UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                  FORM 10-KSB/A

                                 AMENDMENT NO. 1

               [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 1996

                                       OR

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                         Commission file number 0-21818

                          FIELDS AIRCRAFT SPARES, INC.
           (Name of Small Business Issuer as specified in its charter)

            Utah                                       95-4218263
(State or other jurisdiction of           (I.R.S. employer identification No.)
incorporation or organization)
                               2251-A Ward Avenue
                          Simi Valley, California 93065
                    (Address of principal executive offices)
         Issuer's telephone number, including area code: (805) 583-0080

    Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities  registered  pursuant to Section  12(g) of the Exchange  Act:  Common
Shares, par value $.05 per share

     Check whether the Issuer (1) has filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained, to the best of Issuer's knowledge, in definitive proxy or information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. |_|

     The  Issuer's  revenues  for the fiscal year ended  December  31, 1996 were
$5,734,000.

     As of December 31,  1996,  1,302,137  of the  Issuer's  common  shares were
issued  and  outstanding,   approximately   1,011,200  of  which  were  held  by
non-affiliates.  As of March 26, 1997, the aggregate market value of shares held
by non-affiliates (based upon last cash sale of common shares) was approximately
$6,132,000.  The Issuer believes that two shareholders  who owned  approximately
11.84% and, 8.42%  respectively as of March 26, 1997, of the total shares issued
and  outstanding  are not affiliates of the Issuer since they do not participate
in management decisions.

                    DOCUMENTS INCORPORATED BY REFERENCE: None

          Transitional Small Business Disclosure Format: Yes_____ No X


<PAGE>


                                     PART I.

ITEM 1.  BUSINESS

Development of the Company

         The primary business of Fields Aircraft Spares, Inc. (the "Company") is
the  distribution  of and  stocking  of factory new spare  parts  applicable  to
various  commercial  aircraft  models and the brokerage of a wide variety of new
and reconditioned  aircraft parts through its subsidiary Fields Aircraft Spares,
Incorporated ("FAS").

         In 1984,  the Company was organized as FEP  Resources,  Inc.  under the
laws of the State of Utah for the purpose of acquiring  business  opportunities.
In 1985,  the Company was renamed  Fields  Industrial  Group,  Inc. and acquired
Fields Industrial Supply, Inc., a California corporation that was engaged in the
sale of cutting tools and supplies.  As of 1990, that business was  discontinued
and 100% of its common stock sold to an unrelated  party on February 9, 1995. In
1987, the Company began its current business of distributing  aircraft parts. In
1988,  the  Company  incorporated  FAS as a  wholly-owned  subsidiary.  In 1995,
McDonnell  Douglas  Corporation  (together with its affiliates and/or divisions,
"MDC")  acquired  Series A  Convertible  Preferred  Stock of FAS. The  Company's
primary  business of  distribution  of spare parts for  commercial  aircraft was
commenced and has been  conducted  through FAS since 1988. In 1995,  the Company
changed its name to Fields Aircraft Spares, Inc.

         On March 29, 1995,  the Company's  shareholders  authorized the reverse
split of the  Company's  common shares on the basis of 50 old shares for one new
share. The reverse split was effective as of November 20, 1995.

         All material  aspects of the Company's  business are conducted  through
FAS.  The  Company  has an  additional  wholly  owned  subsidiary,  Fields  Aero
Management,  Inc., a California  corporation  ("FAM").  However,  no significant
operations  are conducted  through FAM. The business of the Company as conducted
through  FAS  is  referred  to in  this  document  as  the  Company's  business.
References in this document to the Company,  where appropriate,  shall be deemed
to be references to the Company and its subsidiaries, collectively.

Business of the Company

         The primary business of the Company is the distribution and stocking of
factory new spare parts applicable to various commercial aircraft models and the
brokerage of a wide variety of new and reconditioned aircraft parts through FAS.
The Company's  business is concentrated in the distribution and stocking,  as an
authorized   factory   distributor  for  various   manufacturers,   of  interior
replacement parts for a wide variety of commercial  aircraft models. The Company
also distributes from what it believes to be the largest  inventory,  outside of
McDonnell  Douglas  Corporation,  of factory new parts for DC-8, DC-9, DC-10 and
MD-80 aircraft,  and also purchases and distributes  both new and used parts and
related  equipment from other aircraft  manufacturers  for other  aircraft.  The
Company  sells,  exchanges  or leases  parts to  commercial  aircraft  operators
servicing  both the passenger and cargo markets,  to overhaul  facilities and to
brokers throughout the world.



<PAGE>

         Distributorships

         The  Company  provides   distribution  services  for  manufacturers  of
aircraft spare parts.  The Company has decided,  at this time, to concentrate on
interior parts and is an authorized  distributor  for a number of  manufacturers
providing replacement parts for lavatories,  galleys,  seats, latches,  lighting
and cleaning  products.  The Company is in varying stages of negotiations with a
number  of  other  manufacturers  with  respect  to  becoming  their  authorized
distributor.

         The  Company's  salespersons  solicit  annual  usage  projections  from
customers which are used by management to determine inventory stocking levels.

         During the fourth  quarter of 1996,  a major US airline  and a regional
carrier each  appointed  the Company as their  exclusive  source of  replacement
parts for a leading  manufacturer of galleys and  lavatories.  The Company is in
varying stages of  negotiations  with a number of other airlines to become their
exclusive source of various interior  replacements  parts. No formal  agreements
have been reached with other airlines.

         As of December 31, 1996, backlog of distributorship orders for shipment
in 1997,  which the Company  believes to be firm, was in excess of $1.6 million.
There was no backlog of distributorship orders as of December 31, 1995.

         The Company believes that  distributorships  will represent over 50% of
the  Company's  gross  revenue in 1997,  up from 28% in 1996.  Accordingly,  the
majority of the Company's resources will be directed to this area of business.

         McDonnell Douglas Parts

         The Company  believes that it has the largest  factory new inventory of
DC-8,  DC-9,  DC-10 and MD-80 parts outside of MDC. This  inventory  consists of
over $80 Million,  catalog value, of factory new spare parts purchased  directly
from MDC. MDC inventory is generally  sold at a discount to catalog  value.  The
total future discount to catalog value cannot be quantified at this time.

         An important factor in the aircraft spare parts distribution  market is
the  documentation or traceability that is supplied with an aircraft spare part.
MDC has  re-certified  this inventory as directly  traceable to their production
certificate,  and is the only  inventory  known to the Company  outside of MDC's
direct  control that has been  certified to allow them to repurchase and ship to
customers  without having to go through their quality  control  department for a
source inspection.

         Based upon its market research, the Company believes that in many cases
parts in this inventory are the only new material and in many cases are the only
material available in any condition.


                                        2

<PAGE>

         McDonnell Douglas Corporation Contracts

         On February 7, 1995,  the Company  and  McDonnell  Douglas  Corporation
("MDC")  entered  into a  Debt  Restructure  Agreement  and  related  agreements
(collectively the "Current Agreement") pursuant to which MDC canceled $7,658,500
of debt  owed by the  Company  in  exchange  for  586,862  shares  of  Series  A
Convertible Preferred Stock of FAS (the "Series A Shares") and a cash payment of
$850,000.

         In connection with the Current  Agreement,  the Company and MDC entered
into a Securities  Exchange  Agreement  of even date with the Current  Agreement
(the "Exchange  Agreement").  The Exchange  Agreement provided for the mandatory
exchange  of the Series A Shares for 25% of the  issued and  outstanding  common
shares of the  Company,  par value $.05 per share (the  "Common  Shares"),  on a
fully diluted basis within 10 days following the date on which the Common Shares
are  approved  for  quotation,  and are quoted for trading on, the Nasdaq  Stock
Market as a Small Cap Market Security.  The Exchange  Agreement further provides
for the Company to register the Common Shares  issued to MDC in connection  with
the Exchange Agreement under certain circumstances.

         On March 26, 1997, the Company's  Common Shares began  quotation on the
Nasdaq  SmallCap  Market.  Accordingly,  the Company  exchanged the MDC Series A
Shares for 564,194 Common Shares on April 4, 1997.

         Peter  Frohlich,  Alan Fields and Lawrence  Troyna (each an officer and
director of the Company and collectively referred to as the "Fields' Group") and
the Company and MDC have entered  into a Voting  Agreement of even date with the
Current Agreement (the "Voting  Agreement").  The Voting Agreement provides that
MDC will vote the Series A Shares and Common Shares owned by MDC (i) in favor of
directors proposed by the Fields' Group, provided MDC has the right to designate
up to 25% of the  directors  proposed  if MDC so elects and (ii) in favor of any
matter  reasonably  deemed  necessary  by the Company to have the Common  Shares
qualified and listed on the Nasdaq Stock Market.

         The Current Agreement provides that where it is in the best interest of
the  parties,  MDC and the  Company  will move  forward on a number of  business
activities.  The Company and MDC are currently  exploring the following business
activities:  1)  consignment  of a  portion  of  MDC's  excess  customer  spares
inventory to the Company;  2) on a selective basis, MDC providing spare parts to
the Company at a discount;  3) MDC  purchasing  inventory  from the Company,  at
mutually  agreed prices,  when items that are in inventory are needed by MDC; 4)
MDC purchasing spare parts from the Company through brokerage arrangements where
items not in inventory,  but which can be located by the Company,  are needed by
MDC;  and 5) MDC  cooperating  with the  Company in  identifying  and  acquiring
additional inventories of aircraft spare parts.


                                        3
<PAGE>

         The Company is currently marketing spare parts that MDC considers to be
surplus to their  needs.  There are no other  current  agreements  in place with
respect  to any such  various  activities  and there is no  assurance  any other
agreements will result from such discussions.

         Brokerage Sales

         The Company receives requests from its customers for parts that are not
currently held in its inventory.  The salesperson  receiving this request checks
various computerized  databases as well as utilizes the knowledge of the Company
and its staff to locate a suitable  part.  Once  located,  a  purchase  price is
agreed with the owner of the part.  At that time,  the sales person will contact
the customer and extend a quote.  If the quote is accepted by the customer,  the
part is purchased  and  shipment to the  Company's  warehouse is arranged.  When
received at the  warehouse,  both the part and its  accompanying  paperwork  are
inspected. After inspection and acceptance, the part is shipped to the customer.

         Because of government and industry group guidelines, aircraft operators
have  become  increasingly  more  careful  about from whom they buy  parts.  The
Company has had its quality control systems and procedures audited and evaluated
by MDC as well as by a number of major  airlines and freight  operators.  Almost
every major U.S. airline,  freight operator and overhaul facility has designated
the Company as either an approved or preferred vendor. This preferred status has
enabled the Company to act as a broker to purchase  parts for airlines  when the
Company does not have the parts in stock.

         Because parts for brokerage  are not  purchased  until a  corresponding
sale has been made, it is less capital  intensive  than the purchase and sale of
inventory. Brokerage allows incremental increases in sales without corresponding
increases in overhead.

         Marketing Arrangements

         The  Company is  currently  in  negotiations  with  several  parties on
exclusive and  non-exclusive  marketing  arrangements.  The basis of a marketing
arrangement is similar to a consignment  agreement,  except the Company does not
physically warehouse the spare parts.

         Operations

         The Company maintains an inventory  consisting primarily of factory new
aircraft  spare parts in its  warehouse in Fillmore,  California.  The Company's
inventory  is listed in two  computerized  data banks that are  available to the
airline industry: SPEC 2000 and the Inventory Locator System. The Company pays a
fee to be listed on such  systems  and  continually  updates the systems to keep
them current. In addition, the Company provides an inventory listing in computer
readable form to many of its major  customers.  The Company  receives orders for
spare parts from commercial  aircraft operators servicing both the passenger and
cargo markets,  from overhaul facilities and from brokers. The Company currently
has four full-time inside

                                        4
<PAGE>

salespersons and three full-time outside salespersons. Additionally, the Company
is represented  on an  international  basis by a number of  independent  outside
general sales agents.

         Orders for parts in inventory are filled and shipped, 24 hours per day,
F.O.B.  from the  warehouse,  generally  within five hours of the receipt of the
order.  The Company believes that the turn-around time between the time an order
is taken and the part is  delivered  is a key service for which the  customer is
willing to pay.  Reducing  the time that an aircraft is on the ground is a major
advantage the Company  offers to its  customers.  The Company is 60 minutes from
Los Angeles  International Airport and has a delivery service to the airport. In
addition,  the Company utilizes commercial cargo carriers to deliver spare parts
to the Los Angeles  airport and around the world.  The  Company  emphasizes  its
service, which is to respond quickly and assist customers in obtaining parts.

         Consignments

         On  June  27,  1995  the  Company  entered  into a 3  year  consignment
arrangement  to warehouse  and market spare parts for Airweld of Kentucky,  Inc.
Other  consignment  arrangements  are currently under  negotiation,  although no
assurances  can be made that the Company will be successful in completing  those
negotiations.   Under  such  consignment   arrangements  the  consignor  retains
ownership and the Company arranges the sales for the consignor.

         Parts warehoused by the Company under consignment arrangements are also
listed  by the  Company  in the  SPEC  2000  and the  Inventory  Locator  System
computerized   databanks.   In  addition,   the  Company  adds  the  consignment
inventories to the inventory listings that it provides its customers in computer
readable form.

Pricing

         The  price at which  the  Company  sells  parts  is based  upon  market
competition.

Marketing

         The  Company  currently  concentrates  its  marketing  efforts  in  the
following areas:

                  (i) commercial airlines servicing the passenger market;

                  (ii) commercial airlines servicing the cargo market;

                  (iii) aircraft leasing companies; and

                  (iv) overhaul facilities.


                                        5

<PAGE>

         The Company intends to continue  concentrating its marketing efforts in
these areas as its business expands.

         The Company has not conducted  any formal  market  studies to determine
the actual size of each of its current and any proposed markets, and relies upon
the experience of its officers and key employees for such judgments.

         The Company sells its products through three primary methods:

                  1.       The use of computerized parts database systems.

                  2.       The  use of  its  own  sales  staff  which  currently
                           includes  7  salespersons.  This  staff  works at the
                           Company's  corporate  office by calling on  customers
                           and  potential  customers to  determine  the needs of
                           such  customers  as well as  responding  to  incoming
                           calls. Once the need is determined, the order is then
                           sent to the Company's warehouse.

                  3.       The use of exclusive and  non-exclusive general sales
                           agency agreements.

         The Company markets its products primarily as follows:

         The  Company  has  developed   literature  and   advertising   material
describing the Company's products and services. The literature is distributed by
the Company's sales staff and agents, as well as by mail, to previous customers,
persons who have responded to previous  advertising and companies believed to be
engaged in the relevant market.

         The Company also uses media advertising directed toward specific market
segments such as trade  journals and technical  publications.  In addition,  the
Company attends trade shows and puts on exhibitions  directed to specific market
segments.

         During the fiscal year ended  December  31,  1996,  one customer of the
Company accounted for more than 10% of sales. No other single customer accounted
for more than 10% of the Company's  sales.  During the prior fiscal year, two of
the Company's customers each accounted for more than 10% of sales.

         In an effort to increase  foreign sales,  the Company intends to engage
additional independent representatives to serve foreign markets.

Competition

         The  Company  competes  with a number  of large and  small  sellers  of
aircraft spare parts in various markets. For many of the Company's  competitors,
the sale of aircraft spare parts is only a part of larger sales operations. Many
of the Company's  competitors are larger and more  established  than the Company
and have greater financial resources and larger facilities and

                                        6
<PAGE>

marketing forces. The Company's  increased emphasis during the past two years on
distributorships and foreign markets has exposed the Company to new competitors,
including foreign competitors.

         Although the Company has not performed any market  survey  studies,  it
believes  that its  competition  is based  primarily  upon  service,  price  and
reputation of the supplier. The Company believes that it is competitive and that
it  enjoys a good  reputation.  There  can be no  assurance,  however,  that the
Company has, or can  maintain,  a  significant  competitive  advantage in any of
these areas.

Government Regulation

         The   Company's   business  is  regulated   by  the  Federal   Aviation
Administration  ("FAA").  The FAA has numerous regulations that must be complied
with by the Company.

         The Company is subject to federal  governmental  regulation  on foreign
sales of its  products.  Depending  on the type of  product,  the Company may be
subject to review by the various federal agencies for a determination of whether
the specific product is a high technology product subject to restriction. Export
licenses may be denied for certain high technology products.  If such a decision
is rendered,  the Company may experience  substantial time delays and expense in
the  application  and approval of export  licenses.  If export  licenses are not
granted,  the Company  would be precluded  from selling such products in certain
foreign markets.

         The  Company's  sales in  foreign  countries  are  subject  to  various
applicable  foreign  governmental  regulations.  To date,  compliance  with such
regulations has not had a material adverse effect on the Company's operations.

Employees

         The  Company  has  26  full-time  employees,  including  its  executive
officers, and two part-time employees. Eight are engaged in sales and marketing,
four in administration and the remainder in warehouse and support services. None
of the  employees  are  unionized  and  management  is of the  opinion  that its
relationship with its employees is good.  Management  believes that persons with
requisite training and experience are readily available to meet Company needs if
and when necessary.

Financing Arrangements

         On February 7, 1995, the Company owed  $7,658,000 to MDC made up of the
original  note of  $3,387,000  granted  at the time of the  Original  Agreement,
deferred  interest of $1,138,000 and deferred  sales  commissions of $3,133,000.
Additionally,  the Company's bank lender was owed approximately  $5,500,000.  At
that time the Company closed the Current  Agreement and Exchange  Agreement with
MDC described above.

                                        7

<PAGE>

         On February 9, 1995, the Company,  through FAS,  entered into a line of
credit  arrangement  (the "Credit  Agreement") with Norwest Business Credit Inc.
("Norwest")  providing  originally  for a  line  of  credit  in  the  amount  of
$10,000,000 with interest payable monthly at 2.5% over the prime rate.  Although
due on demand,  it expires in February  1998.  The line of credit was  partially
used to repay the bank lender  $5,500,000 and to pay $850,000 to MDC. All assets
of the Company and its subsidiaries are pledged as collateral.

         The Norwest credit line of $10,000,000  was initially  divided into two
areas: an $8,000,000  inventory line and a $2,000,000  accounts receivable line.
Commencing  April 1995 the available  inventory  credit  reduced by $100,000 per
month. The available  accounts  receivable credit could increase up to a maximum
of  $10,000,000  depending on the amount of accounts  receivable;  however,  the
total  of  the  inventory  line  and  accounts  receivable  line  cannot  exceed
$10,000,000.  In August  1996,  The Fourth  Amendment to Credit  Agreement  (the
"Fourth Amendment") reduced the maximum amount outstanding at any time under the
Credit  Agreement to $6,900,000 with monthly  reductions of $250,000  commencing
October  1996.  Subsequent  to the  year  end,  the  Fifth,  Sixth  and  Seventh
Amendments to the Credit  Agreement were signed which reduced the maximum amount
permitted  to  be  outstanding  to   $6,150,000,   $6,100,000  and   $6,081,000,
respectively.  In March  1997,  an  Eighth  Amendment  was  entered  into  which
increased the maximum amount permitted to be outstanding to $6,131,000.

         In June 1996,  FAS entered into a Third  Amendment to Credit  Agreement
with Norwest  whereby,  among other  things,  the interest rate was increased to
5.5% over the prime rate. In August 1996, the Fourth Amendment further increased
the interest rate payable to Norwest by .5% per month  commencing  October 1996.
As of December 31, 1996, the interest rate was 15.25%.

         As of December 31, 1996,  the Company was in default with Norwest.  The
Credit  Agreement with Norwest  required that the Company,  as of June 30, 1996,
achieve net earnings from  operations  for the six months ending on that date of
$150,000  whereas the Company had a net loss from  operations for that period of
$679,000.  Subsequently,  on March 12, 1997, Norwest waived all and any defaults
by the Company up to that date.

         On April 18, 1997, the Company's wholly-owned subsidiaries entered into
separate Loan and Security Agreements for an aggregate of up to $10,000,000 with
NationsCredit Commercial Funding ("NationsCredit") at an annual interest rate of
prime plus 3%.  NationsCredit  advanced  $6,717,000  on April 18, 1997 which was
used to repay the  obligations  owed to  Norwest  and  other  fees  incurred  in
connection  with  the  NationsCredit  loan  facility.  In  connection  with  the
NationsCredit  loan  facility,  the Company  issued  NationsCredit  an option to
acquire 40,000 Common Shares of the Company at a price of $6.25 per share.

         In connection with the Norwest and NationsCredit credit facilities, the
Company  retained a  financial  advisor to assist the Company in  obtaining  and
closing the credit facilities. At the closing of each facility, the Company paid
the  financial  advisor a fee of  $200,000.  The  Company  also  entered  into a
two-year contract with the financial advisor in February 1995

                                        8
<PAGE>

whereby the financial  advisor will provide  ongoing  consulting to the Company.
The  contract   provides  for  the  Company  to  pay  the  financial  advisor  a
non-refundable  retainer of $150,000,  which was originally payable at a rate of
$15,000 per month for the first ten months of the contract. However, the parties
subsequently  agreed that the retainer  would be payable at a rate of $7,500 per
month. The agreement with the financial  advisor is  non-exclusive  and does not
provide for  additional  completion  fees which would be negotiated on a case by
case basis.

ITEM 2.  DESCRIPTION OF PROPERTY

         The  Company's  warehouse  is  located  at 341  "A"  Street,  Fillmore,
California.  The  executive  offices  are located at 2251-A  Ward  Avenue,  Simi
Valley,  California and its telephone  number is (805)  583-0080.  The warehouse
building  was leased by the Company in 1988.  In 1991 the Company  exercised  an
option to purchase the building for $885,000.  The executive  offices located at
the warehouse were severely  damaged during the January 17, 1994  earthquake and
are no longer in use. The warehouse itself was only partially damaged, while the
inventory was not damaged.  The building was insured against  earthquake damage.
During 1996, the Company received $1,250,000 in final settlement of its claim.

         The warehouse is an older produce-packing building of wood and concrete
construction  with a  high-ceiling  upper  floor and a  concrete  lower/basement
floor, all clear span except for wooden pillar supports.  The total storage area
for both floors is 83,600 sq. ft.  Exterior  open- air storage area (secured) is
approximately 18,700 sq. ft.

         A modern fire-prevention system with a ceiling water pressure sprinkler
system is installed on both floors.  A visual/aural  monitoring  security system
operates inside the building and in all the exterior  property  contained within
the fenced area.

         As a result of the  damage to the  Company's  executive  offices in the
warehouse,  the Company leased its current  executive offices from a third party
at a monthly rental of $4,451.
The property is leased on a month to month basis.

         On March 21, 1997 the Company  signed a  new lease  effective August 1,
1997 for a facility  to replace  its  current  executive  offices and to provide
additional  warehousing  capabilities.  The facility  consists of  approximately
7,500 sq. ft. of offices  and 16,500 sq. ft. of  warehouse  space.  The  monthly
rental is $12,000 and the lease expires in 2002.

         The Company  maintains an executive office located in London,  England.
The office is leased from a third party by Belgravia Financial Services Limited,
an entity  owned and  controlled  by certain  officers  of the  Company,  and is
sublicensed  to the Company on a month to month basis at a monthly rental to the
Company of $1,900.  The underlying lease expires September of 1999. See "Certain
Relationships and Related Transactions."


                                        9
<PAGE>

         The following chart provides more detailed  information  concerning the
Company's properties:

                           Approximate Size
                                  in
Location                 Sq. Ft. of Facility   Lease Expiration    Primary Use

Fillmore, California            83,600(1)          Owned            Warehouse

Simi Valley, California          5,000         month to month  Executive Offices

London, England                  1,000(2)      month to month  Executive Offices

Simi Valley, California(3)      24,000              2002       Executive Offices
                                                                 and Warehouse


(1)      Located on two acres.
(2)      Licensed from Belgravia Financial Services Limited. Belgravia Financial
         Services.
         Limited has a lease on the property that expires in September 1999. See
         "Certain Relationships and Related Transactions."
(3)      Effective August 1, 1997.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is currently not a party to any known litigation.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were  submitted  during the fourth quarter of the year ended
December 31, 1996 to a vote of the Company's shareholders.


                                       10
<PAGE>

                                    PART II.

ITEM 5.  MARKET FOR COMMON SHARES AND RELATED SHAREHOLDER
MATTERS

Market Information

         During  1995 and  until  May 17,  1996,  there  was no  market  for the
Company's Common Shares.  The Common Shares were quoted  over-the-counter  under
the symbol FASS until March 25,  1997.  Commencing  March 26,  1997,  the Common
Shares were quoted on the Nasdaq  SmallCap  Market  under the symbol  FASI.  The
following table sets forth, for the fiscal quarters indicated,  the high and low
bid  quotations  as reported by the National  Quotation  Bureau and based on the
Company's  records.  The quotations reflect  inter-dealer  prices without retail
mark-up, mark-down or commission, and may not represent actual transactions.


          1996                High Bid          Low Bid

     Second Quarter
(beginning May 17, 1996)         6 1/2           2 1/2

      Third Quarter              5               4

     Fourth Quarter              5               2 1/2


Shareholders.

         At April 4, 1997, the number of record holders of the Company's  Common
Shares was approximately 300. The Company has no outstanding preferred shares.

Dividends

         The Company  has  utilized  all  available  funds for  working  capital
purposes and has never paid a dividend.  Management  does not anticipate  paying
dividends in the  foreseeable  future on Common Shares or preferred  shares.  In
addition, the Company's loan provisions restrict the payment of dividends by the
Company.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations

         The  following  discussion  should  be read  in  conjunction  with  the
consolidated  financial statements and related notes thereto set forth elsewhere
in  this  Annual  Report.  The  following  tables  illustrate  certain  selected
financial information regarding the Company and its subsidiaries:


                                       11

<PAGE>
<TABLE>
<CAPTION>


                                          FOR THE YEAR ENDED DECEMBER 31,
=============================================================================================================================
Statement of Operations Data:                                1996                     1995                    1994
                                                             ----                     ----                    ----
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                      <C>                     <C>        
Sales                                                        $ 5,734,000              $ 5,589,000             $ 2,965,000
-----------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                           $  (242,000)              $ 4,547,000            $(1,337,000)
-----------------------------------------------------------------------------------------------------------------------------
Net income (loss) per common share                          $     (0.13)              $      3.47            $     (1.51)
-----------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Balance Sheet Date: December 31,                             1996                     1995                    1994
                                                             ----                     ----                    ----
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                      <C>                     <C>        
Total Assets                                                 $11,499,000              $10,934,000             $10,217,000
-----------------------------------------------------------------------------------------------------------------------------
Current Liabilities                                          $ 7,418,000              $ 8,533,000             $14,206,000
-----------------------------------------------------------------------------------------------------------------------------
Long Term Liabilities                                        $   268,000                      -0-             $   457,000
-----------------------------------------------------------------------------------------------------------------------------
Minority Interest                                                    -0-              $ 2,050,000                      --
-----------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity (Deficit)                               $ 3,813,000              $   351,000            $(4,446,000)
=============================================================================================================================
</TABLE>

Results of Operations

         To date, the Company has not achieved sustained profitable  operations.
The Company may incur losses in the future. If such losses do occur, the Company
may be  required  to reduce its  inventory  and its  marketing  efforts and seek
additional financing.

         The  following  table sets for the  percentages  which the items in the
Company's  consolidated  statement  of  operations  bears to net  sales  for the
periods indicated:
<TABLE>
<CAPTION>
                                                                             Fiscal Year
                                                        ------------------------------------------------------
                                                        ------------------------------------------------------
                                                                1996             1995             1994
                                                                ----             ----             ----
Statements of Operations Data:
<S>                                                            <C>              <C>              <C>   
   Net Sales                                                   100.0%           100.0%           100.0%
   Cost of Sales                                                51.9             44.1             37.0
                                                                ----             ----             ----
       Gross Profit                                             48.1             55.9             63.0
   General and administrative expenses                          45.5             43.2             70.7
   Interest expense, net                                        23.3             20.8             34.2
                                                                ----             ----             ----
       Operating Profit (loss)                                 (20.7)            (8.1)           (41.9)
   Other income                                                 16.6             88.4              0.0
                                                                ----             ----              ---
       Income (loss) before income taxes                       (4.1)             80.3            (41.9)
  Income tax expense (credit)                                   0.1              (1.0)             3.2
                                                                ---              -----             ---
       Net income (loss)                                       (4.2)             81.3            (45.1)
                                                               =====             ====            ======
</TABLE>

                                       12

<PAGE>

Years Ended December 31, 1996 and 1995


         Sales for the year ended  December 31, 1996  increased by $145,000,  or
2.6%, to $5,734,000  as compared to $5,589,000  for the year ended  December 31,
1995.  The  increase  in net  sales  was  attributable  to a 71.4%  increase  in
distributorship  and  brokerage  sales  offset  by a  decrease  of  36.2% in MDC
inventory gross sales.  The trend of overall  increasing net sales and the shift
to  distributorship  and brokerage  sales is evidenced by 1997 sales through the
quarter  ended March 31, 1997 as compared to the quarter ended March 31, 1996 as
follows:  An increase in net sales of 54.0%, an increase in distributorship  and
brokerage  sales of 138.7% and a decrease in MDC inventory  sales of 35.1%.  The
increase in distributorship  and brokerage sales is expected to continue and the
decrease in MDC inventory sales is expected to level off.

         Cost of  goods  sold for 1996  increased  by  $513,000,  or  20.8%,  to
$2,975,000  from  $2,462,000 in 1995.  Cost of goods sold were 51.9% of sales in
1996  compared to 44.1% of net sales in 1995.  The reduction in the gross margin
percentage is a result of the increasing  proportion of total sales  represented
by brokerage and distributorship  transactions as opposed to MDC inventory where
the margins are larger.

         Total  operating  expenses  before  non-recurring   earthquake  expense
reimbursement of $150,000 for 1996 increased by $519,000, or 14.5% to $4,096,000
as compared to $3,577,000  for 1995.  Net operating  expenses for 1996 after the
non-recurring earthquake expense reimbursement of $150,000 was $3,946.000.  This
increase is principally  attributable to additional expenses associated with the
increase  in sales,  the shift of sales and  higher  interest  expense.  General
administrative  expenses  increased  $344,000  or  14.2%  and  interest  expense
increased  $175,000 or 15.0%.  The major  portion of the increase in general and
administrative  expenses  resulted from  additional  staffing  costs incurred to
generate the increased  distributorship  and brokerage  sales.  Interest expense
increased  because of an increase in the rate charged by the  Company's  primary
lender and because of the fees associated with several  amendments to the Credit
Agreement.

         Operations  of the Company and its  subsidiaries  for 1996  generated a
loss of  $1,187,000,  as compared  to a loss of $450,000 in the prior year.  The
increase of $737,000 in the loss from  operations in 1996 is  attributable to an
increase in operating and interest expenses and a reduction in gross margin.

         During 1996, the Company  recognized a  non-recurring  gain of $949,000
from  the  recovery  of a  casualty  insurance  claim  as a  result  of the 1994
earthquake. During 1995, the Company recognized a $4,759,000 gain on exchange of
debt as a  result  of the  exchange  of  preferred  stock  of a  subsidiary  for
$6,809,000 of debt of that  subsidiary.  In addition,  the Company  recognized a
non-recurring gain of $183,000 from the sale of a subsidiary.

         As a result of the  foregoing,  the  Company  had a net loss in 1996 of
$242,000,  as  compared  to net  income in 1995 of  $4,547,000,  a  decrease  of
$4,789,000.

                                       13

<PAGE>

Years Ended December 31, 1995 and 1994

         The Company had net income of  $4,547,000  for the year ended  December
31, 1995  compared to a net loss of $1,337,000  for the year ended  December 31,
1994. The increase in net income is attributable to a decrease in operating loss
of approximately $792,000 and non-recurring gains recognized during 1995.

         During 1995,  the Company  recognized a $4,759,000  gain on exchange of
debt as a  result  of the  exchange  of  preferred  stock  of a  subsidiary  for
$6,809,000 of debt of that  subsidiary.  In addition,  the Company  recognized a
non-recurring gain of $183,000 from the sale of a subsidiary.

         Operations  of the  Company  and its  subsidiaries  for the year  ended
December  31,  1995  generated  a loss of  $450,000  as  compared  to loss  from
operations  of  $1,242,000  in the  prior  year.  Sales  for 1995 and 1994  were
$5,589,000  and  $2,965,000,  respectively.  The  reduction  in  the  loss  from
operations in 1995 is attributed to increased sales and a reduction in operating
expenses as a percentage of sales.

         Among  factors  causing the  increase in sales were an expansion of the
sales  team,  the  completion  of  the  Company's  refinancing,   which  allowed
management  to  concentrate  its efforts  toward  marketing,  and the ability to
pursue brokerage transactions, which the new refinancing package allowed.

         Costs  of  goods  sold  for the  year  ended  December  31,  1995  were
$2,462,000  (approximately  44% of sales) compared to $1,096,000  (approximately
37% of sales) for the prior year.  The reduction in the gross margin  percentage
is a result of the increasing proportion of total sales represented by brokerage
transactions  as  opposed  to sales of owned  inventory  where the  margins  are
larger.

         Total operating expenses before non-recurring items were $3,577,000 for
the year ended  December 31, 1995 compared with  $3,111,000  for the prior year.
The increase is due  principally  to  additional  expenses  associated  with the
increase in sales, and the higher interest expense.

Liquidity

         At December 31, 1996 the Company had working capital (current assets in
excess of current  liabilities)  of  $2,434,000  compared to working  capital of
$657,000  on December  31,  1995.  The  increase in  liquidity  is  attributable
principally  to a decrease in short term bank debt as a result of the  Company's
receipt of both the proceeds of a casualty insurance claim and the proceeds of a
sale of Common Shares and Warrants to non-United  States investors by means of a
private  placement  memorandum  under Regulation S of the Securities Act of 1933
(the  "Securities  Act").  The Company  received  the  proceeds of the  casualty
insurance claim after it agreed on a final settlement with its insurance company


                                       14

<PAGE>

on its claim following the January 17, 1994 Los Angeles earthquake. This change,
coupled with an increase in distributorship  inventory,  was partially offset by
an increase in accounts payable and accrued liabilities.

         Operating  activities  used $350,000 and $820,000 of the Company's cash
flow for the year ended  December  31,  1996 and the prior  year,  respectively.
Increases  in accounts  payable and accruals of $467,000  and  depreciation  and
amortization of $120,000  generated cash. Such amounts were partially  offset by
an  increase  of $456,000 in  inventories  and  $272,000 of other  assets and an
increase in accounts receivable of $226,000.

         In June 1996,  FAS entered into a Third  Amendment to Credit  Agreement
with Norwest  whereby,  among other  things,  the interest rate was increased to
5.5% over the prime rate. In August 1996, FAS entered into a Fourth Amendment to
Credit Agreement further  increasing the interest rate payable to Norwest by .5%
per month  commencing  October 1996. As of December 31, 1996,  the interest rate
was 15.25%.

         The Credit Agreement with Norwest required that the Company, as of June
30, 1996, achieve net earnings from operations for the six months ending on that
date of $150,000  whereas the  Company had a net loss from  operations  for that
period of $679,000.  Norwest had indicated to the Company that it did not intend
to take any action as a result of the  default,  but  reserved its right to take
appropriate action at any time. Subsequently,  on March 12, 1997, Norwest waived
any and all defaults by the Company up to that date.

         On April 18, 1997, the Company's wholly-owned subsidiaries entered into
separate Loan and Security Agreements for an aggregate of up to $10,000,000 with
NationsCredit Commercial Funding ("NationsCredit") at an annual interest rate of
prime plus3%, NationsCredit advanced $6,717,000 on April 18, 1997 which was used
to repay the  obligations  owed to Norwest and other fees incurred in connection
with the NationsCredit loan facility.  In connection loan facility,  the Company
issued NationsCredit an option to acquire 40,000 common shares of the company at
a price of $6.25 per share.

Capital Resources

         The Company's  operations to date have been  primarily  funded  through
bank loans and vendors deferred purchase notes.


                                       15

<PAGE>

         The Company had no  commitments  of capital  resources  at December 31,
1996.  On February 9, 1995,  the Company,  through  FAS,  entered into a line of
credit  arrangement with Norwest providing for a line of credit in the amount of
$10,000,000.  At December 31, 1996,  approximately $6,232,000 of credit had been
extended under the credit line of $10,000,000.

         The Norwest credit line of $10,000,000  was initially  divided into two
areas: an $8,000,000  inventory line and a $2,000,000  accounts receivable line.
Commencing  April 1995 the available  inventory  credit  reduces by $100,000 per
month. The available  accounts  receivable credit could increase up to a maximum
of  $10,000,000  depending on the amount of accounts  receivable;  however,  the
total  of  the  inventory  line  and  accounts  receivable  line  cannot  exceed
$10,000,000.  The Fourth Amendment reduced the maximum amount outstanding at any
time to $6,900,000 with monthly reductions of $250,000 commencing October 1996.

         Subsequent  to the year end,  the  Fifth,  Sixth,  Seventh  and  Eighth
Amendments to the Credit  Agreement were signed which reduced the maximum amount
permitted  to  be  outstanding  to   $6,150,000,   $6,100,000,   $6,081,000  and
$6,131,000, respectively.

         On February 7, 1995, the Company's wholly owned  subsidiary,  FAS, owed
MDC  $7,658,000.  In connection with the Norwest  financing,  MDC cancelled that
debt in exchange for $850,000 in cash and 586,862  Series A Shares of FAS. MDC's
investment  in FAS is  reflected as a minority  interest in a subsidiary  on the
Company's  balance  sheet dated  December  31, 1995.  The minority  interest was
valued at  $2,050,000.  The  valuation of the minority  interest is based on the
estimated market value of the Common Shares of the Company into which the Series
A Shares of FAS may be  converted.  While the  Company  has valued the  minority
interest on this basis for accounting purposes,  the Series A Shares of FAS have
other rights and  preferences  in addition to their  conversion  rights that may
substantially increase their value.

         During 1996 MDC filed with the Securities and Exchange  Commission (the
"SEC")  a Form  13(d)  evidencing  its  beneficial  ownership  in  the  Company.
Accordingly,  although the Series A Shares were not converted into Common Shares
of the Company  prior to December  31, 1996,  the  December  31, 1996  financial
statements  have  been  prepared  as if such  conversion  had  occurred  and the
minority interest was reclassified as additional paid-in capital.

         The  Series A Shares  became  convertible  into  Common  Shares  of the
Company  at MDC's upon the  approval  of the Common  Shares  for  quotation  and
commencement of trading on Nasdaq as a Small Cap Market Security.  The Company's
Common Shares began quotation on the Nasdaq SmallCap Market  beginning March 26,
1997. On April 4, 1997 the MDC Series A Shares were exchanged for 564,194 Common
Shares.

         During 1996, the Company began a private placement transaction by means
of a private  placement  memorandum to  non-United  States  persons  pursuant to
Regulation S of the  Securities  Act.  164,283 units (the "Units")  representing
328,566 Common Shares and warrants to acquire 164,283 Common Shares at $6.25 per


                                       16

<PAGE>

share (the "Warrants") were sold for $2,135,685 between September 1996 and March
1997. The Warrants are exercisable at anytime prior to the second anniversary of
their issuance.  In addition,  the placement agent received  Warrants to acquire
32,857 Common Shares at $6.25 per share.  Etablissement Pour Le Placement Prive,
Zurich  Switzerland,  acted as the Company's  placement agent in connection with
the offering.  After brokerage and issuance  costs,  the sales resulted in a net
infusion  of  capital of  approximately  $1,654,000  at  December  31,  1996 and
approximately $1,724,000 through March 1997.

         On April 18, 1997, the Company's wholly-owned subsidiaries entered into
separate Loan and Security Agreements for an aggregate of up to $10,000,000 with
NationsCredit Commercial Funding ("NationsCredit") at an annual interest rate of
prime plus 3%.  NationsCredit  advanced  $6,717,000  on April 18, 1997 which was
used to repay the  obligations  owed to  Norwest  and  other  fees  incurred  in
connection  with  the  NationsCredit  loan  facility.  In  connection  with  the
NationsCredit  loan  facility,  the Company  issued  NationsCredit  an option to
acquire 40,000 common shares of the Company at a price of $6.25 per share.

          The Company will continue to actively seek equity  capital  infusions.
Unless operations of the Company generate a profit,  additional  capital will be
needed to continue operations in the future or operations may be reduced.  There
is no assurance the Company will be successful in securing additional capital.

          In  addition,  the Company  will seek to acquire  other  companies  in
similar  or allied  businesses.  Any such  acquisition  will only be  undertaken
following  a  careful  analysis  of the  potential  acquisition,  any  potential
synergism  with the  Company's  existing  business and the capital  needs of the
acquired  products  compared to the capital  needs and resources of the Company.
There is no assurance that any acquisitions will be successfully completed.

Forward-Looking Statements

         Statements  regarding  the  Company's  expectations  as to its  capital
resources and certain other information presented in this Form 10-KSB constitute
forward  looking  statements  within  the  meaning  of  the  Private  Securities
Litigation  Reform  Act  of  1995.   Although  the  Company  believes  that  its
expectations  are  based on  reasonable  assumptions  within  the  bounds of its
knowledge of its business and operations,  there can be no assurance that actual
results will not differ materially from its expectations. In addition to matters
affecting the economy and the Company's industry  generally,  factors that could
cause actual results to differ from  expectations  include,  but are not limited
to, the following:(i) the Company's ability to obtain future  debt financing may
be adversely  affected by its past technical  defaults on its debt financing and
its uncertainty of future  profitability;  (ii) the Company's ability to acquire
other  businesses in similar or allied  businesses may be adversely  affected if
the Company is not able to raise  additional  capital  and obtain any  necessary
debt financing;  (iii) the Company's ability to raise additional  capital may be
adversely  affected by its lack of trading volume and the Company's  uncertainty
of future profitability;  (iv) regulation by governmental  authorities,  and (v)
growth of the airline industry.


                                       17
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

         The financial statements,  supplementary data and report of independent
public accountants are filed as part of this report on pages F-1 through F-13.

The following financial statements of the Company are included beginning at page
F-1.

    Independent Auditors' Report                                     F-1

    Balance Sheet as of December 31, 1996 and 1995                   F-2

    Statement of Operations for the years ended
             December 31, 1996 and 1995                              F-3

    Statement of Shareholders' Equity (Deficit) for the years
             ended December 31, 1996 and 1995                        F-4

    Statement of Cash Flows for the years ended
             December 31, 1996 and 1995                              F-5

    Notes to the Financial Statements                        F-6 through F-13

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.


                                       18

<PAGE>


The Board of Directors
Fields Aircraft Spares, Inc.
Fillmore, California

                          Independent Auditors' Report

         We have audited the accompanying  consolidated  balance sheet of Fields
Aircraft Spares,  Inc.,  formerly known as Fields Industrial Group,  Inc., as of
December  31,  1996  and  1995  and  the  related  consolidated   statements  of
operations, shareholders' equity and cash flows for the years ended December 31,
1996, 1995 and 1994. These financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

         We conducted our audits in accordance with generally  accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly,  in all material  respects,  the financial  position of Fields  Aircraft
Spares, Inc. as of December 31, 1996 and 1995, and the results of its operations
and its cash  flows for the years  ended  December  31,  1996,  1995 and 1994 in
conformity with generally accepted accounting principles.


                              /s/ Moore Stevens Frazier and Torbet, LLP

                               Certified Public Accountants


January 23, 1997

                                      F-1


<PAGE>
                          FIELDS AIRCRAFT SPARES, INC.              EXHIBIT A

                                FORMERLY KNOWN AS
                          FIELDS INDUSTRIAL GROUP, INC.

                           CONSOLIDATED BALANCE SHEET
                               AS OF DECEMBER 31,
<TABLE>
<CAPTION>


                                   A S S E T S
                                   -----------

                                                                                           1996                 1995
                                                                                           ----                 ----

CURRENT ASSETS:
<S>                                                                              <C>                    <C>
    Cash                                                                         $          88,000      $        111,000
    Accounts receivable, net of allowance for
        doubtful accounts of $50,000  in 1996 and
        $10,000 1995                                                                     1,507,000             1,281,000
    Inventory                                                                            8,108,000             7,652,000
    Prepaid expenses                                                                       149,000               146,000
                                                                                    --------------           -----------

                 Total current assets                                            $       9,852,000      $      9,190,000
                                                                                     -------------            ----------



LAND, BUILDING AND EQUIPMENT:
    Land                                                                         $         210,000          $    210,000
    Building and building improvements                                                   1,061,000             1,132,000
    Furniture and equipment                                                                548,000               536,000
                                                                                    --------------           -----------

                 Totals                                                          $       1,819,000           $ 1,878,000
    Less accumulated depreciation and amortization                                         734,000               635,000
                                                                                    --------------           -----------

                     Total land, building and equipment, net                     $       1,085,000           $ 1,243,000
                                                                                     -------------            ----------



OTHER ASSETS:
    Debt issuance costs, net of accumulated
        amortization of $388,000  in 1996 and
        $177,000  in 1995                                                        $         300,000      $        420,000
    Other assets                                                                           262,000                81,000
                                                                                    --------------         -------------

                 Total other assets                                              $         562,000      $        501,000
                                                                                    --------------           -----------


                     Total assets                                                $      11,499,000      $     10,934,000
                                                                                      ============            ==========




<CAPTION>

        L I A B I L I T I E S  A N D  S H A R E H O L D E R S'  E Q U I T Y
        ----------------------------------------------------------------                     1996                  1995
                                                                                            ------                -----
CURRENT LIABILITIES:
<S>                                                                              <C>                    <C>
    Accounts payable                                                             $         864,000      $        488,000
    Accrued liabilities                                                                    230,000               139,000
    Income taxes payable                                                                     1,000                 1,000
    Current portion of notes payable                                                     6,323,000             7,905,000
                                                                                     -------------          ------------



                 Total current liabilities                                       $       7,418,000      $      8,533,000
                                                                                     -------------           -----------




LONG-TERM LIABILITIES:
    Notes payable, net of current portion                                        $         268,000      $
                                                                                    --------------        ---------------





MINORITY INTEREST                                                                $                      $      2,050,000
                                                                                  --------------------       -----------



SHAREHOLDERS' EQUITY:
    Common stock                                                                 $         312,000      $        297,000
    Additional paid-in capital                                                           5,065,000             1,376,000
    Retained deficit                                                                    (1,564,000)           (1,322,000)
                                                                                     -------------           -----------

                 Total shareholders' equity                                      $       3,813,000      $        351,000
                                                                                     -------------          ------------



                       Total liabilities and shareholders' equity                $      11,499,000      $     10,934,000
                                                                                      ============           ===========
</TABLE>

The accompanying notes are an integral part of this statement



                                       F-2

<PAGE>

                          FIELDS AIRCRAFT SPARES, INC.            EXHIBIT B

                                FORMERLY KNOWN AS
                          FIELDS INDUSTRIAL GROUP, INC.

                      CONSOLIDATED STATEMENT OF OPERATIONS
                        FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>


                                               1996                       1995                  1994
                                               ----                       ----                  ----

<S>                                        <C>                        <C>                     <C>
SALES                                      $  5,734,000               $  5,589,000            $  2,965,000

COST OF SALES                              $  2,975,000               $  2,462,000            $  1,096,000
                                           -----------               -----------               -----------

GROSS PROFIT                               $  2,759,000               $  3,127,000            $  1,869,000
                                           -------------             -----------               ------------

OPERATING EXPENSES:
     General and administrative            $   2,608,000              $  2,414,000            $  2,096,000
     Interest, net                             1,338,000                 1,163,000               1,015,000
                                            -------------              ----------             -------------
              Total operating expenses     $   3,946,000              $  3,577,000            $  3,111,000
                                             -------------              ----------            -------------

LOSS FROM OPERATIONS                       $  (1,187,000)             $   (450,000)           $ (1,242,000)
                                            -------------             -----------              -------------

OTHER INCOME:
     Casualty gain                         $     949,000              $       -                $      -
     Gain on exchange of debt                       -                      4,759,000                  -
     Gain on sale of subsidiary                     -                        183,000                  -
                                           ---------------            --------------           -------------

              Total other income           $     949,000              $    4,942,000           $      -
                                            --------------            --------------            -------------

(LOSS) INCOME BEFORE PROVISION
  (CREDIT) FOR INCOME TAXES                $    (238,000)             $    4,492,000           $  (1,242,000)

PROVISION (CREDIT) FOR INCOME TAXES                 4,000                    (55,000)                 95,000
                                           --------------             ---------------           -------------

NET (LOSS) INCOME                          $      (242,000)           $    4,547,000           $  (1,337,000)
                                            ==============            ===============           =============

NET (LOSS) INCOME PER SHARE
  (fully-diluted)                        $            (.13)           $        3.47           $        (1.51)
                                          =================            ==============            ================

NET (LOSS) INCOME PER SHARE (primary)    $            (.13)          $         3.47           $        (1.51)
                                          =================            ==============            ================

</TABLE>






The accompanying notes are an integral part of this statement.


                                       F-3


<PAGE>
                          FIELDS AIRCRAFT SPARES, INC.               Exhibit C

                                FORMERLY KNOWN AS
                          FIELDS INDUSTRIAL GROUP, INC.
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                        FOR THE YEARS ENDED DECEMBER 31,





<TABLE>
<CAPTION>
                                                   COMMON STOCK
                                                   -------------
                                              NUMBER                            ADDITIONAL                                 TOTAL
                                           OF SHARES                            PAID-IN          RETAINED            SHAREHOLDERS'
                                         OUTSTANDING         AMOUNT             CAPITAL          DEFICIT            EQUITY (DEFICIT)
                                        -------------       --------           ----------        --------           ----------------

<S>                                      <C>               <C>               <C>               <C>                    <C>
BALANCES, January 1, 1994                   883,232          $ 44,000        $ 1,376,000        $ (4,532,000)          $ (3,112,000)

     Common stock issued for services        61,120             3,000                                                          3,000

     Net loss                                                                                     (1,337,000)            (1,337,000)
                                          -------------      -------------    ------------       ------------           ------------

BALANCES, December 31, 1994                 944,352          $ 47,000        $ 1,376,000         $ 5,869,000)          $ (4,446,000)

     Sale of common stock                    40,000           250,000                                                        250,000

     Net income                                                                                    4,547,000               4,547,000
                                          -------------     --------------    ------------       ------------           ------------

BALANCES, December 31, 1995                 984,352         $ 297,000        $ 1,376,000         $(1,322,000)              $ 351,000

     Additional paid-in capital                                                2,050,000                                   2,050,000

     Sale of common stock                   317,785            15,000          1,639,000                                   1,654,000

     Net loss                                                                                       (242,000)              (242,000)
                                          ---------------   --------------    -------------      -------------          ------------

BALANCES, December 31, 1996               1,302,137         $ 312,000        $ 5,065,000        $ (1,564,000)            $ 3,813,000
                                          =========          ========         ==========         =============          ============


</TABLE>






The accompanying notes are an integral part of this statement.


                                       F-4

<PAGE>

                           FIELDS AIRCRAFT SPARES, INC.             EXHIBIT D

                                FORMERLY KNOWN AS
                          FIELDS INDUSTRIAL GROUP, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                        FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>

                                                                        1996                  1995                   1994
                                                                        ----                  ----                   ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                        <C>                    <C>                    <C>
     Net (loss) income                                       $        (242,000)     $      4,547,000      $      (1,337,000)
     Adjustments to reconcile net (loss)
      income to net cash (used in)
       provided by operating activities:
         Depreciation and amortization                                 120,000                89,000                 86,000
         Amortization of debt issuance costs                           211,000               177,000                112,000
         Loss on sale of assets                                         51,000
         Gain on exchange of debt                                                         (4,759,000)
         Gain on sale of subsidiary                                                         (183,000)
         Common stock issued for services                                                                             3,000
         (Increase) decrease in accounts receivable                   (226,000)             (925,000)               423,000
         (Increase) decrease in inventory                             (456,000)               84,000                288,000
         Increase in prepaid expenses                                   (3,000)              (93,000)               (20,000)
         Increase in other assets                                     (272,000)              (81,000)
         Decrease in income tax refund receivable                                            711,000                 95,000
         Increase (decrease) in accounts payable                       376,000              (225,000)               416,000
         Increase in accrued interest payable                                                                       296,000
         Increase (decrease) in other accrued liabilities               91,000              (127,000)              (186,000)
         Decrease in income taxes payable                                                    (35,000)
         Increase in deferred sales commissions                                                                      71,000
              Net cash (used in) provided by
               operating activities                          $        (350,000)     $       (820,000)     $         247,000

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of land, building and equipment                $         (13,000)     $       (156,000)     $        (176,000)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Net (payments) borrowings on line of credit             $      (1,195,000)     $      1,250,000      $
     Principal payments on notes payable                              (193,000)              (64,000)               (76,000)
     Borrowings on notes payable                                        74,000                64,000
     Costs associated with issuance of notes payable                                        (424,000)              (170,000)
     Proceeds from sale of common stock                              1,654,000               250,000
              Net cash provided by (used in)
                financing activities                         $         340,000      $      1,076,000      $        (246,000)

NET (DECREASE) INCREASE IN CASH                              $         (23,000)     $        100,000      $        (175,000)

CASH, beginning of year                                                111,000                11,000                186,000

CASH, end of year                                            $          88,000      $        111,000      $          11,000

</TABLE>


The accompanying notes are an integral part of this statement.

                                       F-5


<PAGE>
                          FIELDS AIRCRAFT SPARES, INC.
                 FORMERLY KNOWN AS FIELDS INDUSTRIAL GROUP, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1.       Summary of significant accounting policies

         a.       Principles of consolidation and company background

                  The  consolidated  Group  financial   statements  include  the
accounts of Fields Aircraft Spares, Inc., a Utah corporation,  formerly known as
Fields  Industrial  Group,  Inc.,   hereafter  referred  to  as  FASI,  and  its
wholly-owned   subsidiaries  Fields  Aircraft  Spares  Incorporated   (FASC),  a
California  corporation  and  Fields  Aero  Management,   Inc.  All  significant
intercompany accounts and activity have been eliminated.
                  In 1995, Fields  Industrial  Group, Inc.  changed its  name to
Fields Aircraft Spares, Inc.
                  The Group distributes new aircraft parts and equipment for use
on international and domestic commercial and military aircraft and purchases and
sells parts on a brokerage basis.

         b.       Concentration of credit risk

                  Substantially  all of the Group's trade  accounts  receivables
are due from  companies in the airline  industry  located  throughout the United
States and  internationally.  The Group performs periodic credit  evaluations of
its  customers'  financial  condition  and does not require  collateral.  Credit
losses  relating to customers in the airline  industry  have  consistently  been
insignificant and within management's expectations.

         c.       Concentration of sales

                  The Group had sales to foreign companies that amounted to 17%,
32% and 17% of total sales for the years ended December 31, 1996, 1995 and 1994,
respectively.

                  For the year ended  December 31, 1996 two customers  accounted
for sales of $657,000 and $351,000.  For the year ended  December 31, 1995,  two
customers  accounted  for sales of  $801,000  and  $790,000.  For the year ended
December 31, 1994, one customer accounted for $507,000 of sales.

         d.       Inventory

                  Inventory is valued at the lower of cost or market value using
the  first-in,  first-out  method.  Where a group of parts  have been  purchased
together as a lot, the cost of the lot is allocated to the  individual  parts by
management  pro  rata  to the  list  selling  price  at the  time  of  purchase.
Consistent with industry  practice,  inventory is carried as a current asset but
all inventory is not expected to be sold within one year.



                                       F-6




<PAGE>


                          FIELDS AIRCRAFT SPARES, INC.
                 FORMERLY KNOWN AS FIELDS INDUSTRIAL GROUP, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1.       Summary of significant accounting policies (continued):

         e.       Land, building and equipment

                  Land,   building   and   equipment   are   recorded  at  cost.
Depreciation  is computed  using the  straight-line  method  over the  estimated
useful lives of the assets which range from 3 to 25 years.

                  The cost and related  accumulated  depreciation of assets sold
or otherwise  retired are  eliminated  from the accounts and any gain or loss is
included in the statement of operations.  The cost of maintenance and repairs is
charged to income as incurred,  whereas significant renewals and betterments are
capitalized.  Depreciation  expense for the years ended December 31, 1996,  1995
and 1994 amounted to $120,000, $89,000 and $86,000, respectively.

         f.       Debt issuance costs

                  The  debt  issuance  costs  relate  to  the  issuance  of  new
financing.  Amortization of debt issuance costs for the years ended December 31,
1996, 1995 and 1994 amounted to $211,000, $177,000 and $112,000, respectively.

           g.        Revenue recognition

                   The Group  recognizes  revenue  from all types of sales under
the accrual method of accounting  when title  transfers.  Title transfers at the
Group's facility.

          h.        Earnings per share

                  In March  1995,  FASI's  shareholders  authorized  the reverse
split of its  common  stock on the basis of fifty old  shares for one new share.
This reverse split was effective as of November 1995.  All references  herein to
the number of shares are after the reverse split.

                  Earnings per share was computed using 1,840,543, 1,312,469 and
888,325  shares  for  the  years  ended  December  31,  1996,   1995  and  1994,
respectively.

         i.       Income taxes

                  The Group  files  consolidated  income tax  returns.  Deferred
income taxes relate to temporary  differences  between  financial  statement and
income tax reporting of certain accrued expenses, state income taxes, bad debts,
inventory, and depreciation.



                                       F-7




<PAGE>


                          FIELDS AIRCRAFT SPARES, INC.
                 FORMERLY KNOWN AS FIELDS INDUSTRIAL GROUP, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1.       Summary of significant accounting policies (continued):

                      The  Group  adopted  Statement  of  Financial   Accounting
Standards  No.  109,  "Accounting  for  Income  Taxes".  SFAS 109  requires  the
recognition of deferred tax  liabilities  and assets for the expected future tax
consequences of temporary  differences between tax basis and financial reporting
basis of other assets and  liabilities.  The income tax effect of the  temporary
differences as of December 31 consisted of the following:

                                                          1996          1995

     Deferred tax liability resulting from
         taxable temporary differences for
         accounting for inventory                  $   (314,000)    $ (314,000)
     Deferred tax asset resulting from
         deductible temporary differences
         for allowance for doubtful accounts              4,000          4,000
     Deferred tax asset resulting from
         deductible temporary differences
         for utilization of net operating loss
         carryforwards for income tax
         purposes                                     1,344,000        921,000
     Valuation allowance resulting from the
        potential nonutilization of net operating
        loss carryforwards for income tax
        purposes                                     (1,034,000)      (611,000)
                                                      ----------      ---------

                     Total deferred income taxes    $       -0-      $    -0-
                                                    =============    ==========

            j.    Employee benefit plan

                  FASC has a 401(k) Plan under  Section  401(k) of the  Internal
Revenue Code.  The Plan allows all employees who are not covered by a collective
bargaining agreement to defer up to 15% of their compensation on a pre-tax basis
through  contributions  to the  Plan.  Contributions  to the  Plan by  FASC  are
discretionary  and are  determined by the Board of Directors.  No  contributions
were made to the Plan during the years ended December 31, 1996, 1995 and 1994.

         k.       Use of estimates

                  The  preparation  of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Management believes that the estimated utilized in preparing
its financial statements are reasonable and prudent. Actual results could differ
from these estimates.

                                       F-8


<PAGE>

                          FIELDS AIRCRAFT SPARES, INC.
                 FORMERLY KNOWN AS FIELDS INDUSTRIAL GROUP, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2.       Shareholders' equity

                  FASI has  50,000  shares  authorized  of its  $.001  par value
preferred  stock.  At  December  31,  1996 and  1995,  there  were no  shares of
preferred stock issued or outstanding.  The preferred shares, if issued,  may be
granted the right to convert into common shares.  On liquidation,  the preferred
shares may be entitled to share in the liquidation  proceeds after  satisfaction
of creditors and prior to any  distribution  to the common  shareholders  to the
extent of the  preference  determined  by the Board of  Directors at the time of
issuance.

                  FASI has the following common stock as of December 31:

                                                   1996                1995
                                                   ----                ----

                  Authorized                    2,000,000            2,000,000
                  Issued and outstanding        1,302,137              984,352
                  Par value                          $.05                 $.05

                  All of the common shares have equal voting rights.  The common
shares have no  pre-emptive  or  conversion  rights,  no  redemption  or sinking
provisions, and are not liable for further call or assessment. Each common share
is entitled to share  ratably in any assets  available for  distribution  to the
common shareholders upon liquidation of the Group.

                  In  February  1995,  the Group owed  $7,658,000  to  McDonnell
Douglas  Corporation (MDC). MDC cancelled the debt in exchange for $850,000 plus
586,862 shares of Series A convertible preferred stock of FASC. This constituted
full and complete  satisfaction of the MDC debt. The agreement  provided for the
mandatory  exchange of the Series A preferred stock of FASC for 25% of the total
outstanding  common stock of FASI within 10 days  following  the date the common
stock is  approved  for  quotation  on, and is quoted for trading on, the Nasdaq
Stock  Market.  The Series A convertible  preferred  stock carries a liquidation
preference of $5,000,000;  which, in the event of a liquidation of FASC,  should
be paid pro rata to the holders of the Series A shares.

                  On April  17,  1996 the  Securities  and  Exchange  Commission
("Commission")  notified FASI that it had no further  comments on the Form 10-SB
that had been filed with the Commission on October 30, 1995. MDC was notified of
such event and accordingly  filed a Form 3 and Schedule 13-D with the Commission
claiming  beneficial  ownership  in 514,220  common  shares of FASI based on its
right to  convert  Series A  convertible  preferred  stock for 25% of the common
stock of FASI on a  fully-diluted  basis.  FASI had stated to the  Commission in
writing that upon MDC's filing of the Schedule 13-D or similar filing  indicated
beneficial  ownership in FASI,  FASI's  financial  statements  would  thereafter
reflect the  acquisition of the minority  interest.  Accordingly,  the financial
statements have reported the acquisition of the minority  interest as additional
paid-in capital even though the 514,220 common shares of FASI have not, and will
not, be issued until the Series A preferred shares of FASC have been converted.

                                       F-9



<PAGE>


                          FIELDS AIRCRAFT SPARES, INC.
                 FORMERLY KNOWN AS FIELDS INDUSTRIAL GROUP, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS




2.       Shareholders' equity (continued):

                  The exchange of the MDC debt for the  preferred  stock of FASC
was accounted for as a minority  interest.  A gain of $4,759,000 was recorded in
the financial statements in 1995 as a result of this transaction.

                  In 1995,  FASI sold 40,000 shares of common stock for $250,000
($6.25  per  share).  FASI  then paid  $250,000  to FASC as  additional  paid-in
capital.

                  On February 9, 1995,  FASC obtained new financing from Norwest
Business Credit, Inc., (Norwest).  FASC obtained a line of credit in the maximum
amount  of  $10,000,000.  As of  December  31,  1996,  FASC  could  borrow up to
$6,150,000 against eligible accounts  receivable and inventory.  Although due on
demand,  it expires in February,  1998. The line of credit was partially used to
pay the note  payable to the prior  lending bank and to pay $850,000 to MDC. All
assets of the Group are pledged as collateral.

                  On February 9, 1995, FASI sold 100% of the outstanding  common
stock of  Fields  Industrial  Supply,  Inc.  to an  unrelated  party.  A gain of
$183,000 was recorded in the  financial  statements  in 1995 as a result of this
transaction.

                  In April 1996, the Group reached a final  settlement  with its
insurance  company.  Management elected to record a casualty gain as a result of
the January 1994  earthquake.  A gain of $949,000 was recorded in the  financial
statements in 1996 as a result of this transaction.

                  In 1996,  FASI sold  317,785  shares of common stock for $6.25
per share and 158,000  warrants for $.50 each. Each warrant allows the holder to
purchase one share of common stock for $6.25.  The net proceeds were  $1,654,000
after deducting the costs of underwriting and issuance.



                                     F-10





<PAGE>


                          FIELDS AIRCRAFT SPARES, INC.
                 FORMERLY KNOWN AS FIELDS INDUSTRIAL GROUP, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS






3.       Notes payable

                  The notes payable at December 31 consisted of the following:
<TABLE>
<CAPTION>

                                                                           1996               1995
                                                                           ----               ----
<S>                                                            <C>                  <C>
Line of credit  from  Norwest,  secured by all assets
     of the Group,  interest at prime plus 7.0% (15.25%
     at December 31, 1996), payable monthly                      $      6,232,000    $       7,427,000

Notepayable to bank,  secured by land and  building, 
     payable  monthly at $2,396 plus interest at prime 
     plus 2% (10.25% at December 31, 1996), due February 1998             331,000             457,000

Other notes payable                                                        28,000              21,000
                                                                     ------------        ------------

             Totals                                              $      6,591,000    $      7,905,000
Less current portion                                                    6,323,000           7,905,000
                                                                       ----------         -----------

                Notes payable, net of current portion            $        268,000    $          -
                                                                      ===========     ===============
</TABLE>


                 Principal  payment  requirements  on all notes payable based on
terms and rates in effect at December 31, 1996 are as follows:

                 YEAR ENDING
                 DECEMBER 31,                            AMOUNT

                       1997                      $     6,323,000
                       1998                              268,000
                       Thereafter                           -

                  Total interest  expense for the years ended December 31, 1996,
1995 and 1994 amounted to $1,338,000,  $1,163,000 and $1,017,000,  respectively.
Total  interest  paid for the  years  ended  December  31,  1996,  1995 and 1994
amounted to $1,076,000, $936,000 and $761,000, respectively.




                                      F-11




<PAGE>


                          FIELDS AIRCRAFT SPARES, INC.
                 FORMERLY KNOWN AS FIELDS INDUSTRIAL GROUP, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


4.       Provision (credit) for income taxes
         -----------------------------------

                  The  provision  (credit)  for income taxes for the years ended
December 31 consisted of the following:

                                  1996                1995                1994
                                  ----                ----                ----
   CURRENT:
     Federal                                      $ (55,000)           $  95,000
   CURRENT:
     State                         4,000

      Total provision (credit)
        for income taxes         $ 4,000         $  (55,000)           $  95,000
                               ==========          =========           =========

               Total income taxes paid in 1996, 1995 and 1994 amounted to $3,000
each year.  The Group has net  operating  loss  carryovers  available  to offset
future taxable  income.  The amount and expiration date of the carryovers are as
follows:

      YEAR ENDING
      DECEMBER 31,                               FEDERAL                  STATE
      -----------                                -------                 -------
             1997                           $                          $ 814,000
             1998                                                        750,000
             1999                                                        580,000
             2000                                                        126,000
             2001                                                        120,000
             2008                                942,000
             2009                              1,161,000
             2010                                255,000
             2011                                240,000

5.       Commitments
         -----------
                  The Group leases vehicles and equipment and office  facilities
under  operating  leases.  The minimum lease payments  required under  operating
leases as of December 31, 1996 are as follows:

       YEAR ENDING
       DECEMBER 31,                                                   AMOUNT
      -------------                                                  --------
           1997                                                     $  15,500
           1998                                                        14,200
           Thereafter                                                    -

                                      F-12



<PAGE>


                          FIELDS AIRCRAFT SPARES, INC.
                 FORMERLY KNOWN AS FIELDS INDUSTRIAL GROUP, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



5.       Commitments (continued):
         -----------------------

                  Lease expense for the years ended December 31, 1996,  1995 and
1994 was $102,000, $84,000 and $33,000 , respectively.

                  The Group has a contract with a financial  advisor whereby the
financial  advisor will provide  consulting  services to the Group.  The minimum
payments required under the contract as of December 31, 1996 are as follows:

                      YEAR ENDING
                      DECEMBER 31,                                     AMOUNT
                     -------------                                    --------
                      1997                                           $  37,500
                      Thereafter                                          -


6.       Related party transactions
         --------------------------

                  The Group leases a small overseas  office  facility on a month
to month basis from an entity owned by certain officers of the Group.

                  In November  1995 FASI issued  options to 25  employees of the
Group to acquire up to 82,525 common shares of FASI at a purchase price of $3.00
per share  subject to certain  requirements.  The options  must vest by November
1998.


7.       Contingency
         -----------

                In the event of the death of a Director or Officer of the Group,
the Group is obligated to pay up to 100% of the  Director's or Officer's  annual
compensation to their  beneficiary  within the twelve months subsequent to their
death.











                                      F-13


<PAGE>


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

The following  table lists all  directors and executive  officers of the Company
and their ages as of April 23, 1997:


NAME                             AGE          POSITION

Peter Frohlich                   55           Chairman and Chief Executive 
                                              Officer of the Company;
                                              Chairman of FAS

Alan M. Fields                   45           President and Director of the 
                                              Company; President, Director and 
                                              Chief Executive Officer of FAS

Lawrence J. Troyna               53           Chief Financial Officer and 
                                              Director of the Company; Chief 
                                              Financial Officer, Secretary and 
                                              Director of FAS

Leonard I. Fields                78           Director of the Company;
                                              Director of FAS

Carlos Sedillo                   55           General Counsel, Secretary and  
                                              Director of the Company;
                                              Director of FAS

Neil E. O'Hara                   43           Vice President of the Company


         All current  directors of the Company were elected at a special meeting
of the  shareholders  held March 29, 1995.  Each  director  will serve until his
successor is duly elected by the shareholders  and qualified.  Officers serve at
the will of the Board of Directors. Except for the directors of the Company that
are presently salaried employees of the Company, the directors are not otherwise
compensated as directors.  The Board of Directors may in the future determine to
pay  directors'  fees and  reimburse  directors  for  expenses  related to their
activities. In February 1997, George Fields, brother of Leonard Fields, uncle of
Alan  Fields  and a  director  of the  Company,  died.  The  directors  have not
appointed  a new  director  to fill the  vacancy  created by the death of George
Fields. Instead, the directors have reduced the number of positions on the Board
of Directors to five.

         Peter Frohlich is Chairman and Chief  Executive  Officer of the Company
and Chairman of Fields Aircraft  Spares Incorporated, a  wholly owned subsidiary
of the Company  ("FAS").  Mr.  Frohlich is a Certified  Accountant in the United
Kingdom with over 12 years  experience  in public  accounting  as a partner in a
large  accounting  firm. From 1972 to 1980 he was Managing  Director of a public
company  quoted on the London  Stock  Exchange.  The  company  employed  several
thousand  people and had annual sales of  approximately  $75,000,000.  From 1980
until joining the Company in 1987, Mr.  Frohlich was a consultant to a number of
public and private  companies  advising on many aspects of corporate  and fiscal
matters, and on mergers and acquisitions with specific regard to refinancing and


                                       19

<PAGE>

restructuring.  Mr.  Frohlich was appointed  Chairman of the Company in 1987. He
resigned as Chairman in 1989 but  remained as a Director  until  resigning  as a
Director in February 1991. Mr. Frohlich was re-appointed a Director and Chairman
of the  Company  in March  1992.  From 1989 to 1991,  Mr.  Frohlich  acted as an
investment  advisor to a substantial  private group of companies.  In 1991,  Mr.
Frohlich  became  Chairman of Tower Group plc, an unquoted United Kingdom public
company.  He  was  retained  by a  number  of its  shareholders  to  attempt  to
reorganize  the company  following  multi million pound  trading  losses.  After
several  months he concluded  that the group should invite the bank to appoint a
receiver and he resigned.

         Alan M. Fields is President and a Director of the Company, Director and
Chief  Executive  Officer  and  President  of FAS  and  has  served  in  various
capacities since 1992. From 1989 until 1991 Mr. Fields was a Vice-President  and
General Manager of Quantum Microsystems, Inc., a computer systems retailer. From
1985 until 1992, Mr. Fields acted as an independent sales consultant for several
direct sales companies. His efforts on behalf of those companies resulted in the
development of a combined sales force exceeding 5,000 direct  salespersons,  and
monthly sales averaging an estimated  $350,000.  From 1982 until 1984 he was the
Founder and President of Savers Tax Service.  Mr. Fields was responsible for all
operations of that company, which he built to over 2,000 clients and 17 offices.
That  company  was sold in 1984.  From 1982 until  1984 Mr.  Fields was also the
President  and  responsible  for all  operations of AFA  Datashare  Services,  a
computer data  processing  firm.  That company was also sold in 1984.  From 1980
until 1984 he was President,  one of the founders,  a minority  shareholder  and
head of marketing of an income tax preparation  firm which provided  services to
over 3,000 Amway distributors  through 16 offices. In 1984, as a result of Amway
corporation  being  subjected to major  negative  attacks by the media,  the tax
preparation firm was adversely effected  resulting in a bankruptcy.  Also, as an
ongoing result of that business bankruptcy, Mr. Fields filed personal bankruptcy
in 1992.  Prior to entering the business world, Mr. Fields spent five years with
the Internal Revenue Service as a Tax Auditor and Revenue Agent.  Alan Fields is
the son of Leonard Fields.

         Lawrence  J.  Troyna  has served  since  1992 as a  Director  and Chief
Financial  Officer of the Company and Chief  Financial  Officer,  Secretary  and
Director of FAS. Mr. Troyna has a law degree and is a chartered accountant,  and
was an audit senior with Price  Waterhouse  before joining  Greyhound  Financial
Corporation.  He spent 17 years with Greyhound, where he rose to the position of
Deputy  Managing  Director of  Greyhound  European  Group.  As the number "2" in
Europe for this  approximately  $350,000,000 in assets  company,  Mr. Troyna was
responsible  for  the  marketing  and  business  development  of  the  company's
investments  in  real  estate,  aviation  and  general  equipment.  He was  also
responsible for overall corporate  control.  From 1986 until joining the Company
in 1988,  Mr.  Troyna was  Chairman  and Chief  Executive  Officer  of  Chigwell
Properties Ltd., a United Kingdom real estate company. From 1989 to 1992 he took
a leave of absence  from the  Company.  During his three year  absence  from the
Company,  Mr. Troyna acted as a financial and real estate consultant to a number
of private and public companies in the United Kingdom.


                                       20

<PAGE>

         Leonard I.  Fields has been a Director of the Company and a Director of
FAS since  January  1992.  At various  times since 1985,  he has served in other
capacities for the Company and its subsidiaries. Mr. Fields has a B.S. degree in
Engineering,  and has over 40 years of  management  and sales  experience in the
industrial supply field. He was a founder of Union Industrial Supply in 1953 and
for thirty years was Executive  Vice President of that company  responsible  for
all day to day operations. Under his guidance, that company grew to yearly sales
in excess of $5,000,000. Leonard Fields is the father of Alan Fields.

         Carlos  Sedillo has been  Secretary and a Director of the Company and a
Director  of FAS  since  1987.  Mr.  Sedillo  is an  attorney  and has an LLM in
taxation law. He has practiced law for 31 years and  specializes in business and
tax matters.  From 1987 until the present,  he has served as General  Counsel of
the Company.  From 1963 until 1974,  Mr.  Sedillo was President of Stewart Title
and Trust Company.  This firm, which was sold in 1974,  provided title insurance
services  to  clients in five  states.  From 1980  until  1984 Mr.  Sedillo  was
associated  with  Alan  Fields  in the  operation  of Savers  Tax  Service,  AFA
Datashare  Services and Alan Fields and Associates.  From August 1989 to January
1992,  he was the  Secretary  and a member of the Board of  Directors of Quantum
Microsystems,  a company  engaged in the retail  sales of computer  hardware and
software.  From 1989 until 1993, Mr. Sedillo was also an officer and a member of
the Board of Directors of Aerobit  International,  Inc., a  manufacturer  of oil
well drill bits, and of Graphic Arts Personnel, a personnel company specializing
in temporary help for the printing industry.

         Neil E. O'Hara is a Vice-President  of the Company and has concentrated
on  marketing  and  sales  of the  Company.  Mr.  O'Hara  has  over 18  years of
management experience in aerospace. He graduated from Adelphi University in 1976
with a Bachelor of Science  degree.  Mr.  O'Hara worked eight years for American
Airlines,  rising to the position of Senior  Manager of Purchasing and Material.
In that position he oversaw all purchases of interior class I equipment. He then
spent  eight  years  at  Weber  Aircraft,  where  at  various  times he held the
positions of Manager of Marketing & Sales,  Manager of New Product  Development,
and finally Director of Customer Services and Program Management.  While in that
position,  Mr. O'Hara was  responsible for all spare parts sales and pricing and
had total management control over new programs and new product  development.  At
the Company,  he is using his  experience  and contacts to expand the brokerage,
distributorship and consignment programs.



                      COMPLIANCE WITH SECTION 16(a) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's  directors,  and persons who own more than ten percent of a registered
class of the  Company's  equity  securities,  to file reports of  ownership  and
changes  in  ownership  with the  Securities  and  Exchange  Commission  and the
National Association of Securities Dealers. Officers, directors and greater than


                                       21
<PAGE>

ten-percent  shareholders  are required by  Securities  and Exchange  Commission
regulations  to furnish the Company with copies of all Section  16(a) forms they
file.  Based  solely on a review of the  copies of such forms  furnished  to the
Company  between  January 1, 1996 and  December 31,  1996,  on year-end  reports
furnished to the Company after December 31, 1996 and on representations  that no
other reports were  required,  the Company has  determined  that during the last
fiscal year all applicable 16(a) filing requirements were met except as follows:

         McDonnell Douglas Corporation filed a Form 3 on May 31, 1996, reporting
a beneficial  ownership in the Company.  The Form 3 should have been filed on or
before April 27, 1996.

         Alan Fields filed a Form 4 on August 12, 1996,  reporting  the purchase
of 100 Common  Shares of the Company  during  July 1996.  The Form 4 should have
been filed on or before August 10, 1996.

                                       22

<PAGE>

ITEM 10.     SUMMARY COMPENSATION

         The following table sets forth the aggregate cash  compensation paid by
the Company for services rendered during the last three full fiscal years to the
Company's Chief  Executive  Officer and to each of the Company's other executive
officers whose annual salary and bonus for the year 1996 exceeded  $100,000 (the
"Named Executive Officers").
<TABLE>
<CAPTION>

                                            Summary Compensation Table

                                  Annual Compensation                                     Long-Term Compensation Awards

                                                                                                            Securities
                                                                                          Restricted        Underlying
Name and Principal                                                    Other Annual        Stock             Stock        [All Other
Position               Year       Salary($)        Bonus($)           Compensation($)     Awards($)         Options(#) Compensation]

<S>                    <C>        <C>              <C>                <C>               <C>              <C>                        
Peter Frohlich         1996(1)    $130,000         $12,500                                  --                --
Chairman and CEO       1995       $130,000           --                                     --              19,800(2)
                       1994       $130,000(3)      $28,000(4)                             $3,750(5)           --


Alan M. Fields         1996(1)    $130,000         $12,500            $2,800                --                --
President              1995       $130,000           --               $2,800                --              19,800(2)
                       1994       $130,000(6)      $28,000(4)(7)      $2,800              $3,750(5)(7)        --


Lawrence J. Troyna     1996(1)    $130,000         $12,500                                  --                --
Chief Financial        1995       $130,000           --                                     --              19,800(2)
Officer                1994       $130,000(3)      $28,000(4)                             $3,750(5)           --


Neil O'Hara            1996(8)    $ 83,252         $24,838            $6,000                --                --
Vice President         1995       $ 78,000         $23,625            $6,000                --              7,125(2)
                       1994       $ 78,000         $27,662            $6,000              $  500(9)
</TABLE>


(1)      Does not include  $15,773 paid to Mr. Fields in 1996 and $2,500 paid to
         each of Mr. Frohlich and Mr. Troyna in 1996 for amounts earned in 1995.
         Does include  salary of $7,500 earned by Mr. Fields in 1996 and $10,000
         earned by each of Mr.  Frohlich and Mr.  Troyna in 1996,  which will be
         paid in  1997.  In  addition,  $10,000  bonus  to  each of the  Current
         Executive Officers (as defined below) was  earned in  1996 but  will be
         paid in 1997.  Does not include options to acquire 30,000 Common Shares
         at  $6.25  per  share  granted  in  April  1997  to each of the Current
         Executive Officers which are not  qualified stock  options for  federal
         tax purposes.

(2)      Represents  options granted pursuant to a Management Stock Option Plan,
         which is not a qualified  stock option plan for federal tax purposes or
         purposes  of Section  16 of the  Securities  Exchange  Act of 1934 (the
         "Exchange Act").

(3)      Reflects fees paid under the Consulting  Agreements between the Company
         and  certain  Named  Executive  Officers  prior to such Named Executive
         Officers being employed by the Company.

(4)      Represents bonus awarded in 1994, of which $20,000 was paid in 1994 and
         $8,000 was paid in 1995.

(5)      Represents  15,000 shares awarded (after taking into account the 50 for
         1 reverse stock split approved March 29, 1995). Based on a valuation of
         $.25 per share or a total value of approximately $3,750 for each award.
         At December  31, 1996,  based on the closing  market price of $4.75 per
         share, such shares had a total value of $71,250 for each award.   These
         stock awards are fully vested. 

(6)      Reflects  fees  paid  to  Brimat  International,  Inc.  pursuant  to  a
         Consulting  Agreement prior to January 1, 1995. Alan Fields,  President
         of the Company,  is President of Brimat  International,  Inc., which is
         owned solely by his father, Leonard Fields.

(7)      Paid or awarded  to Alan Fields, individually, for services rendered in
         his capacity as President of Brimat International, Inc.

(8)      Includes $5,000 bonus earned in 1996 but paid in 1997. Does not include
         options to acquire  4,000 Common  Shares at $6.25 per share  granted in
         April  1997,  which are not  qualified  stock  options  for federal tax
         purposes. 


                                       23

<PAGE>

(9)      Represents 2,000 shares awarded (after taking into account the 50 for 1
         reverse stock split approved  March 29, 1995).  Based on a valuation of
         $.25 per share or a total value of approximately  $500. At December 31,
         1996, based on the closing market price of $4.75 per share, such shares
         had a total value of $9,500. These stock awards are fully vested. 

         The Company through FAS has a 401(k) plan and a retirement trust but no
other  retirement,  pension  or  profit  sharing  plans for the  benefit  of the
Company's  officers,  directors and  employees.  Each of the 401(k) plan and the
retirement  trust are  defined  contribution  plans.  The  Company  may,  at its
discretion, make matching contributions to the 401(k) plan. However, to date, no
matching contributions have been made and the Company does not anticipate making
any matching contributions until the Company achieves profitability. The Company
does  provide  health  insurance  and  life  and  disability  insurance  for its
employees. The board of directors may recommend and adopt additional programs in
the future for the benefit of officers, directors and employees.

Long-Term Incentive Plan Awards and Option Grants in Fiscal Year 1996

         The Company has no long-term incentive plan. No options were granted in
fiscal year 1996.

Aggregated Option Exercises and Year-End Option Values in 1996

         The following table summarizes for the Named Executive  Officers of the
Company the number of stock options,  if any, exercised during Fiscal Year 1996,
the  aggregate  dollar  value  realized  upon  exercise,  the  total  number  of
unexercised  options held at December 31, 1996 and the aggregate dollar value of
in-the-money  unexercised  options,  if any,  held at December 31,  1995.  Value
realized  upon exercise is the  difference  between the fair market value of the
underlying stock on the exercise date and the exercise price of the option.  The
value  of  unexercised,  in-the-money  options  at  December  31,  1996  is  the
difference  between  its  exercise  price  and  the  fair  market  value  of the
underlying stock on December 31, 1996. The underlying options have not been and,
may never be exercised; and actual gains, if any, on exercise will depend on the
value of the  Common Shares on the  actual  date of  exercise.  There  can be no
assurance that these values will be realized. See "-Stock Option Plan" below for
a description of the terms of the options.


                                       24

<PAGE>
<TABLE>
<CAPTION>
                                  Aggregate Option Exercises in Fiscal Year 1996
                                            and Year-End Option Values


                                                          Number of Unexercised Options at      Value of Unexercised In-The-Money
                                                                      12/31/96                        Options at 12/31/96(1)


                       Shares                Value
        Name           Acquired           Realized($)     # Exercisable      Unexercisable        Exercisable         Unexercisable
                       on Exercise(#)

<S>                       <C>               <C>             <C>               <C>                 <C>                <C>     
Peter Frohlich              None              N/A             None              19,800                N/A               $34,650

Lawrence J. Troyna          None              N/A             None              19,800                N/A                34,650

Alan M. Fields              None              N/A             None              19,800                N/A                34,650

Neil O'Hara                 None              N/A             None              7,125                 N/A                12,469
</TABLE>


(1) The closing  bid price  of the Common Shares on December 31, 1996 was $4.75.
The exercise price of the options is $3.00.

Director Compensation

         Except as specifically  provided herein,  board members receive no fees
for serving as members of the board of directors.  However, board members may be
reimbursed their expenses  incurred in attending board meetings and the board of
directors may in the future decide to pay directors' fees.

Employment  Contracts  and  Termination  of  Employment  and   Change-In-Control
Arrangements.

         Effective  January  1,  1995,  the Board of  Directors  authorized  the
Company  to  enter  into  one-year  Employment  Agreements  with  each of  Peter
Frohlich,  Lawrence Troyna and Alan Fields (the "Current  Executive  Officers"),
which  are  automatically  renewable  for  additional  one-year  periods  unless
terminated  by the  executive  officer  or the  Company  at the end of the  then
current term.  The terms of employment  provide for a base salary to each of the
Current Executive Officers of $143,000,  which includes $13,000 payable only out
of and to the  extent  of  profits  of the  Company  and not  paid in  1995.  In
addition,  the Current  Executive  Officers were entitled to bonuses in calendar

                                       25
<PAGE>

year 1995 of $41,800  payable  only in the event that the Company  achieved  the
minimum financial covenants established by the Company's principal lender. Since
the minimum financial covenants were not achieved, these bonuses were not earned
in 1995. In May, 1995, each of the Current Executive  Officers,  in an effort to
assist the Company with its  financial  condition,  agreed to waive their salary
for that  month.  The  waived  salary  was paid later in the form of a bonus for
1995.  The Current  Executive  Officers  have been employed on these terms since
January 1, 1995. However, formal employment agreements have not been executed by
either the Company or any of its Current  Executive  Officers.  The parties have
agreed that the written  consulting  agreements  between each Current  Executive
Officer and the Company, to the extent not inconsistent with the terms described
in this paragraph,  will document the terms of employment.  The Company employed
the  Current  Executive  Officers  on the same terms for 1996,  except  that the
annual base salary was set at $157,300  with $27,300  payable only out of and to
the extent of profits of the  Company  for 1996.  Since the Company did not have
profits  in  1996,  the  $27,300  was not  earned.  However,  a bonus  equal  to
one-week's  base salary was paid. In addition,  the Current  Executive  Officers
were  entitled  to  bonuses  in 1996 of  $41,800  payable  only in the event the
Company achieves the minimum  financial  covenants  established by the Company's
principal lender. Since the minimum financial covenants were not achieved, these
bonuses were not earned in 1996.  However,  the Current Executive  Officers were
awarded a bonus of $10,000  for their  services  in 1996,  which will be paid in
1997.  Effective  November 29, 1995,  the Current  Executive  Officers were each
awarded an option to acquire  19,800  common shares of the Company at a purchase
price of $3.00 per share pursuant to the Management  Plan described  above.  The
Company has  employed  the Current  Executive  Officers on the same terms as set
forth above,  except that the annual base salary will be set at  $157,000,  with
$17,000 payable only out of and to the extent of profits of the Company for 1997
and a one week bonus equal to  one-week's  base  salary.  To the extent that the
Company has pretax net income in 1997,  each of the Current  Executive  Officers
will be entitled to a bonus equal to 6.67% of pretax net income, up to a maximum
of $41,800 each. Each Current  Executive  Officer is also entitled to one-year's
base salary if he is terminated for any reason other than cause.  In April 1997,
each of the Current  Executive  Officers  was granted an option to acquire up to
30,000 Common Shares at $6.25 per share.

         The Company has not entered  into any  currently  effective  employment
agreements other than the employment agreements described above.

Insider Participation in Compensation Decisions

         The Company has no compensation  committee.  Compensation decisions are
made by the Board of  Directors.  Each of the  Current  Executive  Officers is a
member of the Board of Directors and participates in compensation decisions.

Stock Options Plan

         Effective  November 29, 1995,  the Company  adopted a  Management Stock
Option Plan  ("Management  Plan") and an Employee  Stock Option Plan  ("Employee
Plan"). Pursuant to the  Management Plan, the Company has issued options to five


                                       26
<PAGE>


individuals  involved in the  management  of the Company to acquire up to 69,025
Common Shares of  the Company at a purchase  price of $3.00 per share subject to
vesting  requirements,  which  includes  the Company  obtaining  sales  during a
12-month  period of  $7,500,000  and an average  closing price for the Company's
Common Shares for a three-month period of $6.00, $9.00 and $12.00, respectively,
for each  one-third  of the options to vest.  The options  must vest by November
1998 and must be exercised  within  three years of vesting.  None of the options
have vested.  Pursuant to the Employee  Plan,  the Company has issued options to
acquire  13,500 Common Shares of the Company to 20 employees of the Company at a
purchase price of $3.00 per share subject to vesting requirements, which include
the Company  obtaining sales during a 12-month period of $7,500,000 and at least
one year continued  employment  after the grant of the option.  The options must
vest by November 1998 and must be exercised within two years of vesting. None of
the options  have  vested.  Neither the  Management  Plan or the  Employee  Plan
provide  for  any  further  options  to be  issued.  In  addition,  neither  the
Management  Plan or the Employee  Plan is qualified  for federal tax purposes or
for purposes of Section 16 of the Securities Exchange Act of 1934.

         Other than the 1997 Stock Option Plan described below,  the Company has
not adopted any other  incentive  stock  option or stock award plan.  No options
were  granted by the  Company to any of its  officers,  directors  or  employees
during  fiscal  years 1994 and 1996.  However,  the Company has in the past paid
bonuses  to  certain  key  employees  through  grants of Common  Shares.  During
calendar year 1994, the Company  granted  approximately  61,120 Common Shares to
key employees of or consultants to the Company as bonus compensation. (3,056,002
shares prior to the 50 to 1 reverse stock split approved March 29, 1995.)

         On April 2,  1997,  the Board of  Directors  cancelled  the 1997  Stock
Option Plan that was  previously  approved by the board  subject to  shareholder
approval. On that same date, the Board of Directors authorized and granted stock
options  to key  executives  (including  the  Current  Executive  Officers)  and
directors providing for options to acquire an aggregate of 100,000 Common Shares
at a price of $6.25 per share.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following  table sets forth the  ownership of the Company's  Common
Shares by each  person  who owned of record,  or was known to own  beneficially,
more than 5% as of April 23, 1997.  As of April 23, 1997,  there were  1,877,112
Common  Shares  and no  preferred  shares  outstanding.  There are  options  and
warrants  to  acquire   419,665   Common  Shares  from  the  Company   currently
outstanding.  The table also sets forth the present holdings of Common Shares by
all officers and directors, individually and as a group.


                                       27

<PAGE>

Names and Addresses                             Number of Common    Percent of
Principal Shareholders                            Shares Owned*      Class**

McDonnell Douglas Corporation                         564,194        30.06%
P.O. Box 516
McDonnell Blvd. at Airport Road
St. Louis, MO  63166-0516

Keusch & Merlo Invest A.G.                            155,400          8.28
Bahnhofplatz 2
CH-8023 Zurich
Switzerland

James A., Jr. and Jeanette Duffield                   110,500          5.89
2640 West 10th Place
Tempe, AZ  85281


Peter Frohlich (1),(2)                                 54,927          2.93
128 Mount Street
London W1Y5HA, U.K.

Alan M. Fields (1),(3)                                 68,052          3.62
341 "A" Street
Fillmore, CA  93015-1931

Lawrence J. Troyna (1),(4)                             56,926          3.03
128 Mount Street
London W1Y5HA, U.K.

Leonard I. Fields (5)                                  30,745          1.64
341 "A" Street
Fillmore, CA  93015-1931

Carlos Sedillo (1),(6)                                 13,722           ***
341 "A" Street
Fillmore, CA  93015-1931

Neil E. O'Hara (7)                                      8,001           ***
341 "A" Street
Fillmore, CA  93015-1931

All officers and directors as a group                 232,373         12.37
(6 persons)


*        All shares are held beneficially and of record and each shareholder has
         sole voting and investment  power unless  otherwise  noted. A person is
         deemed to be the beneficial owner of securities that can be acquired by
         such person  within 60 days from the record  date upon the  exercise of
         options.

                                       28
<PAGE>


**       Each beneficial owner's percentage  ownership is determined by assuming
         that  options  that are held by such  person (but not those held by any
         other person) and exercisable in such period have been exercised.

***      Less than 1%.

(1)      Officer and Director of the Company

(2)      Includes 9,927 shares  held by  Mr. Frohlich's  spouse, Sylvia Frohlich
         and 10,000  shares held  in the  name of a  nominee for  Mr. Frohlich's
         benefit.  In addition, Mr. Frohlich has  an option  to  acquire  19,800
         shares  subject to  vesting requirements,  which  includes  the Company
         obtaining sales  during a 12-month  period of $7,500,000 and an average
         closing  price for the Company's Common Shares for a three-month period
         of $6.00, $9.00 and $12.00,  respectively,  for each  one-third  of the
         options to vest. Vesting of the options may be accelerated in the event
         of certain changes of control of the Company.  The  option must vest by
         November  1998 and  must be  exercised  within  three years of vesting.
         Mr. Frohlich was also granted in April 1997 an option to acquire 30,000
         Common Shares at a price of $6.25 per share.

(3)      Includes 12,000 shares owned by Alan Fields' spouse, Nancy Fields. Does
         not include (a) 13,488 shares owned by Alan Fields's children through a
         trust created and funded by Leonard Fields and (b) approximately 47,154
         shares owned by relatives of Alan Fields, including  his father Leonard
         Fields, a director of the company, and the estate  of  his uncle George
         Fields,  who  was a  former director of the Company.  In addition, Alan
         Fields  has  an  option to  acquire 19,800  shares  subject to  vesting
         requirements,  which  includes  the  Company obtaining  sales  during a
         12-month period of $7,500,000  and an  average closing  price  for  the
         Company's  Common Shares  for a  three-month period of $6.00, $9.00 and
         $12.00, respectively,  for each  one-third  of  the  options  to  vest.
         Vesting of the  options  may be  accelerated  in the  event of  certain
         changes of control of the Company.  The  option  must vest  by November
         1998 and  must be  exercised within  three years of vesting. Mr. Fields
         was also  granted  in April 1997 an  option to  acquire  30,000  Common
         Shares at a price of $6.25 per share.

(4)      Includes 10,000 share  owned by Mr. Troyna's  spouse, Susan Troyna, and
         10,000 shares  held in  the name of a nominee for Mr. Troyna's benefit.
         In addition, Mr. Troyna has  an option to acquire 19,800 shares subject
         to vesting  requirements, which  includes the  Company  obtaining sales
         during a 12-month period of $7,500,000 and an average closing price for
         the Company's  Common Shares  for a three-month period of  $6.00, $9.00
         and  $12.00,  respectively, for  each one-third of the options to vest.
         Vesting of  the options may  be accelerated  in the  event  of  certain
         changes of  control of  the Company.  The option  must vest by November
         1998 and must  be exercised  within three years  of vesting. Mr. Troyna
         was also  granted in  April 1997  an option to  acquire  30,000  Common
         Shares at a price of $6.25 per share.


                                       29

<PAGE>


(5)      Leonard  Fields is a director of the Company.  Includes  13,488  shares
         owned by Alan Fields's  children  through a trust created and funded by
         Leonard  Fields.  Mr.  Fields  disclaims  beneficial  ownership of such
         shares.  Does  not  include   approximately  155,817  shares  owned  by
         relatives of Leonard Fields,  including his son Alan Fields, an officer
         and  director  of the  Company,  and the estate of his  brother  George
         Fields, who was a former director of the Company.

(6)      Includes 11,722 shares owned by an affiliated entity.

(7)      In addition, Mr. O'Hara has an option  to acquire 7,125  shares subject
         to vesting requirements,  which  includes the  Company  obtaining sales
         during a 12-month period of $7,500,000 and an average closing price for
         the Company's  Common Shares  for a three-month period of $6.00,  $9.00
         and $12.00,  respectively, for  each one-third of the options  to vest.
         Vesting of  the options  may be  accelerated in  the event  of  certain
         changes of  control of  the Company.  The option  must vest by November
         1998 and must be exercised within  three years  of vesting.  Mr. O'Hara
         was also granted in April 1997 an option to acquire 4,000 Common Shares
         at a price of $6.25 per share.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

         Except  as set  forth  below,  the  Company  has not  entered  into any
transactions with officers and directors of the Company or their affiliates that
may involve conflicts of interest or were other than arms' length transactions.

         During  1994,  the Company was a party to a Consulting  Agreement  with
Brimat International,  Inc., Lawrence Troyna and Peter Frohlich. Pursuant to the
agreement,  an annual  amount of  approximately  $130,000 was paid in consulting
fees by the Company to each of Brimat  International,  Inc., Lawrence Troyna and
Peter  Frohlich  during that fiscal  year.  Alan  Fields,  the  President of the
Company is also President of Brimat  International,  Inc., which is owned by his
father,  Leonard  Fields.  The  Consulting  Agreements  between  the Company and
Lawrence  Troyna,  Peter  Frohlich and Brimat,  Inc. were  terminated  effective
January 1, 1995 at which time the Company authorized  employment agreements with
each of Lawrence  Troyna,  Peter  Frohlich  and Alan Fields.  In addition,  Alan
Fields,  Lawrence  Troyna and Peter Frohlich  received stock and cash bonuses in
connection with the Consulting Agreements. See "Management Compensation."

         The Company paid approximately $27,700, $40,650 and $32,533(based on an
estimated  average  conversion  rate of  $1.60  to each  British  Pound)  during
calendar years 1994, 1995 and 1996, respectively to Belgravia Financial Services
Limited for rent,  telephone and medical  insurance  expenses in connection with
a sales office in London,  England during 1994,  1995 and 1996.  Amounts paid to
Belgravia  Financial  Services Limited  represent its actual costs,  except that
Belgravia  Financial  Services Limited pays a portion of rent expenses in London
without  reimbursement from the Company.  Peter Frohlich and Lawrence Troyna are
officers, directors and shareholders of Belgravia Financial Services Limited.

                                       30
<PAGE>

         During the three most recent full  fiscal  years,  the Company has paid
legal fees in the  aggregate  of  approximately  $64,000 to Carlos  Sedillo.  An
additional  $8,000 is owed to Mr. Sedillo for 1996 services but has not yet been
paid. Mr. Sedillo serves as General Counsel and Secretary of the Company is also
is a director of the Company.  In April 1997, the Company granted Mr. Sedillo an
option to acquire 2,000 Common Shares of the Company.



ITEM 13. EXHIBITS, AND REPORTS ON FORM 8-K

(a) Index to Exhibits

The following documents are included as exhibits.


  SEC    Exhibit                                                      Sequential
 Number  Number   Description                                        Page Number

   3      3.1     Articles of Incorporation, as amended                      *

   3      3.2     By-laws, as amended                                        *

   4      4.1     Form of Warrant Agreement (Regulation S
                  Private Placement)

   4     4.2      Form of Option Agreement to NationsCredit                 
                  Commercial Funding

   9     9.1      Voting Agreement dated February 7, 1995                    *
                  among McDonnell Douglas Corporation,
                  the Registrant, Peter Frohlich, Alan Fields,
                  and Lawrence Troyna

  10    10.1      Debt Restructure Agreement dated February 7, 1995          *
                  between McDonnell Douglas Corporation and
                  the Registrant

  10    10.2      Securities Exchange Agreement dated February 7,            *
                  1995 between McDonnell Douglas Corporation
                  and the Registrant

  10    10.3      Discretionary Revolving Credit Facility and                *
                  Credit and Security Agreement dated February 9,
                  1995 between Fields Aircraft Spares, Inc.,
                  a California corporation and Norwest Business
                  Credit, Inc.                                               *

  10    10.4      First Amendment to Credit Agreement, dated
                  November 20, 1995                                         **


                                       31
<PAGE>


  10    10.5      Second Amendment to Credit Agreement, dated             ****
                  February 19, 1996

  10    10.6      Third Amendment to Credit Agreement, dated              ****
                  June 30, 1996.

  10    10.7      Fourth Amendment to Credit Agreement, dated             ****
                  August 1996

  10    10.8      Fifth Amendment to Credit Agreement, dated              ****
                  January 1, 1997

  10    10.9      Sixth Amendment to Credit Agreement, dated              ****
                  February 1, 1997

  10    10.10     Seventh Amendment to Credit Agreement, dated            ****
                  March 1, 1997

  10    10.11     Eighth Amendment to Credit Agreement, dated
                  March 1997

  10    10.12     Management Stock Option Plan                             ***

  10    10.13     Employee Stock Option Plan                               ***

  10    10.14     Loan Agreement between Fields Aircraft Spares
                  Incorporated and NationsCredit Commercial Funding,
                  dated April 18, 1997

  10    10.15     Loan Agreement between Fields Aero Management, Inc.
                  and NationsCredit Commercial Funding, dated
                  April 18, 1997

  11    11.1      Statement re: Computation of Per Share Earnings         ****

  21    21.1      Subsidiaries of Registrant                              ****

  27    27.1      Financial Data Schedule                                 ****


*        This exhibit is incorporated  herein by reference to the exhibits filed
         with the Company's  Registration Statement on Form 10-SB, filed October
         30, 1995.

**       This exhibit is incorporated  herein by reference to the exhibits filed
         with the  Company's  Annual  Report on Form  10-KSB for the fiscal year
         ended December 31, 1995, filed April 11, 1996.

***      This exhibit is incorporated herein by reference  to the exhibits filed
         with the Company's  Registration  Statement on  Form 10-SB/A, Amendment
         No. 1, filed January 29, 1996.

                                       32
<PAGE>

****     This exhibit is incorporated  herein by reference to the exhibits filed
         with the  Company's  Annual  Report on Form  10-KSB for the fiscal year
         ended December 31, 1996, filed on March 31, 1997.

(b) Reports on Form 8-K

         The Company filed a Report on Form 8-K, dated April 17, 1996,  covering
Item 5,  Other  Events,  with  respect to the  filing of  certain  documents  by
McDonnell Douglas Corporation with the Securities and Exchange Commission.

         The  Company  filed a Report  on Form 8-K,  dated  December  27,  1996,
covering Item 9, Sales of Equity Securities Pursuant to Regulation S.

         The  Company  filed a Report  on Form 8-K,  dated  February  11,  1997,
covering item 9, Sales of Equity Securities Pursuant to Regulation S.

                                       33

<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the Company
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated:  April 29, 1997

                                  FIELDS AIRCRAFT SPARES, INC.

                                  By /s/ Alan M. Fields
                                    --------------------                 
                                     Alan M. Fields
                                     President