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

                                    FORM 10-K

(Mark One)

X ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
(No Fee Required) For the year ended January 31, 2003

___  TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
     OF 1934 (No Fee Required)
For the transition period from___________ to ____________

Commission File Number 0-2199

                          First Aviation Services Inc.
             (Exact name of registrant as specified in its charter)

  Delaware                                            06-1419064
  (State or other jurisdiction                       (I.R.S. Employer
  of incorporation or organization)                  Identification No.)

  15 Riverside Avenue
  Westport, Connecticut                                06880-4214
  (Address of principal executive offices)              (Zip Code)

                    Issuer's telephone number (203) 291-3300
                            (Office of the Secretary)

           Securities registered pursuant to Section 12(b) of the Act:

                                                      Name of each exchange
  Title of each class                                 on which registered
  None                                                None

 Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01
                                   par value

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities 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 or for such short period that the registrant was subject to such filing
requirements.
Yes X   No __
   ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).  Yes __ No  X
                                              ---

The aggregate market value of the voting stock held by non-affiliates as of July
31, 2002 was approximately $16.4 million.

The number of shares outstanding of the registrant's common stock as of April
11, 2003 was 7,251,370 shares.

                      Documents incorporated by reference:

         First Aviation's Proxy Statement for the 2003 Annual Meeting of
                     Stockholders is incorporated herein by
                         reference into Part III hereof

<PAGE>


                          First Aviation Services Inc.

                            Annual Report on Form 10-K
                       for the Year Ended January 3, 2003


                                     PART I

  Forward-Looking Statements

  Certain statements discussed in Item 1, "Business", Item 3, "Legal
  Proceedings", Item 7, "Management's Discussion and Analysis of Financial
  Condition and Results of Operations", Item 7, "Liquidity and Capital
  Resources", and elsewhere in this Annual Report on Form 10-K constitute
  forward-looking statements within the meaning of the Private Securities
  Litigation Reform Act of 1995. Forward-looking statements are not statements
  of historical facts, but rather reflect the Company's current expectations
  concerning future events and results. Such forward-looking statements,
  including those concerning the Company's expectations, involve known and
  unknown risks, uncertainties and other factors, some of which are beyond the
  Company's control, that may cause the Company's actual results, performance or
  achievements, or industry results, to be materially different from any future
  results, performance or achievements expressed or implied by such
  forward-looking statements. Such risks, uncertainties and other important
  factors include, at a minimum, the Company's ability to obtain parts and
  components from its principal suppliers on a timely basis, depressed domestic
  and international market and economic conditions, especially those currently
  facing the aviation industry as a whole, the impact of changes in fuel and
  other freight related costs, relationships with its customers, the ability of
  the Company's customers to meet their financial obligations to the Company,
  the ability to obtain and service supply chain management contracts, changes
  in regulations or accounting standards, the ability to consummate suitable
  acquisitions and expand, and other items that are beyond the Company's control
  and may cause actual results to differ from management's expectations. In
  addition, specific consideration should be given to the various factors
  described in Item 7, "Management's Discussion and Analysis of Financial
  Condition and Results of Operations", and elsewhere in this Annual Report on
  Form 10-K.


Item 1.    Business

General

           First Aviation Services Inc. ("First Aviation"), together with its
wholly owned subsidiaries, Aircraft Products International, Ltd. ("API Ltd."),
and API Asia Pacific Inc. ("API Asia Pacific"), and its majority-owned
subsidiary, Aerospace Products International, Inc. ("API"), (collectively, the
"Company"), is one of the premier suppliers of products and services to the
aviation industry worldwide, including the sale of aircraft parts and
components, and the provision of supply chain management services, including the
provision of third party logistics and inventory management services. In
addition, the Company performs overhaul and repair services for brakes and
starter/generators, and is a Federal Aviation Administration ("FAA") authorized
hose assembly facility, building custom hose assemblies.

           The Company's executive offices are located at 15 Riverside Avenue in
Westport, Connecticut 06880. Further information about the Company, including
all of the Company's public filings and press releases, which are posted as soon
as practicable, can be found on the worldwide web at www.favs.com, or at
www.apiparts.com. Our public filings also can be obtained by calling our
investor relations department, or by e-mail at first@firstaviation.com. The
Chairman of the Board of Directors is Aaron P. Hollander. The executive officers
of the Company are Michael C. Culver, Gerald E. Schlesinger and Michael D.
Davidson.

Industry Overview

           The Company believes that the current annual worldwide market for new
and used parts, components and consumable supplies for aircraft and engines is
approximately $30.0 - $40.0 billion, and has been decreasing due to


                                       2
<PAGE>

reduced business activity levels in the industry over the past two years. Of the
worldwide market, $2.5 billion is supplied to the general aviation aftermarket
sector in which the Company operates, $5.0 billion goes through distribution to
all sectors, and the balance is supplied direct to the end user. The general
aviation aftermarket includes passenger and cargo airlines, fleet and corporate
aircraft operators, certified repair facilities, governments and military
services, flight training schools, fixed base operators ("FBOs"), business
aviation, helicopter and recreational operators. The aviation parts, components
and consumable supplies market is highly-fragmented, with a limited number of
large, well-capitalized companies, including original equipment manufacturers
("OEMs"), and suppliers, selling a broad range of parts and components, and
numerous smaller competitors serving niche markets.

           Aviation Parts and Components Supply Services. The Company
distributes the products of more than 150 manufacturers and suppliers,
constituting approximately 80,000 new and factory reconditioned parts and
components that are sold to professional aircraft maintenance organizations,
aircraft operators, including fleet operators and airlines, and FBOs. The parts
and components distributed by the Company are approved by the FAA and are
acquired from small, specialized manufacturers as well as major OEMs such as
Goodrich Aerospace, Champion, General Electric Lighting, Goodyear Tire and
Rubber, Lord Corporation, Marathon Power Technologies, Michelin Aircraft Tire,
Parker Hannifin, Scott Aviation, Superior Air Parts, Inc. ("Superior"), The New
Piper Aircraft, Inc., and Teledyne Continental Motors. Most of these
manufacturers and suppliers service their aftermarket customers solely through
wholesale distributors such as API. Distributors add value to commonly available
products by offering immediate availability, broad product lines, technical
assistance and other value added services, such as supply chain management
services. API does not have any long-term agreements or commitments from OEMs or
other suppliers from whom it purchases parts, and is dependent upon these
manufacturers for access to parts for resale.

           Supply Chain Management Services. The Company provides supply chain
management services to the aerospace industry, principally through logistics and
inventory management services. The terms and nature of supply chain management
services are stipulated in a long-term contract between the Company and the
customer. The Company uses its expertise gained in managing its own parts and
supply business to manage its customers' product in a seamless method to the end
customer, and at less cost to the Company's customer than if they provided the
services themselves. As part of this process, the Company provides its internal
resources, such as facilities, personnel and systems to the customer. The
Company either may distribute its own inventory for the customer, or hold its
customers' inventory in its own facility, without taking ownership of such
inventory, and distribute the inventory on behalf of its customer. As an
example, the Company may pick, pack and ship product on behalf of its customer
in return for a fee based upon the level of services provided. In providing
these services the Company may provide other support services as well to its
customers, including sales and billing, and the use of the Company's call
center. Services contracts are part of a continuum of product lines offered by
the Company to its customers. The Company considers its business to be
distributing parts and components and providing the services to manage and/or
distribute its customers' parts and components. The Company believes that the
provision of supply chain management services will be one of its fastest growing
sources of operating profit in the future.

           Competition. Competition in the parts and components supply services
market is generally based on availability of product, service, price, and
quality, including parts traceability. The Company's major competitors include
Aviall, Inc., AAR Corporation, Raytheon Aircraft, Cessna Aircraft Company and
Satair A/S. There also is substantial competition, both domestically and
overseas, from companies who focus on regional/niche markets, or on market
segments of secondary interest. Several of the Company's competitors have faced
moderate to severe financial difficulties recently.

           Competition in supply chain management services comes from numerous
companies both within and outside of the aerospace industry, although many
competitors are specialized to a particular industry or market group. The supply
chain management services market is fragmented and growing as a result of the
growing trend to outsource, a trend that is increasing due to economic
conditions and the need for companies to reduce their cost structures. The
Company views such business as distribution. Some competitors in the
distribution business pay up front fees and acquire their customers' inventory
in exchange for supply chain contracts, a practice that the Company generally
does not follow. The Company believes that it has an advantage in the aerospace
industry due to its experience, knowledge, focus, and contacts within the
industry. However, other large providers of supply chain management and
logistics services may enter the aerospace industry.


                                       3
<PAGE>

           Increasing Consolidation. In order to reduce the costs
associated with carrying and managing inventory, satisfy governmental regulatory
scrutiny, streamline buying decisions and assure quality, aircraft and fleet
operators are seeking to reduce their number of suppliers, including parts and
component providers, and are using third parties to manage their parts and
components inventories. Operators also have become more sensitive to quick
turnaround times. As a result, the Company believes that aircraft and fleet
operators increasingly select larger, more sophisticated, tecnologically capable
and better capitalized service providers that are capable of providing a range
of high quality, efficient and timely services, including supply chain
management services, at a reasonable price. Additionally, the increasing costs
of technology and inventory levels required to compete effectively has made
entry into and continued success in the industry more difficult and expensive.
The Company believes that well-capitalized, technologically sophisticated
providers capable of offering a wide range of services, like the Company, will
benefit from this consolidation trend. During the past few years, a number of
service providers have consolidated or combined their operations. A number have
faced moderate to severe financial difficulties. In addition, some OEMs
have decided to by-pass wholesale distributors such as API and are distributing
their products directly to their customers. This is a trend that the Company
believes will continue, and is another reason for the Company's focus on growing
its supply chain management services, as some potential customers for the
Company's supply chain management services include those OEMs who have decided
to distribute their products themselves, and are looking for the most efficient
way to do so.

           Industry Conditions. Results for the year ended January 31, 2003
continued to be adversely impacted by the poor state of the economy, and
especially by the recession in the aerospace industry that began in late 2000
and increased after the terrorist acts that occurred on September 11, 2001.
Recovery in the industry has been minimal, and overall business activity in the
aerospace industry continues to be depressed, especially in the general aviation
and commercial airline sectors. Flight schools have significantly reduced their
operations and certain flight zones remain restricted for general aviation
flights. Bankruptcies have and continue to occur in the industry. The Company
expects that the current level of reduced business activity in the industry will
continue, and the timing of any recovery in the industry is uncertain. The
Company continues to look for new sources of revenue, to control its costs, and
expand its offering of products and services.

Principal Suppliers

           API has five suppliers from whom approximately 49%, 53%, and 49% of
its total purchases were made during the years ended January 31, 2003, 2002 and
2001, respectively.

Sales and Marketing

           Parts and Components Supply Services. New and serviceable parts,
supplies and components are sold to professional aircraft maintenance
organizations, aircraft operators, including fleet operators and airlines,
flight training schools, and FBOs. The Company uses regional sales managers,
inside salespersons, outbound telephone salespersons, electronic commerce,
independent contract representatives, associated distributors, and foreign
partners in its sales and marketing efforts.

           Supply Chain Management Services. The Company sells supply chain
management services to the aerospace industry. The Company identifies potential
customers and opportunities in the industry through contacts within the
industry, advertising and targeted marketing, and recommendations from current
customers. Lead times for the procurement of new contracts is long due to the
long-term nature of such contracts, the relationship building with the customer
that is required, and the substantial change they entail for the customer.

Customers

           The Company currently has approximately 7,000 customers. The Company
is not reliant upon any single customer.


                                       4
<PAGE>




Regulation

           Regulatory bodies such as the FAA, the Joint Airworthiness
Administration, the Department of Defense (the "DOD"), and governments
around the world require all aircraft and engines to follow defined maintenance
programs to ensure airworthiness and safety. For parts and components
distributed by the Company, including inventory managed by the Company under
supply chain management services, the programs are developed by the OEM or
customer in coordination with the regulatory body. The Company has received
certifications from the FAA covering its repair and overhaul facilities, and its
hose shop. The DOD requires that parties providing parts for branches of the
U.S. armed services comply with applicable government regulations, and the DOD
continually reviews the operations of the Company for compliance with applicable
regulations. In addition, the Company's Memphis, Tennessee facility is ISO/9002
certified and subject to periodic reviews.

Environmental Matters and Proceedings

           The Company's operations are subject to federal, state and local
environmental laws and related regulation by government agencies, including the
United States Environmental Protection Agency, the United States Department of
Transportation, and the United States Occupational Safety and Health
Administration. Among other matters, these regulatory authorities impose
requirements that regulate the operation, handling, transportation and disposal
of hazardous materials, the health and safety of workers, and require the
Company to obtain and maintain licenses and permits in connection with its
operations. This extensive regulatory framework imposes potentially significant
compliance burdens and risks on the Company. The Company believes that it is in
material compliance with all federal, state, and local laws and regulations
governing its operations. The Company has not had and does not anticipate that
any material capital expenditures will be required during the next fiscal year
in order to maintain compliance with the federal, state and local laws and
regulations.

Employees

           As of January 31, 2003, the Company employed 193 persons on a
full-time basis. None of the Company's employees is covered by collective
bargaining agreements. The Company believes that its relationship with its
employees is good.

Geographic Areas

           Sales to unaffiliated foreign customers were approximately 18%, 17%,
and 13% of net sales for the years ended January 31, 2003, 2002 and 2001,
respectively. The majority of these customers were located in Canada, Southeast
Asia, Latin America and Europe.



                                       5
<PAGE>





Item 2.    Properties

           The Company operates within the following facilities:

<TABLE>
<CAPTION>


                                                                                     Square                  Lease
 Location                          Entity                  Description              Footage               Expiration
 --------                          ------                  -----------              -------               ----------
<S>                                <C>                   <C>                         <C>                   <C>
 Westport, CT                      First Aviation          Executive offices          3,000                 2007

 Memphis, TN                       API                     Distribution/sales       157,000                 2013

 Calgary, Canada                   API Ltd.                Sales                      5,600                 2009

 Montreal, Canada                  API Ltd.                Sales                      7,160                 2003

 Clark Field, Pampanga,
 Philippines                       API Asia Pacific        Distribution/sales        22,235                 2010
</TABLE>


The Company plans to renew the Montreal lease prior to its expiration.


Item 3.    Legal Proceedings

           The Company's business exposes it to possible claims for personal
injury, death or property damage that may result from a failure of certain parts
serviced by the Company or spare parts and components sold by it, or in
connection with the provision of its supply chain management services. The
Company takes what it believes to be adequate precautions to ensure the quality
of the work it performs and the traceability of the aircraft parts and
components that it sells. The OEMs that manufacture the parts, components and
supplies that the company sells carry liability insurance on the products they
manufacture. In addition, the Company maintains what it believes is adequate
liability insurance to protect it from any claims.

           In the normal conduct of its business, the Company also is involved
in various claims and lawsuits, none of which, in the opinion of the Company's
management, will have a material, adverse impact on the Company's consolidated
financial position. The Company maintains what it believes is adequate liability
and other insurance to protect it from such claims. However, depending on the
amount and timing, unfavorable resolution of any of these matters could have a
material effect on the Company's consolidated financial position, results of
operations or cash flows in a particular period.


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

           None.


Item 4a.    Executive Officers of the Registrant

           The Company's executive officers, their ages and backgrounds are as
follows:

           Michael C. Culver, 52, has served as President and Chief Executive
Officer of the Company since March 1995. Mr. Culver also serves as Chairman of
API. In 1985, Mr. Culver co-founded First Equity Group Inc. ("First Equity
Group"). First Equity Group's interests, in addition to the Company, include
First Equity Development Inc., an aerospace investment and advisory firm, Skip
Barber Racing School, LLC and Imtek, Inc., a printing company. Mr. Culver serves
on the Boards of Skip Barber Racing School, LLC and Imtek, Inc.


                                       6
<PAGE>

           Gerald E. Schlesinger, 58, became Senior Vice President upon his
employment by the Company in June 1997. From November 1993 to June 1997, Mr.
Schlesinger was affiliated with the SK Group and served as its Managing
Principal. The SK Group provided consulting and management advisory services to
its clients. Prior to November 1993, Mr. Schlesinger served as Executive
Vice-President, CFO and CIO for Butler Aviation.

           Michael D. Davidson, 43, became the Chief Financial Officer and Vice
President of Finance in April 2002. He is the acting Chief Financial Officer of
API. He became Secretary to the Company's Board of Directors in October 2001.
Previously he served as the Company's Controller since his employment in
February 1998. Prior to joining First Aviation, from 1996 to 1998, Mr. Davidson
served as Chairman of Access Ambulance Company, Inc. From 1993 to 1998 he was
engaged as a principal in a consulting firm specializing in turnaround and
management consulting, restructuring and bankruptcy, and from 1993 to 1995 also
was the Executive Director of Stamford Emergency Medical Services, Inc. Prior to
1993 Mr. Davidson worked for the Dyson-Kissner-Moran Corporation, a leveraged
buyout firm, and spent nearly ten years with Ernst & Young LLP. Mr. Davidson is
a Certified Public Accountant.


                                     PART II



Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters

           Market Information. The Company's common stock trades on The NASDAQ
Stock Market under the symbol FAVS. The table below sets forth the quarterly
high and low sales prices for the Company's common stock as reported on the
NASDAQ Composite Tape since February 1, 2001.
<TABLE>
<CAPTION>


                         Year Ended                                                             Year Ended
                      January 31, 2003                                                       January 31, 2002
-------------------------------------------------------------           ------------------------------------------------------------
                                High              Low                                                High               Low
<S>                            <C>               <C>                                                 <C>               <C>
First Quarter                  $5.15             $4.60                  First Quarter                $4.88             $4.00
Second Quarter                 $5.15             $4.50                  Second Quarter               $4.98             $4.37
Third Quarter                  $4.75             $3.50                  Third Quarter                $4.96             $4.06
Fourth Quarter                 $5.33             $3.54                  Fourth Quarter               $5.20             $4.09
</TABLE>


           Holders. As of April 11, 2003, there were 20 holders of record of the
Company's common stock.

           Dividends. In January 2003, the Company paid a special cash dividend
of $1.00 per share. The total cash paid was $7.3 million. This is the only cash
dividend or distribution paid on the Company's common stock since its inception.
At this time, the Company anticipates that, for the foreseeable future, all
earnings will be retained for use in the Company's business and no cash
dividends will be paid on the common stock. Any payment of cash dividends in the
future on the common stock will be dependent upon the Company's financial
condition, results of operations, current and anticipated cash requirements,
plans for expansion, the ability of its subsidiaries to pay dividends or
otherwise make cash payments or advances to it, and restrictions, if any, under
any current or future debt obligations, as well as other factors that the Board
of Directors deems relevant. In addition, API's credit facility prohibits the
payment of cash dividends from it to First Aviation without the lender's
consent.



                                       7
<PAGE>



Item 6.    Selected Financial Data

           The selected financial data set forth below should be read in
conjunction with the "Consolidated Financial Statements", the "Notes to
Consolidated Financial Statements", "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and other financial information
included herein.

           Results for the year ended January 31, 2003 were significantly
impacted by a one-time, non-cash charge to adopt a new accounting principle, a
non-cash charge to increase its allowance for doubtful trade receivables, and a
non-cash charge to establish a valuation allowance against the Company's
deferred income tax assets. These charges, which totaled $5.5 million, had no
impact on the Company's cash flow from operations, which was strong, and
significantly higher than in prior years.
<TABLE>
<CAPTION>

                                                                          Year Ended January 31,
(Amounts in thousands, except per share amounts)        2003           2002           2001            2000            1999

Balance Sheet Summary:

<S>                                                <C>             <C>            <C>           <C>              <C>
   Working capital                                 $   47,996      $   56,903     $   42,673    $    57,445      $   40,665
   Cash per share outstanding (1)                        3.59            4.31           4.43           6.16            0.02
   Total assets                                        65,041          80,544         80,714         86,392          79,319

   Current debt and obligations under capital
      leases                                                4             180         11,757            163          22,908
   Long-term debt                                      14,500          14,800              -          7,900               -
   Other long-term liabilities                          1,041           1,041          1,188          1,156           1,292
   Total stockholders' equity                   $      36,094   $      49,018  $      47,832  $      54,143   $      44,381
   Book value per share outstanding (2)                  4.98            6.79           6.65           6.65            4.93
   Dividends paid                                       7,251               -              -              -               -
   Common shares outstanding                            7,251           7,214          7,185          8,134           9,002

Results of Operations Summary (3):

   Net sales                                    $     101,737   $     105,696  $      97,550  $      82,999   $      61,015
   Gross profit                                        18,473          19,016         18,543         15,928          11,180
   Income (loss) from operations                      (1,577)             227        (2,300)           (92)         (1,376)
   Income (loss) before income taxes                  (1,413)             486          (925)           (23)         (1,686)
   Provision (benefit) for income taxes               (1,786)           (194)            349            190             675
                                                -------------   -------------  -------------  -------------   -------------
   Income (loss) from continuing operations
      before accounting change                        (3,199)             292          (576)            167         (1,011)
   Cumulative effect of change in accounting          (2,735)               -              -              -               -
   Net income (loss)                            $     (5,934)   $       1,252  $     (1,830)  $      15,530   $     (1,714)
   Basic income (loss) per share from
      continuing operations                     $      (0.44)   $        0.04  $      (0.08)  $        0.02   $      (0.11)
   Basic net income (loss) per share            $      (0.82)   $        0.17  $      (0.24)  $        1.74   $      (0.19)
   Weighted average shares outstanding - basic          7,225           7,198          7,721          8,909           8,973
   Income (loss) per share from continuing
      operations - assuming dilution            $      (0.44)   $        0.04  $      (0.08)  $        0.02   $      (0.11)
   Net income (loss) per share - assuming
      dilution                                  $      (0.82)   $        0.17  $      (0.24)  $        1.72   $      (0.19)
   Weighted average shares outstanding -
      assuming dilution                                 7,225           7,209          7,721          9,006           8,973
</TABLE>


                                       8
<PAGE>




Notes to Selected Financial Data

(1)        Cash per share outstanding is calculated by taking the cash balance
           and dividing by common shares outstanding. The Company repurchased
           for treasury $4,834 and $5,869 during the years ended January 31,
           2001 and 2000, respectively.

(2)        Book value per share outstanding is calculated by taking total
           stockholders' equity and dividing by common shares outstanding.

(3)        During the year ended January 31, 2003 the Company recorded a charge
           of $0.8 million to increase its allowance for doubtful trade
           receivables, recorded an income tax charge of $2.0 million to
           establish a valuation allowance against its deferred income tax
           assets, recorded a net charge of $2.7 million upon adoption of a new
           accounting principle related to goodwill, and paid a special cash
           dividend of $1.00 per share. In fiscal year 2000 the Company sold its
           former wholly owned subsidiary, National Airmotive Corporation
           ("NAC") and in fiscal year 2001 discontinued its e-commerce
           subsidiary, AeroV Inc. ("AeroV"). As a result of the sale and
           discontinuance, NAC and AeroV have been accounted for as discontinued
           operations, and their results of operations and gain or loss on
           disposition were condensed and reported separately from continuing
           operations.


Item 7.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations

Cautionary Statements

Certain statements discussed under the captions "Business", "Legal Proceedings",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", "Liquidity and Capital Resources", and elsewhere in this Annual
Report on Form 10-K constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
are not statements of historical facts, but rather reflect the Company's current
expectations concerning future events and results. Such forward-looking
statements, including those concerning the Company's expectations, involve known
and unknown risks, uncertainties and other factors, some of which are beyond the
Company's control, that may cause the Company's actual results, performance or
achievements, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties, and other important
factors, include, at minimum:

     -    The Company's continued ability to obtain parts and components from
          its principal suppliers on a timely basis. The Company's distribution
          services business is dependent upon the availability of parts,
          components and supplies from its suppliers. A disruption in the
          Company's ability to obtain parts, components and supplies, for any
          reason, and without the ability to find alternative sources, would
          have an adverse impact on the Company's business. In addition, some
          OEM's, in an effort to find additional sources of income, are
          attempting to distribute directly to the customer and by-pass the
          Company as a distribution channel.

     -    Depressed domestic and international market and economic conditions,
          especially those currently facing the aviation industry as a whole.
          The Company is dependent upon the level of activity in the aviation
          industry, including commercial and recreational flying, and flight
          training schools. Continued depressed conditions in the aviation
          industry, as well as depressed overall economic conditions, will have
          an adverse impact on the Company's future results.

     -    The impact of changes in fuel and other freight related costs. Fuel is
          a significant cost in the aviation industry and increases in the cost
          of fuel or lack of availability of fuel could have an adverse impact
          on overall flight activity levels, and the Company's business.

     -    Relationships with its customers. An inability to maintain good
          relationships with its customers, or the inability to expand by
          establishing relationships with new customers, could have an adverse
          impact on the Company.


                                       9
<PAGE>

     -    The ability of the Company's customers to meet their financial
          obligations to the Company. The inability of the Company's customers
          to meet their obligations to the Company, or to meet their general
          financial obligations and face financial difficulty, would adversely
          impact the ability of the Company to collect on its receivables and
          generate future sales.

     -    The ability to obtain and service supply chain management contracts.
          Supply chain management contracts have a long lead-time and require
          extensive effort and focus to obtain. An inability to obtain such
          contracts, or to service the customer appropriately, for any reason,
          will have an adverse impact on the Company's future results.

     -    Changes in regulations or accounting standards. The Company is subject
          to regulations (including income tax laws) and accounting standards
          that could change in the future, and such changes could have an
          adverse impact on the Company's reported results.

     -    The ability to consummate suitable acquisitions and expand. An
          inability to expand through acquisitions or through other means of
          growth, including internationally, will have an adverse impact on the
          Company.

 The factors noted above are not all inclusive. All of the factors should be
 considered carefully when reviewing the Company's current results and
 forward-looking statements.

           The following analysis of the financial condition and results of
operations of the Company should be read in conjunction with the Company's
Consolidated Financial Statements, including the Notes thereto, and selected
financial data of the Company included elsewhere in this Annual Report on Form
10-K. (Amounts in millions, except share amounts, and where specifically noted.)

General

           The Company is one of the premier suppliers of products and services
to the aerospace industry worldwide, including the provisioning of aircraft
parts and components, and supply chain management services. The Company also
builds custom hose assemblies, and performs overhaul and repair services for
brakes and starters/generators.

           The loss incurred by the Company for the year ended January 31, 2003
principally was the result of non-cash charges taken by the Company, thus
there was no effect upon the Company's liquidity. The Company continues to
maintain a large cash position and a strong balance sheet. With some indices
indicating that activity in the industry is down 20% or more over prior year
levels, the Company believes that its results show that it continues to take
market share from its competitors, especially from less financially stable
competitors.

           Results for the three months and year ended January 31, 2003
continued to be adversely impacted by the poor state of the economy, and
especially by the recession in the aerospace industry that began in late 2000
and increased after the terrorist acts that occurred on September 11, 2001.
Recovery in the industry has been minimal, and overall business activity in the
aerospace industry continues to be depressed, especially in the general aviation
and commercial airline sectors. Flight training schools have significantly
reduced their operations, and certain flight zones remain restricted for general
aviation flights. Bankruptcies have and continue to occur in the industry. As a
result of these events, during the quarter ended January 31, 2003, the Company
re-assessed its reserves for uncollectible accounts receivable and took a
$0.8 million charge to increase its allowance for doubtful accounts. The Company
expects that the current level of reduced business activity in the industry will
continue, and the timing of any recovery in the industry is uncertain. The
Company continues to look for new sources of revenue, to control its costs, and
expand its offering of products and services.

           During the quarter ended January 31, 2003 the Company, due to the
loss incurred for the year, and in accordance with requirements of Statement of
Financial Accounting Standards No. ("FAS") 109, "Accounting for Income Taxes",
recorded a non-cash deferred income tax charge of $2.0 million to establish a
full valuation allowance against its net deferred income tax assets. The
establishment of the valuation allowance is not a reflection of the future or
long-term profitability of the Company, and the Company expects that it will
reverse in future years if financial results increase sufficiently to support
the value of the assets.


                                       10
<PAGE>

           On July 24, 2002, the Company announced that it had entered into a
multi-year contract with Gulfstream Aerospace Corporation for the provision of
supply chain management services, effective July 1, 2002. Net sales from this
contract favorably impacted results beginning in the quarter ended October 31,
2002.

           During the first quarter ended April 30, 2002, the Company adopted
FAS No. 142, "Goodwill and Other Intangible Assets". Pursuant to FAS 142,
goodwill is not amortized but is tested periodically for impairment using
discounted cash flows and other fair value methodologies. Upon adoption of FAS
142, the Company was required to perform transitional impairment tests relating
to its goodwill existing as of February 1, 2002, the date of adoption. As a
result, upon adoption of FAS 142, the Company took a one-time, non-cash charge
of $2,735, net of applicable income tax benefit of $922, or $0.38 per share, to
write-off the carrying value of its goodwill. No charge was required under
previous generally accepted accounting principles, which were based upon
undiscounted cash flows. The adoption of FAS 142 represented a change in
accounting principle, and the cumulative effect, net of the applicable income
tax benefit, has been shown on a separate line in the consolidated statements of
operations.

Critical Accounting Policies

           The Company is required to provide additional disclosure and
commentary on those accounting policies considered most critical. An accounting
policy is deemed to be critical if it is important to the Company's financial
condition and results, and requires judgment and estimates on the part of
management in its application. The process of preparing financial statements in
conformity with accounting principles generally accepted in the United States
requires the use of judgments, estimates and assumptions to determine the
measurement of revenues and expenses, and the realizable value of certain assets
and liabilities. These estimates and assumptions are based upon the best
information available at the time the estimates or assumptions are made. The
estimates and assumptions could change significantly as conditions within and
beyond management's control change. Therefore, actual results could differ
significantly from the estimates. The most significant estimates made in
preparing the Company's financial statements include revenue recognition, the
determination of the allowance for doubtful trade receivables, the allowance for
excess and obsolete inventories, deferred income tax asset valuations, the
valuation of goodwill, and, in prior years, estimates made relating to
discontinued operations, including the determination of the amount of gain or
loss upon disposition. The following is a discussion of the critical accounting
policies and the related judgments, estimates and assumptions utilized in
preparing the Company's consolidated financial statements. A summary of
significant accounting policies is included in Note 2 to the consolidated
financial statements included in this Annual Report on Form 10-K.

Revenue Recognition

           The Company's net sales consist of sales of products and services,
including parts and components, component overhaul and repair services, and
supply chain management services. Net sales are recorded when parts and
components are shipped and title transfers to the customer, when overhauled and
repaired items are completed and shipped back to the customer, or when supply
chain management services have been provided to the customer. Shipping and
handling fees billed to customers are included in net sales. The terms and
nature of supply chain management services provided are stipulated in a
long-term contract between the Company and the customer. In providing services
where the Company distributes parts and components on behalf of its customer,
the Company may use its own inventory or hold its customers' inventory without
taking ownership of such inventory. In cases where the Company does not take
ownership of its customers' inventory, net sales are recognized as a fee based
on the sales value of the product shipped through the Company's facilities
("throughput"), and not the sales value of the product itself.

Allowance for Doubtful Accounts

           The allowance for doubtful trade receivables is established based on
estimates of the amount of uncollectible trade receivables, utilizing financial
formulas based principally upon historical experience, the credit worthiness of
the customer, the age of the account, the estimated risk that the account can be
collected, and specific identification. Collection of trade receivables is
affected by aviation industry and market trends, overall economic trends and
conditions, and customers' credit issues and financial condition. Changes in any
of these factors may have a significant negative impact upon the estimated
allowance, and the Company's financial performance.


                                       11
<PAGE>

Allowance for Excess and Obsolete Inventories

           Inventories generally consist of aircraft parts and components, and
are valued at the lower of cost or market, using the first-in, first-out method.
Provisions are made in each period for the estimated effect of excess and
obsolete inventories based upon financial formulas that take into account
quantities, costs, the age of the inventory on hand, historical and projected
sales, and other inventory movements, adjusted for known or estimated factors
such as new product lines and product return allowances. Actual excess and
obsolete inventories may differ significantly from such estimates, and such
differences could have a significant negative impact on the estimated allowance,
and the Company's financial performance.

Goodwill

           Goodwill arises from the excess of the purchase price paid over the
underlying fair value of assets acquired in transactions accounted for under the
purchase method of accounting for business combinations. Goodwill was recognized
upon First Aviation's acquisition of API's business in 1997 and upon the
acquisition of Superior's distribution business in 2001. A significant amount of
judgment is used to estimate the fair value of assets acquired and to allocate
the purchase price to the underlying assets and liabilities, including the
recognition of liabilities incurred directly as a result of the acquisition.
Most of the assumptions and estimates utilized in this process were based upon
known factors and exposures, historical information and management's experience.

Deferred Income Tax Assets

           The Company uses the liability method to account for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities,
and are estimated using the enacted tax rates and laws that are estimated to be
in effect when the differences are expected to reverse. The realization of the
assets is subject to estimates and judgments, and may change based upon a
variety of factors, including future profitability of the Company and tax law
changes. If an asset is not deemed more likely than not to be fully realizable,
a valuation allowance must be established against all or part of the asset. In
addition, FAS 109 requires the establishment of a valuation allowance under
certain conditions.

Discontinued Operations

           Upon the sale or disposition of a subsidiary, management estimates
what it believes to be costs to be incurred upon and after the sale or disposal
of the subsidiary, including income taxes that relate directly to the sale or
disposal transaction, or the operations of the former entity. Such estimates are
subject to change, and the changes may be significant.

New Accounting Pronouncements

           During the year ended January 31, 2003, the Company adopted FAS
144, "Accounting for the Impairment or Disposal of Long-Lived Assets". Under FAS
144, an impairment loss must be recognized when the carrying amount of a
long-lived asset exceeds its fair value. In the event that the carrying amounts
of long-lived assets may be impaired, an assessment of recoverability must be
performed. The assessment process consists of comparing the estimated future
undiscounted cash flows associated with the asset to the asset's carrying amount
to determine if a write-down is required. If this review process indicates that
the asset will not be recoverable, the carrying value of the asset must be
reduced to its estimated realizable value. The adoption of FAS 144 had no effect
on the consolidated financial position of the Company.



                                       12
<PAGE>



Results of Operations

           The following table sets forth, for the periods indicated, the
percentages of the Company's net sales that certain income and expense items
represent.
<TABLE>
<CAPTION>


                                                                                          Year Ended January 31,
                                                                ------------------------ ------------------------ -----------------
                                                                          2003                     2002                     2001
                                                                ------------------------ ------------------------ -----------------

<S>                                                                       <C>                      <C>                      <C>
  Net sales                                                               100.0%                   100.0%                   100.0%
  Cost of sales                                                            81.8                     82.0                     81.0
  Gross profit                                                             18.2                     18.0                     19.0
  Selling, general and administrative expenses                             17.4                     16.0                     17.8
  Corporate expenses                                                        2.4                      2.5                      3.6
  Litigation (income)                                                       -                       (0.7)                     -
  Income (loss) from operations                                            (1.6)                     0.2                     (2.4)
  Interest income                                                           0.3                      0.6                      2.0
  Interest and other expenses                                              (0.1)                    (0.3)                    (0.6)
                                                                           (1.4)                     0.5                     (1.0)
  Income (loss) before income taxes
  (Provision) benefit for income taxes                                     (1.7)                    (0.2)                     0.4
  Income (loss) from continuing operations                                 (3.1)                     0.3                     (0.6)
  Income (loss) from discontinued operation                                 -                        -                       (1.9)
  Gain from dispositions of subsidiaries                                    -                        0.9                      0.6
  Cumulative effect of accounting change                                   (2.7)                     -                        -
     Net income (loss)                                                     (5.8)%                    1.2%                    (1.9)%
</TABLE>


Year ended January 31, 2003 compared to year ended January 31, 2002

Net sales

           Net sales for the year ended January 31, 2003 decreased $4.0 million,
or 3.7%, to $101.7 million from $105.7 million for the year ended January 31,
2002. Net sales decreased principally as a result of depressed economic and
industry conditions, and continued additional security measures that especially
affected the commercial airline and general aviation markets, including flight
training schools. The result was significantly less flight activity and
therefore less requirements for parts and components. In addition, as a result
of economic and industry conditions, the Company previously had tightened
its credit policies, and this further contributed to the decline in sales.
Price reductions by competitors seeking to maintain and/or regain market
share have and are expected to continue to adversely affect the rate of
growth and profit margins in the near term, as will adverse industry conditions.
The majority of the decrease in sales occurred in the U.S. market, but continued
weakness in Asia and Latin America, due to economic weakness in those areas,
also negatively impacted sales. Canada and Europe experienced sales growth.

           Partially offsetting the decline in sales of parts and components was
an increase in sales relating to supply chain management contracts, due to new
customers and expanded service offerings. However, as these contracts often are
based upon a fee relative to the services provided, the impact on sales is less
than if the Company was selling the product itself. However, since the Company's
investment in its personnel, facilities and systems are scalable, as services
contracts increase throughput they will have the effect of decreasing the
Company's overall per unit costs, and increasing efficiencies.


                                       13
<PAGE>

           The Company expects to continue to expand into new markets,
especially internationally, add additional product lines, and invest in new
product offerings. The Company also continues to seek new customers and
opportunities in its supply chain management business.

Cost of sales

           Cost of sales consists of costs of inventory sold, direct costs to
overhaul and repair parts and components, and direct costs of providing
services. Freight costs also are included in cost of sales. Costs of sales for
the year ended January 31, 2003 decreased $3.4 million, or 3.9%, to $83.3
million from $86.7 million for the year ended January 31, 2002. The decrease in
cost of sales is consistent with the decrease in net sales. In addition, the
decrease in cost of sales was impacted by a shift in mix toward more supply
chain management services contracts, which have a higher margin, as described
below under Gross profit.

Gross profit

           Gross profit for the year ended January 31, 2003 decreased $0.5
million, or 2.9%, to $18.5 million from $19.0 million for the year ended January
31, 2002. Gross margin increased to 18.2% from 18.0%. The decline in gross
profit was due principally to the decrease in net sales, due to the reasons
described above under Net sales. Offsetting this decrease, which also was the
reason for the increase in the gross margin, was an increase in gross profit
from services contracts, which have a higher gross margin, as explained below.

           A significant portion of the costs relating to services contracts are
indirect costs, including indirect personnel, warehouse and related, and
systems, and these costs are included in selling, general and administrative
expenses. Therefore, gross margins for services sales will be higher than for
product sales. As net sales of services increase, the trend of increased gross
profit and gross margin from the current year compared to the prior year will
continue, along with smaller increases in selling, general and administrative
expenses. For the year ended January 31, 2003, gross profit from services sales
doubled that of the prior year.

           Services contracts are part of a continuum of product lines offered
by the Company to its customers, and represent a growth opportunity for the
Company. The Company considers its business to be distributing parts and
components and providing services to manage and/or distribute its customers'
parts and components.

Selling, general and administrative expenses

           Selling, general and administrative expenses for the year ended
January 31, 2003 increased $0.8 million, or 4.5%, to $17.7 million from $16.9
million for the year ended January 31, 2002. The increase is due principally to
increased charges for estimated bad debts, and an increase in indirect costs
related to services contracts. As stated in Gross Profit, indirect costs
relating to services sales are classified as part of selling, general and
administrative expenses. As net sales from services increase, selling, general
and administrative costs also will increase, though generally at a lower rate.

Corporate expenses

           Corporate expenses for the year ended January 31, 2003 decreased $0.2
million to $2.4 million from $2.6 million for the year ended January 31, 2002.
The reduction was due principally to less personnel related costs.

Interest income and interest and other expenses

           Interest income of $0.3 million earned during the year ended January
31, 2003 was derived from investing the Company's cash in short term
investments. The decrease from the $0.6 million earned during the year ended
January 31, 2002, was due principally to the marked decrease in interest rates
from fiscal year 2002 to fiscal year 2003. Interest and other expense of $0.1
million for the year ended January 31, 2003 decreased from $0.3 million for the
year ended January 31, 2002, principally for the same reason.


                                       14
<PAGE>

(Provision) benefit for income taxes

           For the first three quarters of the fiscal year ended January 31,
2003, the Company's results showed pre-tax income before the cumulative effect
of the accounting change. As a result of the pre-tax loss incurred by the
Company in the fourth quarter, the Company incurred a pre-tax loss before the
effect of the accounting change for the full fiscal year. After considering this
loss, the Company had incurred a cumulative loss over the prior three years.
This cumulative loss triggered certain provisions under FAS 109, that required
the Company to re-evaluate its deferred income tax assets. As a result, the
Company took a charge of $2.0 million to establish a valuation allowance against
its deferred income tax assets since, under the provisions of FAS 109, a greater
emphasis is placed on three-year cumulative losses as an indicator of
the Company's ability to realize its deferred income tax assets than the
potential for future income. The requirement to establish the valuation
allowance is not an indication of management's evaluation of the Company's
future or long-term profitability, performance or financial condition of the
Company. The valuation allowance will be reversed in future years if financial
results increase sufficiently to support the value of the assets. The difference
between the effective rate for the year January 31, 2003 as compared to the
statutory rate of 34% is due principally to changes in the valuation allowance.

Income (loss) from continuing operations before cumulative effect of
accounting change

           For the year ended January 31, 2003 the Company incurred a loss of
$3.2 million from continuing operations, compared to income of $0.3 million for
the year ended January 31, 2002. The decrease in income principally was due to
lower sales and gross profit, significant charges to increase the Company's
allowance for bad debts, and the charge taken to establish a valuation allowance
against the Company's deferred income tax assets.

Cumulative Effect of Accounting Change

           As previously described, during the year ended January 31, 2003, the
Company adopted FAS 142 and recorded a net charge of $2.7 million upon adoption.
There was no accounting change during the year ended January 31, 2002.

Net income (loss) and Net income (loss) per share

           The Company incurred a net loss of $5.9 million, or $0.82 per share
for the year ended January 31, 2003, as compared to net income of $1.3 million,
or $0.17 per share for the year ended January 31, 2002. The net loss and
decrease in net income principally were due to the reasons described above.


Year ended January 31, 2002 compared to year ended January 31, 2001

Net sales

           Net sales for the year ended January 31, 2002 increased $8.1 million,
or 8.4%, to $105.7 million from $97.6 million for the year ended January 31,
2001. Net sales increased principally as a result of a combination of factors,
including growth in international operations, especially Southeast Asia and
Europe, increased domestic market share, especially in the commercial airline
sector, the impact of the acquisition of Superior's distribution business and
growth in the Company's logistics services business. Price reductions by
competitors seeking to regain market share have and are expected to continue to
adversely affect the rate of growth and profit margins in the near term, as will
adverse industry conditions. The Company expects to continue to expand into new
markets, add additional product lines, and invest in new product offerings. The
Company also continues to seek new customers and opportunities in its logistics
and inventory management business.

Cost of sales

           Costs of sales for the year ended January 31, 2002 increased $7.7
million, or 9.7%, to $86.7 million from $79.0 million for the year ended January
31, 2001. The increase in cost of sales was due to the increase in net sales and
the reasons described below under Gross profit.


                                       15
<PAGE>

Gross profit

           Gross profit for the year ended January 31, 2002 increased $0.5
million, or 2.6%, to $19.0 million from $18.5 million for the year ended January
31, 2001. Gross margin decreased to 18.0% from 19.0%. The decline in gross
margin also was due to a combination of factors, including competitive
pressures, changes in product mix to lower margin sales in the airline and
Superior product lines, and an increase of $0.5 million in inventory reserves.
The increase in inventory reserves was a result of the Company's normal review
procedures.

Selling, general and administrative expenses

     Selling, general and administrative expenses for the year ended January 31,
2002 decreased $0.5 million, or 2.9%, to $16.9 million from $17.4 million for
the year ended January 31, 2001. The decrease is attributable to the Company's
overall focus on profitability and controlling costs, and a reduction in
personnel costs due to the industry slowdown following the terrorists attacks
last September. Included in selling, general and administrative expenses for the
year ended January 31, 2002 was a $0.1 million charge relating to a change in
the Company's estimate of recording bad debts to a more conservative
methodology.

Corporate expenses

           Corporate expenses for the year ended January 31, 2002 decreased $0.3
million to $2.6 million from $2.9 million for the year ended January 31, 2001.
The reduction was due principally to reduced other legal costs.

Litigation (income) expense

           During the three months and year ended January 31, 2002 the Company
settled its litigation against Gulf Insurance Company for a cash payment to the
Company of approximately $1.0 million. The litigation had been ongoing for
several years. The settlement, net of associated legal costs, has been
reclassified out of corporate expenses and shown separately. Legal costs not
associated with this litigation are classified in Corporate expenses. Prior year
legal costs, relating to this matter were reclassified out of corporate expenses
and shown separately as well.

Interest income and interest and other expenses

           Interest income of $0.6 million earned during the year ended January
31, 2002 was derived from investing the Company's cash in short term
investments. The decrease from the $2.0 million earned during the year ended
January 31, 2001 was due principally to the marked decrease in interest rates
from fiscal year 2001 to fiscal year 2002. Interest expense and other of $0.3
million for the year ended January 31, 2002 decreased from $0.5 million for the
year ended January 31, 2001 for the same reason.

(Provision) benefit for income taxes

           The Company recorded a provision for income taxes on income from
continuing operations for the year ended January 31, 2002 of $0.2 million, for
an effective rate of 39.9%. For the year ended January 31, 2001, the Company
recorded a benefit on its loss from continuing operations of $0.3 million, for
an effective rate of 37.7%. The change in the effective rate for the year
January 31, 2002 over the prior year was due to changes in estimates and the
magnitude of permanent differences between book and taxable income or loss.

Income (loss) from continuing operations

           For the year ended January 31, 2002 the Company earned $0.3 million
from continuing operations, compared to a loss of $0.6 million for the year
ended January 31, 2001. The increase in income was due to growth in net sales
and gross profit, lower selling, general and administrative expenses as a
percentage of net sales, lower corporate expenses, due principally to decreased
other legal costs, and the legal settlement with Gulf Insurance


                                       16
<PAGE>

Company, offset by an increase in inventory reserves, an increase in the
provision for bad debts, and a decrease in net interest income for the year
ended January 31, 2002.

Gain from dispositions of subsidiaries

           During the year ended January 31, 2002, the Company reversed reserves
related to the sale of NAC and the disposal of AeroV that no longer were
required. As a result, the Company recorded income of $1.0 million during the
year ended January 31, 2002, after associated income taxes of $0.6 million. The
income related principally to NAC. During the year ended January 31, 2001 the
Company finalized its income tax liabilities related to the sale of NAC. The
difference between the estimated income tax liabilities and the actual
liabilities incurred, a $1.0 million credit, was recorded in the year ended
January 31, 2001. Offsetting this gain was the net loss on the disposal of AeroV
of $0.4 million.

Net income (loss)

           The Company had net income of $1.3 million for the year ended January
31, 2002, as compared to a net loss of $1.8 million for the year ended January
31, 2001. The increase in net income was due to the reasons described above.

Net income (loss) per share

           No significant shares were repurchased during the year ended January
31, 2002. During the year ended January 31, 2001 the Company repurchased
1,023,398 shares of its common stock. The effect of these repurchases was to
decrease the weighted average shares outstanding and increase the net loss per
share by approximately $0.02 per share for the year ended January 31, 2001.

Liquidity and Capital Resources

           The Company's liquidity requirements arise principally from its
working capital needs. In addition, the Company has liquidity requirements to
fund capital expenditures to support its current operations, and facilitate
growth and expansion. The Company funds its liquidity requirements with a
combination of cash on hand, cash flows from operations, and from borrowings.
The Company manages its cash and debt to minimize its interest expense.

           Cash and cash equivalents at any time may consist of a combination of
demand deposits, money market or short-term, high-grade bond funds, and
short-term certificates of deposit.

           The loss incurred by the Company for the year ended January 31, 2003
principally was the result of non-cash charges taken by the Company, thus
there was no effect upon the Company's liquidity. The Company continues to
maintain a large cash position and a strong balance sheet, which allowed us to
pay the special cash dividend to stockholders in January.

           The Company's cash provided by (used in) operations for the years
ended January 31, 2003, 2002 and 2001 was $3.4 million, $1.9 million, and
$(14.1) million, respectively. Cash provided by operations for the year ended
January 31, 2003 was positively impacted by reductions in receivables and
inventory, offset partially by a reduction in accounts payable. The Company has
been reducing its inventory levels since the third quarter of the prior fiscal
year when the Company acquired the distribution business of Superior, and a
significant amount of inventory. The Company is focused on managing its overall
working capital. Cash used in investing activities for the years ended January
31, 2003, 2002 and 2001 was $(0.9) million, $(5.7) million, and $(3.0) million,
respectively. Cash used in investing activities for the year ended January 31,
2002 includes $5.0 million related to the acquisition of Superior. Cash provided
by (used in) financing activities for the years ended January 31, 2003, 2002 and
2001 was $(7.7) million, $3.1 million, and $(1.1) million, respectively. Cash
used in investing activities for the year ended January 31, 2003 includes $7.3
million to pay stockholders a special cash dividend of $1.00 per share, and $0.5
million to pay down long-term debt and capital lease obligations. In the prior
year the Company had borrowed cash to fund a portion of its acquisition of
Superior.


                                       17
<PAGE>

           First Aviation's aggregate cash used for capital expenditures,
excluding the acquisition of Superior, for the years ended January 31, 2003,
2002 and 2001 was $0.9 million, $0.7 million, and $3.0 million, respectively.
The decrease over the three years is due to the discontinuance of NAC and AeroV,
and less capital requirements as a result of heavy spending in prior years to
upgrade the Company's systems and equipment to handle the Company's growth and
expansion. For fiscal year 2004 the amount required for capital expenditures
currently is expected to remain at approximately the same amount as for fiscal
year 2003. Management expects to fund these requirements from cash on hand, cash
flows from operations, and from borrowings.

           API has a $20 million revolving line of credit through a Commercial
Revolving Loan and Security Agreement (the "Facility"). Borrowings under this
Facility bear interest equal to the LIBOR rate plus 1.5% and are limited to
specified percentages of eligible trade receivables and inventories of API. The
Facility contains a number of covenants, including restrictions on mergers,
consolidations and acquisitions, the incurrence of indebtedness, transactions
with affiliates, the creation of liens, and limitations on capital expenditures.
Pursuant to the terms and conditions of the Facility, the payment of dividends
on API's common stock is prohibited, except with the lender's consent, and API
is required to maintain minimum levels of net worth and specified interest
expense coverage ratios. Substantially all of API's domestic assets are pledged
as collateral under the Facility, and First Aviation guarantees all borrowings
under the Facility. Borrowings under the Facility were $14.5 million at January
31, 2003, at an interest rate of approximately 2.9%. An additional total of
approximately $3.0 million was available to borrow under the Facility at January
31, 2003. During the quarter ended July 31, 2002, API extended the maturity date
of the Facility to July 1, 2004 from July 1, 2003. The extension of the
agreement was on the same terms and conditions as the prior Facility. As a
result of the extension, borrowings under the Facility continue to be classified
as long-term. Management believes that the carrying amount of the Company's
borrowings approximates fair market value because the interest rate is variable
and resets frequently.

           On January 6, 2003, the Company announced that its Board of
Directors, in light of the Company's cash position, had approved a special cash
dividend of $1.00 per share. The dividend was paid on January 30, 2003. The
total paid was $7.3 million. The Company previously had not declared nor paid
any cash dividends or distributions on its common stock since its inception in
1997. At this time, the Company anticipates that all future earnings will be
retained for use in the Company's business. Any payment of cash dividends in the
future on the Company's common stock will be dependent upon the Company's
financial condition, its results of operations, current and anticipated cash
requirements, plans for expansion, the ability of its subsidiaries to pay
dividends or otherwise make cash payments or advances to it, and restrictions,
if any, under any future debt obligations, as well as any other factors that the
Board of Directors deems relevant.

           Based upon current and anticipated levels of operations, the Company
believes that its cash on hand and cash flow from operations, combined with
borrowings available under its line of credit, will be sufficient to meet its
current and anticipated cash operating requirements through the year ending
January 31, 2004, including scheduled interest payments, working capital needs,
capital expenditures and subsidiary preferred dividend requirements.

           In a series of authorizations commencing November 3, 1999, the
Company's Board of Directors authorized a repurchase program of up to 2,118,817
shares of the Company's common stock. The repurchases were funded from a portion
of the proceeds from the sale of NAC, and were made from time to time in open
market transactions, block purchases, and privately negotiated transactions or
otherwise at prices prevailing at the time of the repurchase.

           During the years ended January 31, 2002 and 2001, respectively, the
Company repurchased 1,100 and 1,023,398 shares of its common stock. Common
shares reacquired to date under the Company's share repurchase program totaled
2,024,498 shares at January 31, 2002, with an aggregate cost of approximately
$10.7 million, or $5.29 per share. Approximately 94,000 shares still may be
repurchased under this program.

           The Company acquired API's domestic distribution business from AMR
Combs, Inc. ("AMR Combs") in 1997. In conjunction with this acquisition, AMR
Combs purchased preferred stock of API, convertible into ten percent of the
common stock of API as of the date of conversion, prior to any dilution
(the "Preferred Stock"). In addition, First Aviation, API and AMR Combs
entered into a Stockholders Agreement. Pursuant to this agreement, API has
the right to redeem the Preferred Stock at any time. Subject to certain terms
and conditions, AMR Combs has the right to cause the Company to repurchase the
Preferred Stock. The redemption price is equal to the fair market value of the
Preferred Stock as determined by an independent appraisal. The Stockholders
Agreement also contains certain other rights, including: (i) a right of first
refusal on the part of First Aviation with respect to any proposed sale of the
Preferred Stock; (ii) the right of First Aviation to require AMR Combs to
participate, on a pro rata basis, with it in the sale of the capital stock of
API to a third party; (iii) the right of


                                       18
<PAGE>

AMR Combs to elect to participate, on a pro rata basis, in the sale of the
capital stock of API to a third party; and (iv) piggyback and demand
registration rights granted to AMR Combs with respect to the Preferred Stock.
The demand registration rights became exercisable in March 2000. If API has not
previously closed an underwritten public offering of its common stock at the
time AMR Combs elects to exercise its demand registration rights, API may elect
to treat the demand as an exercise by AMR Combs of its put option with respect
to the Preferred Stock. There are no plans to cause API to conduct a public
offering of its securities.

           On March 5, 1999, AMR Combs was acquired by Signature Flight Support,
an affiliate of BBA Group Plc.

Inflation

           The Company does not believe that the relatively moderate levels of
inflation that have been experienced in the United States have had a significant
impact on its revenues or operations.


Item 7A.     Quantitative and Qualitative Disclosures about Market Risks

           The Company's Canadian operations utilize the Canadian dollar as
their functional currency, while the Company's Asian operation utilizes the U.S.
dollar as its functional currency. The Company has transactions denominated in
Canadian dollars and Philippine pesos. Foreign currency transaction exposure
principally arises from the transfer of foreign currency to and/or from US
dollars from one subsidiary to another within the Company, and from foreign
currency denominated trade receivables. Currency transaction and translation
exposures are not hedged. Foreign currency transaction gains and losses are
included in earnings, and gains and losses have not been significant. Unrealized
currency translation gains and losses are recognized as other comprehensive
income or loss upon the translation of foreign subsidiaries' balance sheets to
U.S. dollars. The Company does have risk principally relating to the translation
of accounts in which the Canadian dollar is the functional currency.

           Borrowings of the Company are denominated in U.S. dollars. Management
believes that the carrying amount of the Company's borrowings approximates fair
value because the interest rates are variable and reset frequently.


Item 8.    Financial Statements and Supplementary Data

           See Index to Financial Statements, which appears on page F-1 hereof.


Item 9.    Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure

           None.


                                    PART III



Item 10.    Directors and Executive Officers of the Registrant

           Information regarding the directors of First Aviation is set forth
under the caption "Executive Officers and Directors" in the Company's Proxy
Statement for its 2003 Annual Meeting of Stockholders, which is incorporated
herein by reference. Information regarding compliance with Section 16 (a) of the
Exchange Act is set forth under the caption "Section 16 (a) Beneficial Ownership
Reporting Compliance" in the Company's Proxy Statement for its 2003 Annual
Meeting of Stockholders, which also is incorporated herein by reference. The
information required in this section regarding executive officers can be found
under Item 4a., "Executive Officers of the Registrant".



                                       19
<PAGE>





Item 11.     Executive Compensation

           Information regarding compensation of the Company's directors and
executive officers is set forth under the caption "Compensation of Directors and
Executive Officers" in the Company's Proxy Statement for its 2003 Annual Meeting
of Stockholders, which is incorporated herein by reference.


Item 12.     Security Ownership of Certain Beneficial Owners and Management, and
             Related Stockholder Matters

           Information regarding share ownership by certain beneficial owners
and the Company's directors and executive officers, and related stockholder
matters is set forth under the captions "Security Ownership of Certain
Beneficial Owners and Management", and "Equity Compensation Plan Information",
in the Company's Proxy Statement for its 2003 Annual Meeting of Stockholders,
which is incorporated herein by reference.


Item 13.     Certain Relationships and Related Transactions

           Information regarding certain relationships and related transactions
of the Company is set forth under the caption "Certain Relationships and Related
Transactions" in the Company's Proxy Statement for its 2003 Annual Meeting of
Stockholders, which is incorporated herein by reference.


Item 14.     Controls and Procedures

      (a)  The Company maintains disclosure controls and procedures that are
           designed to ensure that information required to be disclosed in the
           Company's filings under the Securities Exchange Act of 1934 is
           recorded, processed, summarized and reported within the periods
           specified in the rules and forms of the Securities and Exchange
           Commission. Such information is accumulated and communicated to the
           Company's management, including its principal executive officer and
           principal financial officer, as appropriate, to allow timely
           decisions regarding required disclosure. The Company's management,
           including the principal executive officer and the principal financial
           officer, recognizes that any set of controls and procedures, no
           matter how well designed and operated, can provide only reasonable
           assurance of achieving the desired control objectives, and management
           necessarily is required to apply judgment in evaluating disclosure
           controls and procedures.

           Within 90 days prior to the filing date of this Annual Report on Form
           10-K, the Company has carried out an evaluation, under the
           supervision and with the participation of the Company's management,
           including the Company's principal executive officer and the Company's
           principal financial officer, of the effectiveness of the design and
           operation of the Company's disclosure controls and procedures. Based
           on such evaluation, the Company's principal executive officer and
           principal financial officer concluded that the Company's disclosure
           controls and procedures are effective.

      (b)  There have been no significant changes in the Company's internal
           controls or in other factors that could significantly affect the
           internal controls subsequent to the date of their evaluation in
           connection with the preparation of this Annual Report on Form 10-K.


                                       20
<PAGE>





                                     PART IV


Item 15.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)             Documents filed as part of this report:
(1)             Financial Statements: See Index to Consolidated Financial
                Statements, which appears on Page F-1 hereof.
(2)             Financial Statement Schedule II - Valuation and Qualifying
                Accounts, which appears on Page F-20 hereof. (All other
                schedules have been omitted because they are not applicable or
                the required information is shown in the Consolidated Financial
                Statements or the Notes to Consolidated Financial Statements.)
(3)             Exhibits

Exhibit
Number                           Description of Exhibit

3.1  Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1
     to the Company's Registration Statement on Form S-1 (No. 333-18647), as
     amended, filed on December 23, 1996, and incorporated herein by reference).

3.2  Amended and Restated Bylaws of the Company (filed as Exhibit 3.2 to the
     Company's Quarterly Report on Form 10-Q for the quarterly period ended
     October 31, 2001, and incorporated herein by reference).

10.1 Form of Director Indemnification Agreement between the Company and each of
     its directors (filed as Exhibit 10.1 to the Company's Registration
     Statement on Form S-1 (No. 333-18647), as amended, filed on December 23,
     1996, and incorporated herein by reference).

10.2 Asset Purchase Agreement, dated November 25, 1996, by and between AMR Combs
     and API (filed as Exhibit 10.9 to the Company's Amendment No. 1 to
     Registration Statement on Form S-1 (No. 333-18647), as amended, filed on
     January 17, 1997, and incorporated herein by reference).

10.3 First Aviation Services Inc. Stock Incentive Plan (filed as Exhibit 10.14
     to the Company's Amendment No. 3 to Registration Statement on Form S-1 (No.
     333-18647), as amended, filed on February 24, 1997, and incorporated herein
     by reference).

10.4 First Aviation Services Inc. Employee Stock Purchase Plan (filed as Exhibit
     10.15 to the Company's Amendment No. 3 to Registration Statement on Form
     S-1 (No. 333-18647), as amended, filed on February 24, 1997, and
     incorporated herein by reference).

10.5 Amended and Restated Registration Rights Agreement, dated as of February
     21, 1997, by and between the Company and FAS Inc. (filed as Exhibit 10.24
     to the Company's Amendment No. 3 to Registration Statement on Form S-1 (No.
     333-18647), as amended, filed on February 24, 1997, and incorporated herein
     by reference).

10.6 Sublease Agreement, dated as of December 31, 1996, between First Equity and
     the Company (filed as Exhibit 10.30 to the Company's Amendment No. 3 to
     Registration Statement on Form S-1 (No. 333-18647), as amended, filed on
     February 24, 1997, and incorporated herein by reference).

10.7 Amendment No. 1 to the First Aviation Services Inc. Stock Incentive Plan
     (filed on Form S-8 (No. 333-80125) on June 7, 1999, and incorporated herein
     by reference).

10.8 Commercial Revolving Loan and Security Agreement dated March 30, 2000 by
     and between Hudson United Bank and Aerospace Products International, Inc.
     (filed as Exhibit 10.43 to the Company's Annual Report on Form 10-K for the
     year ended January 31, 2000, and incorporated herein by reference).


                                       21
<PAGE>

10.9 Guaranty, dated as of March 30, 2000, between First Aviation Services Inc.
     and Hudson United Bank (filed as Exhibit 10.44 to the Company's Annual
     Report on Form 10-K for the year ended January 31, 2000, and incorporated
     herein by reference).

10.10 Second Amendment to Commercial Revolving Loan and Security Agreement dated
     as of April 27, 2001 between Hudson United Bank and Aerospace Products
     International, Inc. (filed as Exhibit 10.48 to the Company's Quarterly
     Report on Form 10-Q for the quarterly period ended April 30, 2001, and
     incorporated herein by reference).

10.11 Second Reaffirmation of Guaranty dated as of April 27, 2001 by First
     Aviation Services Inc. and in favor of Hudson United Bank (filed as Exhibit
     10.49 to the Company's Quarterly Report on Form 10-Q for the quarterly
     period ended April 30, 2001, and incorporated herein by reference).

10.12 Third Amendment to Commercial Revolving Loan and Security Agreement dated
     as of June 28, 2001 between Hudson United Bank and Aerospace Products
     International, Inc. (filed as Exhibit 10.48 to the Company's Quarterly
     Report on Form 10-Q for the quarterly period ended July 31, 2001, and
     incorporated herein by reference).

10.13 Third Reaffirmation of Guaranty dated as of June 28, 2001 by First
     Aviation Services Inc. and in favor of Hudson United Bank (filed as Exhibit
     10.49 to the Company's Quarterly Report on Form 10-Q for the quarterly
     period ended July 31, 2001, and incorporated herein by reference).

10.14 Amendment No. 2 to the First Aviation Services Inc. Stock Incentive Plan
     (filed on Form S-8 (No. 333-25915) on September 20, 2001, and incorporated
     herein by reference).

10.15 Letter, effective February 1, 2002, by and between First Equity
     Development Inc. and its affiliates and First Aviation Services Inc.
     regarding pursuit of acquisition opportunities (filed as Exhibit 10.23 to
     the Company's Annual Report on Form 10-K for the year ended January 31,
     2002, and incorporated herein by reference).

10.16 Engagement Letter between First Equity Development Inc. and its affiliate,
     FED Securities Inc., and First Aviation Services Inc. effective February 1,
     2002 (filed as Exhibit 10.40 to the Company's Annual Report on Form 10-K
     for the year ended January 31, 2002, and incorporated herein by reference).

10.17 Fourth Amendment to Commercial Revolving Loan and Security Agreement dated
     as of July 31, 2002 between Hudson United Bank and Aerospace Products
     International, Inc. (filed as Exhibit 10.48 to the Company's Quarterly
     Report on Form 10-Q for the quarterly period ended July 31, 2002, and
     incorporated herein by reference).

10.18 Fourth Reaffirmation of Guaranty dated as of July 31, 2002 by First
     Aviation Services Inc. and in favor of Hudson United Bank. (filed as
     Exhibit 10.49 to the Company's Quarterly Report on Form 10-Q for the
     quarterly period ended July 31, 2001, and incorporated herein by
     reference).

21.1* List of Subsidiaries.

23.1* Consent of Ernst & Young LLP, Independent Auditors.

99.1* Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section
     1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2* Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section
     1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

      *    Exhibit included herein.


                                       22
<PAGE>

(b) Reports on Form 8-K
                Current report on Form 8-K, dated January 7, 2003, announcing,
                under Item 5, the Company's payment of a special cash dividend
                of $1.00 per share, payable January 30, 2003 to shareholders of
                record on January 17, 2003.



                                   SIGNATURES


           Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has fully caused this report to be signed
on its behalf by the undersigned thereunto duly authorized on April 29, 2003.


                                      FIRST AVIATION SERVICES INC.



                                By:  /s/ Michael D. Davidson
                                    -------------------------
                                    Michael D. Davidson
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)

<TABLE>
<CAPTION>

          Signature                                 Title                                                      Date




<S>                                                 <C>                                        <C>
        /s/ Aaron P. Hollander                      Chairman of the Board                      April 29, 2003
        -------------------------------
        Aaron P. Hollander



        /s/ Michael C. Culver                       Chief Executive Officer and                April 29, 2003
        -------------------------------
        Michael C. Culver                           Director (Principal Executive Officer)



        /s/ Stanley J. Hill                         Director                                   April 29, 2003
        -------------------------------
        Stanley J. Hill




        /s/ Robert L. Kirk                          Director                                   April 29, 2003
        -------------------------------
        Robert L. Kirk



        /s/ Joseph J. Lhota                         Director                                   April 29, 2003
        -------------------------------
        Joseph J. Lhota
</TABLE>


                                       23
<PAGE>



                                 CERTIFICATIONS


I, Michael C. Culver, certify that:

1.              I have reviewed this annual report on Form 10-K of First
                Aviation Services Inc.;

2.              Based on my knowledge, this annual report does not contain any
                untrue statement of a material fact or omit to state a material
                fact necessary to make the statements made, in light of the
                circumstances under which such statements were made, not
                misleading with respect to the period covered by this annual
                report;

3.              Based on my knowledge, the financial statements, and other
                financial information included in this annual report, fairly
                present in all material respects the financial condition,
                results of operations and cash flows of the registrant as of,
                and for, the periods presented in this annual report;

4.              The registrant's other certifying officers and I are responsible
                for establishing and maintaining disclosure controls and
                procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
                for the registrant and have:

     a)   Designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     b)   Evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and


     c)   Presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.              The registrant's other certifying officers and I have disclosed,
                based on our most recent evaluation, to the registrant's
                auditors and the audit committee of registrant's board of
                directors (or persons performing the equivalent function):

     a)   All significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b)   Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.              The registrant's other certifying officers and I have indicated
                in this annual report whether or not there were significant
                changes in internal controls or in other factors that could
                significantly affect internal controls subsequent to the date of
                our most recent evaluation, including any corrective actions
                with regard to significant deficiencies and material weaknesses.

Date: April 29, 2003

                         /s/  Michael C. Culver
                         ----------------------
                         Name:  Michael C. Culver
                         Title: Chief Executive Officer


                                       24
<PAGE>







I, Michael D. Davidson, certify that:

1.              I have reviewed this annual report on Form 10-K of First
                Aviation Services Inc.;

2.              Based on my knowledge, this annual report does not contain any
                untrue statement of a material fact or omit to state a material
                fact necessary to make the statements made, in light of the
                circumstances under which such statements were made, not
                misleading with respect to the period covered by this annual
                report;

3.              Based on my knowledge, the financial statements, and other
                financial information included in this annual report, fairly
                present in all material respects the financial condition,
                results of operations and cash flows of the registrant as of,
                and for, the periods presented in this annual report;

4.              The registrant's other certifying officers and I are responsible
                for establishing and maintaining disclosure controls and
                procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
                for the registrant and have:

     d)   Designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     e)   Evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and


     f)   Presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.              The registrant's other certifying officers and I have disclosed,
                based on our most recent evaluation, to the registrant's
                auditors and the audit committee of registrant's board of
                directors (or persons performing the equivalent function):

     c)   All significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     d)   Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.              The registrant's other certifying officers and I have indicated
                in this annual report whether or not there were significant
                changes in internal controls or in other factors that could
                significantly affect internal controls subsequent to the date of
                our most recent evaluation, including any corrective actions
                with regard to significant deficiencies and material weaknesses.

Date: April 29, 2003

                            /s/ Michael D. Davidson
                            ------------------------
                            Name: Michael D. Davidson
                            Title: Chief Financial Officer


                                       25
<PAGE>



                                                                   Exhibit 21.1


                          FIRST AVIATION SERVICES INC.

                              LIST OF SUBSIDIARIES


<TABLE>
<CAPTION>

NAME                                                                                        Place of Incorporation


<S>                                                                                                     <C>
Aerospace Products International Inc.                                                                     Delaware

Pieces D'Avion Produits, Ltee, (d/b/a Aircraft Parts International, Ltd.)                           Quebec, Canada

API Asia Pacific Inc.                                                                                     Delaware

API Logistics Services, Inc. (Inactive)                                                                   Delaware

</TABLE>


                                       26
<PAGE>




                                                                  Exhibit 23.1






                         Consent of Independent Auditors


We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-25915) pertaining to the First Aviation Services Inc. Stock
Incentive Plan, as amended, and (Form S-8 No. 33-25909) pertaining to the First
Aviation Services Inc. Employee Stock Purchase Plan, of our report dated April
16, 2003 with respect to the consolidated financial statements and schedule of
First Aviation Services Inc., included in the Annual Report (Form 10-K) for the
year ended January 31, 2003.


                                                         /s/ Ernst & Young LLP


Stamford, Connecticut
April 23, 2003


                                       27
<PAGE>



                                                                   Exhibit 99.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


CEO Certification. In connection with the Annual Report of First Aviation
Services Inc. (the "Company") on Form 10-K for the year ending January 31, 2003
as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Michael C. Culver, President and Chief Executive Officer of the
Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to
section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1)  the Report fully complies with the requirements of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  the information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.

/s/ Michael C. Culver
-------------------------------------
President and Chief Executive Officer
April 29, 2003


A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.
-------------------------------------------------------------------------------

                                                                   Exhibit 99.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002




CFO Certification. In connection with the Annual Report of First Aviation
Services Inc. (the "Company") on Form 10-K for the year ending January 31, 2003
as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Michael D. Davidson, Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906
of the Sarbanes-Oxley Act of 2002, that:

     (1)  the Report fully complies with the requirements of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  the information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.

/s/ Michael D. Davidson
-----------------------
Chief Financial Officer
April 29, 2003

A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.



                                       28
<PAGE>




                          First Aviation Services Inc.

                        Consolidated Financial Statements

               For the years ended January 31, 2003, 2002 and 2001


<TABLE>
<CAPTION>


                   Index to Consolidated Financial Statements
<S>                                                                                              <C>
Report of Independent Auditors.....................................................................F2

Consolidated Financial Statements:

Consolidated Balance Sheets........................................................................F3
Consolidated Statements of Operations..............................................................F4
Consolidated Statements of Stockholders' Equity....................................................F5
Consolidated Statements of Cash Flows..............................................................F6
Notes to Consolidated Financial Statements.....................................................F7-F19

Schedule II - Valuation and Qualifying Accounts...................................................F20
</TABLE>




                                       F1
<PAGE>



                         Report of Independent Auditors



The Board of Directors and Stockholders
First Aviation Services Inc.


We have audited the accompanying consolidated balance sheets of First Aviation
Services Inc. as of January 31, 2003 and 2002, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended January 31, 2003. Our audits also included the
financial statement schedule listed in the Index at Item 15(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 consolidated financial position of First Aviation
Services Inc. as of January 31, 2003 and 2002, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended January 31, 2003, in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

As discussed in Note 3 to the consolidated financial statements, the Company
changed its method of accounting for goodwill effective February 1, 2002.



                                                      /s/  Ernst & Young LLP



Stamford, Connecticut
April 16, 2003



                                       F2
<PAGE>



                          First Aviation Services Inc.

                           Consolidated Balance Sheets
                      (in thousands, except share amounts)

<TABLE>
<CAPTION>


                                                                                         January 31,
Assets                                                                         2003                   2002
                                                                          ----------------       ----------------
Current assets:
    <S>                                                                         <C>                    <C>
     Cash and cash equivalents                                                   $ 26,013               $ 31,113
     Trade receivables, net                                                        12,978                 15,396
     Inventories, net                                                              20,617                 23,016
     Prepaid expenses and other                                                     1,794                  1,851
     Deferred and refundable income taxes                                               -                  1,212
                                                                          ----------------       ----------------

Total current assets                                                               61,402                 72,588

Plant and equipment, net                                                            3,639                  4,100
Goodwill, net                                                                           -                  3,856
                                                                          ----------------       ----------------

                                                                                 $ 65,041               $ 80,544
                                                                          ================       ================

Liabilities and stockholders' equity
Current liabilities:
     Accounts payable                                                            $ 10,324               $ 11,464
     Accrued compensation and related expenses                                      1,060                  1,195
     Other accrued liabilities                                                      1,009                  1,553
     Income taxes payable                                                           1,009                  1,293
     Current obligations under capital leases                                           4                    180
                                                                          ----------------       ----------------

Total current liabilities                                                          13,406                 15,685

Long-term debt                                                                     14,500                 14,800
Minority interest in subsidiary                                                     1,041                  1,041
                                                                          ----------------       ----------------

Total liabilities                                                                  28,947                 31,526

Stockholders' equity
     Common stock, $0.01 par value, 25,000,000 shares authorized,                      91                     91
          9,135,699 shares issued, respectively
     Additional paid-in capital                                                    38,445                 38,516
     Retained earnings                                                              7,543                 20,728
    Accumulated other comprehensive loss                                              (96)                  (193)
                                                                          ----------------       ----------------

                                                                                   45,983                 59,142
     Less:  Treasury stock, at cost, 1,884,989 and 1,921,946                       (9,889)               (10,124)
          shares, respectively
                                                                          ----------------       ----------------
     Total stockholders' equity                                                    36,094                 49,018
                                                                          ----------------       ----------------

Total liabilities and stockholders' equity                                       $ 65,041               $ 80,544
                                                                          ================       ================


See accompanying notes.
</TABLE>


                                       F3
<PAGE>




                          First Aviation Services Inc.

                      Consolidated Statements of Operations
                      (in thousands, except share amounts)
<TABLE>
<CAPTION>

                                                                                        Year ended January 31,
                                                                        ------------------------------------------------------
                                                                             2003               2002               2001
                                                                        ----------------  -----------------   ----------------
<S>                                                                           <C>               <C>                <C>
Net sales                                                                     $ 101,737          $ 105,696           $ 97,550
Cost of sales                                                                    83,264             86,680             79,007
                                                                        ----------------  -----------------   ----------------
Gross profit                                                                     18,473             19,016             18,543

Selling, general and administrative expenses                                     17,656             16,896             17,408
Corporate expenses                                                                2,394              2,628              2,934
Litigation (income) expense                                                           -               (735)               501
                                                                        ----------------  -----------------   ----------------
Income (loss) from operations                                                    (1,577)               227             (2,300)
Interest income                                                                     273                592              1,955
Interest and other expenses                                                         (67)              (291)              (538)
Minority interest in subsidiary                                                     (42)               (42)               (42)
                                                                        ----------------  -----------------   ----------------
Income (loss) before income taxes                                                (1,413)               486               (925)
(Provision) benefit for income taxes                                             (1,786)              (194)               349
                                                                        ----------------  -----------------   ----------------

Income (loss) from continuing operations before cumulative                       (3,199)               292               (576)
    effect of accounting change

Loss from discontinued operation                                                      -                  -             (1,847)
Gain from dispositions of subsidiaries                                                -                960                593
Cumulative effect of accounting change                                           (2,735)                 -                  -
                                                                        ----------------  -----------------   ----------------
Net income (loss)                                                              $ (5,934)           $ 1,252           $ (1,830)
                                                                        ================  =================   ================

Basic net income (loss) per share, and net income (loss)
    per share - assuming dilution:

Income (loss) from continuing operations before cumulative                      $ (0.44)            $ 0.04            $ (0.08)
    effect of accounting change
Income (loss) from discontinued operation                                             -                  -              (0.24)
Gain from dispositions of subsidiaries                                                -               0.13               0.08
Cumulative effect of accounting change                                            (0.38)                 -                  -
                                                                        ----------------  -----------------   ----------------
Basic net income (loss) per  share, and net income (loss) per                   $ (0.82)            $ 0.17            $ (0.24)
    share - assuming dilution
                                                                        ================  =================   ================

Weighted average shares outstanding - basic                                   7,224,532          7,197,941          7,720,520
                                                                        ================  =================   ================

Weighted average shares outstanding - assuming dilution                       7,224,532          7,208,725          7,720,520
                                                                        ================  =================   ================

</TABLE>

See accompanying notes.




                                       F4
<PAGE>


                          First Aviation Services Inc.

                 Consolidated Statements of Stockholders' Equity
                      (in thousands, except share amounts)


<TABLE>
<CAPTION>


                                                                         Accumulated
                                     Common Stock   Additional           Other
                                 Number             Paid-in    Retained  Comprehensive             Treasury
                                of Shares   Amount  Capital    Earnings  Loss         Sub-Total    Stock        Total
                                ---------   ------  ---------  --------  ----------  -----------  -----------  ----------
<S>                             <C>            <C>   <C>       <C>             <C>    <C>          <C>          <C>
Balances at January 31, 2000    8,133,997     $ 91   $ 38,615  $ 21,306         $ -   $ 60,012     $ (5,869)   $ 54,143

Shares issued to directors          1,702        -         10         -           -         10            -          10
Common shares repurchased      (1,023,398)       -          -         -           -          -       (4,834)     (4,834)
Proceeds from issuance
 of common stock from
 treasury, and shares
 issued under qualified
 plans and to directors
 from treasury                     72,403        -          -         -           -          -          343         343
Net loss                                -        -          -    (1,830)          -     (1,830)           -      (1,830)
                              -----------   ------  ---------  --------  ----------  ---------    ---------  ----------

Balances at January 31, 2001    7,184,704       91     38,625    19,476           -     58,192      (10,360)     47,832
                              -----------   ------  ---------  --------  ----------  ---------    ---------  ----------

Shares issued
 under qualified
 plans and to directors            30,149        -       (109)        -           -       (109)         241         132
Common shares repurchased          (1,100)       -          -         -           -          -           (5)         (5)
Other comprehensive loss                -        -          -         -        (193)      (193)           -        (193)
Net income                              -        -          -     1,252           -      1,252            -       1,252
                              -----------   ------  ---------  --------  ----------  ---------    ---------  ----------

Balances at January 31, 2002    7,213,753     $ 91   $ 38,516  $ 20,728      $ (193)  $ 59,142    $ (10,124)   $ 49,018
                              -----------   ------  ---------  --------  ----------  ---------    ---------  ----------

Exercise of stock options
 to purchase common shares         10,800        -          -         -           -          -           63          63
Shares issued under
 qualified plans
 and to directors                  26,157        -        (71)        -           -        (71)         172         101
Other comprehensive income              -        -          -         -          97         97                       97
Dividends paid                          -        -          -    (7,251)          -     (7,251)           -      (7,251)
    Net loss                            -        -          -    (5,934)          -     (5,934)           -      (5,934)
                              -----------   ------  ---------  --------  ----------  ---------    ---------  ----------
Balances at
 January 31, 2003               7,250,710     $ 91   $ 38,445   $ 7,543       $ (96)  $ 45,983     $ (9,889)   $ 36,094
                              ===========   ======  =========  ========  ==========  =========    =========  ==========

See accompanying notes.
</TABLE>



                                       F5
<PAGE>




                          First Aviation Services Inc.

                      Consolidated Statements of Cash Flows
                                 (in thousands)
<TABLE>
<CAPTION>


                                                                              Year ended January 31,
                                                                -----------------------------------------------------
                                                                      2003              2002               2001
                                                                ----------------  ----------------   ----------------
<S>                                                                 <C>                <C>                <C>
Cash flows from operating activities
Net income (loss)                                                   $ (5,934)          $ 1,252           $ (1,830)

Adjustments to reconcile net income (loss)
 to net cash from operating activities
      - non cash expense (income):
     Depreciation and amortization                                     1,372             1,399              1,251
     Deferred income taxes                                             1,786                 -               (148)
     Compensation paid through issuance of stock                         104               112                 72
     Loss from discontinued operation                                      -                 -              1,117
     Gain from dispositions of subsidiaries                                -              (960)              (593)
     Cumulative effect of accounting change                            2,735                 -                  -
(Increase) decrease in working capital assets:
          Trade receivables                                            2,418               467             (2,050)
          Inventories                                                  2,399             1,708             (7,661)
          Prepaid expenses and other assets                              421               (73)            (1,662)
Increase (decrease) in working capital liabilities:
          Accounts payable                                            (1,140)           (2,032)             5,232
          Other accrued liabilities                                     (685)                -             (7,812)
          Income taxes payable                                           (87)                -                  -
                                                             ----------------  ----------------   ----------------
Net cash provided by (used in) operating activities                    3,389             1,873            (14,084)

Cash flows from investing activities
Purchases of plant and equipment
 and other assets - continuing operations                               (925)             (683)            (1,529)
Purchase of assets from
 Superior, including acquisition costs                                     -            (5,028)                 -
Purchases of plant and
 equipment - discontinued operations                                       -                 -             (1,494)

                                                             ----------------  ----------------   ----------------
Net cash used in investing activities                                   (925)           (5,711)            (3,023)

Cash flows from financing activities
Net borrowings (repayments) on long-term
 debt and capital lease obligations                                     (476)            3,076              3,411

Repurchases of common stock for treasury                                   -                (5)            (4,834)
Dividends paid                                                        (7,251)                -                  -
Other                                                                     60                25                281
                                                             ----------------  ----------------   ----------------
Net cash provided by
 (used in) financing activities                                       (7,667)            3,096             (1,142)

Effect of exchange rate changes
 on cash and cash equivalents                                            103                 -                  -
                                                             ----------------  ----------------   ----------------

Net change in cash and cash equivalents                             $ (5,100)           $ (742)         $ (18,249)
Cash and cash equivalents
 at the beginning of the year                                         31,113            31,855             50,104

                                                             ----------------  ----------------   ----------------
Cash and cash equivalents
 at the end of the year                                             $ 26,013          $ 31,113           $ 31,855
                                                             ================  ================   ================

Supplemental cash flow disclosures
Cash paid for:
     Interest                                                           $ 54             $ 130              $ 455
                                                             ================  ================   ================

     Income taxes (refunded) paid, net                                $ (322)           $ (748)           $ 4,196
                                                             ================  ================   ================

Acquisition of equipment through
 incurrence of capital lease obligation                                  $ -                 -              $ 315
                                                             ================  ================   ================

See accompanying notes.

</TABLE>



                                       F6
<PAGE>


                          First Aviation Services Inc.

                   Notes to Consolidated Financial Statements
                      (in thousands, except share amounts)

1.    Business and Basis of Presentation

First Aviation Services Inc. ("First Aviation"), through its wholly-owned
subsidiaries, Aircraft Products International, Ltd., API Asia Pacific Inc.,
and its majority-owned subsidiary, Aerospace Products International, Inc.
("API"), (collectively the "Company"), is one of the premier suppliers
of products and services to the aerospace industry worldwide, including
the provisioning of aircraft parts and components, and supply chain
management services. The Company also performs overhaul and repair services
for brakes and starter/generators, and builds custom hose assemblies. The
Company has its headquarters in Westport, Connecticut.

The accompanying consolidated financial statements include the accounts of First
Aviation and its subsidiaries. Significant intercompany balances and
transactions have been eliminated in consolidation.

First Aviation was formed in March 1995 to acquire the capital stock of National
Airmotive Corporation ("NAC"). On March 5, 1997, the Company completed an
initial public offering of its common stock. A portion of the proceeds was used
to acquire API's business from AMR Combs, Inc. ("AMR Combs").

As described in Note 10, on August 10, 2001 the Company acquired the
distribution business of Superior Air Parts, Inc. ("Superior"). As described in
Note 11, in prior years the Company sold NAC, and disposed of AeroV Inc.
("AeroV"), its former e-commerce subsidiary. Accordingly, NAC and AeroV have
been accounted for as discontinued operations and their results of operations,
cash flows and the net gain or loss on operations and on disposition have been
condensed and reported separately in the accompanying consolidated financial
statements. As described in Note 3, during the year the Company changed its
accounting for goodwill and, accordingly, reported the net cumulative effect of
the accounting change separately in the consolidated statements of operations.


2.    Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying notes. Actual results
could differ from those estimates, and the differences may be significant.

Net Sales, Cost of Sales, and Trade Receivables

The Company's net sales consist of sales of products and services, including
aircraft parts and components, component overhaul and repair services, and
supply chain management services. Net sales are recorded when parts and
components are shipped and title transfers to the customer, when overhaul and
repair services are completed and the item is shipped back to the customer, or
when supply chain management services have been provided to the customer.
Shipping and handling fees billed to customers are included in net sales. The
terms and nature of supply chain management services provided are
stipulated in a long-term contract between the Company and the customer. The
Company provides its facilities, personnel and systems to provide cost effective
services to the customer. In providing services where the Company distributes
inventory on behalf of its customer, the Company may use its own inventory or
hold its customers' inventory without taking ownership of such inventory. In
cases where the Company does not take ownership of its customers' inventory, net
sales generally are recognized as a fee based on the sales value of the product
shipped through the Company's facilities, and not the sales value of the product
itself.



                                       F7
<PAGE>

Cost of sales consists of costs of inventory sold, costs to overhaul and repair
parts and components, and direct costs of providing services.

Sales to unaffiliated foreign customers were approximately 18%, 17% and 13% of
net sales for the years ended January 31, 2003, 2002 and 2001, respectively. The
majority of these customers were located in Canada, Southeast Asia, Latin
America, and Europe.

The Company provides credit in the form of trade accounts receivable to its
customers. The Company generally does not require collateral to support domestic
customer receivables. Receivables arising from export activities may be
supported by foreign credit insurance. The Company performs ongoing credit
evaluations of its customers and maintains allowances that management believes
are adequate for potential credit losses. During the three months ended January
31, 2003, due to continued deteriorating economic conditions, especially in the
aerospace industry, the Company recorded a charge of $804 to increase its
allowance, for doubtful accounts. The allowance for doubtful accounts was $1,656
and $707, at January 31, 2003 and 2002, respectively.

Shipping and Handling Revenues and Costs

Fees billed to customers associated with shipping and handling activities are
classified as revenue, and costs associated with shipping and handling are
classified as part of cost of sales. Previously, shipping and handling costs
were included in selling, general and administrative expenses. These costs have
been reclassified to cost of sales for all periods presented.

Stock Based Compensation and Stock Options Issued to Employees

In lieu of cash, the Company's directors elect to receive their compensation in
the form of the Company's stock. The value of stock issued is equivalent to the
compensation expense, and the number of shares issued is based upon the fair
market value per share at the date issued.

The Company generally grants stock options to its employees for a fixed number
of shares with an exercise price equal to the fair market value of the stock on
the date of grant. As permitted under Statement of Financial Accounting Standard
No. ("FAS") 123, "Accounting for Stock-Based Compensation", the Company has
elected to follow Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations in accounting for stock
awards to employees. No compensation expense was recognized during the years
ending January 31, 2003, 2002 and 2001 since all grants were issued at the fair
market value of the Company's common stock at the date of grant.

The Company is required to disclose the fair value, as defined, of options
granted to employees and the related compensation expense. The fair value of the
stock options granted was estimated at the date of grant using a Black-Scholes
option-pricing model. The Black-Scholes option-pricing model was developed for
use in estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. In addition, option valuation models
require the input of highly subjective assumptions, including the expected stock
price volatility. In management's opinion, because the Company's employee stock
options are not publicly traded, and have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options.


                                       F8
<PAGE>



The fair value of each option issued was estimated at the date of grant using
the following assumptions for the years ended January 31:
<TABLE>
<CAPTION>


                                                            2003                     2002                   2001
                                                     -------------------      -------------------    -------------------
        <S>                                               <C>                     <C>                     <C>
         Expected dividend yield                           0.0%                     0.0%                   0.0%
         Risk-free interest rate                           2.5%                     4.0%                   5.0%
         Expected volatility                              37.4%                    41.9%                  49.3%
         Expected life of option                           5.0 years                4.0 years              4.0 years
         Weighted-average fair value
          of options granted during the year           $  1.77                  $  1.64                $  2.24
</TABLE>


Using the above noted assumptions and the weighted-average fair value of each
option granted, the net income (loss) and earnings (loss) per share that would
have been recorded was approximately $(6,229), $1,130 and $(2,072), or $(0.86),
$0.16 and $(0.27) per share, for the years ended January 31, 2003, 2002 and
2001, respectively.

Cash and Cash Equivalents

Cash and cash equivalents at any time may consist of a combination of demand
deposits, money market or short-term, high-grade bond funds, and short-term
certificates of deposit.

Inventories

Inventories generally consist of aircraft parts and components and are stated at
the lower of cost or market, using the first-in, first-out method. Provisions
are made in each period for the estimated effect of obsolete and slow moving
inventories. Actual obsolete and slow moving inventories may differ
significantly from such estimates, and such differences could be material to the
financial statements. The allowance for obsolete and slow moving inventory was
$997 and $885, at January 31, 2003 and 2002, respectively.

Fair Value of Financial Instruments

The carrying values of current assets and liabilities approximate fair market
value due to the short-term maturities of these assets and liabilities.

Plant and Equipment

Plant and equipment are stated at cost, less an allowance for depreciation.
Additions and improvements that materially increase the productive capacity or
extend the useful life of an asset are added to the cost of the asset.
Expenditures for normal maintenance and repairs are charged to expense as
incurred.

Depreciation of plant and equipment is computed using the straight-line method
over the estimated useful lives of the assets, which range from 3 to 15 years.
Leasehold improvements generally are amortized over the shorter of the estimated
life of the improvement or the term of the related lease.

Goodwill

In prior years, goodwill consisted of the excess of the purchase price of API
and Superior over the fair value of the net assets acquired. As described in
Note 3, all goodwill was written off during the three months ended April 30,
2002 upon the required adoption of an accounting change. Amortization expense
was $65 and for the years ended January 31, 2002 and 2001, respectively.
Accumulated amortization was $322 at January 31, 2002.




                                       F9
<PAGE>




Long-Lived Assets

During the year ended January 31, 2003, the Company adopted FAS 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets". Under FAS 144, an
impairment loss must be recognized when the carrying amount of a long-lived
asset exceeds its fair value. In the event that the carrying amounts of
long-lived assets may be impaired, an assessment of recoverability must be
performed. The assessment process consists of comparing the estimated future
undiscounted cash flows associated with the asset to the asset's carrying amount
to determine if a write-down is required. If this review process indicates that
the asset will not be recoverable, the carrying value of the asset must be
reduced to its estimated realizable value. The adoption of FAS 144 had no effect
on the consolidated financial position of the Company. No asset impairments were
recorded during the years ended January 31, 2003, 2002 and 2001.

Principal Suppliers

API has five suppliers of parts and components from which approximately 49%, 53%
and 49% of its total purchases were made during the years ended January 31,
2003, 2002 and 2001, respectively. Accounts payable to these vendors totaled
$2,531 and $3,956 at January 31, 2003 and 2002, respectively. An inability to
maintain timely access to parts and components from these vendors on
commercially reasonable terms would have a material adverse effect on the
Company's consolidated business, financial condition and results of operations.

Income Taxes

The Company uses the liability method to account for income taxes. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities, and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. The Company records valuation allowances
against deferred tax assets as deemed necessary. As described in Note 7, during
the three months ended January 31, 2003 the Company recorded a charge of $1,993
to establish a valuation allowance against its deferred tax assets.

Accumulated Other Comprehensive Loss

The accumulated other comprehensive loss rose from the translation of accounts
into U.S. dollars where the functional currency is the Canadian dollar. The
decrease during the year ended January 31, 2003 was due to an increase in the
value of the Canadian dollar relative to the US dollar, and less foreign
exposure. Comprehensive income (loss) was ($5,837) and $1,059 for the years
ended January 31, 2003 and 2002, respectively.

Reclassifications

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


3.    Accounting Change

During the first quarter ended April 30, 2002, the Company adopted FAS 142,
"Goodwill and Other Intangible Assets". Pursuant to FAS 142, goodwill is not
amortized but is tested periodically for impairment using discounted cash flows
and other fair value methodologies. Upon adoption of FAS 142, the Company was
required to perform transitional impairment tests relating to its goodwill and
other intangibles existing as of February 1, 2002, the date of adoption. As a
result, upon adoption of FAS 142, the Company took a one-time, non-cash charge
of $2,735, net of applicable income tax benefit of $922, or $0.38 per share, to
write-off the carrying value of its goodwill. No charge was required under
previous generally accepted accounting principles, which were based upon
undiscounted cash flows.

The adoption of FAS 142 represented a change in accounting principle, and the
cumulative effect, net of the applicable income tax benefit, has been shown on a
separate line in the consolidated statements of operations. The effective rate
of the income tax benefit on the charge was approximately 25%. The difference
between the effective income tax rate and the statutory rate was due to
differences in book and income tax bases of the assets.


                                       F10
<PAGE>

4.    Plant and Equipment
<TABLE>
<CAPTION>

Plant and equipment consist of the following:
                                                                                  January 31,
                                                                        2003                    2002
                                                                        ----                    ----
<S>                                                                       <C>              <C>
Machinery and equipment                                           $     2,025              $    1,759
Buildings and leasehold improvements                                    1,219                   1,183
Computer equipment, software, office
 furniture, fixtures and other office equipment                         5,681                   5,276
Construction-in-process                                                   184                      36
                                                                        9,109                   8,254

Less:  accumulated depreciation                                        (5,470)                 (4,154)
                                                                 $      3,639              $    4,100


Certain equipment has been pledged as collateral under capital leases.
Amortization of assets under capital leases is included in depreciation and
amortization.


5.    Obligations Under Capital Leases and Long-Term Debt

                                                                                January 31,
                                                                       2003                    2002

Current obligations under capital leases                            $      4               $      180
                                                                    ========               ==========

Long-term debt - revolving line of credit                           $ 14,500               $   14,800
                                                                    ========               ==========
</TABLE>


API has a $20,000 revolving line of credit through a Commercial Revolving Loan
and Security Agreement (the "Facility"). Borrowings under this Facility bear
interest equal to the LIBOR rate plus 1.5% and are limited to specified
percentages of eligible trade receivables and inventories of API. The Facility
contains a number of covenants, including restrictions on mergers,
consolidations and acquisitions, the incurrence of indebtedness, transactions
with affiliates, the creation of liens, and limitations on capital expenditures.
Pursuant to the terms and conditions of the Facility, the payment of dividends
on API's common stock is prohibited, except with the lender's consent, and API
is required to maintain minimum levels of net worth and specified interest
expense coverage ratios. Substantially all of API's domestic assets are pledged
as collateral under the Facility, and First Aviation guarantees all borrowings
under the Facility. Borrowings under the Facility were $14,500 at January 31,
2003, at an interest rate of approximately 2.9%. An additional total of
approximately $2,951 was available to borrow under the Facility at January 31,
2003. During the quarter ended July 31, 2002, API extended the maturity date of
the Facility to July 1, 2004 from July 1, 2003. The extension of the agreement
was on the same terms and conditions as the prior Facility. As a result of the
extension, borrowings under the Facility continue to be classified as long-term.
Management believes that the carrying amount of the Company's borrowings
approximates fair value because the interest rate is variable and resets
frequently.

The Company leases certain equipment under leases that have been classified as
capital leases. The obligations under the capital leases are recorded at the net
present value of the future minimum lease payments. All such obligations are due
within one year from the balance sheet date are therefore classified as current.
Interest expense on the obligations is recorded as incurred.





                                       F11
<PAGE>




6.    Stockholders' Equity

On January 6, 2003, The Company announced that its Board of Directors, in light
of the Company's cash position, had approved a special cash dividend of $1.00
per share. The dividend was paid on January 30, 2003. The total paid was $7,251.
The Company previously had not declared nor paid any cash dividends or
distributions on its common stock since its inception in 1997.

The Company has an Employee Stock Purchase Plan ("ESPP"). Under the ESPP,
250,000 shares of common stock have been reserved for issuance. With certain
limitations, the plan allows for eligible employees to purchase stock through
payroll deductions at 85% of the lower of the fair market value of the Company's
common stock as of the first day of each semi-annual offering period or the fair
market value of the stock at the end of the offering period. The Company issued
3,640 and 4,697 shares from treasury stock to employees under the ESPP during
the years ended January 31, 2003 and 2002, respectively. At January 31, 2003,
189,128 shares were available for purchase under the ESPP.

The Company also has a Stock Incentive Plan (the "Plan"). The Plan provides for
the grant of incentive stock options, nonqualified stock options, stock
appreciation rights, stock grants and stock purchase rights. A total of
1,000,000 shares of common stock have been reserved for issuance under the Plan.
Only employee stock options and shares issued to directors have been issued
under the Plan.

All of the stock options vest ratably over two to five-year periods, beginning
one year after the date of the grant, and expire ten years after issuance. Since
the exercise price of all of the options granted during the years ended January
31, 2003, 2002 and 2001 was at or above the fair market value per share of the
Company's common stock at the dates of grant, no compensation expense relating
to stock options was recorded. At January 31, 2003, options for 759,000 shares
had been issued under the Plan. The following table is a summary of activity
related to stock options for the respective years ended January 31:

<TABLE>
<CAPTION>

                                     2003                                2002                                 2001
                        --------------------------------    --------------------------------    ----------------------------------
                                            Weighted-                           Weighted-                            Weighted-
                           Number           Average            Number           Average            Number            Average
                             Of             Exercise           Of               Exercise           Of                Exercise
                          Options           Price              Options          Price              Options           Price
                        -------------     --------------    -------------     --------------    --------------     ---------------
<S>                        <C>             <C>                  <C>             <C>             <C>                    <C>
Outstanding at
 beginning of year          389,000       $     5.36            375,500       $     6.16          252,500               $ 7.05

Granted                     220,000             4.82            198,500             4.36          180,500                 5.08

Exercised                   (10,800)             4.31                  -               -                 -                    -

Forfeited                         -             -              (185,000)            5.90          (57,500)                6.72
                        -------------     --------------    -------------     --------------    --------------     ---------------
Outstanding
 at end of year             598,200       $     5.18            389,000       $     5.36          375,500          $      6.16
                        =============     ==============    =============     ==============    ==============     ===============
Exercisable
 at end of year             258,864       $     5.14            155,249       $     6.57          132,000          $      7.94
                        =============     ==============    =============     ==============    ==============     ===============
</TABLE>


The following table is a summary of information about stock options outstanding
at January 31, 2003:
<TABLE>
<CAPTION>

                                   Options Outstanding                                             Options Exercisable
---------------------------------------------------------------------------------------    ----------------------------------------
                                           Weighted-
      Range of        Number               Average                  Weighted-                                      Weighted-Actual
      Exercise        Of                   Remaining                Actual Average          Number of              Average Exercise
      Prices          Options              Contractual Life         Exercise Price          Options                Price
------------------  -----------------     ---------------------     ------------------     ----------------     -------------------
<S>     <C>         <C>                     <C>                    <C>                         <C>              <C>
$  4.31 - 6.00       548,200                 8.1 years            $       4.74                 208,864        $        4.82
      10.00           50,000                 4.4 years                   10.00                  50,000                10.00
-----------------  ------------------     ---------------------     ------------------     ----------------     -------------------
$4.31 - $10.00       598,200                 7.8 years            $       5.18                 258,864        $        5.14
=================  ==================     =====================     ==================     ================     ===================
</TABLE>


                                       F12
<PAGE>

All of the Company's current directors elected to receive their compensation for
the years ended January 31, 2003, 2002 and 2001 paid in the form of shares of
the Company's common stock. The fair market value of the Company's common stock
at the date of issuance was charged to expense with a corresponding decrease to
treasury stock and additional paid-in capital. Such compensation expense totaled
$104, $112 and $72, and the number of shares issued was 22,517, 25,452 and
13,713 for the years ended January 31, 2003, 2002 and 2001, respectively. A
total of 85,304 shares have been issued to directors under the Plan.

At January 31, 2003, 155,696 shares were available to be issued under the Plan.

In a series of authorizations commencing November 3, 1999, the Company's Board
of Directors authorized a repurchase program of up to 2,118,817 shares of the
Company's common stock. The repurchases have been funded from a portion of the
proceeds from the sale of NAC, and were made from time to time in open market
transactions, block purchases, privately negotiated transactions or otherwise at
prices prevailing at the time of the repurchase.

During the years ended January 31, 2002 and 2001, respectively, the Company
repurchased 1,100 and 1,023,398 shares of its common stock. The aggregate share
repurchases since the repurchase program began totaled 2,024,498 and 2,023,398
shares at January 31, 2002 and 2001, respectively. The aggregate cost of the
common shares repurchased was approximately $10,708 and $10,703, or $5.29 per
share both at January 31, 2002 and 2001, respectively. Approximately 94,000
shares still may be repurchased under this program.

In conjunction with the API acquisition, AMR Combs purchased 10,407 shares of
API Series A Cumulative Convertible Preferred Stock, $0.001 par value (the
"Preferred Stock"), at a price of $100 per share. Total adjusted proceeds to the
Company were $1,041. This transaction has been accounted for as minority
interest in subsidiary in the accompanying consolidated balance sheets.
Dividends are payable on a quarterly basis on the Preferred Stock at an annual
rate of $4.00 per share; accordingly, dividends of $42 were paid during each of
the years ended January 31, 2003, 2002 and 2001, respectively, and have been
reflected as minority interest in subsidiary in the accompanying consolidated
statements of operations. The Preferred Stock is convertible into ten percent of
the common stock of API as of the date of conversion, prior to any dilution to
the Preferred Stock.

Also in conjunction with the API acquisition, First Aviation, API and AMR Combs
entered into a Stockholders Agreement. Pursuant to this agreement, API has the
right to redeem the Preferred Stock at any time. Subject to certain terms and
conditions, AMR Combs has the right to cause the Company to repurchase the
Preferred Stock. The redemption price is equal to the fair market value of the
Preferred Stock as determined by an independent appraisal. The Stockholders
Agreement also contains certain other rights, including: (i) a right of first
refusal on the part of First Aviation with respect to any proposed sale of the
Preferred Stock; (ii) the right of First Aviation to require AMR Combs to
participate, on a pro rata basis, with it in the sale of the capital stock of
API to a third party; (iii) the right of AMR Combs to elect to participate, on a
pro rata basis, in the sale of the capital stock of API to a third party; and
(iv) piggyback and demand registration rights granted to AMR Combs with respect
to the Preferred Stock. The demand registration rights became exercisable in
March 2000. If API has not previously closed an underwritten public offering of
its common stock at the time AMR Combs elects to exercise its demand
registration rights, API may elect to treat the demand as an exercise by AMR
Combs of its put option with respect to the Preferred Stock. There are no plans
to cause API to conduct a public offering of its securities.

On March 5, 1999, AMR Combs was acquired by Signature Flight Support, an
affiliate of BBA Group Plc.




                                      F13
<PAGE>



7.    Income Taxes

The provision (benefit) for income taxes on continuing operations is as follows:
<TABLE>
<CAPTION>

                                                                              Year ended January 31,
                                                             ---------------------------------------------------------
                                                                  2003                 2002                2001
                                                             ----------------    -----------------    ----------------
                                                                  <S>                    <C>                 <C>

  Current:
        Federal                                              $          -        $        236         $       (201)
        State                                                           -                 (42)                   -
                                                             ----------------    -----------------    ----------------
                                                                        -                 194                 (201)

  Deferred:
        Federal                                              $      1,760        $          -         $       (191)
        State                                                          26                   -                   43
                                                             ----------------    -----------------    ----------------
                                                                    1,786                   -                 (148)
                                                             ----------------    -----------------    ----------------

  Total provision (benefit)                                  $      1,786        $        194         $       (349)
                                                             ================    =================    ================

</TABLE>

A reconciliation between the income tax provision (benefit) computed at the U.S.
federal statutory rate and the effective rate reflected in the consolidated
statements of operations is as follows:
<TABLE>
<CAPTION>

                                                                               Year ended January 31,
                                                              ----------------------------------------------------------
                                                                    2003                2002                 2001
                                                              -----------------   -----------------    -----------------
<S>                                                                 <C>                <C>                 <C>
Provision (benefit) at federal statutory rate                       (34.0)%              34.0%               (34.0)%
State tax provision (benefit), net of federal                        (1.8)               (7.9)                 3.1
Deferred tax valuation allowance                                    141.0                 -                    -
Non-deductible items                                                  3.0                13.8                 (6.8)
Prior year items                                                     18.2                 -                    -
                                                              -----------------   -----------------    -----------------
                                                                    126.4%               39.9%               (37.7)%
                                                              =================   =================    =================
</TABLE>

Deferred tax assets result from temporary differences in the recognition of
income and expenses for tax and financial statement purposes. These differences
are set forth below:
<TABLE>
<CAPTION>

                                                                                         January 31,
                                                                                2003                     2002
                                                                                ---                      ----
<S>                                                                            <C>                      <C>
Financial statement accruals not currently
 deductible for income tax purposes, tax goodwill basis
 in excess of book, and net operating loss carryforwards                     $    1,993                  $ 1,264
                                                                                  1,993                    1,264
Valuation allowance                                                              (1,993)                       -
Net deferred income tax assets                                               $        -                  $ 1,264
</TABLE>


For the first three quarters of the fiscal year ended January 31, 2003, the
Company's results showed pre-tax income before the cumulative effect of the
accounting change. As a result of the pre-tax loss incurred by the Company in
the fourth quarter, the Company incurred a pre-tax loss before the effect of the
accounting change for the full fiscal year. After considering this loss, the
Company had incurred a cumulative loss over the prior three years. This
cumulative loss triggered certain provisions under FAS 109, "Accounting for
Income Taxes", that required the Company to re-evaluate its deferred income tax
assets. As a result, the Company took a charge of $1,993 to establish a
valuation allowance against its deferred income tax assets since, under the
provisions of FAS 109, a greater emphasis is placed on three-year cumulative
losses as an indicator of the Company's ability to realize its deferred income
tax assets than the potential for future income. The valuation allowance will be
reversed in future years if financial results increase sufficiently to support
the net book value of the assets. The increase in the deferred tax asset is due
principally to the benefit from the Company's write-off of its goodwill. Based
upon a number of factors, including the nature of the temporary differences and
the timing of their reversal, the Company believed that the utilization of the
deferred tax benefit at January 31, 2002 was more likely than not; therefore, a
valuation reserve was not provided in that year. The Company has net operating
loss carryforwards totaling approximately $1,258 for federal income tax
purposes. The carryforwards expire in 2021 and 2023.

                                       F14
<PAGE>


8.    Employee Benefits Plan

API maintains a defined contribution savings plan, qualified under Section
401(k) of the Internal Revenue Code, that covers substantially all of its
full-time employees. The savings plan allows employees to defer up to 15 percent
of their salary, with the Company partially matching employee contributions.
Employees vest in the Company contribution ratably over three years. The Company
expensed $195, $171 and $143 related to the savings plan in the years ended
January 31, 2003, 2002 and 2001, respectively. Employees do not have an option
to invest in the Company's stock under the savings plan.


9.    Related Parties

Effective February 1, 2002 the Company, upon the authorization of the
independent members of the Board of Directors, entered into a two-year advisory
agreement with a related party and stockholder, First Equity Development Inc.
("First Equity"). The advisory agreement was a renewal of a prior agreement on
substantially the same terms and conditions. Pursuant to the terms of this
agreement, First Equity provides the Company with investment and financial
advisory services relating to potential acquisitions and other financial
transactions. The Company pays First Equity a $30 monthly retainer, and
reimburses First Equity for its out-of-pocket expenses. In addition, upon the
successful completion of certain transactions, the Company will pay a fee to
First Equity (the "Success Fee"). The amount of any Success Fee will be
established by the independent members of the Board of Directors and will be
dependent upon a variety of factors, including, but not limited to, the services
to be provided, the size and the type of transaction. Up to one year's worth of
retainer fees paid can be applied as a credit against any Success Fee, subject
to certain limitations. During each of the years ended January 31, 2003 and
2001, respectively, the Company paid First Equity retainer fees of $360. During
the year ended January 31, 2002 the Company paid First Equity retainer fees of
$340, as First Equity voluntarily reduced the amount its retainer fees for the
four months ended January 31, 2002. The aggregate total of retainer fees paid
over the last three years was $1,060. The agreement can be terminated by either
party upon 30-days written notice to the other party.

In 1997 the Company entered into a ten-year sublease with First Equity for
office space. The sublease is cancelable upon six months notice by either party.
The Company has the option of renewing the sublease for two additional five-year
periods. Payments under the sublease totaled approximately $83, $91 and $95 for
the years ended January 31, 2003, 2002 and 2001, respectively.

In addition, the Company paid an affiliate of First Equity approximately $37 per
year in each of the years ended January 31, 2003 and 2002, respectively, for
printing and mailing services, and reimbursed the affiliate for actual expenses
incurred. The services may be cancelled at any time.


10.   Acquisition of Superior

On August 10, 2001 the Company completed the acquisition of the distribution
business of Superior for $4,614 in cash. Pursuant to the terms of the
acquisition, the Company acquired the distribution business of Superior,
including four distribution centers, approximately $2,945 of inventory and
equipment, and was named a worldwide distributor for Superior's product line of
replacement parts for certain aircraft engines. The Company also entered into a
five-year service agreement with Superior whereby the Company provides Superior
with a variety of supply chain management services for a fee based on the scope
of services provided. The purchase price was allocated to the assets acquired,
principally inventory, based upon their relative fair values. The excess of the
purchase price paid over the fair value of the assets acquired, approximately
$2,242, was allocated to goodwill. In addition, the Company recorded
approximately $573 of accruals to cover the estimated costs to complete the
acquisition and execute its plan to close the four distribution centers and
consolidate facilities. Approximately $386 of the accruals were paid prior to
the year ended January 31, 2002. Substantially all of the remaining accruals
were utilized during the year ending January 31, 2003.


                                       F15
<PAGE>

The net incremental sales and gross profit from the Superior acquisition were
not significant to consolidated results for the year ended January 31, 2002.


11. Loss from Discontinued Operation and Gain from Dispositions of Subsidiaries

Details of the loss from discontinued operation and gain from dispositions of
subsidiaries, are as follows:
<TABLE>
<CAPTION>

                                                                           Year ended January 31,
                                                   ------------------------------------------------------------------------
                                                           2003                     2002                      2001
                                                   ---------------------     --------------------     ---------------------
    <S>                                             <C>                        <C>                    <C>
      Loss from discontinued operation - AeroV     $            -            $            -           $       (1,847)
                                                   =====================     ====================     =====================
      Gain from dispositions of subsidiaries:
             AeroV                                 $            -            $          191           $         (386)
             NAC                                                -                       769                      979
                                                   ---------------------     --------------------     ---------------------
                                                   $            -            $          960           $          593
                                                   =====================     ====================     =====================
</TABLE>

AeroV

In February 2000 the Company established AeroV. The purpose of AeroV was to
design a proprietary electronic procurement platform to enable electronic
communication between the Internet and airlines' legacy systems, in order to
reduce supply chain costs. In December 2000 the Board of Directors of the
Company reassessed its strategic position with respect to AeroV, and approved a
plan to sell or dispose AeroV. The net loss of $1,847 from the operations of
AeroV for the year ended January 31, 2001, was net of a benefit for income taxes
of $1,100, and included a pre-tax asset impairment charge of $1,245 to write-off
the investment in AeroV. In addition, during the year ended January 31, 2001,
the Company took a charge of $386, net of a benefit for income taxes of $199, to
dispose of the operations of AeroV. AeroV had no significant sales during the
year ended January 31, 2001.

In connection with the disposition of AeroV, the Company had accrued $660
pre-tax for certain transaction, legal and other costs directly relating to the
disposition. During the year ended January 31, 2002, $306 was charged against
the accruals and the Company reversed $298 of accruals no longer needed. This
reversal, net of a provision for income taxes of $107, for a net credit of $191,
was included in gain from dispositions of subsidiaries in the year ended January
31, 2002. At January 31, 2002, $56 of the accruals remained. The accruals were
completely utilized during the year ended January 31, 2003.

NAC

On November 1, 1999, the Company consummated the sale of the stock of NAC to
Rolls-Royce North America, Inc. ("RRNA") for $73,000 in cash, subject to
adjustment, pursuant to a Stock Purchase Agreement between First Aviation
Services Inc. and Rolls-Royce North America, Inc. dated as of September 9, 1999
(the "Agreement"). During the year ended January 31, 2001, the sales price was
adjusted down to $70,950 to reflect a decrease in the net book value of the net
assets sold. The difference was repaid to RRNA and had been accrued previously.
NAC's operations included the repair and overhaul of gas turbine engines and
accessories, and the remanufacturing of engine components and accessories.

Pursuant to the Agreement, RRNA acquired substantially all of the assets and
assumed certain liabilities of NAC, excluding income tax liabilities, debt,
amounts due to parent (First Aviation) and any contingent liabilities resulting
from NAC's previous liquidation of its former qualified defined retirement
benefit plan (the "NAC Plan").

The Company recorded a net gain from the disposition of NAC during the year
ended January 31, 2000. Included in the net gain on disposition the Company
accrued $3,700 for estimated transaction and other costs directly relating to
the sale, excluding the estimated sales price adjustment. In addition, the
Company accrued $600 for estimated liabilities under the NAC Plan, whose
liquidation had been audited by the Pension Benefit Guarantee Corporation, and
who had challenged the amount paid to liquidate the NAC Plan (collectively, the
"Accruals").


                                       F16
<PAGE>

First Aviation had been liable, without limitation, for any and all income taxes
that might have been imposed upon NAC for all taxable periods ending on or prior
to the date of sale.

Both First Aviation and RRNA were liable, without limitation, for any losses
incurred relating to any breach of any representation or warranty made in the
Agreement, and for any loss that occurs relating to matters specifically
retained by the parties.

On February 28, 2001, the day prior to the expiration of most of the Company's
representations and warranties under the Agreement, RRNA filed a $10 million
claim for indemnification with the American Arbitration Association. The claim
sought indemnification under provisions of the Agreement relating to
environmental and non-environmental covenants and representations. Pursuant to
the terms of the Agreement, the Company's liability for indemnification claims
had been limited to $5 million for environmental and $5 million for
non-environmental claims (with limited exceptions related to taxes and other
specified items).

On May 15, 2001, the Company and RRNA reached an agreement releasing the Company
from any claim, cause of action or liability of any nature whatsoever which has
arisen, or thereafter may arise from any covenant, negligence, representation,
warranty, indemnity, transaction, failure, omission or communication under the
Agreement, and the arbitration was discontinued. In addition, RRNA assumed any
exposure from the liquidation of the NAC Plan.

During the year ended January 31, 2001, the Company paid $5,175 of estimated
income tax liabilities that arose as a result of the sale. The $979 difference
between the estimated income tax liabilities previously recorded and the actual
income tax liabilities paid was included in gain from dispositions of
subsidiaries in the year ended January 31, 2001. During the year ended January
31, 2002, the Company reversed $1,242 of the Accruals that were deemed
unnecessary. The net credit of $769, after applicable income taxes of $473, was
included in gain on dispositions of subsidiaries. At January 31, 2002, $57 of
the Accruals remained relating to the sale of NAC. The Accruals were completely
utilized during the year ended January 31, 2003.


12.   Net Income (Loss) per Share

The following sets forth the denominator used in the computation of basic
earnings per share and earnings per share - assuming dilution.
<TABLE>
<CAPTION>

                                                                      Years ended January 31,
                                                    -------------------------------------------------------------
                                                          2003                2002                   2001
                                                    -----------------   ------------------    -------------------
<S>                                                     <C>                 <C>                    <C>
   Denominator for basic net income (loss)
    per share - weighted average shares                  7,224,532           7,197,941              7,720,520

   Effect of dilutive
    warrants and employee stock options                        N/A              10,784                    N/A
                                                    -----------------   ------------------    -------------------


   Denominator for net income (loss) per share
    - assuming dilution - adjusted weighted
    average shares and assumed conversions               7,224,532           7,208,725              7,720,520
                                                    =================   ==================    ===================

</TABLE>

For the years ended January 31, 2003 and 2001, the denominator used in the
calculation of loss per share from continuing operations - assuming dilution,
was the same as the denominator used for basic loss per share because the effect
of warrants and options would have been antidilutive.




                                       F17
<PAGE>




13.   Commitments and Contingencies

Commitments

The Company leases certain warehouse facilities, equipment and office space.
Certain of the Company's operating leases have options which allow the Company,
at the end of the initial lease term, to renew the leases for periods ranging
from three to five years. Certain lease agreements also contain escalation
clauses that are based on the consumer price index. Future minimum rental
payments under operating leases that have initial noncancelable lease terms in
excess of one year as of January 31, 2003 are as follows:
<TABLE>
<CAPTION>

                 <S>                                                         <C>
                  Year ending January 31, 2004                           $     758
                  Year ending January 31, 2005                                 741
                  Year ending January 31, 2006                                 604
                  Year ending January 31, 2007                                 632
                  Year ending January 31, 2008                                 636
                  Thereafter                                                 2,373
                                                                     -------------
                                                                         $   5,744
                                                                     =============

</TABLE>

Future minimum rental payments for the years ended January 31, 2004 through
January 31, 2006 are net of sublease income of $65. Rental expense under
noncancelable operating leases amounted to $982, $918, and $830 for the years
ended January 31, 2003, 2002 and 2001, respectively.

Contingencies

In the ordinary course of business, the Company is subject to many levels of
governmental inquiry and investigation. Among the agencies that oversee the
Company's business activities are the Federal Aviation Administration, the
Department of Transportation and the Environmental Protection Agency. The
Company does not anticipate that any action as a result of such inquiries and
investigations would have a material adverse affect on its consolidated
financial position, results of operations or its ability to conduct business.

In the normal conduct of its business, the Company also is involved in various
claims and lawsuits, none of which, in the opinion of the Company's management,
will have a material adverse impact on the Company's consolidated financial
position. The Company maintains what it believes is adequate liability and other
insurance to protect it from such claims. However, depending on the amount and
timing, unfavorable resolution of any of these matters could have a material
effect on the Company's consolidated financial position, results of operations
or cash flows in a particular period.

During the fourth quarter ended January 31, 2002, the Company settled litigation
previously initiated against Gulf Insurance Company for a cash payment to the
Company of $950. The income was shown separately net of associated legal
expenses on the consolidated statements of operations for the year ended January
31, 2002.




                                       F18
<PAGE>


<TABLE>
<CAPTION>


14.   Quarterly Financial Information (unaudited)

                                                                       First           Second            Third      Fourth
Year ended January 31, 2003                                            Quarter         Quarter           Quarter    Quarter(1)
                                                                       --------        --------          --------   ----------
<S>                                                                     <C>           <C>               <C>           <C>
Net sales                                                           $    24,998    $   26,165        $   26,611    $   23,963

Gross profit                                                              4,674         4,924             5,131         3,744

Income (loss) before cumulative effect of accounting change                  78          (145)              121        (3,253)

Cumulative effect of accounting change                                   (2,735)            -                 -             -

Net income (loss)                                                        (2,657)         (145)              121        (3,253)

Basic income (loss) per share before
 cumulative effect of accounting change                             $      0.01     $   (0.02)        $    0.02    $    (0.45)
Basic and diluted net income (loss) per share                       $     (0.37)    $   (0.02)        $    0.02    $    (0.45)

</TABLE>


(1)  Fourth quarter results include the impact of a non-cash charge of $804 to
     increase the allowance for doubtful trade receivables, and a non-cash
     income tax charge $1,993 to establish a valuation allowance against the
     Company's deferred income tax assets. See Notes 2 and 7 for further
     explanation.

<TABLE>
<CAPTION>

Year ended January 31, 2002
<S>                                                                    <C>           <C>               <C>              <C>
Net sales                                                               $25,571       $27,564           $26,953           $25,608

Gross profit                                                              4,636         4,904             4,722             4,754

Income (loss) from continuing operations                                     87            70              (490)              625

Net income (loss)                                                            87           777              (490)              878

Basic and diluted income (loss)
 per share from continuing operations                                     $0.01         $0.01            $(0.07)            $0.09
Basic and diluted net income (loss) per share                             $0.01         $0.11            $(0.07)            $0.12
</TABLE>



                                      F19
<PAGE>

<TABLE>
<CAPTION>


Schedule II - Valuation and Qualifying Accounts


           First Aviation Services Inc. and Consolidated Subsidiaries
                             (amounts in thousands)

                                                   Balance at
                                                   beginning of                                       Balance as of
                                                   period              Additions         Deductions   end of period
                                                   -------------      ----------         ----------   -------------
<S>                                                <C>                    <C>             <C>          <C>
Description:

Year ended January 31, 2001
   Allowance for doubtful accounts                    $ 820                243            116 (a)      $ 947
Year ended January 31, 2002
   Allowance for doubtful accounts                    $ 947                310            550 (a)      $ 707
Year ended January 31, 2003
   Allowance for doubtful accounts                    $ 707              1,302            353 (a)    $ 1,656



Year ended January 31, 2001
   Slow moving and obsolete inventory                 $ 414                  7             45 (b)      $ 376
Year ended January 31, 2002
   Slow moving and obsolete inventory                 $ 376              1,089            580 (b)      $ 885
Year ended January 31, 2003
   Slow moving and obsolete inventory                 $ 885                442            330 (b)      $ 997



(a)  Write off of uncollectible accounts. (b) Write off of excess and obsolete
     inventory.

</TABLE>




                                      F20
<PAGE>