SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                             -----------------------
                                    FORM 10-K

                 ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                              ---------------------

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997
                          COMMISSION FILE NUMBER 0-9974

                       UNITED STATES AIRCRAFT CORPORATION
                       ----------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          DELAWARE                                               95-3518487
-----------------------------                                -------------------
STATE OR OTHER JURISDICTION OF                                (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION                                IDENTIFICATION NO.)

3121 East Greenway Rd., Suite 201, Phoenix, Arizona                85032
---------------------------------------------------                -----
     (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                    ZIP CODE

                                 (602) 787-1351
               ---------------------------------------------------
               REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:

                                      NONE
          ------------------------------------------------------------
          SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:

                              CLASS A COMMON STOCK
          ------------------------------------------------------------
          SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities  Exchange Act for
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                    YES   X                        NO
                       -------                       -------

         At September 30, 1997, no market existed for the  Registrant's  Class A
Common Stock, the only class which is publicly held.

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

         The number of shares outstanding of each of the registrant's classes of
common stock as of September 30, 1997 was:

                   Class A Common Stock:     7,652,504 shares
                   Class B Common Stock:     4,962,801 shares
<PAGE>
                                     PART I

Item 1.       Business.
              ---------

Introduction
------------

         At September  30, 1997,  the Company is engaged in adult  education and
travel  services plus the ownership of real estate.  The Company was  previously
active in the  modification  of the DC-3/C-47  aircraft and real estate property
management both of which were discontinued in 1984 and 1997 respectively.

         The Company,  United States Aircraft  Corporation,  was incorporated in
Delaware on October 6, 1978 and began  operations  in April 1980.  The principal
executive  offices of the Company are located at 3121 East Greenway  Rd.,  Suite
201, Phoenix, Arizona 85032, telephone number (602) 787-1351.

Adult Education
---------------

         The  Company's  adult  education  operation  is conducted by its wholly
owned subsidiaries Ford Schools, Inc. and Western College, Inc.

Ford Schools, Inc. is an Arizona real estate training organization providing the
required training to individuals seeking a real estate salesperson's or broker's
license,  and  continuing  education  for  licensed  salespersons  and  brokers.
Effective  January 1, 1996, the Company acquired  Western  College,  Inc. a real
estate training organization  providing the same courses of study. On January 1,
1996, the operations of Ford and Western were combined at the Western campus and
operated as a single  school under the name of Western  College / Ford  Schools.
The  Company  intends to adopt the name  Westford  College,  Inc.  for its adult
education  opertion.  The school and its  courses of study are  approved  by the
Arizona Department of Real Estate.

Ford Schools is one of the oldest  continuously  operated real estate schools in
Arizona. At September 30, 1997, there are approximately four proprietary schools
for real  estate  training  in the  Phoenix  metropolitan  area that  offer both
license and license renewal education. Another metropolitan Phoenix based school
has the largest market share in Arizona. While small schools will continue to be
formed,  management believes the trend will be toward larger schools,  providing
high quality instruction and a variety of programs.

In 1997 the State of Arizona required the following real estate training:

                                             Courses and Hours
                                             -----------------

Real Estate Salesperson License              Principles of Real Estate - 90
                                             hours

Real Estate Brokers License                  Principles of Real Estate - 90
                                             hours

Renewal of License                           Various courses approved by
                                             Real Estate Department
                                             generally 3 to 6 hours in length.
                                             Total 24 hours every two years.

Currently,  the required training must be completed in a class room setting. The
Arizona  Department of Real Estate is currently  reviewing  this  requirement in
order to consider
                                       2
<PAGE>
the  establishment  of policies and  procedures  for "out of the  classroom"  or
"distance"  learning.  Under  consideration are, among other methods of distance
learning, computer-aided classroom settings, compact disc-based program that can
be studied at home,  the  Internet,  and  satellite  TV and videos.  The Company
intends to develop course  materials to present  distance  learning courses when
such  policies  and  procedures  are adopted by the Arizona  Department  of Real
Estate.

During the three years ended September 30, 1997, student enrollments and tuition
revenues were as follows:

                                                               Average
                              Students       Revenue           Tuition
                              --------       -------           -------
         Sales Licensing
              1997              1,049        $261,099        $   248.90
              1996                937        $204,453        $   218.19
              1995                328        $ 87,745        $   267.51

         Broker Licensing
              1997                 34        $ 14,840        $   436.47
              1996 (1)             41        $ 18,507        $   451.39
              1995 (2)              9        $  2,975        $   330.55

         Renewal
              1997              9,835        $134,206        $    13.64
              1996 (1)          7,252        $106,908        $    14.74
              1995              3,697        $ 51,761        $    14.00

          (1)  Represents the combined  operations of Western College,  Inc. and
               Ford Schools,  Inc.  since January 1, 1996.  Statistics  prior to
               January 1, 1996 represent Ford Schools, Inc. only.
          (2)  Broker licensing  classes were not offered by Ford Schools,  Inc.
               until June 1995.

         There are  approximately  50,000  licensed real estate  salesperson and
brokers in Arizona.  The number of individuals taking the licensing  examination
each month varies,  generally  increasing as real estate activity  increases and
decreases  when it is slow. In the fiscal year 1997, the number taking the State
of  Arizona  sales  licensing  tests that were  given  each  month  ranged  from
approximately  300 to 450. Even though there are significant  numbers taking the
licensing exam each month, the number of licensed  personnel remains  relatively
constant  as a  significant  number of  licensees  choose to let their  licenses
lapse.

         Western  College / Ford  Schools has  continued  its planned  expansion
program  with the  opening of a second  campus in  northeast  Phoenix,  Arizona.
Currently,  the two  campuses,  each with  three  class  rooms,  are  located as
follows:

               West Campus                   4425 West Olive, Suite #128
                                             Glendale, Arizona

               Northeast Campus              3121 East Greenway Rd., Suite #201
                                             Phoenix, Arizona

         The Company advertises its real estate programs in metropolitan Phoenix
telephone  directories  plus  through  direct mail to its referral  sources.  In
October,  1996 the Company began publishing the Renewal News, a monthly magazine
for real estate  licensees  with a  circulation  of  approximately  11,000.  The
magazine  includes the class  schedule for both  locations  along with  relevant
articles and paid  advertising  revenue in the year ended September 30, 1997 was
$18,359. The Company has launched a program to increase the circulation, and the
advertising revenue plus expand the editorial content.
                                       3
<PAGE>
Utilizing its existing base in adult  education,  the Company  intends to expand
and profit  from the adult  career  education  field.  Through  its  acquisition
program,  the  Company  intends to expand into other  geographic  markets and to
expand its curriculum to include training for other professionals such as travel
and insurance agents, accountants and home inspectors. The expansion is expected
to  include  the  offering  of home study  courses  which in some cases will use
computer networks,  video conferencing,  and interactive multimedia courses, all
of which  provide  enhanced  education and training that is not bound by time or
location.

Travel Services

         The Company,  through  acquisitions,  implemented  its travel  services
division on July 1, 1997.  Effective July 1, 1997 the Company  purchased certain
assets of Travel Easy, Inc. and in August 1997 the assets of FirsTravel, both of
which were full service travel agencies.  The Travel Easy agency has been closed
and its approximately 175 independent contractor Home Based Travel Agents became
affiliated with the Company's travel agency operated as FirsTravel.

         FirsTravel is a full service travel agency  registered with the Airline
Reporting Corporation. It serves the retail market from its office at 4700 North
Central  Avenue,  Phoenix Arizona and serves its  approximately  175 independent
contractor Home Based Travel Agents located throughout the country.

         Travel  Agency  sales for the three  months  from  acquisition  through
September 30, 1997 were as follows:

              Airline tickets                                 $339,217
              Hotels                                            81,861
              Automobiles                                       26,255
              Cruises                                          116,508
              Tours                                            161,362
              Other                                             51,341
                                                              --------
                  Total Sales                                 $776,544
                                                              --------

         Total sales for the acquired  agencies were  $5,191,426  and $2,324,325
for the years ended September 30, 1997 and 1996, respectively.  The sales of the
acquired  agencies for the fiscal year ended September 30, 1997 and 1996 are not
representative  of the expected sales volume in the fiscal year ended  September
30, 1998 due to changes in operations, primarily the reduction of outside agents
from over 3,000 to  approximately  175 Home Based  Travel  Agents that intend to
book sales for others as opposed to just booking personal travel.

         In  October,1997  the major airlines  changed their  commission rate to
travel agencies from 10% to 8%. Accordingly,  in January 1998 FirsTravel adopted
the policy of  generally  charging  its  customers  a $10  service  fee for each
airline ticket generated. Further, the company intends to continue its policy to
promote  leisure  travel,  such as tours  and  cruises,  where  the  commissions
generally  range from 10% to 13%.  Management  believes that the travel services
operation  can be  expanded  through the  acquisition  of other  travel  service
companies and that  FirsTravel  can be expanded  through the  recruitment of new
Home  Based  Travel  Agents.  Additionally,  the  Company  is in the  process of
implementing a travel  education  program for individuals  desiring to enter the
travel services industry and continuing  education for active travel agents. The
education program will be presented by the Company's adult education division.

Real Estate Owned
-----------------

         The  Company  owns  35.66  acres of  undeveloped  land  located  on the
Interstate 5 frontage road in Glenn County, California which is approximately 85
miles  North  of  Sacramento,   California.  The  Company  is  pursuing  various
alternatives for realizing the value of this property, including the possibility
of forming a Real Estate  Investment  Trust (REIT) to whom the undeveloped  land
would be sold or contributed.
                                       4
<PAGE>
         The Company  believes the land can be developed with a service station,
mini-mart,  motel,  fast food outlet and a  recreational  vehicle park and it is
expected that the REIT would contract with the Company to manage and develop its
parks.

         The land has been  pledged as  collateral  for  $601,000  of trust deed
notes  payable  for which  interest on the second and third  position  notes are
delinquent.  The Company does not have sufficient  liquid capital to continue to
service  the  debt.  If a REIT or  other  alternative  is not  formed  with  the
resulting  sale or  contribution  of the land to the REIT,  the company  will be
required  to take other  steps to sell the land that  could be at a sales  price
that would be less than the trust deed notes payable.

         For additional information regarding working capital, reference is made
to Item 7, Financial Condition and Liquidity and Capital Resources.

Discontinued Operations
-----------------------
Aircraft Modifications

         From April  1980,  the  Company  had been  engaged in the  business  of
modifying  and  converting  the Douglas  DC-3/C-47  aircraft  from  conventional
piston-driven  engines to Pratt & Whitney PT6 turboprop engines and modification
of the  airframe  systems to  accommodate  the new  engines.  The purpose of the
program was to increase payload capacity,  reduce maintenance costs and increase
revenues.

The Company's  aircraft engine  conversion  program  conservatively  substitutes
equivalent  power using widely accepted new turboprop  engines as  replacements.
Weight is reduced by changing to lighter engines and lengthening the fuselage to
increase  payload  capacity.  The Company had been  developing the capability to
modify or convert an operator's aircraft, supply a completely converted aircraft
to a customer or provide complete kits for installation at regional installation
centers.  The conversion and modification of existing DC-3 aircraft was expected
to increase demand because of the savings based on reduced capital investment in
new equipment and spare parts,  reduced  expenditures for flight and maintenance
crew training, reduced operating cost and increased productivity.  The converted
aircraft is known as the "DC-3/C-47 Turbo Express".

         The Company  selected the DC-3/C-47  conversion  program as its initial
project  because of the large number to these aircraft  available for conversion
and the need for the conversion.  The turboprop  engines deliver thrust slightly
higher than delivered by the piston engines. The new engine installation results
in a weight saving in excess of 3,000 pounds and substantially  less aerodynamic
drag. It offers  increased  cruising  speed and  considerably  improved  overall
aircraft performance. Although turboprop engines consume slightly more fuel than
piston-driven  engines, the conversion is particularly  desirable since the fuel
required for the  piston-driven  engines,  aviation gas, is  substantially  more
expensive  and scarce  than that  required  to operate  the  turboprop  engines.
Furthermore,  the PT6 turboprop  engines would operate with  significantly  more
reliability than the  piston-driven  engines,  thus requiring less down-time and
expense  for  maintenance,   with  a  substantial  improvement  in  safety.  The
availability  of the PT6 turboprop  engine  depends on sufficient  lead time and
adequate capital to place advance deposits when the order is placed. In 1984 the
Company believed that the Federal Aviation  Administration  Certification of the
Company's converted DC-3 demonstrator  aircraft would be accepted by most of the
Company's foreign customers and their aviation regulatory agencies as sufficient
proof of airworthiness.  Regulatory  agencies in Canada,  England and France may
require their own  certification  after  examination of design,  engineering and
flight test data by these authorities.

         An Alaskan charter and air taxi operator, Harold's Air Service, Inc. of
Fairbanks,  Alaska, purchased the Company's demonstrator aircraft which was paid
for and
                                       5
<PAGE>
delivered on December 8, 1983. FAA Certification was issued for this aircraft on
December 1, 1983.  Harold's Air purchased a conventional  DC-3 for conversion by
the Company.  In December  1984  ownership was  transferred  to the Company with
Harold's Air retaining an option to lease or purchase.  Harold's Air also placed
a  $330,000  advance  payment  for the lease or  purchase  option on the  second
aircraft on which the Company started the conversion process.

         In July, 1983, Air Group International placed a non-refundable  deposit
of $50,000 for the  conversion of an aircraft,  and the Company billed its first
progress  payment of $192,000 in December 1983. The billing was not paid and the
contract was  canceled.  The initial  deposit was recorded as income in the year
ended September 30, 1984.

         The  DC-3/C-47  Turbo  Express is an aircraft  that meets the  specific
requirements of several potential  customers.  Potential customers are primarily
foreign commercial operators for cargo and geological  explorations and surveys.
Although there had been indicated demand for the Company's product,  the Company
was unable to accept any orders without additional financing.

         By September 30, 1984, the Company  decided to cease  operations  until
additional  financing  for the  marketing  and  production  operations  could be
obtained.  The conversion of the second  aircraft was not completed.  During the
fiscal  years  ended  September  30,  1985,  1986 and 1987,  except for  certain
marketing  efforts and attempts to obtain  additional  capital,  the Company was
inactive.

         In April  1988,  the  Company  executed  an  agreement  with a  company
specializing in aircraft  conversions and with certain other parties.  As a part
of the  agreement,  the  Company  granted for a two year period a license to the
aircraft converter company to use the Company's  technology that is set forth in
the FAA Supplemental  Type Certificate  owned by the Company.  Consideration for
the use of the license was  $150,000  cash and future  royalties  of $10,000 for
each aircraft converted during the two year period. Also $30,000 was received in
cash as an advance  against  future  royalties  plus an  additional  $30,000 for
certain tangible assets.

         Also as part of the  agreement,  a customer who held a promissory  note
for  $330,000 and had filed a lawsuit in July 1985  released all claims  against
the Company. Consideration by the aircraft converter company to the customer was
$35,000 cash and future royalties not to exceed $265,000.

         At September 30, 1989, management was informed by the licensee that the
licensee expected  approximately 12 to 15 aircraft would be converted during the
royalty period.  During the years ended September 30, 1990 and 1991, the Company
determined  that $80,000 and $20,000,  respectively of royalties had been earned
pursuant  to the  licensing  agreement.  The  licensee  had paid  $30,000 of the
royalties in advance and the  remaining  $70,000 less an allowance of $5,700 was
receivable at September 30, 1991.  The licensee of the Company's  technology (as
defined  below) did not pay the royalties due and did not return the  technology
as required in the April 1988 agreement.  In August,  1991, the Company demanded
that  the  licensee  pay  the  royalties  due and  return  the  technology.  The
definition of technology in the April 1988 agreement includes among other items,
drawings,   all  reports,   vendor  data   including   component   drawings  and
qualification reports,  flight manuals,  maintenance manual supplements and jigs
and tools.  When the licensee did not return the  technology as  requested,  the
Company obtained a portion of the technology that was held by certain vendors.

         On  September  4, 1991,  the  licensee  filed a  complaint  against the
Company in Wisconsin state court alleging that the Company's  Technology was not
used in the development of their conversion kit product. In their complaint they
requested a declaratory judgment that the licensee is the exclusive owner of the
conversion technology and denying the Company's entitlement to royalties.
                                       6
<PAGE>
         In  February,  1992,  the  Company  filed an answer  to the  licensee's
complaint along with counterclaims that requested judgments for damages, payment
of the royalties due and an immediate return of the Technology.

         On  September  23,  1993,  the  Company  and the  licensee  agreed to a
settlement and dismissal of the litigation  whereby the Company could retain the
Technology  they had  obtained  from  certain  vendors and the  licensee  had no
obligation  to  return  the  remainder  of  the  Technology.  As  an  additional
inducement to settle the litigation certain shareholders of the licensee, agreed
to pay the Company  $40,000 plus assume the obligation for legal fees related to
the litigation.

         The Company invested over five years of effort and substantial  capital
in  developing  the Turbo  Express  aircraft  conversion  and  obtaining the FAA
Certification.  The Company is aware of only one other entity in addition to the
licensee certified by the FAA to convert the DC-3/C-47 to turboprop power.

         The Company has investigated methods of realizing its investment in the
plans and specifications.  Possible methods to realize the Company's  investment
in the plans and specifications  include a new licensing agreement,  sale of the
plans and specifications,  acquisitions or by obtaining financing and successful
future  development.  At September 30, 1996,  the Company was unable to identify
any proceeds to the Company from its investment in the plans and specifications.
Accordingly,  a loss of  $649,999,  that  represents  the excess of the carrying
amount over the present value of  identifiable  net cash flow, has been included
in operations for the year ended September 30, 1996.

Real Estate Property Management
-------------------------------

         Hansen & Associates,  Inc. dba Property  Masters is a Phoenix,  Arizona
residential  real estate  brokerage  that  specializes  in  management of single
family residential homes. In August 1997 the Company decided to discontinue this
line of business and sold the stock in Hansen & Associates Inc. to the president
of the  subsidiary  in a  transaction  that was effective on September 30, 1997,
with a resulting gain on the sale of $53,796.

EMPLOYEES
---------

         On September  30, 1997,  the Company,  had 15 employees.  Further,  the
Company had  approximately  175 independent  contractor home based travel agents
and fifteen to twenty  independent  contractor  instructors  for the real estate
training school.

SPECIAL CONSIDERATIONS
----------------------

The following factors,  in addition to those discussed elsewhere in this Report,
should be considered carefully in evaluating the Company and its business.

1.   Lack of  Profitable  Operations.  The  Company  experienced  a net  loss of
     $(49,922) for the fiscal year ended September 30, 1997.  Management expects
     that the results of operations  for the year ended  September 30, 1998 will
     be  improved;  however no  assurance  can be given that the Company will be
     able to attain or maintain a profitable  level of operations in the future,
     or that it will not continue to incur operating losses.

2.   Current  Defaults on Existing  Obligations.  The  Company  currently  is in
     default on the payment of various convertible debentures in the outstanding
     principal  amount of  $56,450.  The  Company  also is in default on various
     trust deed notes payable with respect to 35.66 acres of undeveloped land it
     owns in Glenn County,  California (the "California  Land") in the amount of
     $435,000, and the holder of the $100,000 second trust deed note payable has
     filed a notice of default with respect to the non-
                                       7
<PAGE>
     payments on the related note. The Company is pursuing various  alternatives
     for realizing the value of the California  land,  including the possibility
     of forming a Real Estate  Investment  Trust (REIT) to whom the  undeveloped
     land  would be sold or  contributed.  If the  Company  is unable to pay the
     balance  due on the second  trust deed note  payable,  then the Company may
     lose the California Land in a foreclosure  sale and would be liable for any
     deficiency  in the payment on the notes  securing the land,  which could be
     substantial.  The Company currently does not have the ability to pay any of
     its  defaulted  debts and no  assurance  can be given that the Company will
     have sufficient capital to pay such debts.

3.   Risk  Associated  with Business  Strategy.  The Company intends to pursue a
     strategy of growth primary though acquisitions of school and travel service
     operations.  Further, the Company intends to investigate  potential mergers
     or acquisitions in other lines of business,  including recreational vehicle
     park operations, in which the Company does not currently operate. There can
     be no assurance that the Company,  will be successful in acquiring existing
     businesses  on  acceptable  terms  and  conditions  or that the  businesses
     acquired will be effectively and profitably managed and integrated into its
     operations.

4.   Need  for  Additional  Financing.   The  Company  will  require  additional
     financing  in the future.  No assurance  can be given that such  additional
     financing  will be  available  to the Company on terms  favorable  to it if
     additional financing is available at all.

5.   Dependence Upon Current Management. The education,  training and experience
     of certain  individuals  engaged in the  management  and  operation  of the
     Company are critical to the success of the Company. The loss of any of such
     persons  as an  officer  or  employee  of the  Company  could  result  in a
     significant  decrease in the Company's prospects for success,  and there is
     no  assurance  that such persons will  continue to be  associated  with the
     Company in the future. In addition,  there is no assurance that should such
     persons remain with the Company, the Company will become successful.

6.   Absence of Liquid Public Market.  The Company's Class B Common Stock is not
     publicly traded. The Company's Class A Common Stock is traded on the Nasdaq
     bulletin board on an extremely  limited  basis.  As a result of the Company
     having two classes of Common Stock and the extremely limited trading market
     for the Company's Class A Common stock, trading in the Class A Common Stock
     may be subject to  substantial  fluctuations.  Moreover,  in view of such a
     limited  market it may be extremely  difficult for any owner of the Class A
     Common Stock to sell shares  without having an adverse effect on the market
     price of the Common Stock.  Further,  the Company's Class A Common Stock is
     not traded on the Nasdaq small  capital  market,  and is unlikely that such
     stock would be so traded in the foreseeable  future.  The Company's Class A
     Common Stock  constitutes  "penny stock" under the rules and regulations of
     the Securities and Exchange  Commission,  and such  designation may have an
     adverse  effect on the market in the Company's  Class A Common  Stock.  The
     Company is exploring  alternatives  to simplifying  its capital  structure,
     including the possibility of combining its two classes of Common Stock, and
     any such  actions  may have an adverse  effect on the  market  price of the
     Class A Common Stock or the Class B Common Stock, or both.

7.   Lack of Dividends.  The Company  intends to employ all available  funds for
     the  development  of its  business  and,  accordingly,  does not  intend to
     declare or pay cash dividends in the foreseeable future.

8.   Dependency on Economic Conditions on the Adult Education and Travel Service
     Business.  The  Company's  line of business  and the success of its planned
     expansion is largely  dependent on economic  growth in its market area.  At
     present,   adult  education   serves  the  real  estate  industry  that  is
     experiencing  significant  growth. Real Estate education generally declines
     when real estate activity declines.  Travel services also generally follows
     general  economic  trends.  If the current  economic  activity  slows,  the
     depressed  economy could slow and possibly  frustrate the Company's planned
     expansion of its operations.
                                       8
<PAGE>
9.   Competition.  The  markets  in which the  Company  sells its  services  and
     products are highly competitive.  The Company faces competition from larger
     and  better  capitalized  companies  which  are  better  able to  withstand
     operating losses and the effects of a cyclical market.

10.  Liquidity.  The  Company  had a negative  working  capital of  $200,887  at
     September 30, 1997.  Obtaining  positive working capital and the completion
     of the Company's  expansion of its operation is dependent on the successful
     completion  of the sale of or  refinancing  of the debt with respect to the
     California  land and formation of a Real Estate  Investment  Trust or other
     alternative,  renegotiation  of certain  current  liabilities and obtaining
     other long-term financing.

11.  Cautionary  Statement  Regarding   Forward-Looking   Information.   Certain
     statements  and  other  information  contained  herein  concerning  future,
     proposed,  and intended activities of the Company or other matters that are
     not  historical  facts are  forward-looking  statements  (as defined in the
     Securities  Act).  When  used  herein,  the  words  "believe"  ,  "expect",
     "anticipate",  "estimate", and similar expressions are intended to identify
     forward-looking   statements   that   are   subject   to   certain   risks,
     uncertainties,  and  assumptions.  Should  one or more of  these  risks  or
     uncertainties materialize or should underlying assumptions prove incorrect,
     actual results may vary  materially from those expressed or implied by such
     forward-looking  statements.  Factors  that could cause  actual  results to
     differ  materially  include those,  among others,  discussed under "Special
     Considerations."

Item 2.  Properties
         ----------

         The Company  maintains its corporate  offices within the Western / Ford
campus at 3121 East Greenway Rd., Suite #201, Phoenix, Arizona 85032.

         Western / Ford  maintains two  campuses.  The West campus is located at
4425  West  Olive,  Suite  #128 in  Glendale,  Arizona.  The  campus  has  three
classrooms  and  office  space  and is leased  pursuant  to a three  year  lease
expiring in May 1998.  The lease rental is paid at $2,182.  per month for eleven
months each year with no rental paid in December of each year.

         The Northeast  campus is located at 3121 East Greenway Road, Suite #201
in Phoenix,  Arizona.  The campus has three  classrooms  and office space and is
leased pursuant to a five year lease expiring July 31, 2001. The monthly rent is
$1,689 plus common area charges that  approximate  $585 per month. The base rent
per month increases each annual period as follows:

                      Year 2                        $1,948
                      Year 3                        $2,208
                      Year 4                        $2,274
                      Year 5                        $2,343

         FirsTravel maintains its office at 4700 North Central Avenue, Suite 205
in Phoenix,  Arizona.  The office  space is leased  pursuant to a two year lease
expiring on December 31, 1999 the monthly rent is $333.

Item 3.  Legal Proceedings
         -----------------

         At December 31, 1997, there were no material legal proceedings.

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

         There were no matters  submitted to a vote of Security  holders  during
the quarter ended September 30, 1997.
                                       9
<PAGE>
                                     PART II

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

         The  Company's  Class  B  common  stock  is not  publicly  traded.  The
Company's  Class A common stock has traded in the  over-the-counter  market.  At
September 30, 1997 and for the eight prior quarters,  no significant  market has
existed for the Class A common  stock;  however,  a diminutive  number of shares
have traded during the last eight  quarters at a low of $.01 and a high of $.15.
The symbol for the Class A shares on the NASDAQ bulletin board is UAIRA.

         As of September 30, 1997, the number of holders of the Company's  Class
A common stock was  approximately  850.  This number is based upon the number of
record  holders of the  Company's  Class A common stock.  At the same date,  the
number of holders of the Company's Class B common stock was 41.

         The Company has paid no  dividends  in its history and does not plan to
pay any dividends in the immediate  future.  The Certificate of Incorporation of
the Company  provides  that  holders of Class B common stock are not entitled to
receive any dividends thereon until dividends  aggregating $0.50 per share shall
have been declared and paid on Class A common stock; thereafter, both classes of
common stock shall share ratably in the dividends.
                                       10
<PAGE>
Item 6.  Selected Financial Data
         -----------------------

         The following table summarizes  certain selected  financial data of the
Company,  which are qualified in their  entirety by the more detailed  financial
statements included herein.

                        For The Year Ended September 30,
                        --------------------------------

<TABLE>
<CAPTION>
                                    1993           1994           1995           1996          1997
                                    ----           ----           ----           ----          ----
<S>                             <C>            <C>            <C>            <C>            <C>        
BALANCE SHEET DATA:

Total Assets                    $   806,943    $   802,690    $   803,169    $   278,669    $ 1,066,159
                                -----------    -----------    -----------    -----------    -----------

Total Liabilities               $   581,473    $   622,161    $   220,008    $   240,992    $   941,404
                                -----------    -----------    -----------    -----------    -----------

Shareholders'
  Investment                    $   225,470    $   180,529    $   583,161    $    37,677    $   124,755
                                -----------    -----------    -----------    -----------    -----------

STATEMENT OF OPERATIONS DATA:

Revenues                        $    93,171    $   110,480    $   193,640    $   386,173    $ 1,222,243
                                -----------    -----------    -----------    -----------    -----------

Income (loss) before
interest expense, dep 
and amortization                $    19,476    $     7,011    $    48,509    $    33,604    $   (66,770)
                                -----------    -----------    -----------    -----------    -----------

Depreciation and
 Amortization                   $    14,795    $     9,629    $     7,729    $    15,281    $    26,412
                                -----------    -----------    -----------    -----------    -----------

Interest Expense                $    38,608    $    37,950    $     9,819    $    12,979    $    14,933
                                -----------    -----------    -----------    -----------    -----------

(Loss) from Write Off
 of Plans and Spec                                                           $  (649,999)
                                                                             -----------

Income (loss) from
 Discontinued Operations        $     5,063    $    (4,373)   $    (2,356)   $    11,671    $    58,193(1)
                                -----------    -----------    -----------    -----------    -----------

Net Income (loss)               $   (28,864)   $   (44,941)   $    28,605    $  (632,984)   $   (49,922)
                                -----------    -----------    -----------    -----------    -----------

PER SHARE DATA:

Net Income
 (loss)                         $      (.00)   $      (.01)   $       .00    $      (.06)   $       .00
                                -----------    -----------    -----------    -----------    -----------
</TABLE>

The four years ended  September 30, 1996 have been restated to reflect  Hansen &
Associates, Inc. dba Property Masters as a discontinued operation.

(1)  Includes  the $53,796 gain on the sale of Hansen and  Associates,  Inc. dba
     Property Masters.
                                       11
<PAGE>
Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations
         -------------

Results of Operations
---------------------

Comparison 1997 to 1996

         The  loss  before  interest,   depreciation  and  amortization  expense
increased by $100,374. The increased loss consists of the following:

         Reduction in Real Estate Education 1997
                operating income over 1996               $ 22,820.

         Operating loss from
                travel agency operation
                during the three months from
                acquisition on July 1, 1997              $ 16,033.

         Increase in general
                corporate overhead                       $ 28,125.

         Decrease in other revenue                       $ 33,396.

The operating income from the adult education division declined by $22,820.  The
decline was due to an $115,742  increase in operating  costs offset by a $92,922
increase  in  revenues.  The  revenue  increase  is  the  result  of  additional
enrollment including those at the new East campus, and due to a $18,035 increase
in  advertising  revenue  related to the  publication  of the Renewal News.  The
operating cost increase  consists of an $58,679  increase in personnel  expense,
$34,633 increase in facility costs and $22,430 increase in other operating costs
all of which increased primarily due to the opening of the East campus in August
1996.

The travel  services  operation was started on July 1, 1997 with the purchase of
an  existing  travel  agency and the  operating  results are  included  from the
acquisition  date  through  September  30, 1997 with no  comparable  amounts for
fiscal 1996 as follows:

                                                              Amount
                                                              ------
                                                        
          Sales                                             $ 776,544
                                                            ---------
                                                        
          Cost of sales                                     $ 699,699
                                                            ---------
                                                        
          Gross Profit                                  
            operating costs                                    76,875
                                                        
          Personal Expense                        48,553
                                                        
          Facility cost                            2,534
                                                        
          Other Operating costs                   41,821
                                                  ------
            Total operating costs                              92,908
                                                               ------
                                                        
          Income (loss) before interest                 
            depreciation and amortization                     (16,033)
                                                              ------- 
                                                    
General  corporate  overhead  increased by $28,125  primarily  due to management
compensation  increases of $16,108 and an increase of legal and accounting  fees
of $6,884.

Other  revenue  declined by $33,396  primarily  due to revenue in fiscal 1996 of
$30,000 related to a reduction of certain accrued obligations with no comparable
amount in 1997.
                                       12
<PAGE>
Depreciation  and amortization  increased by $11,131  primarily due to equipment
and business acquisitions. Interest increased by $1,953.

On September 30, 1997 the company sold its  wholly-owned  subsidiary  Hansen and
Associates,  Inc. dba Property Masters after determining to discontinue its real
estate  brokerage  and  property  management  line of  business,  The  financial
statements  have been restated to reflect the  operations of the subsidiary as a
discontinued  operation reflecting a 1997 operating profit of $4,397 compared to
$11,671 in 1996. The sale of Hansen and  Associates,  Inc. dba Property  Masters
resulted in a gain of $53,796 in 1997 with no comparable amount in 1996.

Comparison 1996 to 1995

         The income before interest,  depreciation and amortization  expense and
the write off of assets not in use  decreased by $14,905.  This decrease was due
to the  $192,533  increase  in revenue  and offset by the  $207,438  increase in
operating  expense.  The revenue increase  included a $201,307  increase in real
estate education revenue resulting primarily from additional student enrollments
as a result of the January 1, 1996  acquisition of Western  College,  Inc. Other
revenue,  consisting of financial  consulting fees and a $30,000 adjustment of a
long-term debt accrual recorded in prior periods, declined by $8,774.

         The  $207,438  increase in  operating  expense  included  increases  of
$145,683  in  personnel  expenses,  $16,297 in  facility  costs,  and $47,767 in
general and administrative expenses; and a decrease of $2,309 in other operating
costs. The $145,683  increase in personnel  expense consists of $125,749 related
to the real estate  education  operation  due to the increased  enrollments  and
class  offerings  plus  increased  compensation  for management of the education
operation related to the planned expansion.  The $47,767 increase in general and
administrative  expense  includes an increase in personnel  expenses for general
corporate activities of $14,659 and a $26,844 increase in professional fees.

         Interest expense  increased by $3,908 and depreciation and amortization
increased by $7,552.

         The  Company  recorded a loss of  $649,999  in 1996 with no  comparable
amount in 1995 from the write down of the plans and specifications to $1 because
the Company  could not identify any cash flow from its  investment  in the plans
and specifications.

         The 1996 and 1995 statement of operations have been restated to reflect
the  operations  of  Hansen  and  Associates,   Inc.  dba  Property  Masters  as
discontinued  operation with an operating  income of $11,671 in 1996 compared to
an operating loss of $2,356 in 1995.

         For  additional  information,  reference is made to Item 1 Business and
Notes  2 and 3 of  the  financial  statements  included  in  Item  8,  Financial
Statements and Supplementary Data.
                                       13
<PAGE>
Financial Condition, Liquidity and Capital Resources
----------------------------------------------------

         The working  capital deficit  increased  $64,024 from 1996 to $200,887.
Current assets increased by $47,376 from 1996 to $119,538. The increase consists
of a $10,290  increase  in cash,  a $14,477  increase  in  accounts  receivable,
primarily due to the acquisition of the travel  agencies,  an $8,000 increase in
Notes  receivable  related to the sale of Hansen & Associates  Inc. dba Property
Masters and a $14,609  increase  in prepaid  expenses  primarily  related to the
travel agency acquisitions.

         Current  liabilities  increased  $111,400  from 1996 to  $320.425.  The
increase consists of a $3,362 decrease in the current portion of long-term debt,
a $8,879 increase  related to the accrued  interest on the debentures,  a 63,839
increase in accounts  payable and a $32,052 increase in accrued expenses both of
which were related the  acquisition  of the travel  agencies.  Unearned  tuition
increased by $9,992 due to the increased enrollments.

Advances  to  officer  made  pursuant  to  the  officer's  compensation  program
decreased by $2,815.  The long term note receivable of $52,044 all relate to the
sale of Hansen and Associates Inc. Property and equipment decreased by $1,350 as
a result of equipment  acquisitions  of $7,581 offset by depreciation of $8,931.
Goodwill increased by $9,030 with a $20,000 addition due to the Western College,
Inc.  acquisition offset by amortization for 1997 and the elimination of the net
goodwill of $6,756 related to Hansen and Associates Inc. due to its sale. Course
materials  decreased by $1,965 due to the amortization  recorded for 1997. Other
assets increased by $3,069.

         In February 1997, the Company  acquired 35.66 acres of undeveloped land
in Glenn County,  California which is recorded for financial  reporting purposes
at $577,327.  The land has been pledged as collateral for three trust deed notes
payable  totaling  $601,000.  The Company is planning  the  formation  of a Real
Estate Investment Trust (REIT) or other alternative to whom the undeveloped land
would be sold or  contributed.  Interest  payments on the second and third trust
deed notes payable are  delinquent  and the holder of the second trust deed Note
payable  filed a notice  of  default  on March  30,  1998.  If the REIT or other
alternative is not formed with the resulting sale or  contribution  of the land,
the Company will be required to take other steps to sell the land which could be
at a sales price that would be less than the trust deed notes payable.

The  July  and  August  purchase  price  of the  travel  agencies  exceeded  the
indentifiable  tangible assets of the agencies by $110,288 and relates primarily
to the value of the income production of the approximately 175 Home Based Travel
Agents who place their travel sales  through  FirsTravel . The original cost has
been reduced by amortization of $5,514.

Long-term  debt  decreased by $11,988 due to payments of $15,350 less the $3,362
decrease in the current portion. The convertible  debentures of $56,450 plus the
related accrued interest are classified as current  liabilities as they were due
on December 31, 1996.  Currently,  the debentures  remain unpaid and the Company
believes  that  they  will  eventually  be  retired  through  conversion  to the
Company's  Class A common  stock,  although no assurance  that such a conversion
will be elected by the debenture holders.

         The  Company's  management  has  continued  its  program  to expand the
services  operations  through further expansion of its existing  operations plus
the acquisition of other service  organizations.  Working  capital  continues to
limit the  expansion  of the  Company  although  the  Company in  February  1997
acquired  35.66  acres of  undeveloped  land for  250,000  Class A shares of its
common  stock plus  approximately  $500,000  of trust deed  notes  payable.  The
Company  intends to plan the  development of the parcel and has used the land as
collateral  for a $100,000 loan to provide an interim  resolution to the working
capital deficiency.  Further, in March 1998 the Company obtained a one year bank
revolving line of credit in the amount of $30,000. Additionally, the Company is
                                       14
<PAGE>
aggressively investigating  acquisitions of adult education,  travel services or
other  operations that are compatible with the existing  operations and that can
be acquired for the Company's common stock or with debt that is retired from the
cash flow from the acquired operation.  Further, the Company plans to complete a
private placement aggregating approximately $150,000 to provide working capital,
fund the  acquisitions  and retire a portion of the long-term debt. No assurance
can be given the acquisitions will be completed or the private placement will be
successful.


Item 8.  Financial Statements and Supplemental Data
         ------------------------------------------

         Reference is made to the financial statements,  the report thereon, the
notes thereto,  and the supplement  data  commencing at page F-1 of this report,
which financial statements, report, notes and data incorporated by reference.


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

         There  were  no  changes  in  or  disagreements   with  accountants  on
accounting and financial disclosure.
                                       15
<PAGE>
                                    PART III

Item 10. Directors and Executive Officers of the Registrant
         --------------------------------------------------

         The  following  table  sets forth  certain  information  regarding  the
Company's directors and executive officers as of September 30, 1997.

NAME                     AGE          POSITIONS                SERVED SINCE
----                     ---          ---------                ------------

Harry V. Eastlick         58       President, Chief          October 6, 1988
                                   Executive Officer
                                   and Director

Donald E. Cline           71       Secretary                 November 16, 1989
                                   and Director

Dale L. Dykema            67       Director                  November 16, 1989

Whipple Manning           61       Director                  April 22, 1997

John R. Thomas            65       Director                  November 16, 1989

All  directors  serve until the next annual  meeting of  stockholders  and until
their  successors are elected and  qualified.  All officers serve until the next
annual meeting of the Board of Directors and until their  successors are elected
and qualified.

         Harry V.  Eastlick,  a  certified  public  accountant,  has  served  as
Chairman  of the Board,  President  and Chief  Executive  Officer of the Company
since October 6, 1988.

         Donald E. Cline has served as a business  consultant  since  March 1991
and as the Director of the State of Arizona Department of Commerce from February
1990 to March  1991.  Mr.  Cline had served as  Chairman  of the Board and Chief
Executive  Officer of First  National  Utilities,  Inc.,  an Arizona based water
utility holding  company,  from September 1987 to February 1990.  Prior thereto,
Mr. Cline served as Vice  President and Chief  Executive  Officer of the Arizona
operations of Mountain Bell, now known as US West. He retired from Mountain Bell
after 37 years of employment.

         Dale L.  Dykema  has been  Chairman  of the Board  and Chief  Executive
Officer of TD Service  Financial  Corporation since its formation in 1985. Prior
thereto,  Mr. Dykema held similar  positions with TD Service Company,  since its
organization  by Mr. Dykema in 1964.  Both  corporations  are  California  based
companies that provide trust deed foreclosure services to financial institutions
and other holders of trust deeds in California and Arizona.

         Whipple H. Manning has been an independent real estate consultant since
January  1989.  From 1983 through  1988 Mr.  Manning  served as  Executive  Vice
president of Coast Savings and Loan in charge of the Commercial/Industrial  Real
Estate  Loan  Division.  From 1978 to 1983,  Mr.  Manning  was the  senior  Vice
President  of  California  Federal  Savings  and Loan in  charge  of the  Income
Property  Division.   Prior  thereto,  Mr.  Manning  spent  seventeen  years  in
commercial real estate lending with Pacific Mutual Life Insurance.

         John R. Thomas, a certified public accountant, has served as a business
consultant  since 1993.  From  September  1990 to December 1993 he served as the
Chairman of the Board of  Directors of G.T.  Products,  Inc. a  manufacturer  of
flashlight  products and from  September  1987 to September  1990,  he served as
Executive Vice President,  Chief Operating Officer,  and Chief Financial Officer
of  T.G.  Environmental,   Inc.,  a  California  based  construction  firm  that
specialized in environmental projects. Prior thereto, for a period of twenty-six
years,  Mr. Thomas was with the national  accounting firm of Coopers and Lybrand
where he served as a partner for the last sixteen years.
                                       16
<PAGE>
         The Company  indemnifies  its  officers and  directors  pursuant to its
Certificate of Incorporation.

Item 11. EXECUTIVE COMPENSATION
         ----------------------

         The following  table sets forth  information  concerning the three most
highly  compensated  officers of the Company.  No officer received a cash salary
and bonus that exceeded $100,000 during the year ended September 30, 1997.

                           Summary Compensation Table
                               Annual Compensation
                               -------------------
      Name and                  Fiscal     Salary(3)      Bonus     Other
      --------                  ------     ---------      -----     -----
Principal Position               Year
------------------               ----

Harry V.Eastlick, Chairman       1997      $51,000
of the Board, President &        1996      $36,000
of the Board, President &        1996      $36,000
Chief Executive Officer(1)       1995      $21,000

Andrew Israel, President         1997      $60,000
of the Real Estate training      1996      $42,238
subsidiary (2)                   1995      $     -

Stuart Israel, Vice              1997      $60,000
President of the real estate     1996      $42,238
training subsidiary(2)           1995      $     -

(1) On April 22, 1997,  The Company  approved an  employment  agreement  for Mr.
Harry V.  Eastlick.  The term of the  agreement is for the  thirty-seven  months
ending  December  31,  2002  and  automatically  renews  for a one  year  period
thereafter.  The agreement provides for a base compensation of $100,000; however
the  annual   compensation  can  be  more  or  less  than  the  contracted  base
compensation as determined by the Board of Directors.  The employment  agreement
also provides that Mr. Eastlick can take advances against his base salary and at
September  30,  1997  he has  received  advances  in  excess  of  his  estimated
compensation of $27,769.  As part of the annual  compensation  payment,  200,000
Class A shares  were issued to Mr.  Eastlick in 1996 and 1997.  In the event Mr.
Eastlick is terminated without cause, or terminates his employment under certain
circumstances,  the  Company  may be  obligated  to  pay  him  75%  of his  base
compensation through the end of the term of employment.

(2) In connection  with the  acquisition of Western  College,  Inc., the Company
approved  five year  employment  contracts  with  Andrew and Stuart  Israel with
options to renew for an additional five year period.  The contracts  provide for
Messrs.  Israel  to serve as  executive  officers  of the real  estate  training
operations  and to each receive a base salary of $70,000 per year plus incentive
compensation with a minimum monthly payment of $5,000 each. In the event Messrs.
Israel are terminated without cause, or either terminates their employment under
certain circumstances, the Company may be obligated to pay the 75% of their base
compensation through the end of the term of employment.

(3) Represents amounts paid or accrued.

         The four non-employee  directors of the Company were each issued 50,000
Class A shares of common stock in payment for their services as directors.
                                       17
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
         ---------------------------------------------------------------

         The following table sets forth,  as of September 30, 1997,  information
as to ownership of the Company's  outstanding  securities by certain  beneficial
owners and management.

<TABLE>
<CAPTION>
                                                           Shares of Common Stock (Class A and B)
                                                                    Beneficially Owned
                                                           --------------------------------------
                                                               Number              Percent
                                                              of Shares            of Total
                                                              ---------            --------
<S>                                                           <C>                   <C>  
            Harry V. Eastlick, Chairman                                            
                of the Board and President                                         
                    Class B Shares                            2,600,000 {1}        
                    Class A Shares                              588,708 {2}        
                                                              ---------
                        Total Shares                          3,188,708             25.3%
            Andrew Israel, President and                                           
                Chief Executive Officer of                                         
                Real Estate Training                                               
                    Class A Shares                              600,000 {4}          4.7%
            Stuart Israel, Executive Vice-president                                
                and Chief Operating Officer                                        
                of Real Estate Training                                            
                    Class A Shares                              600,000 {4}          4.7%
            Donald E. Cline, Secretary                                             
                and Director                                                       
                    Class B Shares                               50,000            
                    Class A Shares                              100,000            
                                                              ---------
                                                                150,000 {3}          1.2%
            Dale L. Dykema, Director                                               
                    Class B Shares                               50,000            
                    Class A Shares                              114,700            
                                                                164,700 {3}          1.3%
            Whipple H. Manning, Director                                           
                    Class B Shares                               50,000            
                    Class A Shares                               50,000
                                                              ---------
                                                                100,000               .8%
            John R. Thomas, Director                                               
                    Class B Shares                               50,000            
                    Class A Shares                              100,000            
                                                              ---------
                                                                150,000 {3}          1.2%
            All Officers and Directors                                             
                as a group (6 persons)                        4,953,408             39.2%
</TABLE>
                                                                                
{1}  Mr. Harry V. Eastlick and Mr. Jeffrey B. Roth each acquired 125,000 Class B
     common shares on December 15, 1988 and received  irrevocable  proxies for a
     total of 2,475,000 shares held in escrow by the Security Pacific Bank. Upon
     approval by the Arizona  Corporation  Commission,  it was expected that the
     shares  held in escrow  will be  transferred  in equal  number  to  Messrs.
     Eastlick and Roth.  Due to the  resignation of Mr. Roth his interest in the
     shares held in escrow by the  Security  Pacific  Bank (now Bank of America)
     have been transferred to Mr. Harry V. Eastlick.

{2}  Includes  188,708  shares  owned by  Diversified  Professionals,  Inc.,  an
     Arizona  Corporation  controlled  by Harry V.  Eastlick and 200,000  shares
     authorized to be issued to Mr. Eastlick on April 22,1997

{3}  The shares are held directly and the owners thereof possess sole voting and
     sole investment power.
                                       18
<PAGE>
Item 13. Certain Relationships and Related Transactions
         ----------------------------------------------

         There were no  relationships  or related  transactions  during the year
ended September 30, 1997 that require disclosure.


Item 14. Exhibits, Financial Statement, Schedules and Reports on Form 8-K
         ----------------------------------------------------------------

        (a) The following documents are filed as a part of this report:

        1.  Financial statements included in Item 8

            a.  Report of Independent Certified Public Accountant.

            b.  Balance sheets as of September 30, 1997 and 1996.

            c.  Statements  of  operations  for each of the  three  years in the
                period ended September 30, 1997.

            d.  Statements of  shareholders'  equity for each of the three years
                in the period ended September 30, 1997.

            e.  Statements  of cash  flows  for each of the  three  years in the
                period ended September 30, 1997.

            f.  Notes to the Financial Statements.

        2.  All   supporting   schedules  are  omitted   because  they  are  not
            applicable, not required or the information required to be set forth
            therein is  included  in the  financial  statements  or in the notes
            thereto.

        3.  Exhibits

            a.  3       Certificate of Incorporation and Bylaws Exhibits 3.1 and
                        3.2

            b.  10.1    Agreement  between the  shareholders of Western College,
                        Inc. and United States Aircraft  Corporation  dated Inc.
                        and United States Aircraft Corporation dated January 29,
                        1996.

            c.  10.2    Employment  Agreement  between  Harry  V.  Eastlick  and
                        United States Aircraft Corporation dated April 22, 1997.

            d.  10.3    Employment  Agreement  between  Andrew Israel and United
                        States Aircraft Corporation dated December 31, 1995.

            e.  10.4    Employment  Agreement  between  Stuart Israel and United
                        States Aircraft Corporation dated December 31, 1995.

            f.  22      Subsidiaries of Registrant

            g.  27      Financial Data Schedule

Exhibit a. is  incorporated by reference to the September 30, 1984 Form 10-K and
Exhibits b through e are  incorporated  by reference to the  September  30, 1996
Form 10-K.
                                       19
<PAGE>
                                   SIGNATURES

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



                             UNITED STATES AIRCRAFT CORPORATION


Date: May 15, 1998               By:  /s/ Harry V. Eastlick
                                      ------------------------------------------
                                      Harry V. Eastlick


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.



Date: May 15, 1998                    /s/ Harry V. Eastlick
                                      ------------------------------------------
                                      Harry V. Eastlick, Chief Executive
                                      and Financial Officer and a Director



Date: May 15, 1998                    /s/ Donald E. Cline
                                      ------------------------------------------
                                      Donald E. Cline
                                      Director



Date: May 15, 1998                    /s/ Dale L. Dykema
                                      ------------------------------------------
                                      Dale L. Dykema
                                      Director

Date: May 15, 1998                    /s/ Whipple H. Manning
                                      ------------------------------------------
                                      Whipple H. Manning
                                      Director



Date: May 15, 1998                    /s/ John R. Thomas
                                      ------------------------------------------
                                      John R. Thomas
                                      Director
                                       20
<PAGE>
                                INDEX TO EXHIBITS

                                                                        Page No.
                                                                        --------

 3.1     Certificate of Incorporation of the Company as
         currently in effect.                                          See Below

 3.2     Bylaws of the Company as currently in effect.                 See Below

10.1     Agreement between the shareholders of Western
         College, Inc. and United States Aircraft Corporation
         dated January 29, 1996.                                       See Below

10.2     Employment Agreement between Harry V. Eastlick
         and United States Aircraft Corporation dated April 22, 1997   See Below

10.3     Employment Agreement between Andrew Israel and
         United States Aircraft Corporation dated December 31, 1995.   See Below

10.4     Employment Agreement between Stuart Israel and
         United States Aircraft Corporation dated December 31, 1995    See Below

22       Subsidiaries of Registrant                                       22

27       Financial Data Schedule                                          27

Exhibits 3.1 and 3.2 are  incorporated  by reference to the  September  30, 1984
Form 10-K and Exhibits  10.1 through 10.4 are  incorporated  by reference to the
September 30, 1996 Form 10-K.
                                       21
<PAGE>
                       UNITED STATES AIRCRAFT CORPORATION
                                AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                            Page
                                                                            ----

Report of Independent Certified Public Accountant.                          F-2

Balance sheets as of September 30, 1997 and 1996.                           F-3

Statements of operations for each of the three years in the period
ended September 30, 1997.                                                   F-5

Statements of shareholders' equity for each of the three years in the
period ended September 30, 1997.                                            F-6

Statements of cash flows for each of the three years in the period
ended September 30, 1997.                                                   F-7

Notes to the Financial Statements.                                          F-8
                                      F-1
<PAGE>
                          Independent Auditor's Report
                          ----------------------------





The Stockholders and Board of Directors
United States Aircraft Corporation

I have audited the  accompanying  consolidated  balance  sheets of United States
Aircraft  Corporation,  and  subsidiaries as of September 30, 1997 and 1996, and
the related  consolidated  statements of operations,  stockholders'  equity, and
cash flows for each of the years in the three year period  ended  September  30,
1997. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  My  responsibility  is to  express  an  opinion on these
consolidated financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing  standards.
Those standards  require that I plan and perform the audits to obtain reasonable
assurance  about  whether  the  consolidated  financial  statements  are free of
material  misstatement.  An audit  includes  examining on a test basis  evidence
supporting the amounts and disclosure in the consolidated  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.  I believe that my audits provide a reasonable basis for
my opinion.

In my opinion,  the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated financial position of United
States Aircraft Corporation,  and subsidiaries as of September 30, 1997, and the
results  of their  operations  and their cash flows for each of the years in the
three year period  ended  September  30,  1997,  in  conformity  with  generally
accepted accounting principles.


                                 ROBERT MARTIN

Mesa, Arizona
March 19, 1998
                                      F-2
<PAGE>
              UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES

                           Consolidated Balance Sheets
                           September 30, 1997 and 1996

                                     Assets

                                                        1997             1996
                                                     ----------       ----------

Current assets
  Cash                                               $   20,427       $   10,137
  Accounts receivable, less
   allowance for doubtful accounts
   of $7,500 (1997)                                      69,311           54,834
  Notes receivable                                        8,000
  Prepaid expenses                                       21,800            7,191
                                                     ----------       ----------
        Total current assets                            119,538           72,162

Advance to officer                                       27,769           30,584

Notes receivable, net of current
  portion                                                52,044

Land held for future development                        577,327

Property and equipment, net of
  accumulated depreciation of
  $65,962 (1997) and $57,031 (1996)                      57,154           58,504

Goodwill, net of accumulated
  amortization of $22,428 (1997) and
  $33,977 (1996)                                         87,308           78,278

Agency acquisitions, net of
  accumulated amortization of
  $5,514 (1997)                                         104,774

Course materials                                         15,718           17,683

Other                                                    24,527           21,458
                                                     ----------       ----------

                                                     $1,066,159       $  278,669
                                                     ----------       ----------


   The accompanying notes are an integral part of these financial statements.
                                       F-3
<PAGE>
              UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES

                           Consolidated Balance Sheets
                           September 30, 1997 and 1996

                      Liabilities and Stockholders' Equity

                                                      1997              1996
                                                  -----------       -----------
Current liabilities
  Current portion of long term debt               $    37,775       $    41,137
  Convertible debentures and
     related accrued interest                          82,938            74,059
  Accounts payable                                     86,159            22,320
  Accrued expenses                                     68,263            36,211
  Unearned tuition                                     45,290            35,298
                                                  -----------       -----------
       Total current liabilities                      320,425           209,025

Long term debt, net of
  current portion                                      19,979            31,967

Trust deed notes payable                              601,000

Commitments

Stockholders' equity
  Capital Stock
    Class A: $.50 par value
      10,000,000 shares authorized,
      7,652,504 (1997) and
      6,282,504 (1996) shares
      issued and outstanding                        3,826,252         3,141,252
  Class B: $.001 par value,
     5,000,000 shares authorized
     4,962,801 shares issued and
     outstanding                                        4,963             4,963
Paid-in-capital (deficit)                            (751,827)         (203,827)
Accumulated (deficit)                              (2,954,633)       (2,904,711)
                                                  -----------       -----------
                                                      124,755            37,677
                                                  -----------       -----------

                                                  $ 1,066,159       $   278,669
                                                  -----------       -----------


   The accompanying notes are an integral part of these financial statements.
                                      F-4
<PAGE>
              UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES
                      Consolidated Statement of Operations
                            For the Three Years Ended
                       September 30, 1997, 1996, and 1995

<TABLE>
<CAPTION>
                                            1997            1996            1995
                                        ------------    ------------    ------------
<S>                                     <C>             <C>             <C>         
Revenue
  Real estate education                 $    436,710    $    343,788    $    142,481
  Travel agency                              776,544
  Other                                        8,989          42,385          51,159
                                        ------------    ------------    ------------
        Total revenue                      1,222,243         386,173         193,640

Operating costs and expenses
  Cost of sales - travel agency              699,669
  Personnel expenses                         292,437         183,700          46,887
  Facility cost                               57,192          22,025           5,728
  Other operating costs                      129,076          64,330          57,769
  General and administrative                 110,639          82,514          34,747
  Interest                                    14,933          12,979           9,819
  Depreciation and amortization               26,412          15,281           7,729
                                        ------------    ------------    ------------
                                           1,330,358         380,829         162,679
                                        ------------    ------------    ------------

      Income (loss) from operations         (108,115)          5,344          30,961
Other expense
  Loss from write off of plans and
    specifications                                           649,999
                                        ------------    ------------    ------------


     Income (loss) from continuing
       operations                           (108,115)       (644,655)         30,961

Discontinued operations
  Income of Hansen & Associates, Inc. 
   dba Property Masters                        4,397          11,671          (2,356)
  Gain on disposal of Hansen &
    Associates, Inc. dba Property
    Masters                                   53,796
                                        ------------    ------------    ------------

      Net income (loss)                 $    (49,922)   $   (632,984)   $     28,605
                                        ------------    ------------    ------------

Net income (loss) per share from
  continuing operations                 $       (.01)   $       (.06)   $          -
Net income (loss) per share from
  discontinued operations                        .01
                                        ------------    ------------    ------------

Net income (loss) per share             $          -    $       (.06)   $          -
                                        ------------    ------------    ------------

Weighted number of shares
   outstanding                            11,391,138      10,808,846       9,870,305
                                        ------------    ------------    ------------
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                      F-5
<PAGE>
              UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES

                Consolidated Statements of Stockholders' Equity
                            For the Three Years Ended
                       September 30, 1997, 1996, and 1995

<TABLE>
<CAPTION>
                                                                             Capital Stock
                                                                             -------------
                                                                                                      Paid-in
                                         Number                        Number                         Capital
                                       of Shares        Amount       of Shares         Amount        (Deficit)       (Deficit)
                                      ------------   ------------   ------------    ------------   ------------    ------------

<S>                                      <C>         <C>               <C>          <C>            <C>             <C>          
Balance, September 30, 1994              4,159,450   $  2,078,725      4,962,801    $      4,963   $    396,173    $(12,300,332)

Year ended September 30, 1995
  Shares issued in payment
    of debt                                748,054        374,027
 Net income                                                                                                              28,605
                                      ------------   ------------   ------------    ------------   ------------    ------------
Balance, September 30, 1995              4,907,504   $  2,453,752      4,962,801    $      4,963   $    396,173    $ (2,271,727)

Year ended September 30, 1996
   Shares issued in acquisition
     of Western College, Inc.            1,000,000        500,000                                      (450,000)
   Shares issued in payment for
     services rendered                     375,000        187,500                                      (150,000)
  Net (loss)                                                                                                           (632,984)
                                      ------------   ------------   ------------    ------------   ------------    ------------
Balance, September 30, 1996              6,282,504   $  3,141,252      4,962,801    $      4,963   $   (203,827)   $ (2,904,711)

Shares issued in acquisition of
  Western College, Inc.                    200,000        100,000                                       (80,000)

Shares issued in travel agency
   operations acquisition                  500,000        250,000                                      (200,000)

Shares issued in acquisition of
   land held for future development        250,000        125,000                                      (100,000)

Shares issued in payment for
   services rendered                       420,000        210,000                                      (168,000)

Net (loss)                                                                                                              (49,922)
                                      ------------   ------------   ------------    ------------   ------------    ------------

Balance, September 30, 1997              7,652,504   $  3,826,252      4,962,801    $      4,963   $   (751,827)   $ (2,954,633)
                                      ------------   ------------   ------------    ------------   ------------    ------------
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                      F-6
<PAGE>
                       UNITED STATES AIRCRAFT CORPORATION
                      Consolidated Statements of Cash Flows
                            For the Three Years Ended
                       September 30, 1997, 1996, and 1995
<TABLE>
<CAPTION>
                                                         1997         1996         1995 
                                                      ---------    ---------    ---------
<S>                                                   <C>          <C>          <C>      
Cash flows from operating activities
Net income, (loss)                                    $ (49,922)   $(632,984)   $  28,605
     Adjustments to reconcile net
      income, (loss) to cash provided
      by (used in) operating activities
         (Income) loss from discontinued operations      (4,397)     (11,671)       2,356
         Depreciation                                    10,788        8,792        3,250
         Amortization                                    15,624        8,079        4,735
         Allowance for doubtful accounts                  7,500
         Gain on disposal of operations                 (53,796)
         Class A Shares issued in payment
           for services rendered                         42,000       37,500
         Gain from write off of long term debt                       (30,000)
         Gain from write off of accruals                                          (50,574)
         Loss from write off of plans
            and specifications                                       649,999
         Change in assets and liabilities
            net of effects from acquisition
               Accounts receivable                      (21,977)     (31,661)      16,469
               Other                                     (3,069)     (15,466)
               Prepaid expenses                         (14,609)      (5,939)        (361)
               Accounts payable                          63,839        6,338       (7,423)
               Accrued expenses                          32,052      (14,678)       1,109
               Unearned tuition                           9,992       20,240        5,524
                                                      ---------    ---------    ---------
Net cash provided by (used in)
  operating activities of continuing operations          34,025      (11,451)       3,690
Net cash provided by (used in) discontinued
  operations                                                           2,917         (589)
                                                      ---------    ---------    ---------
Net cash provided by (used in) operating
  activities                                             34,025       (8,534)       3,101

Cash flows from investing activities
  Changes in advance to officer                           2,815       (4,399)       2,064
  Increase in notes receivable                          (60,044)
  Cash provided from acquisition of
   Western College, Inc.                                               4,145
  Addition to land for future development              (577,327)
  Proceeds from disposition of operations                60,044
  Additions to intangible assets, net                  (131,172)
  Additions to property and equipment                    (7,580)      (8,826)     (26,959)
                                                      ---------    ---------    ---------
Net cash (used in) investing activities                (713,264)      (9,080)     (24,895)

Cash flows from financing activities
  Increase in convertible debentures
    and related accrued interest                          8,879       17,609
  Increase in trust deed notes payable                  601,000
  Class A shares issued for acquisitions                 95,000
  Proceeds from long term debt                                        36,822       49,354
 Decrease in long term debt                             (15,350)     (32,339)     (23,691)
                                                      ---------    ---------    ---------
   Net cash provided by financing activities            689,529       22,092       25,663
                                                      ---------    ---------    ---------
Net increase (decrease) in cash and cash
  equivalents                                            10,290        4,478        3,869
Cash, beginning of year                                  10,137        5,659        1,790
                                                      ---------    ---------    ---------
Cash, end of year                                     $  20,427    $  10,137    $   5,659
                                                      ---------    ---------    ---------
</TABLE>
   The accompanying note are an integral part of these financial statements.
                                       F-7
<PAGE>
              UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

Note 1 - Summary of significant accounting policies
---------------------------------------------------

Nature of organization
----------------------

Unites States  Aircraft  Corporation  (Company) was  incorporated in Delaware on
October 6, 1978, and commenced operations in April, 1980. The Company, operating
solely in Arizona provides real estate  educational  services through its wholly
owned subsidiaries  Western College,  Inc. and Ford Schools,  Inc. Travel agency
services are provided through its wholly owned operating division FirsTravel.

Principles of consolidation
---------------------------

The  consolidated  financial  statements  include the accounts of United  States
Aircraft  Corporation  and  its  wholly  owned  subsidiaries.   All  significant
intercompany transactions and balances have been eliminated in consolidation.

Recognition of revenue
----------------------

Real estate  education  services  tuition fees are generally paid in advance and
recorded as unearned tuition. Tuition revenue is recognized when students attend
classes.  Travel agency  revenues are  recognized at the time of booking  travel
arrangements.

Included in revenue during the year ended September 30, 1996, is $30,000 related
to the reduction of certain accrued obligations recorded in prior years.

Industry segments
-----------------

During  1997,  approximately  44% of the  Company's  travel  agency  revenue was
received from the airline  industry.  In 1997, the major airlines  reduced their
commission rate from ten percent to eight percent, and set a maximum amount paid
on certain commissions.  The company subsequently adopted a policy of charging a
service fee for airline tickets issued, and will continue to promote other forms
of  leisure  travel,  such as tours  and  cruises,  where  the  commissions  are
generally higher. However, any adverse change in the airline industry could have
a material effect on the future operations of the Company.

Accounts receivable
-------------------

The Company uses the reserve  method of  accounting  for doubtful  accounts.  At
September 30, 1996, all accounts receivable were considered fully collectible.
                                      F-8
<PAGE>
              UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES

             Notes to Consolidated Financial statements (continued)

Note 1 - Summary of significant accounting policies (continued)
---------------------------------------------------------------

Income taxes
------------

Deferred tax assets and  liabilities  are recognized for the expected future tax
consequences  of events that have been included in the  financial  statements or
income tax returns.  Deferred tax assets and liabilities are determined based on
the  difference  between  the  financial  statement  and tax basis of assets and
liabilities  using  enacted tax rates  expected to be recovered or settled.  The
effect  on  deferred  tax  assets  and  liabilities  of a change in tax rates is
recognized in income in the period that includes the enactment date.

Investment tax credits are recognized as a reduction of the provision for income
taxes using the flow-through method to the extent realization is assured.

Property and equipment
----------------------

Property  and  equipment  consists of office  furniture  and  equipment,  and is
depreciated  using the straight  line method over their  estimated  useful lives
ranging from five to ten years.

Allowance for doubtful accounts
-------------------------------

The allowance for doubtful  accounts  represents an amount which, in managements
judgement,  will be adequate  to absorb  probable  losses on  existing  accounts
receivable that may become uncollectible.

Plans and specifications
------------------------

The Company owns plans and  specifications  for the turbo-prop engine conversion
for the  DC-3/C-47  aircraft,  and has  investigated  methods of realizing  this
investment.  Possible  methods to realize the Company's  investment in the plans
and  specifications  include a new  licensing  agreement,  sale of the plans and
specifications,  acquisition  or by obtaining  financing and  successful  future
development.  As of September  30, 1997,  the Company was unable to identify any
cash flows from its investment in the plans and specifications.  Accordingly, an
impairment  loss of $649,999,  that represents the excess of the carrying amount
over the present value of the  identifiable  net cash flow, has been included in
operations for the year ended September 30, 1996.

Goodwill
--------

Goodwill results from acquisitions of subsidiaries in which the acquisition cost
exceeded the book value of the net assets acquired.  Goodwill is being amortized
using the straight line method over 25 years.
                                      F-9
<PAGE>
              UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

Note 1 - Summary of significant accounting policies (continued)
---------------------------------------------------------------

Agency acquisitions
-------------------

Agency acquisitions result from acquiring travel agency operations and assets in
which the  acquisition  cost exceeded the book value of net assets  acquired and
represent the travel  agency's base of customers and  home-based  travel agents.
Agency acquisitions are being amortized using the straight line method over five
years.

Course materials
----------------

Course  materials  represent  the initial cost of the  Principles of Real Estate
textbook.  The textbook is updated annually and the annual costs are expensed as
incurred.  Due to the  acquisition  of Western  College,  Inc. and the resulting
change in the use of the textbook,  the Company is  amortizing  the initial cost
over a ten year period.

Net income (loss) per share
---------------------------

Net income (loss) per share amounts are based upon the average  number of shares
outstanding.  The effect of debentures  convertible into Class A common stock on
the net income (loss) per share calculations are antidilutive and therefore, are
not included in the earnings per share calculations.

Advertising
-----------

The Company  expenses  advertising  coats when the  advertisment  occurs.  Total
advertising  expenses  amounted to $11,308,  $8,045 and $ 627 in 1997,  1996 and
1995,  respectively.  There were not any capitalized  advertising  costs for the
periods presented..

Use of estimates
----------------

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

Reclassification
----------------

Certain  items  included  in  prior  years'   financial   statements  have  been
reclassified to conform to the current year financial statement classification.
                                      F-10
<PAGE>
              UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

Note 2 - Income taxes
---------------------

At September 30, 1997,  the Company had the  following  net  operating  loss and
credit carryovers for income tax purposes:

                Taxable      Year of                       Net
                 Year       Expiration               Operating Loss
                 ----       ----------               --------------

                 1983          1998                     $369,000
                 1984          1999                      886,000
                 1985          2000                      197,000
                 1986          2001                      116,000
                 1987          2002                       35,000
                 1989          2004                      190,000
                 1990          2005                      110,000
                 1991          2006                       56,000
                 1993          2008                       23,000
                 1994          2009                       39,000
                 1996          2011                      556,000
                 1997          2012                       77,000
                                              
The income tax effect of the net  operating  loss  carryforward  gives rise to a
deferred income tax asset as follows:

                                                        1997            1996
                                                        ----            ----

Net operating loss carryforwards                    $ 2,654,000     $ 2,807,000
                                                    -----------     -----------

Gross deferred tax assets                           $ 1,327,000     $ 1,403,500

Deferred tax asset valuation allowance                1,327,000      (1,403,500)
                                                    -----------     -----------

          Net deferred tax asset                    $      --       $      --
                                                    -----------     -----------

The gross  deferred tax  deferred tax asset is reduced by a valuation  allowance
based in  management's  estimate  that it is more  likely  than not that the tax
benefits will not be realized.  The decrease in the valuation  allowance  during
the year ended September 30, 1997, is $76,500.

Note 3 - Advances to officer
----------------------------

Advances to officer represent non-interest bearing advances with no stated terms
of repayment.
                                      F-11
<PAGE>
              UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES

             Notes to consolidated Financial Statements (continued)

Note 4 - Notes receivable
-------------------------

The Company has notes  receivable from an individual  resulting from the sale of
Hansen &  Associates,  Inc. dba Property  Masters.  The notes are due in varying
monthly installments, including interest at 7.5 % through September, 2009.

Note 5 - Acquisitions
---------------------

Effective January 1, 1996 the Company acquired all of the outstanding  shares of
Western College,  Inc. a real estate training organization whose operations have
been combined with the Company's wholly owned subsidiary, Ford Schools, Inc. The
acquisition was through a tax-free exchange of stock,  resulting in the issuance
of 1,000,000  shares of the Company's  Class A common stock plus an agreement to
issue an  additional  600,000  Class A shares  over the  following  three  years
contingent on the gross tuition revenue equaling or exceeding $250,000 per year.

The  acquisition is being  accounted for by the purchase  method.  The 1,000,000
shares of Class A common  stock has been  recorded  for  accounting  purposes at
$50,000. During the year ended September 30, 1997, and additional 200,000 shares
of Class A common stock were issued pursuant to the acquisition and recorded for
accounting  purposes at $20,000.  The $70,000  purchase  price  exceeds the book
value of the net  assets of Western  College,  Inc.  by  $79,361  which has been
allocated as follows:

                   Property and equipment            $31,713
                   Goodwill                           47,648

The  property  and  equipment  is being  depreciated  over  seven  years and the
goodwill is being  amortized over 25 years.  Operations of Western  College have
been  included in the  consolidated  statement  of  operations  from the date of
acquisition.

Supplemental   cash  flow  information   related  to  the  assets  acquired  and
liabilities  assumed  from the  acquisition  of  Western  College,  Inc.,  is as
follows:

               Assets
                 Accounts receivable                      $ 4,500
                 Property and equipment                    31,713
                 Goodwill                                  47,648
                 Deposits                                   1,904
                                                          -------
                                                           85,765
               Liabilities
                 Current liabilities                       13,587
                 Long-term debt                             6,323
                                                          -------
                                                           19,910
               Class A common shares of
                 the Company issued for
                 acquisition                               70,000
                                                          -------

               Cash provided from acquisition             $ 4,145
                                                          -------
                                      F-12
<PAGE>
              UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

Note 5 - Acquisitions (continued)
---------------------------------

The  Company,  through  asset  acquisitions,  implemented  its  travel  services
division on July 1, 1997.  Effective July 1, 1997, the Company purchased certain
assets of Travel Easy Inc., and in August, 1997, the assets of FirsTravel,  both
of which were full  service  travel  agencies.  The Travel  Easy agency has been
closed and its approximately 175 independent contractor Home Based Travel Agents
became affiliated with the Company's travel agency operated as FirsTravel.

The  acquisition  of the  Company's  travel  agency  operations  resulted in the
acquisition  cost  exceeding  the  book  value  of the net  assets  acquired  by
$110,288. The excess has been recorded as agency acquisitions.  At September 30,
1997, accumulated amortization on the agency acquisition is $5,514.

The  results of  operations  of  Western  College,  Inc.,  are  included  in the
consolidated  statement  of  operations  since  January  1,  1996,  the  date of
acquisition.  The results of  operations  of the travel  services  division  are
included in the consolidated statement of operations beginning July 1, 1997, the
date of acquisition.

The following  supplemental  unaudited pro forma  information  has been prepared
assuming Western College,  Inc., and the predecessor travel services  operations
had been acquired as of the start of the years ended September 30:

                                     1997           1996           1995
                                     ----           ----           ----
Revenue                           $5,727,606     $2,874,314     $  699,727
                                  ----------     ----------     ----------

Net income (loss)                 $  102,887     $ (472,461)    $   42,507
                                  ----------     ----------     ----------

Per share based on weighted
 average shares of 10,870,305     $     (.01)    $     (.04)    $     --
                                  ----------     ----------     ----------

Note 6 - Goodwill
-----------------

The acquisition of the Company's  wholly owned  subsidiaries,  Western  College,
Inc. and Ford Schools,  Inc. each resulted in the acquisition cost exceeding the
book value of the net assets acquired.  The excess has been recorded as goodwill
and is summarized as follows:

           Ford Schools, Inc.              $ 62,088          25 years
           Western College, Inc.             47,648          25 years
                                           --------

                                            109,736

           Less accumulated
             amortization                    22,428
                                           --------

                                           $ 87,308
                                           --------
                                      F-13
<PAGE>
              UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

Note 7 - Convertible debentures
-------------------------------

The  convertible  debentures of $56,450 and accrued  interest of $26,488 in 1997
and $17,609 in 1996 that were due in December, 1996, are convertible into common
shares at $.75 per share.  Currently,  the  debentures  remain unpaid and are in
default.

Note 8 - Long term debt
-----------------------

At September 30, 1997 and 1996, long term debt consists of the following:

                                               1997         1996
                                             -------      -------
Note payable, bank, due in monthly
  principal payments of $833 plus
  interest at 10.5% per annum                $16,665      $20,000
                                                        
Notes and payables to trade creditors                   
  with interest ranging from 10% to 18%       41,089       53,104
                                             -------      -------
                                              57,754       73,104
Less current portion                          37,775       41,137
                                             -------      -------
                                                        
                                             $19,979      $31,967
                                             -------      -------
                                                     
At September 30, 1997, maturities of long term debt are as follows:

                 Year ended
                September 30,
                -------------
                    1998                     $37,775
                    1999                      15,604
                    2000                       4,375
                                            --------

                                            $ 57,754
                                            --------

Substantially all assets are pledged as collateral for long term debt.

Note 9 - Trust deed notes payable
---------------------------------

At September 30, 1997, trust deed notes payable consist of the following:

<TABLE>
<S>                                                                            <C>     
First trust deed, bearing interest at 14.5% per annum, payable in
$2,066 monthly installments of interest only, due February, 1999               $171,000

Second trust deed, bearing interest at 16% per annum, payable in
$1,333 monthly installments of interest only, due February, 1999                100,000

Seller carryback, bearing interest at 10% per annum, payable in
$2,750 monthly installments only, due February, 2001                            330,000
                                                                               --------

                                                                               $601,000
                                                                               --------
</TABLE>
                                      F-14
<PAGE>
              UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

Note 9 - Trust deed notes payable (continued)
---------------------------------------------

At September 30, 1997, maturities of trust deed notes payable are as follows:

               Year ended
              September 30,
              -------------

                   1998                         $   -
                   1999                          271,000
                   2000                             -
                   2001                          330,000
                                                --------

                                                $601,000
                                                --------

The Company  anticipates that amounts due under trust deed notes payable will be
paid from the sale of the land held for future development.

During the year ended September 30, 1997, the Company incurred interest costs of
$42,507 of which  $14,933  was  charged to  interest  expense  and  $27,574  was
capitalized and included in land held for future development.

At September 30, 1997, interest payments are delinquent on the second trust deed
and seller  carryback  and these are in defaults.  Subsequent  to September  30,
1997,  under  the terms of the  second  trust  deed,  the  holder  has filed for
foreclosure.

Note 10 - Commitments and contingencies
---------------------------------------

The real estate training  services  operation  leases two classroom  facilities,
which include an office facility, pursuant to long term leases with monthly rent
of $4,500.  The travel agency operation leases office  facilities  pursuant to a
long term lease with monthly rent of $333.  The Company also has leased  certain
computer equipment at a monthly rental of $450 plus taxes and insurance.

Minimum lease payments on long term operating leases are as follows:

               Year ended
              September 30,
              -------------
                   1998                         $ 52,867
                   1999                           40,154
                   2000                           35,812
                   2001                           30,445
                                                --------

                                                $159,278
                                                --------

Rent expense under these operating leases totaled $59,002,  $17,800,  and $5,250
for the years ended September 30, 1997, 1996 and 1995 respectively.
                                      F-15
<PAGE>
              UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

Note 10 - Commitments and contingencies (continued)
---------------------------------------------------

The Company is not currently involved in any material litigation.

Note 11 - Going concern considerations
--------------------------------------

During the year ended September 30, 1997, the company incurred an operating loss
of $108,115,  and at September  30, 1997,  was in default on certain  trust deed
notes and  convertible  debentures,  and had a  working  capital  deficiency  of
$200,887.

Management is taking actions to alleviate these  conditions,  which will provide
the  opportunity  for the Company to continue as a going concern.  These actions
include the continuation of the expansion of the real estate  education  segment
and the  reduction  of the  travel  services  operating  costs both of which are
expected to increase operating  profits;  the arrangement of a $30,000 revolving
line of credit;  the planned  formation of a Real Estate Investment Trust (REIT)
and the sale or contribution of the California land to the REIT.

Note 12 - Capital stock
-----------------------

The Company's  articles of  incorporation  authorize  issuance of two classes of
stock,  Class A common stock and Class B common stock. The rights of the Class A
and Class B stockholders differ in the following respects:

         The Class A stock has a preference  in  distribution  of the  Company's
         assets  upon   liquidation  in  the  amount  of  $.50  per  share.  The
         liquidation  preference  is to be  reduced  by $.005  for each  $.01 of
         dividends paid on the Class A stock.

         Dividends  are  not to be paid on the  Class  B stock  until  dividends
         aggregating  $.50  per  share  have  been  paid on the  Class A  stock.
         Thereafter, both classes of stock are to share ratably in dividends.

         When an aggregate of $1.00 per share in dividends  has been paid on the
         Class  A  stock,  the  Class A stock  and the  Class B stock  are to be
         identical in all respects.

Note 13 - Discontinued operations
---------------------------------

On September 30, 1997,  the Company sold its  wholly-owned  subsidiary  Hansen &
Associates,  Inc. dba Property  Masters to the President of Hansen & Associates,
Inc. Operating results of Hansen & Associates,  Inc. are shown separately in the
accompanying  income statements as discontinued  operations for the years ending
September 30, 1997, 1996, and 1995.
                                      F-16
<PAGE>
              UNITED STATES ARICRAFT CORPORATION, AND SUBSIDIARIES

             Notes to Consolidated Financial statements (continued)

Note 14 - Disclosure about fair value of financial instruments
--------------------------------------------------------------

The  carrying  amounts  of cash,  accounts  receivable,  accounts  payable,  and
unearned  tuition  approximate fair value because of the short maturity of those
instruments.  Financial instruments in notes receivable and land held for future
development have no quoted market prices and, accordingly, a reasonable estimate
of fair  market  value  could not be make  without  incurring  excessive  costs.
However,  the Company  believes by reference to stated  interest  rates and land
held, that the fair value of the assets would not differ  significantly from the
carrying value.

Based on prevailing interest rates, the Company estimates that the fair value of
the  Company's  long-term  debt,  convertible  debentures  and  related  accrued
interest, and trust deed notes payable, approximates carrying value.

Note 15 - Supplemental disclosure of cash flow information
----------------------------------------------------------

The following is the cash paid for interest for the three years ended  September
30, 1997, 1996, and 1995:

                      1995                        $1,162
                      1996                        $6,841
                      1997                       $27,106

Supplementary schedule of non-cash activities:

For the year ended September 30, 1995:
  Conversion long term debt to common stock                        $374,027

For the year ended September 30, 1996:
  Class A shares issued in payment for services rendered            $37,500

For the year ended September 30, 1997:
  Class A shares issued in payment for services rendered            $42,000

The Class A shares  issued  during the years ended  September  30, 1997 and 1996
were to the board of directors, and an officer and shareholder of the Company.
                                      F-17
<PAGE>
              UNITED STATES ARICRAFT CORPORATION, AND SUBSIDIARIES

             Notes to Consolidated Financial statements (continued)

Note 16 - Business segments
---------------------------

In 1995 and 1996, the Company's  operations consisted of real estate educational
services.  In 1997, it expanded into the travel services  business,  and certain
financial  information  related  to these  two  business  segments  for 1997 are
summarized as follows:

                       Real Estate      Travel      Corporate  &
                        education      services     eliminations   Consolidated
                        ---------      --------     ------------   ------------

Sales                  $   436,710   $   776,544    $     8,989    $ 1,222,243
Operating income            38,713       (27,113)      (119,715)      (108,115)
Identifiable assets        216,583       164,256        685,320      1,066,159
Capital expenditures         4,248        11,570         (8,238)         7,580
Depreciation and
   amortization             12,519        10,023          3,870         26,412

Note 17 - Subsequent event
--------------------------

Effective  February 26, 1998, the Company obtained a $30,000 line of credit from
Valley Bank of Arizona. This note payable bears interest at 10.5% and is payable
in monthly  installments  of interest  only until  February 26,  1999,  when the
entire principal amount is due. The note is  collateralized by substantially all
of the assets of the Company and is  guaranteed  by the board of directors and a
separate property trust of a member of the board of directors.
                                      F-18