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 June 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 August 3, 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

























<PAGE>





PART I  FINANCIAL INFORMATION

Item 1.  Financial Statements


<TABLE>
                                         PARTSBASE, INC.
                                  Condensed Balance Sheets
                                          (Unaudited)


                                                                June 30,       December 31,
                                                                  2001            2000
                                                             --------------   --------------
                                                             --------------   --------------
<CAPTION>
Assets:
Current assets:
<S>                                                           <C>              <C>
Cash and cash equivalents .................................   $ 21,513,576    $  23,045,491
Accounts receivable, net of allowance of $129,920
 and $221,559 at June 30, 2001 and December 31, 2000 ......        639,426       1,510,645
Marketable debt securities, at amortized cost .............      4,025,756       7,139,052
Prepaid expenses and other current assets .................        420,188         647,213
                                                               ------------    ------------
            Total current assets ..........................     26,598,946      32,342,401
Property and equipment, net ...............................      2,910,073       3,655,310
Certificates of deposit- restricted cash ..................      2,215,265         524,008
Other assets ..............................................         65,320         629,387
                                                               ------------    ------------
                 Total assets .............................   $ 31,789,604    $ 37,151,106
                                                               ============    ============

Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable ..........................................   $    260,188    $  1,075,032
Accrued expenses and other current liabilities ............        545,449         419,696
Deferred revenue, net .....................................      2,730,784       3,219,422
                                                               ------------    ------------
            Total current liabilities .....................      3,536,421       4,714,150

Other liabilities .........................................        108,907          89,055
                                                               ------------    ------------
            Total liabilities .............................      3,645,328       4,803,205
                                                               ------------    ------------

Commitments and Contingencies

Stockholders' equity:
Preferred stock ...........................................             --              --
Common stock, no par ......................................             --              --
Additional paid-in capital ................................     53,598,590      55,478,819
Treasury stock, at cost ...................................       (142,624)       (330,202)
Accumulated deficit .......................................    (24,981,364)    (21,216,659)
Unearned compensation .....................................       (330,326)     (1,584,057)
                                                               ------------    ------------
            Total stockholders' equity ....................     28,144,276      32,347,901
                                                               ------------    ------------
                 Total liabilities and stockholders' equity   $ 31,789,604    $ 37,151,106
                                                               ============    ============



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


                                       3
<PAGE>


<TABLE>
                                                            PARTSBASE, INC.
                                                   Condensed Statements of Operation
                                                              (Unaudited)



<CAPTION>
                                            Three Months Ended                 Six Months Ended
                                                 June 30,                        June 30,
                                      ------------------------------  ------------------------------
                                             2001           2000            2001             2000
                                      --------------  --------------  --------------  --------------
<S>                                    <C>             <C>             <C>             <C>
Net revenues .......................   $  1,353,833    $    935,113    $  2,953,066    $  1,484,137
Cost of revenues ...................      1,076,041         947,584       2,564,801       2,206,545
                                        ------------    ------------    ------------    ------------
Gross profit (loss) ................        277,792         (12,471)        388,265        (722,408)
                                        ------------    ------------    ------------    ------------

Operating expenses:
General and administrative expenses       2,050,310       2,101,093       4,314,567       3,521,887
Stock-based compensation expense ...        134,993       1,016,938         178,004       2,479,171
Litigation and other related costs .        457,500              --         457,500              --
                                        ------------    ------------    ------------    ------------
Total operating expenses ...........      2,642,803       3,118,031       4,950,071       6,001,058
                                        ------------    ------------    ------------    ------------

Operating loss .....................     (2,365,011)     (3,130,502)     (4,561,806)     (6,723,466)
Other income, net ..................        299,014         599,430         797,100         616,338
                                        ------------    ------------    ------------    ------------

Net loss ...........................   $ (2,065,997)   $ (2,531,072)   $ (3,764,706)   $ (6,107,128)
                                        ============    ============    ============    ============

Basic and diluted net loss per share   $      (0.15)   $      (0.18)   $      (0.26)   $      (0.51)
                                        ============    ============    ============    ============
Weighted average of common
shares outstanding .................     14,155,140      14,088,000      14,219,174      11,909,000
                                        ============    ============    ============    ============

     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>
                                                                     SIX MONTHS ENDED
                                                        --------------------------------------------
                                                            June 30, 2001           June 30, 2000
                                                         ------------------      -------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                       <C>                    <C>
Net loss ..............................................   $ (3,764,706)          $ (6,107,128)
Adjustments to reconcile net loss to net cash
   used in operating activities:
   Depreciation and amortization ......................        397,216                529,284
   Provision for doubtful accounts ....................        551,244                109,313
   Provision for litigation and other related costs....        158,565                     --
   Recognition of unearned compensation ...............        178,004              2,479,171
   Changes in assets and liabilities:
     Accounts receivable ..............................        361,063               (421,256)
     Prepaid expenses and other current assets ........        227,025               (469,820)
     Deferred charges and other assets ................         62,216                 (9,730)
     Accounts payable .................................       (445,123)                15,274
     Accrued expenses and other current liabilities ...        (31,780)               (95,251)
     Deferred revenue, net ............................       (488,638)             1,059,937
     Other liabilities ................................         19,850                     --
                                                           ------------           ------------
Net cash used in operating activities .................     (2,775,064)            (2,910,206)
                                                           ------------           ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ..................................        (77,516)            (1,262,196)
Web site development costs ............................             --                (24,000)
Maturities of marketable debt securities ..............      3,615,147                     --
Purchase of marketable debt securities ................             --             (5,664,029)
Purchase of certificate of deposit-restricted cash ....     (1,677,864)                    --
                                                           ------------           ------------
Net cash provided by (used in) investing activities ...      1,859,767             (6,950,225)
                                                           ------------           ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net ...........             --             40,879,932
Purchase of treasury stock ............................       (795,544)                  (984)
Exercise of employee non-qualified stock options ......        178,926                     --
                                                            ------------          ------------
Net cash (used in) provided by financing activities ...       (616,618)            40,878,948
                                                            ------------          ------------

Net change in cash and cash equivalents ...............     (1,531,915)            31,018,517
Cash and cash equivalents at beginning of period ......     23,045,491                735,276
                                                           ------------           ------------
Cash and cash equivalents at end of period ............   $ 21,513,576           $ 31,753,793
                                                           ============           ============

Supplemental disclosures of cash flow information:
  Cash paid during the period for interest ............   $         --           $     18,353
                                                           ============           ============



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 six month periods
ended June 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 June 30, 2001 and December 31, 2000:
<TABLE>

<CAPTION>
                                                     Gross Unrealized    Gross Unrealized     Amortized
                                       Fair Value     Holding Gains        Holding Losses       Cost
                                     -------------   ----------------    ----------------    ------------

June 30, 2001:
Current:
<S>                                   <C>               <C>                 <C>              <C>
Corporate debt securities .........   $ 3,943,949       $   28,845          $ (110,652)      $ 4,025,756
                                       ==========        =========           ==========       ==========

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 June 30,  2001,  was  $292,000.  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 June 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            Six Months
                                   June 30,                Ended June 30,
                             ---------------------   -----------------------
                               2001        2000          2001       2000
                              ------      ------        ------     ------

Net revenues:
Advertising .............    $   158     $   68       $   245     $   126
Subscriptions ...........      1,194        855         2,702       1,347
Other ...................          2         12             6          11
                              ------      -----        ------      ------
 Total ..................    $ 1,354     $  935       $ 2,953     $ 1,484
                              ======      =====        ======      ======


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 June 30,  2001 and  December  31,  2000,  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 June 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.  This payment is included in  litigation  and other
related costs in the statement of operations  for the three and six months ended
June 30, 2001.

                                       8
<PAGE>

     In April and May 2001,  the Company  received  notice of or has been served
with three 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). The lawsuits name as defendants,  the Company,  certain of
its current and former  officers  and  directors,  and the  underwriters  of its
initial  public  offering of  securities.  The  lawsuits  allege  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 lawsuits  seek 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 lawsuits 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  officers'  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  classified as litigation  and other
related costs in the statement of operations  for the three and six months ended
June 30, 2001.  During the quarter,  $83,935 of invoices  related to this matter
were received and applied against this reserve.

     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 lawsuits described above.

     Two other  litigation  matters,  relating to the  providing  of services by
information  technology vendors, were resolved during the quarter in the amounts
of $40,000  and  $12,500.  An  additional  reserve was  established  for $30,000
relating  to a lawsuit  filed and served on the  Company in July 2001 by a third
information  technology  vendor  claiming  damages  resulting from the Company's
alleged breach of a software sales and service contract. These amounts, totaling
$82,500,  are included in litigation and other related costs in the statement of
operations for the three and six months ended June 30, 2001. The Company intends
to vigorously defend the allegations contained in this third lawsuit.

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.

     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.

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  $1,353,833  and  $2,953,066 for the second quarter and first half of 2001,


                                       9
<PAGE>

respectively,  compared to $935,113 and $1,484,137 for the same periods in 2000,
an increase of 45% and 99%,  respectively.  During the second  quarter and first
half of 2001,  PartsBase  signed up 459 and 1,153 new  subscribers at an average
subscription  fee of $1,785 and $1,730,  respectively.  During the same periods,
291 and 728  subscribers  renewed  their  subscription  for  another  year at an
average  subscription  fee of $1,331 and  $1,232,  respectively.  The  aggregate
average  subscription fee of both new and renewal  subscribers during the second
quarter and first half of 2001 was $1,609 and $1,538, respectively.

     During the second quarter and first half of 2000,  PartsBase  signed up 887
and 2,115 new subscribers at an average  subscription  fee of $1,225 and $1,074,
respectively.  The  average  subscription  fee  increased  in 2001 over the same
periods 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.  Given the finite size of the  aerospace
community, the number of new subscribers signed up in 2001 decreased compared to
2000.

     At June 30, 2001,  PartsBase  had 4,056 paying  subscribers  as compared to
4,837 paying subscribers at March 31, 2001, 4,756 paying subscribers at December
31, 2000, and 4,067 paying  subscribers  at June 30, 2000. The subscriber  count
decreased  during the second 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.  The renewal rate for
customers  renewing their  subscription for a second year was approximately 51%.
During the second half of 2001,  some  customers  will begin  renewing for their
third  year.  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  $1,207,019  and $2,867,116 for the second quarter and
first half of 2001, respectively,  compared to $1,302,916 and $2,614,063 for the
same periods in 2000, a decrease of 7% and an increase of 10%,  respectively.  A
portion of the decrease in gross revenue during the current quarter  compared to
the prior quarter is attributable to the small number of  subscriptions  sold in
May through July of the prior year. This negatively  impacted renewal revenue in
the  current  quarter  as  renewals  typically  are  sold the  month  prior to a
subscription's expiration date.


     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,  net
decreased to $2,730,784 at June 30, 2001,  compared to $3,219,422 as of December
31, 2000, and increased from $2,323,915 at June 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)

                                         06/30/00    09/30/00    12/31/00    03/31/01    06/30/01
                                         --------    --------    --------    --------    --------
<S>                                     <C>          <C>        <C>         <C>          <C>
New Subscriptions ................      $  1,188     $   873    $  1,196    $  1,048     $   729
Renewal Subscriptions ............             3         734         887         509         387
Advertising ......................            95          48          20          60          89
Other ............................            17           5          --          43           2
                                         --------     --------   --------    ---------    -------
Total Gross Revenue ..............      $  1,303     $  1,660   $  2,103    $  1,660     $ 1,207
                                         ========     ========   ========    ========     =======
Sequential Gross Rev. Growth .....           (1%)         27%        27%        (21%)       (27%)
                                         ========     ========   ========    ========     =======
Total Net Revenue ................      $    935     $  1,228   $  1,386    $  1,599     $ 1,354
                                         ========     ========   ========    ========     =======
Sequential Net Rev. Growth .......           70%          31%        13%         15%        (15%)
                                         ========     ========   ========    ========     =======
Salesperson Compensation .........      $    352     $    720   $  1,109    $    730     $   484
                                         ========     ========   ========    ========     =======
Sales Comp/Gross Revenue .........           27%          43%        53%         44%         40%
                                         ========     =========  ========    ========     =======
Deferred Revenue Balance .........      $  2,324     $   2,742  $  3,219    $  3,175     $ 2,731
                                         ========     =========  ========    ========     =======
</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  $1,076,041  and  $2,564,801 for the
second  quarter and first half of 2001,  respectively,  compared to $947,584 and
$2,206,545 for the same periods in 2000. As a percent of net revenues,  costs of
revenues  were  79% and 87% for the  second  quarter  and  first  half of  2001,
respectively,  compared  to 101% and 149% for the same  period  periods in 2000.
Salesperson  compensation  in the  second  quarter  and first  half of 2001 as a
percentage of gross revenue was 40% and 42%, respectively.  This compares to 27%
and 38%,  respectively,  in the second quarter and first half of 2000.  Although
salesperson  compensation  as a percentage of gross revenue is starting to trend
back  downwards,  the percentage is higher during 2001 due to higher  commission
rates paid to salespersons compared to the same periods in 2000.

     At June 30,  2001,  PartsBase  employed  113 persons in sales and  customer
service,  compared to 103 persons at June 30,  2000.  Additionally,  included in
cost of revenues in the second  quarter and first half of 2001 was  $260,000 and
$560,000,  respectively,  for contract  payments to a third party for government
procurement  data. These costs were not incurred in the same periods in 2000. In
the second quarter and first half of 2000, $253,444 and $270,005,  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  $2,050,310  or  151%  of  net
revenues,  for the  second  quarter  of  2001,  and  $2,101,093,  or 225% of net
revenues,   for  the  second   quarter  of  2000,   respectively.   General  and
administrative expenses consisted primarily of personnel costs of $1,144,513 and
$1,177,978, rent expense of $166,753 and $130,572,  advertising costs of $27,449
and $235,798, bad debt expense of $339,091 and $92,483, and other costs totaling
$372,504 and $464,262 consisting of professional fees,  utilities,  supplies and
other related  administrative  costs,  for the second  quarter of 2001 and 2000,
respectively.

                                       11
<PAGE>

     General  and  administrative  expenses  were  $4,314,567  or  146%  of  net
revenues,  for the first half of 2001,  and  $3,521,887 or 237% of net revenues,
for the first half of 2000,  respectively.  General and administrative  expenses
consisted  primarily of  personnel  costs of  $2,573,618  and  $1,676,091,  rent
expense of $379,358 and $147,090, advertising costs of $38,602 and $463,935, bad
debt expense of $551,244 and  $109,313,  and other costs  totaling  $771,745 and
$1,125,458  consisting  of  professional  fees,  utilities,  supplies  and other
related administrative costs, for the first half of 2001 and 2000, respectively.

     The  decrease  in other  costs  for the six  months  ended  June 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 and a decrease
of $114,020 in placement  fees. The increase in personnel  costs for the current
six-month  period,  compared to the same period of the prior year,  is due to an
increase in sales training and  information  technology  related  salaries.  The
Company made significant  personnel reductions during the first half of 2001. In
addition,  during  the  first  half 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
second half of 2001.  The increase in bad debt  expense for current  quarter and
first half 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  second  quarter,  the  Company  significantly
tightened its deal verification processes, and expects that its bad debt expense
will begin to decrease during the second half of 2001.

     At June 30,  2001,  PartsBase  employed  17 persons in  administrative  and
executive management positions, compared to 30 persons at June 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  $134,993  and  $1,016,938  was
recognized in the second quarter 2001 and 2000,  respectively,  and $178,004 and
$2,479,171 during the first half of 2001 and 2000, respectively. The significant
decrease in the current  quarter and first half  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 quarter ended
and six  months  ended  June  30,  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 to settle or accrue
for litigation and other related costs.

Other Income, Net

     Other income,  net,  consisting  primarily of interest income, was $299,014
and  $797,100  for the  second  quarter  and first  half of 2001,  respectively,
compared to $599,430 and $616,338 for the first quarter and second half 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  $2,065,997  and
$3,764,706 for the second quarter and first half of 2001, compared to $2,531,072
and $6,107,128 for same periods in 2000.


Liquidity and Capital Resources

Financial Condition

     As of  June  30,  2001,  the  Company  had  $21,513,576  of cash  and  cash
equivalents,  restricted cash totaling $2,215,265,  and $4,025,756 of marketable
debt  securities.  At June 30,  2001,  the  Company had  $23,062,525  of working
capital.



                                       12
<PAGE>

     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 that are complementary to those of the Company's, 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 $2,775,064 for the six months
ended  June 30,  2001  compared  to net cash  used in  operating  activities  of
$2,910,206  for the  comparable  period of the prior year.  The  current  period
decrease reflects a decrease of $673,006 in accounts  receivable,  primarily the
result of improvements in collecting customer balances,  offset by a decrease of
$460,397 in accounts  payable due to increased pay downs of vendor  balances and
an overall contraction in Company spending.

     Net cash provided by investing  activities  totaled  $1,859,767 for the six
months ended June 30, 2001 compared to net cash used in investing  activities of
$6,950,225  for the  comparable  period of the prior year.  The  current  period
increase of $8,809,992 in cash provided is primarily the result of a significant
reduction in capital  expenditures  along with proceeds received from marketable
securities that matured.

     Net cash used in financing  activities  totaled $616,618 for the six months
ended June 30,  2001,  compared  to net cash  provided by  financing  activities
totaling  $40,878,948  for the  comparable  period  of  2000.  The  decrease  of
$41,495,566  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 six months  ended June 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  June  30,  2001,   PartsBase's   portfolio   consisted  of   investments  in
institutional  money market funds and  corporate  bonds rated A or higher at the
time of  purchase.  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
and medium term notes.

     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
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.


                                       13
<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.

     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 payment is classified as a litigation
expense in the statement of  operations  for the three and six months ended June
30, 2001.

     In April and May 2001,  the Company  received  notice of or has been served
with three 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). The lawsuits name as defendants,  the Company,  certain of
its current and former  officers  and  directors,  and the  underwriters  of its
initial  public  offering of  securities.  The  lawsuits  allege  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 lawsuits  seek 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 lawsuits 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  officers'  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 three and six months ended
June 30, 2001.  During the quarter,  $83,935 of invoices  related to this matter
were received and applied against this reserve.

     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 lawsuits described above.

     Two other  litigation  matters,  relating to the  providing  of services by
information  technology vendors, were resolved during the quarter in the amounts
of $40,000  and  $12,500.  An  additional  reserve was  established  for $30,000
relating  to a lawsuit  filed and served on the  Company in July 2001 by a third
information  technology  vendor  claiming  damages  resulting from the Company's
alleged breach of a software sales and service contract. These amounts, totaling
$82,500,  are included in litigation and other related costs in the statement of
operations for the three and six months ended June 30, 2001. The Company intends
to vigorously defend the allegations contained in this third lawsuit.

                                       14
<PAGE>

Item 2.  Changes in Securities

     On  September  27, 2000 the  Company's  Board of Directors  authorized  the
Company to  repurchase  up to 500,000  shares of its  outstanding  no par common
stock from time to time on the open market  over the next  twelve  months at the
prevailing  market  price.  Once  purchased,  such shares would become  treasury
stock. At June 30, 2001, the Company had completed the repurchase of the 500,000
shares of common stock. The stock was repurchased at an aggregate purchase price
of $752,065 inclusive of brokerage fees, of which 208,100 shares at an aggregate
cost of $231,397 had been purchased during the quarter ended June 30, 2001.

     On May 7, 2001, the Company's Board of Directors  authorized the Company to
repurchase as treasury stock an additional  500,000 shares of its outstanding no
par common stock.  At June 30, 2001, the Company had completed the repurchase of
154,065  shares of common  stock.  The stock  was  repurchased  at an  aggregate
purchase price of $178,253 inclusive of brokerage fees.

     During  the six months  ended June 30,  2001,  534,285  shares of  treasury
stock, with a value of $983,123, were retired.

     During the quarter  ended June 30, 2001,  pursuant to the exercise of stock
options  granted  pursuant to the  Company's  1999 Stock Option Plan (the " 1999
Plan") the Company issued 23,383 shares of its common stock.  In connection with
these exercises,  the Company generated gross exercise proceeds of $14,731.  For
the six months  ended June 30,  2001,  the Company  generated  gross  exercision
proceeds of $178,296.

     In March 2001, pursuant to the 1999 Plan, the Company granted to several of
its  employees  non-qualified  stock  options to acquire an aggregate of 315,000
shares of the Company's  common stock at a per share exercise price of $5.00 per
share. The options vest on a pro-rata basis over a 48-month period from the date
of grant and expire 10 years from the date of the grant. Additionally,  a member
of the Board of Directors was granted the option to acquire 20,000 shares of the
Company's  common  stock at an  exercise  price of $3.00  per  share at any time
through March 2011.

     In June 2001,  pursuant to the 1999 Plan, the Company granted to several of
its  employees,   as  a  result  of  the   implementation   of  pay  reductions,
non-qualified  stock  options to acquire an aggregate  of 360,600  shares of the
Company's  common  stock at a per  share  exercise  price of  $2.00  per  share,
including  271,000  shares to officers  of the  Company.  The options  vest on a
pro-rata basis over a 12-month period from the date of grant and expire 10 years
from the date of the grant.  The  Company  also  granted to several of its other
employees  non-qualified  stock options to acquire an aggregate of 51,000 shares
of the Company's  common stock at a per share exercise price of $2.00 per share.
The  options  vest on a pro-rata  basis over a 48-month  period from the date of
grant and expire 10 years from the date of the grant.

Item 3.  Defaults Upon Senior Securities

         None.

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

     On June 20, 2001, the Company held its Annual Meeting of Stockholders.  At
the meeting,  the  stockholders  elected as  directors  Robert  Hammond,  Pierre
Narath,  Thomas Van Hare,  Edward McCartin,  Kenneth  Corriea,  and John Menefee
(with 13,594,515 shares voting for and 8,250 votes withheld).

     The stockholders also approved an amendment to effect a change in the state
of  incorporation  of the Company  from Texas to Delaware by approving a Plan of
Reorganization and Merger. As part of the Plan of Reorganization and Merger, the
Company's name was changed to PartsBase, Inc. (with 9,971,191 shares voting for,
7,050 voting against, 500 votes withheld, and 3,624,024 no-votes).

     The  stockholders  also ratified the adoption of the  Company's  2001 Stock
Option Plan (with 9,936,950  shares voting for, 7,050 voting against,  500 votes
withheld, and 3,624,024 no-votes).

     The stockholders  also ratified the appointment of Deloitte & Touche LLP as
the independent  auditors for the Company for the year ending December 31,  2001
(with  13,601,115  shares  voting  for,  1,050  voting  against,  and 600  votes
withheld).

Item 5.  Other Information

         None.

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:  August 3, 2001                 /s/ Robert A. Hammond
                                      ---------------------
                                      ROBERT A. HAMMOND, JR.
                                      President, Chief Executive Officer,
                                       And Chairman
                                      (Principal Executive Officer)



Date:  August 3, 2001                 /s/ Michael W. Siegel
                                      ---------------------
                                      MICHAEL W. SIEGEL
                                      Chief Financial Officer
                                      (Principal Financial Accounting Officer)




                                       16
<PAGE>



                                 PARTSBASE, INC.

                                Index to Exhibits


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


                                       1
<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  $24,981,364 as of June 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  varyin  size and in the  scope and  breadth  of the
services they offer.

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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:

     subscriber and advertiser demand for our solutions;

     user traffic levels and activity on our e-marketplace;

     seasonal fluctuations in Internet usage;

     changes in the growth rate of Internet usage;

     the commitment of e-commerce customers in the aviation industry who
      subscribe to our service;

     the timing and amount of costs relating to the expansion of our operations;

     changes in our pricing policies or those of our competitors;

     the introduction of new solutions by us or our competitors;

     costs related to acquisitions of technology or businesses; and

     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 which 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  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 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.

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


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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 which 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


                                       3
<PAGE>

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.

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.

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<PAGE>

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
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  which 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.

                                       5
<PAGE>

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:

      finance unanticipated working capital requirements;

      develop or enhance existing services or products;

      respond to competitive pressures; and

      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
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.


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