<PAGE>   1
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                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


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

                       For the Period Ended March 31, 1998

                             Commission File 0-20889

                                  AVTEAM, INC.
             (Exact name of Registrant as specified in its charter)

                FLORIDA                                        65-0313187
     (State or other jurisdiction of                        (I.R.S. Employer
     incorporation or organization)                        Identification No.)

            3230 Executive Way                                    33025
             Miramar, Florida                                  (Zip Code)
  (Address of principal executive offices)


       Registrant's telephone number, including area code: (954) 431-2359



       Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed 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     
                                                                -----     -----

       Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.


       As of May 15, 1998, 10,665,739 shares of Class A Common Stock, par value
$.01 per share, of the Registrant were outstanding and 439,644 shares of Class B
Common Stock, par value $.01 per share, of the Registrant were outstanding.


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<PAGE>   2


                                  AVTEAM, INC.

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                 ----

<S>                                                                                              <C>
PART I - FINANCIAL INFORMATION

Item 1.           Condensed Consolidated Financial Statements................................... 1 - 6

                  Condensed Consolidated Balance Sheets as of March 31, 1998
                  and December 31, 1997.........................................................   1

                  Condensed Consolidated Statements of Income for the Three
                  Months Ended March 31, 1998 and 1997..........................................   2

                  Condensed Consolidated Statements of Cash Flows for the Three
                  Months Ended March 31, 1998 and 1997..........................................   3

                  Notes to Condensed Consolidated Financial Statements.......................... 4 - 6

Item 2.           Management's Discussion and Analysis
                  Of Financial Condition and Results of Operations.............................. 7 - 9

PART II - OTHER INFORMATION

Item 5.           Other Information............................................................   10

Item 6.           Exhibits and Reports on Form 8-K..............................................  11

SIGNATURES .....................................................................................  12

EXHIBIT INDEX ..................................................................................  13


</TABLE>


<PAGE>   3



                                  AVTEAM, INC.
                      Condensed Consolidated Balance Sheets
                                 (In thousands)

PART I   FINANCIAL INFORMATION

Item 1.  Financial Statements.

<TABLE>
<CAPTION>
                                                                                                MARCH 31,     DECEMBER 31,
                                                                                                  1998           1997
                                                                                                --------       --------
                                                                                              (UNAUDITED)
<S>                                                                                             <C>              <C>   
ASSETS
Current assets:
       Cash and cash equivalents .........................................................      $    802         18,676
       Trade accounts receivable, net ....................................................         8,111          5,751
       Inventory .........................................................................        39,333         24,480
       Prepaid expenses ..................................................................           541          1,153
       Deposits ..........................................................................         7,488            432
       Deferred tax asset ................................................................           102             80
                                                                                                --------       --------

Total current assets .....................................................................        56,377         50,572

Revenue producing equipment, at cost .....................................................         9,567          7,152
       Accumulated depreciation ..........................................................          (377)          (217)
                                                                                                --------       --------
                                                                                                   9,190          6,935

Property and equipment, at cost ..........................................................         1,783          1,543
       Accumulated depreciation ..........................................................          (688)          (605)
                                                                                                --------       --------
                                                                                                   1,095            938

Other assets .............................................................................           270            509
                                                                                                --------       --------
         Total assets ....................................................................      $ 66,932       $ 58,954
                                                                                                ========       ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
       Accounts payable ..................................................................      $  6,970       $    706
       Accrued expenses ..................................................................           903          1,654
       Customer deposits .................................................................         3,961            344
       Current portion of notes payable-lease financing ..................................           140            328
       Current portion of capital lease obligations ......................................           109            115
                                                                                                --------       --------

Total current liabilities ................................................................        12,083          3,147

Capital lease obligations, net of current portion ........................................           161            186

Notes payable - lease financing ..........................................................         1,532          3,817

Shareholders' equity:
      Preferred stock, $.01 par value, 20,000,000 shares authorized, no shares issued
         or outstanding in 1997, 1,974,642 shares of Class A Preferred Stock and
         439,644 shares of Class B Preferred Stock issued and outstanding in 1996 ........            --             -- 
      Class A Common Stock, $.01 par value, 77,000,000 shares
         authorized, 10,665,739 shares issued and outstanding ............................           107            107
      Class B Common Stock, $.01 par value, 3,000,000 shares authorized, 439,644
         shares issued and outstanding ...................................................             4              4 
      Additional paid-in capital .........................................................        47,444         47,444
      Retained earnings ..................................................................         5,601          4,249
                                                                                                --------       --------
Total shareholders' equity ...............................................................        53,156         51,804
                                                                                                --------       --------

Total liabilities and shareholders' equity ...............................................      $ 66,932       $ 58,954
                                                                                                ========       ========


</TABLE>

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                     Page 1


<PAGE>   4


                                  AVTEAM, INC.
                   Condensed Consolidated Statements of Income
                      (In thousands except per share data)

<TABLE>
<CAPTION>
                                                                                          THREE MONTHS ENDED
                                                                                               MARCH 31,
                                                                                    -------------------------------
                                                                                        1998                1997
                                                                                    ------------       ------------
                                                                                              (Unaudited)
<S>                                                                                 <C>                <C>         
Net sales ....................................................................      $     13,117       $      8,413
Cost of sales ................................................................             9,232              5,716
                                                                                    ------------       ------------
         Gross profit ........................................................             3,885              2,697
Operating expenses ...........................................................             1,689              1,349
                                                                                    ------------       ------------
Income from operations .......................................................             2,196              1,348
Interest expense, net ........................................................                50                129
                                                                                    ------------       ------------

Income before provision (credit) for income taxes ............................             2,146              1,219

Provision (credit) for income taxes:
         Current .............................................................               816                545
         Deferred ............................................................               (22)              (101)
                                                                                    ------------       ------------
                                                                                             794                444
                                                                                    ------------       ------------
Net income ...................................................................      $      1,352       $        775
                                                                                    ============       ============

Net income per common equivalent share - basic ...............................      $       0.12       $       0.16
                                                                                    ============       ============

Weighted average number of common equivalent shares outstanding ..............        11,105,383          5,000,000
                                                                                    ============       ============

Net income per common equivalent share - diluted .............................      $       0.12       $       0.12
                                                                                    ============       ============

Weighted average number of common equivalent shares outstanding - diluted ....        11,135,631          6,700,000
                                                                                    ============       ============

</TABLE>


            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                     Page 2


<PAGE>   5



                                  AVTEAM, INC.
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                           THREE MONTHS ENDED
                                                                                                MARCH 31,
                                                                                        -----------------------
                                                                                          1998           1997
                                                                                        --------       --------
                                                                                             (UNAUDITED)
<S>                                                                                     <C>            <C>     
OPERATING ACTIVITIES
Net income .......................................................................      $  1,352       $    775
Adjustments to reconcile net income to net cash used in operating activities:
          Depreciation and amortization ..........................................           352             36
          Bad debt expense .......................................................            47             13
          Deferred tax credit ....................................................           (22)          (101)
          Changes in operating assets and liabilities:
                 Trade accounts receivable .......................................        (2,407)           607
                 Inventory .......................................................       (14,853)        (6,797)
                 Prepaid expenses and deposits ...................................        (6,444)          (788)
                 Other assets ....................................................           239             (3)
                 Accounts payable ................................................         6,264           (318)
                 Accrued expenses/customer deposits ..............................         2,866            378
                 Due to shareholders and affiliates ..............................            --             17
                                                                                        --------       --------

                          Net cash used in operating activities ..................       (12,606)        (6,181)

INVESTING ACTIVITIES
Purchases of revenue producing equipment .........................................        (4,985)            --
Purchases of property and equipment ..............................................          (240)          (108)
                                                                                        --------       --------
                          Net cash used in investing activities ..................        (5,225)          (108)

FINANCING ACTIVITIES
Payments on capital leases .......................................................           (31)           (14)
Net payments on notes payable ....................................................           (12)            --
Net proceeds from short-term line of credit ......................................            --          7,733
                                                                                        --------       --------
                         Net cash (used in) provided by financing activities .....           (43)         7,719
                                                                                        --------       --------
                         Net (decrease) increase in cash and cash equivalents ....       (17,874)         1,430
                         Cash and cash equivalents at beginning of period ........        18,676             --
                                                                                        --------       --------
                         Cash and cash equivalents at end of year ................      $    802       $  1,430
                                                                                        ========       ========

SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid ....................................................................      $     50       $    122
                                                                                        ========       ========
Income taxes paid ................................................................      $     31             --
                                                                                        ========       ========


</TABLE>

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                     Page 3


<PAGE>   6



                                  AVTEAM, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                 March 31, 1998

1.  GENERAL

         The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three-month periods
ended March 31, 1998, are not necessarily indicative of the results that may be
expected for the year ended December 31, 1997. For further information, refer to
the financial statements and footnotes thereto included in the Company's 1997
Annual Report on Form 10-K for the year ended December 31, 1997.

         The Company has in the past and may in the future experience
substantial fluctuations in its results of operations as a result of seasonal
effects. The Company believes that demand for aircraft engines, engine parts and
airframe components ("Engines and Components") is seasonal, with increased
demand during the summer months. This seasonality exists because aircraft engine
performance is directly related to ambient temperature (as temperatures rise it
is more difficult for aircraft engines to perform properly). As a result,
certain aircraft are removed from service during the summer months due to the
failure of those particular aircraft engines to comply with certain exhaust gas
temperature limitations. Aircraft engines of the same type and model can have
different performance capabilities. The summer months also include peak travel
periods during which aircraft utilization levels are high. In addition, the
timing of whole aircraft engine sales, at greater unit purchase prices than the
installed parts and components, may cause significant fluctuations in the
Company's quarterly results of operations.

2.  SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

         The Company classifies as cash equivalents all highly liquid
investments with a maturity of three months or less at the time of purchase.

INVENTORY

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

REVENUE RECOGNITION

         Revenues from the sale of engine parts and airframe components are
recognized when shipped.

         Revenues from the sale of aircraft engines are recognized when title
and risk of ownership are transferred to the customer, which generally is upon
shipment or customer pick-up. In certain instances prior to shipment or customer
pick-up, certain customers request the Company to hold aircraft engines until
the customer determines the most economical means of taking possession. The
Company records revenues under such circumstances only if: (1) payment is
received or is receivable within 30 days; (2) title and risk of ownership is
transferred to the

                                     Page 4


<PAGE>   7



                           AVTEAM, INC. AND SUBSIDIARY

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)

customer; (3) the customer's request that the transaction be on a bill-and-hold
basis is in writing; (4) there is a fixed schedule for delivery of the engines
that is within 30 days of the sale; (5) the Company does not have any specific
performance obligations; (6) the engines are segregated from other engines and
are not subject to being used to meet other customer's needs and (7) the engines
are ready for shipment.

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

WARRANTIES AND PRODUCT RETURNS

         The Company does not provide service warranties in addition to those
provided by repair facilities and as a result does not record accruals for
warranties. The Company has established programs which, under specific
conditions, enable its customers to return inventory. The effect of these
returns is estimated based on a percentage of sales and historical experience
and sales are recorded net of a provision for estimated returns.

PROPERTY AND EQUIPMENT

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

         Office furniture and equipment.......................     3-7 years
         Warehouse and transport equipment....................     5-7 years
         Leasehold improvements...............................     3-5 years

REVENUE PRODUCING EQUIPMENT

         Revenue producing equipment is comprised of engines and aircraft leased
to users on a short-term basis. Such engines and aircraft are carried at cost
and are depreciated using the straight-line method over periods between five and
ten years. Two of such engines are the subject of a sale/leaseback arrangement.
The proceeds under the arrangement are recorded as a financing obligation and
will be reduced by payments under the lease over its five year term. The lease
agreement provides the Company with an option to terminate the lease and to
repurchase the engines at any time after one year at varying rates based on the
original sales price.

CONCENTRATION OF CREDIT RISK

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

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.


                                     Page 5


<PAGE>   8


                           AVTEAM, INC. AND SUBSIDIARY

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NET INCOME PER COMMON SHARE

         In 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share" which requires the Company to replace its presentation of
primary earnings per share with a presentation of basic earnings per share and
requires dual presentation of basic and diluted earnings per share on the face
of the income statement. The principal difference between earnings per share
presented by the Company in its previous SEC filings and the presentation
required by the new statement and the new interpretation required by the SEC is
the inclusion of the 2,414,286 shares of preferred stock only from their date of
issue until their conversion to common shares on October 30, 1997, the date of
the Company's initial public offering, for the purposes of calculating diluted
earnings per share only. Previously these shares were included in the
calculation of both primary and fully diluted earnings per share for all periods
presented.

The following table sets forth the computation of basic and diluted net income
and net income per share:

<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED MARCH 31,
                                                                                1998             1997
                                                                             -----------      -----------
<S>                                                                          <C>              <C>        
     Numerator:
            Net income ................................................      $ 1,352,000      $   775,000
                                                                             ===========      ===========

     Denominator:
             Denominator for basic net income per share - weighted
                 average shares .......................................       11,105,383        5,000,000

     Effect of dilutive securities
             Convertible preferred stock ..............................               --        1,700,000
             Employee stock options ...................................           30,248               --
                                                                             -----------      -----------
     Dilutive potential common shares .................................           30,248        1,700,000
                                                                             -----------      -----------
             Denominator for diluted earnings per share - adjusted
                 weighted-average shares and assumed conversions ......      $11,135,631      $ 6,700,000
                                                                             ===========      ===========

     Net income per common share - basic ..............................      $      0.12      $      0.16
                                                                             ===========      ===========
     Net income per common share - diluted ............................      $      0.12      $      0.12
                                                                             ===========      ===========

</TABLE>

DEPOSITS AND CUSTOMER DEPOSITS

        The Company has entered into various contracts for the purchase and sale
of whole engines. Occasionally, these contracts require a substantial
down-payment to fix the consideration of such engines and to allow the time to
perform due diligence work. These deposits are refundable.

SUBSEQUENT EVENT

         On April 30, 1998, the Company entered into a Credit Agreement with a
syndicate of lenders. This agreement provides for a revolving credit facility in
the maximum aggregate principal of up to $70 million. The revolving credit
facility includes a working capital revolving loan facility of up to $45 million
and an acquisition revolving loan facility of up to $25 million. The Credit
Agreement expires on April 30, 2001.



                                     Page 6


<PAGE>   9



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

OVERVIEW

         AVTEAM, Inc. (the "Company") is a global supplier of aftermarket
aircraft engines, engine parts and airframe material. The Company supplies its
products to other aftermarket suppliers, independent repair facilities, aircraft
operators and original equipment manufacturers. Beginning in April, 1997 the
Company, through its wholly-owned subsidiary, AVTEAM Aviation Field Services,
Inc., began providing certain on-wing maintenance and repair and borescope
services.

RESULTS OF OPERATIONS

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

                                                    THREE MONTHS
                                                   ENDED MARCH 31,
                                                  ----------------
                                                  1998       1997
                                                  ----       ----

     Net sales ..............................      100%      100%
     Cost of sales ..........................       70        68
                                                  ----       ----
     Gross profit ...........................       30        32
     Operating expenses .....................       13        16
                                                  ----       ----
     Income from operations .................       17        16
     Interest expense, net ..................        1         2
                                                  ----       ----
     Income before income taxes .............       16        14
     Provision (credit) for income taxes ....        6         5
                                                  ====       ====
     Net income .............................       10%        9%
                                                  ====       ====

----------

         FIRST QUARTER 1998 COMPARED TO FIRST QUARTER 1997

         NET SALES. Net sales increased 55.9% to $13.1 million in 1998 from $8.4
million in 1997. This increase is primarily due to an increase in whole engine
sales of 128.6% over whole engine sales in 1997. In addition, revenue from
leasing and field services increased to $1.3 million from $47,000.

         GROSS PROFIT. Gross profit increased 44.0% to $3.9 million in 1998 from
$2.7 million in 1997. Gross margin decreased to 29.6% in 1998 from 32.1% in 1997
principally because of the lower margins generated from the sale of whole
engines, which accounted for 32.9% of the Company's net sales.

         OPERATING EXPENSES. Operating expenses increased 25.2% to $1.7 million
in 1998 from $1.3 million in 1997. As a percentage of net sales, such expense
decreased to 12.9% in 1998 from 16.0% in 1997. The expense increase is primarily
attributable to increased personnel expense resulting from additional staffing
in the Florida headquarters office, increased insurance expense as a result of
higher inventory levels and volume of shipments and additional occupancy costs
associated with the acquisition of an additional 50,000 square feet of rental
warehouse space, offset by the reversal of a $100,000 reserve associated with a
lapsed repair commitment to one customer.

         NET INTEREST EXPENSE. Net interest expense decreased 61.2% to $50,000
in 1998 from $129,000 in 1997. As a percentage of net sales, such expense
decreased to .4% in 1998 from 1.5% in 1997. The decreased interest expense is a
result of lower borrowing levels, subsequent to the initial public offering in
October 1997.

                                     Page 7


<PAGE>   10




LIQUIDITY AND CAPITAL RESOURCES

         Historically, the Company's primary sources of liquidity have been from
financing activities and cash flow generated by operations and, to a lesser
extent, from consignment sales. During the first quarter of 1998, the Company
used approximately $12.6 million in operating activities, principally for the
purchase of inventory. Net cash provided by financing activities, derived
primarily from the sale of the Company's Class A Common Stock in its initial
public offering which was consummated on November 3, 1997 was $29.7 million. The
Company also obtained airframe material on consignment and may enter into other
consignment arrangements in the future. In May 1997, the Company launched a
program in conjunction with third-party financing sources under which the
Company leases aircraft engines to its customers, which has increased the
Company's liquidity and provides working capital for the purchase of additional
aircraft engines.

         On February 20, 1997, the Company obtained from NationsBank, N.A.
("NationsBank") a Credit Facility which provided working capital of up to $20.0
million with interest at either the lender's prime rate or LIBOR plus 2.75% per
annum, as determined by the Company at the time of each advance, subject to an
availability calculation based on the eligible borrowing base. The eligible
borrowing base included certain receivables and inventories of the Company. The
Credit Facility also permitted NationsBank to issue letters of credit on behalf
of the Company of up to $5.0 million, and the aggregate principal amount of any
letters of credit so issued reduced amounts available under the Credit Facility.
The Credit Facility matured in May 1998 and the term of any letters of credit
issued thereunder must expire prior to May 1999. At May 1, 1998, the Company was
obligated under a letter of credit in the amount of approximately $132,000 and
had additional availability of approximately $18.2 million under the Credit
Facility. The Company established a new credit facility with NationsBank
effective May 1998 to replace its existing credit facility.

         On July 25, 1997, the Company entered into an agreement with
NationsBanc Leasing Corporation ("NBLC") whereby the Company sold three Pratt &
Whitney JT8D engines to NBLC for approximately $4.3 million and subsequently
leased-back such engines for a period of five years at fixed monthly payments.
The Company, at its option, may repurchase any of these engines at a
predetermined percentage of the original leased amount beginning in July 1998.
The engines subject to this agreement are currently on lease by the Company to
third parties. Payments under such leases provide sufficient cash flow to exceed
the Company's payments to NBLC. The proceeds from the sale of these engines were
used by the Company to reduce the outstanding balance of its credit facility
with NationsBank. On February 18, 1998, the Company repurchased one of the
engines in order to sell it to a third party leasing company.

         On August 21, 1997, the Company issued and sold Class A Preferred Stock
and Class B Preferred Stock to The Clipper Group for an aggregate purchase price
of approximately $5.0 million, with the proceeds being used to reduce the
outstanding balance of its credit facility with NationsBank.

         Also, on August 21, 1997, the Company issued and sold 327,772 shares of
Class A Common Stock to Mr. Sragowicz for an aggregate purchase price of
approximately $2.3 million as payment for loans made by Mr. Sragowicz to the
Company in the amount of approximately $2.0 million and payment for the
remaining inventory of Pratt & Whitney engine parts valued at $270,648 related
to an agreement between the Company and Parati Corporation.

         On November 3, 1997, the Company completed an initial public offering
of 4,500,000 shares of its Class A Common Stock at an offering price of $8.50
per share. Of the shares of Class A Common Stock offered thereby, 3,033,000
shares were sold by the Company and 1,467,000 shares were sold by Sragowicz
Foundation, Inc. On December 3, 1997, the Company sold an additional 330,325
shares of its Class A Common Stock at an offering price of $8.50 per share price
upon the exercise of an underwriters' over-allotment option. The Company
received aggregate net proceeds from the initial public offering of
approximately $25.6 million. Of this amount, $12.5 million was used to repay
outstanding indebtedness, $200,000 was used for payment of accrued compensation
and the remainder is being used for working capital and general corporate
purposes, including the purchase of surplus aircraft, aircraft engines, engine
parts and airframe material for the Company's inventory.


                                     Page 8


<PAGE>   11




         The Company has established a capital expenditure budget of
approximately $1.75 million during 1998, including approximately $750,000 for
additional engine tooling in the Company's disassembly operations, approximately
$150,000 for enhancements to the Company's management information systems,
approximately $400,000 for warehouse improvements, approximately $300,000 for
additional leasehold improvements related to planned increases in personnel,
approximately $100,000 for additional equipment to be utilized by the Company's
field service subsidiary and $50,000 for additional office furniture and
equipment.

         The Company's principal working capital requirements relate to the
acquisition of inventory and carrying of receivables. The Company believes that
the current level of working capital and amounts available under the credit
facility with NationsBank will enable it to meet its liquidity requirements for
the next twelve months.

SEASONALITY

         The Company believes that demand for aircraft engines, engine parts and
airframe material is seasonal, with increased demand during the summer months.
This seasonality exists because aircraft engine performance is directly related
to ambient temperature (as temperatures rise it is more difficult for aircraft
engines to perform properly). As a result, certain aircraft engines are removed
from service during the summer months due to the failure of those particular
aircraft engines to comply with exhaust gas temperature limitations. Aircraft
engines of the same type and model can have different performance capabilities.
The summer months also include peak travel periods during which aircraft
utilization levels are high. In addition, the timing of whole aircraft engines
sold, which have a substantially greater purchase price than the installed parts
and components, may cause significant fluctuations in the Company's quarterly
operating results. The Company has in the past and may in the future experience
substantial quarterly fluctuations in sales as a result of these seasonal
effects.

IMPACT OF YEAR 2000

         The Company believes that it has prepared its computer systems and
related software to accommodate data sensitive information relating to the Year
2000. The Company expects that any additional costs related to ensuring such
systems and software to be Year 2000-compliant will not be material to the
financial condition or results of operations of the Company. In addition, the
Company is discussing with its vendors and customers the possibility of any
difficulties which may affect the Company as a result of its vendors and
customers ensuring that their computer systems and software are Year
2000-compliant. To date, no significant concerns have been identified. However,
there can be no assurance that no Year 2000-related computer operating problems
or expenses will arise with the Company's computer systems and software or in
the computer systems and software of the Company's vendors and customers.


                                     Page 9


<PAGE>   12





PART II  OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds.

         On November 3, 1997, the Company completed an initial public offering
of 4,500,000 shares of its Class A Common Stock at an offering price of $8.50
per share. Of the shares of Class A Common Stock offered thereby, 3,033,000
shares were sold by the Company and 1,467,000 shares were sold by Sragowicz
Foundation, Inc. On December 3, 1997, the Company sold an additional 330,325
shares of its Class A Common Stock at an offering price of $8.50 per share price
upon the exercise of an underwriters' over-allotment option. The Company
received aggregate net proceeds from the initial public offering of
approximately $25.6 million. Of this amount, $12.5 million was used to repay
outstanding indebtedness, $200,000 was used for payment of accrued compensation
and the remainder is being used for working capital and general corporate
purposes, including the purchase of surplus aircraft, aircraft engines, engine
parts and airframe material for the Company's inventory.

Item 5.  Other Information.

         On April 30, 1998, the Registrant, as borrower, and AVTEAM Aviation
Field Services, Inc., as guarantor, (the "Guarantor") entered into a Credit
Agreement (the "Credit Agreement") with a syndicate of lenders led by
NationsBank, as administrative agent, (the "Lenders"), pursuant to which the
Lenders agreed to make available to the Registrant a revolving credit facility
(the "Revolving Credit Facility") in the maximum aggregate principal amount of
up to $70,000,000. The Revolving Credit Facility includes (i) a working capital
revolving loan facility (the "Working Capital Revolving Loan Facility") in the
aggregate principal amount of up to $45,000,000 and (ii) an acquisition
revolving loan facility (the "Acquisition Revolving Loan Facility") in the
aggregate principal amount of up to $25,000,000. The Working Capital Revolving
Loan Facility will be used by the Registrant to finance working capital, capital
expenditures and general corporate purposes. The Acquisition Revolving Loan
Facility will be used by the Registrant to finance acquisitions permitted under
the Credit Agreement. The Credit Agreement is secured by a senior security
interest in all of the assets of the Registrant and the Guarantor. In addition,
the obligations of the Registrant under the Credit Agreement are guaranteed by
the Guarantor.

         The Registrant may borrow, repay and re-borrow funds under the Credit
Agreement until April 30, 2001. The Credit Agreement requires the Registrant to
make certain mandatory prepayments of principal and interest and permits the
Registrant to make optional prepayments of principal and interest.

         The Credit Agreement contains certain restrictions, including
restrictions on (i) incurring debt, (ii) declaring or paying any dividend or
other distribution on account of any class of stock of the Registrant, (iii)
creating liens on the Registrant's properties or assets, (iv) entering into a
merger or other business combination or (v) causing a Change in Control (as
defined below). The Registrant is also required to comply with certain financial
covenants under the Credit Agreement. A Change in Control ("Change in Control")
will result upon the occurrence of an event of default under the Credit
Agreement, when (i) any person, or group of persons acting in concert, acquires
50% or more of the voting capital stock of the Registrant or (ii) either Donald
A. Graw, the Chairman, President and Chief Executive Officer of the Registrant,
or Jaime J. Levy, the Executive Vice President of the Registrant, cease to serve
as an officer of the Registrant or are no longer active in the day-to-day
management of the business of the Registrant.

         The foregoing description of the terms of the Credit Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Credit Agreement, a copy of which is attached hereto as an exhibit and is
incorporated herein by reference.


                                     Page 10


<PAGE>   13



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

    (a)    Exhibits

         10.1     Credit Agreement dated April 30, 1998, among the Registrant,
                  AVTEAM Aviation Field Services, Inc., NationsBank, N.A., and
                  certain lenders identified therein

         10.2     Employment Agreement dated as of January 5, 1998 between the
                  Registrant and Dallas Cobb

         10.3     Employment Agreement dated as of March 1, 1998 between the
                  Registrant and Bryan T. McFarland

         10.4     Employment Agreement dated as of March 1, 1998 between the
                  Registrant and Paula Sparks

         27.1     Financial Data Schedule for the period ended March 31, 1998


    (b)    Reports on Form 8-K.

          The Registrant did not file any reports on Form 8-K for the period
ended March 31, 1998.



                                     Page 11


<PAGE>   14



                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                 AVTEAM, Inc.


                                 
                                   
                                 
                                 /s/   DONALD A. GRAW
Date:  May  15, 1998             -----------------------------------------------
                                 Donald A. Graw
                                 Chairman, President and Chief Executive Officer



                                 /s/   MARK S. KOONDEL
Date:  May  15, 1998             -----------------------------------------------
                                 Mark S. Koondel
                                 Chief Financial Officer and Treasurer












                                     Page 12


<PAGE>   15





                                  EXHIBIT INDEX



Exhibit Index     Description
-------------     -----------

         10.1     Credit Agreement dated April 30, 1998, among the Registrant,
                  AVTEAM Aviation Field Services, Inc., NationsBank, N.A., and
                  certain lenders identified therein

         10.2     Employment Agreement dated as of March 1, 1998 between the
                  Registrant and Dallas Cobb

         10.3     Employment Agreement dated as of January 5, 1998 between the
                  Registrant and Bryan T. McFarland

         10.4     Employment Agreement dated as of March 24, 1997 between the
                  Registrant and Paula Sparks

         27.1     Financial Data Schedule for the period ended March 31, 1998












                                     Page 13