whose total annual salary and bonus exceeded
$100,000 during the relevant periods (the "Named Officer").

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
FISCAL COMPENSATION(1)
YEAR ENDED --------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION DECEMBER 31, SALARY BONUS (SHARES) COMPENSATION(2)
--------------------------- ------------ -------- ----- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Karl F. Brown, 1997 $150,000 $-0- -- $17,788
Chairman of the Board, Chief 1996 150,000 -0- -- 17,972
Executive Officer and
President 1995 95,000 -0- -- 17,994
</TABLE>

- ---------------
(1) Excludes S Corporation distributions.

(2) Represents costs attributable to two Company automobiles provided for use by
the Named Officer and his spouse and cash advances made in connection with a
split-dollar life insurance plan maintained by the Company on behalf of the
Named Officer.

37
<PAGE> 39

No employee of the Company receives any additional compensation for his
services as a director. Non-management directors receive no salary for their
services as such, but receive a fee of $250 per meeting or committee meeting
attended. The Board of Directors has also authorized payment of reasonable
travel or other out-of-pocket expenses incurred by non-management directors in
attending meetings of the Board of Directors or committees thereof.

Employment and Other Agreements. In January 1998, the Company entered into
an employment agreement with Karl F. Brown. The employment agreement requires
that he devote his full business time to the Company, may be terminated by the
Company for "cause" (as defined in the employment agreement) and, as currently
in effect, calls for Mr. Brown to receive an annual salary of $200,000 and a
discretionary bonus determined by the Compensation Committee. The employment
agreement extends for a three-year term. Mr. Brown is also entitled to receive
lump sum compensation equal to approximately three times his annual salary and
bonus in the event of a change in control of the Company and upon Mr. Brown's
services being terminated or his status, authority or responsibilities being
substantially diminished.

In February 1998, the Company has also entered into an employment agreement
with Elaine T. Rudisill, the Chief Financial Officer of the Company. This
agreement extends for a one-year term, is subject to successive one-year
automatic renewals unless either party provides notice of non-renewal, and
provides for Ms. Rudisill to receive an annual salary of $65,000 and a
discretionary bonus.

The Company has also entered into confidentiality and non-compete
agreements with its officers and key employees.

The Company maintains a 401(k) profit sharing plan and a medical
reimbursement plan covering substantially all of its employees.

STOCK OPTION PLAN

The Company adopted its 1998 Omnibus Stock Option Plan in February 1998
(the "Option Plan"). An aggregate of 450,000 shares of Common Stock are
currently reserved for issuance under the Option Plan.

The Option Plan provides for the granting of incentive stock options
("Incentive Stock Options") within the meaning of Section 422 of the Code and
non-qualified stock options. Non-qualified stock options may be granted to
employees, directors and consultants of the Company, while Incentive Stock
Options may be granted only to employees. The Option Plan is currently
administered by the Compensation Committee of the Board of Directors, which
determines the terms and conditions of the options granted under the Option
Plan, including the exercise price, the number of shares subject to a particular
option and the exercisability thereof.

The exercise price of all Incentive Stock Options granted under the Option
Plan must be at least equal to the fair market value of the Common Stock of the
Company on the date of grant, and must be 110% of fair market value when granted
to a 10% or more stockholder. The exercise price of all non-qualified stock
options granted under the Option Plan shall be not less than 85% of the fair
market value of the Common Stock on the date of grant. The term of all options
granted under the Option Plan may not exceed ten years, except the term of
Incentive Stock Options granted to a 10% or more stockholder may not exceed five
years. The Option Plan may be amended or terminated by the Board of Directors,
but no such action may impair the rights of a participant under a previously
granted option.

The Option Plan provides the Board of Directors or the Compensation
Committee with the discretion to determine when options granted thereunder shall
become exercisable and the vesting period of such options. Upon termination of a
participant's employment or consulting relationship with the Company, all
unvested options terminate and are no longer exercisable. Vested non-qualified
options remain exercisable for a period not to exceed three months following the
termination date.

The Option Plan provides that, in the event the Company enters into an
agreement providing for the merger of the Company into another corporation or
the sale of substantially all of the Company's assets, any outstanding
unexercised option shall become immediately exercisable as of the date of such
agreement. Upon the consummation of the merger or sale of assets such options
shall terminate unless they are assumed or another option is substituted
therefor by the successor corporation.

38
<PAGE> 40

As of April 30, 1998, a total of 263,600 non-qualified and Incentive Stock
Options were outstanding with exercise prices ranging from $6.00 to $6.60 per
share. The Option Plan was approved by Karl F. Brown, the sole stockholder of
American Aircarriers Support, Incorporated, a Delaware corporation, as of
February 9, 1998. All of the options granted by the Company to date are eligible
to purchase Common Stock of American Aircarriers Support, Incorporated, a
Delaware corporation. Accordingly, such options are ineligible to purchase
shares of Common Stock of American Aircarriers Support, Inc., a South Carolina
corporation. None of the options granted under the Option Plan are exercisable
prior to September 1998. Pursuant to the terms of the Underwriting Agreement,
the Representative has required that the Company not file a registration
statement covering shares issuable upon exercise of outstanding options until 12
months from the date of this Prospectus.

CERTAIN TRANSACTIONS

In June 1995, the Company obtained the Credit Facility that, following
successive annual renewals, is now due in September 1998. Repayment of advances
under the Credit Facility are personally guaranteed by the Existing Common
Stockholders, who received no additional compensation in connection with
providing such guarantees. The Company expects to repay outstanding indebtedness
under the Credit Facility of approximately $1.5 million using a portion of the
proceeds of this offering. See "Use of Proceeds."

Herman O. Brown, Jr., a principal stockholder of the Company and the father
of Karl F. Brown, is a co-founder, officer and director of U.S. Aviation, Inc.
In 1993, the Company borrowed $525,000 from the unaffiliated co-founder of U.S.
Aviation, Inc. The repayment of amounts due under the promissory note that
evidences this borrowing was personally guaranteed by the Existing Common
Stockholders. Neither of the Existing Common Stockholders received any
compensation for providing the guarantees. At December 31, 1997, the principal
amount outstanding under this promissory note totalled $121,000, which was
repaid in April 1998. The Company was also indebted to U.S. Aviation, Inc. in
the principal amount of $46,000 at December 31, 1997, which amount was repaid in
February 1998.

U.S. Aviation, Inc. has in the past consigned aircraft components and spare
parts to the Company. Under the consignment arrangement, the Company remits to
U.S. Aviation, Inc. 60% of the sales price of the components and spare parts,
less any overhaul and repair costs incurred by the Company. Consignment sales on
behalf of U.S. Aviation, Inc. totalled $97,000 and $77,000 in 1996 and 1997,
respectively. Consignment sales on behalf of U.S. Aviation, Inc. for the three
months ended March 31, 1998 were immaterial and are expected to be immaterial in
future periods.

At various times from 1993 through December 31, 1997, the Existing Common
Stockholders made unsecured advances to the Company. The proceeds of such
advances were used for working capital purposes. The advances bear interest at
rates between 6% and 8% per annum and mature June 30, 1998. In April 1998, the
Company repaid $829,000 in principal and accrued interest to the Existing Common
Stockholders and distributed $683,000 to the Existing Common Stockholders for
payments due in connection with 1997 and 1998 tax liabilities. At April 30,
1998, the Company was indebted to Messrs. Karl F. Brown and Herman O. Brown, Jr.
in the amounts of $101,000 and $547,000, respectively. The Company expects to
repay such advances using a portion of the proceeds of this offering. See "Use
of Proceeds" and Note 8 to the Financial Statements.

The Company currently leases a 15,000 square foot facility, consisting
primarily of warehouse storage, from B & C Enterprises, a partnership in which
Herman O. Brown, Jr. is a 50% partner. The facility is leased to the Company
through June 1998 for an annual rental of $50,000. The lease term may be
extended at the Company's option through December 2002. The Company leases its
headquarters facility from Brown Enterprises, a partnership of the Existing
Common Stockholders, for an annual rental of $87,000. The lease extends through
July 30, 2002, with a right on the part of the Company to extend the lease for
an additional five-year period. Each of the foregoing leases requires the
Company to pay taxes, insurance and maintenance expenses for the facility in
question. The Company believes that such facilities were leased to it on terms
at least as favorable as could have been obtained from unaffiliated third
parties. See "Business -- Facilities."

39
<PAGE> 41

In January 1998, the Company entered into an employment agreement with Karl
F. Brown. See "-- Executive Compensation."

In connection with this offering, the Company will terminate its S
Corporation election and anticipates distributing approximately $2.4 million to
the Existing Common Stockholders to provide such persons with funds sufficient
to pay personal tax liabilities related to 1998 taxable income earned prior to
the date of termination of the Company's S Corporation election, together with
an amount equal to approximately 50% of the previously undistributed accumulated
taxable income. The Company and the Existing Common Stockholders have entered
into the Tax Agreement, which relates to their respective income tax
liabilities, indemnification obligations and tax adjustments. See "S Corporation
Distributions."

Prior to the date of this offering, the Existing Common Stockholders were
parties to agreements providing that, in the event of the death of Karl F.
Brown, the shares of Common Stock owned by him would be placed in a family trust
under which Herman O. Brown, Jr., as trustee, would retain all voting rights
with respect to such Common Stock. Additionally, the agreements provided that in
the event of the death of Herman O. Brown, Jr., Karl F. Brown would retain the
right to purchase the Common Stock owned by Herman O. Brown, Jr. at a price
equal to the book value of such Common Stock at the time of Herman O. Brown,
Jr.'s death. Pursuant to an agreement between the Existing Common Stockholders,
upon consummation of this offering, such prior agreements shall be terminated
and be of no further force or effect. In February 1998, Herman O. Brown, Jr.
entered into a voting trust agreement (the "Voting Trust") pursuant to which
David M. Furr, a director of the Company, has been vested with all voting rights
relating to the Common Stock currently owned or hereafter acquired by Herman O.
Brown, Jr. See "Principal Stockholders."

The Company has adopted a policy that future transactions between the
Company and its officers, directors and 5% or more stockholders are subject to
approval by a majority of the disinterested directors of the Company. Any such
transactions will be on terms believed to be no less favorable to the Company
than could be obtained from unaffiliated parties.

LIMITATION OF LIABILITY AND INDEMNIFICATION

Pursuant to the provisions of the Delaware General Corporation Law, the
Company has adopted provisions in its Certificate of Incorporation which provide
that directors of the Company shall not be personally liable for monetary
damages to the Company or its stockholders for a breach of fiduciary duty as a
director, except for liability as a result of (i) a breach of the director's
duty of loyalty to the Company or its stockholders; (ii) acts or omissions not
in good faith or which involve intentional misconduct or knowing violation of
law; (iii) an act related to the unlawful stock repurchase or payment of a
dividend under Section 174 of Delaware General Corporation Law; and (iv)
transactions from which the director derived an improper personal benefit. Such
limitation of liability does not affect the availability of equitable remedies
such as injunctive relief or rescission.

The Company's Certificate of Incorporation also authorizes the Company to
indemnify its officers, directors and other agents, through its Bylaws,
agreements or otherwise, to the fullest extent permitted under Delaware law. The
Company intends to enter into separate indemnification agreements with its
directors and officers which may, in some cases, be broader than the specific
indemnification provisions contained in the Delaware General Corporation Law.
The indemnification agreements may require the Company, among other things, to
indemnify such officers and directors against certain liabilities that may arise
by reason of their status or service as directors or officers (other than
liabilities arising from willful misconduct of a culpable nature), to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified, and to obtain directors' and officers' insurance if
available on reasonable terms.

At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding which may result in a claim for such indemnification.

Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers and control persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the Commission, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable.

40
<PAGE> 42

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 30, 1998 and as adjusted to
reflect the sale of the Common Stock offered by this Prospectus, by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's outstanding Common Stock, (ii) each of the Company's executive
officers and directors, and (iii) all executive officers and directors as a
group. Common Stock not outstanding but deemed beneficially owned by virtue of
the right of an individual to acquire shares within 60 days are treated as
outstanding only when determining the amount and percentage of Common Stock
owned by such individual. Except as noted, each person has sole voting and
investment power with respect to the shares shown. The address of each person
listed is 3516 Centre Circle Drive, Fort Mill, South Carolina 29715, except as
otherwise indicated.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED PRIOR TO OFFERING PERCENTAGE
------------------------ OWNED
NAME NUMBER PERCENT AFTER OFFERING
---- ----------- --------- --------------
<S> <C> <C> <C>
Karl F. Brown(1).................................... 3,075,000 75.0% 50.4%
Elaine T. Rudisill(2)............................... -- -- --
Herman O. Brown, Jr.(3)............................. 1,025,000 25.0 16.8
David M. Furr(2)(3)................................. 1,025,000 25.0 16.8
516 South New Hope Road
Gastonia, North Carolina 28053
Pamela K. Clement(4)................................ -- -- --
1 Morrocroft Centre
Suite 380
6805 Morrison Boulevard
Charlotte, North Carolina 28211
James T. Comer, III(5).............................. -- -- --
4731 Hedgemore Drive
Charlotte, North Carolina 28209
All directors and officers as a group (five
persons).......................................... 4,100,000 100.0% 67.2%
</TABLE>

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

(1) Excludes 60,000 shares of Common Stock subject to options exercisable
commencing September 1998.

(2) Excludes 20,000 shares of Common Stock subject to options exercisable by
each individual noted commencing September 1998.

(3) In February 1998, Herman O. Brown, Jr., David M. Furr and the Company
entered into the Voting Trust pursuant to which David M. Furr has been
vested with all voting rights relating to the Common Stock currently owned
or hereafter acquired by Herman O. Brown, Jr. for the term of the Voting
Trust. See below for further information concerning the Voting Trust.

(4) Excludes 5,000 shares of Common Stock subject to options exercisable
commencing September 1998.

(5) Excludes 5,000 shares of Common Stock subject to options exercisable
commencing September 1998.

The Company and Messrs. David M. Furr and Herman O. Brown, Jr. entered into
the Voting Trust in February 1998. During the term of the Voting Trust, Mr. Furr
has the exclusive right to exercise all of the voting rights and powers with
respect to the Common Stock subject to the Voting Trust. The Voting Trust will
terminate on the earlier to occur of (i) sale of all of the Common Stock subject
to the Voting Trust, (ii) the death of Herman O. Brown, Jr., or (iii) expiration
of the ten-year term of the Voting Trust, subject to the automatic renewal of
the Voting Trust for an additional period of ten years in the event Herman O.
Brown, Jr. continues to own Common Stock of the Company upon expiration of the
initial ten-year term of the Voting Trust. Under the Voting Trust, Herman O.
Brown, Jr. retains the power to receive dividends and to instruct the trustee to
dispose of shares of Common Stock within the Voting Trust, subject to compliance
with applicable federal and state securities laws and the lock-up agreement
entered into with the Representative.

41
<PAGE> 43

DESCRIPTION OF SECURITIES

The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, par value $.001 per share, and 2,000,000 shares of Preferred
Stock, par value $.01 per share.

COMMON STOCK

Upon consummation of this offering, 6,100,000 shares of Common Stock will
be issued and outstanding (assuming no options are exercised after March 31,
1998, and assuming the Underwriters' over-allotment option is not exercised). If
the over-allotment option is exercised in full, 6,400,000 shares of Common Stock
will be issued and outstanding.

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. The Company's
Certificate of Incorporation denies cumulative voting rights in the election of
directors. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Subject to preferences that may be applicable to any
outstanding Preferred Stock, holders of Common Stock are entitled to receive
ratably such dividends as may be declared by the Board of Directors out of funds
legally available therefor. See "Dividend Policy." In the event of a
liquidation, dissolution or winding up of the Company, holders of Common Stock
are entitled to share ratably in the assets remaining after payment of
liabilities and the liquidation preference of any outstanding Preferred Stock.
Holders of Common Stock have no preemptive, conversion or redemption rights. All
of the outstanding shares of Common Stock are, and the shares to be sold in this
offering when issued and paid for will be, fully paid and non-assessable.

PREFERRED STOCK

The Board of Directors has the authority, without further stockholder
approval, to issue up to 2,000,000 shares of Preferred Stock from time to time
in one or more series, to establish the number of shares to be included in each
such series, and to fix the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof. The issuance of Preferred Stock may have the effect of delaying or
preventing a change in control of the Company. The issuance of Preferred Stock
could decrease the amount of earnings and assets available for distribution to
the holders of Common Stock or could adversely affect the rights and powers,
including voting rights, of the holders of the Common Stock. In certain
circumstances, such issuances could have the effect of decreasing the market
price of the Common Stock. As of the closing of this offering, no shares of
Preferred Stock will be outstanding and the Company currently has no plans to
issue any shares of Preferred Stock.

DELAWARE BUSINESS COMBINATION PROVISIONS

As a Delaware corporation, the Company is subject to Section 203 of the
Delaware General Corporation Law ("Section 203"), which regulates large
accumulations of shares, including those made by tender offers. Section 203 may
have the effect of significantly delaying a purchaser's ability to acquire the
entire interest in the Company if such acquisition is not approved by the
Company's Board of Directors. In general, Section 203 prevents an "Interested
Stockholder" (defined in Section 203 generally as a person with 15% or more of a
corporation's outstanding voting stock) from engaging in a "Business
Combination" (defined below) with a Delaware corporation for three years
following the date such person became an Interested Stockholder, except as
described below. For purposes of Section 203, the term "Business Combination" is
defined broadly to include mergers and certain other transactions with or caused
by the Interested Stockholder; sales or other dispositions to the Interested
Stockholder (except proportionately with the corporation's other stockholders)
of assets of the corporation or a subsidiary equal to 10% or more of the
aggregate market value of the corporation's consolidated assets or outstanding
stock; the issuance or transfer by the corporation or a subsidiary of stock of
the corporation or such subsidiary to the Interested Stockholder (except for
transfers in a conversion or exchange or a pro-rata distribution, or certain
other transactions, none of which increase the Interested Stockholder's
proportionate ownership of any class or series of the corporation's or such
subsidiary's stock); or the receipt by the Interested Stockholder (except
proportionately as a stockholder), directly or

42
<PAGE> 44

indirectly, of any loans, advances, guarantees, pledges or other financial
benefits provided by or through the corporation or a subsidiary.

The three-year moratorium imposed on Business Combinations by Section 203
does not apply if: (a) prior to the date on which a stockholder becomes an
Interested Stockholder, the Board approves either the Business Combination or
the transaction that resulted in the person becoming an Interested Stockholder;
(b) the Interested Stockholder owns 85% of the corporation's voting stock upon
consummation of the transaction that made such stockholder an Interested
Stockholder (excluding from the 85% calculation shares owned by directors who
are also officers of the corporation and shares held by employee stock plans
which do not permit employees to decide confidentially whether to accept a
tender or exchange offer); or (c) on or after the date a stockholder becomes an
Interested Stockholder, the Board approves the Business Combination, and the
Business Combination is also approved at a stockholder meeting by 66 2/3% of the
voting stock not owned by the Interested Stockholder.

Under Section 203, the restrictions described above do not apply if, among
other things, the corporation's original certificate of incorporation contains a
provision expressly electing not to be governed by Section 203. The Company's
Certificate of Incorporation does not contain such a provision. The restrictions
described above also do not apply to certain Business Combinations proposed by
an Interested Stockholder following the announcement or notification of one of
certain extraordinary transactions involving the corporation and a stockholder
who had not been an Interested Stockholder during the previous three years or
who became an Interested Stockholder with the approval of a majority of the
corporation's directors.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Company's Common Stock is American
Securities Transfer & Trust, Inc.

43
<PAGE> 45

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have 6,100,000 shares of
Common Stock outstanding, assuming no options are exercised after March 31, 1998
and assuming the Underwriters' over-allotment option is not exercised. If the
Underwriters' over-allotment option is exercised in full, 6,400,000 shares of
Common Stock will be outstanding. Of these shares, the 2,000,000 shares sold in
this offering (and any shares sold by the Company upon exercise of the
Underwriters' over-allotment option) will be freely transferable by persons
other than "affiliates" of the Company (as that term is defined under the 1933
Act) without restriction or further registration under the 1933 Act.

The remaining 4,100,000 outstanding shares of Common Stock are "restricted
securities" within the meaning of Rule 144 under the Act and may not be sold in
the absence of registration under the 1933 Act unless an exemption from
registration is available, including the exemption contained in Rule 144. All of
such shares are eligible for sale under Rule 144 commencing 90 days from the
date of this Prospectus. Pursuant to the terms of the Underwriting Agreement,
the Representative has required that the Common Stock owned by officers,
directors and the Existing Common Stockholders may not be sold until 12 months
from the date of this Prospectus without the prior written consent of the
Representative.

In general, under Rule 144 as currently in effect, a stockholder who has
beneficially owned shares for at least one year is entitled to sell, within any
three-month period, a number of "restricted" shares that does not exceed the
greater of 1% of the then outstanding shares of Common Stock or the average
weekly trading volume during the four calendar weeks preceding such sale. Sales
under Rule 144 are also subject to certain manner of sale limitations, notice
requirements and the availability of current public information about the
Company. Rule 144(k) provides that a stockholder who is not deemed to be an
"affiliate" and who has beneficially owned shares for at least two years is
entitled to sell such shares at any time under Rule 144(k) without regard to the
limitations described above.

In addition to the shares of Common Stock that are currently outstanding, a
total of 450,000 shares of Common Stock have been reserved for issuance upon
exercise of options granted under the Option Plan, under which options to
acquire 263,600 shares of Common Stock at exercise prices of between $6.00 and
$6.60 per share have been granted and are exercisable commencing in September
1998. Shares purchased pursuant to options will be freely tradeable without
restriction under the 1933 Act, except for shares held by an "affiliate" of the
Company, which shares will remain subject to certain restrictions. See
"Management -- Stock Option Plan."

The Company is unable to estimate the number of shares that may be sold in
the future by the Existing Common Stockholders or holders of options or the
effect, if any, that sales of shares by the Existing Common Stockholders or
option holders will have on the market price of the Common Stock prevailing from
time to time. Sales of substantial amounts of Common Stock by the Existing
Common Stockholders or holders of options could adversely affect then prevailing
market prices.

44
<PAGE> 46

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, for which Cruttenden Roth Incorporated is acting as
the representative (the "Representative"), have severally agreed to purchase
from the Company the shares of Common Stock offered hereby. Each Underwriter
will purchase the number of shares set forth opposite its name below, and will
purchase the shares at the price to public less underwriting discounts and
commissions set forth on the cover page of this Prospectus.

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
----------- ---------
<S> <C>
Cruttenden Roth Incorporated................................
Laidlaw Global Securities, Inc..............................

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

The Underwriting Agreement provides that the Underwriters' obligations are
subject to certain conditions precedent and that the Underwriters are committed
to purchase all shares of Common Stock offered hereby (other than those covered
by the over-allotment option described below) if the Underwriters purchase any
shares.

The Representative has advised the Company that the several Underwriters
propose to offer the shares of Common Stock in part directly to the public at
the price to public set forth on the cover page of this Prospectus, and in part
to certain dealers at the price to public less a concession not exceeding
$ per share. The Underwriters may allow, and such dealers may reallow,
a concession not exceeding $ per share to other dealers. After the
initial public distribution of the shares of Common Stock, the Representative
may change the initial price to public and other selling terms. No change in
such terms shall change the amount of proceeds to be received by the Company as
set forth on the cover page of this Prospectus. Cruttenden Roth Incorporated and
Laidlaw Global Securities, Inc. will also receive an aggregate nonaccountable
expense allowance equal to 3% of the gross proceeds of the offering including
the over-allotment option, if exercised, of which $30,000 has been paid.

The Company has granted the Underwriters an option, exercisable for 45 days
after the date of this Prospectus, to purchase up to 300,000 additional shares
of Common Stock at the initial price to public. The Underwriters may purchase
these shares solely to cover over-allotments, if any, in connection with the
sale of the shares of Common Stock offered hereby. If the Underwriters exercise
the over-allotment option, the Underwriters will purchase additional shares in
approximately the same proportions as those in the above table.

The Representative has informed the Company that it does not expect any
sales of the shares of Common Stock offered hereby to be made to discretionary
accounts by the Underwriters.

The Underwriting Agreement provides that the Company and the Underwriters
will indemnify each other against certain liabilities under the 1933 Act.

45
<PAGE> 47

The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the 1934 Act. Over-allotment involves syndicate sales in excess of the
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the securities in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the Underwriters to reclaim a selling concession from a
syndicate member when the securities originally sold by such syndicate member
are purchased in a syndicate covering transaction to cover syndicate short
positions. Such stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the Common Stock to be higher than it would
otherwise be in the absence of such transactions.

Neither the Company nor the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.

The Company's officers and directors, holding in the aggregate 4,100,000
shares of Common Stock, have agreed not to offer, sell or otherwise dispose of
any shares of Common Stock for a period of 365 days after the date of this
Prospectus (the "lock-up period") without the prior written consent of the
Representative. The Representative has no present intention to waive or shorten
the lock-up period. The Company has undertaken to file a post-effective
amendment to the Registration Statement that includes this Prospectus if and
when such intention changes and 10% or more of the shares of Common Stock will
be released from the lock-up. If less than 10% but more than 5% of the shares of
Common Stock subject to the lock-up are released, the Company has undertaken to
supplement this Prospectus.

The Company has also agreed to sell to Cruttenden Roth Incorporated and
Laidlaw Global Securities, Inc., for nominal consideration, warrants (the
"Representative's Warrants") to purchase an aggregate of 200,000 shares of
Common Stock. The Representative's Warrants will be exercisable, at a price per
share equal to 122% of the initial price to public, commencing one year from the
date hereof and for a period of four years thereafter. During the exercise
period, holders of the Representative's Warrants are entitled to certain demand
and incidental registration rights with respect to the securities issuable upon
exercise of the Representative's Warrants. The number of shares of Common Stock
issuable upon exercise of the Representative's Warrants is subject to adjustment
in certain events to prevent dilution. The Representative's Warrants cannot be
transferred, assigned or hypothecated for a period of one year from the date of
issuance except to Underwriters, selling group members and their employees,
officers or partners.

Prior to this offering, there has not been a public market for the Common
Stock. The public offering price of the Common Stock has been determined by
arms-length negotiation between the Company and the Representative. There is no
direct relation between the offering price of the Common Stock and the assets,
book value or net worth of the Company. Among the factors considered by the
Company and the Representative in pricing the Common Stock were the results of
operations, the current financial condition and future prospects of the Company,
the experience of management, the amount of ownership to be retained by the
Existing Common Stockholders, the general condition of the economy and the
securities markets, and the demand for securities of companies considered
comparable to the Company.

46
<PAGE> 48

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon by
Berliner Zisser Walter & Gallegos, P.C., Denver, Colorado. A partner of such
firm holds options to acquire 20,000 shares of Common Stock. Berliner Zisser
Walter & Gallegos, P.C. has represented the Representative from time to time in
other matters. Certain legal matters will be passed upon for the Representative
by LeBoeuf, Lamb, Greene & MacRae, L.L.P., a limited liability partnership
including professional corporations, Salt Lake City, Utah.

EXPERTS

The balance sheets of the Company as of December 31, 1996 and 1997 and the
statements of operations, stockholders' equity and cash flows for the years then
ended, have been included herein in reliance on the report of Cherry, Bekaert &
Holland, L.L.P., independent accountants, given on the authority of that firm as
experts in auditing and accounting. With respect to the unaudited interim
financial information for the three months ended March 31, 1997 and 1998, the
independent accountants have not audited or reviewed such financial information
and have not expressed an opinion or any other form of assurance with respect to
such financial information.

ADDITIONAL INFORMATION

The Company has filed with the Commission, a registration statement
(together with all amendments thereto, the "Registration Statement") under the
1933 Act with respect to the Common Stock of the Company offered hereby. This
Prospectus, filed as part of the Registration Statement, omits certain
information contained in the Registration Statement in accordance with the rules
and regulations of the Commission. For further information, reference is hereby
made to the Registration Statement and to the exhibits filed therewith, which
may be inspected without charge at the principal office of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, and copies of the material contained
therein may be obtained from the Commission upon payment of applicable copying
charges. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein are not necessarily complete, and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement.

Upon completion of this offering, the Company will be subject to the
reporting and other informational requirements of the 1934 Act and, in
accordance therewith, will file reports and other information with the
Commission. Such reports, proxy statements and other information, once filed by
the Company, can be inspected and copied at the public reference facilities
maintained by the Commission at the offices of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at Northwest Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade Center, New
York, New York 10048. The Commission also maintains a Web site on the Internet
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission. The address of
such site is http://www.sec.gov. Copies of such materials can also be obtained
by written request to the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.

47
<PAGE> 49

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors.............................. F-2
Balance Sheets -- December 31, 1996 and 1997, March 31, 1998
(unaudited) and pro forma March 31, 1998 (unaudited)...... F-3
Statements of Operations -- For the years ended December 31,
1996 and 1997 and the three months ended March 31, 1997
and 1998 (unaudited)...................................... F-4
Statements of Stockholders' Equity -- For the years ended
December 31, 1996 and 1997 and the three months ended
March 31, 1998 (unaudited)................................ F-5
Statements of Cash Flows -- For the years ended December 31,
1996 and 1997 and the three months ended March 31, 1997
and 1998 (unaudited)...................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>

F-1
<PAGE> 50

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
American Aircarriers Support, Inc.

We have audited the accompanying balance sheets of American Aircarriers
Support, Inc. as of December 31, 1996 and 1997 and the related statements of
operations, stockholders' equity and cash flows for the years then ended. 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 American Aircarriers
Support, Inc. at December 31, 1996 and 1997, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

Cherry, Bekaert & Holland, L.L.P.

Charlotte, North Carolina
February 18, 1998, except for Notes 7., 12., and 13.,

as to which the date is May 27, 1998

F-2
<PAGE> 51

AMERICAN AIRCARRIERS SUPPORT, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, MARCH 31,
------------------------ MARCH 31, 1998
1996 1997 1998 (NOTE 13)
---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents...................... $1,773,294 $ 750,448 $ 1,031,209 $ 1,031,209
Receivables:
Trade and other, net of allowances of
$115,000, $130,000 and $130,000 in 1996
and 1997, and March 31, 1998,
respectively.............................. 708,951 1,958,798 1,293,619 1,293,619
Affiliate................................... 16,200 13,589 -- --
Inventory...................................... 1,803,695 5,625,107 9,204,762 9,204,762
Prepaid expenses and other assets.............. 6,393 30,725 54,119 54,119
---------- ---------- ----------- -----------
Total current assets................... 4,308,533 8,378,667 11,583,709 11,583,709
Property and equipment, net...................... 127,117 335,795 382,237 382,237
Investments...................................... 50,000 335,000 510,000 510,000
Other assets..................................... -- -- 227,696 272,696
---------- ---------- ----------- -----------
TOTAL ASSETS........................... $4,485,650 $9,049,462 $12,703,642 $12,748,642
========== ========== =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Bank line of credit............................ $ -- $1,500,000 $ 3,500,000 $ 3,500,000
Current maturities of long-term debt........... 112,287 120,708 120,708 120,708
Current maturities of notes payable to related
parties..................................... 42,607 1,501,846 1,456,267 1,456,267
Accounts payable and accrued expenses.......... 722,349 1,057,700 1,642,698 1,642,698
Distributions payable to stockholders.......... -- -- -- 2,700,000
---------- ---------- ----------- -----------
Total current liabilities.............. 877,243 4,180,254 6,719,673 9,419,673
Long-term debt, less current maturities.......... 120,708 -- -- --
Notes payable to related parties, less current
maturities..................................... 691,846 -- -- --
---------- ---------- ----------- -----------
Total liabilities...................... 1,689,797 4,180,254 6,719,673 9,419,673
Commitments and contingencies
Stockholders' equity (Notes 12 and 13):
Preferred stock, $.01 par value; 2,000,000
shares authorized; no shares issued or
outstanding................................. -- -- -- --
Common stock, $.001 par value; 20,000,000
shares authorized; 4,100,000 shares issued,
as adjusted................................. 4,100 4,100 4,100 4,100
Additional paid-in capital..................... -- -- -- 3,324,869
Retained earnings.............................. 2,791,753 4,865,108 5,979,869 --
---------- ---------- ----------- -----------
Total stockholders' equity............. 2,795,853 4,869,208 5,983,969 3,328,969
---------- ---------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY............................... $4,485,650 $9,049,462 $12,703,642 $12,748,642
========== ========== =========== ===========
</TABLE>

See notes to financial statements.

F-3
<PAGE> 52

AMERICAN AIRCARRIERS SUPPORT, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
FOR THE YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------- --------------------------
1996 1997 1997 1998
-------------- -------------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net sales...................................... $ 8,352,095 $ 13,250,328 $2,336,538 $3,677,341
Cost of sales.................................. 5,479,380 7,946,467 1,401,900 2,109,912
------------ ------------ ---------- ----------
GROSS PROFIT......................... 2,872,715 5,303,861 934,638 1,567,429
Operating expenses:
Selling and marketing........................ 550,656 702,809 125,004 230,929
General and administrative................... 377,499 563,981 134,073 162,677
------------ ------------ ---------- ----------
Total operating expenses............. 928,155 1,266,790 259,077 393,606
------------ ------------ ---------- ----------
INCOME FROM OPERATIONS............... 1,944,560 4,037,071 675,561 1,173,823
Other income (expense):
Interest income.............................. 70,898 80,978 23,311 7,723
Interest expense............................. (73,588) (79,435) (19,859) (66,785)
Other income................................. 1,440 34,741 -- --
------------ ------------ ---------- ----------
Total other income (expense)......... (1,250) 36,284 3,452 (59,062)
------------ ------------ ---------- ----------
NET INCOME........................... $ 1,943,310 $ 4,073,355 $ 679,013 $1,114,761
============ ============ ========== ==========
Pro forma data (unaudited):
Net income as reported....................... $ 1,943,310 $ 4,073,355 $ 679,013 $1,114,761
Pro forma income tax expense................. 777,300 1,629,300 271,600 445,900
------------ ------------ ---------- ----------
Pro forma net income......................... $ 1,166,010 $ 2,444,055 $ 407,413 $ 668,861
============ ============ ========== ==========
Pro forma basic earnings per share........... $ 0.28 $ 0.60 $ 0.10 $ 0.16
============ ============ ========== ==========
Pro forma diluted earnings per share......... $ 0.28 $ 0.59 $ 0.10 $ 0.16
============ ============ ========== ==========
Pro forma weighted average shares
outstanding:
Basic..................................... 4,100,000 4,100,000 4,100,000 4,100,000
============ ============ ========== ==========
Diluted................................... 4,108,144 4,108,144 4,108,144 4,108,144
============ ============ ========== ==========
</TABLE>

See notes to financial statements.

F-4
<PAGE> 53

AMERICAN AIRCARRIERS SUPPORT, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK TOTAL
------------------- RETAINED STOCKHOLDERS'
SHARES DOLLARS EARNINGS EQUITY
--------- ------- ----------- -------------
<S> <C> <C> <C> <C>
Balance, January 1, 1996.................................. 4,100,000 $4,100 $ 2,048,843 $ 2,052,943
Net income................................................ 1,943,310 1,943,310
Stockholder distributions................................. (1,200,400) (1,200,400)
--------- ------ ----------- -----------
BALANCE, DECEMBER 31, 1996................................ 4,100,000 4,100 2,791,753 2,795,853
Net income................................................ 4,073,355 4,073,355
Stockholder distributions................................. (2,000,000) (2,000,000)
--------- ------ ----------- -----------
BALANCE, DECEMBER 31, 1997................................ 4,100,000 4,100 4,865,108 4,869,208
Net income, three months ended March 31, 1998
(Unaudited)............................................. 1,114,761 1,114,761
--------- ------ ----------- -----------
BALANCE, MARCH 31, 1998 (Unaudited)....................... 4,100,000 $4,100 $ 5,979,869 $ 5,983,969
========= ====== =========== ===========
</TABLE>

See notes to financial statements.

F-5
<PAGE> 54

AMERICAN AIRCARRIERS SUPPORT, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------------- ------------------------
1996 1997 1997 1998
----------- ----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income.......................................... $ 1,943,310 $ 4,073,355 $ 679,013 $ 1,114,761
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization.................... 22,769 54,557 13,639 23,900
Decrease (increase) in trade and other
receivables.................................... 8,421 (1,249,847) (28,652) 665,179
Decrease (increase) in receivables from
affiliate...................................... 330 2,611 (3,194) 13,589
Increase in inventory............................ (971,542) (3,821,412) (259,193) (3,579,655)
Increase in prepaid expenses and other
assets......................................... (5,393) (24,332) (12,160) (23,394)
Increase (decrease) in accounts payable and
accrued expenses............................... 204,337 335,351 (256,057) 584,998
----------- ----------- ---------- -----------
Net cash provided by (used in)
operating activities...................... 1,202,232 (629,717) 133,396 (1,200,622)
INVESTING ACTIVITIES
Investments......................................... (50,000) (285,000) -- (175,000)
Capital expenditures................................ (39,902) (263,235) (2,678) (70,342)
----------- ----------- ---------- -----------
Net cash used in investing activities....... (89,902) (548,235) (2,678) (245,342)
FINANCING ACTIVITIES
Proceeds from bank line of credit................... -- 1,500,000 -- 2,000,000
Proceeds from notes payable to related parties...... -- 810,000 -- --
Principal repayments on long-term debt.............. (104,453) (112,287) -- --
Principal repayments on notes payable to
related parties.................................. (187,772) (42,607) -- (45,579)
Deferred costs associated with planned public
offering......................................... -- -- -- (227,696)
Distributions to stockholders....................... (1,200,400) (2,000,000) -- --
----------- ----------- ---------- -----------
Net cash provided by (used in)
financing activities...................... (1,492,625) 155,106 -- 1,726,725
----------- ----------- ---------- -----------
Net decrease in cash and cash
equivalents............................... (380,295) (1,022,846) 130,718 280,761
Cash and cash equivalents, beginning of year.......... 2,153,589 1,773,294 1,773,294 750,448
----------- ----------- ---------- -----------
Cash and cash equivalents, end of year................ $ 1,773,294 $ 750,448 $1,904,012 $ 1,031,209
=========== =========== ========== ===========
</TABLE>

See notes to financial statements.

F-6
<PAGE> 55

AMERICAN AIRCARRIERS SUPPORT, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

DESCRIPTION OF BUSINESS

American Aircarriers Support, Inc. is an international supplier of aircraft
parts primarily to maintenance and repair facilities, major commercial passenger
and cargo airlines and other redistributors located throughout the world. The
Company's offices and inventory storage locations are in Fort Mill, South
Carolina.

BASIS OF PRESENTATION

The financial statements include the accounts of American Aircarriers
Support, Inc., a South Carolina corporation (the "Company"). Certain pro forma
information has been provided in connection with the Agreement and Plan of
Exchange and initial public offering of securities (Notes 12 and 13).

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INTERIM FINANCIAL STATEMENTS

The Company's financial statements for the three months ended March 31,
1997 and 1998, and all related footnote information for those periods, are
unaudited, and reflect all adjustments which, in management's opinion, are
necessary for fair presentation. All such adjustments are of a normal, recurring
nature.

CASH AND CASH EQUIVALENTS

The Company considers all liquid investments purchased with a maturity of
90 days or less to be cash equivalents. Included in cash equivalents are
investments in overnight repurchase agreements and a tax-exempt money market
mutual fund. These investments are recorded at cost, which approximates market.

TRADE RECEIVABLES

The Company's allowance for doubtful accounts is based on management's
estimates of the creditworthiness of its customers, and, in the opinion of
management is believed to be set in an amount sufficient to respond to normal
business conditions.

INVENTORIES

Inventories are valued at lower of cost or market. The cost of aircraft
parts purchased individually is determined on a specific identification basis,
which includes the cost associated with the overhaul and repair necessary for
resale. For parts acquired through bulk purchases or through whole aircraft
purchases, the costs are assigned to pools, which are amortized as part sales
are recognized. The amount of cost amortized is based upon the gross profit
percentage as determined from the estimated sales value of the parts. The sales
value estimates and gross profit percentages are based on historical experience,
are monitored by management, and are adjusted periodically as necessary.

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost. Depreciation of furniture,
fixtures and equipment is provided under the straight-line method over the
estimated useful lives, generally five and seven years. Amortization of
leasehold improvements is provided on the straight-line method over the
estimated useful lives of leased assets or the term of the lease, whichever is
shorter.

Repair and maintenance costs are charged to operations as incurred while
major improvements are capitalized. When assets are retired or disposed of, the
cost and accumulated depreciation thereon are removed from the accounts and any
gains or losses are included in operations.

F-7
<PAGE> 56
AMERICAN AIRCARRIERS SUPPORT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

REVENUE RECOGNITION

Revenue from the sales of parts and related costs is recognized when
products are shipped to the customer. Revenue from engine sales is recognized
when the Company has received all consideration and title and risk of ownership
are transferred to the customer, which is generally upon delivery of the engine.
The Company provides its customers the right to return products within 45 days
of shipment. The effect of this program is estimated and a provision for sales
returns and allowances is established.

PRO FORMA EARNINGS PER SHARE (UNAUDITED)

In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share", which is required to be adopted for the fiscal years ending after
December 15, 1997. SFAS No. 128 supercedes APB Opinion No. 15, "Earnings Per
Share" and specifies the computation, presentation and disclosure requirements
for earnings per share ("EPS") for entities with publicly held common stock or
potential common stock. Essentially, this Statement replaces the primary EPS and
fully diluted EPS presentations under APB Opinion No. 15 with a basic EPS and a
diluted EPS. Pro forma earnings per share for all periods presented have been
determined under the provisions of SFAS No. 128, and include certain pro forma
adjustments to income and shares as discussed in Note 13.

INCOME TAXES

The Company, with the consent of its stockholders, elected to be taxed as
an S Corporation for federal and state income tax purposes as defined in Section
1361 of the Internal Revenue Code of 1986. Therefore, the Company is generally
exempt from all federal and state income taxes as stockholders of the Company
are taxed on corporate income. Pro forma income and earnings per share have been
determined using estimated effective federal and state income tax rates as
discussed in Note 13.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value approximates book value for the following financial instruments
due to their short-term nature: cash and cash equivalents, accounts receivable,
and accounts payable. Fair values of notes payable and long-term debt are based
on estimates using present value techniques. Fair values of investments
accounted for at cost were based on prices of recently-made investments in the
companies, and at December 31, 1996 and 1997 and March 31, 1997 and 1998,
approximated carrying values.

At December 31, 1996 and 1997 and March 31, 1997 and 1998, the carrying
values of the Company's notes payable and long-term debt approximated their fair
values as the interest rates on such financial instruments are comparable to
market rates and/or remaining principal is due in a relatively short period of
time. Fair value of unused line of credit arrangements approximate carrying
value as the terms are at current market for similar agreements.

CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Company to
concentrations of credit risk consist of cash and cash equivalents, accounts
receivable and investments.

Cash balances in financial institutions periodically exceed amounts insured
by the FDIC. These balances and investments in overnight repurchase agreements
are held by a national financial institution and management believes risk of
loss related to these amounts is remote.

Accounts receivable subject the Company to a potential concentration of
credit risk. Receivables are usually due within 30 days and the Company performs
periodic credit evaluations of its customer's financial

F-8
<PAGE> 57
AMERICAN AIRCARRIERS SUPPORT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
CONCENTRATIONS OF CREDIT RISK -- (CONTINUED)
condition. Substantially all of the Company's customers are in the aviation
industry and sales are usually affected by the current economic condition of the
industry. The Company estimates that sales to international customers accounted
for approximately 12% of net sales in 1996 and approximately 30% of net sales in
1997. The Company anticipates that international sales will continue to
represent a material portion of the Company's net sales in future periods. Sales
to international customers may be subject to greater risks, including variations
in local economies, fluctuating exchange rates and greater difficulty in
accounts receivable collection.

In a given period, a substantial portion of the Company's net sales may be
attributable to the sale of one or more engines. Sales of engines, the timing of
aircraft spare parts sales or a lease transaction during a given period may
result in a customer being considered a major customer of the Company for that
period. In 1996 and 1997, none of the Company's customers accounted for in
excess of 10% of net sales. In the three months ended March 31, 1998, one
customer that purchased an engine accounted for approximately 22% of net sales
and sales to two customers each accounted for between 5% and 10% of net sales.
Currently, the Company believes that it has no customer, the loss of which would
have a material adverse effect on the Company's results of operations.

USE OF ESTIMATES

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.

ADVERTISING COSTS

The Company expenses advertising costs as they are incurred. For the years
ended December 31, 1996 and 1997 and the three-month period ended March 31,
1998, advertising costs were $14,251 and $17,437, and $3,655, respectively.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which establishes standards for reporting and display of comprehensive
income and its components in a full set of general-purpose financial statements.
There currently are no additional disclosures in the financial statements of the
Company that are expected to be required by the provisions of this Statement.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which changes the way public companies
report information about segments of their business in annual financial
statements and requires segment information in quarterly reports to
shareholders. It also requires that public business enterprises report certain
information about their products and services, the geographic areas in which
they operate, and their major customers. This Statement is effective for fiscal
years beginning after December 15, 1997. The Company has not determined what
additional disclosures may be required by the provisions of this Statement.

In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits," which revises employers'
disclosures about pension and other postretirement benefit plans. The Statement
does not change the measurement or recognition of those plans, but requires
additional

F-9
<PAGE> 58
AMERICAN AIRCARRIERS SUPPORT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS -- (CONTINUED)

information on changes in benefit obligations and fair values of plan assets,
and eliminates certain disclosures previously required by SFAS Nos. 87, 88 and
106. This Statement is effective for fiscal years beginning after December 15,
1997. The Company has not determined what additional disclosures may be required
by the provisions of this Statement.

NOTE 3. TRADE RECEIVABLES AND NET SALES BY REGION

Trade receivables are shown net of the following allowances at December 31:

<TABLE>
<CAPTION>
MARCH 31,
1996 1997 1998
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Allowance for doubtful accounts..................... $ 25,000 $100,000 $100,000
Reserve for sales returns and allowances............ 90,000 30,000 30,000
-------- -------- --------
Total accounts receivable allowances................ $115,000 $130,000 $130,000
======== ======== ========
</TABLE>

Net sales to unaffiliated customers by geographic region are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------ -----------------------
1996 1997 1997 1998
---------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Domestic............................ $7,334,391 $ 9,010,357 $1,841,311 $3,181,789
Canada.............................. 33,115 872,222 41,440 12,063
Europe and Middle East.............. 945,460 2,512,730 405,568 427,339
Far East............................ 4,800 820,800 39,300 38,850
Other............................... 34,329 34,219 8,919 17,300
---------- ----------- ---------- ----------
Total..................... $8,352,095 $13,250,328 $2,336,538 $3,677,341
========== =========== ========== ==========
</TABLE>

NOTE 4. INVENTORY

Inventory, stated at lower of cost or market, is comprised of the
following:

<TABLE>
<CAPTION>
MARCH 31,
1996 1997 1998
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Aircraft parts................................... $1,372,695 $3,186,364 $2,912,734
Complete engines................................. 365,000 2,438,743 4,092,028
Complete aircraft................................ -- -- 2,200,000
Deposits on inventory............................ 66,000 -- --
---------- ---------- ----------
Total.................................. $1,803,695 $5,625,107 $9,204,762
========== ========== ==========
</TABLE>

F-10
<PAGE> 59
AMERICAN AIRCARRIERS SUPPORT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment, stated at cost, is comprised of the following:

<TABLE>
<CAPTION>
MARCH 31,
1996 1997 1998
-------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Leasehold improvements............................. $ -- $ 154,353 $ 183,901
Office furniture and equipment..................... 78,247 155,866 186,563
Vehicles........................................... 114,273 115,657 115,657
Shop equipment..................................... 20,169 36,283 46,380
-------- --------- ---------
212,689 462,159 532,501
Less accumulated depreciation...................... (85,572) (126,364) (150,264)
-------- --------- ---------
Property and Equipment, net........................ $127,117 $ 335,795 $ 382,237
======== ========= =========
</TABLE>

NOTE 6. INVESTMENTS

During the three months ended March 31, 1998, the Company invested $175,000
for a 50% interest in a joint venture arrangement with Global Turbine Services,
Inc. to convert eight engines from a short duct configuration to a long duct
configuration for a certain customer. The Company and the other venturer share
equally in the profits and losses of the joint venture. The investment is
accounted for on the equity method. No income has been recognized from the joint
venture through March 31, 1998.

During 1997, the Company invested $235,000 for a 50% interest in a joint
venture arrangement with Global Turbine Services, Inc. to purchase and lease
three aircraft engines. The Company and the other venturer share equally in the
profits and losses of the joint venture. The investment is accounted for on the
equity method. Income recognized from the joint venture in 1997 and in the three
months ended March 31, 1998 was insignificant.

The Company made investments of $50,000 in 1996 and $50,000 in 1997 in
nonpublic companies, which are accounted for at cost. The investment made in
1997 was in a company in which a director is a principal (see Note 11). No
income was recognized from these investments in 1996 or 1997 or in the three
months ended March 31, 1998.

NOTE 7. LINE OF CREDIT

In June 1995, the Company entered into a revolving line of credit ("the
facility") with a bank under which the Company could borrow up to $1,000,000 at
the bank's prime rate (8.25% at December 31, 1996). No amounts were borrowed
under the facility during 1996. On December 10, 1997, the Company renewed and
amended the facility to increase the borrowing limit to $2,000,000. Upon
renewal, the facility bore interest at the bank's prime rate (8.50% at December
31, 1997) and matured May 31, 1998. On December 31, 1997, $1,500,000 was
outstanding under the facility. On March 4, 1998, the facility was modified to
increase the borrowing limit to $4,000,000, and reduce the interest rate to the
three-month London Interbank Offered Rate (LIBOR) plus 2%. The facility is
collateralized by the Company's accounts receivable and inventory, and
guaranteed by one of the existing stockholders.

On April 9, 1998, the Company entered into an agreement with the bank for a
$10 million line of credit, at an annual interest rate of LIBOR plus an amount
between 1.75% to 2.25%. The line of credit matures September 30, 1998, is
collateralized by the Company's accounts receivable and inventory, and is
guaranteed by one of the existing stockholders. On May 27, 1998, $5,950,000 was
outstanding under the facility.

F-11
<PAGE> 60
AMERICAN AIRCARRIERS SUPPORT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 8. NOTES PAYABLE AND LONG-TERM DEBT

Notes payable and long-term debt as of December 31, 1996 and 1997 are
summarized as follows:

<TABLE>
<CAPTION>
MARCH 31,
1996 1997 1998
--------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Long-term debt
Note payable to unaffiliated co-founder of U.S.
Aviation originated July 1993, bearing interest at
7.75% on $525,000, guaranteed by the existing
stockholders, payable in five (5) equal annual
installments of principal and interest, maturity
June 30, 1998...................................... $ 232,995 $ 120,708 $ 120,708
Less current maturities............................ (112,287) (120,708) (120,708)
--------- ----------- -----------
Long-term debt, less current maturities............ $ 120,708 $ -- $ --
========= =========== ===========
Notes payable to related parties
Note payable to stockholder dated July 1993, bearing
interest at 6% on $525,000 principal amount,
guaranteed by one of the existing stockholders,
interest only payable for five (5) years, principal
and any unpaid interest due at maturity on June 30,
1998............................................... $ 525,000 $ 525,000 $ 525,000
Note payable to U.S. Aviation originated October
1993, bearing interest at 7% on $200,000, secured
by inventory and guaranteed by one existing
stockholder, payable in five (5) equal annual
installments of principal and interest, maturity
October 1998, paid in full February 1998........... 88,186 45,579 --
Notes payable to existing stockholders, $121,267
originated December 1996, bearing interest at 8%,
principal and accrued interest payable at maturity
on June 30, 1998. Notes payable for an additional
$810,000 originated in December 1997, bearing
interest at 8%, principal and accrued interest
payable at maturity on April 15, 1998.............. 121,267 931,267 931,267
--------- ----------- -----------
Total notes payable to related parties............. 734,453 1,501,846 1,456,267
Less current maturities......................... (42,607) (1,501,846) (1,456,267)
--------- ----------- -----------
Notes payable to related parties, less current
maturities...................................... $ 691,846 $ -- $ --
========= =========== ===========
</TABLE>

Interest paid during the years ended December 31, 1996 and 1997 and the
three months ended March 31, 1997 and 1998, was $62,227, $83,248, $-0- and
$43,065, respectively.

NOTE 9. COMMITMENTS AND CONTINGENCIES

The Company neither manufacturers nor repairs aircraft parts and requires
that all of the parts it sells are properly documented and traceable to an
approved source. Although the Company has never been subject to product
liability claims, there is no guarantee that the Company could not be subject to
liability from its potential exposure relating to faulty aircraft parts in the
future. The Company maintains liability insurance with coverage it believes to
be in sufficient amounts and on terms that are generally consistent with
industry practice, but there can be no assurance that such coverage will be
adequate to fully protect the Company from any liabilities it might incur. An
uninsured or partially insured loss could have a material adverse effect upon
the Company's financial condition.

F-12
<PAGE> 61
AMERICAN AIRCARRIERS SUPPORT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 9. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
OPERATING LEASES

The Company leases its office and warehouse facilities from partnerships
owned in whole or in part by the Company's existing stockholders. Terms of the
lease agreements are described in Note 11. Rental expense under all cancelable
and noncancelable operating leases, and commitments for future minimum lease
payments under noncancelable operating leases with remaining terms of more than
one year are as follows:

<TABLE>
<CAPTION>
MARCH 31,
1996 1997 1998
------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Operating lease rental expense............. $41,268 $ 83,750 $34,350
======= ======== =======
Future minimum lease payments at December
1997 (all to related parties):
1998..................................... $112,200
1999..................................... 87,000
2000..................................... 87,000
2001..................................... 87,000
2002..................................... 50,750
--------
$423,950
========
</TABLE>

NOTE 10. EMPLOYEE BENEFIT PLANS

For the year ended December 31, 1996, the Company had a profit sharing plan
for employees who met certain eligibility requirements. Contributions to the
plan were discretionary. The Company's contribution to the plan was $53,827
(approximately 10% of eligible salaries) in 1996.

In January 1997, the Company amended the plan and adopted a 401(k) profit
sharing plan that covers substantially all of its employees. Employees who have
completed more than one year of service and are over the age of 21 may
contribute from 1% to 15% of their base pay. The Company match on the 401(k)
portion is discretionary up to 100% of contributions up to 6% of eligible
salaries. The profit sharing contribution by the Company is also discretionary.
The Company made no contribution to the plan for the 401(k) portion and
contributed $63,261 for the profit sharing portion (approximately 10% of
eligible salaries) for the year ended December 31, 1997.

The Company has a medical reimbursement plan covering substantially all of
its employees that pays up to $500 per quarter per employee for all medical
bills not covered by another group plan. Reimbursement to employees under this
plan for the years ended December 31, 1996 and 1997 were $17,281 and $16,266,
respectively.

The Company has a security interest in a certain life insurance policy for
cash advances made in connection with a collateral assignment split-dollar life
insurance plan provided to a key employee of the Company. An assignment of the
Company's security interest in the policy has been made for the purpose of
providing security for indebtedness incurred by the Company to facilitate
implementation of the split-dollar plan without utilizing working capital needed
for other business purposes. Expense for the plan was $12,209 for each of the
years ended December 31, 1996 and 1997.

NOTE 11. RELATED PARTY TRANSACTIONS

The Company leases a 15,000 square foot warehouse facility from B & C
Enterprises, a partnership in which an existing stockholder is a 50% partner.
The lease is for an initial term effective January 1, 1993

F-13
<PAGE> 62
AMERICAN AIRCARRIERS SUPPORT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 11. RELATED PARTY TRANSACTIONS -- (CONTINUED)

through June 30, 1998, with a five-year renewal option. Rent expense under this
lease in each of the periods ended December 31, 1996 and 1997 was $45,000. Rent
expense under this lease in the three months ended March 31, 1997 and 1998 was
$11,250 and $12,600, respectively.

The Company leases approximately 25,000 square feet of warehouse storage
and administrative and sales offices from Brown Enterprises, a partnership owned
by the Company's existing stockholders. The lease is for an initial term of five
years beginning August 1, 1997, with a five year renewal option. The annual rent
is $87,000. Rent expense pertaining to this lease for the period ended December
31, 1997 and March 31, 1998 was $36,250 and $21,750, respectively.

In October 1993, the Company borrowed $200,000 from U.S. Aviation, Inc.
("USAC") related to the balance of the purchase price of aircraft parts acquired
in December 1989. An existing stockholder is a co-founder, officer and director
of USAC. The note bears an interest rate of 7%, payable in five equal annual
installments of principal and interest, with a maturity of October 1, 1998. The
note is secured by inventory and guaranteed by one existing stockholder.
Principal and interest paid on this note during the periods ended December 31,
1996 and 1997 was $48,780. Subsequent to year end, the note was paid in full.

The Company presently sells inventory owned by USAC on consignment and
remits payments quarterly to USAC for 60% of the sales price, less any overhaul
and repair costs incurred by the Company necessary to facilitate the sale of the
inventory. Sales on consignment for USAC were $97,160 and $76,959 in 1996 and
1997, respectively. Consignment sales on behalf of USAC for the three months
ended March 31, 1998 were immaterial. The Company also pays monthly insurance
premiums for three employees of USAC and is reimbursed annually by USAC for the
premiums incurred. Such premiums were $16,200 and $13,589 for 1996 and 1997,
respectively.

In July 1993, the Company borrowed $525,000 from an existing stockholder.
The note bears an interest rate of 6%, with interest only payable at each
anniversary date and the note balance payable in full on June 30, 1998. The note
is guaranteed by the other existing stockholder. Interest expense recognized was
$31,500 in 1996 and 1997. Interest expense recognized during the each of
three-month periods ended March 31, 1997 and 1998 was $7,875.

The Company has historically made distributions to stockholders in amounts
estimated to cover individual tax liabilities on income from the Company in
connection with its S Corporation election. In 1996, the stockholders loaned
back to the Company funds in excess of their tax liabilities. The notes payable
totaling $121,267 bear interest at an annual rate of 8% and are due and payable
at maturity on June 30, 1998. In December 1997, the Company made distributions
to the stockholders the amount necessary to fund their anticipated 1997 tax
liabilities. The stockholders loaned back to the Company funds in excess of 110%
of their 1996 tax liabilities. The notes payable totaling $810,000 bear interest
at an annual rate of 8%. Principal and interest are due and payable at maturity
on April 15, 1998.

In April 1998, the Company repaid $829,000 in principal and accrued
interest to the Existing Common Stockholders. At the same time, the Company also
distributed $683,000 to the Existing Common Stockholders for payments due
related to 1997 and 1998 tax liabilities.

In 1997, the Company invested $50,000 in a company in which a director is a
principal. The investment, an equity interest of less than 2% of the investee,
is accounted for at cost, and no income has been received or recognized in 1997
in connection with the investment.

The Company incurred legal expenses of $2,200 in 1996 and $15,985 in 1997
from a law firm in which a director is a partner. During the three months ended
March 31, 1998, the Company incurred expenses of $45,000. These expenses have
been included in other assets as part of the deferred costs relating to the
planned public offering.

F-14
<PAGE> 63
AMERICAN AIRCARRIERS SUPPORT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12. SUBSEQUENT EVENT -- ADOPTION OF AGREEMENT AND PLAN OF EXCHANGE AND
RELATED CONTRACTS

Effective February 10, 1998, an Agreement and Plan of Exchange
("Agreement") was adopted by and among the Company, American Aircarriers
Support, Incorporated, a Delaware corporation ("AASI"), Karl F. Brown and Herman
O. Brown, Jr. The Agreement provides that, one day prior to the effective date
of a registration statement related to the initial public offering of stock,
existing stockholders of the Company will exchange all outstanding shares of the
Company for 4.1 million shares of common stock of AASI, and the Company will
merge with and into AASI (together, the "Reincorporation"). Contemporaneously
with the merger, the Company will terminate its S Corporation income tax
election. AASI was formed for the purpose of merging with the Company and
otherwise has no operations. The authorized capital stock of AASI consists of
20,000,000 shares of common stock and 2,000,000 shares of preferred stock. The
authorized capital stock of the Company consists of 100,000 shares of common
stock, $1 par value. At December 31, 1996 and 1997 and March 31, 1998, 100
shares were outstanding. The balance sheets, statements of stockholders' equity,
and pro forma earnings per share calculations give effect to the stock to be
issued in connection with the Reincorporation.

In January and February 1998, the Company entered into employment
agreements with certain key executives. The employment agreements require the
executives to devote their full business time to the Company, specify annual
salaries and provide for payments to the executives in the event their
responsibilities are substantively changed as a result of a change in control of
the Company.

In February 1998, AASI adopted the 1998 Omnibus Stock Option Plan. An
aggregate of 450,000 shares of common stock are reserved for issuance under the
Option Plan. Subsequent to its adoption, AASI granted stock options to
individuals who are employees, directors or consultants of the Company, totaling
263,600 shares. The options have an exercise price ranging from $6.00 to $6.60
per share, with a weighted average exercise price of $6.14 per share. Options
for 50,000 shares vest September 1998, and the remaining options vest over four
years from the date of grant. The options have terms of five to ten years. AASI
intends to measure compensation expense using the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees."

In connection with the Offering, the Company has agreed to sell to the
representative of the underwriters, for nominal consideration, warrants to
purchase 200,000 shares of common stock. The warrants will be exercisable, at a
price of 122% of the initial price to public, commencing one year from the
effective date of the offering and for a period of four years thereafter.

NOTE 13. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

The Company intends to file a Registration Statement with the Securities
and Exchange Commission covering a proposed initial public offering of common
stock (the "Offering") at an offering price of $6.25 per share.

Prior to the Offering, the Company anticipates distributing to the existing
stockholders, funds sufficient to pay personal tax liabilities related to 1997
and 1998 taxable income earned prior to the termination of the S Corporation
election together with an amount equal to approximately 50% of the previously
undistributed accumulated taxable income. The Company estimates that if the
Company had been converted to a C Corporation as of March 31, 1998, the
distribution would have been $2,700,000.

As described in Note 2, the Company has elected to be taxed as an S
Corporation under the provisions of the Internal Revenue Code. Assuming the
completion of the Offering, the Company will terminate its S Corporation
election and will accordingly become subject to federal and state income taxes.
Upon termination of the S Corporation election, deferred income taxes reflecting
the tax effect of temporary differences between the Company's financial
statement and tax bases of certain assets and liabilities will become a net
liability or asset of the Company and will be reflected on the balance sheet
with a corresponding

F-15
<PAGE> 64
AMERICAN AIRCARRIERS SUPPORT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 13. PRO FORMA FINANCIAL INFORMATION (UNAUDITED) -- (CONTINUED)
nonrecurring tax expense or benefit in the statement of operations for the first
calendar quarter following the Offering. Deferred taxes relate primarily to
accounts receivable allowances, accrued expenses and property and equipment. The
amount of such net deferred tax asset approximated $45,000 at December 31, 1997
and March 31, 1998.

The pro forma data in the balance sheet provides information as if the
Company had terminated its S Corporation election, declared the distribution and
recorded the deferred income tax asset as of March 31, 1998. The estimated
distribution of $2,700,000 has been reflected as a distribution payable to
shareholders. The pro forma data does not give effect to the receipt of any
proceeds from the Offering or earnings from March 31, 1998 through the date of
termination of the S Corporation election.

The Company and the existing stockholders are parties to an S Corporation
Tax Allocation and Indemnification Agreement (the "Tax Agreement") relating to
their respective income tax liabilities. The Tax Agreement indemnifies the
existing stockholders for any adjustments causing an increase in their federal
and state income tax liability (including interest and penalties) related to the
Company's tax years prior to revocation of the S Corporation election. Subject
to certain limitations, the Tax Agreement also provides that the Company will be
indemnified by the existing stockholders with respect to federal and state
income taxes (plus interest and penalties) shifted from an S Corporation taxable
year to a Company taxable year subsequent to revocation of the S Corporation
election. The Company is not aware of any tax adjustments that may arise under
the Tax Agreement. Any payment made by the Company pursuant to the tax agreement
may be non-deductible by the Company for income tax purposes.

The pro forma data in the statement of operations provides information as
if the Company had been treated as a C Corporation for income tax purposes for
all periods presented. The following unaudited pro forma information reflects
the reconciliation between the statutory provision for income taxes and the
actual provision relating to the incremental income tax expense that the Company
would have incurred if it had been subject to federal and state income taxes.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31 THREE MONTHS ENDED
--------------------- -------------------
1996 1997 1997 1998
-------- ---------- -------- --------
<S> <C> <C> <C> <C>
Income taxes at federal statutory rate... $660,700 $1,384,900 $230,900 $379,000
State taxes, net of federal benefit...... 97,200 203,700 34,000 55,700
Other.................................... 19,400 40,700 6,700 11,200
-------- ---------- -------- --------
Pro forma income taxes................. $777,300 $1,629,300 $271,600 $445,900
======== ========== ======== ========
</TABLE>

The provisions of SFAS No. 128 have been adopted in determining pro forma
basic and diluted EPS for 1996 and 1997. The weighted average number of shares
outstanding have been retroactively restated to give effect to the shares to be
issued in the Reincorporation (Note 12).

Determination of pro forma diluted shares gives effect to the options for
263,600 shares of Common Stock issued by AASI pursuant to the 1998 Omnibus Stock
Option Plan prior to the Reincorporation

F-16
<PAGE> 65
AMERICAN AIRCARRIERS SUPPORT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 13. PRO FORMA FINANCIAL INFORMATION (UNAUDITED) -- (CONTINUED)
(Note 12). Pro forma net income includes a provision for income taxes as if the
Company were subject to federal and state income taxes as described above.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNTS
----------- ------------- ---------
<S> <C> <C> <C>
Net income..................................... $ 1,943,310
Pro forma income taxes......................... (777,300)
-----------
Pro forma basic earnings per share........ 1,166,010 4,100,000 $0.28
=====
Effect of dilutive securities
Options...................................... 8,144
----------- ---------
Pro forma diluted earnings per share...... $ 1,166,010 4,108,144 $0.28
=========== ========= =====
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-----------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNTS
----------- ------------- ---------
<S> <C> <C> <C>
Net income..................................... $ 4,073,355
Pro forma income taxes......................... (1,629,300)
-----------
Pro forma basic earnings per share........ 2,444,055 4,100,000 $0.60
=====
Effect of dilutive securities
Options...................................... 8,144
----------- --------- =====
Pro forma diluted earnings per share...... $ 2,444,055 4,108,144 $0.59
=========== ========= =====
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
-----------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNTS
----------- ------------- ---------
<S> <C> <C> <C>
Net income...................................... $ 679,013
Pro forma income taxes.......................... (271,600)
---------
Pro forma basic earnings per share......... 407,413 4,100,000 $0.10
=====
Effect of dilutive options...................... 8,144
--------- ---------
Pro forma diluted earnings per share....... $ 407,413 4,108,144 $0.10
========= ========= =====
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
-----------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNTS
----------- ------------- ---------
<S> <C> <C> <C>
Net income...................................... $1,114,761
Pro forma income taxes.......................... (445,900)
----------
Pro forma basic earnings per share......... 668,861 4,100,000 $0.16
=====
Effect of dilutive options...................... 8,144
---------- ---------
Pro forma diluted earnings per share....... $ 668,861 4,108,144 $0.16
========== ========= =====
</TABLE>

Warrants to purchase 200,000 shares of common stock at 122% of the initial
per share price to public were not included in the computation of pro forma
diluted earnings per share because the warrants' exercise price is greater than
the estimated offering price of the common stock.

F-17
<PAGE> 66

======================================================

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF
THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE SUCH DATE.

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

TABLE OF CONTENTS
---------------------------

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 14
S Corporation Distributions........... 15
Dividend Policy....................... 15
Dilution.............................. 16
Capitalization........................ 17
Selected Financial Data............... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 19
Business.............................. 24
Management............................ 36
Principal Stockholders................ 41
Description of Securities............. 42
Shares Eligible for Future Sale....... 44
Underwriting.......................... 45
Legal Matters......................... 47
Experts............................... 47
Additional Information................ 47
Index to Financial Statements......... F-1
</TABLE>

UNTIL JUNE 22, 1998, 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.

======================================================
======================================================

2,000,000 SHARES

[AMERICAN CARRIERS LOGO]

COMMON STOCK
------------------------

PROSPECTUS
------------------------
CRUTTENDEN ROTH
INCORPORATED

LAIDLAW GLOBAL
SECURITIES, INC.
, 1998

======================================================
<PAGE> 67

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Delaware General Corporation Law permits a corporation organized
thereunder to indemnify its directors and officers for certain of their acts.
The Certificate of Incorporation of the Company has been framed so as to conform
to the Delaware General Corporation Law. (Reference is made to the Certificate
of Incorporation filed as Exhibit 3.1.2 to this Registration Statement.)

In general, any officer, director, employee or agent may be indemnified
against expenses, fines, settlements or judgments arising in connection with a
legal proceeding to which such person is a party, if that person's actions were
in good faith, were believed to be in the Company's best interest and were not
unlawful. Unless such person is successful upon the merits in such an action,
indemnification may be awarded only after a determination by independent
decision of the Board of Directors, by legal counsel or by a vote of the
stockholders that the applicable standard of conduct was met by the person to be
indemnified.

The circumstances under which indemnification is granted in connection with
an action brought on behalf of the Company are generally the same as those set
forth above; however, with respect to such actions, indemnification is granted
only with respect to expenses actually incurred in connection with the defense
or settlement of the action. In such actions, the person to be indemnified must
have acted in good faith, in a manner believed to have been in the Company's
best interest and with respect to which such person was not adjudged liable for
negligence or misconduct.

Indemnification may also be granted pursuant to the terms of agreements
which may be entered into in the future pursuant to a vote of stockholders or
directors. The statutory provision cited above and the referenced portion of the
Certificate of Incorporation also grant the power to the Company to purchase and
maintain insurance which protects its officers and directors against any
liabilities incurred in connection with their services in such a position, and
such a policy may be obtained by the Company in the future.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Other expenses in connection with this offering which will be paid by
American Aircarriers Support, Incorporated (hereinafter in this Part II, the
"Company") are estimated to be substantially as follows:

<TABLE>
<CAPTION>
AMOUNT
PAYABLE
BY THE
ITEM COMPANY*
---- -----------
<S> <C>
S.E.C. Registration Fees.................................... $ 6,369.08
N.A.S.D. Filing Fees........................................ 2,659.01
State Securities Laws (Blue Sky) Legal Fees................. 10,000.00*
Printing and Engraving...................................... 120,000.00*
Legal Fees.................................................. 250,000.00*
Representative's Non-Accountable Expense Allowance.......... 375,000.00
Accounting Fees and Expenses................................ 80,000.00*
Transfer Agent's Fees and Cost of Certificates.............. 5,000.00*
Miscellaneous Expenses...................................... 25,971.91*
-----------
Total............................................. $875,000.00*
===========
</TABLE>

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

* Estimated for the purpose of this filing.

II-1
<PAGE> 68

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

(a) The Company has made no sales of its Common Stock within the past three
years. The Company relied on Section 3(a)(9) of the Securities Act of 1933, as
amended (the "1933 Act"), for the exemption from the registration requirements
with respect to the plan of reorganization effecting a change of corporate
domicile from the State of South Carolina to the State of Delaware. American
Aircarriers Support, Incorporated, a Delaware corporation, issued ten shares of
its Common Stock to Karl F. Brown upon the formation of such corporation in
February 1998. The consideration paid for such Common Stock was $1.00. Mr. Brown
will donate such ten shares of Common Stock to the capital of American
Aircarriers Support, Incorporated, a Delaware corporation, upon the
reincorporation of the Company.

In February 1998, American Aircarriers Support, Incorporated, a Delaware
corporation, granted options to certain employees and consultants pursuant to
its 1998 Omnibus Stock Option Plan. The issuance of such options was exempt
pursuant to Rule 701 of the 1933 Act. None of such options are exercisable prior
to September 1, 1998.

ITEM 27. EXHIBITS.

The following is a complete list of Exhibits filed as part of this
Registration Statement and which are incorporated herein.

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
*1.1 -- Form of Underwriting Agreement by and between American
Aircarriers Support, Incorporated (the "Company") and
Cruttenden Roth Incorporated (the "Representative").
*1.2 -- Form of Master Selected Dealers Agreement by and between
the Representative and selected dealers.
*2.1 -- Form of Agreement and Plan of Exchange, dated May ,
1998, by and among American Aircarriers Support, Inc., a
South Carolina corporation, American Aircarriers Support
Incorporated, a Delaware corporation, and Messrs. Karl F.
Brown and Herman O. Brown, Jr.
*3.1.1 -- Articles of Incorporation, as amended, of American
Aircarriers Support, Inc. as filed on June 27, 1985, and
as amended January 8, 1990, with the Secretary of State
of the State of South Carolina.
*3.1.2 -- Certificate of Incorporation of the Company as filed on
February 9, 1998 with the Secretary of State of the State
of Delaware.
*3.2 -- Bylaws of the Company.
*4.1.1 -- Form of specimen certificate for Common Stock of the
Company.
*4.1.2 -- Form of Representative's Warrant Agreement to be issued
by the Company to the Representative.
*5. -- Opinion of Berliner Zisser Walter & Gallegos, P.C.,
regarding legality of the securities covered by this
Registration Statement.
*10.1.1 -- Employment Agreement, dated January 31, 1998, by and
between Karl F. Brown and the Company.
*10.1.2 -- Employment Agreement, effective January 1, 1998, by and
between Elaine T. Rudisill and the Company.
*10.2 -- Form of Indemnification Agreement to be entered into
between the Company and each officer and director of the
Company.
*10.3 -- 1998 Omnibus Stock Option Plan, effective February 9,
1998, authorizing 450,000 shares of Common Stock for
issuance pursuant to the Plan.
</TABLE>

II-2
<PAGE> 69

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
*10.4.1 -- Promissory Note, dated June 29, 1995, issued to
NationsBank, N.A. by the Company.
*10.4.2 -- Security Agreement, dated June 29, 1995, between
NationsBank, N.A. and the Company.
*10.4.3 -- Continuing and Unconditional Guaranty, dated June 29,
1995, from Karl F. Brown to NationsBank, N.A.
*10.4.4 -- Promissory Note Renewal, increasing principal amount
borrowable to $2 million, issued to NationsBank, N.A. by
the Company.
*10.4.5 -- Promissory Note, increasing principal amount borrowable
to $4 million, issued to NationsBank, N.A. by the
Company.
*10.4.6 -- Commitment Letter, dated February 19, 1998, from
NationsBank, N.A. to the Company.
*10.4.7 -- Promissory Note, dated April 9, 1998, issued to
NationsBank, N.A. by the Company.
*10.4.8 -- Loan Agreement, dated April 9, 1998, between NationsBank,
N.A. and the Company.
*10.4.9 -- Security Agreement, dated April 9, 1998, between
NationsBank, N.A. and the Company.
*10.4.10 -- Continuing and Unconditional Guaranty, dated April 9,
1998, from Karl F. Brown to NationsBank, N.A.
*10.5.1 -- Lease Agreement, dated June 30, 1993, by and between B &
C Enterprises and the Company.
*10.5.2 -- Lease Agreement, dated July 30, 1997, by and between
Brown Enterprises and the Company.
*10.6 -- Form of S Corporation Tax Allocation and Indemnification
Agreement, dated May , 1998, by and among the Company,
Karl F. Brown and Herman O. Brown, Jr.
*10.7 -- Joint Venture Agreement, dated January 26, 1998, between
Global Turbine Services, Inc. and the Company.
*10.7.1 -- Joint Venture Agreement, dated January 26, 1998, between
Global Turbine Services, Inc. and the Company.
*10.8 -- Voting Trust Agreement, dated February 23, 1998, by and
among Herman O. Brown, Jr., David M. Furr, as Trustee,
and the Company.
*10.9 -- Form of Lock-Up Agreements between shareholders of the
Company and the Representative.
*10.10 -- Sale and Purchase Agreement, Two Boeing 737-200 Aircraft,
between European Aviation Limited and the Company.
11. -- Not applicable.
13. -- Not applicable.
14. -- Not applicable.
15. -- Not applicable.
16. -- Not applicable.
21. -- Not applicable.
22. -- Not applicable.
</TABLE>

II-3
<PAGE> 70

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
*23.1 -- The consent of Berliner Zisser Walter & Gallegos, P.C.,
to the use of its opinion with respect to the legality of
the securities covered by this Registration Statement and
to the references to such firm in the Prospectus filed as
part of this Registration Statement is included in
Exhibit 5.
+23.2 -- Consent of Cherry, Bekaert & Holland, L.L.P., independent
certified public accountants for the Company.
*24. -- The Power of Attorney is included in the signature page
of this Registration Statement.
*27. -- Financial Data Schedule.
</TABLE>

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

* Previously filed.

+ Filed herewith.

ITEM 28. UNDERTAKINGS.

(a) Rule 415 Offering.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to:

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement; and

(iii) Include any additional material information on the plan of
distribution.

(2) For determining any liability under the Securities Act, treat each
such post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be
the initial bona fide offering.

(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.

(d) Prompt Delivery.

The undersigned Registrant undertakes to provide the Underwriters at the
closing as specified in the Underwriting Agreement certificates for Common Stock
in such denominations and registered in such names as required by the
Underwriters to permit prompt delivery to each purchaser.

(e) Indemnification.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 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 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-4
<PAGE> 71

(f) Rule 430A.

The undersigned Registrant hereby undertakes that:

(i) For the purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of Prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of Prospectus filed by the Registrant under Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time the Commission declared
it effective.

(ii) For the purpose of determining any liability under the Securities
Act of 1933, 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.

Lock-up Agreement Release.

The undersigned Registrant hereby undertakes to file a post-effective
amendment to this Registration Statement in the event the Representative waives
or shortens the lock-up period and 10% or more of the shares of Common Stock
will be released from the lock-up. If less than 10% but more than 5% of the
shares of Common Stock subject to lock-up are released, the undersigned
Registrant undertakes to supplement the Prospectus filed as part of this
Registration Statement.

II-5
<PAGE> 72

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement or Amendment to be signed on its behalf by the undersigned in the City
of Fort Mill, State of South Carolina on May 27, 1998.

AMERICAN AIRCARRIERS SUPPORT,
INCORPORATED

By: /s/ KARL F. BROWN
----------------------------------
Karl F. Brown
Chief Executive Officer

Each person whose signature appears below constitutes and appoints Karl F.
Brown or David M. Furr, his or her attorneys-in-fact, with the power of
substitution, for him or her in any and all capacities, to sign any amendments
to this Registration Statement, and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment was signed by the following persons in the
capacities and on the dates stated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KARL F. BROWN Chairman of the Board, Chief May 27, 1998
- ----------------------------------------------------- Executive Officer and
Karl F. Brown President (Principal
Executive Officer)
/s/ ELAINE T. RUDISILL Chief Financial Officer May 27, 1998
- ----------------------------------------------------- (Principal Financial and
Elaine T. Rudisill Accounting Officer)
/s/ DAVID M. FURR Director May 27, 1998
- -----------------------------------------------------
David M. Furr
/s/ PAMELA K. CLEMENT Director May 27, 1998
- -----------------------------------------------------
Pamela K. Clement
/s/ JAMES T. COMER, III Director May 27, 1998
- -----------------------------------------------------
James T. Comer, III
*By
-------------------------------------------------
Karl F. Brown
attorney-in-fact
</TABLE>

II-6
<PAGE> 73

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
<C> <S> <C>

*1.1 -- Form of Underwriting Agreement by and between American
Aircarriers Support, Incorporated (the "Company") and
Cruttenden Roth Incorporated (the "Representative").
*1.2 -- Form of Master Selected Dealers Agreement by and between
the Representative and selected dealers.
*2.1 -- Form of Agreement and Plan of Exchange, dated May ,
1998, by and among American Aircarriers Support, Inc., a
South Carolina corporation, American Aircarriers Support
Incorporated, a Delaware corporation, and Messrs. Karl F.
Brown and Herman O. Brown, Jr.
*3.1.1 -- Articles of Incorporation, as amended, of American
Aircarriers Support, Inc. as filed on June 27, 1985, and
as amended January 8, 1990, with the Secretary of State
of the State of South Carolina.
*3.1.2 -- Certificate of Incorporation of the Company as filed on
February 9, 1998 with the Secretary of State of the State
of Delaware.
*3.2 -- Bylaws of the Company.
*4.1.1 -- Form of specimen certificate for Common Stock of the
Company.
*4.1.2 -- Form of Representative's Warrant Agreement to be issued
by the Company to the Representative.
*5. -- Opinion of Berliner Zisser Walter & Gallegos, P.C.,
regarding legality of the securities covered by this
Registration Statement.
*10.1.1 -- Employment Agreement, dated January 31, 1998, by and
between Karl F. Brown and the Company.
*10.1.2 -- Employment Agreement, effective January 1, 1998, by and
between Elaine T. Rudisill and the Company.
*10.2 -- Form of Indemnification Agreement to be entered into
between the Company and each officer and director of the
Company.
*10.3 -- 1998 Omnibus Stock Option Plan, effective February 9,
1998, authorizing 450,000 shares of Common Stock for
issuance pursuant to the Plan.
*10.4.1 -- Promissory Note, dated June 29, 1995, issued to
NationsBank, N.A. by the Company.
*10.4.2 -- Security Agreement, dated June 29, 1995, between
NationsBank, N.A. and the Company.
*10.4.3 -- Continuing and Unconditional Guaranty, dated June 29,
1995, from Karl F. Brown to NationsBank, N.A.
*10.4.4 -- Promissory Note Renewal, increasing principal amount
borrowable to $2 million, issued to NationsBank, N.A. by
the Company.
*10.4.5 -- Promissory Note, increasing principal amount borrowable
to $4 million, issued to NationsBank, N.A. by the
Company.
*10.4.6 -- Commitment Letter, dated February 19, 1998, from
NationsBank, N.A. to the Company.
*10.4.7 -- Promissory Note, dated April 9, 1998, issued to
NationsBank, N.A. by the Company.
*10.4.8 -- Loan Agreement, dated April 9, 1998, between NationsBank,
N.A. and the Company.
</TABLE>

<PAGE> 74

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
<C> <S> <C>
*10.4.9 -- Security Agreement, dated April 9, 1998, between
NationsBank, N.A. and the Company.
*10.4.10 -- Continuing and Unconditional Guaranty, dated April 9,
1998, from Karl F. Brown to NationsBank, N.A.
*10.5.1 -- Lease Agreement, dated June 30, 1993, by and between B &
C Enterprises and the Company.
*10.5.2 -- Lease Agreement, dated July 30, 1997, by and between
Brown Enterprises and the Company.
*10.6 -- Form of S Corporation Tax Allocation and Indemnification
Agreement, dated May , 1998, by and among the Company,
Karl F. Brown and Herman O. Brown, Jr.
*10.7 -- Joint Venture Agreement, dated January 26, 1998, between
Global Turbine Services, Inc. and the Company.
*10.7.1 -- Joint Venture Agreement, dated January 26, 1998, between
Global Turbine Services, Inc. and the Company.
*10.8 -- Voting Trust Agreement, dated February 23, 1998, by and
among Herman O. Brown, Jr., David M. Furr, as Trustee,
and the Company.
*10.9 -- Form of Lock-Up Agreements between shareholders of the
Company and the Representative.
*10.10 -- Sale and Purchase Agreement, Two Boeing 737-200 Aircraft,
between European Aviation Limited and the Company.
11. -- Not applicable.
13. -- Not applicable.
14. -- Not applicable.
15. -- Not applicable.
16. -- Not applicable.
21. -- Not applicable.
22. -- Not applicable.
*23.1 -- The consent of Berliner Zisser Walter & Gallegos, P.C.,
to the use of its opinion with respect to the legality of
the securities covered by this Registration Statement and
to the references to such firm in the Prospectus filed as
part of this Registration Statement is included in
Exhibit 5.
+23.2 -- Consent of Cherry, Bekaert & Holland, L.L.P., independent
certified public accountants for the Company.
*24. -- The Power of Attorney is included in the signature page
of this Registration Statement.
*27. -- Financial Data Schedule.
</TABLE>

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

* Previously filed.

+ Filed herewith.

<PAGE> 1

EXHIBIT 23.2

The Board of Directors
American Aircarriers Support, Inc.

We consent to the use in this amendment to the registration statement on
Form SB-2 of our report dated February 18, 1998 with respect to the financial
statements of American Aircarriers Support, Inc. as of December 31, 1996 and
1997 and for the years then ended included herein and to the reference to our
firm under the heading "Experts" in the prospectus.

CHERRY, BEKAERT & HOLLAND, L.L.P.

CHARLOTTE, NORTH CAROLINA

MAY 27, 1998