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 September 30, 2001

                                       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)



                              621 N.W. 53rd Street
                         Boca Raton, Florida 33487-8242
                    (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 14,003,620  shares of its common stock,
no par value, outstanding as of the close of business on November 1, 2001.


<PAGE>



                                 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 ................            9

 ITEM 3.   Quantitative and Qualitative Disclosure about Market Risk       13


PART II-  OTHER INFORMATION

 ITEM 1.   Legal Proceedings ....................................          14

 ITEM 2.   Changes in Securities ................................          15

 ITEM 3.   Default Upon Senior Securities .......................          15

 ITEM 4.   Submission of Matters to a Vote of Security Holders ..          15

 ITEM 5.   Other Information ....................................          15

 ITEM 6.   Exhibits and Reports on Form 8-K .....................          15

 SIGNATURES .....................................................          16

























                                       2
<PAGE>






PART I  FINANCIAL INFORMATION

Item 1.  Financial Statements

<TABLE>

                                 PARTSBASE, INC.
                            Condensed Balance Sheets
                                   (Unaudited)

<CAPTION>

                                                                        September 30,         December 31,
                                                                            2001                 2000
                                                                         ------------         ------------

Assets:
Current assets:
<S>                                                                    <C>                   <C>
Cash and cash equivalents ..........................................   $  8,079,412          $ 23,045,491
Accounts receivable, net of allowance of $140,840
 and  $221,559 at September 30, 2001 and December 31, 2000 .........        362,267             1,510,645
Marketable debt securities, at amortized cost ......................     16,892,742             7,139,052
Prepaid expenses and other current assets ..........................        386,788               647,213
                                                                        ------------          ------------
            Total current assets ...................................     25,721,209            32,342,401
Property and equipment, net ........................................      2,789,882             3,655,310
Certificates of deposit - restricted cash ..........................      2,153,258               524,008
Other assets .......................................................         35,686               629,387
                                                                        ------------          ------------
                 Total assets ......................................   $ 30,700,035          $ 37,151,106
                                                                        ============          ============

Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable ...................................................   $    300,738          $  1,075,032
Accrued expenses and other current liabilities .....................        438,446               419,696
Deferred revenue, net ..............................................      2,412,787             3,219,422
                                                                        ------------          ------------
            Total current liabilities ..............................      3,151,971             4,714,150

Other liabilities ..................................................         83,049                89,055
                                                                        ------------          ------------
            Total liabilities ......................................      3,235,020             4,803,205
                                                                        ------------          ------------

Commitments and Contingencies

Stockholders' equity:
Preferred stock ....................................................             --                    --
Common stock, no par ...............................................             --                    --
Additional paid-in capital .........................................     53,427,144            55,478,819
Treasury stock, at cost ............................................             --              (330,202)
Accumulated deficit ................................................    (25,759,236)          (21,216,659)
Unearned compensation ..............................................       (202,893)           (1,584,057)
                                                                        ------------          ------------
            Total stockholders' equity .............................     27,465,015            32,347,901
                                                                        ------------          ------------
                 Total liabilities and stockholders' equity ........   $ 30,700,035          $ 37,151,106
                                                                        ===========           ============


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

</TABLE>


                                       3
<PAGE>


<TABLE>

                                                           PARTSBASE, INC.
                                                  Condensed Statements of Operations
                                                              (Unaudited)



<CAPTION>
                                                   Three Months Ended                Nine Months Ended
                                                      September 30,                    September 30,
                                              -----------------------------      -----------------------------
                                                  2001             2000                2001            2000
                                              ------------    ------------        ------------    ------------

<S>                                           <C>             <C>                <C>             <C>
Net revenues ..............................   $  1,343,649    $  1,227,610       $  4,296,715    $  2,711,747
Cost of revenues ..........................        885,225       1,661,711          3,450,026       3,867,711
                                               ------------    ------------       ------------    ------------
Gross profit (loss) .......................        458,424        (434,101)           846,689      (1,155,964)
                                               ------------    ------------       ------------    ------------
Operating expenses:
General and administrative expenses .......      1,441,207       2,885,824          5,755,774       6,408,950
Stock-based compensation expense ..........         98,610         612,937            276,614       3,092,108
Litigation and other related costs ........             --              --            457,500              --
                                               ------------    ------------       ------------    ------------
Total operating expenses ..................      1,539,817       3,498,761          6,489,888       9,501,058
                                               ------------    ------------       ------------    ------------

Operating loss ............................     (1,081,393)     (3,932,862)        (5,643,199)    (10,657,022)
Other income, net .........................        303,522         592,141          1,100,622       1,209,173
                                               ------------    ------------       ------------    ------------
Net loss .................................    $   (777,871)   $ (3,340,721)      $ (4,542,577)   $ (9,447,849)
                                               ============    ============       ============    ============

Basic and diluted net loss per share .....    $      (0.06)   $      (0.24)      $      (0.32)   $      (0.75)
                                               ============    ============       ============    ============
Weighted average of common shares
 outstanding .............................      14,029,387      14,094,030         14,144,372      12,642,482
                                               ============    ============       ============    ============

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

</TABLE>


                                       4
<PAGE>

<TABLE>

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


<CAPTION>
                                                                      NINE MONTHS ENDED
                                                                         September 30,
                                                               --------------------------------
                                                                      2001            2000
                                                                 ------------    ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                              <C>             <C>
Net loss ....................................................    $ (4,542,577)   $ (9,447,849)
Adjustments to reconcile net loss to net cash used in
 operating activities:
   Depreciation and amortization ............................         660,989         589,960
   Provision for doubtful accounts ..........................         674,805              --
   Provision for litigation and other related costs..........         457,500              --
   Recognition of unearned compensation .....................         276,309       3,092,108
   Changes in assets and liabilities:
     Accounts receivable ....................................          (4,038)       (717,828)
     Prepaid expenses and other current assets ..............         439,767        (401,681)
     Deferred charges and other assets ......................         497,424         (37,448)
     Accounts payable .......................................        (491,208)       (136,557)
     Accrued expenses and other current liabilities .........        (438,750)        313,886
     Deferred revenue, net ..................................        (329,024)      1,478,619
     Other liabilities ......................................          (6,006)             --
                                                                  ------------    ------------
Net cash used in operating activities .......................      (2,804,809)     (5,266,790)
                                                                  ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ........................................        (161,817)     (1,688,589)
Web site development costs ..................................              --         (24,000)
Maturities of marketable debt securities ....................       4,118,965              --
Purchase of marketable debt securities ......................     (13,872,550)     (7,040,431)
Purchase of certificate of deposit-restricted cash  .........      (1,629,250)             --
                                                                  ------------    ------------
Net cash used in investing activities .......................     (11,544,652)     (8,753,020)
                                                                  ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net .................              --      40,879,932
Purchase of treasury stock ..................................        (795,544)         (3,332)
Exercise of employee non-qualified stock options ............         178,926              --
Paid-in capital .............................................              --          32,503
                                                                  ------------    ------------
Net cash (used in) provided by financing activities .........        (616,618)     40,909,103
                                                                  ------------    ------------


Net change in cash and cash equivalents .....................     (14,966,079)     26,889,293
Cash and cash equivalents at beginning of period ............      23,045,491         735,276
                                                                  ------------    ------------
Cash and cash equivalents at end of period ..................    $  8,079,412    $ 27,624,569
                                                                  ============    ============




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

</TABLE>




                                       5
<PAGE>





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


The Company and Basis of Presentation

     PartsBase,   Inc.  ("PartsBase"  or  the  "Company"),   formerly  known  as
PartsBase.com,  Inc.,  is an online  provider of  Internet  business-to-business
e-commerce   services  for  the  aviation   industry.   The   Company's   global
e-marketplace  provides a means for aviation parts buyers and sellers to buy and
sell new, repaired and overhauled  aviation parts,  list products,  services and
catalogs, and hold auctions for slow moving and excess inventory.

     The Company was  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 affect a change in the state of  incorporation  of the Company
from Texas to Delaware.

     The accompanying  unaudited condensed interim financial  statements reflect
all  adjustments,  which in the opinion of  management  are necessary for a fair
presentation of the results of operations for the periods shown.  The 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, 2000.

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.

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
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 and nine month periods
ended September 30, 2001 and 2000,  common share equivalents are not included in
the  computation of diluted loss per share since  inclusion of such shares would
be anti-dilutive.


                                       6
<PAGE>



Marketable Securities

     The Company's  marketable  securities,  whose  maturities are typically one
year or less, are held to maturity and valued at amortized cost.  Investments in
securities  are  summarized  as follows at  September  30, 2001 and December 31,
2000:
<TABLE>
<CAPTION>

                                                       Gross Unrealized    Gross Unrealized       Amortized
                                        Fair Value       Holding Gains       Holding Losses          Cost
                                      -------------    ----------------    ----------------    --------------

September 30, 2001:
Current:
<S>                                   <C>              <C>                  <C>                 <C>
Corporate debt securities ........... $  1,879,078     $     7,887          $   (92,000)        $  1,963,191
Investment grade bond funds .........   15,051,998         130,230               (7,783)          14,929,551
                                       -----------      ----------           -----------         -----------
Totals .............................. $ 16,931,076     $   138,117          $   (99,783)        $ 16,892,742
                                       ===========      ==========           ===========         ===========

December 31, 2000:
Current:
U.S. government agencies ............ $   774,162      $       939          $        --         $    773,223
Corporate debt securities ...........   6,440,416           74,587                   --            6,365,829
                                       -----------      ----------           -----------         -----------
Totals .............................. $ 7,214,578      $    75,526          $        --         $  7,139,052
                                       ==========       ==========           ===========        ============
Non-Current:
Corporate debt securities ........... $   500,110      $        --          $    (1,741)        $    501,851
                                       ==========       ==========           ===========        ============
</TABLE>

     On January 15, 2001, corporate debt securities owned by the Company, issued
by a State of California  electrical utility (the "Utility"),  with a face value
of $400,000  and  maturing on January  15,  2001,  were  defaulted  on.  Moody's
Investor  Service  subsequently  lowered the securities debt rating to Caa3. The
current fair value of this security as of September 30, 2001, was $308,000.  The
Utility is currently  in  negotiations  with its banks and the Public  Utilities
Commission of California to resolve its financial  difficulties  and pay amounts
owed to its secured and unsecured  creditors.  While there can be no assurances,
the Company  currently  believes  that it is probable it will be able to collect
all amounts  due the  Company  according  to the  contractual  terms of the debt
security.  On April 19, 2001 outstanding accrued interest on this obligation was
paid to the  Company  and,  as a result,  the  decline in fair value of the debt
security is judged to be temporary as of September 30, 2001.

Segment Information

     Based on the criteria  established  by  Statement  of Financial  Accounting
Standards  ("SFAS")  No.131,  "Disclosures  about  Segments of an Enterprise and
Related  Information," the Company currently  operates in one principal business
segment globally, the development and marketing of an online marketplace for the
purchasing and distribution of products.

     Summarized  information  by  revenue  source  as  excerpted  from  internal
management reports is as follows (in thousands):

                          Three Months Ended         Nine Months
                                Sept 30,             Ended Sept 30,
                        ----------------------    ---------------------
                           2001        2000          2001       2000
                         ---------- -----------   ---------- ----------
Net revenues:
Advertising              $    74     $    39       $   336    $   141
Subscriptions              1,251       1,169         3,936      2,534
Other                         19          20            25         37
                          ------      ------        ------     ------
 Total                   $ 1,344     $ 1,228       $ 4,297    $ 2,712
                          ======      ======        ======     ======


Reclassifications

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


                                       7
<PAGE>


Commitments and Contingencies

     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 expires October 31, 2006. In lieu of a security deposit,  the
Company has invested in  Certificates  of Deposit in the amounts of $434,000 and
$500,000 as of September 30, 2001 and December 31, 2001,  respectively,  and has
pledged such  certificates  as collateral for an  irrevocable  standby letter of
credit in favor of the  Sublessor.  Such amounts are classified as a certificate
of  deposit-restricted  cash on the  accompanying  balance  sheets.  The standby
letter of credit decreases incrementally $65,000 to $70,000 per year until lease
expiration. From the commencement date of the sublease through February 28, 2001
the Company was  obligated  to pay rent on only 25,000  square  feet.  Effective
March 1, 2001 the  Company  became  obligated  to pay all  minimum  annual  rent
required by the prime lease.

     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,  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-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  through
May 15,  2001.  Commencing  with the payment due June 15, 2001,  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 was also obligated to obtain, and delivered to, USAIS on March 20, 2001,
an  irrevocable,  transferable  standby  Letter  of  Credit  in  the  amount  of
$1,665,000,  collateralized by a certificate of deposit of the same amount which
is classified as Certificate of deposit-restricted  cash on the balance sheet in
the accompanying condensed financial statements at September 30, 2001.

     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.

     In December 2000, a third party (the "Third Party"),  unaffiliated with the
Company,  instituted arbitration against the Company in Dallas, Texas based upon
allegations  that  it  breached  a  February  18,  2000  professional   services
agreement. The Third Party claimed damages of $308,083 plus un-liquidated damage
amounts for copyright  infringement,  interest,  attorneys' fees and costs.  The
Company filed a  counterclaim  denying the breach and claiming  entitlement to a
refund of $73,496  previously  paid to the Third Party plus  damages of $250,000
because of the Third  Party's  breach of its  obligations  to the Company.  This
matter was settled on June 30, 2001,  resulting in the Company making a $175,000
payment to the Third Party.  The  settlement is included in litigation and other
related costs in the statement of operations for the nine months ended September
30, 2001.

     In April and May 2001,  the Company  received  notice of or has 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,


                                       8
<PAGE>

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
allege the Company's March 2000 registration statement misrepresented and failed
to disclose matters related to the Company's business  operations and membership
sales.  The  consolidated  lawsuit  seeks damages and  certification  of 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 believes that
the  allegations  contained in the  consolidated  lawsuit are without  merit and
intends  to  vigorously  defend  this  action.   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  $200,000.  The  Company  fully  expects  its legal  expenses  to exceed  the
retention  amount.  Therefore  at June 30,  2001,  the  Company  has  recorded a
litigation  reserve for $200,000 to cover the expected  retention.  This reserve
has been  included in  litigation  and other  related  costs in the statement of
operations for the nine months ended September 30, 2001. During the three months
and nine months ended September 30, 2001, $45,079 and $129,014, respectively, of
legal charges have been incurred.

     An  additional  reserve  was  established  for  $30,000 as of June 30, 2000
relating  to a lawsuit  filed and served on the  Company in July 2001 by a third
party  information   technology  vendor  claiming  damages  resulting  from  the
Company's alleged breach of a software sales and service  contract.  This amount
is included in litigation and other related costs in the statement of operations
for the nine months ended  September 30, 2001. 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.

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

     PartsBase,   Inc.   ("PartsBase"  or  the  "Company")   formerly  known  as
PartsBase.com,  Inc.,  is an online  provider of  Internet  business-to-business
e-commerce   services  for  the  aviation   industry.   The   Company's   global
e-marketplace  provides a means for aviation parts buyers and sellers to buy and
sell new, repaired and overhauled  aviation parts,  list products,  services and
catalogs,  and hold  auctions for slow moving and excess  inventory.  In October
2001,  the Company  commenced  exploring the  possibility  of entering the nurse
staffing  services  business.  To date, the Company has not derived any material
revenues  nor  incurred  many  material   expenses  in  connection   with  these
activities.

     The Company was  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 affect a change in the state of  incorporation  of the Company
from Texas to Delaware.


                                       9
<PAGE>

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
were  $1,343,649  and  $4,296,715 for the third quarter and first nine months of
2001,  respectively,  compared to $1,227,610 and $2,711,747 for the same periods
in 2000, an increase of 9% and 58%,  respectively.  During the third quarter and
first nine months of 2001,  PartsBase signed up 282 and 1,435 new subscribers at
an average subscription fee of $1,675 and $1,490, respectively.  During the same
periods,  427 and 1,155 subscribers  renewed their subscription for another year
at an average subscription fee of $1,368 and $1,316, respectively. The aggregate
average  subscription fee of both new and renewal  subscribers  during the third
quarter and first nine months of 2001 was $1,547 and $1,412, respectively.

     During the third quarter and first nine months of 2000, PartsBase signed up
527 and 2,642 new  subscribers  at an  average  subscription  fee of $1,780  and
$1,345, respectively. In addition, during the third quarter of 2000, 519 members
renewed  their  subscriptions  for another  year at the  average  renewal fee of
$1,390. The average subscription fee increased during the nine month period 2001
over the same  period  in 2000,  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. The average subscription
fee for the quarter ended  September 30, 2001 was minimally less,  $1,584,  than
the average fee of the comparable  period of the prior year,  $1,586.  Given the
finite size of the aerospace community,  the number of new subscribers signed up
in 2001 decreased compared to 2000.

     At September 30, 2001 PartsBase had 3,315 paying subscribers as compared to
4,056 paying subscribers at June 30, 2001, 4,837 paying subscribers at March 31,
2001,  4,756  paying   subscribers  at  December  31,  2000,  and  4,594  paying
subscribers  at September 30, 2000. The subscriber  count  decreased  during the
third quarter of 2001 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 427  subscribers  who renewed  their
subscriptions during the third quarter, 197 represent those subscribers renewing
for the second time,  representing  38% of the new subscribers  initially signed
during the third quarter of 1999. Additionally, of the 427 subscriptions renewed
during the quarter, 230 represent those subscribers renewing for the first time,
or 44% of those new  subscribers  during the third quarter of 2000.  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 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  $1,125,229  and  $3,993,137 for the third quarter and
first nine months of 2001,  respectively,  compared to $1,660,252 and $4,273,517
for the same  periods  in 2000,  a  decrease  of 32% and 7%,  respectively.  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 2000.


     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
decreased to  $2,412,787  at September  30, 2001,  compared to  $3,219,422 as of
December 31, 2000, and $2,742,619 at September 30, 2000.

                                       10
<PAGE>

     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>

<CAPTION>
                                                            PartsBase, Inc.
                                                 ------------------------------------
                                                   Revenue Detail by Quarter (000's)

                                         09/30/00    12/31/00   03/31/01    06/30/01   09/30/01
                                         --------    --------   --------    --------   --------
<S>                                          <C>       <C>        <C>           <C>      <C>
New Subscriptions                            $873      $1,196     $1,048        $729     $  492
Renewal Subscriptions                         734         887        509         387        591
Advertising                                    48          20         60          89         27
Other                                           5          --         43           2         15
                                       ----------- ----------- ---------- ----------- ----------
Total Gross Revenue                        $1,660      $2,103     $1,660      $1,207     $1,125
                                       =========== =========== ========== =========== ==========
Sequential Gross Rev. Growth                  27%         27%      (21%)       (27%)       (7%)
                                       =========== =========== ========== =========== ==========
Total Net Revenue                          $1,228      $1,386     $1,599      $1,354     $1,344
                                       =========== =========== ========== =========== ==========
Sequential Net Rev. Growth                    31%         13%        15%       (15%)       (1%)
                                       =========== =========== ========== =========== ==========
Salesperson Compensation                     $720      $1,109       $730        $484       $398
                                       =========== =========== ========== =========== ==========
Sales Comp/Gross Revenue                      43%         53%        44%         40%        35%
                                       =========== =========== ========== =========== ==========
Deferred Revenue Balance                   $2,742      $3,219     $3,175      $2,731    $ 2,413
                                       =========== =========== ========== =========== ==========

</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 $885,225 and $3,450,026 for the third
quarter and first nine months of 2001, respectively,  compared to $1,661,711 and
$3,867,711 for the same periods in 2000. As a percent of net revenues,  costs of
revenues  were 66% and 80% for the third  quarter and first nine months of 2001,
respectively,  compared  to  135%  and  143%  for  the  same  periods  in  2000.
Salesperson compensation in the third quarter and first nine months of 2001 as a
percentage of gross revenue was 35% and 38%, respectively.  This compares to 43%
and 47%,  respectively,  in the third  quarter  and first  nine  months of 2000.
Salesperson  compensation  as a percentage of gross revenue is starting to trend
back  downwards,  as renewals,  for which the commission  rate is  substantially
lower than new subscriptions, comprise a greater portion of gross revenues.

     At September 30, 2001,  PartsBase employed 83 persons in sales and customer
service,  compared to 130 persons at September 30, 2000. Additionally,  included
in cost of  revenues  in the third  quarter  and first  nine  months of 2001 was
$180,000 and $749,083,  respectively, for contract payments to a third party for
government  procurement  data and  $301,000  for both the three  months and nine
months ended  September  30, 2000  respectively.  In the third quarter and first
nine months of 2000, $25,176 and $295,181 respectively, was incurred for initial
start-up  costs  relating to  transactional  software the Company had purchased.
Such costs were not incurred in the same periods in 2001.

General and Administrative Expenses

     General  and  administrative  expenses  were  $1,441,207  or  107%  of  net
revenues, for the third quarter of 2001, and $2,885,824 or 235% of net revenues,
for the third quarter of 2000, respectively. General and administrative expenses
consisted primarily of personnel costs of $765,832 and $1,873,679,  rent expense
of $150,519 and $157,008, advertising costs of $0 and $152,889, bad debt expense
of  $123,560  and  $60,016,  and other  costs  totaling  $401,296  and  $642,232
consisting  of  professional  fees,   utilities,   supplies  and  other  related
administrative costs, for the third quarter of 2001 and 2000, respectively.

                                       11
<PAGE>

     General  and  administrative  expenses  were  $5,755,774  or  134%  of  net
revenues,  for the first  nine  months of 2001,  and  $6,408,950  or 236% of net
revenues,  for  the  first  nine  months  of  2000,  respectively.  General  and
administrative expenses consisted primarily of personnel costs of $3,339,450 and
$3,500,355, rent expense of $529,876 and $304,098,  advertising costs of $96,843
and $701,059, bad debt expense of $674,805 and $169,329 and other costs totaling
$1,572,300 and $1,734,109 consisting of professional fees,  utilities,  supplies
and other related  administrative  costs,  for the first nine months of 2001 and
2000, respectively.

     The decrease in other costs for the nine months ended  September  30, 2001,
compared to the same period of the prior year,  is primarily  attributable  to a
decrease of $245,059 in amortization of deferred  financing  costs.  The Company
made significant  personnel  reductions during the first nine months of 2001. In
addition,  during the first nine months of 2001,  depending on salary level, all
remaining  salaried  personnel  took a pay reduction,  ranging from 5%-30%.  The
Company  expects that its personnel  costs will continue to decrease  during the
remainder  of 2001.  The  increase in bad debt  expense for current  quarter and
first nine months of the year,  compared to the same  periods of the prior year,
relates to the  Company's  policy 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,   the  Company
significantly  tightened its deal verification  processes,  and expects that its
bad debt expense will begin to decrease during the remainder of 2001.

     At September 30, 2001,  PartsBase employed 28 persons in administrative and
executive management positions, compared to 53 persons at September 30, 2000.

Stock-Based Compensation Expense

     In connection  with the issuance of employee  stock options issued prior to
our IPO, stock-based compensation expense of $98,610 and $612,937 was recognized
in the third quarter 2001 and 2000,  respectively,  and $276,614 and  $3,092,108
during the first nine  months of 2001 and 2000,  respectively.  The  significant
decrease  in the  current  quarter  and first nine  months  compared to the same
periods  of the prior  year was a result of a  decrease  in the number of shares
vesting by employees. Stock based compensation expense will continue to decrease
each quarter until fully recognized by April 2002.

Litigation and Other Related Costs

     Litigation  and other  related  costs of $457,500 and $0 for the first nine
months of 2001 and 2000,  respectively,  consist of a provision  for $200,000 to
cover expected retention costs associated with class action lawsuits the Company
is party to as well as  $257,500  made  during the first nine  months of 2001 to
settle or accrue for  litigation and other related  costs.  No additional  costs
were incurred during the three months ended September 30, 2001.

Other Income, Net

     Other income,  net,  consisting  primarily of interest and dividend income,
was $303,522 and $1,100,622 for the third quarter and first nine months of 2001,
respectively,  compared to $592,141  and  $1,209,173  for the third  quarter and
first nine months of 2000,  respectively.  The decrease in other income, net for
the  current  periods  compared to the  comparable  periods of the prior year is
attributable  to  lower  cash  balances  and  interest  rates  on the  Company's
investments and cash equivalents.

Net Loss

     As a result  of the  foregoing,  the net loss  decreased  to  $777,871  and
$4,542,577  for the third  quarter  and first nine  months of 2001,  compared to
$3,340,721 and $9,447,849 for same periods in 2000.


                                       12
<PAGE>



Liquidity and Capital Resources

Financial Condition

     As of  September  30,  2001,  the Company had  $8,079,412  of cash and cash
equivalents,  restricted cash totaling $2,153,258, and $16,892,742 of marketable
debt  securities.  At September 30, 2001, the Company had $22,569,238 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
technologies,  which may require the use of cash. The Company  believes that its
existing  cash and cash  equivalents  and  marketable  debt  securities  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  $2,804,809  for the nine
months  ended  September  30,  2001  compared  to net  cash  used  in  operating
activities  of  $5,266,790  for the  comparable  period of the prior  year.  The
current period decrease in cash used reflects a decrease of $713,790 in accounts
receivable, primarily the result of improvements in collecting customer balances
and a reduction in prepaid  expenses and other  current  assets of $841,448 as a
result of the utilization of services,  notably rent,  during the current period
which were previously prepaid. This decrease is offset by a decrease of $354,651
in accounts payable due to increased pay downs of vendor balances and an overall
contraction in Company spending.

     Net cash used in  investing  activities  totaled  $11,544,652  for the nine
months  ended  September  30,  2001  compared  to net  cash  used  in  investing
activities  of  $8,753,020  for the  comparable  period of the prior  year.  The
current  period  increase of  $2,791,632 in cash used is primarily the result of
the  purchase of  marketable  debt  securities  in order to maximize the rate of
return on cash in excess of current requirements.

     Net cash used in financing  activities totaled $616,618 for the nine months
ended September 30, 2001, compared to net cash provided by financing  activities
totaling  $40,909,103  for the  comparable  period  of  2000.  The  decrease  of
$41,525,721  in cash provided  during the current period is primarily the result
of net proceeds  received by PartsBase in connection with the issuance of common
stock  related to the Company's  IPO during the  comparable  period of the prior
year. In addition,  during the nine months ended September 30, 2001, the Company
repurchased shares of its no par common stock at a cost of $795,544.

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 September  30,  2001,  PartsBase's  portfolio  consisted  of  investments  in
institutional money market funds,  corporate bonds rated A or higher at the time
of purchase and investment grade bond 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 and change in the market  values
of its  investments.  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


                                       13
<PAGE>

interest  rates or the Company may suffer  losses in principal if forced to sell
securities that have declined in market value 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.


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.

     In December 2000, a third party (the "Third Party"),  unaffiliated with the
Company,  instituted arbitration against the Company in Dallas, Texas based upon
allegations that the Company breached a February 18, 2000 professional  services
agreement. The Third Party claimed damages of $308,083 plus un-liquidated damage
amounts for copyright  infringement,  interest,  attorneys' fees and costs.  The
Company filed a  counterclaim  denying the breach and claiming  entitlement to a
refund of $73,496  previously  paid to the Third Party plus  damages of $250,000
because of the Third  Party's  breach of its  obligations  to the Company.  This
matter  was  settled  on June 30,  2001,  resulting  with the  Company  making a
$175,000  payment  to the  Third  Party.  This  settlement  is  classified  as a
litigation  expense in the  statement  of  operations  for the nine months ended
September 30, 2001.

     In April and May 2001,  the Company  received  notice of or has 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
allege the Company's March 2000 registration statement misrepresented and failed
to disclose matters related to the Company's business  operations and membership
sales.  The  consolidated  lawsuit  seeks damages and  certification  of 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 believes that
the  allegations  contained in the  consolidated  lawsuit are without  merit and
intends  to  vigorously  defend  this  action.   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  $200,000.  The  Company  fully  expects  its legal  expenses  to exceed  the
retention  amount.  Therefore  at June 30,  2001,  the  Company  has  recorded a
litigation  reserve for $200,000 to cover the expected  retention.  This reserve
has been  included in  litigation  and other  related  costs in the statement of
operations for the nine months ended September 30, 2001. During the three months
and nine months ended September 30, 2001, $45,079 and $129,014, respectively, of
legal charges have been incurred.


                                       14
<PAGE>

     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.

     An  additional  reserve  was  established  for  $30,000 as of June 30, 2000
relating  to a  lawsuit  filed  and  served  on the  Company  in July 2001 by an
information  technology  vendor  claiming  damages  resulting from the Company's
alleged breach of a software sales and service contract. This amount is included
in litigation  and other  related  costs in the statement of operations  for the
nine months ended September 30, 2001. 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.


Item 2.  Changes in Securities
------------------------------

     During the nine months ended  September 30, 2001,  the Company  repurchased
538,120  shares of its common stock in the open market at an aggregate  purchase
price of $795,544, inclusive of brokerage fees. All of these shares were retired
as of September 30, 2001.

     During the quarter ended  September 30, 2001,  the Company issued no shares
of its common stock pursuant to the exercise of stock options  granted  pursuant
to the Company's 1999 Stock Option Plan (the " 1999 Plan").  For the nine months
ended  September 30, 2001, the Company issued 286,260 shares of its common stock
pursuant to the exercise of stock options and generated gross exercise  proceeds
of $178,926.

Item 3.  Defaults Upon Senior Securities
----------------------------------------

         None.

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

         None.

Item 5.  Other Information
--------------------------

     In August 2001, the Company received notice from the Nasdaq National Market
warning  that its 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 was provided 90 calendar days, or
until  November 12, 2001 to regain  compliance.  On September  27, 2001,  Nasdaq
announced an across the board  moratorium on minimum bid requirements and public
float requirements for continued listing on Nasdaq.



Item 6.   Exhibits and Reports on Form 8-K
------------------------------------------

         None.



                                       15
<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:  November 14, 2001                /s/ Robert A. Hammond
                                        ---------------------
                                        ROBERT A. HAMMOND, JR.
                                        President, Chief Executive Officer,
                                        And Chairman
                                        (Principal Executive Officer)


Date:  November 14, 2001                /s/ Mark Weicher
                                        ----------------
                                        MARK WEICHER
                                        Chief Financial Officer
                                        (Principal Financial Accounting Officer)



                                       16
<PAGE>


                                 PARTSBASE, INC.

                                Index to Exhibits


Title                                                         Exhibit No.
---------------------------------------                       ------------

Safe Harbor Compliance Statement                                     99.1


                                       17
<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.

                 RISKS RELATING TO OUR COMPANY AND OUR 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 2001. We
may be unable to ever achieve  profitability in the future. We have incurred net
losses  in each  accounting  period  since we began  operations  in April  1996,
totaling  $25,759,235  as of  September  30,  2001.  We will  need  to  generate
significant revenues and reduce our expenses to achieve profitability.  Although
our 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 our 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
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
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.  While we
have  experienced  increases in our subscriber  base,  there can be no assurance
that our recent growth in subscriber  base can be  continued.  In addition,  our
success will depend on our ability to generate  additional  revenues through the
introduction of a transaction-based  model 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; and

  o general economic and market conditions.

     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 plan 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,  or if our  expenses
precede  increased  revenues,  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 RAPIDLY EXPANDING  OPERATIONS AND THE
INCREASING  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 we have grown our workforce substantially.  Our rapid 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  that  could  result  in our  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 subscriber 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.  If our  subscribers  fail  to  continuously  renew,  or if they
terminate, their subscriptions,  our revenues would be significantly reduced and
our business could suffer dramatically.

                                       2
<PAGE>

     THERE IS 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 that 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.

     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 FRAUDULENT ACTIVITIES
OF THIRD PARTIES ON OUR WEB SITE.  Our future  success will depend  largely upon
sellers reliably  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  that 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 that 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 SERVICES, 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 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.

     A 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 back
up our databases to tapes and store the backup tapes offsite, we do not maintain


                                       4
<PAGE>

a redundant site. As a result, our systems and operations could be vulnerable to
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 that would insure us
against product liability claims.

     RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS OR INVESTMENTS. We may acquire
or make investments in complementary or other businesses,  products, services or
technologies. From time to time we may have discussions with companies regarding
our  acquiring,  or  investing  in,  their  businesses,  products,  services  or
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 make 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.

     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.


                                       5
<PAGE>

     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 THAT 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 YOUR
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
initial 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.



                                       6
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