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


                                    FORM 10-Q



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


                  For the quarterly period ended March 31, 2002

                                       OR


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


              For the transition period from      to

                        Commission File Number 000-29727

                                 PARTSBASE, INC.
             (Exact name of registrant as specified in its charter)

               Delaware                                76-0604158
     ________________________________        ___________________________________
     (State or other jurisdiction of        (I.R.S. Employer Identification No.)
       incorporation or organization)



                              905 Clint Moore Road
                         Boca Raton, Florida 33487-8233
                    (Address of principal executive offices)

        Registrant's telephone number, including area code: 561.953.0700



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



APPLICABLE ONLY TO CORPORATE ISSUERS:

     The registrant  had an aggregate of 13,977,920  shares of its common stock,
$0.001par value, outstanding as of the close of business on May 13, 2002.





                                 PARTSBASE, INC.
                                TABLE OF CONTENTS

                                                                            Page
                                                                            ____

PART I-   FINANCIAL INFORMATION

   ITEM 1.   Financial Statements ...........................................  3

   ITEM 2.   Management's Discussion and Analysis of Financial
              Condition and Results of Operations ........................... 11

   ITEM 3.   Quantitative and Qualitative Disclosure about Market Risk ...... 15


PART II-   OTHER INFORMATION

   ITEM 1.   Legal Proceedings .............................................. 16

   ITEM 2.   Changes in Securities .......................................... 17

   ITEM 3.   Default Upon Senior Securities ................................. 17

   ITEM 4.   Submission of Matters to a Vote of Security Holders ............ 17

   ITEM 5.   Other Information .............................................. 17

   ITEM 6.   Exhibits and Reports on Form 8-K ............................... 18

   SIGNATURES ............................................................... 19
























                                       2
<PAGE>







PART I  FINANCIAL INFORMATION

Item 1.  Financial Statements
<TABLE>

                                         PARTSBASE, INC. AND SUBSIDIARY

                                      Consolidated Condensed Balance Sheets
                                                   (Unaudited)
<CAPTION>

                                                                    March 31,       December 31,
                                                                      2002              2001
                                                                  -------------     -------------

                              ASSETS

Current assets:
<S>                                                               <C>               <C>
Cash and cash equivalents                                         $ 23,842,323      $ 23,851,593
Accounts receivable, net                                             1,096,395           403,969
Investments, at amortized cost                                              -            900,073
Prepaid expenses and other current assets                              287,925           330,966
                                                                   ------------      ------------
  Total current assets                                              25,226,643        25,486,601
Property and equipment, net                                          2,281,091         2,570,330
Certificate of deposit - restricted cash                               840,000         1,070,000
Other assets                                                            51,164            36,839
                                                                   ------------      ------------
 Total assets                                                     $ 28,398,898      $ 29,163,770
                                                                   ============      ============


               LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable                                                  $    188,922      $     87,060
Accrued expenses and other current liabilities                         456,796           406,147
Deferred revenue, net                                                2,308,109         2,231,076
                                                                   ------------      ------------
 Total current liabilities                                           2,953,827         2,724,283
                                                                   ------------      ------------

Commitments and contingencies

Stockholders' equity
Preferred stock, $0.001 par value, 2,000,000 shares authorized,
  0 shares issued and outstanding in 2002 and 2001                          -                 -
Common stock, $0.001 par value; 30,000,000 shares authorized,
  issued and outstanding 13,977,920 in 2002 and 14,003,620
  in 2001                                                               13,978            14,004
Additional paid-in capital                                          53,232,653        53,255,465
Accumulated deficit                                                (27,801,560)      (26,828,892)
Unearned compensation                                                       -             (1,090)
                                                                   ------------      ------------
    Total stockholders' equity                                      25,445,071        26,439,487
                                                                   ------------      ------------
    Total liabilities and stockholders' equity                    $ 28,398,898      $ 29,163,770
                                                                   ============      ============



The accompanying notes are an integral part of these consolidated condensed financial statements.
</TABLE>


                                       3
<PAGE>


<TABLE>

                         PARTSBASE, INC. AND SUBSIDIARY

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                                   (Unaudited)
<CAPTION>

                                                 THREE MONTHS ENDED
                                           ----------------------------
                                              MARCH 31,      MARCH 31,
                                                2002            2001
                                           ------------    ------------
<S>                                        <C>             <C>
Net revenues                               $ 1,973,992     $ 1,599,233

Cost of revenues                             1,695,773       1,488,761
                                            -----------     -----------

Gross profit                                   278,219         110,472
                                            -----------     -----------

Operating expenses:
General and administrative expenses          1,105,305       2,264,256
Stock-based compensation expense                 1,090          43,011
Relocation expenses and abandonment costs      281,906              -
                                            -----------     -----------
     Total operating expenses                1,388,301       2,307,267
                                            -----------     -----------

Operating loss                              (1,110,082)     (2,196,795)
Other income, net                              137,416         498,087
                                            -----------     -----------
Net loss                                   $  (972,666)    $(1,698,708)
                                            ===========     ===========


Basic and diluted net loss per share       $     (0.07)    $     (0.12)
                                            ===========     ===========

Weighted average common shares outstanding  13,998,871      14,277,075
                                            ==========      ==========


The accompanying notes are an integral part of these consolidated condensed financial statements.
</TABLE>


                                       4
<PAGE>


<TABLE>

                              PARTSBASE, INC. AND SUBSIDIARY
                      Consolidated Condensed Statements of Cash Flows
                                        (Unaudited)

<CAPTION>

                                                                        THREE MONTHS ENDED
                                                                 -------------------------------

                                                                     MARCH 31,       MARCH 31,
                                                                       2002            2001
                                                                 -------------   ---------------

Cash flows from operating activities:
<S>                                                               <C>             <C>
  Net loss                                                        $  (972,666)    $  (1,698,708)
  Adjustment to reconcile net loss to cash used in
    operating activities:
  Depreciation and amortization                                       193,126           146,536
  Loss on property abandonment                                        251,498                -
  Provision for doubtful accounts                                      26,959           212,153
  Recognition of unearned compensation                                  1,090            43,011
  Changes in assets and liabilities:
    Accounts receivable, net                                         (705,514)           20,434
    Prepaid and other current assets                                   43,041           266,417
    Other assets                                                      (14,512)           70,063
    Accounts payable                                                   50,396          (573,035)
    Accrued expenses and other current liabilities                     50,649            52,195
    Deferred revenue, net                                              63,161           (44,757)
                                                                   -----------     -------------
       Net cash used in operating activities                       (1,012,772)       (1,505,691)
                                                                   -----------     -------------

Cash flows from investing activities:
  Capital expenditures                                               (103,733)          (63,580)
  Maturities of marketable debt securities                            900,073         1,523,027
  Purchase of certificate of deposit - restricted cash                     -         (1,665,000)
  Redemption of certificate of deposit-restricted cash                230,000                -
                                                                   -----------     -------------
       Net cash provided by (used in) investing activities          1,026,340          (205,553)
                                                                   -----------     -------------

Cash flows from financing activities:
  Purchase of treasury stock                                          (22,838)         (520,668)
  Exercise of employee non-qualified stock options                         -            164,195
                                                                   -----------     -------------
       Net cash used in financing activities                          (22,838)         (356,473)
                                                                   -----------     -------------

Net decrease in cash and cash equivalents                              (9,270)       (2,067,717)
Cash and cash equivalents at beginning of period                   23,851,593        20,977,774
                                                                   -----------     -------------
Cash and cash equivalents at end of period                        $23,842,323     $  18,910,057
                                                                   ===========     =============

Noncash investing and financing activities:
  Capital expenditures trade payables                             $    51,465     $          -
                                                                   ===========     =============
    Retirement of treasury stock                                  $    22,838     $     728,564
                                                                   ===========     =============



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

</TABLE>



                                       5
<PAGE>



                         PARTSBASE, INC. AND SUBSIDIARY
              Notes to Consolidated Condensed Financial Statements
                                   (Unaudited)


The Company and Basis of Presentation


     PartsBase,  Inc. and subsidiary  ("PartsBase" or the "Company") operates in
two business segments;  an online provider of aviation e-commerce business and a
supplemental nurse staffing agency.

     At the Company's Annual Meeting of Stockholders  held on June 20, 2001, the
stockholders  approved an amendment to change the state of  incorporation of the
Company  from  Texas  to  Delaware  and  changed  the name of the  Company  from
PartsBase.com, Inc. to PartsBase, Inc.

     PartsBase's global e-marketplace provides a means for aviation parts buyers
and sellers to buy and sell new, repaired or overhauled  aviation parts and list
products and services.

     In  September  2001,  the  Company  formed  RNpartners,   Inc.,  a  Florida
corporation,  ("RNpartners"),  as a wholly owned subsidiary of PartsBase,  which
operates  as  a  supplemental  nurse  staffing  agency.   RNpartners   commenced
operations on October 1, 2001 as a provider of critical care  registered  nurses
for  temporary  assignment  to hospitals in  Miami/Dade,  Palm Beach and Broward
counties of the State of Florida.


     The  accompanying   unaudited   consolidated  condensed  interim  financial
statements  reflect  all  adjustments,  which in the opinion of  management  are
necessary for a fair presentation of the consolidated  results of operations for
the periods shown. The  consolidated  results of operations for such periods are
not necessarily  indicative of the results  expected for the full fiscal year or
for any future period.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting  principles generally accepted
in the United  States of America have been  condensed or omitted as permitted by
Article 10 of Regulation S-X of the Securities  and Exchange  Commission.  These
condensed financial  statements should be read in conjunction with the financial
statements  and notes thereto  included in the  Company's  Annual Report on Form
10-K for the year ended December 31, 2001.

Principles of Consolidation

     The accompanying  consolidated financial statements include the accounts of
PartsBase,  Inc.  and  its  wholly  owned  subsidiary,   RNpartners,   Inc.  All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.

Revenue Recognition

     PartsBase records subscription and banner advertising revenue over the life
of the  subscription,  which is  typically  12 months.  Sales  costs,  including
commissions, are expensed as incurred, and are included in the cost of revenues.
Net revenue  represents that portion of gross revenue that was earned during the
period  presented.  Therefore,  during quarters with  significant  gross revenue
growth,  gross  margins will be  negatively  impacted due to the effect of sales
costs being  expensed in their  entirety,  whereas the  corresponding  sales are
amortized over the subscription  term.  Nurse staffing  revenues and the related
labor  costs and  payroll  taxes are  recorded  in the period in which  staffing
services are performed.


Cash and Cash Equivalents

     Cash and cash equivalents  consist of highly liquid  investments  purchased
with an original maturity of three months or less.

Basic and Diluted Net Loss per Share

     Basic net loss per share is computed  using the weighted  average number of
common  shares  outstanding  during the  period.  Diluted  net loss per share is
computed  using the  weighted  average  number of common and  common  equivalent


                                       6
<PAGE>

shares  outstanding  during the period.  Common equivalent shares consist of the
incremental  common  shares  issuable  upon the  exercise  of stock  options and
warrants  (using the treasury stock  method).  For the three month periods ended
March 31,  2002 and 2001,  common  share  equivalents  are not  included  in the
computation  of diluted  loss per share since  inclusion of such shares would be
anti-dilutive.

Reclassifications

     Certain  amounts  in  the  prior  year's  financial  statements  have  been
reclassified to conform to the current year presentation.


Relocation expenses and abandonment costs

     During  May 2000 the  Company  entered  into a sublease  agreement  with an
unaffiliated  third party for 35,668 square feet of general  office  space.  The
sublease  agreement  was to expire on October 31, 2006.  In December  2001,  the
sublessor  filed for  bankruptcy  protection  and as a result,  the sublease was
voided by the bankruptcy court. In January 2002, the Company entered into a new
sublease  agreement with another  unaffiliated third party for 6,600 square feet
of general office space in Boca Raton.  In conjunction  with the move to the new
and smaller office space in February 2002, the Company  incurred moving expenses
totaling  $30,408 and  abandoned  furniture,  fixtures and  trailing  technology
computer equipment and software with a net book value of $251,498.


Segment Information

     Based on the criteria  established  by the Financial  Accounting  Standards
Board,  Statement of Financial Accounting Standards No. 131,  "Disclosures about
Segments of an Enterprise and Related Information,"  management assesses Company
performance  and allocates  resources  principally on the basis of two segments:
(i) aviation e-commerce segment which develops and markets an online marketplace
for the purchasing and distribution of aviation products,  globally and (ii) the
supplemental  nurse  staffing  agency  currently  in South  Florida.  The latter
segment was formed in September 2001 as a wholly-owned subsidiary of the Company
and commenced operations in October 2001.  Accordingly,  the Company operated in
one business line in the three months ended March 31, 2001.

     The online  marketplace  for the  purchasing and  distribution  of aviation
products  provides a means for aviation parts buyers and sellers to buy and sell
new,  repaired  or  overhauled  aviation  parts,  list  products,  services  and
catalogs.  The primary  source of  revenues is from the sales of  subscriptions,
generally  one year in term and  recognized  over the life of the  subscription.
Additionally, the Company recognizes revenue from advertising sales, principally
banner ads which run from three months to one year in duration of which  revenue
is  recognized  ratably  over  the run  period.  Cost of  revenues  include  the
commissions paid to salespersons who sell  subscriptions and banner  advertising
and direct costs of operating  the web site,  the related  depreciation  and the
overhead associated with managing the website.

     The  supplemental  nurse  staffing  agency  provides  registered  nurses to
hospitals  in  Miami/Dade,  Broward  and  Palm  Beach  counties  of  Florida  to
supplement  their  existing  nursing  staffs  based on need.  The sole source of
revenue  is derived  from the  hourly  fees  charged  to the  hospitals  for the
services rendered by the Company's registered nurse employees.  Cost of revenues
include the wages paid to these nurses as well as the cost of  recruitment,  the
related depreciation and the overhead of managing the segment.

     Revenues,  expenses and assets are  accounted  for in  accordance  with the
accounting policies set forth as noted above. Revenues and non-overhead expenses
for each  business  line are those  that  directly  relate to those  operations.
Overhead expenses,  such as general,  corporate and administrative  expenses are
allocated  to each  business  line based on  management's  best  estimate of the
resources utilized in the management and operations of each business line. Total
assets are those assets  directly used in the Company's  operations in each line
of business.  Other than the online  marketplace  funding the  operations of the
supplemental nurse staffing agency,  there are no significant  transfers between
segments.

                                       7
<PAGE>

<TABLE>

<CAPTION>

                                               For the three months ended March 31, 2002
                                     ---------------------------------------------------------
                                         Aviation
                                        e-commerce      Supplemental      Corporate
(In thousands)                           business      Nurse Staffing     and other    Total
                                     -------------   ----------------    ----------  ---------
<S>                                   <C>                                            <C>
Subscription revenues                 $  1,125                                       $  1,125
Advertising                                 28                                             28
Nurse staffing services                      -           $   816                          816
Other                                        5                                              5
                                       --------           -------                     --------
 Total revenues                          1,158               816                        1,974
                                       --------           -------                     --------
Cost of operations                         778               807                        1,585
General and administrative                 484               364            $ 175       1,023
Depreciation and amortization              173                20                -         193
Stock based compensation                     1                                  -           1
Relocation and other related
 costs                                       -                 -              282         282
                                       --------           -------            -----    --------
Total costs and operating
 expenses                                1,436             1,191              457       3,084
                                       --------           -------            -----    --------
Operating loss                        $   (278)          $  (375)           $(457)   $ (1,110)
                                       ========           =======            =====    ========
Interest income                       $      -           $     -            $  28    $     28
                                       ========           =======            =====    ========
Other income, net                     $      -           $     -            $ 109    $    109
                                       ========           =======            =====    ========
Capital expenditures                  $     64           $    90            $   -    $    154
                                       ========           =======            =====    ========
Total assets                          $ 27,449           $   950            $   -    $ 28,399
                                       ========           =======            =====    ========
</TABLE>

     All of the Company's  long-lived assets are  geographically  located in the
United States. Management does not review revenues by geographical locations.


Commitments and Contingencies

     In  September  2000 the Company  sued a third party  financial  institution
because  such  financial  institution  paid a check in the  amount  of  $161,000
despite a stop payment  order duly issued by the  Company.  The payee cashed the
check, along with a replacement check. Before the Company learned that the payee
had cashed both checks,  the Company entered into a binding  settlement with the
payee  ending the  Company's  business  relationship  with the payee.  The payee
refused to return the amounts and the financial institution failed to credit the
Company's account. The Company filed suit, and discovery has commenced. The only
claim against the Company in this matter is the financial  institution's  demand
for legal fees if the  financial  institution  prevails.  In a separately  filed
lawsuit,  the payee of the  checks has filed an action  for  declaratory  relief
against the  financial  institution  and the Company  requesting  that the court
declare its settlement  agreement  with the Company to be valid and binding.  In
this declaratory relief action, the payee has requested that the Company and the
financial  institution  reimburse  it for  costs  and fees  associated  with the
action.  In July 2001, the separately filed lawsuit against the Company filed by
the  payee  of  the  checks  was  dismissed,  without  prejudice,  for  lack  of
jurisdiction. This matter is scheduled for trial in January 2003.

     In April and May 2001,  the Company  received  notice of or had been served
with four purported class action lawsuits (Foderaro vs.  PartsBase.com,  Inc. et
al, Case No.: 01-8319 CIV- FERGUSON;  IKCYBERINVESTMENTS vs. PartsBase.com, Inc.
et al, Case No.: 01-8368  CIV-SEITZ;  and Webb vs.  PartsBase,  et.al.  Case No.
01-8376  CIV- GRAHAM and Jesus  Martin vs.  PartsBase.com,  Inc. et al, Case No.
01-8526-CIV-UNGARO-BENAGES).  These  cases  were  consolidated  into one  action
entitled,  In  re:   PartsBase.com,   Inc.  Securities   Litigation,   Case  No.
01-8319-CIV-UNGARO-BENAGES/BROWN   currently   before   the   Honorable   Ursula
Ungaro-Benages.  The  consolidated  lawsuit  names as  defendants  the  Company,
certain of its current and former officers and directors,  and the  underwriters
of its initial public offering of securities.  The consolidated  lawsuit alleges
violations  of Sections 11,  12(a)(2) and 15 of the  Securities  Act of 1933 and
alleges the  Company's  March 2000  registration  statement  misrepresented  and
failed to disclose  matters  related to the Company's  business  operations  and
membership sales. The complaint alleges damages of nearly $42 million. The Court
has recently  certified a class consisting of purchasers of the Company's common
stock in the offering  during the period from March 22, 2000  through  April 25,
2000. The Company maintains a director and officer's  liability insurance policy


                                       8
<PAGE>

that provides $3 million of coverage,  with  retention of $200,000.  As of March
31,  2002,  the Company has  incurred and  previously  charged the  retention of
$200,000 to expense.  In May 2002, the Company reached an agreement in principle
for the settlement of the consolidated  class action. The plaintiffs in the case
and the  defendants,  entered into a Memorandum of  Understanding  outlining the
general  terms of the  proposed  settlement.  The  Memorandum  of  Understanding
provides for, among other things,  a settlement  amount of $1.5 million in cash,
plus  interest,  payable  to the class  under an  insurance  policy  and for the
plaintiffs' dismissal of the class action with prejudice as well as a broad form
of release in favor of PartsBase  and the other  defendants  in the class action
which,  among  other  things,  will have the effect of barring all claims by the
plaintiffs  and the members of the class  other than those who opt out,  arising
out of the purchase  and sale of the  Company's  common  stock in the  Company's
initial public offering of securities.

     The final  settlement of the class action is subject to the preparation and
execution of definitive settlement documents and court approval.  The settlement
also applies to the directors, management personnel, underwriters and securities
firms named as defendants in the litigation.


     In July 2001, the Company was served with a lawsuit filed by an information
technology  vendor claiming damages  resulting from the Company's alleged breach
of a  software  sales  and  service  contract  in the  amount of  $126,631  plus
interest,   cost  and  fees.  The  Company  intends  to  vigorously  defend  the
allegations  contained  in this  lawsuit.  In July 2001,  the  Company  sued the
manufacturer  of such  software  for  damages  totaling  $220,000 as a result of
software  malfunction.  The Company  believes the resolution of this matter will
not have a material impact upon the Company's consolidated financial statements,
results of operations or cash flows.

     In March 2001 the  Company  received  notice from  counsel to the  Business
Software Alliance (the "BSA"), an industry watchdog group representing  software
manufacturers,  in connection with the BSA's  investigation  of possible illegal
duplication of certain software companies'  proprietary software products by the
Company.  Through  subsequent  correspondence  from the BSA, the BSA has alleged
that the  Company  has  installed  unauthorized  copies of BSA  member  software
products on Company computers. The correspondence from the BSA provides that the
Company's  potential exposure in this matter could be over $1,950,000 if willful
copyright  infringement is shown. The Company is currently in negotiations  with
the BSA in an attempt to resolve the matter. To date the Company is not aware of
any legal proceedings initiated by BSA in this matter.

     During  May 2000 the  Company  entered  into a sublease  agreement  with an
unaffiliated  third party for 35,668 square feet of general  office  space.  The
sublease  agreement  was to expire on October 31, 2006.  In December  2001,  the
sublessor  filed for  bankruptcy  protection  and as a result,  the sublease was
voided by the  bankruptcy  court.  The Company  continued to occupy the premises
until  February  2002, at which time,  the Company moved to new subleased  6,600
square feet office space in Boca Raton from an unaffiliated  party. On March 26,
2002,  the lessor of the former  property  filed a complaint  for damages in the
amount of $92,910 plus interest,  costs and fees,  representing the value of the
time the Company  occupied the premises from the date the sublease was voided by
the  bankruptcy  court  through  the date the Company  vacated  the  premises in
accordance with rent provisions of the voided sublease. The Company believes the
resolution  of this  matter will not have a material  impact upon the  Company's
consolidated financial statements, results of operations or cash flows.

     The Company is not currently aware of any other legal proceedings or claims
that the Company  believes are likely to have a material  adverse  effect on the
Company's  financial  position,  results of operations,  or cash flows except as
noted in Subsequent Events below.


     On February 15, 2002, the Company  received notice from the NASDAQ National
Market warning that the Company's stock may be delisted because its common stock
has failed to  maintain a minimum  bid price of $1 over the last 30  consecutive
trading  days and failed to maintain a minimum  market  value of public float of
$5,000,000.  In accordance with  MarketPlace  Rules,  the Company is provided 90
calendar  days,  or until May 15, 2002 to regain  compliance.  If the Company is
unable to  demonstrate  compliance on or before May 15, 2002,  NASDAQ staff will
provide  the Company  with  written  notification  that its  securities  will be
delisted.  At any time,  the Company  may appeal  NASDAQ  Staff's  decision to a
NASDAQ Listing Qualifications Panel.

                                       9
<PAGE>


     The  Company is party to a Content  License  and  Reseller  Agreement  (the
"Agreement") with USA Information Systems Inc. ("USAIS"),  an exclusive owner of
an  Internet-based  government  parts,  logistic and digital document  database,
whereby USAIS provides access to that database to paid subscribers through a Web
site owned, operated and maintained by USAIS (the "Subscription Services").  Per
the  Agreement,  as amended on March 15, 2001 and March 15, 2002,  respectively,
USAIS  licenses  to  the  Company  the   non-exclusive   rights  to  resell  the
Subscription  Services  and to offer  access to  certain  segments  of the USAIS
content to the Company's existing customers.  The Agreement commenced on June 1,
2000 and has an initial term of three years. The Agreement will be automatically
renewed for two  one-year  terms,  unless  either  party  notifies  the other in
writing of its  intention  not to renew the  Agreement  within  ninety (90) days
prior to the  expiration of the  then-current  term. The Company is obligated to
pay USAIS the sum of $100,000 in monthly  installments  during the first year of
the  Agreement.  Beginning  with  the  second  year  and  continuing  until  the
expiration  of the  Agreement,  the Company is obligated to pay USAIS $60,000 in
monthly  installments.  In conjunction with the amended  Agreement,  the Company
obtained and delivered to USAIS, on March 21, 2002, an irrevocable, transferable
standby  Letter  of  Credit  in the  amount  of  $840,000,  collateralized  by a
certificate  of deposit of the same  amount  that is to diminish on a dollar for
dollar basis as payments are made in accordance with the amended  Agreement.  As
of March 31, 2002, the Company owed USAIS $840,000.

Subsequent Events

     On  April  8,  2002,   the   Company   received   a  proposal   from   the
Company's Chairman  of the Board,  President,  CEO and majority stockholder (the
"Company's  Chairman")  and a limited  partnership  controlled  by the Company's
Chairman  to  acquire  the  remaining  shares  of the  Company's  common  stock,
approximately  5,000,000  shares or  approximately  36% of the shares  currently
outstanding  that the  Company's  Chairman does not own or control at a price of
$1.02 per share.  The proposal is subject to, among other  things,  a definitive
merger  agreement,  approval of both the Board of Directors and  shareholders of
PartsBase, Inc., receipt of any regulatory approval which may be necessary and a
fairness opinion from the Company's investment banker. The Board of Directors of
the Company has formed a Special Committee ("Special Committee") to consider the
proposed transaction.  The Special Committee is in the process of evaluating the
proposal.

     On April 16 and 17, and May 8, 2002, the  Company  received  notices of, or
had been served with, three  purported class action lawsuits,  two of which were
filed in the Circuit Court in and for Palm Beach  County,  Florida and the other
of which was filed in the Court of  Chancery  of the State of  Delaware  ( Cliff
Gordon  vs.  PartsBase,  Inc.  et.al,  Case  No.  024277,  Hughes  Rousseau  vs.
PartsBase,  Inc.  et.al Case No.  0205368 in Palm Beach County,  Florida and Key
Equity Investors vs.  PartsBase,  Inc.,  et.al.  C.A. 19546 in  Delaware).  The
lawsuits  name as  defendants  the  Company and certain of its current  officers
and directors.  The  lawsuits allege the directors have breached their fiduciary
duty to the  plaintiffs  and the purported  class and seek to enjoin the Company
from  entering  into a  proposed  going-private  transaction,  by the  Company's
Chairman and a limited  partnership and to recover unspecified damages resulting
from the alleged breach of fiduciary duty.  The Company  intends to  vigorously
defend  these  actions.   Nevertheless,   an  unfavorable  resolution  of  these
lawsuits could have a material  adverse  effect on the  Company  in one or more
future  periods.  The Company  maintains a director  and  officer's   liability
insurance   policy  that  provides $3 million of  coverage,  with  retention  of
$150,000.

     On April 19, 2002, the Company  received a proposal  from AirOperations.com
("AirOps")  for a going  private  transaction.  According to the  correspondence
received from AirOps,  AirOps'  parent  company,  Air  Operations  International
repairs,  overhauls and markets  aircraft engines and components and through its
website  Airoperations.com  engages in e commerce in the aviation industry.  The
proposed  transaction from AirOps would be either in the form of a merger with a
corporation  owned,  affiliated with and/or controlled by AirOps or the purchase
of substantially  all the assets of PartsBase.  Pursuant to the AirOps proposal,
the stockholders of PartsBase would receive $1.22 per share in exchange for each
share of PartsBase Common Stock outstanding or the same aggregate  consideration
to  PartsBase  in the event of an asset  purchase.  The  proposal is subject to,
among  other  things,  approval  of the  proposed  transaction  by the  Board of
Directors and  stockholders  of PartsBase,  receipt of any regulatory  approvals
which may be necessary,  the receipt of a fairness opinion,  the inapplicability
(either by its terms or as a result of Company Board action) of certain business
combination provisions under Delaware law, the receipt of satisfactory financing
by AirOps to consummate the transaction,  the receipt of all necessary  consents
without payment of any penalty from creditors, lessors or customers of PartsBase
and the termination of all outstanding options and warrants of the Company.  The
proposal  expires on May 15, 2002. The proposal from AirOps has been referred to
the Special Committee of the Board of Directors.


                                       10
<PAGE>


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

     This  Report  contains  forward-looking  statements  within the  meaning of
Section 27A  of the  Securities  Act of 1933 and  Section 21E  of the Securities
Exchange Act of 1934,  including,  without limitation,  statements regarding the
Company's  expectations,  beliefs,  intentions  or  future  strategies  that are
signified  by the words  "expects",  "anticipates",  "intends",  "believes",  or
similar language.  All forward-looking  statements included in this document are
based on  information  available  to the  Company  on the date  hereof,  and the
Company  assumes no  obligation to update any such  forward-looking  statements.
Actual   results   could  differ   materially   from  those   projected  in  the
forward-looking  statements as a result of a number of factors including but not
limited  to those set forth  under  "Risk  Factors"  included  in  Exhibit  99.1
elsewhere in this report.

Overview

     We   currently   operate  in  two   business   segments:   (i)  we  provide
business-to-business  e-commerce  services  for the  aviation  industry and (ii)
since October 2001 we have provided,  for a fee, registered nurses for temporary
assignment  to  hospitals  located  in Broward  County  and Palm  Beach  County,
Florida.

     We were  incorporated  in Texas on April  27,  1999 and  prior to such date
operated as a division of Aviation  Laboratories,  Inc. At the Company's  Annual
Meeting of  Stockholders  held on June 20, 2001,  the  stockholders  approved an
amendment  to change the state of  incorporation  of the  Company  from Texas to
Delaware  and  changed  the name of the  Company  from  PartsBase.com,  Inc.  to
PartsBase, Inc. As a Texas corporation, the Company's shares of common stock had
no par value.  As a result of the  reincorporation  in Delaware,  the  Company's
shares of preferred and common  stock,  each have a $0.001 par value and $14,004
was reclassified from Additional  Paid-In Capital to Common Stock to reflect the
par value of the  shares of common  stock  outstanding.  No shares of  preferred
stock were  issued or  outstanding  at March 31,  2002 and  December  31,  2001,
respectively.

         The Aviation E-commerce Business and Corporate

Results of Operations

Net Revenues

     Net revenues consist of subscription  fees charged to subscribers and, to a
lesser extent, banner-advertising and product listings revenue. Net revenues for
the  first  quarters  of  2002  and  2001  were   $1,157,745   and   $1,599,233,
respectively,  a decrease of 27.6% . During the first quarter of 2002, PartsBase
signed up 196 new subscribers at an average  subscription fee of $2,300.  During
the same period, 452 subscribers  renewed their subscription for another year at
an average subscription fee of $1,708. The aggregate average subscription fee of
both new and renewal subscribers during the first quarter of 2002 was $1,887.

     During the first quarter of 2001,  PartsBase  signed up 694 new subscribers
at an average subscription fee of $1,584. In addition,  during the first quarter
of 2001, 437 members renewed their subscriptions for another year at the average
renewal fee of $1,284.  The average  subscription fee increased during the three
month period in 2002 over the same period in 2001,  due to higher prices charged
for competing services,  and PartsBase's ability to offer additional value added
services to its  subscribers,  such as government  procurement  data and premium
parts search. The average  subscription fee for the quarter ended March 31, 2001
was $1,469. Given the finite size of the aerospace community,  the number of new
subscribers signed up in 2002 decreased compared to 2000.

     At March 31, 2002,  PartsBase had 2,749 paying  subscribers  as compared to
2,926  paying  subscribers  at December 31, 2001,  3,315 paying  subscribers  at
September 30, 2001, 4,056 paying  subscribers at June 30, 2001, and 4,837 paying
subscribers at March 31, 2001. The subscriber  count decreased  during the first
quarter  of 2002  compared  to the prior  quarter,  as  PartsBase  was unable to
acquire new subscribers at a sufficient rate to replace current  customers whose
subscriptions  expired or were deactivated during their subscription  period due
to  non-payment  of their  invoice.  Of the 452  subscribers  who renewed  their
subscriptions  during  the first  quarter  of 2002,  245  represent  subscribers
renewing for the second time,  representing 21% of the new subscribers initially
signed during the first quarter of 2000 and 30% of the new subscribers initially
signed  during the first  quarter of 2001 The Company  expects  that the renewal
rate for third  year  subscriptions  will be higher  than that  experienced  for
second year renewals,  although  there can be no assurances  that future renewal


                                       11
<PAGE>

rates  will be  higher  than  that  experienced  for  the  second  year.  A paid
subscriber  is defined as a member of the PartsBase web site who has purchased a
subscription  that  is  currently  active,  and  therefore,   does  not  include
subscribers whose subscriptions have expired,  or potential  subscribers who are
trialing the service.

     Gross  revenues were  $1,258,708 for the first quarter of 2002, as compared
to $1,660,249 for the same period in 2001, a decrease of 24.2%.  The decrease in
gross  revenue  during the current  quarter  compared to the same quarter of the
prior  year is  attributable  to  finite  number  of  members  in the  aerospace
community and fewer renewals of initial subscribers in 2002.


     PartsBase records earned  subscription and banner advertising  revenue over
the life of the  subscription,  which is  typically  12  months.  Gross  revenue
represents  total  subscription  and  advertising  sales made  during the period
presented, of which a portion is deferred and recognized as earned. Net revenues
represent  that portion of gross  revenues of all periods that was earned during
the current period presented.  Sales costs, including commissions,  are expensed
as  incurred,  and are  included  in the  cost  of  revenues.  Deferred  revenue
increased to  $2,308,109 at March 31, 2002 as compared to $2,231,076 at December
31, 2001, $2,412,787 at September 30, 2001 and $3,174,665 as of March 31, 2001.





     The  following  table sets forth gross revenue by product line for the last
five  quarters,  as well as  operating  data and  sequential  quarter-to-quarter
revenue growth percentages for the same period.

<TABLE>

                                                            PartsBase, Inc.
                                            Revenue Detail by Quarter (000's)

<CAPTION>
                                         03/31/01    06/30/01   09/30/01    12/31/01   03/31/02
                                         --------    --------   --------    --------   --------
<S>                                        <C>         <C>        <C>         <C>        <C>
New Subscriptions                          $1,048      $  729     $  492      $  381     $  451
Renewal Subscriptions                         509         387        591         833        772
Advertising                                    60          89         27          26         31
Other                                          43           2         15           2          5
                                       ----------- ----------- ---------- ----------- ----------
Total Gross Revenue                        $1,660      $1,207     $1,125      $1,242     $1,259
                                       =========== =========== ========== =========== ==========
Sequential Gross Rev. Growth                (21%)       (27%)       (7%)         10%         1%
                                       =========== =========== ========== =========== ==========
Total Net Revenue                          $1,599      $1,354     $1,344      $1,224     $1,158
                                       =========== =========== ========== =========== ==========
Sequential Net Rev. Growth                    15%       (15%)       (1%)        (9%)       (5%)
                                       =========== =========== ========== =========== ==========
Salesperson Compensation                     $730        $484       $398        $422       $441
                                       =========== =========== ========== =========== ==========
Sales Comp/Gross Revenue                      44%         40%        35%         34%        35%
                                       =========== =========== ========== =========== ==========
Deferred Revenue Balance                   $3,175      $2,731     $2,413      $2,231     $2,308
                                       =========== =========== ========== =========== ==========
</TABLE>


Cost of Revenues

     Cost  of  revenues   consists  of  compensation  for  sales  and  marketing
personnel,  telephone  expenses,   amortization  and  maintenance  of  web  site
development  costs,  contract  payments  to a third party for  procurement  data
functionality and a proportion of rent and office expenses.  Compensation  costs
for sales and  marketing  personnel  are  incurred  in the month  paid while the
revenue is pro-rated over the related subscription period,  generally a 12-month
period.  Therefore,  during quarters with negative gross revenue  growth,  gross
margins will be positively impacted due to the effect of a smaller pool of sales
commissions  being expensed in their entirety during the quarter,  whereas sales
from prior  quarters  with larger gross  revenues are being  amortized  over the
subscription term. Costs of revenues were $888,427 for the first quarter of 2002
compared  to  $1,488,761  for the same  period  in  2001.  As a  percent  of net
revenues,  costs of revenues  were 77% the first quarter of 2002 compared to 93%
for the same periods in 2001.  Salesperson  compensation in the first quarter of
2002,  $441,046,  as a percentage  of gross  revenue was 35%.  This  compares to
$730,392  and 44%,  respectively,  in the  first  quarter  of 2001.  Salesperson
compensation as a percentage of gross revenue  continues to trend downwards,  as
renewals,  for  which  the  commission  rate is  substantially  lower  than  new
subscriptions, comprise a greater portion of gross revenues.

     At March 31,  2002,  PartsBase  employed  35 persons in sales and  customer
service,  compared to 100 persons at March 30, 2001.  Additionally,  included in


                                       12
<PAGE>

cost of revenues in the first quarter of 2002 was $180,000 for contract payments
to a third party for government procurement data as compared to $314,000 for the
same period in 2001.


General and Administrative Expenses

     For the three  months  ended March 31, 2002 and 2001,  aviation  e-commerce
general and administrative expenses,  excluding stock-based compensation expense
of $1,090 and  $43,011  respectively,  and  unallocated  corporate  general  and
administrative  expenses  of  $175,470  and $0  respectively,  were  $545,730 as
compared to $2,264,256;  a decrease of 76% and $1,718,526 from the first quarter
of 2001.  General and administrative  expenses consisted  primarily of personnel
costs of  $388,768  and  $1,436,125,  rent  expense  of  $34,632  and  $212,605,
advertising  costs of $4,366  and  $98,732,  bad debt  expense  of  $15,888  and
$212,153,   and  other  costs  totaling  $102,076  and  $304,641   respectively,
consisting of utilities,  supplies and other related  administrative  costs, for
the three months ended March 31, 2002 and 2001, respectively.

     The Company made significant  personnel reductions during 2001 and 2002. In
addition, depending on salary level, all remaining salaried personnel took a pay
reduction,  ranging from 5%-30% during the second  quarter of 2001.  The Company
expects that its  personnel  costs will  continue to decrease into 2002 but at a
smaller  rate.  The decrease in bad debt expense  compared to the same period of
the  prior  year  relates  to the  Company's  policy,  in 2000 of  paying  sales
commissions  upon signing a Company sales order,  rather than upon cash receipt,
thereby  increasing the probability that sales orders of lesser quality could be
submitted.   Although  the  Company  can  recover   commissions  paid  to  sales
representatives  if the customer does not pay, the  Company's  high turnover has
made it  difficult  to collect on a portion of  subscriptions  sold.  During the
third quarter of 2001, the Company significantly tightened its deal verification
processes, thereby causing its bad debt expense to decrease in 2002.

     For the three months ended March 31, 2002 and 2001,  unallocated  corporate
general and  administrative  expenses,  excluding  stock-based  compensation  of
$1,090 and $43,011,  respectively,  were $175,470 and $0. Corporate  general and
administrative   expenses  consisted  primarily  of  executive  compensation  of
$125,253,  professional  and  directors'  fees of  $26,074  and  directors'  and
officers' liability insurance premiums of $16,317.

     At March 31, 2002,  we employed 18 persons in  administrative,  information
technology   and  executive   management   positions   (inclusive  of  corporate
positions), compared with 52 persons in such positions at March 31, 2001.


Corporate Relocation Expenses and Abandonment Costs

     As a  result  of the  Company's  former  sublessor  filing  for  bankruptcy
protection in December  2001,  the Company's  sublease for 35,668 square feet of
office space in Boca Raton was voided by the bankruptcy court. In January 2002,
the Company  entered into a new  sublease  agreement  with another  unaffiliated
third party for 6,600  square  feet of general  office  space in Boca Raton.  In
conjunction  with the move to the new and smaller office space in February 2002,
the Company incurred moving expenses  totaling $30,408 and abandoned  furniture,
fixtures and trailing technology computer equipment and software with a net book
value of $251,498. Rent savings will be approximately $700,000 per annum.


Stock-Based Compensation

     In connection  with the issuance of employee  stock options issued prior to
our IPO,  stock-based  compensation expense of $1,090 and $43,011 was recognized
during the three months ended March 31, 2002 and 2001,  respectively.  There are
no  remaining  charges to be  recognized  in future  periods  related to pre-IPO
grants as there are no non-vested  options  outstanding whose exercise price are
below the market price on the date of grant.


Corporate Other Income, Net

     Corporate other income,  net consisting  primarily of interest and dividend
income was $137,416 and $498,087 for 2002 and 2001, respectively,  a decrease of


                                       13
<PAGE>

$360,671  in 2002.  The  decrease  in other  income,  net in fiscal year 2001 is
attributable  to lower cash, cash  equivalents  and investments  balances and an
overall market decline in interest rates on the Company's  investments  and cash
equivalents.


Net Loss

     As a result of the  foregoing,  the net loss  decreased to $597,462 for the
first quarter of 2002, compared to $1,698,708 for same period in 2001.



         The Nurse Staffing Business

Results of Operations

Comparison of Three Months Ended March 31, 2002 and 2001

Net Revenues

     We commenced our nurse staffing  operations on October 1, 2001.  During the
three months ended March 31, 2002,  we earned  $816,247 in net revenues from the
placement of our registered  nurse  employees  working as  supplemental  nursing
staff in hospitals in Miami/Dade  County,  Palm Beach County and Broward County,
Florida. Approximately 67% of these revenues were derived from four clients.


Cost of Revenues

     Cost  of  revenues  consists  of  compensation  for  our  registered  nurse
employees,   uniforms  and  costs  incurred  in  the  recruitment  of  qualified
professional healthcare professionals. For the three months ended March 31, 2002
our total cost of revenues totaled  $807,346 or 99% of net revenues.  Registered
nurse compensation as a percentage of cost of revenues totaled 94% for the three
months  ended March 31,  2002.  As of March 31,  2002,  102  registered  nurses,
affiliated with us, had worked at least one shift for the week then ended.


General and Administrative Expenses

     For the three  months  ended March 31,  2002,  general  and  administrative
expenses  totaled  $384,105.   General  and  administrative  expenses  consisted
primarily  of  personnel  costs of  $253,785,  rent of $28,819  and other  costs
totaling  $101,501,  consisting  of  marketing  expenses,  phone and  utilities,
supplies and other related  administrative costs. At March 31, 2002, we employed
31 persons in administrative,  and executive  management  positions in our nurse
staffing operations. In April 2002, we opened offices in Hillsborough County and
Martin County, Florida.


Net Loss

     As a result of the foregoing, the net loss incurred during the three months
ended March 31, 2002 totaled $375,204.


Liquidity and Capital Resources

Financial Condition

     As of  March  31  2002,  the  Company  had  $23,842,323  of cash  and  cash
equivalents,  and  restricted  cash totaling  $840,000.  At March 31, 2002,  the
Company had $22,272,816 of working capital.

     The Company  currently  anticipates  that its operating  expenses will be a
material use of its cash resources.  Additionally,  the Company will continue to
evaluate possible acquisitions of, or investments in, businesses,  products, and


                                       14
<PAGE>

technologies,  which may require the use of cash. The Company  believes that its
existing cash and cash  equivalents  will be sufficient to meet its  anticipated
cash needs for working  capital and capital  expenditures  for at least the next
twelve months.

Cash Flows

     Net cash used in  operating  activities  totaled  $1,012,772  for the three
months ended March 31, 2002 compared to net cash used in operating activities of
$1,505,691  for the  comparable  period of the prior year.  The  current  period
decrease in cash used as  compared  to the same  period of last year  reflects a
decrease  in the loss for the  period  of  $726,042  offset  by an  increase  in
accounts  receivable  of $725,948,  primarily  the result of the  operations  of
RNpartners.  These  items are offset by an  increase  of  $623,431  in  accounts
payable due to an  increase in the  operations  of  RNpartners  during the first
quarter of 2002.

     Net cash provided by investing  activities totaled $1,026,340 for the three
months ended March 31, 2002 compared to net cash used in investing activities of
$205,553  for the  comparable  period  of the prior  year.  The  current  period
increase of $1,231,89 in cash provided as compared to last year is primarily the
result  of  maturities  of  marketable   debt   securities  and  redemptions  of
certificates  of  deposit-restricted  cash  as  opposed  to  the  purchase  of a
certificate of deposit-restricted cash of $1,665,000 during the first quarter of
2001.

     Net cash used in financing  activities totaled $22,838 for the three months
ended March 31, 2002,  compared to net cash used financing  activities  totaling
$356,473  for the  comparable  period of 2001.  The decrease of $333,635 in cash
used during the current  period as  compared to last year is  primarily  because
during the three months ended March 31, 2001,  the Company  repurchased  291,900
shares of its common stock at a cost of $520,668 whereas the Company repurchased
25,700  shares of its .common  stock for $22,838  during the three  months ended
March 31, 2002.



Item 3.  Quantitative and Qualitative Disclosures about Market Risk

         The Company is exposed to the impact of interest rate changes.

Interest Rate Risk

     The primary  objective of investment  activities  is to preserve  principal
while at the same time maximizing yields without significantly  increasing risk.
At  March  31,  2002,   PartsBase's   portfolio   consisted  of  investments  in
institutional  money market funds.  PartsBase's  investment policy is focused on
ensuring  that  PartsBase  has  liquid  cash  balances  available  to  meet  its
day-to-day  operating  cash needs.  The policy  establishes  guidelines  for the
investment  of surplus  cash  balances  that will  maximize  return with minimum
credit and liquidity risk. All investments  are held in U.S.  dollars.  Specific
instruments  approved for inclusion in the portfolio are limited to: obligations
issued by the U.S.  Treasury  and U.S.  Federal  Agencies,  obligations  of U.S.
commercial  banks such as bankers'  acceptances and  certificates of deposit and
obligations  of major  corporations  and bank holding  companies  such as direct
issue commercial paper, medium term notes and investment grade bond funds.

     The Company intends to hold its investments until maturity;  however, it is
exposed to the impact of interest rate changes.  Investments  in both fixed rate
and floating rate interest earning instruments carries a degree of interest rate
risk. Fixed rate securities may have their fair market value adversely  impacted
due to a rise in interest rates, while floating rate securities may produce less
income than expected if interest rates fall.  Due in part to these factors,  the
Company's future investment income may fall short of expectations due to changes
in interest rates.


Foreign Exchange Risk

     The  Company has minimal  exposure to foreign  exchange  risk as all of its
sales to customers outside of the United States are collected in U.S. dollars.


                                       15
<PAGE>





PART II---OTHER INFORMATION

Item 1.  Legal Proceedings

     In  September  2000 the Company  sued a third party  financial  institution
because  such  financial  institution  paid a check in the  amount  of  $161,000
despite a stop payment  order duly issued by the  Company.  The payee cashed the
check, along with a replacement check. Before the Company learned that the payee
had cashed both checks,  the Company entered into a binding  settlement with the
payee  ending the  Company's  business  relationship  with the payee.  The payee
refused to return the amounts and the financial institution failed to credit the
Company's account. The Company filed suit, and discovery has commenced. The only
claim against the Company in this matter is the financial  institution's  demand
for legal fees if the  financial  institution  prevails.  In a separately  filed
lawsuit,  the payee of the  checks has filed an action  for  declaratory  relief
against the  financial  institution  and the Company  requesting  that the court
declare its settlement  agreement  with the Company to be valid and binding.  In
this declaratory relief action, the payee has requested that the Company and the
financial  institution  reimburse  it for  costs  and fees  associated  with the
action.  In July 2001, the separately filed lawsuit against the Company filed by
the  payee  of  the  checks  was  dismissed,  without  prejudice,  for  lack  of
jurisdiction. This matter is scheduled for trial in January 2003.

     In April and May 2001,  the Company  received  notice of or had been served
with four purported class action lawsuits (Foderaro vs.  PartsBase.com,  Inc. et
al, Case No.: 01-8319 CIV- FERGUSON;  IKCYBERINVESTMENTS vs. PartsBase.com, Inc.
et al, Case No.: 01-8368  CIV-SEITZ;  and Webb vs.  PartsBase,  et.al.  Case No.
01-8376  CIV- GRAHAM and Jesus  Martin vs.  PartsBase.com,  Inc. et al, Case No.
01-8526-CIV-UNGARO-BENAGES).  These  cases  were  consolidated  into one  action
entitled,  In  re:   PartsBase.com,   Inc.  Securities   Litigation,   Case  No.
01-8319-CIV-UNGARO-BENAGES/BROWN   currently   before   the   Honorable   Ursula
Ungaro-Benages.  The  consolidated  lawsuit  names as  defendants  the  Company,
certain of its current and former officers and directors,  and the  underwriters
of its initial public offering of securities.  The consolidated  lawsuit alleges
violations  of Sections 11,  12(a)(2) and 15 of the  Securities  Act of 1933 and
alleges the  Company's  March 2000  registration  statement  misrepresented  and
failed to disclose  matters  related to the Company's  business  operations  and
membership sales. The complaint alleges damages of nearly $42 million. The Court
has recently  certified a class consisting of purchasers of the Company's common
stock in the offering  during the period from March 22, 2000  through  April 25,
2000. The Company maintains a director and officer's  liability insurance policy
that provides $3 million of coverage,  with  retention of $200,000.  As of March
31,  2002,  the Company has  incurred and  previously  charged the  retention of
$200,000 to expense.  In May 2002, the Company reached an agreement in principle
for the settlement of the consolidated  class action. The plaintiffs in the case
and the  defendants,  entered into a Memorandum of  Understanding  outlining the
general  terms of the  proposed  settlement.  The  Memorandum  of  Understanding
provides for, among other things,  a settlement  amount of $1.5 million in cash,
plus  interest,  payable  to the class  under an  insurance  policy  and for the
plaintiffs' dismissal of the class action with prejudice as well as a broad form
of release in favor of PartsBase  and the other  defendants  in the class action
which,  among  other  things,  will have the effect of barring all claims by the
plaintiffs  and the members of the class  other than those who opt out,  arising
out of the purchase  and sale of the  Company's  common  stock in the  Company's
initial public offering of securities.

     The final  settlement of the class action is subject to the preparation and
execution of definitive settlement documents and court approval.  The settlement
also applies to the directors, management personnel, underwriters and securities
firms named as defendants in the litigation.


     In July 2001, the Company was served with a lawsuit filed by an information
technology  vendor claiming damages  resulting from the Company's alleged breach
of a  software  sales  and  service  contract  in the  amount of  $126,631  plus
interest,   cost  and  fees.  The  Company  intends  to  vigorously  defend  the
allegations  contained  in this  lawsuit.  In July 2001,  the  Company  sued the
manufacturer  of such  software  for  damages  totaling  $220,000 as a result of
software  malfunction.  The Company  believes the resolution of this matter will
not have a material impact upon the Company's consolidated financial statements,
results of operations or cash flows.

     In March 2001 the  Company  received  notice from  counsel to the  Business
Software Alliance (the "BSA"), an industry watchdog group representing  software
manufacturers,  in connection with the BSA's  investigation  of possible illegal
duplication of certain software companies'  proprietary software products by the


                                       16
<PAGE>

Company.  Through  subsequent  correspondence  from the BSA, the BSA has alleged
that the  Company  has  installed  unauthorized  copies of BSA  member  software
products on Company computers. The correspondence from the BSA provides that the
Company's  potential exposure in this matter could be over $1,950,000 if willful
copyright  infringement is shown. The Company is currently in negotiations  with
the BSA in an attempt to resolve the matter. To date the Company is not aware of
any legal proceedings initiated by BSA in this matter.

     During  May 2000 the  Company  entered  into a sublease  agreement  with an
unaffiliated  third party for 35,668 square feet of general  office  space.  The
sublease  agreement  was to expire on October 31, 2006.  In December  2001,  the
sublessor  filed for  bankruptcy  protection  and as a result,  the sublease was
voided by the  bankruptcy  court.  The Company  continued to occupy the premises
until  February  2002, at which time,  the Company moved to new subleased  6,600
square feet office space in Boca Raton from an unaffiliated  party. On March 26,
2002,  the lessor of the former  property  filed a complaint  for damages in the
amount of $92,910 plus interest,  costs and fees,  representing the value of the
time the Company  occupied the premises from the date the sublease was voided by
the  bankruptcy  court  through  the date the Company  vacated  the  premises in
accordance with rent provisions of the voided sublease. The Company believes the
resolution  of this  matter will not have a material  impact upon the  Company's
consolidated financial statements, results of operations or cash flows.


     On April 16 and 17, and May 8, 2002, the  Company  received  notices of, or
had been served with, three  purported class action lawsuits,  two of which were
filed in the Circuit Court in and for Palm Beach  County,  Florida and the other
of which was filed in the Court of  Chancery  of the State of  Delaware  ( Cliff
Gordon  vs.  PartsBase,  Inc.  et.al,  Case  No.  024277,  Hughes  Rousseau  vs.
PartsBase,  Inc.  et.al Case No.  0205368 in Palm Beach County,  Florida and Key
Equity  Investors vs.  PartsBase,  Inc.,  et.al.  C.A. 19546 in  Delaware).  The
lawsuits  name as  defendants  the  Company and certain of its current  officers
and  directors.  The lawsuits allege the directors have breached their fiduciary
duty to the  plaintiffs  and the purported  class and seek to enjoin the Company
from  entering  into a  proposed  going-private  transaction,  by the  Company's
Chairman and a limited  partnership and to recover unspecified damages resulting
from the alleged breach of fiduciary duty.  The Company  intends to  vigorously
defend  these  actions.   Nevertheless,   an  unfavorable  resolution  of  these
lawsuits could have a material  adverse  effect on the  Company  in one or more
future  periods.  The Company  maintains a director  and  officer's   liability
insurance   policy  that  provides $3 million of  coverage,  with  retention  of
$150,000.  The Company does not intend to file further  Current  Reports on Form
8-K or other disclosures  describing  additional  lawsuits,  if any,  purporting
class  action  status,  in either  federal  or state  court,  which are based on
allegations substantially similar to those contained in the consolidated lawsuit
described above.


Item 2.  Changes in Securities

     During the three  months  ended March 31,  2002,  the  Company  repurchased
25,700  shares of its common stock in the open market at an  aggregate  purchase
price of $22,838,  inclusive of brokerage fees. All of these shares were retired
as of March 31,2002.


Item 3.  Defaults Upon Senior Securities

         None.


Item 4.  Submission of Matters to a Vote of Security Holders

         None.


Item 5.  Other Information


     On February 15, 2002, the Company  received notice from the NASDAQ National
Market warning that the Company's stock may be delisted because its common stock
has failed to  maintain a minimum  bid price of $1 over the last 30  consecutive
trading  days and failed to maintain a minimum  market  value of public float of
$5,000,000.  In accordance with  MarketPlace  Rules,  the Company is provided 90


                                       17
<PAGE>

calendar  days,  or until May 15, 2002 to regain  compliance.  If the Company is
unable to  demonstrate  compliance on or before May 15, 2002,  NASDAQ staff will
provide  the Company  with  written  notification  that its  securities  will be
delisted.  At any time,  the Company  may appeal  NASDAQ  Staff's  decision to a
NASDAQ Listing Qualifications Panel.



Item 6.   Exhibits and Reports on Form 8-K

1.       Current Report on Form 8-K dated April 8, 2002 regarding the Company's
         receipt of a "going private transaction" proposal from Robert Hammond.

2.       Current Report on form 8-K dated April 16, 2002 regarding the filing
         and/or service of two purported class action lawsuits against the
         Company and certain of its officers and directors.

3.       Current Report on Form 8-K dated April 19, 2002 regarding the Company's
         receipt of a "going private transaction" proposal from AirOps.com.

4.       Current Report on Form 8-K dated May 8, 2002 regarding the Company's
         reaching an agreement in principle for the settlement of the
         consolidated class action litigation pending in the United States
         District Court Southern District of Florida styled In Re: Partsbase.com
         Securities Litigation, Case No. 01-8319-CIV-Ungaro-Benages/Brown and
         the filing of and service of an additional purported class action
         lawsuit against the Company and certain of its officers and directors.


                                       18
<PAGE>

                                   Signatures

     In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




Date:  May 14, 2002                     /s/ Robert A. Hammond
                                        ---------------------
                                        ROBERT A. HAMMOND, JR.
                                        President, Chief Executive Officer,
                                        And Chairman
                                       (Principal Executive Officer)



Date:  May 14, 2002                     /s/ Mark Weicher
                                        ----------------
                                        MARK WEICHER
                                        Chief Financial Officer
                                        (Principal Financial Accounting Officer)




                                       19
<PAGE>




                                 PARTSBASE, INC.

                                Index to Exhibits


Title                                                        Exhibit No.
--------------------------------                            -------------
Safe Harbor Compliance Statement                                99.1


                                       20
<PAGE>

                                                                   Exhibit 99.1

                        SAFE HARBOR COMPLIANCE STATEMENT

     The Company  believes  that the  following  risks could cause the Company's
actual results to differ materially.

The Aviation E-commerce Business

     We have  never  been  profitable,  anticipate  continued  losses and cannot
guarantee  profitability in the future. We have never been profitable and expect
to continue to incur operating  losses until at least the end of fiscal 2002. We
may be unable to ever achieve  profitability in the future. We have incurred net
consolidated losses in each accounting period since we began operations in April
1996,  including net losses  attributable  to common  shareholders  of $972,666,
$5,612,233,  $13,453,981,  $7,815,409  ($5,913,034  before  consideration of the
value of a preferred stock beneficial conversion feature) during the first three
months  of 2002  and for  calendar  years  2001,  2000 and  1999,  respectively.
Although  revenues  have grown in recent  periods,  we cannot assure you that we
will  achieve  sufficient  revenues  for  profitability.  Even if we do  achieve
profitability,   we  cannot   assure  you  that  we  can   sustain  or  increase
profitability  on a quarterly  or annual basis in the future.  If revenues  grow
slower than we  anticipate,  or if operating  expenses  exceed  expectations  or
cannot  be  adjusted  accordingly,  our  business,  results  of  operations  and
financial condition will be materially and adversely affected.

     We cannot predict our success because our business model is unproven and we
have operated our business for only a short period of time.  Our business  model
is new to the aviation  industry and our ability to generate revenues or profits
is unproven.  We have a limited operating history,  which will make it difficult
to evaluate our performance. Our prospects will be dependent upon our ability to
effectively   implement  our  business   model  and  adapt  to  changes  in  the
business-to-business  e-commerce  market. If our business model is not viable or
if we are unable to identify and address changes in our markets,  we will not be
able to grow our business,  compete effectively or achieve profitability.  These
factors could cause our stock price to fall significantly.

     We primarily rely on revenue from  subscriptions  and we may not be able to
successfully expand our membership base or establish additional revenue sources.
We  currently  generate  revenues  from  e-commerce  customers  in the  aviation
industry  who  subscribe  to our  service.  Our success will be dependent on our
ability to expand our  membership  base within the  aviation  industry.  We have
experienced  decreases in our  subscriber  base.  In addition,  our success will
depend on our ability to generate  additional  revenues through the introduction
of a new functionality and/or the expansion into new markets and industries.  We
cannot  assure  you  that we will  be  successful  in any  efforts  to  generate
additional revenues.

     We  receive  substantially  all of our  revenue  from  participants  in the
aviation  industry,  so a downturn in the  aviation  industry  could  damage our
business.  We receive  substantially all of our revenue from members  associated
with the  aviation  industry,  and we expect  these  revenues  will  account for
substantially all of our revenues for the foreseeable  future. Our dependence on
members  associated with the aviation  industry makes us vulnerable to downturns
in that  industry.  A downturn  could lead our members to reduce  their level of
activity on our e-marketplace and cause some to cancel their subscription.

     Intense competitive pressures in the business-to-business e-commerce market
may impede our ability to establish a substantial  market share that would allow
us to be profitable. The business-to-business  e-commerce market is new, rapidly
evolving,  and  intensely  competitive,  and we expect  competition  to  further
intensify in the future.  Barriers to entry are  minimal,  and  competitors  may
develop and offer services  similar to ours in the future.  Recent entrants into
the business-to-business  aviation parts market include an alliance of prominent
aircraft  parts  manufacturers  and  aviation  industry  participants  that have
superior  capital  resources and  established  reputations  in the industry.  In
addition,  we expect that additional  companies will offer competing  e-commerce
solutions in the future, and our business could be severely harmed if we are not
able to compete successfully against current or future competitors. In addition,
our  members  and  partners  may become  competitors  in the  future.  Increased
competition  is  likely to result in price  reductions,  reduced  gross  margins
and/or loss of market share,  any of which could harm our  business.  Our actual
and  potential  competitors  vary in size and in the  scope and  breadth  of the
services they offer.

                                       1
<PAGE>

     Quarterly  Operating Results are Subject to Significant  Fluctuations.  Our
revenues and operating  results may vary  significantly  from quarter to quarter
due to a number of factors,  not all of which are in our control.  These factors
include:

o        Subscriber and advertiser demand for our solutions;
o        User traffic levels and activity on our e-marketplace;
o        Seasonal fluctuations in Internet usage;
o        Changes in the growth rate of Internet usage;
o        The commitment of e-commerce customers in the aviation industry who
          subscribe to our service;
o        The timing and amount of costs relating to the expansion of our
          operations;
o        Changes in our pricing policies or those of our competitors;
o        The introduction of new solutions by us or our competitors;
o        Costs related to acquisitions of technology or businesses;
o        General economic and market conditions; and
o        Effects of terrorist activities upon the aviation industry.

     Our  revenues  for the  foreseeable  future will remain  dependent  on user
traffic  levels and the  commitment  of  e-commerce  customers  in the  aviation
industry who  subscribe to our service.  Such future  revenues are  difficult to
forecast. In addition,  we may significantly  increase our operating expenses to
increase  our sales and  marketing  operations,  to continue our  expansion,  to
upgrade and enhance our technology,  and to market and support our solutions. We
may be unable to adjust spending quickly enough to offset any unexpected revenue
shortfall.  If we have a shortfall in revenues in relation to our expenses, then
our business,  results of operations and financial condition would be materially
and  adversely  affected.  Such a result would likely affect the market price of
our common stock in a manner that may be unrelated  to our  long-term  operating
performance.

     Due to all of the foregoing  factors and the other risks  discussed in this
section, you should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of future performance.  It is possible that, in some
future  periods,  our results of  operations  may be below the  expectations  of
public market  analysts and  investors.  In this event,  the price of our common
stock may fall.

     If we  fail  to  effectively  manage  our  operations  and  the  use of our
services, we may lose members or incur significant expenses. Our success depends
on effective planning and growth management. We will need to continue to improve
our financial and managerial controls, reporting systems, and procedures, and we
will need to continue to expand, train and manage our workforce.  We continue to
increase  the  scope of our  operations  and our  growth  has  placed,  and will
continue  to place,  a  significant  strain on our  management  and  operational
systems and resources.  If we do not successfully  implement and integrate these
new systems or if we fail to scale these systems to our growth,  the performance
of our Web site may suffer  which would cause us to lose  members.  In addition,
any failure could make us unable to operate with  adequate,  accurate and timely
financial  and  operational  information,  which  could  result in us  incurring
unnecessary and possibly damaging expenses.

     Because  our  revenue is derived  from  providing  e-marketplace  access to
subscribers for an annual  subscription  fee, the cancellation or non-renewal of
these subscriptions would hurt our business. We have generated substantially all
of our  revenues  to date  through  member  subscription  fees for access to our
e-marketplace. Generally, our subscription fees are paid on an annual basis, and
these  subscriptions  may be terminated on short-term  notice.  We have expended
significant  financial and personnel  resources and have expanded our operations
on the assumption that our subscribers will renew these annual subscriptions. We
do not have a  sufficiently  long  history of  operations  to be able to predict
renewal rates of our members.  If our members fail to continuously  renew, or if
they terminate their subscriptions,  our revenues would be significantly reduced
and our business could suffer dramatically.

     There are a finite number of potential  subscribers and we may be unable to
develop other means of generating revenue, so our growth may be limited. A major
element of our growth  strategy is the  expansion of our  subscriber  base.  The
number of participants  in the aviation  market limits our potential  subscriber
base.  Additionally,  the barriers to entry, which exist in the aviation market,
may  limit  the  entry  of  additional   subscribers  into  our   e-marketplace.
Accordingly,  the number of potential subscribers to our e-marketplace is likely
finite,  in which  case our  revenues  may be  similarly  limited  if we  cannot
generate revenue through other means.

                                       2
<PAGE>

     If our sellers do not provide timely,  professional  and lawful delivery of
products to our buyers,  our membership may decrease and we may have  liability.
We rely on our sellers to deliver  purchased parts and products to our buyers in
a professional,  safe and timely manner. If our sellers do not deliver the parts
and products to our buyers in a professional,  safe and timely manner,  then our
service will not meet customer expectations and our reputation and brand will be
damaged.  In  addition,  deliveries  that  are  nonconforming,  late  or are not
accompanied by information  required by applicable  laws or  regulations,  could
expose us to liability or result in decreased  adoption and use of our solution,
which could have a negative  effect on our business,  results of operations  and
financial condition.

     We cannot guard against harm to our business  from the  activities of third
parties  on our web site.  Our  future  success  will  depend  largely  upon the
reliably of our sellers in delivering and accurately  representing  their listed
products  and  buyers  paying  the  agreed   purchase  price.  We  do  not  take
responsibility  for the  delivery  of  payment or goods to any  member.  We have
received  in the  past,  and  anticipate  that we will  receive  in the  future,
communications  from  members  who did not  receive  the  purchase  price or the
products  that were to be  exchanged.  While we can  suspend the  privileges  of
members who fail to fulfill  their  delivery or payment  obligations,  we do not
currently have the ability to require  sellers to deliver  products or buyers to
make payments. We do not compensate members who believe they have been defrauded
by other members.  Any negative publicity generated as a result of fraudulent or
deceptive  conduct by members of our  e-marketplace  could damage our reputation
and diminish the value of our brand name. We may in the future receive  requests
from  members  for  reimbursement  or threats of legal  action  against us if no
reimbursement  is made. Any resulting  litigation could be costly for us, divert
management  attention,  result in  increased  costs of doing  business,  lead to
adverse judgments, or otherwise harm our business.

     If we are unable to  implement  adequate  measures to maintain the value of
our  intellectual  property and internet domain name, our ability to compete may
be severely harmed. As an Internet company,  our current and future  copyrights,
service  marks,  trademarks,  patents,  trade  secrets,  domain name and similar
intellectual property, if any, are especially vital to our success.  Despite our
precautions,  unauthorized  third  parties may  infringe or  misappropriate  our
intellectual  property;  copy  portions of our  services or reverse  engineer or
obtain and use information  that we regard as proprietary.  Any  infringement or
misappropriation of our intellectual  property or proprietary  information could
make it  difficult  for us to compete.  In addition,  we currently  hold various
Internet  Web  addresses  relating  to our  network,  including  the domain name
"PARTSBASE.COM."  If we are not able to prevent third parties from acquiring Web
addresses that are similar to our addresses, third parties could acquire similar
domain names that could  create  confusion  that  diverts  traffic away from our
e-marketplace to other competing Web sites.

     Other  parties may assert  claims  against us that we are  infringing  upon
their intellectual property rights, which could harm our financial condition and
ability to compete.  We cannot be certain that our services do not infringe upon
the intellectual  property rights of others.  Because patent applications in the
United  States  are  not  publicly   disclosed   until  the  patent  is  issued,
applications  may have been  filed  which  relate to  services  similar to those
offered by us. We may be subject to legal  proceedings  and claims  from time to
time in the  ordinary  course  of our  business,  including  claims  of  alleged
infringement of the trademarks and other  intellectual  property rights of third
parties.  If our services  violate  third-party  proprietary  rights,  we cannot
assure you that we would be able to obtain  licenses to continue  offering  such
services on  commercially  reasonable  terms,  or at all. Any claims  against us
relating to the  infringement  of third-party  proprietary  rights,  even if not
meritorious,  could  result in the  expenditure  of  significant  financial  and
managerial  resources and for injunctions  preventing us from distributing these
services. Such claims could severely harm our financial condition and ability to
compete.

     If we  are  unable  to  license  third-party  technologies  or  effectively
integrate  them, we may  experience  delays in  development  or expansion of our
business.  The e-commerce market is rapidly evolving and we have and will depend
on third-party  software and other technology for the effective operation of our
Web site and  business.  We may not be able to license or renew the  license for
these  technologies  on terms favorable to us or at all. Our inability to obtain
necessary  third-party  licenses  could delay the continued  development  of our
business and services,  which could result in a loss of members, slow our growth
and severely  harm our  business.  In  addition,  even if we are able to license
needed technology,  we may not be able to successfully integrate such technology
into our  operations,  which could also  result in a loss of  members,  slow our
growth and severely harm our business.


                                       3
<PAGE>


Risks Related to the Internet and e-Commerce Industries

     Our growth may be impaired if the Internet is unable to accommodate  growth
in  e-commerce.  Our success  depends on the widespread use of and growth in the
use of the Internet for retrieving,  sharing and transferring  information among
buyers  and  sellers  in the  aviation  parts  market.  If the  Internet  cannot
accommodate growth in e-commerce or experiences periods of poor performance, the
growth of our  business  may  suffer.  Our  ability to sustain  and  improve our
services is  limited,  in part,  by the speed and  reliability  of the  networks
operated by third parties.  Consequently, the emergence and growth of the market
for our  services  is  dependent  on  improvements  being  made to the  Internet
infrastructure  to  alleviate  overloading  and  congestion.  Additionally,  the
possible slow adoption of the Internet as a means of commerce by businesses  may
harm  our  prospects.  Even if the  Internet  is  widely  adopted  as a means of
commerce, the adoption of our network for procurement, particularly by companies
that  have  relied on  traditional  means of  procurement,  will  require  broad
acceptance of e-commerce and online purchasing. In addition, companies that have
already invested substantial resources in traditional methods of procurement, or
in-house  e-commerce  solutions,  may  be  reluctant  to  adopt  our  e-commerce
solution, thus impairing the growth of our member base and revenue potential.

     The security  risks related to  e-commerce  may cause members to reduce the
use of our service,  and attempting to guard against these risks may cause us to
incur  significant  costs and  expenses.  A fundamental  requirement  to conduct
business-to-business  e-commerce is the secure  transmission of information over
public networks. If our members are not confident in the security of e-commerce,
they  may  not  effect   transactions  on  our   e-marketplace  or  renew  their
subscriptions, which would severely harm our business. There can be no guarantee
that  advances  in  computer  capabilities,  new  discoveries  in the  field  of
cryptography,  or other developments will not result in the compromise or breach
of the  algorithms  that  we use to  protect  content  and  transactions  on our
e-marketplace or proprietary information in our databases. We may be required to
incur  significant  costs to protect against  security  breaches or to alleviate
problems caused by breaches.  Further, a well-publicized  compromise of security
could deter people from using the Internet to conduct  transactions that involve
transmitting confidential information. Our failure to prevent security breaches,
or well-publicized  security breaches  affecting the Internet in general,  could
adversely affect the willingness of our members to use our services.

     If our  sellers  fail to  provide  timely  and  accurate  information,  our
membership base and potential  revenue may decline.  Our members use our service
in  large  part  because  of  the  comprehensive  breadth  and  accuracy  of our
databases.  It is our responsibility to load seller product information into our
database and categorize the information  for search  purposes.  However,  we are
dependent  on our  sellers  to  provide  us in a timely  manner  with  accurate,
complete,  and current  information  regarding their product  inventory.  If our
timely  loading of this  information  is  impaired,  this could result in member
dissatisfaction and a loss of members.

     We may not be able to keep up with technological advancements,  which could
result in a loss of  members  and harm our  ability to  compete.  The market for
Internet commerce is characterized by rapid change,  evolving industry standards
and the frequent  introduction of new technological  products and services.  The
introduction of new technology,  products, services or standards may prove to be
too  difficult,  costly or simply  impossible  to  integrate  into our  existing
systems. Moreover,  innovations could render obsolete our existing or any future
products  and  services.  Our  ability to remain  competitive  will also  depend
heavily  upon our ability to maintain  and upgrade our  technology  products and
services.  We must continue to add hardware and enhance  software to accommodate
any increased  content and use of our Web site. If we are unable to increase the
data  storage and  processing  capacity of our systems at least in pace with the
growth in  demand,  our Web site may fail to  operate  at an  optimal  level for
unknown  periods  of time.  As a  relatively  small  company  in the  market for
Internet  commerce,  we will be in a position  of  responding  to  technological
changes  rather  than  establishing  them.  Any  difficulty  keeping  pace  with
technological  advancements  could  hurt  our  ability  to  retain  members  and
effectively compete.

     Because we do not maintain a redundant  system,  any system  failure  could
delay or  interrupt  our  service,  which could  severely  harm our business and
result in a loss of members. Our ability to successfully  maintain an e-commerce
marketplace and provide acceptable levels of customer service depends largely on
the efficient  and  uninterrupted  operation of our computer and  communications
hardware and network systems. Any interruptions could severely harm our business
and result in a loss of members.  Our  computer and  communications  systems are
located in Boca Raton,  Florida.  Although we periodically back up our databases
to tapes and store the backup tapes offsite,  we have not maintained a redundant
site. As a result,  our systems and  operations are  particularly  vulnerable to


                                       4
<PAGE>

damage or interruption from human error, sabotage, fire, flood, hurricane, power
loss,  telecommunications  or equipment  failure,  and similar events. We cannot
assure you that we will not experience system failures in the future.  Moreover,
we have  experienced  delays and  interruptions  in our  telephone  and Internet
access that have prevented members from accessing our e-marketplace and customer
service department.  Furthermore, we do not have a formal disaster recovery plan
and do not carry sufficient business interruption insurance to compensate us for
losses  that may occur as a result of any  system  failure,  and  therefore  the
occurrence  of any  system  failure  or similar  event  could harm our  business
dramatically.


     Defects in the complex  software on which our  services  depend could cause
service  interruptions  that could damage our  reputation and harm our business.
Unlike many  traditional  suppliers and  distributors  of aviation parts, we are
wholly  dependent  on  the  error-free  functioning  of our  Web  site  and  its
associated  software.  Our e-marketplace  depends on complex software  developed
internally  and by  third  parties.  Moreover,  we are  relying  on  third-party
software to implement our  transaction-based  model,  which software has not yet
been integrated into our system.  Software often contains defects,  particularly
when first introduced or when new versions are released.  Our testing procedures
may not discover  software  defects  that affect our new or current  services or
enhancements  until after they are  deployed.  These defects could cause service
interruptions,  which could damage our reputation or increase our service costs,
cause us to lose revenue,  delay market  acceptance,  or divert our  development
resources,  any of which could severely harm our business,  financial condition,
and results of operations.

     We could face liability for information  retrieved from or transmitted over
the internet and  liability for aircraft  products  sold over the  Internet.  We
could be exposed to liability with respect to third-party  information  that may
be  accessible  through our Web site.  If any  third-party  content  information
provided  on our Web site  contains  errors,  consumers  potentially  could make
claims  against us for losses  incurred  in  reliance  on that  information.  In
addition,  because defective  aviation products can result in substantial losses
of property  or life,  we have a  relatively  greater  risk of being  exposed to
product  liability  claims  arising out of or  relating  to  aviation  parts and
products  sold  through  our  Web  site,  which  could  result  in us  incurring
substantial defense costs and, if successful,  liability,  either of which could
severely harm our business.  We currently carry no policies,  which would insure
us against product liability claims.


Risks Related to the Nurse Staffing Business

     We can not predict our success as we have operated our business for a short
period  of  time.  We have a  limited  operating  history,  which  will  make it
difficult for you to evaluate our  performance.  Our prospects will be dependent
upon our  ability  to  effectively  implement  our  business  model and adapt to
changes in the nurse staffing  business.  If our business model is not viable or
if we are unable to identify and address changes in our markets,  we will not be
able to grow our business,  compete effectively or achieve profitability.  These
factors could cause our stock price to fall significantly.

     If  we  are  unable  to  attract   qualified   registered  nurses  for  our
supplemental  nurse staffing business at reasonable costs, it could increase our
operating costs and negatively impact our business. We rely significantly on our
ability to  attract  and  retain  registered  nurses  who  possess  the  skills,
experience and licenses  necessary to meet the  requirements of our hospital and
healthcare  facility  clients.  We  compete  for  registered  nurses  with other
temporary  healthcare  staffing  companies  and with  hospitals  and  healthcare
facilities. We must continually evaluate and expand our registered nurse network
to  keep  pace  with  our  hospital  and  healthcare  facility  clients'  needs.
Currently,  there is a shortage of qualified  nurses in most areas of the United
States,  competition  for nursing  personnel  is  increasing,  and  salaries and
benefits  have risen.  We may be unable to  continue  to increase  the number of
registered  nurses that we recruit,  decreasing  the potential for growth of our
business. Our ability to attract and retain registered nurses depends on several
factors,  including our ability to provide  registered  nurses with  assignments
that they view as attractive and to provide them with  competitive  benefits and
wages.  We cannot  assure you that we will be  successful in any of these areas.
The cost of  attracting  registered  nurses and providing  them with  attractive
benefit  packages may be higher than we anticipate  and, as a result,  if we are
unable to pass these costs on to our hospital clients,  our profitability  could
decline.  Moreover, if we are unable to attract and retain registered nurses the
quality of our services to our hospital clients may decline and, as a result, we
could lose clients.

     We operate in a highly  competitive  market and our success  depends on our
ability to remain  competitive in obtaining and retaining  hospital  clients and
registered   nurses.   The  supplemental   nurse  staffing  business  is  highly


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competitive. We compete in regional and local markets with full-service staffing
companies  and  with  specialized  temporary  staffing  agencies.  Some  of  our
competitors in the  supplemental  nurse staffing sector include  American Mobile
Nurse, Interim Healthcare Services and Nursefinders. Some of these companies may
have greater  marketing and financial  resources than we do. We believe that the
primary  competitive  factors in obtaining  and retaining  hospital  clients are
identifying  qualified  healthcare  professionals for specific job requirements,
providing qualified employees in a timely manner, pricing services competitively
and effectively monitoring employees' job performance. We compete for registered
nurses based on the  quantity,  diversity  and quality of  assignments  offered,
compensation packages and the benefits that we provide. Competition for hospital
clients and  registered  nurses may increase in the future and, as a result,  we
may not be able to remain competitive. To the extent competitors seek to gain or
retain market share by reducing prices or increasing marketing expenditures,  we
could lose  revenues or hospital  clients and our margins could  decline,  which
could  seriously harm our operating  results and cause the price of our stock to
decline. In addition, the development of alternative  recruitment channels could
lead our  hospital  clients to bypass our  services,  which would also cause our
revenues and margins to decline.

     Our  business  depends  upon our ability to secure and fill new orders from
our hospital  clients  because we do not have long-term  agreements or exclusive
contracts with them. We do not have long-term agreements or exclusive guaranteed
order  contracts  with our  hospital  clients.  The  success of our  business is
dependent upon our ability to  continually  secure new orders from hospitals and
to fill those orders with our registered nurse  employees.  Our hospital clients
are free to place  orders  with our  competitors  and  choose  to use  temporary
healthcare  professionals  that our competitors offer them.  Therefore,  we must
maintain  positive  relationships  with  our  hospital  clients.  If we  fail to
maintain positive  relationships with our hospital clients,  we may be unable to
generate new supplemental healthcare professional orders and our business may be
adversely affected.

     Fluctuations  in patient  occupancy  at the  hospital  of our  clients  may
adversely affect the demand for our services and therefore the  profitability of
our  business.  Demand for our  supplemental  healthcare  staffing  services  is
significantly affected by the general level of patient occupancy at our hospital
clients' facilities. When occupancy increases,  supplemental employees are often
added before  full-time  employees are hired. As occupancy  decreases,  hospital
clients   typically  will  reduce  their  use  of  temporary   employees  before
undertaking layoffs of their regular employees.  In addition,  we may experience
more  competitive   pricing  pressure  during  periods  of  occupancy  downturn.
Occupancy  at  our  hospital  clients'  facilities  also  fluctuates  due to the
seasonality of some elective  procedures.  We are unable to predict the level of
patient  occupancy  at any  particular  time and its effect on our  revenues and
earnings.

     Healthcare  reform  could  negatively  impact our  business  opportunities,
revenues and margins.  The U.S.  government  has  undertaken  efforts to control
growing   healthcare  costs  through   legislation,   regulation  and  voluntary
agreements with medical care providers and drug  companies.  In the recent past,
the  U.S.  Congress  has  considered  several  comprehensive  healthcare  reform
proposals.  The proposals were generally intended to expand healthcare  coverage
for the uninsured and reduce the growth of total healthcare expenditures.  While
the U.S. Congress did not adopt any comprehensive  reform proposals,  members of
Congress may raise similar  proposals in the future.  If any of these  proposals
are approved,  hospitals and other  healthcare  facilities may react by spending
less on healthcare  staffing,  including nurses. If this were to occur, we would
have fewer business opportunities, which could have a material adverse effect on
our business.  State  governments  have also  attempted to control the growth of
healthcare  costs.  For  example,   the  state  of  Massachusetts  has  recently
implemented a regulation  that limits the hourly rate paid to temporary  nursing
agencies for registered  nurses,  licensed practical nurses and certified nurses
aides. While the current regulation does not apply to us, if similar regulations
were to be  applied  in  Florida,  our  revenues  and  margins  could  decrease.
Furthermore,  third  party  payors,  such as health  maintenance  organizations,
increasingly challenge the prices charged for medical care. Failure by hospitals
to obtain full  reimbursement  from those third party  payors  could  reduce the
demand or the price paid for our services.

     We operate in a regulated industry and changes in regulations or violations
of regulations  may result in increased costs or sanctions that could reduce our
revenues and profitability.  The healthcare industry is subject to extensive and
complex  federal  and  state  laws  and  regulations   related  to  professional
licensure,  conduct  of  operations,   payment  for  services  and  payment  for
referrals.  If we fail to comply with the laws and regulations that are directly
applicable to our business,  we could suffer civil and/or criminal  penalties or
be subject to injunctions or cease and desist orders.  Our business is generally
not  subject  to the  extensive  and  complex  laws that  apply to our  hospital


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clients,  including  laws  related to Medicare,  Medicaid and other  federal and
state healthcare programs.  However, these laws and regulations could indirectly
affect the demand or the prices paid for our services. For example, our hospital
clients  could suffer civil and/or  criminal  penalties  and/or be excluded from
participating in Medicare,  Medicaid and other healthcare  programs if they fail
to comply  with the laws and  regulations  applicable  to their  businesses.  In
addition,  our hospital  clients  could  receive  reduced  reimbursements  or be
excluded from  coverage,  because of a change in the rates or conditions  set by
federal or state  governments.  In turn,  violations of or changes to these laws
and regulations  that adversely affect our hospital clients could also adversely
affect  the  prices  that  these  clients  are  willing  or  able to pay for our
services.

     Significant legal actions could subject us to substantial  liabilities.  In
recent years, our hospital  clients have become subject to an increasing  number
of legal actions  alleging  malpractice or related legal  theories.  Because our
registered  nurses  provide  medical  care,  claims may be brought  against  our
registered nurses and us relating to the quality of medical care provided by our
registered nurse employees while on assignment at our hospital  clients.  We and
our  registered  nurse  employees  may at  times  be  named  in  these  lawsuits
regardless of our  contractual  obligations  or the standard of care provided by
our  registered  nurses.  In some  instances,  we may be required  to  indemnify
hospital  clients  contractually  against some or all of these  potential  legal
actions.  Also,  because  our  registered  nurses are our  employees,  we may be
subject to various  employment  claims and  contractual  disputes  regarding the
terms of a registered nurse's employment. We have two layers of professional and
general  liability  coverage.  The professional and general  liability  coverage
consists of primary  coverage  with limits of $1 million per  occurrence  and $3
million in the  aggregate  and an  umbrella  policy  with  limits of $5 million.
However,  our insurance coverage may not cover all claims against us or continue
to be available to us at a reasonable  cost. Also, we may not be able to pass on
all or any portion of increased  insurance costs to our hospital clients.  If we
are unable to  maintain  adequate  insurance  coverage  or if any claims are not
covered by insurance, we may be exposed to substantial liabilities.

     We may be legally liable for damages  resulting from our hospital  clients'
mistreatment  of our  healthcare  personnel.  Because we are in the  business of
placing our  registered  nurses in the  workplaces  of other  companies,  we are
subject to possible  claims by our registered  nurses  alleging  discrimination,
sexual  harassment,  negligence  and other  similar  activities  by our hospital
clients.  The  cost of  defending  such  claims,  even if  groundless,  could be
substantial and the associated  negative  publicity  could adversely  affect our
ability to attract and retain qualified individuals in the future.

     Difficulties in developing and  maintaining our management  information and
communications   systems  may  result  in   increased   costs  that  reduce  our
profitability.  Our ability to deliver  our  staffing  services to our  hospital
clients  and manage our  internal  systems  depends to a large  extent  upon the
performance of our management information and communications systems,  currently
under development. If these systems do not adequately support our operations, or
if we are required to incur  significant  additional costs to maintain or expand
these systems,  our business and financial results could be materially adversely
affected.

     Our  operations  may  deteriorate  if we are unable to continue to attract,
develop  and retain our sales  personnel.  Our  success  is  dependent  upon the
performance of our sales  personnel,  especially  client  registered nurse sales
managers,   hospital  account   coordinators  and  recruiters.   The  number  of
individuals  who meet our  qualifications  for these positions is limited and we
may experience  difficulty in attracting qualified  candidates.  In addition, we
commit substantial  resources to the training,  development and support of these
individuals.  Competition  for qualified sales personnel in the line of business
in which we  operate  is  strong  and there is a risk that we may not be able to
retain  our sales  personnel  after we have  expended  the time and  expense  to
recruit and train them.


Risks Associated with Potential Acquisitions or Investments

     We may acquire or make  investments  in businesses,  products,  services or
technologies  some of which may not be  complementary  or related to our current
businesses.  From time to time we may have discussions with companies  regarding
our  acquiring,  or  investing  in,  their  businesses,  products,  services  or


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technologies.  We cannot  assure you that we will be able to  identify  suitable
acquisition  or  investment   candidates.   Even  if  we  do  identify  suitable
candidates,  we  cannot  assure  you  that we will  be able to  consummate  such
acquisitions  or  investments  on  commercially  acceptable  terms.  If we buy a
company,  we could have difficulty in assimilating that company's  personnel and
operations.  In addition,  the key personnel of the acquired  company may decide
not to work for us.  If we make  other  types  of  acquisitions,  we could  have
difficulty in assimilating the acquired products,  services or technologies into
our operations.  These difficulties could disrupt our ongoing business, distract
our  management and  employees,  increase our expenses and adversely  affect our
results  of  operations  due  to  accounting   requirements  such  as  goodwill.
Furthermore,  we may incur debt or issue equity securities to pay for any future
acquisitions.  The  issuance  of  equity  securities  could be  dilutive  to our
existing  stockholders.  We do not  have  established  criteria  for  evaluating
acquisition or investment opportunities.

     Future growth of our  operations may make  additional  capital or financing
necessary.  We anticipate  that we have  sufficient  working capital to meet our
working capital needs for at least the next 12 months.  However,  we may need to
raise additional funds in the future in order to:

o        Finance unanticipated working capital requirements;
o        Develop or enhance existing services or products;
o        Respond to competitive pressures; and
o        Acquire complementary businesses, technologies, content or products.

     We  cannot  be  certain  that we will be able to  obtain  needed  funds  on
favorable  terms,  if at all. If we decide to raise funds by issuing  additional
equity  securities,  investors  in our common  stock may  experience  additional
dilution.

     We may be unable to obtain  sufficient  funds to  effectively  operate  our
business,  which could damage our competitive  position. In the rapidly evolving
and highly  competitive  e-commerce  industry,  our future prospects will depend
heavily on our  ability to take  advantage  of new  business  opportunities  and
respond to technological  developments.  There can be no assurances that we will
have  sufficient  capital  resources  to  respond  to  business   opportunities,
technological   advancements  and  competitive  pressures.  A  lack  of  capital
resources could seriously damage our competitive position and prospects.

     You may experience significant volatility in the market value of our shares
and may be unable to sell our stock on terms  favorable to you.  Because we have
no history of  profitability,  it will be difficult  for investors in the public
market to determine the intrinsic value of our shares.  In addition,  our market
capitalization  and public float is small relative to other public  companies in
the business-to-business  e-commerce or other sectors. As a result, the price at
which our common  stock trades may be more  volatile  than those of other public
companies  and, as a result,  it may be more difficult for you to sell our stock
on terms favorable to you. In addition, any significant volatility in the market
price of our common stock could result in the  initiation  of  securities  class
action  litigation,  which could divert our management  and financial  resources
from more productive uses.


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