UNITED STATES
                       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 December 31, 2001

                        Commission File Number: 000-29727
                 ______________________________________________

                                 PARTSBASE, INC.
             (Exact name of registrant as specified in its charter)

                 Delaware                            76-0604158
      State or other jurisdiction of      (I.R.S. Employer Identification No.)
      incorporation or organization)

                              905 Clint Moore Road
                         Boca Raton, Florida 33487-8233
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (561) 953-0700
                _________________________________________________


        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                         COMMON STOCK, $0.001 PAR VALUE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
Yes [X] No [  ]

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

The  aggregate  market value of the Common Stock held by  non-affiliates  of the
registrant as of March 26, 2002 was approximately  $3,330,165 based on the $0.68
closing  sales  price for the Common  Stock  quoted on NASDAQ on such date.  For
purposes of this  computation,  all  executive  officers  and  directors  of the
registrant have been deemed to be affiliates.  Such determination  should not be
deemed to be an  admission  that  such  directors  and  officers  are,  in fact,
affiliates of the registrant.

The number of shares of Common Stock of the  registrant  outstanding as of
 March 26, 2002 was 13,977,920.

               __________________________________________________


                                PARTSBASE, INC.
                               TABLE OF CONTENTS


                                                                          Page

                                     PART I

   ITEM 1.   Business......................................................  1

   ITEM 2.   Properties.....................................................13

   ITEM 3.   Legal Proceedings. ............................................14

   ITEM 4.   Submission of Matters to a Vote of Security Holders ...........14

                                     PART II

   ITEM 5.   Market for Registrant's Common Equity and Related
              Stockholder Matters...........................................15

   ITEM 6.   Selected Financial Data........................................16

   ITEM 7.   Management's Discussion and Analysis of Financial
              Condition and Results of Operations...........................17

   ITEM 7A.  Quantitative and Qualitative Disclosures About Market Risk.....21

   ITEM 8.   Financial Statements and Supplementary Data ...................21

   ITEM 9.   Change in and Disagreements with Accountants on Accounting
              and Financial Disclosures.....................................22

                                    PART III

   ITEM 10.   Directors and Executive Officers of the Registrant............23

   ITEM 11.   Executive Compensation........................................26

   ITEM 12.   Security Ownership of Certain Beneficial Owners
               and Management...............................................29

   ITEM 13.   Certain Relationships and Related Transactions................30

                                     PART IV

   ITEM 14.   Exhibits, Financial Statement Schedules and Reports
               on Form 8-K..................................................31

   SIGNATURES ..............................................................32

   ANNEX I    .............................................................F-1




                                     PART I
Item 1.  Business

     THE  FOLLOWING   DESCRIPTION  OF  OUR  BUSINESS  CONTAINS   FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995, AS DO THE MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF  OPERATIONS  SECTIONS OF THIS FORM 10-K,  ALL OF WHICH RELATE TO SUCH
MATTERS AS ANTICIPATED FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, TECHNOLOGICAL
DEVELOPMENTS, AND SIMILAR MATTERS. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN
AND UNKNOWN RISKS,  UNCERTAINTIES,  AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL
RESULTS,  PERFORMANCE, OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT
FROM THOSE  EXPRESSED  OR IMPLIED BY SUCH  FORWARD-LOOKING  STATEMENTS.  FACTORS
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED ELSEWHERE IN THIS REPORT IN THE
SECTION  ENTITLED "RISK FACTORS" AND THE RISKS DISCUSSED IN OUR OTHER SECURITIES
AND EXCHANGE COMMISSION FILINGS.

Company

     All  references  to "we",  "us",  "our",  "our  company",  the "Company" or
"PartsBase" in this report refer to PartsBase,  Inc., a Delaware corporation and
its   wholly   owned   subsidiary,   Florida   corporation,   RNpartners,   Inc.
("RNpartners").  We currently  operate two businesses:  (i) we provide  Internet
business-to-business   e-commerce   services  for  the  aviation  industry  (the
"Aviation e-commerce Business");  and (ii) since October 2001, we have provided,
for a fee, critical care registered nurses for temporary assignment to hospitals
located in Palm Beach County and Broward  County,  Florida (the "Nurse  Staffing
Business") Our Web site addresses are WWW.PARTSBASE.COM. and WWW.RNpartners.COM.
The information contained on these Web sites is not a part of this Annual Report
on Form 10-K.


Industry Overview

   The Aviation E-commerce Business

     We are an  online  provider  of  Internet  business-to-business  e-commerce
services for the aviation industry. Our global e-commerce marketplace, sometimes
referred to as our  "e-marketplace" or our "solution,"  provides our subscribers
in more  than 115  countries  with the  ability  to buy and sell  new,  used and
overhauled  aviation  parts  and  products  in  an  efficient,  competitive  and
cost-effective manner. We estimate that our e-marketplace utilizes a database of
approximately  2,500  suppliers,  containing  over 23.5  million  line  items of
inventory.  We  believe  our  e-marketplace   constitutes  one  of  the  largest
independent  databases of inventory and  information  in the aviation  industry.
Current members of our e-commerce marketplace include Boeing, Honeywell, Federal
Express, BE Aerospace,  Fokker, Raytheon, Rolls Royce, United Airlines, Frontier
Airlines, BF Goodrich Aerospace, Saab, Lufthansa and Northrup Grumman.

     The worldwide  market for aviation parts and products is highly  fragmented
and  includes  many types of  suppliers,  such as airlines,  original  equipment


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<PAGE>

manufacturers  ("OEMs"),  numerous  independent  distributors,  on-site  airport
maintenance  providers,  also known as fixed base  operators,  Federal  Aviation
Administration  certified repair and overhaul  facilities,  traders and brokers.
There are four types of parts,  components,  or supplies  purchased  by aviation
companies:  rotables (i.e.  pumps,  landing  gear),  repairables  (i.e.  valves,
pistons), expendables (i.e. fasteners,  bearings), and consumables (i.e. grease,
oil). Rotables constitute 80% of the value of all parts purchased,  but only 20%
of the number of transactions.  A typical air carrier can process 3,000 purchase
orders per day, while a typical major OEM can process 20,000 purchase orders per
day. A large  commercial  aircraft,  such as a 747,  can contain  over 3 million
parts.

     According to Boeing's  20-year current market  outlook,  the world fleet of
aircraft is projected to increase from 4,548 aircraft in 2000 to 32,955 aircraft
in 2020.  Boeing  estimates  the total market  potential  during this period for
commercial  aviation support  services,  in 2000 dollars,  is $3.1 trillion,  of
which $1.5  trillion  will be spent on airframe  and engine  repair  parts.  The
airframe and engine  repair parts market  constitutes  the primary  focus of our
database and service offerings. In addition, management believes that as the age
of the world fleet of aircraft increases the demand for new, used and overhauled
parts and products may increase.

     We provide the aerospace  industry with an Internet based  e-marketplace in
which this fragmented  market can easily locate and procure parts from a variety
of sellers,  in a cost effective manner.  The advent of the Internet has created
new opportunities  for conducting  business-to-business  commerce,  offering the
potential for  organizations to streamline  complex  processes,  lower costs and
improve productivity. Even if a company is currently using other electronic data
interchange (EDI) networks, the Internet and e-marketplace exchanges can provide
significant opportunities to save companies on transaction costs, in addition to
providing better pricing opportunities.

     In February 2001, we introduced "PartsDirect", which allows aviation buyers
to solicit quotes online to purchase  aircraft  parts. As sellers reply to these
quotations,  buyers are given an  easy-to-read  display of all prices offered by
potential  sellers.  Seller  quotations are updated on a real-time basis as bids
are posted.  The buyer can then generate a purchase order  electronically to the
seller of his or her choice. Through PartsDirect, we seek to provide a worldwide
search  capability to buyers that creates a forum in which buyers can save money
by enabling them to more quickly and efficiently  locate surplus new,  repaired,
or overhauled inventory. Sellers utilizing the e-marketplace will gain access to
an  expanded  customer  base  and  have a  greater  opportunity  to  sell  their
inventory. If our new technology gains acceptance in the marketplace,  we intend
to  begin  the  integration  of our  sites  offerings,  utilizing  standard  XML
protocols,  into customer's Enterprise Resource Planning (ERP) systems.  Because
of the aerospace  industry's  enormous size and global nature,  the  integration
challenge of tying  together  these  companies is one of great  magnitude.  Many
industry  experts estimate that this is a process that will take at least two or
three years to gain traction.

     In October 2001, we introduced our premium parts search functionality which
allows our subscribers to search for a part by a National Stock Number, a number
used by  governmental  agencies to classify  aviation and aerospace  parts,  and
return a list of all the companies that carry the standard  manufacturers'  part
number.  We seek to facilitate  the process for buyers of aviation and aerospace
parts to locate these parts and provide them with the  applicable  OEM's of such
parts  so as to  decrease  lead  times  for  procurement  and  maintain  optimum
inventory levels of such parts.

                                       2
<PAGE>

     In January 2002, we launched  "Parts2Find" which enables subscriber sellers
who  specialize  in hard to find  aviation and  aerospace  parts to retrieve all
requests for parts (numbers) for a given day that were not found in our database
by member  "would-be"  buyers and contact them,  should they have access to such
parts.  We  believe  this  functionality  enhances  the value of our  website by
simultaneously  facilitating the procurement  process for both subscriber buyers
and  sellers by  providing  an  additional  resource  for parts and  incremental
revenue opportunities.


   The Nurse Staffing Business

     Services Provided

     Since October 2001, we have provided,  for a fee,  registered nurses to our
hospital  clients  to  supplement  their  staff.   Hospitals   generally  obtain
supplemental  staffing  from  local  temporary  (per  diem)  agencies.  Per diem
staffing,  which  has  historically  comprised  the  majority  of the  temporary
healthcare staffing industry, involves the placement of locally-based healthcare
professionals  on  short-term  assignments,  such as daily shift work,  on an as
needed (per diem) basis.  Hospitals  often give minimal  advance notice of their
per diem  assignments,  and  require  a quick  turnaround  from  their  staffing
agencies,  generally less than 24 hours.  Per diem agencies  select from a local
highly skilled labor pool and provide pre-screened  candidates to their hospital
clients.

     Nurses / Hospital Client Base / Industry

     We provide medical nurses,  surgical  nurses and specialty  nurses,  all of
whom are registered  nurses,  in a wide range of specialties  for assignments in
Broward  County and Palm Beach County,  Florida.  We place our  qualified  nurse
professionals  with  hospitals  and  hospital  networks.  The  majority  of  our
assignments are in acute-care hospitals, including teaching institutions, trauma
centers and community hospitals.

     We offer our registered nurse professionals  local placement  opportunities
and provide supplemental  staffing solutions to our hospital clients all of whom
are currently  located in South Florida.  In January 2002, we had  approximately
800 open orders with our  hospital  clients in our service  area.  Our number of
hospital  clients has grown from  approximately  5 in November 2001 to 22 active
hospital  clients as of March 2002. As of December 2001,  two clients  comprised
approximately 41% of our revenues; no other single client,  including affiliated
groups,  comprised more than 10% of our registered nurse employees on assignment
or 10% of our revenues.

     In 2000, total healthcare  expenditures in the United States were estimated
at $1.3  trillion,  representing  approximately  13% of the U.S.  gross domestic
product,  and had grown  approximately 8% over 1999 according to the Centers for
Medicare & Medicaid Services. Over the next decade, an aging U.S. population and
advances  in medical  technology  are  expected to drive  increases  in hospital
patient  populations  and the consumption of healthcare  services.  As a result,
total healthcare  expenditures  are projected to increase by approximately  $1.3
trillion during the next decade.

     Within the healthcare staffing sector, temporary staffing has emerged as an
increasingly  utilized method to efficiently deliver healthcare services. In the


                                       3
<PAGE>

mid-1990s, several factors prompted the increased usage of temporary staffing at
hospitals.  A principal  factor was cost  containment.  Managed care,  Medicare,
Medicaid and competitive pressures created renewed emphasis on cost containment.
Among other responses,  this led acute-care hospitals to redesign their staffing
models to  reduce  their  levels of fixed  staffing  and to  include a  variable
staffing component.

     The temporary  healthcare  staffing industry  accounted for $7.2 billion in
revenues  in 2000 and this  amount is  projected  to  increase  by 21%,  to $8.7
billion,  in 2001  according to estimates by The Staffing  Industry  Report,  an
independent  staffing industry  publication.  Approximately 70% of the temporary
healthcare  staffing  industry is comprised of nurse staffing and  approximately
30%  is   comprised  of  allied   health,   physicians   and  other   healthcare
professionals.  Temporary  healthcare staffing has experienced strong historical
growth  since 1996,  growing at a compound  annual  growth rate of 13%, but this
growth has accelerated to approximately 15% over the past two years.  Within the
temporary  healthcare  staffing  industry,  we believe that  critical care nurse
staffing is one of the fastest growing segments.


     Demand and Supply Drivers

     Since  the  mid-1990s,  changes  in  the  healthcare  industry  prompted  a
permanent   shift  in  staffing  models  that  led  to  an  increased  usage  of
supplemental  staffing  at  hospitals.  The  supply  of  professionals  choosing
supplemental  healthcare  as a short-term  or long-term  career  option has also
grown alongside increased demand for supplemental healthcare  professionals.  We
believe that this expanded demand and supply pattern will continue, particularly
in the critical care temporary nurse staffing  sector,  because of the following
drivers:

     Demand Drivers

     DEMOGRAPHICS  AND  ADVANCES  IN  MEDICINE  AND  TECHNOLOGY.   As  the  U.S.
     population  ages  and  as  advances  in  medicine  result  in  longer  life
     expectancy,  it is likely that chronic  illnesses and hospital  populations
     will continue to increase.  We believe that these factors will increase the
     demand for both temporary and permanent  nurses.  In addition,  advances in
     healthcare  technology  have increased the demand for specialty  nurses who
     are  qualified to operate  advanced  medical  equipment or perform  complex
     medical procedures associated with critical care.

     SHIFT TO  FLEXIBLE  STAFFING  MODELS.  Nurse  wages  comprise  the  largest
     percentage of hospitals' labor expenses. Cost containment initiatives and a
     renewed focus on  cost-effective  healthcare  service delivery  continue to
     lead many  hospitals  and other  healthcare  facilities  to adopt  flexible
     staffing  models  that  include  reduced  permanent   staffing  levels  and
     increased utilization of flexible staffing sources, such as temporary staff
     nurses.

     NURSING  SHORTAGE.  Most regions of the United  States are  experiencing  a
     shortage of nurses. The American Hospital Association  estimates that up to
     126,000  position  vacancies  currently exist for registered  nurses.  This
     represents  approximately 10% of the hospital-based nursing workforce.  The
     Journal  of  the  American  Medical   Association  has  reported  that  the
     registered   nurse   workforce  is  expected  to  be  20%  below  projected
     requirements  by 2020.  Faced with  increasing  demand for and a  shrinking


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<PAGE>

     supply of nurses,  hospitals are utilizing  more  temporary  nurses to meet
     staffing  requirements.  Factors  contributing to the current and projected
     declining supply of nurses include:

       DECREASING   NUMBER  OF  ENTRANTS  TO  NURSING  SCHOOL  AND  NEW  NURSING
       GRADUATES.  According to the American Association of Colleges of Nursing,
       enrollment  in  all  basic  nursing  education  programs  (baccalaureate,
       associate  or diploma)  has fallen each year since 1995 by  approximately
       5%.

       NURSES LEAVING PATIENT CARE ENVIRONMENTS FOR LESS STRESSFUL AND DEMANDING
       CAREERS.  Career  opportunities  for  nurses  have  expanded  beyond  the
       traditional bedside role. Pharmaceutical companies,  insurance companies,
       HMOs and hospital service and supply companies  increasingly offer nurses
       attractive  positions  which involve less  demanding  work  schedules and
       physical requirements.

       AGING  NURSE  POPULATION.  The  average  age  of a  registered  nurse  is
       estimated to be 45.2 years old, an increase of 8.4% since 1988.  By 2010,
       40% of the nurse  population is expected to be older than 50, as compared
       to 29% of nurses that were older than 50 as of March  2000.  As a growing
       number of nurses retire, the nursing shortage is likely to worsen.

     SEASONALITY.  Hospitals  in  areas  that  experience  significant  seasonal
     fluctuations in population,  such as Florida during the winter months, must
     be able to  efficiently  adjust their staffing  levels to  accommodate  the
     change in demand.  Many of these  hospitals  utilize  temporary  healthcare
     professionals to satisfy these seasonal staffing needs.

     FAMILY AND MEDICAL  LEAVE ACT. The adoption of the Family and Medical Leave
     Act in 1993, which mandates 12-week  job-protected  maternity and dependent
     care leave,  continues to create temporary  nursing vacancies at healthcare
     facilities.   Approximately   94%  of  the  registered  nurses  working  at
     healthcare facilities in the United States are women.

     STATE LEGISLATION  REQUIRING HEALTHCARE  FACILITIES TO UTILIZE MORE NURSES.
     In  response  to  concerns  by  consumer  groups  over the  quality of care
     provided in  healthcare  facilities  and concerns by nursing  organizations
     about the increased  workloads and  pressures  placed upon nurses,  several
     states have passed or introduced  legislation  that is expected to increase
     the demand for nurses.

     MINIMUM  NURSE-TO-PATIENT  RATIOS.  California  passed  legislation in 1999
     (effective  January  2002)  that  requires  the  establishment  of  minimum
     nurse-to-patient ratios throughout all hospitals. Other states have already
     adopted, and several are now considering, similar legislation.

     ELIMINATION OF MANDATORY OVERTIME. Many healthcare facilities require their
     permanent  staff to work overtime to cover  staffing  shortages.  Maine and


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<PAGE>

     Oregon  recently  passed  legislation  that limits  mandatory  overtime for
     nurses,  and similar  legislation  has already been  introduced  in several
     other states.

     Supply Drivers

     TRADITIONAL REASONS FOR A HEALTHCARE PROFESSIONAL TO WORK ON A SUPPLEMENTAL
     ASSIGNMENT.  Supplemental  assignments  allow  healthcare  professionals to
     explore  new areas of the United  States,  work at  prestigious  hospitals,
     learn new skills, build their resumes and avoid unwanted workplace politics
     that may accompany a permanent  position.  Other  benefits to  supplemental
     healthcare  professionals include professional  development  opportunities,
     competitive wages and flexible work schedules.  All of these  opportunities
     have  been  constant  supply  drivers,  bringing  a  growing  number of new
     healthcare professionals into accepting temporary assignments.

     WORD-OF-MOUTH   REFERRALS.  New  applicants  are  most  often  referred  to
     supplemental  nurse  staffing  companies  by current  or former  employees.
     Growth  in the  number  of  healthcare  professionals  that  have  accepted
     temporary  assignments,  as well as the increased  number of hospitals that
     utilize temporary healthcare professionals,  creates more opportunities for
     referrals.

     MORE NURSES CHOOSING SUPPLEMENTAL  ASSIGNMENTS DUE TO THE NURSING SHORTAGE.
     In times of nursing shortages,  nurses with permanent jobs feel more secure
     about their employment  prospects.  They have a higher degree of confidence
     that they can  leave  their  permanent  position  to join the  supplemental
     healthcare  professional  workforce  and have the  ability  to  return to a
     permanent position in the future. Additionally,  during a nursing shortage,
     permanent staff nurses are often required to assume greater  responsibility
     and  patient  loads,  work  mandatory  overtime  and  deal  with  increased
     pressures  within the hospital.  Many  experienced and critical care nurses
     consequently choose to leave their permanent employer,  and look for a more
     flexible and rewarding position as a supplemental healthcare professional.


Business Strategy

   The Aviation E-commerce Business

     Our goal is to  become  one of the  leading  aviation  industry  e-commerce
marketplaces.  In order to capitalize  on the continued  expansion of the market
for aviation parts and products,  our technology  takes advantage of the growth,
pervasiveness,  low costs and  community  building  nature of the  Internet as a
basis for e-commerce for the broad, highly fragmented  aviation industry.  It is
our belief that the value of an  e-marketplace  grows  substantially as each new
member brings  additional parts,  products,  information and buying power to the
community.

     Our technology has been designed to streamline  the  procurement  cycle for
our subscribers.  We enable subscribers to source,  bid parts and products,  and
eventually  manage their order payment online.  Our target members are primarily
businesses that buy and sell aviation parts, supplies and components in a global
marketplace.  Our  current  members  vary from small  businesses  to Fortune 500
companies such as Boeing, BF Goodrich Aerospace, Honeywell, and Federal Express.
We have  designed our  e-marketplace  to meet the needs of these  customers  and


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<PAGE>

their  industry.  With a  standard  Internet  connection,  a Web  browser  and a
PartsBase  subscription,  each of our e-marketplace  subscribers can immediately
participate as both a buyer and a seller.

     Our  e-marketplace  is  designed  to provide  advantages  over  traditional
procurement processes, including:

    o Reduced procurement costs;
    o More efficient pricing and improved access to sellers for buyers;
    o Ability to locate the most geographically desirable parts;
    o Expanded distribution opportunities for sellers; and
    o Ease of use and better access to information.

     Our current Web site features include:
    o Online buying and selling options utilizing advanced parts search
       features, inventory listings, requests for quotations ("RFQs"), and
       Purchase Order generation;
    o Member access to detailed information regarding current transactions;
    o Online auctions for aviation parts and products;
    o Procurement controls providing members with the ability to monitor
       corporate purchasing; and
    o Community-building  information  such as industry job and  aircraft  sales
       listings,  as well as links to members and other industry Web sites.

     Our objective is to establish our  e-marketplace as the preferred  aviation
industry  business-to-business  e-commerce  solution.  The key  elements  of our
strategy include:

    o Achieving  growth  through  adding  additional  functionalities  so as to
       generate additional sources of revenues;
    o Strengthening the PartsBase brand;
    o Increasing the number of subscribers and market penetration;
    o Establishing and expanding strategic sales and marketing relationships;
    o Expanding international presence; and
    o Attracting and retaining members with new content, features and services.

     The successful implementation of our strategy will be subject to many risks
and will depend on many  factors,  including  but not  limited to the  continued
growth and acceptance of e-commerce in the aviation industry as a whole, and the
acceptance of our business model in particular.  We may be adversely affected by
a variety of risks and  difficulties.  For a detailed  description of certain of
these risks, please refer to the "Risk Factors" section.



   The Nurse Staffing Business

     Our  goal is to  expand  our  temporary  nurse  staffing  operations  first
throughout  Florida  and  ultimately  throughout  the  United  States.  The  key
components of our business strategy include:

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<PAGE>

     EXPANDING  OUR  NETWORK OF  REGISTERED  NURSE  PROFESSIONALS.  Through  our
     recruiting  efforts in South  Florida we  continue to expand our network of
     registered  nurse  professionals.  As of March 2002,  we  currently  have a
     network of approximately  300 registered  nurses,  approximately 75 of whom
     are placed by us with our hospital clients continuously.  We have exhibited
     growth in our  registered  nurse  employee  base over the past three months
     primarily through referrals from our current and former employees,  as well
     as through  advertising and direct mailings.  While we expect these methods
     to continue to gain momentum,  we are implementing creative ways to attract
     additional  registered  nurse  professionals.  An example of this  strategy
     would be our internet recruitment tools such as the RNpartners.com website,
     which is a known nurse community site on the Internet.

     STRENGTHENING AND EXPANDING OUR RELATIONSHIPS WITH HOSPITALS AND HEALTHCARE
     FACILITIES.  We seek to continue to strengthen and expand our relationships
     with our hospital  clients,  and to develop new  relationships.  Because we
     possess a network of registered nurses, we are well positioned to offer our
     hospital clients effective  solutions to meet their  supplemental  staffing
     needs particularly in the critical care area.

     LEVERAGING OUR BUSINESS  MODEL AND LARGE  HOSPITAL AND HEALTHCARE  FACILITY
     CLIENT BASE TO INCREASE PRODUCTIVITY.  We seek to increase our productivity
     through our recruiting strategy,  network of registered nurses, established
     hospital clients relationships, proprietary information systems, innovative
     marketing  and  recruitment  programs,  training  programs and  centralized
     administrative  support systems. Our recruiting strategy allows a recruiter
     in  any  of  our  offices  to  take  advantage  of  all  of  our  placement
     opportunities.  In addition,  our information systems and support personnel
     permit  our  recruiters  to spend  more time  focused  on our  supplemental
     healthcare professionals' needs and placing them on appropriate assignments
     in hospitals in their specialized disciplines.

Sales and Marketing

    The Aviation E-commerce Business

     We market  through a direct  inside  and  outside  sales  force.  Since our
potential members fall within a defined market segment,  we are able to identify
and target the purchasing decision-makers and potential users who will influence
the decision to adopt our e-commerce solution.

     Our sales and  marketing  approach  is  designed to help buyers and sellers
understand both the business and technical benefits of our e-marketplace, and to
promote adoption through one-on-one education and training.

     Our sales and marketing programs are designed to educate our target market,
create  awareness  and attract  members to our  e-marketplace.  To achieve these
goals,  we intend to take  advantage  of the  community  offered by our existing
membership base and engage in marketing activities such as trade shows, speaking
engagements and Web site marketing.

                                       8
<PAGE>

     We provide  member  service  support  from 6:00 a.m. to 8:00 p.m.,  Eastern
Standard  Time,  Monday  through  Friday.  Our customer  support  department  is
responsible  for day-to-day  contact with members and responds to questions from
members  through e-mail and a toll-free  number.  This department is responsible
for retaining and increasing use by existing  members and is an important aspect
of member  satisfaction.  Our  customer  support  and service  personnel  handle
general member inquiries and technical questions.  We have automated some of the
tools used by our customer  support and service staff,  such as tracking screens
that let our support staff track a transaction  through a variety of information
sources.

     Our sales and marketing group consisted of  approximately 72 individuals as
of  December  31,  2001,  all of whom are  located  at our Boca  Raton,  Florida
headquarters.


   The Nurse Staffing Business

     We believe that nursing  professionals  are  attracted to us because of our
sizeable  and  diverse   offering  of  work  assignments  and  our  service  and
relationship-oriented  approach.  We also market ourselves through a combination
of a web site, print  advertising,  direct mail, printed marketing material and,
most  importantly,  through  personal  word-of-mouth  referrals from current and
former employees. We also operate RNpartners.com, a nurse community website that
caters to the  professional and personal lives of nurses and offers nursing news
and updates,  links to other Internet sites,  discounted  products and services,
and career opportunities including an online application process. Currently, our
four recruiters are actively  working with a pre-screened  pool of approximately
300  registered  nurses  in an effort  to place  them  with one of our  hospital
clients.

     Screening/Quality Management

     Through our quality management  department,  we screen each candidate prior
to their employment and we continue to evaluate each registered nurse after they
are placed to ensure  adequate  performance as well as to determine  feasibility
for future  placements.  Our internal processes are designed to ensure that each
registered nurse has the appropriate experience,  credentials and skills for the
assignments  that they accept.  Our  screening  and quality  management  process
includes three principal stages:

       INITIAL  SCREENING.  Each new registered  nurse  candidate who submits an
       application  with us must meet certain  criteria,  including  appropriate
       prior work experience and proper  educational and licensing  credentials.
       We independently verify each applicant's work history and references. Our
       clinical skills  checklists,  developed for each specialty area, are used
       by our  hospital  clients'  hiring  managers  as a basis  for  evaluating
       candidates and conducting interviews,  and for facilitating the selection
       of a registered nurse who can meet the hospital client's specific needs.

       ASSIGNMENT  SPECIFIC  SCREENING.  Once an  assignment  is  accepted  by a
       supplemental healthcare  professional,  our quality management department
       tracks the necessary  documentation and license verification required for
       the  registered  nurse  to meet the  requirements  set  forth by us,  the
       hospital  and, when  required,  the  applicable  state board of health or
       nursing.  These  requirements  may include  obtaining  copies of specific


                                       9
<PAGE>

       health records,  drug screening,  criminal  background checks and certain
       certifications or continuing education courses.

       ONGOING  EVALUATION.   We  continually   evaluate  our  registered  nurse
       professionals'  performance  through  a  verbal  and  written  evaluation
       process. We receive these evaluations directly from our hospital clients,
       and use the feedback to determine appropriate future assignments for each
       registered nurse.

     Sales and Marketing to Hospitals and Healthcare Facilities

       Our client service directors market our services to prospective  hospital
clients,  and supervise ongoing contract management of existing clients in their
territory.  The number of our hospital and healthcare  facility  clients that we
serve has grown from  approximately  5 in November 2001 to 22 active  clients in
March 2002. All of our registered nurse assignments are at acute-care  hospitals
located in Broward County and Palm Beach County, Florida.

         Account Management

       Once hospital  contracts are obtained by our registered  nurse area sales
managers,  our four hospital account coordinators are responsible for soliciting
and receiving  orders from these clients and working with our recruiters to fill
those orders with  qualified  registered  nurse  professionals.  An "order" is a
request from a client  hospital for a  registered  nurse to fill an  assignment.
Hospital  account  coordinators  regularly  call  and  solicit  orders  from our
clients,  who also submit orders via the Internet and by fax. Our average number
of orders for upcoming  assignments has increased  significantly during the past
three  months.  The  combination  of an  increasing  number of open orders and a
greater number of nurses choosing  supplemental staffing assignments benefits us
by providing us with numerous  assignments to offer and an increasing  supply of
new registered  nurse  professionals  to hire. In March 2002, we have over 1,885
open customer  orders in South Florida (the area  encompassing  Broward and Palm
Beach  counties).  Our  growth  in open  orders  can be  attributed  to  factors
including:

     o  Continuing increased demand for registered nurses;
     o  Our extensive network of registered nurse employees; and
     o  Our increased number of hospital client relationships.

       Because   hospitals  often  list  their  orders  with  multiple   service
providers,  open orders may also be listed with our  competitors.  An order will
generally be filled by the company  that  provides a suitable  candidate  first,
highlighting  the  need  for a  network  of  registered  nurses  and  integrated
operating and  information  systems to quickly and  effectively  match  hospital
client needs with appropriate registered nurses.

         Placement

       Orders are entered into our information network and are made available to
the  recruiters  at all of our  offices.  Our  recruiters  provide our  hospital
coordinators  with the  personnel  profiles  of the  registered  nurse  who have
expressed  an interest in a  particular  assignment.  The  hospital  coordinator
approves  the  profiles  to be sent to the  hospital  client  and  confirms  the
assignments  with the  hospital.  Our  recruiters  seek to develop and  maintain
strong and long-lasting relationships with our registered nurses. Each recruiter


                                       10
<PAGE>

manages a group of approved  registered  nurse employees and works to understand
the unique needs and desires of each individual  registered nurse. The recruiter
will present open order  assignments  to a  registered  nurse,  request that the
personnel  profile be submitted for  assignment,  arrange a telephone  interview
with assistance from the coordinators and generally  facilitate each assignment.
We share orders among our various  offices to increase  placement  opportunities
for our registered nurse employees.

         Registered Nurse Payroll

       We pay our  registered  nurse  employees  only to the extent  they accept
placement  and  actually  work at one of our  hospital  clients.  We perform all
payroll services for our registered nurse employees.  Providing payroll services
is a value-added and convenient service that hospitals  increasingly expect from
their supplemental  staffing sources.  To provide convenience and flexibility to
our hospital clients, we accommodate several different payroll frequencies. This
enables our hospital clients to integrate management of supplemental  registered
nurse staff  scheduling  and overtime  with their  permanent  staff.  Consistent
accuracy and timeliness of making payroll payments is essential to the retention
of our registered  nurses. Our internal payroll service group currently receives
and  processes  timesheets  for  approximately  75 registered  nurse  employees,
weekly.  Payroll is typically  processed  daily after the completion of each pay
period,  heightening  the  importance of having  adequately  trained and skilled
payroll personnel and appropriate  operating and information systems. We process
our payroll  internally  so as to minimize  costs and provide a higher degree of
flexibility in  accommodating  our registered  nurse  professional  workforce as
opposed to  processing  externally  through a payroll  processing  service.  Our
payroll service group offers our registered nurse  professionals  the ability to
be paid daily upon receipt of an approved time sheet from our hospital clients.

         Registered Nurse Benefits

       In our effort to attract and retain highly  qualified  professionals,  we
offer a variety of benefits to our registered  nurse  employees.  These benefits
include:


    o  24-HOUR  MANAGEMENT AND CLINICAL  SUPPORT.  It is our goal to always be
       available to our  registered  nurses.  Registered  nurse  employees  with
       emergencies can be connected 24 hours per day with a clinical  liaison or
       recruitment manager to help resolve their problem.

    o  HOSPITAL BILLING.  To accommodate the needs of our hospital clients, we
       bill all of our  registered  nurse  professionals  on a payroll  contract
       basis. Under a payroll contract, the registered nurse is our employee for
       payroll  and  benefits  purposes.  Under  this  arrangement,  we bill our
       hospital   clients   at  an  hourly   rate  that   effectively   includes
       reimbursement for recruitment fees, wages and benefits for the registered
       nurse professional, and employer taxes. Overtime and holiday hours worked
       are typically  billed at a premium  rate.  We in turn pay the  registered
       nurse's  wages and  benefits  which are  calculated  on an hourly  basis.
       Providing  payroll services is a value-added and convenient  service that
       hospitals  increasingly  expect from their  supplemental  nurse  staffing
       sources.

                                       11
<PAGE>

    o  DAILY PAY. Our local  branch  offices  have the  capability  to produce
       payroll checks for our registered nurse employees the very same day their
       time sheets are verified and approved.  This is an attractive  benefit to
       registered  nurses  who, if working for  another  staffing  firm,  may be
       forced to wait for the  payroll  cycle to be  completed  before  they can
       receive their paychecks.

    o  INFORMATION   SYSTEMS  Our   primary   management   information   and
       communications  systems are  centralized  and controlled in our corporate
       headquarters  and  are  utilized  in each of our  staffing  offices.  Our
       financial systems are primarily centralized at our corporate headquarters
       and our operational  reporting is standardized at all of our offices.  We
       use an internal system to facilitate payroll for our corporate  employees
       and our  temporary  healthcare  professionals.  We are in the  process of
       developing a proprietary  Windows-based,  interactive  information system
       that  will  be an  important  tool in  maximizing  our  productivity  and
       accommodating our recruiting strategy. The system will be custom-designed
       for our business  model,  including  integrated  processes for registered
       nurse  professional  and  hospital  contract   management,   matching  of
       supplemental   healthcare   professionals   to   available   assignments,
       registered nurse  professional  file submissions for placements,  quality
       management  tracking,  controlling  compensation  packages  and  managing
       hospital  contract and billing  terms.  Our system will provide our staff
       with fast, detailed information  regarding  individual  registered nurses
       and  hospital  clients.  The  system  will also  provide a  platform  for
       interacting and transacting  with registered nurse employees and hospital
       facility  clients  via the  Internet.  We  anticipate  that  the  initial
       features of this system will be functional  during the latter part of the
       second quarter of 2002.

Competition

   The Aviation E-commerce Business

       The market for business-to-business  e-commerce and Internet ordering and
purchasing is new and rapidly evolving,  and competition is intense and expected
to  increase  significantly  in the future.  We believe  that  companies  in our
Internet business-to-business e-marketplace compete on the basis of:

    o  Ease of use of technology;
    o  Breadth and depth of product and service offerings;
    o  Pricing of products and services;
    o  Quality and reliability of the Internet purchasing solution; and
    o  Quality and scope of customer service and support.

       We currently  compete  almost solely in the market for aviation parts and
products and face  competition  from three main areas within this market:  other
start-up  businesses  that have  formed  exchanges  with  e-commerce  offerings,
existing aerospace companies, or groups of companies that have formed exchanges,
and traditional manufacturers, suppliers and distributors of aviation parts that
have developed  e-commerce  initiatives that are designed to facilitate commerce
between one buyer and multiple sellers.

                                       12
<PAGE>

       Because of the rapidly evolving nature of e-commerce,  it is difficult to
objectively  estimate the number of companies that compete  directly against us.
We believe that  currently,  our primary  competitor  is the  Inventory  Locator
Service Inc., a subsidiary of Aviall,  Inc.  Additional  competition is expected
during  2002  from buy side  exchanges  formed  by major  domestic  and  foreign
carriers, and sell side exchanges formed by large aerospace OEM's.

       Current and  potential  competitors  may be able to devote  significantly
greater  resources to marketing and  promotional  campaigns,  and may adopt more
aggressive pricing policies or may try to attract users by offering services for
free and devote  substantially  more resources to product  development  than us.
Increased  competition may result in reduced operating  margins,  loss of market
share and  diminished  value in our brand,  any of which  could  materially  and
adversely  affect our business,  financial  condition and results of operations.
New  technologies  and the expansion of existing  technologies  may increase the
competitive  pressures  on us by  enabling  competitors  to offer a similar  but
lower-cost  service.  We  cannot  assure  you  that we  will be able to  compete
successfully against current and potential competitors.  Further, as a strategic
response to changes in the  competitive  environment or otherwise,  we may, from
time to time, make pricing,  service or marketing decisions or acquisitions that
could  materially  and adversely  affect our business,  financial  condition and
results of operations.

   The Nurse Staffing Business

       The nurse  staffing  industry  is highly  competitive.  We  compete  with
national  firms and local and  regional  firms.  We compete  with these firms to
attract  registered  nurses with  critical  care skills as temporary  healthcare
professionals  and  to  attract  hospital  clients.  We  compete  for  temporary
healthcare professionals on the basis of the quantity,  diversity and quality of
assignments  available,  compensation packages, and the benefits that we provide
to a  temporary  healthcare  professional  while they are on an  assignment.  We
compete  for  hospital  clients  on the basis of the  quality  of our  temporary
healthcare  professionals,  the timely  availability of our  professionals  with
requisite  skills,  the  quality,  scope  and  price  of our  services,  and the
geographic  reach of our  services.  Continuing  nursing  shortages  and factors
driving  the  demand  for  nurses  over  the past  several  years  have  made it
increasingly difficult for hospitals to meet their critical care staffing needs.
We are focused on attaining a critical mass of available nursing  candidates via
substantial  word-of-mouth referral networks and seek to establish RNpartners as
a recognizable  brand name,  thereby enabling us to attract a consistent flow of
new  applicants.  We believe we can also more easily  provide  payroll  services
billing,  which is cash flow  intensive,  to healthcare  providers.  Some of our
competitors in the temporary  healthcare staffing sector include American Mobile
Nurse, Interim Healthcare Services, Nursefinders and Starmed.


Intellectual Property

   The Aviation E-commerce Business

       We rely on a combination  of trademark and  copyright  law,  trade secret
protection and  confidentiality  and/or license  agreements  with our employees,
customers and business  partners to protect our proprietary  rights in products,
services, know-how and information. We have a federal trademark registration for
"PartsBase" and "PartsBase.com." We may seek additional  trademarks,  copyrights
and patents in the future. Our means of protecting our proprietary rights in the


                                       13
<PAGE>

United States or abroad may not be adequate and  competitors  may  independently
develop  similar  technology.  We cannot be  certain  that our  services  do not
infringe  patents or other  intellectual  property rights that may relate to our
services. Like other technology and Internet-based  businesses, we face the risk
that  we  will  be  unable  to  protect  our  intellectual  property  and  other
proprietary  rights,  and the risk that we will be found to have  infringed  the
proprietary rights of others.

   The Nurse Staffing Business

       We rely on confidentiality agreements with our employees and customers to
protect our proprietary rights in products,  services, know-how and information.
We have no current federal trademark registrations,  however, at sometime in the
future, we may seek trademarks, copyrights and patents.

Government Regulation

   The Aviation E-commerce Business

       Both domestic and foreign  entities  regulate the parts and products sold
on our Web site. The Federal Aviation Administration (the "FAA") is charged with
regulating  the  manufacture,  repair and operation of all aircraft and aircraft
equipment operated in the United States. The FAA monitors safety by promulgating
regulations  regarding  proper  maintenance of aircraft and aircraft  equipment.
Similar  regulations  exist in foreign  countries.  Regulatory  agencies specify
maintenance,   repair  and  inspection  procedures  for  aircraft  and  aircraft
equipment.  Certified technicians in approved repair facilities on set schedules
must perform these procedures.  All parts must conform to prescribed regulations
and be certified  prior to  installation  on any  aircraft.  Although we are not
currently  subject  to any  governmental  regulation  regarding  the  parts  and
products  sold on our Web site,  we may in the future  become  subject to FAA or
other regulatory requirements.

   The Nurse Staffing Business

       The healthcare  industry is subject to extensive and complex  federal and
state  laws and  regulations  related  to  professional  licensure,  conduct  of
operations,  payment  for  services  and payment for  referrals.  Our  business,
however,  is not directly  impacted by or subject to the  extensive  and complex
laws and regulations that generally govern the healthcare industry. The laws and
regulations which are applicable to our hospital and healthcare facility clients
could indirectly impact our business to a certain extent, but because we provide
services  on a  contract  basis  and  are  paid  directly  by our  hospital  and
healthcare  facility clients, we do not have any direct Medicare or managed care
reimbursement  risk.  Florida  requires state  registration  for businesses that
employ and/or assign healthcare personnel to provide healthcare services on-site
at hospitals and other  healthcare  facilities.  We are currently  registered in
Florida.  All of the supplemental  registered nurses that we employ are required
to be individually  licensed under state law. We take reasonable steps to ensure
that our employees possess all necessary licenses in all material respects.

                                       14
<PAGE>


Employees

     The following table details our employee  compliment for our two businesses
as of December 31, 2001 and 2000 respectively:
<TABLE>

<CAPTION>
                                               2001       2000                                            2001
Aviation E-commerce Business:                                       Nurse Staffing Business:
<S>                                             <C>        <C>                                              <C>
Sales and marketing                             72         127      Registered Nurses                       36
Programming, technical and customer support     11          33      Sales and Marketing                      8
                                               ---         ---      Administration                           7
   Total                                        83         160                                              --
Supplemental Nurse Staffing                     51          --      Total                                   51
Corporate finance and administration           _14         _29
   Grand Total                                 148         189
</TABLE>

       Registered  nurses are  considered  our  employees  upon  completing  one
twelve-hour  shift at one of our hospital  clients.  None of our  employees  are
represented by a labor union. We have not experienced any work stoppages, and we
consider our relationship with our employees to be good.


Risk Factors

   The Aviation E-commerce Business

       We have never been  profitable,  anticipate  continued  losses and cannot
guarantee  profitability in the future. We have never been profitable and expect
to continue to incur operating  losses until at least the end of fiscal 2002. We
may be unable to ever achieve  profitability in the future. We have incurred net
consolidated losses in each accounting period since we began operations in April
1996,  including net losses  attributable to common  shareholders of $5,612,233,
$13,453,981,  $7,815,409  ($5,913,034  before  consideration  of the  value of a
preferred  stock  beneficial  conversion  feature)  during 2001,  2000 and 1999,
respectively.  Although revenues have grown in recent periods,  we cannot assure
you that we will achieve sufficient  revenues for  profitability.  Even if we do
achieve  profitability,  we cannot  assure you that we can  sustain or  increase
profitability  on a quarterly  or annual basis in the future.  If revenues  grow
slower than we  anticipate,  or if operating  expenses  exceed  expectations  or
cannot  be  adjusted  accordingly,  our  business,  results  of  operations  and
financial condition will be materially and adversely affected.

       We cannot predict our success  because our business model is unproven and
we have  operated our  business  for only a short  period of time.  Our business
model is new to the aviation  industry  and our ability to generate  revenues or
profits is unproven.  We have a limited  operating  history,  which will make it
difficult to evaluate our performance.  Our prospects will be dependent upon our
ability to effectively  implement our business model and adapt to changes in the
business-to-business  e-commerce  market. If our business model is not viable or
if we are unable to identify and address changes in our markets,  we will not be
able to grow our business,  compete effectively or achieve profitability.  These
factors could cause our stock price to fall significantly.

                                       15
<PAGE>

       We primarily rely on revenue from subscriptions and we may not be able to
successfully expand our membership base or establish additional revenue sources.
We  currently  generate  revenues  from  e-commerce  customers  in the  aviation
industry  who  subscribe  to our  service.  Our success will be dependent on our
ability to expand our  membership  base within the  aviation  industry.  We have
experienced  decreases in our  subscriber  base.  In addition,  our success will
depend on our ability to generate  additional  revenues through the introduction
of a new functionality and/or the expansion into new markets and industries.  We
cannot  assure  you  that we will  be  successful  in any  efforts  to  generate
additional revenues.

       We receive  substantially  all of our revenue  from  participants  in the
aviation  industry,  so a downturn in the  aviation  industry  could  damage our
business.  We receive  substantially all of our revenue from members  associated
with the  aviation  industry,  and we expect  these  revenues  will  account for
substantially all of our revenues for the foreseeable  future. Our dependence on
members  associated with the aviation  industry makes us vulnerable to downturns
in that  industry.  A downturn  could lead our members to reduce  their level of
activity on our e-marketplace and cause some to cancel their subscription.

       Intense  competitive  pressures  in the  business-to-business  e-commerce
market may impede our ability to establish a substantial market share that would
allow us to be profitable.  The  business-to-business  e-commerce market is new,
rapidly  evolving,  and  intensely  competitive,  and we expect  competition  to
further intensify in the future.  Barriers to entry are minimal, and competitors
may develop and offer services  similar to ours in the future.  Recent  entrants
into the  business-to-business  aviation  parts  market  include an  alliance of
prominent aircraft parts  manufacturers and aviation industry  participants that
have superior capital resources and established  reputations in the industry. In
addition,  we expect that additional  companies will offer competing  e-commerce
solutions in the future, and our business could be severely harmed if we are not
able to compete successfully against current or future competitors. In addition,
our  members  and  partners  may become  competitors  in the  future.  Increased
competition  is  likely to result in price  reductions,  reduced  gross  margins
and/or loss of market share,  any of which could harm our  business.  Our actual
and  potential  competitors  vary in size and in the  scope and  breadth  of the
services they offer.

       Quarterly Operating Results are Subject to Significant Fluctuations.  Our
revenues and operating  results may vary  significantly  from quarter to quarter
due to a number of factors,  not all of which are in our control.  These factors
include:

    o  Subscriber and advertiser demand for our solutions;
    o  User traffic levels and activity on our e-marketplace;
    o  Seasonal fluctuations in Internet usage;
    o  Changes in the growth rate of Internet usage;
    o  The commitment of e-commerce customers in the aviation industry who
        subscribe to our service;
    o  The timing and amount of costs relating to the expansion of our
        operations;
    o  Changes in our pricing policies or those of our competitors;
    o  The introduction of new solutions by us or our competitors;
    o  Costs related to acquisitions of technology or businesses;
    o  General economic and market conditions; and
    o  Effects of terrorist activities upon the aviation industry.

                                       16
<PAGE>

       Our revenues  for the  foreseeable  future will remain  dependent on user
traffic  levels and the  commitment  of  e-commerce  customers  in the  aviation
industry who  subscribe to our service.  Such future  revenues are  difficult to
forecast. In addition,  we may significantly  increase our operating expenses to
increase  our sales and  marketing  operations,  to continue our  expansion,  to
upgrade and enhance our technology,  and to market and support our solutions. We
may be unable to adjust spending quickly enough to offset any unexpected revenue
shortfall.  If we have a shortfall in revenues in relation to our expenses, then
our business,  results of operations and financial condition would be materially
and  adversely  affected.  Such a result would likely affect the market price of
our common stock in a manner that may be unrelated  to our  long-term  operating
performance.

       Due to all of the foregoing factors and the other risks discussed in this
section, you should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of future performance.  It is possible that, in some
future  periods,  our results of  operations  may be below the  expectations  of
public market  analysts and  investors.  In this event,  the price of our common
stock may fall.

       If we  fail  to  effectively  manage  our  operations  and the use of our
services, we may lose members or incur significant expenses. Our success depends
on effective planning and growth management. We will need to continue to improve
our financial and managerial controls, reporting systems, and procedures, and we
will need to continue to expand, train and manage our workforce.  We continue to
increase  the  scope of our  operations  and our  growth  has  placed,  and will
continue  to place,  a  significant  strain on our  management  and  operational
systems and resources.  If we do not successfully  implement and integrate these
new systems or if we fail to scale these systems to our growth,  the performance
of our Web site may suffer  which would cause us to lose  members.  In addition,
any failure could make us unable to operate with  adequate,  accurate and timely
financial  and  operational  information,  which  could  result in us  incurring
unnecessary and possibly damaging expenses.

       Because our revenue is derived  from  providing  e-marketplace  access to
subscribers for an annual  subscription  fee, the cancellation or non-renewal of
these subscriptions would hurt our business. We have generated substantially all
of our  revenues  to date  through  member  subscription  fees for access to our
e-marketplace. Generally, our subscription fees are paid on an annual basis, and
these  subscriptions  may be terminated on short-term  notice.  We have expended
significant  financial and personnel  resources and have expanded our operations
on the assumption that our subscribers will renew these annual subscriptions. We
do not have a  sufficiently  long  history of  operations  to be able to predict
renewal rates of our members.  If our members fail to continuously  renew, or if
they terminate their subscriptions,  our revenues would be significantly reduced
and our business could suffer dramatically.

       There are a finite number of potential  subscribers  and we may be unable
to develop other means of generating  revenue,  so our growth may be limited.  A
major element of our growth  strategy is the expansion of our  subscriber  base.
The  number  of  participants  in  the  aviation  market  limits  our  potential
subscriber  base.  Additionally,  the  barriers  to  entry,  which  exist in the
aviation  market,  may  limit  the  entry  of  additional  subscribers  into our
e-marketplace.   Accordingly,   the  number  of  potential  subscribers  to  our
e-marketplace  is likely  finite,  in which case our  revenues  may be similarly
limited if we cannot generate revenue through other means.

                                       17
<PAGE>

       If our sellers do not provide timely, professional and lawful delivery of
products to our buyers,  our membership may decrease and we may have  liability.
We rely on our sellers to deliver  purchased parts and products to our buyers in
a professional,  safe and timely manner. If our sellers do not deliver the parts
and products to our buyers in a professional,  safe and timely manner,  then our
service will not meet customer expectations and our reputation and brand will be
damaged.  In  addition,  deliveries  that  are  nonconforming,  late  or are not
accompanied by information  required by applicable  laws or  regulations,  could
expose us to liability or result in decreased  adoption and use of our solution,
which could have a negative  effect on our business,  results of operations  and
financial condition.

       We cannot guard against harm to our business from the activities of third
parties  on our web site.  Our  future  success  will  depend  largely  upon the
reliably of our sellers in delivering and accurately  representing  their listed
products  and  buyers  paying  the  agreed   purchase  price.  We  do  not  take
responsibility  for the  delivery  of  payment or goods to any  member.  We have
received  in the  past,  and  anticipate  that we will  receive  in the  future,
communications  from  members  who did not  receive  the  purchase  price or the
products  that were to be  exchanged.  While we can  suspend the  privileges  of
members who fail to fulfill  their  delivery or payment  obligations,  we do not
currently have the ability to require  sellers to deliver  products or buyers to
make payments. We do not compensate members who believe they have been defrauded
by other members.  Any negative publicity generated as a result of fraudulent or
deceptive  conduct by members of our  e-marketplace  could damage our reputation
and diminish the value of our brand name. We may in the future receive  requests
from  members  for  reimbursement  or threats of legal  action  against us if no
reimbursement  is made. Any resulting  litigation could be costly for us, divert
management  attention,  result in  increased  costs of doing  business,  lead to
adverse judgments, or otherwise harm our business.

       If we are unable to implement  adequate measures to maintain the value of
our  intellectual  property and internet domain name, our ability to compete may
be severely harmed. As an Internet company,  our current and future  copyrights,
service  marks,  trademarks,  patents,  trade  secrets,  domain name and similar
intellectual property, if any, are especially vital to our success.  Despite our
precautions,  unauthorized  third  parties may  infringe or  misappropriate  our
intellectual  property;  copy  portions of our  services or reverse  engineer or
obtain and use information  that we regard as proprietary.  Any  infringement or
misappropriation of our intellectual  property or proprietary  information could
make it  difficult  for us to compete.  In addition,  we currently  hold various
Internet  Web  addresses  relating  to our  network,  including  the domain name
"PARTSBASE.COM."  If we are not able to prevent third parties from acquiring Web
addresses that are similar to our addresses, third parties could acquire similar
domain names that could  create  confusion  that  diverts  traffic away from our
e-marketplace to other competing Web sites.

       Other parties may assert claims  against us that we are  infringing  upon
their intellectual property rights, which could harm our financial condition and
ability to compete.  We cannot be certain that our services do not infringe upon
the intellectual  property rights of others.  Because patent applications in the
United  States  are  not  publicly   disclosed   until  the  patent  is  issued,
applications  may have been  filed  which  relate to  services  similar to those
offered by us. We may be subject to legal  proceedings  and claims  from time to
time in the  ordinary  course  of our  business,  including  claims  of  alleged
infringement of the trademarks and other  intellectual  property rights of third
parties.  If our services  violate  third-party  proprietary  rights,  we cannot
assure you that we would be able to obtain  licenses to continue  offering  such


                                       18
<PAGE>

services on  commercially  reasonable  terms,  or at all. Any claims  against us
relating to the  infringement  of third-party  proprietary  rights,  even if not
meritorious,  could  result in the  expenditure  of  significant  financial  and
managerial  resources and for injunctions  preventing us from distributing these
services. Such claims could severely harm our financial condition and ability to
compete.

       If we are  unable to  license  third-party  technologies  or  effectively
integrate  them, we may  experience  delays in  development  or expansion of our
business.  The e-commerce market is rapidly evolving and we have and will depend
on third-party  software and other technology for the effective operation of our
Web site and  business.  We may not be able to license or renew the  license for
these  technologies  on terms favorable to us or at all. Our inability to obtain
necessary  third-party  licenses  could delay the continued  development  of our
business and services,  which could result in a loss of members, slow our growth
and severely  harm our  business.  In  addition,  even if we are able to license
needed technology,  we may not be able to successfully integrate such technology
into our  operations,  which could also  result in a loss of  members,  slow our
growth and severely harm our business.


Risks Related to the Internet and e-Commerce Industries

       Our growth  may be  impaired  if the  Internet  is unable to  accommodate
growth in e-commerce. Our success depends on the widespread use of and growth in
the use of the Internet for  retrieving,  sharing and  transferring  information
among buyers and sellers in the aviation  parts market.  If the Internet  cannot
accommodate growth in e-commerce or experiences periods of poor performance, the
growth of our  business  may  suffer.  Our  ability to sustain  and  improve our
services is  limited,  in part,  by the speed and  reliability  of the  networks
operated by third parties.  Consequently, the emergence and growth of the market
for our  services  is  dependent  on  improvements  being  made to the  Internet
infrastructure  to  alleviate  overloading  and  congestion.  Additionally,  the
possible slow adoption of the Internet as a means of commerce by businesses  may
harm  our  prospects.  Even if the  Internet  is  widely  adopted  as a means of
commerce, the adoption of our network for procurement, particularly by companies
that  have  relied on  traditional  means of  procurement,  will  require  broad
acceptance of e-commerce and online purchasing. In addition, companies that have
already invested substantial resources in traditional methods of procurement, or
in-house  e-commerce  solutions,  may  be  reluctant  to  adopt  our  e-commerce
solution, thus impairing the growth of our member base and revenue potential.

       The security  risks related to e-commerce may cause members to reduce the
use of our service,  and attempting to guard against these risks may cause us to
incur  significant  costs and  expenses.  A fundamental  requirement  to conduct
business-to-business  e-commerce is the secure  transmission of information over
public networks. If our members are not confident in the security of e-commerce,
they  may  not  effect   transactions  on  our   e-marketplace  or  renew  their
subscriptions, which would severely harm our business. There can be no guarantee
that  advances  in  computer  capabilities,  new  discoveries  in the  field  of
cryptography,  or other developments will not result in the compromise or breach
of the  algorithms  that  we use to  protect  content  and  transactions  on our
e-marketplace or proprietary information in our databases. We may be required to
incur  significant  costs to protect against  security  breaches or to alleviate
problems caused by breaches.  Further, a well-publicized  compromise of security
could deter people from using the Internet to conduct  transactions that involve


                                       19
<PAGE>

transmitting confidential information. Our failure to prevent security breaches,
or well-publicized  security breaches  affecting the Internet in general,  could
adversely affect the willingness of our members to use our services.

       If our  sellers  fail to provide  timely and  accurate  information,  our
membership base and potential  revenue may decline.  Our members use our service
in  large  part  because  of  the  comprehensive  breadth  and  accuracy  of our
databases.  It is our responsibility to load seller product information into our
database and categorize the information  for search  purposes.  However,  we are
dependent  on our  sellers  to  provide  us in a timely  manner  with  accurate,
complete,  and current  information  regarding their product  inventory.  If our
timely  loading of this  information  is  impaired,  this could result in member
dissatisfaction and a loss of members.

       We may not be able to  keep  up with  technological  advancements,  which
could  result in a loss of members and harm our  ability to compete.  The market
for  Internet  commerce is  characterized  by rapid  change,  evolving  industry
standards  and the  frequent  introduction  of new  technological  products  and
services.  The introduction of new technology,  products,  services or standards
may prove to be too difficult, costly or simply impossible to integrate into our
existing  systems.  Moreover,  innovations could render obsolete our existing or
any future products and services.  Our ability to remain  competitive  will also
depend heavily upon our ability to maintain and upgrade our technology  products
and  services.  We  must  continue  to add  hardware  and  enhance  software  to
accommodate  any increased  content and use of our Web site. If we are unable to
increase  the data  storage and  processing  capacity of our systems at least in
pace with the growth in  demand,  our Web site may fail to operate at an optimal
level for unknown  periods of time. As a relatively  small company in the market
for Internet  commerce,  we will be in a position of responding to technological
changes  rather  than  establishing  them.  Any  difficulty  keeping  pace  with
technological  advancements  could  hurt  our  ability  to  retain  members  and
effectively compete.

       Because we do not maintain a redundant  system,  any system failure could
delay or  interrupt  our  service,  which could  severely  harm our business and
result in a loss of members. Our ability to successfully  maintain an e-commerce
marketplace and provide acceptable levels of customer service depends largely on
the efficient  and  uninterrupted  operation of our computer and  communications
hardware and network systems. Any interruptions could severely harm our business
and result in a loss of members.  Our  computer and  communications  systems are
located in Boca Raton,  Florida.  Although we periodically back up our databases
to tapes and store the backup tapes offsite,  we have not maintained a redundant
site. As a result,  our systems and  operations are  particularly  vulnerable to
damage or interruption from human error, sabotage, fire, flood, hurricane, power
loss,  telecommunications  or equipment  failure,  and similar events. We cannot
assure you that we will not experience system failures in the future.  Moreover,
we have  experienced  delays and  interruptions  in our  telephone  and Internet
access that have prevented members from accessing our e-marketplace and customer
service department.  Furthermore, we do not have a formal disaster recovery plan
and do not carry sufficient business interruption insurance to compensate us for
losses  that may occur as a result of any  system  failure,  and  therefore  the
occurrence  of any  system  failure  or similar  event  could harm our  business
dramatically.


       Defects in the complex  software on which our services depend could cause
service  interruptions  that could damage our  reputation and harm our business.
Unlike many  traditional  suppliers and  distributors  of aviation parts, we are
wholly  dependent  on  the  error-free  functioning  of our  Web  site  and  its


                                       20
<PAGE>

associated  software.  Our e-marketplace  depends on complex software  developed
internally  and by  third  parties.  Moreover,  we are  relying  on  third-party
software to implement our  transaction-based  model,  which software has not yet
been integrated into our system.  Software often contains defects,  particularly
when first introduced or when new versions are released.  Our testing procedures
may not discover  software  defects  that affect our new or current  services or
enhancements  until after they are  deployed.  These defects could cause service
interruptions,  which could damage our reputation or increase our service costs,
cause us to lose revenue,  delay market  acceptance,  or divert our  development
resources,  any of which could severely harm our business,  financial condition,
and results of operations.

       We could face  liability for  information  retrieved  from or transmitted
over the internet and liability for aircraft products sold over the Internet. We
could be exposed to liability with respect to third-party  information  that may
be  accessible  through our Web site.  If any  third-party  content  information
provided  on our Web site  contains  errors,  consumers  potentially  could make
claims  against us for losses  incurred  in  reliance  on that  information.  In
addition,  because defective  aviation products can result in substantial losses
of property  or life,  we have a  relatively  greater  risk of being  exposed to
product  liability  claims  arising out of or  relating  to  aviation  parts and
products  sold  through  our  Web  site,  which  could  result  in us  incurring
substantial defense costs and, if successful,  liability,  either of which could
severely harm our business.  We currently carry no policies,  which would insure
us against product liability claims.


Risks Related to the Nurse Staffing Business

       We can not predict our success as we have  operated  our  business  for a
short period of time. We have a limited  operating  history,  which will make it
difficult for you to evaluate our  performance.  Our prospects will be dependent
upon our  ability  to  effectively  implement  our  business  model and adapt to
changes in the nurse staffing  business.  If our business model is not viable or
if we are unable to identify and address changes in our markets,  we will not be
able to grow our business,  compete effectively or achieve profitability.  These
factors could cause our stock price to fall significantly.

       If  we  are  unable  to  attract  qualified  registered  nurses  for  our
supplemental  nurse staffing business at reasonable costs, it could increase our
operating costs and negatively impact our business. We rely significantly on our
ability to  attract  and  retain  registered  nurses  who  possess  the  skills,
experience and licenses  necessary to meet the  requirements of our hospital and
healthcare  facility  clients.  We  compete  for  registered  nurses  with other
temporary  healthcare  staffing  companies  and with  hospitals  and  healthcare
facilities. We must continually evaluate and expand our registered nurse network
to  keep  pace  with  our  hospital  and  healthcare  facility  clients'  needs.
Currently,  there is a shortage of qualified  nurses in most areas of the United
States,  competition  for nursing  personnel  is  increasing,  and  salaries and
benefits  have risen.  We may be unable to  continue  to increase  the number of
registered  nurses that we recruit,  decreasing  the potential for growth of our
business. Our ability to attract and retain registered nurses depends on several
factors,  including our ability to provide  registered  nurses with  assignments
that they view as attractive and to provide them with  competitive  benefits and
wages.  We cannot  assure you that we will be  successful in any of these areas.
The cost of  attracting  registered  nurses and providing  them with  attractive
benefit  packages may be higher than we anticipate  and, as a result,  if we are
unable to pass these costs on to our hospital clients,  our profitability  could


                                       21
<PAGE>

decline.  Moreover, if we are unable to attract and retain registered nurses the
quality of our services to our hospital clients may decline and, as a result, we
could lose clients.

       We operate in a highly  competitive market and our success depends on our
ability to remain  competitive in obtaining and retaining  hospital  clients and
registered   nurses.   The  supplemental   nurse  staffing  business  is  highly
competitive. We compete in regional and local markets with full-service staffing
companies  and  with  specialized  temporary  staffing  agencies.  Some  of  our
competitors in the  supplemental  nurse staffing sector include  American Mobile
Nurse, Interim Healthcare Services and Nursefinders. Some of these companies may
have greater  marketing and financial  resources than we do. We believe that the
primary  competitive  factors in obtaining  and retaining  hospital  clients are
identifying  qualified  healthcare  professionals for specific job requirements,
providing qualified employees in a timely manner, pricing services competitively
and effectively monitoring employees' job performance. We compete for registered
nurses based on the  quantity,  diversity  and quality of  assignments  offered,
compensation packages and the benefits that we provide. Competition for hospital
clients and  registered  nurses may increase in the future and, as a result,  we
may not be able to remain competitive. To the extent competitors seek to gain or
retain market share by reducing prices or increasing marketing expenditures,  we
could lose  revenues or hospital  clients and our margins could  decline,  which
could  seriously harm our operating  results and cause the price of our stock to
decline. In addition, the development of alternative  recruitment channels could
lead our  hospital  clients to bypass our  services,  which would also cause our
revenues and margins to decline.

       Our business  depends upon our ability to secure and fill new orders from
our hospital  clients  because we do not have long-term  agreements or exclusive
contracts with them. We do not have long-term agreements or exclusive guaranteed
order  contracts  with our  hospital  clients.  The  success of our  business is
dependent upon our ability to  continually  secure new orders from hospitals and
to fill those orders with our registered nurse  employees.  Our hospital clients
are free to place  orders  with our  competitors  and  choose  to use  temporary
healthcare  professionals  that our competitors offer them.  Therefore,  we must
maintain  positive  relationships  with  our  hospital  clients.  If we  fail to
maintain positive  relationships with our hospital clients,  we may be unable to
generate new supplemental healthcare professional orders and our business may be
adversely affected.

       Fluctuations  in patient  occupancy  at the  hospital  of our clients may
adversely affect the demand for our services and therefore the  profitability of
our  business.  Demand for our  supplemental  healthcare  staffing  services  is
significantly affected by the general level of patient occupancy at our hospital
clients' facilities. When occupancy increases,  supplemental employees are often
added before  full-time  employees are hired. As occupancy  decreases,  hospital
clients   typically  will  reduce  their  use  of  temporary   employees  before
undertaking layoffs of their regular employees.  In addition,  we may experience
more  competitive   pricing  pressure  during  periods  of  occupancy  downturn.
Occupancy  at  our  hospital  clients'  facilities  also  fluctuates  due to the
seasonality of some elective  procedures.  We are unable to predict the level of
patient  occupancy  at any  particular  time and its effect on our  revenues and
earnings.

       Healthcare  reform could  negatively  impact our business  opportunities,
revenues and margins.  The U.S.  government  has  undertaken  efforts to control
growing   healthcare  costs  through   legislation,   regulation  and  voluntary
agreements with medical care providers and drug  companies.  In the recent past,


                                       22
<PAGE>

the  U.S.  Congress  has  considered  several  comprehensive  healthcare  reform
proposals.  The proposals were generally intended to expand healthcare  coverage
for the uninsured and reduce the growth of total healthcare expenditures.  While
the U.S. Congress did not adopt any comprehensive  reform proposals,  members of
Congress may raise similar  proposals in the future.  If any of these  proposals
are approved,  hospitals and other  healthcare  facilities may react by spending
less on healthcare  staffing,  including nurses. If this were to occur, we would
have fewer business opportunities, which could have a material adverse effect on
our business.  State  governments  have also  attempted to control the growth of
healthcare  costs.  For  example,   the  state  of  Massachusetts  has  recently
implemented a regulation  that limits the hourly rate paid to temporary  nursing
agencies for registered  nurses,  licensed practical nurses and certified nurses
aides. While the current regulation does not apply to us, if similar regulations
were to be  applied  in  Florida,  our  revenues  and  margins  could  decrease.
Furthermore,  third  party  payors,  such as health  maintenance  organizations,
increasingly challenge the prices charged for medical care. Failure by hospitals
to obtain full  reimbursement  from those third party  payors  could  reduce the
demand or the price paid for our services.

       We  operate  in a  regulated  industry  and  changes  in  regulations  or
violations of regulations  may result in increased costs or sanctions that could
reduce our revenues and  profitability.  The  healthcare  industry is subject to
extensive  and  complex  federal  and  state  laws and  regulations  related  to
professional licensure, conduct of operations,  payment for services and payment
for  referrals.  If we fail to  comply  with the laws and  regulations  that are
directly  applicable  to our  business,  we could suffer  civil and/or  criminal
penalties or be subject to injunctions or cease and desist orders.  Our business
is  generally  not subject to the  extensive  and complex laws that apply to our
hospital clients, including laws related to Medicare, Medicaid and other federal
and  state  healthcare  programs.  However,  these  laws and  regulations  could
indirectly  affect the demand or the prices paid for our services.  For example,
our hospital  clients  could suffer civil and/or  criminal  penalties  and/or be
excluded from participating in Medicare,  Medicaid and other healthcare programs
if they  fail to  comply  with  the  laws and  regulations  applicable  to their
businesses.   In  addition,   our  hospital   clients  could   receive   reduced
reimbursements or be excluded from coverage, because of a change in the rates or
conditions  set by  federal  or state  governments.  In turn,  violations  of or
changes to these laws and regulations that adversely affect our hospital clients
could also adversely affect the prices that these clients are willing or able to
pay for our services.

       Significant legal actions could subject us to substantial liabilities. In
recent years, our hospital  clients have become subject to an increasing  number
of legal actions  alleging  malpractice or related legal  theories.  Because our
registered  nurses  provide  medical  care,  claims may be brought  against  our
registered nurses and us relating to the quality of medical care provided by our
registered nurse employees while on assignment at our hospital  clients.  We and
our  registered  nurse  employees  may at  times  be  named  in  these  lawsuits
regardless of our  contractual  obligations  or the standard of care provided by
our  registered  nurses.  In some  instances,  we may be required  to  indemnify
hospital  clients  contractually  against some or all of these  potential  legal
actions.  Also,  because  our  registered  nurses are our  employees,  we may be
subject to various  employment  claims and  contractual  disputes  regarding the
terms of a registered nurse's employment. We have two layers of professional and
general  liability  coverage.  The professional and general  liability  coverage
consists of primary  coverage  with limits of $1 million per  occurrence  and $3
million in the  aggregate  and an  umbrella  policy  with  limits of $5 million.
However,  our insurance coverage may not cover all claims against us or continue
to be available to us at a reasonable  cost. Also, we may not be able to pass on


                                       23
<PAGE>

all or any portion of increased  insurance costs to our hospital clients.  If we
are unable to  maintain  adequate  insurance  coverage  or if any claims are not
covered by insurance, we may be exposed to substantial liabilities.

       We may be legally liable for damages resulting from our hospital clients'
mistreatment  of our  healthcare  personnel.  Because we are in the  business of
placing our  registered  nurses in the  workplaces  of other  companies,  we are
subject to possible  claims by our registered  nurses  alleging  discrimination,
sexual  harassment,  negligence  and other  similar  activities  by our hospital
clients.  The  cost of  defending  such  claims,  even if  groundless,  could be
substantial and the associated  negative  publicity  could adversely  affect our
ability to attract and retain qualified individuals in the future.

       Difficulties in developing and maintaining our management information and
communications   systems  may  result  in   increased   costs  that  reduce  our
profitability.  Our ability to deliver  our  staffing  services to our  hospital
clients  and manage our  internal  systems  depends to a large  extent  upon the
performance of our management information and communications systems,  currently
under development. If these systems do not adequately support our operations, or
if we are required to incur  significant  additional costs to maintain or expand
these systems,  our business and financial results could be materially adversely
affected.

       Our operations  may  deteriorate if we are unable to continue to attract,
develop  and retain our sales  personnel.  Our  success  is  dependent  upon the
performance of our sales  personnel,  especially  client  registered nurse sales
managers,   hospital  account   coordinators  and  recruiters.   The  number  of
individuals  who meet our  qualifications  for these positions is limited and we
may experience  difficulty in attracting qualified  candidates.  In addition, we
commit substantial  resources to the training,  development and support of these
individuals.  Competition  for qualified sales personnel in the line of business
in which we  operate  is  strong  and there is a risk that we may not be able to
retain  our sales  personnel  after we have  expended  the time and  expense  to
recruit and train them.


Risks Associated with Potential Acquisitions or Investments

       We may acquire or make investments in businesses,  products,  services or
technologies  some of which may not be  complementary  or related to our current
businesses.  From time to time we may have discussions with companies  regarding
our  acquiring,  or  investing  in,  their  businesses,  products,  services  or
technologies.  We cannot  assure you that we will be able to  identify  suitable
acquisition  or  investment   candidates.   Even  if  we  do  identify  suitable
candidates,  we  cannot  assure  you  that we will  be able to  consummate  such
acquisitions  or  investments  on  commercially  acceptable  terms.  If we buy a
company,  we could have difficulty in assimilating that company's  personnel and
operations.  In addition,  the key personnel of the acquired  company may decide
not to work for us.  If we make  other  types  of  acquisitions,  we could  have
difficulty in assimilating the acquired products,  services or technologies into
our operations.  These difficulties could disrupt our ongoing business, distract
our  management and  employees,  increase our expenses and adversely  affect our
results  of  operations  due  to  accounting   requirements  such  as  goodwill.
Furthermore,  we may incur debt or issue equity securities to pay for any future
acquisitions.  The  issuance  of  equity  securities  could be  dilutive  to our
existing  stockholders.  We do not  have  established  criteria  for  evaluating
acquisition or investment opportunities.

                                       24
<PAGE>

       Future growth of our operations may make additional  capital or financing
necessary.  We anticipate  that we have  sufficient  working capital to meet our
working capital needs for at least the next 12 months.  However,  we may need to
raise additional funds in the future in order to:

    o  Finance unanticipated working capital requirements;
    o  Develop or enhance existing services or products;
    o  Respond to competitive pressures; and
    o  Acquire complementary businesses, technologies, content or products.

       We  cannot be  certain  that we will be able to  obtain  needed  funds on
favorable  terms,  if at all. If we decide to raise funds by issuing  additional
equity  securities,  investors  in our common  stock may  experience  additional
dilution.

       We may be unable to obtain  sufficient  funds to effectively  operate our
business,  which could damage our competitive  position. In the rapidly evolving
and highly  competitive  e-commerce  industry,  our future prospects will depend
heavily on our  ability to take  advantage  of new  business  opportunities  and
respond to technological  developments.  There can be no assurances that we will
have  sufficient  capital  resources  to  respond  to  business   opportunities,
technological   advancements  and  competitive  pressures.  A  lack  of  capital
resources could seriously damage our competitive position and prospects.

       You may  experience  significant  volatility  in the market  value of our
shares and may be unable to sell our stock on terms favorable to you. Because we
have no history of  profitability,  it will be  difficult  for  investors in the
public market to determine the intrinsic value of our shares.  In addition,  our
market  capitalization  and  public  float is  small  relative  to other  public
companies in the business-to-business  e-commerce or other sectors. As a result,
the price at which our common  stock trades may be more  volatile  than those of
other public  companies  and, as a result,  it may be more  difficult for you to
sell  our  stock  on  terms  favorable  to you.  In  addition,  any  significant
volatility  in the  market  price  of  our  common  stock  could  result  in the
initiation  of  securities  class  action  litigation,  which  could  divert our
management and financial resources from more productive uses.


ITEM 2.  PROPERTIES

       We are currently  obligated  under three separate lease  agreements  with
separate  unaffiliated  third  parties for  approximately  6,600  square feet of
office  space in Boca Raton,  Florida  (the "Boca Raton  Lease"),  approximately
1,000  square  feet of  office  space in Fort  Lauderdale,  Florida  (the  "Fort
Lauderdale  Lease") and approximately  1,260 square feet of office space in West
Palm Beach,  Florida  (the "West Palm Beach  Lease").  We are  obligated  to pay
approximately  (i) $8,700  monthly  through  February  2003 under the Boca Raton
Lease;  (ii) $900 monthly through November 2004 under the Fort Lauderdale Lease;
and (iii) $1,700  monthly under the West Palm Beach Lease.  We may terminate the
West Palm Beach Lease prior to November 2004 in either December 2002 or December
2003 upon payment of 50% of the remaining  rent due through  November  2004. Our


                                       25
<PAGE>

corporate headquarters are located in our Boca Raton, Florida office. We use our
Fort Lauderdale and West Palm Beach offices as satellite service offices for our
Nurse Staffing Business.

ITEM 3.  LEGAL PROCEEDINGS

       In September  2000 the Company sued a third party  financial  institution
because  such  financial  institution  paid a check in the  amount  of  $161,000
despite a stop payment  order duly issued by the  Company.  The payee cashed the
check, along with a replacement check. Before the Company learned that the payee
had cashed both checks,  the Company entered into a binding  settlement with the
payee  ending the  Company's  business  relationship  with the payee.  The payee
refused to return the amounts and the financial institution failed to credit the
Company's  account.  The Company filed suit,  and discovery has  commenced.  The
financial  institution  recently  sued the payee,  who then sued the Company for
indemnification,  claiming the  settlement  agreement  creates  this claim.  The
Company  disputes  this  contention.  This matter is scheduled  for mediation in
April 2002.

       In December 2000, a third party (the "Third  Party"),  unaffiliated  with
the Company,  instituted  arbitration against the Company in Dallas, Texas based
upon  allegations  that the Company  breached a February  18, 2000  professional
services   agreement.   The  Third  Party  claimed   damages  of  $308,083  plus
un-liquidated damage amounts for copyright  infringement,  interest,  attorneys'
fees and costs. The Company filed a counterclaim denying the breach and claiming
entitlement  to a refund of  $73,496  previously  paid to the Third  Party  plus
damages of $250,000  because of the Third Party's  breach of its  obligations to
the  Company.  This  matter was  settled on June 30,  2001,  resulting  with the
Company  making a  $175,000  payment  to the Third  Party.  This  settlement  is
classified as a litigation  expense in the statement of operations  for the year
ended December 31, 2001.

       In April and May 2001, the Company received notice of, or had been served
with, four purported class action lawsuits (Foderaro vs. PartsBase.com,  Inc. et
al, Case No.: 01-8319 CIV- FERGUSON;  IKCYBERINVESTMENTS vs. PartsBase.com, Inc.
et al, Case No.: 01-8368  CIV-SEITZ;  and Webb vs.  PartsBase,  et.al.  Case No.
01-8376  CIV- GRAHAM and Jesus  Martin vs.  PartsBase.com,  Inc. et al, Case No.
01-8526-CIV-UNGARO-BENAGES).  These  cases  were  consolidated  into one  action
entitled,  In  re:   PartsBase.com,   Inc.  Securities   Litigation,   Case  No.
01-8319-CIV-UNGARO-BENAGES/BROWN   currently   before   the   Honorable   Ursula
Ungaro-Benages.  The  consolidated  lawsuit  names as  defendants  the  Company,
certain of its current and former officers and directors,  and the  underwriters
of its initial public offering of securities.  The consolidated  lawsuit alleges
violations  of Sections 11,  12(a)(2) and 15 of the  Securities  Act of 1933 and
alleges the  Company's  March 2000  registration  statement  misrepresented  and
failed to disclose  matters  related to the Company's  business  operations  and
membership sales. The complaint alleges damages of nearly $42 million. The Court
has recently  certified a class consisting of purchasers of the Company's common
stock in the offering  during the period from March 22, 2000  through  April 25,
2000.  The Company  continues to believe that the  allegations  contained in the
consolidated  lawsuit are without  merit and intends to  vigorously  defend this
action.  Nevertheless,  an unfavorable resolution of these lawsuits could have a
material  adverse  effect on the  Company  in one or more  future  periods.  The
Company  maintains a director  and  officer's  liability  insurance  policy that
provides $3 million of coverage, with retention of $200,000. The Company's legal
expenses  currently exceed the retention  amount.  At June 30, 2001, the Company
recorded a litigation reserve for $200,000 to cover the expected retention. This
reserve has been included in litigation and other related costs in the statement


                                       26
<PAGE>

of operations  for the year ended  December 31, 2001.  The parties are currently
engaged in settlement discussions.  The results of the settlement discussions
th ultimate resolution of this matter are uncertain.

       The Company does not intend to file further  Current  Reports on Form 8-K
or other disclosures  describing  additional lawsuits,  if any, purporting class
action status, in either federal or state court,  which are based on allegations
substantially  similar to those contained in the consolidated  lawsuit described
above.

       In  July  2001,  the  Company  was  served  with a  lawsuit  filed  by an
information  technology  vendor  claiming  damages  resulting from the Company's
alleged  breach  of a  software  sales and  service  contract  in the  amount of
$126,631 plus  interest,  costs and fees.  This amount is included in litigation
and other  related  costs in the  statement  of  operations  for the year  ended
December 31, 2001.  The Company  intends to  vigorously  defend the  allegations
contained in this lawsuit.  In July 2001, the Company sued the  manufacturer  of
such software for damages totaling $220,000 as a result of software malfunction.
The  Company  believes  the  resolution  of this matter will not have a material
impact  upon  the  Company's  consolidated  financial  statements,   results  of
operations or cash flows

       In March 2001 we received  notice from counsel to the  Business  Software
Alliance  (the  "BSA"),  an  industry  watchdog  group   representing   software
manufacturers,  in  connection  with the  BSA's  investigation  of our  possible
illegal  duplication  of  certain  software  companies'   proprietary   software
products.  Through subsequent  correspondence  from the BSA, the BSA has alleged
that we have installed  unauthorized  copies of BSA member software  products on
our  computers.  The  correspondence  from the BSA provides  that our  potential
exposure  in  this  matter  could  be  over  $1,950,000  if  willful   copyright
infringement  is shown.  We are  currently  in  negotiations  with the BSA in an
attempt  to  resolve  the  matter.  To  date,  we are  not  aware  of any  legal
proceedings initiated by BSA in this matter.

       From time to time, we could be subject to legal proceedings and claims in
the ordinary  course of business,  including  claims of alleged  infringement of
trademarks, copyrights and other intellectual property rights.

       We are not currently aware of any other legal  proceedings or claims that
we  believe  are  likely to have a  material  adverse  effect  on our  financial
position, results of operations, or cash flows.

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

       No matters  were  submitted to a vote of  stockholders  during the fourth
quarter of the fiscal year covered
by this report.


                                       27
<PAGE>


                                     PART II

ITEM 5.  MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS



       Since  March 22,  2000,  our Common  Stock has been  traded on the NASDAQ
National  Market System under the symbol "PRTS".  The following table sets forth
the high and low  closing  sales  prices  for our Common  Stock for the  periods
indicated.


           2001                                          High           Low
           First Quarter                                $2.56          $1.00
           Second Quarter                               $1.77          $0.79
           Third Quarter                                $1.00          $0.40
           Fourth Quarter                               $0.95          $0.41


           2000                                          High           Low
           First Quarter (Commencing March 22)         $14.88          $9.00
           Second Quarter                              $10.88          $4.25
           Third Quarter                               $ 8.75          $2.75
           Fourth Quarter                              $ 3.88          $1.69



       On  February  15,  2002,  the  Company  received  notice  from the NASDAQ
National  Market  warning that the Company's  stock may be delisted  because its
common  stock has failed to  maintain a minimum bid price of $1 over the last 30
consecutive trading days and failed to maintain a minimum market value of public
float of  $5,000,000.  In  accordance  with  MarketPlace  Rules,  the Company is
provided 90 calendar  days, or until May 15, 2002 to regain  compliance.  If the
Company is unable to  demonstrate  compliance on or before May 15, 2002,  NASDAQ
staff will  provide the Company with written  notification  that its  securities
will be delisted. At any time, the Company may appeal NASDAQ Staff's decision to
a NASDAQ Listing Qualifications Panel.

       As of March 26, 2002, there were approximately 1,490 holders of record of
our Common Stock.

       We have  never paid cash  dividends  on our  common  stock.  We intend to
retain future earnings,  if any, to finance the expansion of our business and do
not anticipate that any cash dividends will be paid in the  foreseeable  future.
The future  dividend policy will depend on our earnings,  capital  requirements,
expansion plans, financial condition and other relevant factors.

                                       28
<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

       The  following  selected  consolidated  financial  data should be read in
conjunction  with the  consolidated  financial  statements  and the notes to the
consolidated  financial statements and "Management's  Discussion and Analysis of
Financial Condition and Results of Operations",  which are included elsewhere in
this Form 10-K. In September  2001, we incorporated  RNpartners,  a wholly owned
subsidiary,   Florida  corporation,  to  launch  our  nurse  staffing  business.
RNpartners commenced operations on October 1, 2001. The Consolidated  Statements
of Operations  Data for 2001 contain the operations of RNpartners for the period
of October 1, 2001 through  December 31, 2001.  The  Consolidated  Balance Sheet
Data includes the balances of  RNpartners as of December 31, 2001.  The selected
consolidated  financial  data of  PartsBase.Inc.  as of and for each of the five
years in the period ended  December 31, 2001 have been derived from  PartsBase's
audited consolidated financial statements.
<TABLE>

Consolidated Statements of
<CAPTION>
   Operations Data:                                            For the Years Ended December 31,
                                            ----------------------------------------------------------------------------
                                                    1997          1998          1999           2000            2001
                                            --------------- -------------- -------------- --------------- --------------
<S>                                              <C>            <C>         <C>           <C>             <C>
Net revenues                                     $   2,861      $   3,504   $   362,224   $   4,097,585   $  5,619,121
                                                  ---------      ---------   -----------    ------------    -----------

Cost of revenues                                   104,041         43,452     1,412,532       6,140,741      4,451,631
Stock-based compensation expense                        --             --     1,799,139       2,308,440        247,506
                                                  ---------      ---------   -----------    ------------    -----------
  Total cost of revenues                           104,041         43,452     3,211,671       8,449,181      4,699,137
                                                  ---------      ---------   -----------    ------------    -----------
    Gross profit (loss)                           (101,180)       (39,958    (2,849,447)     (4,351,596)       919,984
                                                  ---------      ---------   -----------    ------------    -----------

Operating expenses:
   General and administrative expenses              90,452        108,163     1,293,091       8,920,354      7,224,266
   Stock-based compensation expense                     --             --       899,821       1,944,398         72,931
   Litigation and other related costs                   --             --            --              --        457,500
                                                  ---------      ---------   -----------    ------------    -----------
  Total operating expenses                          90,452        108,163     2,192,912      10,864,752      7,754,697
                                                  ---------      ---------   -----------    ------------    -----------
Operating loss                                    (191,632)      (148,121)   (5,042,359)    (15,216,348)    (6,834,713)
Other income (expense), net                             --             --      (870,675)      1,762,367      1,222,480
                                                  ---------      ---------   -----------    ------------    -----------
Net loss before value of preferred
 stock beneficial conversion feature              (191,632)      (148,121)   (5,913,034)    (13,453,981)    (5,612,233)

Value of preferred stock beneficial
    conversion feature                                  --             --    (1,902,375)             --             --
                                                  ---------      ---------   -----------    ------------    -----------
 Net loss attributable to common stockholders    $(191,632)     $(148,121)  $(7,815,409)   $(13,453,981)   $(5,612,233)
                                                  =========      =========   ===========    ============    ===========

Basic and diluted net loss per share             $      --      $      --   $      (.84)   $      (1.03)   $      (.40)
                                                  =========      =========   ===========    ============    ===========
Weighted average of common shares
outstanding                                             --             --     9,251,250      13,053,755     14,108,895
                                                  =========      =========   ===========    ============    ===========



Consolidated Balance Sheet Data:
                                                                      As of December 31,
                                            -------------------------------------------------------------------------
                                                    1997          1998          1999           2000            2001
                                            --------------- -------------- -------------- --------------- --------------
Cash and cash equivalents                        $      --      $      --   $   735,276    $ 23,045,491    $23,851,593
Investments, at amortized cost current portion)         --             --            --       7,139,052        900,073
Working capital (deficiency)                        (1,709)       (19,044)     (687,172)     27,652,259     22,762,318
Total assets                                         7,848          6,084     4,729,295      37,281,553     29,163,770
Accumulated deficit                               (263,538)      (411,659)   (7,762,678)    (21,216,659)   (26,828,892)
Total stockholders' equity (deficiency)              6,139        (19,044)    1,541,916      32,347,901     26,439,487
</TABLE>

                                       29
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS


Overview

       We  currently   operate  in  two  business   segments:   (i)  we  provide
business-to-business  e-commerce  services  for the  aviation  industry and (ii)
since October 2001 we have provided,  for a fee, registered nurses for temporary
assignment  to  hospitals  located  in Broward  County  and Palm  Beach  County,
Florida.

       We were  incorporated  in Texas on April 27,  1999 and prior to such date
operated as a division of Aviation  Laboratories,  Inc. At the Company's  Annual
Meeting of  Stockholders  held on June 20, 2001,  the  stockholders  approved an
amendment to affect a change in the state of  incorporation  of the Company from
Texas to Delaware and changed the name of the Company from  PartsBase.com,  Inc.
to PartsBase, Inc. As a Texas corporation,  the Company's shares of common stock
had no par value. As a result of the reincorporation in Delaware,  the Company's
shares of preferred and common  stock,  each have a $0.001 par value and $14,004
was reclassified from Additional  Paid-In Capital to Common Stock to reflect the
par value of the  shares of common  stock  outstanding.  No shares of  preferred
stock were issued or outstanding at December 31, 2001 and 2000, respectively.

       The following  discussion  of our  consolidated  financial  condition and
results of operations  should be read together with the  consolidated  financial
statements  and the related  notes  included  elsewhere in this report which are
deemed to be incorporated into this section.  The following  discussion contains
forward-looking  statements that reflect our plans,  estimates and beliefs.  Our
actual  results  may  differ   materially   from  those   anticipated  in  these
forward-looking statements as a result of a number of factors, including but not
limited to those set forth under "Risk  Factors" and included  elsewhere in this
report.

       Since we began operations in April 1996, we have incurred significant net
losses.  For the years ended December 31, 1997,  1998,  1999, 2000 and 2001, our
consolidated  net losses  attributable to holders of common stock were $191,632,
$148,121, $7,815,409, $13,453,981 and $5,612,233, respectively.

   The Aviation E-commerce Business and Corporate


Results of Operations

Comparison of Years Ended December 31, 2001 and 2000

Net Revenues

       Net revenues consist of subscription  fees charged to subscribers and, to
a lesser extent,  banner  advertising and other revenues.  For fiscal years 2001
and 2000, our net revenues were  $5,520,825  and  $4,097,585,  respectively,  an
increase of  $1,423,240  or 35%.  During fiscal year 2001 we signed up 1,423 new
subscribers and renewed 1,603 subscriptions from existing customers. Of the 2001
renewed  subscriptions,  501 subscribers renewed their subscriptions for a third
year.  This compares to 3,175 new  subscribers and 1,285 renewals sold in fiscal


                                       30
<PAGE>

year 2000.  Given the finite size of the  aerospace  community the number of new
subscribers  signed up in 2001  decreased  compared  to 2000.  The  average  new
subscription  fee in fiscal  year 2001 was $1,863  compared  to $1,411 in fiscal
year 2000.  The average new  subscriber fee increased in fiscal year 2001 due to
higher  prices due to  additional  value added  services  being  provided to our
subscribers such as government  procurement data, the new "PartsDirect" feature,
premium parts search  functionality  improvements and other  enhancements to our
service  offerings.  At  December  31,  2001,  we had 2,926  paying  subscribers
compared to 4,756 paying  subscribers at December 31, 2000. A paid subscriber is
defined as a customer whose  subscription  is currently  active,  and therefore,
does not include  subscribers whose  subscriptions have expired.  The subscriber
count decreased during 2001 compared to 2000, as PartsBase was unable to acquire
new  subscribers  at a  sufficient  rate  to  replace  current  customers  whose
subscriptions  expired or were deactivated during their subscription  period for
non payment of their invoice.

       For the fiscal years 2001 and 2000,  gross  revenues were  $5,234,073 and
$6,293,834,  respectively,  a decrease of  $1,059,761,  or 17%.  The decrease in
gross revenue in fiscal year 2001 is  attributable  to a smaller sales force,  a
deeper  penetration of the finite number of members in the aerospace  community,
fewer  renewals  of initial  subscribers  in 2000 and a general  downturn in the
overall  aviation  industry as a result of the events of September 11, 2001. Our
subscription activity has since rebounded to pre September 11, 2001 levels.

       PartsBase  records  subscription,  banner  advertising and other revenues
over the life of the  respective  subscription,  which is  typically  12 months.
Gross revenue  represents total  subscription and advertising  sales made during
the  period,  of which a portion is  deferred  and  recognized  as  earned.  Net
revenues  represent that portion of current and prior year's gross revenues that
was earned during the period. Sales costs, including  commissions,  are expensed
as incurred, and are included in the cost of revenue. Deferred revenue decreased
to  $2,231,076  at December 31, 2001,  compared to $3,349,869 as of December 31,
2000.

       The following  table sets forth gross revenue by product line for each of
the four quarters in fiscal year 2001, as well as sequential  quarter-to-quarter
revenue growth  percentage for the second,  third, and fourth quarters of fiscal
year 2001.
<TABLE>

<CAPTION>

                                               Revenue Detail by Quarter (000's)
                                                  Year Ended December 31, 2001

---------------------------------------------------------------------------------------------------------------
                                             Three Months Ended                        Sequential Growth
                                  ------------------------------------------    -------------------------------
                                   03/31       06/30      09/30      12/31      2nd Qtr    3rd Qtr     4th Qtr
                                   -----       -----      -----      -----      -------    -------     -------
<S>                                <C>        <C>        <C>        <C>          <C>         <C>        <C>
New Subscriptions                  $1,048     $  729     $  492     $  381       (30%)       (33%)      (23%)
Renewal Subscriptions                 509        387        591        833       (24%)        53%        41%
Advertising                            60         89         27         26        48%        (70%)       (0%)
Other                                  43          2         15          2       (95%)       650%       (87%)
                                    -----      -----      -----      -----       -----       -----       ----
Total Gross Revenue                $1,660     $1,207     $1,125     $1,242       (25%)       (82%)       10%
                                    =====      =====      =====      =====       =====       =====      =====
Total Net Revenue                  $1,599     $1,354     $1,344     $1,224       (15%)        (1%)       (9%)
                                    =====      =====      =====      =====       =====       =====      =====
Salesperson Compenssation          $  730     $  484     $  398     $  422       (34%)       (18%)        6%
                                    =====      =====      =====      =====       =====       =====      =====
Sales Comp/Gross Rev.                  44%        40%        35%        34%
                                     =====      =====      =====      =====
Deferred Revenue Bal.               $3,175     $2,731     $2,413     $2,231
                                     =====      =====      =====      =====
</TABLE>


                                       31
<PAGE>

Cost of Revenues

       Cost of revenues  consists of  compensation  for our sales and  marketing
personnel,  telephone  expenses,   amortization  and  maintenance  of  web  site
development  costs,  contract  payments  to a third party for  procurement  data
functionality and a proportion of rent and office expenses.  Compensation  costs
for sales and  marketing  personnel  are  incurred  in the month  paid while the
revenue is pro-rated over the related subscription period,  generally a 12-month
period.  Therefore,  during quarters with negative gross revenue  growth,  gross
margins will be positively impacted due to the effect of a smaller pool of sales
commissions  being expensed in their entirety during the quarter,  whereas sales
from prior  quarters  with larger gross  revenues are being  amortized  over the
subscription  term. For fiscal year 2001, our total cost of revenues,  including
stock based  compensation  of $247,506 was  $4,587,664  compared to  $8,449,181,
including  stock-based  compensation  of  $2,308,440,  for fiscal  year 2000,  a
decrease of $3,861,517,  or 46%. As a percent of net revenues, costs of revenues
excluding stock-based compensation,  were 79% and 150% for fiscal years 2001 and
2000,  respectively.  Salesperson compensation as a percentage of gross revenues
was 39% and 45% for  fiscal  years  2001  and  2000,  respectively.  Salesperson
compensation  as a  percentage  of gross  revenues  is  starting  to trend  back
downwards,  as renewals,  for which the commission rate is  substantially  lower
than new subscriptions, comprise a greater portion of gross revenues.

       The primary  reason for the decrease of  $1,800,583  in cost of revenues,
excluding  stock-based  compensation  for  fiscal  year  2001 is a  decrease  of
$822,297 in  commissions  to our  salespeople.  At December  31, 2001  PartsBase
employed 72 persons in sales and customer  service as compared to 127 persons at
December 31,  2000.  Additionally  included in cost of revenues are  information
technology  costs  related to our website which had decreased in 2001 by 308,117
primarily  as a  result  of a  decrease  in the  level  of  website  development
activities.

General and Administrative Expenses

       For  fiscal  years  2001  and  2000,   aviation  e-commerce  general  and
administrative  expenses,  excluding stock-based compensation expense of $72,931
and   $1,944,398   respectively,   and   unallocated   corporate   general   and
administrative  expenses of $1,048,075 and $0 respectively,  were $5,916,591 and
$8,920,354,  respectively; a decrease of 34% and $3,003,763 from the prior year.
General and administrative  expenses  consisted  primarily of personnel costs of
$3,342,017 and  $5,577,268,  rent expense of $685,664 and $536,769,  advertising
costs of $100,364 and $745,685,  bad debt expense of $705,413 and $142,254,  and
other costs totaling $1,083,133 and $1,918,378 respectively, consisting of rent,
utilities, supplies and other related administrative costs, for the fiscal years
ended 2001 and 2000, respectively.

       The  decrease in other  costs for the fiscal  year 2001,  compared to the
prior year is primarily  attributable  to a decrease of $248,073 in amortization
of deferred financing costs. The Company made significant  personnel  reductions
during 2001.  In addition,  depending on salary level,  all  remaining  salaried
personnel took a pay reduction,  ranging from 5%-30%.  The Company  expects that
its personnel  costs will  continue to decrease  into 2002.  The increase in bad
debt  expense  compared  to the same  periods of the prior  year  relates to the
Company's policy of paying sales commissions upon signing a Company sales order,
rather than upon cash receipt,  thereby  increasing the  probability  that sales
orders of lesser  quality could be  submitted.  Although the Company can recover
commissions  paid to sales  representatives  if the  customer  does not pay, the


                                       32
<PAGE>

Company's  high  turnover  has made it  difficult  to  collect  on a portion  of
subscriptions  sold.  During  the  third  quarter,  the  Company   significantly
tightened its deal verification processes, and expects that its bad debt expense
will decrease in 2002.

       For the fiscal  years 2001 and 2000,  unallocated  corporate  general and
administrative  expenses,  excluding  stock-based  compensation  of $72,931  and
$1,944,398,   respectively,  were  $1,048,075  and  $0.  Corporate  general  and
administrative   expenses  consisted  primarily  of  executive  compensation  of
$663,599,  professional  and  directors'  fees of $ 279,219 and  directors'  and
officers' liability insurance premiums of $105,257.

       At  December  31,  2001,  we  employed  25  persons  in   administrative,
information   technology  and  executive   management  positions  (inclusive  of
corporate positions), compared with 62 persons in such positions at December 31,
2000.

Corporate Litigation and Other Related Costs

       Corporate  litigation and other related costs of $457,500 and $0 for 2001
and 2000,  respectively,  consist of a provision for $200,000 to cover  incurred
retention  costs  associated with a class action lawsuit the Company is party to
as well as $257,500,  during 2001, to settle or accrue for  litigation and other
related costs. As of December 31, 2001, $427,500 had been paid of which $227,500
represented settlement payments and related costs and the remaining $200,000 had
been paid to cover  incurred  retention  costs  associated  with a class  action
lawsuit to which the Company is a defendant.

Stock-Based Compensation

       In connection with the issuance of employee stock options issued prior to
our IPO,  stock-based  compensation  expense  of  $320,437  and  $4,252,838  was
recognized in fiscal years 2001 and 2000,  respectively,  and is classified as a
component  of  cost  of  revenue  and  operating  expense  (See  Note  7 to  the
consolidated  financial  statements).  These remaining charges of $1,090 will be
fully recognized by January 2002.

Corporate Other Income, Net

       Corporate other income, net consisting primarily of interest and dividend
income  was   $1,222,480   and  $1,762,367  for  fiscal  years  2001  and  2000,
respectively,  a decrease of $539,887 in 2001. The decrease in other income, net
in  fiscal  year  2001 is  attributable  to lower  cash,  cash  equivalents  and
investments  balances  and an overall  market  decline in interest  rates on the
Company's investments and cash equivalents.

Net Loss

       As a  result  of the  foregoing,  the net  loss  attributable  to  common
stockholders,  inclusive of corporate  expenses,  decreased  to  $5,339,456  for
fiscal year 2001 from  $13,453,981 for fiscal year 2000.  Excluding  stock-based
compensation expense in 2001 and 2000 (See Note 7 to the consolidated  financial
statements),  the net loss  attributable to common  stockholders for fiscal year
2001 decreased to $5,019,019, compared to $9,201,143 for fiscal year 2000.


                                       33
<PAGE>


Comparison of Years Ended December 31, 2000 and 1999

Net Revenues

       For fiscal years 2000 and 1999,  our net  revenues  were  $4,097,585  and
$362,224,  respectively, an increase of $3,735,361 or 1,031%. During fiscal year
2000, we signed up 3,175 new  subscribers and renewed 1,285  subscriptions  from
existing customers.  This compares to 1,952 new subscribers and 26 renewals sold
in fiscal year 1999. The average subscription fee in fiscal year 2000 was $1,411
compared to $899 in fiscal year 1999.  The average new  subscriber fee increased
in fiscal year 2000 due to additional value added services being provided to our
subscribers,  such as government  procurement data. At December 31, 2000, we had
4,756 paying  subscribers,  compared to 1,952 paying subscribers at December 31,
1999. A paid subscriber is defined as a customer whose subscription is currently
active,  and therefore,  does not include  subscribers whose  subscriptions have
expired.

       For the fiscal years 2000 and 1999,  gross  revenues were  $6,293,834 and
$1,631,855,  respectively,  an increase of $4,661,979,  or 286%. The increase in
gross  revenue in fiscal  year 2000 is  attributable  to a larger  sales  force,
subscription price increases, additional value-added services, and the impact of
renewals on subscriptions sold in 1999.

       We recognize subscription, banner advertising and other revenues over the
life of the respective subscription, which is typically 12 months. Gross revenue
represents total  subscription and advertising  sales made during the period, of
which a portion is deferred and  recognized  as earned.  Net revenues  represent
that portion of current and prior year's gross  revenues  that was earned during
the period. Sales costs,  including  commissions,  are expensed as incurred, and
are  included  in the  cost of  revenue.  Deferred  revenue,  net  increased  to
$3,349,869 at December 31, 2000, compared to $1,263,978 as of December 31, 1999.

       The following  table sets forth gross revenue by product line for each of
the four quarters in fiscal year 2000, as well as sequential  quarter-to-quarter
revenue growth  percentage for the second,  third, and fourth quarters of fiscal
year 2000.
<TABLE>

<CAPTION>

                                       Gross Revenue by Product Line (000's)
                                           Year Ended December 31, 2000

   ------------------------------------------------------------------------------------------------------
                                     Three Months Ended                           Sequential Growth
                       -------------------------------------------       --------------------------------
                         03/31       06/30       09/30       12/31       2nd Qtr     3rd Qtr      4th Qtr
                         ------      ------       -----      -----       -------     -------      -------
<S>                      <C>         <C>         <C>         <C>            <C>       <C>          <C>
   Subscription          $1,182      $1,191      $1,607      $2,000         0.1%      34.9%        24.5%
   Advertising              128          95          48          20        25.8%)    (49.5%)      (58.3%)
   Other                      1          17           5           -     1,600.0%     (70.6%)          -
                          -----       -----       -----       -----     ---------    -------      -------
   Total                 $1,311      $1,303      $1,660      $2,020         0.0%      27.4%        21.7%
                          =====       =====       =====       =====     =========    =======      =======
</TABLE>


Cost of Revenues

       For fiscal year 2000, our total cost of revenues,  including  stock-based
compensation of $2,308,440,  were $8,449,181  compared to $3,211,671,  including
stock-based  compensation  of  $1,799,139,  for fiscal year 1999, an increase of
$5,237,510,  or 163%.  As a  percent  of  sales,  costs of  revenues,  excluding


                                       34
<PAGE>

stock-based  compensation,  were 150% and 390% for  fiscal  years 2000 and 1999,
respectively.  The  primary  reason for the  increase of  $4,728,209  in cost of
revenues,  excluding  stock-based  compensation  for  fiscal  year  2000,  is an
increase of  $2,651,974  in  commissions  to our  salespeople,  and  information
technology  costs totaling  $1,023,669  incurred in 2000, which include contract
payments  totaling  $700,000 to a third party for  government  procurement  data
functionality, that were not incurred in 1999. At December 31, 2000, we employed
127 persons in sales and  marketing,  compared  with 51 in total at December 31,
1999.

General and Administrative Expenses

       For  fiscal  years  2000 and  1999,  our  operating  expenses,  including
stock-based compensation expense, were $10,864,752 and $2,192,912, respectively,
an  increase  of  $8,671,840,   or  395%  from  the  prior  year.   General  and
administrative expenses consisted primarily of personnel costs of $5,577,268 and
$478,361,  advertising costs of $745,685 and $151,195,  and other costs totaling
$2,597,401  and $663,535,  consisting of  professional  fees,  rent,  utilities,
supplies and other related administrative costs, for the fiscal years ended 2000
and 1999,  respectively.  At  December  31,  2000,  we  employed  62  persons in
administrative,  information  technology  and  executive  management  positions,
compared with 16 persons in such positions at December 31, 1999.

Stock-Based Compensation

       In connection with the issuance of employee stock options issued prior to
our IPO,  stock-based  compensation  expense of $4,252,838  and  $2,698,960  was
recognized in fiscal years 2000 and 1999,  respectively,  and is classified as a
component of cost of revenue and operating  expense (See Note 7 to the financial
statements).

Other Income (Expense), Net

       For  fiscal  years  2000  and  1999,  other  income  (expense),  net  was
$1,762,367  and  ($870,675),  respectively,  an increase of  $2,633,042 in other
income,  net in 2000.  The  significant  increase in other income net, in fiscal
year 2000 is attributable  to interest  income earned  primarily on the proceeds
from our IPO compared to non-cash  interest  expense  related to the issuance of
convertible notes as part of our private placement during the prior year.

Net Loss

       As a  result  of the  foregoing,  the net  loss  attributable  to  common
stockholders  increased to $13,453,981  for fiscal year 2000 from $7,815,409 for
fiscal year 1999.  Excluding  stock-based  compensation expense in 2000 and 1999
and the value of the preferred stock beneficial  conversion feature in 1999 (See
Note 7 to the consolidated financial  statements),  the net loss attributable to
common  stockholders  for fiscal year 2000 decreased to $9,201,143,  compared to
$3,214,074 for fiscal year 1999.


                                       35
<PAGE>


   The Nurse Staffing Business

Results of Operations

Comparison of Years Ended December 31, 2001 and 2000

Net Revenues

       We commenced our nurse staffing operations on October 1, 2001 and through
December  31, 2001 earned  $98,296 in net  revenues  from the  placement  of our
registered nurse employees working as supplemental nursing staff in hospitals in
Palm Beach  County  and  Broward  County,  Florida.  Approximately  40% of these
revenues were derived from two hospitals.

Cost of Revenues

       Cost of  revenues  consists  of  compensation  for our  registered  nurse
employees,   uniforms  and  costs  incurred  in  the  recruitment  of  qualified
professional healthcare  professionals.  For the three months ended December 31,
2001 our  total  cost of  revenues  totaled  $111,473  or 113% of net  revenues.
Registered  nurse  compensation as a percentage of cost of revenues  totaled 86%
for the three months ended December 31, 2001.

General and Administrative Expenses

       For the three months ended December 31, 2001,  general and administrative
expenses  totaled  $259,600.   General  and  administrative  expenses  consisted
primarily of personnel costs of $176,180,  advertising costs for the recruitment
of  qualified  registered  nurses of $27,639 and other costs  totaling  $55,781,
consisting of rent, marketing expenses, phone and utilities,  supplies and other
related administrative costs. At December 31, 2001, we employed seven persons in
administrative,  and  executive  management  positions  in  our  nurse  staffing
operations.

Net Loss
       As a result of the  foregoing,  the net loss  incurred  during  the three
months ended December 31, 2001 totaled $272,777.

Financial Condition

       For  fiscal  years  2001  and  2000,  the  Company  had  $23,851,593  and
$23,045,491  of cash and cash  equivalents,  $900,073 and  $7,139,052 of current
investments at amortized  cost,  and $1,070,000 and $500,000 of restricted  cash
invested in certificates of deposit  respectively.  At December 31, 2001, we had
working capital of $22,762,318. The decrease in current investments at amortized
costs  is  attributable  to our use of cash  to fund  operations  of both of our
business segments and the repurchase of our common stock. During the fiscal year
ended  December 31, 2001, we  repurchased  538,120 shares of our common stock on
the open  market  at an  aggregate  purchase  price of  $795,544,  inclusive  of
brokerage fees. All of these shares were retired as of December 31, 2001.

       We believe that our existing  cash and cash  equivalents  and  marketable
securities  will be  sufficient to meet our  anticipated  cash needs for working
capital and capital expenditures for at least the next twelve months. Our future


                                       36
<PAGE>

long-term  capital needs will depend  significantly on the rate of growth of our
businesses,  the timing of  extended  service  offerings,  the  success of these
services  once  they are  launched  as well as the  extent to which we engage in
acquisitions or investments.  Any projections of future long-term cash needs and
cash  flows  are  subject  to  substantial  uncertainty.  We may  need to  raise
additional  funds in future  periods  through public or private  financings,  or
other arrangements. Any additional financings, if needed, might not be available
on reasonable  terms or at all.  Failure to raise capital when needed could harm
our business, financial condition and results of operations. In addition, such a
failure to raise  needed  capital  could  impair our future  plans to expand our
e-marketplace,  attract new members, provide new and upgrade current services to
our members and expand the operations of our supplemental  nurse staffing agency
either through  internal growth or acquisition.  If additional  funds are raised
through  the  issuance  of equity  securities,  additional  dilution to existing
shareholders could result. In addition,  any equity securities issued might have
rights, preferences or privileges senior to our common stock.

Cash Flows

       Net cash flows used in operating activities were $4,616,561,  $7,844,219,
and $596,498 for fiscal years 2001, 2000, and 1999,  respectively.  The decrease
in net cash used in operating  activities for fiscal year 2001 was primarily the
result  of  decreased   expenditures   for  sales  and  marketing,   information
technology,  and  general  and  administrative  expenses  to  coincide  with the
Company's streamlining of operations. The increase in net cash used in operating
activities   for  fiscal  year  2000  was  primarily  the  result  of  increased
expenditures  for sales,  marketing,  information  technology  and  general  and
administrative expenses to coincide with the Company's building critical mass of
its operations.

       Net  cash  flows  provided  by  (used  in)  investing   activities   were
$6,039,281,  ($10,592,615),  and  ($1,238,124)  for fiscal years 2001, 2000, and
1999,  respectively.  The decrease in net cash used in investing  activities for
fiscal  year 2001  includes  the  maturity  of  investment  securities  totaling
$6,918,743,  as compared to the purchase of $7,643,140 of investment  securities
in 2000 and a decrease in  expenditures  resulting  from  purchases  of personal
property and  equipment for the new facility,  including  computer  hardware and
software commensurate with the streamlining of operations in 2001 as compared to
an increase in expenditures  for personal  property and equipment for the former
corporate headquarters, including computer hardware and software.

       Net  cash  flows  (used  in)  provided  by  financing   activities   were
($616,618),  $40,747,049,  and $2,569,898 for fiscal years 2001, 2000, and 1999,
respectively.  The increase in net cash used in financing  activities for fiscal
year 2001 is primarily  the result of the  repurchase  of 538,120  shares of the
Company's  common stock for  $795,544 as opposed to net proceeds of  $40,881,000
received by PartsBase in connection with the issuance of common stock related to
the Company's IPO,  offset by the purchase for treasury of 136,685 shares of our
common stock, totaling $330,202.

New Accounting Guidance

       In June 1998, the Financial  Accounting  Standards  Board ("FASB") issued
Statement of Accounting  Standards ("SFAS") No. 133,  "Accounting for Derivative
Instruments and Hedging  Activities".  SFAS No. 133  establishes  accounting and
reporting  standards  requiring  that  every  derivative  instrument  (including


                                       37
<PAGE>

certain derivative  instruments  embedded in other contracts) be recorded in the
balance sheet as either an asset or liability  measured at its fair value.  SFAS
No. 133  requires  that  changes in the  derivative's  fair value be  recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying  hedges allows for a derivative's  gains and losses to
offset  related  results on the hedged item in the statement of  operations  and
requires  that a company  must  formally  document,  designate  and  assess  the
effectiveness  of  transactions  that receive hedge  accounting  treatment.  The
Company  adopted the  provisions of SFAS No. 133, as amended by SFAS No. 138, in
the first quarter of 2001 and its adoption had no impact to its consolidated
financial statements.

       In June 2001, the FASB issued SFAS No. 141, "Business  Combinations"  and
SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires that
the  purchase  method  of  accounting  be  used  for all  business  combinations
completed  after  June 30,  2001.  SFAS No.  141 also  specifies  criteria  that
intangible  assets acquired in a purchase method business  combination must meet
to be recognized and reported  apart from  goodwill.  SFAS No. 142 requires that
goodwill  and  intangible  assets  with  indefinite  useful  lives no  longer be
amortized, but instead be tested for impairment at least annually on a basis set
forth in SFAS No. 142, and that intangible assets with estimatable  useful lives
be amortized  over their  respective  useful lives to their  estimated  residual
values, and reviewed for impairment.  The Company adopted the provisions of SFAS
No. 141 and SFAS No. 142 on January 1, 2002.  Adoption of these two standards is
not expected to have a material effect on the Company's results of operations or
financial position.

       In June  2001,  the FASB  issued  SFAS No.  143,  "Accounting  for  Asset
Retirement Obligations",  which addresses financial accounting and reporting for
legal obligations  associated with the retirement of tangible  long-lived assets
that result from acquisition,  construction,  development,  and/or normal use of
the asset,  and the associated asset retirement cost. SFAS No. 143 requires that
the fair value of a liability for an asset  retirement  obligation be recognized
in the period in which it is incurred if a reasonable estimate of fair value can
be made. The fair value of the liability is added to the carrying  amount of the
related  asset and  depreciated  over the life of the asset.  The  liability  is
accreted each period through charges to operating expense.  If the obligation is
settled for other than the carrying  amount of the  liability,  the Company will
recognize a gain or loss on  settlement.  The  Company is required  and plans to
adopt the  provisions of SFAS No. 143 for the quarter ending March 31, 2002. The
adoption  of SFAS No.  143 is not  expected  to have a  material  effect  on the
Company's financial position or results of operations.

       In  August  2001,  the FASB  issued  SFAS No.  144,  "Accounting  for the
Impairment  or  Disposal  of  Long-Lived   Assets,"  which  addresses  financial
accounting  and reporting for the  impairment or disposal of long-lived  assets.
This  statement  supersedes  SFAS No.  121, "Accounting  for the  Impairment  of
Long-Lived  Assets  and  for  Long-Lived  Assets  to be  Disposed  Of"  and  the
accounting  and  reporting  provisions  of APB  Opinion No. 30,  "Reporting  the
Results of  Operations-Reporting  the  Effects of a Disposal  of a Business  and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions," for
the disposal of a segment of a business.  This statement also amends ARB No. 51,
"Consolidated Financial Statements," to eliminate the exception to consolidation
for a subsidiary  for which control is likely to be  temporary.  SFAS No. 144 is
effective for the fiscal year ending  December 31, 2002, and the interim periods
within fiscal 2002, with early  application  encouraged.  The provisions of this
statement  generally are to be applied  prospectively.  The Company is currently
evaluating  whether  adoption of SFAS No. 144 will have a material effect on its
financial position or results of operations.

Critical Accounting Policies

       The Company's critical accounting policies, including the assumptions and
judgements  underlying  them,  are  disclosed  in the Notes to the  Consolidated
Financial  Statements.  These  policies  have been  consistently  applied in all
material  respects and addresses  such matters as  principles of  consolidation,
revenue  recognition,  concentration of credit risk,  accounting for stock based
compensation and investments. While the estimates and judgements associated with
the  application of these policies may be affected by different  assumptions and
conditions,  the Company  believes the judgements  associated  with the reported
amounts are appropriate under the circumstances.
                                       38
<PAGE>


ITEM 7A. QUANTITATIVE  AND  QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       We are exposed to the impact of interest rate changes.

Interest Rate Risk

       The  primary  objective  of  our  investment  activities  is to  preserve
principal  while  at the  same  time  maximizing  yields  without  significantly
increasing risk. At December 31, 2001, our portfolio consisted of investments in
institutional  money market funds and "A" rated or higher  corporate  bonds (See
Note 3 to the  consolidated  financial  statements).  Our  investment  policy is
focused on  ensuring  that we have liquid cash  balances  available  to meet our
day-to-day  operating  cash needs.  The policy  establishes  guidelines  for the
investment  of surplus  cash  balances  that will  maximize  return with minimum
credit and liquidity risk. All investments  are held in U.S.  dollars.  Specific
instruments  approved for inclusion in the portfolio are limited to: obligations
issued by the U.S.  Treasury  and U.S.  Federal  Agencies,  obligations  of U.S.
commercial  banks such as bankers'  acceptances and certificates of deposits and
obligations  of major  corporations  and bank holding  companies  such as direct
issue commercial paper, investment grade bond funds and medium term notes.

       We intend to hold our investments until maturity; however, we are exposed
to the impact of interest  rate  changes and change in the market  values of our
investments.  Investments in both fixed rate and floating rate interest  earning
instruments carry a degree of interest rate risk. Fixed rate securities may have
their fair market  value  adversely  impacted  due to a rise in interest  rates,
while floating rate securities may produce less income than expected if interest
rates fall. Due in part to these factors,  our future investment income may fall
short of  expectations  due to changes in interest rates or we may suffer losses
in  principal  if forced to sell  securities  that have an other than  temporary
decline in market value due to changes in interest rates or other factors.

Foreign Exchange Risk

       We have minimal  exposure to foreign exchange risk as all of our sales to
customers outside of the United States are collected in U.S. dollars.



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

       For   information   required  by  Item  8,  refer  to  "PartsBase,   Inc.
Consolidated Financial Information" filed as part of this Report in Annex I.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURES

         None.


                                       39
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

       At December 31, 2001 our executive officers were as follows:


      NAME                       AGE                    POSITION
---------------------            ---         -----------------------------------
Robert A. Hammond, Jr.           47          Chairman of the Board of Directors,
                                             President, Chief Executive Officer,
                                               Secretary and Treasurer
Mark J. Weicher                  50          Chief Financial Officer
Brian Tolley                     26          Chief Information Officer


       Robert A. Hammond,  Jr. Mr.  Hammond has served as our  President,  Chief
Executive Officer, Chairman,  Secretary and Treasurer since our incorporation in
April 1999. In April 1996, Mr. Hammond  founded our predecessor as a division of
Aviation  Laboratories,  Inc.,  a  company  for  which he also  served  as Chief
Executive Officer from its inception in August 1985. From August 1985 until June
1999,  Mr. Hammond was the Chief  Executive  Officer and Chairman of Great Pines
Water Company,  a publicly traded bottled water company that was sold to Suntory
Bottled Water Group in June 1999.

       Mark J. Weicher.  Mr. Weicher has served as our Chief  Financial  Officer
since  August  2001 and joined us in March 2001.  From  September  2000  through
February 2001, Mr. Weicher served as an independent  business  consultant.  From
February 1999 through August 2000, Mr. Weicher served as Chief Financial Officer
of  Site2shop.com,  Inc. a multi  media  company  engaged in  marketing  various
consumer products through its self produced  television programs print media and
internet  and  television  programs  designed  to  educate  the  general  public
regarding  various trends and general  information.  Mr. Weicher served as Chief
Financial  Officer of Computer  Access  International,  Inc., a  refurbisher  of
trailing  technology and peripherals from January 1997 through January 1999. Mr.
Weicher is a Certified Public Accountant and received his Bachelor of Science in
accounting from Brooklyn College.

       Brian  Tolley.  Mr.  Tolley  joined us as Chief  Information  Officer  in
September 2000.  Prior to joining us, Mr. Tolley served as the Vice President of
Advanced Technology for Precision Response  Corporation,  Prcnet.com,  a company
engaged in providing telephone and internet based customer service and marketing
services on an outsourced basis to large corporations.  Prior to his tenure with
Prcnet.com,  Mr.  Tolley  served as the  Director  of Software  Development  for
Mortgage Banking System, Inc.

Board Committees

       We have established an audit committee and a compensation committee.  The
audit committee, the current members of which are Pierre Narath, Thomas Van Hare
and  Charles  Menefee,  recommends  to the board of  directors  the  independent
certified  public  accountants  to be  selected  to audit our  annual  financial
statements and approves any special assignments given to those accountants.  The
audit  committee  also  reviews  the  planned  scope of the  annual  audit,  the
independent  accountants'  letter of comments and management's  response thereto
regarding  any  major   accounting   changes  made  or   contemplated   and  the


                                       40
<PAGE>

effectiveness and efficiency of our internal  accounting staff. The compensation
committee,  the  current  members of which are Robert A.  Hammond,  Jr.,  Pierre
Narath,  Thomas Van Hare and Edward McCartin makes  recommendations to the board
of directors  regarding  the  compensation  payable to our  executive  officers,
reviews  general  policies  relating  to the  compensation  and  benefits of our
employees and  administers  the PartsBase,  Inc. 1999 stock option plan and 2001
stock plan.

Compensation Committee Interlocks and Insider Participation

       The  compensation  committee is  responsible  for  determining  salaries,
incentives and other forms of compensation for our directors and other employees
and administering other various compensation and benefit plans. The compensation
committee met once in 2001 but did not meet in 2000.  Our board of directors was
responsible  for  these  matters  in 2000.  As of March 21,  2002,  our board of
directors  consists of Messrs.  Robert A. Hammond,  Jr., Thomas Van Hare, Pierre
Narath,  Charles  Menefee,  Edward  McCartin and Kenneth  Corriea.  Mr.  Hammond
participates in all discussions and decisions  regarding  salaries and incentive
compensation for all employees and consultants of PartsBase,  Inc.,  except that
he  is  excluded  from  discussions  regarding  his  own  salary  and  incentive
compensation.  Other than Mr.  Hammond,  no current board member has at any time
been an officer or employee of  PartsBase,  Inc. No  interlocking  relationships
exist between any member of our board of directors and any other company's board
of directors or compensation  committee.  No interlocking  relationship  existed
between  any  member  of our  board of  directors  and any  member  of any other
company's board of directors or compensation committee in 2000.

Director Compensation

       Since  inception  until June 19,  2001,  no board member had received any
cash compensation for his services as a director. At the March 16, 2001 board of
directors meeting,  we granted to Mr. Narath the option to acquire 20,000 shares
of our common stock at an exercise  price of $3.00 per share at any time through
March 2011. At the June 20, 2001 board of directors meeting, we granted each non
employee director an annual stipend of $10,000 payable  quarterly;  in the event
the board of  directors  shall meet in excess of four times  annually,  each non
employee  director shall be paid $2,500 for each meeting  attended in person and
$1,250 for each meeting attended by phone for each incremental meeting.

Section 16(a) Beneficial Ownership Reporting Compliance

       Section  16(a)  of the  Securities  Exchange  Act of 1934,  requires  the
Company's directors,  certain officers and beneficial owners of more than 10% of
our  common  stock  (collectively,  "Reporting  Persons")  to  file  reports  of
securities  ownership  and  changes in such  ownership  with the SEC.  Reporting
Persons  are  required  by the SEC to furnish  the  Company  with  copies of all
Section 16(a) forms they file.

       Based  solely on its  review  of the  copies of such  forms  received  or
written  representations  from the Reporting Persons,  the Company believes that
with respect to the year ended December 31, 2001, all Reporting Persons complied
with all applicable reporting requirements under Section 16(a) of the Securities
Exchange Act of 1934.


                                       41
<PAGE>


ITEM 11. EXECUTIVE COMPENSATION


       The following table sets forth certain information regarding compensation
from PartsBase  which was paid to PartsBase's  Chief  Executive  Officer and the
four other most highly  compensated  executive  officers  during the years ended
December 31, 2001, 2000, and 1999.

<TABLE>

<CAPTION>

                                                   Summary Compensation Table
                               ---------------------------------------------------------------------------------------------------
                                                                             Long Term Compensation Awards
                                                                           ----------------------------------
                                               Annual Compensation                                   Payouts
                                         -------------------------------                             --------
                                                                                       Securities
                                                              Other                      Under
                                                              Annual       Restricted   lying                     All Other
Name and                                                      Compen-       Stock       Options/     LTIP          Compen-
Principal Position             Year      Salary      Bonus    sation (1)     Awards      SARS        Payouts       sation
---------------------------    ----     ---------  --------   ----------   ----------  ----------    -------      ---------
<S>                            <C>      <C>        <C>         <C>         <C>           <C>          <C>         <C>
Robert Hammond, President,     2001     $ 226,126  $     --    $ 42,187    $     --      150,000      $  --       $   --
Chief Executive Officer and    2000     $ 227,778  $     --    $ 18,829    $     --           --      $  --       $   --
Chairman of the Board (2)      1999     $  81,250  $     --    $     52    $     --           --      $  --       $   --


Brian Tolley, Chief            2001     $ 135,341  $     --    $  6,160    $     --       45,000      $  --       $   --
Information Officer (3)        2000     $  53,750  $     --    $     26    $     -        35,000      $  --       $   --
                               1999     $      --  $     --    $     --    $     --           --      $  --       $   --


Mark Weicher, Chief            2001     $  41,250  $     --    $     --    $     --       18,000      $  --       $   --
Financial Officer (4)          2000     $      --  $     --    $     --    $     --           --      $  --       $   --
                               1999     $      --  $     --    $     --    $     --           --      $  --       $   --

Michael Siegel, Chief          2001     $ 127,210  $     --    $  5,841    $     --       76,000      $  --       $   --
Financial Officer (5)          2000     $ 160,189  $ 30,000    $  8,666    $     --       75,000      $  --       $   --
                               1999     $      --  $     --    $     --    $     --           --      $  --       $   --

_______________________________________
(1)  Unless otherwise noted, other annual compensation represents the annual premium for term life insurance
     for the above executives with coverage ranging from $25,000 to $100,000.
(2)  Other annual compensation in 2001 includes lease and insurance payments of $26,908 on two vehicles paid
     by the Company; one of which was sold in October 2001 to an unaffiliated third party net of aggregate
     unpaid lease payments due of  $9,631. Additionally, Mr. Hammond has the use of  two automobiles
     purchased by the Company in 2001 at an aggregate cost of $131,583  Also included in 2001 other annual
     compensation is an unaccountable expense allowance of $13,047.  The Company was the owner and
     beneficiary of a $2,000,000 key man life insurance policy on Mr. Hammond. The premium for fiscal year
     2000 was $3,935; the policy was cancelled in 2001.
(3)  Other annual compensation in 2001 includes a car allowance of $6,000 in 2001.  Mr. Tolley joined the
     Company on August 16, 2000.
(4)  Mr. Weicher joined the Company in March 2001 and was named Chief Financial Officer in August 2001.
(5)  Mr. Siegel joined the Company on January 20, 2000 and received a $30,000 signing bonus paid upon
     acceptance of employment.  Other annual compensation includes a car allowance of $5,625 in 2001 and
     $8,523 in 2000.  Mr. Siegel resigned from the Company on August 16, 2001.
</TABLE>


                                       42
<PAGE>


Stock Options

       The following table sets forth information  concerning the grant of stock
options to each of the named officers in fiscal year 2001.
<TABLE>

<CAPTION>

                                           Option /SAR Grants in Last Fiscal Year
                          -------------------------------------------------------------------------------------------------------

                                         Individual Grants
                          ---------------------------------------------------------------

                                                                                             Potential Realizable
                           Number of     Percentage of Total                                 Value at Assumed Annual
                          Securities         Options/SARs                                     Rates of Stock Price
                          Underlying          Granted to        Exercise or                     Appreciation for
                         Options/SARs        Employees in       Base Price     Expiration        Optional Term (3)
Name                      Granted (1)      Fiscal Year 2001       ($/Sh)          Date             5% ($)      10%  ($)
----------------          -----------    -------------------    -----------    ----------        ----------   ----------
<S>                        <C>                  <C>              <C>            <C>                   <C>         <C>
Robert Hammond             150,000              19.67            $  2.00        06/20/11              --          --
Brian Tolley                45,000               5.90            $  2.00        06/20/11              --          --
Mark Weicher                18,000               2.36            $  2.00        06/20/11              --          --
Michael Siegel (2)          76,000               7.83            $  2.00        06/20/11              --          --
-------------------------------------
(1)  All options granted under our 1999 Stock Option Plan were in consideration of salary reductions by the
     respective officers, with the exception of Mr. Hammond.  The shares underlying the options become
     exercisable ratably over 12 months from June 20, 2001, the date of grant.
(2)  Mr. Siegel resigned from the Company on August 16, 2001, however his options continue to vest in
     consideration for him waiving any entitlements he may have had to severance payments and as compensation
     for consulting services rendered since his departure from the Company regarding financial matters
     pertaining to the Company and services to be rendered relative to the Company's outstanding litigation
     which commenced during his tenure.
(3)  On June 20, 2001, the date of grant, the closing market price of the Company's shares of common stock
      was $1.05.
</TABLE>


       The following  table sets forth certain  summary  information  concerning
exercised and  unexercised  options to purchase shares of our common stock as of
December 31, 2001 held by the named executive officers.
<TABLE>

<CAPTION>

                                   Aggregated Option Exercises in Last Fiscal Year And Year-endn Option Values
                                   ---------------------------------------------------------------------------------------
                                                                      Number of Securities          Value of Unexercised
                                     Shares                          Underlying Unexercised        In-the-Money Options at
                                  Acquired on           Value      Options at Fiscal Year End          Fiscal Year-End
Name                               Exercise (#)        Realized      Exercisable/Unexercisable   Excersiable/Unexercisable (1)
------------------                ------------         --------    ---------------------------   -----------------------------
<S>                                        <C>                            <C>    <C>                      <C>   <C>
Robert Hammond                             0             N/A              87,497/62,503                   $ 0 / $ 0
Brian Tolley                               0             N/A              38,643/41,357                   $ 0 / $ 0
Mark Weicher                               0             N/A             10,500/7,500                     $ 0 / $ 0
Michael Siegel                        40,618           $45,492           75,628/34,804                $ 3,125 / $ 314
-----------------------------------
(1)  The difference between the average of the high and low bid prices per share of the common stock as
     reported by the NASDAQ National Market on December 31, 2001, and the exercise or base price.
N/A  Not applicable.
</TABLE>

Employment Agreements and Arrangements

       In  November  1999  and  September   2000,  we  entered  into  employment
agreements with Messrs. Hammond, Jr., and Tolley,  respectively.  The employment
contracts  have initial  terms of two years but shall be renewed for  successive
two-year periods unless earlier terminated.  The agreements may be terminated by
us or the employee,  with or without cause,  upon 30 days prior written  notice.
The base salaries of each  executive  officer may be increased at the discretion
of the  board  of  directors  or the  compensation  committee  of the  board  of


                                       43
<PAGE>

directors.  In addition to base salaries,  each of the executives is entitled to
three  weeks  vacation,  reimbursement  of  business  expenses  and may,  at our
expense,  participate  along with his spouse and  dependents  in any  medical or
other insurance plan maintained by us for salaried employees. The Company leases
one  automobile  for Mr.  Hammond,  Jr. and he has the use of two Company  owned
automobiles.  Mr. Tolley  receives  monthly car  allowances of $500:  Mr. Siegel
formerly  received  a monthly  car  allowance  of $750.  Each of the  employment
agreements  contain  non-compete  covenants  that  prohibit  the  employee  from
directly  or  indirectly  participating  in  business  in  competition  with  us
following  termination of his employment for a period of two years.  Pursuant to
the terms of his  employment  agreement,  Mr.  Siegel was  entitled to receive a
severance  payment equal to six month's  salary in the event of a termination of
his  employment  for any reason other than cause,  as defined in his  employment
agreement.  At the time of his  resignation,  Mr.  Siegel  waived his  severance
payment  entitlement in consideration of continued  vesting rights in all option
grants  received as of the date of his  resignation  and the Company waiving the
forfeiture  provisions of such grants.  Additionally,  Mr. Siegel agreed to make
himself  available  as needed  in  conjunction  with any  financial  matters  or
outstanding  litigation matters which may have arisen during his tenure as Chief
Financial Officer.

Employee Benefit Plans

       In November  1999, we adopted the  PartsBase.com,  Inc. 1999 Stock Option
Plan for the purpose of promoting  our  long-term  growth and  profitability  by
providing key people with incentives to improve stockholder value and contribute
to our growth and financial success.

       The Stock Option Plan  provides  for the award to eligible  participants,
including  employees,  officers,  directors  and  consultants,  of stock options
including non-qualified options and incentive stock options under Section 422 of
the Internal Revenue Service Code. Under the stock option plan, 2,000,000 shares
of common  stock are  reserved  for  issuance.  The 1999 Stock  Option Plan will
terminate on September 30, 2008 unless  extended by our board of directors  and,
to the extent required under  applicable law, our  stockholders.  The 1999 Stock
Option Plan may be amended or  terminated  by our board of directors at any time
provided that our shareholders must approve any significant amendments.

       As of the date of this annual report, non-qualified options to purchase a
total of 682,292  shares of common stock were  outstanding  under our 1999 Stock
Option Plan at exercise prices ranging from $0.63 to $6.38.

       At the Company's  Annual Meeting of  Stockholders  held on June 20, 2001,
the stockholders adopted the PartsBase,  Inc. 2001 Stock Plan for the purpose of
promoting our long-term  growth and  profitability  by providing key people with
incentives  to  improve  stockholder  value and  contribute  to our  growth  and
financial success.

       The 2001  Stock Plan  provides  for the award to  eligible  participants,
including  employees,  officers,  directors  and  consultants,  of stock options
including non-qualified options and incentive stock options under Section 422 of
the Internal Revenue Service Code as well as stock grants. Under the Stock Plan,
1,000,000 shares of common stock are reserved for issuance.  The 2001 Stock Plan
may be amended or terminated by our board of directors at any time provided that
our shareholders must approve any significant amendments.

                                       44
<PAGE>

       As of the date of this annual  report,  no options to purchase  shares of
common stock and no shares of common  stock have been  granted or shares  issued
under the 2001 Stock Plan.

       Both the 1999 Stock Option Plan and the 2001 Stock Plan are  administered
by  our  by  the   compensation   committee  of  our  board  of  directors  (the
"Committee").  The Committee selects  participants and establishes the terms and
conditions  of each  option,  stock or other  rights  granted  under the  plans,
including the exercise price, the number of shares subject to options,  or other
equity  rights  and the time at which the  options  become  exercisable  and the
number of shares. The exercise price of all "incentive stock options" within the
meaning of Section 422 of the Internal  Revenue Service Code,  granted under the
stock  option plan must be equal to 100% to the fair market  value of the option
shares on the date of the grant.  The term of any incentive stock option granted
under the  stock  option  plan may not  exceed  ten  years;  however,  where the
eligible  stock  option  plan  participant  owns over 10% of the total  combined
voting power of all classes of our stock,  the  exercise  price must be at least
equal to 110% of the fair market  value of the option  shares on the date of the
grant and the term can not exceed five years.

       To the extent  required to comply with Rule 16b-3 under the Exchange Act,
if  applicable,  and in any event in the case of an incentive  stock option,  no
award granted under the stock option plan is transferable by a grantee otherwise
than by will or by laws of descent and distribution.  Other terms and conditions
of each  award  are set  forth in the grant  agreement  governing  the award and
determined by the Committee as administrators of the stock option plan.

Limitations on Liability of Directors and Indemnification of Directors and
   Officers

       As permitted by the Delaware General Corporation Law, we have included in
our articles of incorporation,  a provision to eliminate the personal  liability
of our  directors  for  monetary  damages for breach or alleged  breach of their
fiduciary duties as directors,  subject to exceptions.  In addition, both of our
articles  of  incorporation  and our  bylaws  provide  that we are  required  to
indemnify  our officers and  directors,  and we are required to pay for, and may
advance,  expenses for our officers and directors as incurred in connection with
proceedings against them for which they may be indemnified. We have entered into
indemnification agreements with our officers and directors containing provisions
that are in some  respects  broader  than  specific  indemnification  provisions
contained  in  the  Delaware  General   Corporation  Law.  The   indemnification
agreements  require us,  among other  things,  to  indemnify  our  officers  and
directors  against  liabilities  that may  arise by  reason  of their  status or
service as officers and directors,  other than liabilities  arising from willful
misconduct of a culpable nature,  to pay for their expenses incurred as a result
of any  proceeding  against them as to which they could be  indemnified,  and to
obtain  directors' and officers'  insurance if available on reasonable terms. We
have also obtained directors' and officers' liability insurance.

       Except as noted in Item 3- Legal  Proceedings of this annual  report,  we
are not  aware of any other  pending  or  threatened  litigation  or  proceeding
involving   a   director,   officer,   employee   or  agent  of  ours  in  which
indemnification  would be required or  permitted.  We are not aware of any other
threatened   litigation  or  proceedings  that  might  result  in  a  claim  for
indemnification.  We believe  that our charter  provisions  and  indemnification
agreements  are necessary to attract and retain  qualified  persons as directors
and officers.

                                       45
<PAGE>


ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

       The following table sets forth information regarding shares of our common
stock beneficially owned as of March 26, 2002:

   o  Each person or group known to us that beneficially owns more than five
       percent of our outstanding common stock;

   o  Our directors and the named executive officers listed in the Summary
       Compensation Table; and - all of our executive officers and directors as
       a group.

       Beneficial ownership is calculated in accordance with Rule 13d-3(d) under
the Securities  Exchange Act of 1934.  Shares of common stock subject to options
and warrants that are currently exercisable or are exercisable within 60 days of
March 26, 2002 are deemed  outstanding  with respect to the person holding those
options but are not deemed  outstanding for purposes of computing the percentage
ownership  of any other  person.  We believe  each person named in the table has
sole  voting and  investment  power with  respect  to the shares  identified  as
beneficially owned by them.

Name and Address (1)                 Number            Percent
---------------------             -----------          -------
Robert A. Hammond, Jr.            9,150,000 (2)          64.77
Thomas Van Hare (3)                  10,000 (4)              *
Pierre A. Narath (5)                 60,000 (6)              *
Michael W. Siegel                   151,000 (7)           1.07
Brian Tolley                         61,039 (4)              *
Mark Weicher                         18,000 (4)              *
Charles Menefee                           0               0.00
Edward McCartin                           0               0.00
Kenneth Corriea                           0               0.00
All directors and executive
 officers as group  (9 persons)   9,450,039              65.87
------------------------------
*   Represents less than 1% of the outstanding common stock.
(1) Except as otherwise indicated, the business address of each person listed is
    c/o PartsBase.com, Inc., 905 Clint Moore Road, Boca Raton, Florida 33487.
(2) Includes 4,500,000 shares owned by Mr. Hammond individually and 4,500,000
    shares owned by R. Hammond, L.P., a limited partnership of which Mr. Hammond
    is the sole general partner and of which a trust established for the benefit
    of Mr. Hammond's children is a 99% limited partner.
(3) Mr. Van Hare's address is c/o Digital Minute, 700 E. Palmetto Park Road,
    Suite 201, Boca Raton, Florida, 33432.
(4) Consists of shares underlying stock options that are currently exercisable
    or will become exercisable within 60 days following March 22, 2002.
(5) Mr. Narath's address is 1538 Turnpike Street, North Andover, Massachusetts
    01845.
(6) Consists of 40,000 shares of our common stock owned by Metro Investments, a
    company controlled by Mr.Narath, and 20,000 shares underlying stock options
    that are currently exercisable or will become exercisable within 60 days
    following March 22, 2002.
(7) Consists of 40,618 shares of common stock owned and 110,382 shares
    underlying stock options that are currently exercisable or will become
    exercisable within 60 days following March 22, 2002.  Mr. Siegel resigned
    from the Company on August 16, 2001.

                                       46
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                  None


                                       47
<PAGE>



                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

         (a) Documents filed as part of this Report:

              1. Financial Statements

                 Index to Financial Statements in Annex I

              2. Financial Statement Schedules:

                 All schedules have been omitted because they are inapplicable,
                 not required, or the information is included elsewhere in the
                 Financial Statements or Notes thereto.

              Exhibits:

                 See Exhibit Index.  The Exhibits listed in the accompanying
                 Exhibit Index are filed or incorporated by reference as part of
                 this report.

         (b)  Reports on Form 8-K:

                  None.

                                       48
<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.

                                         By: /S/  Robert A. Hammond, Jr.
                                             ---------------------------
                                             Robert A. Hammond, Jr.
                                             President, Chief Executive Officer,
                                              and Chairman
Date:    March 27, 2002

     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:    March 27, 2002                 /S/  Robert A. Hammond, Jr.
                                        ---------------------------
                                        Robert A. Hammond, Jr.
                                        President, Chief Executive Officer,
                                        Secretary, Treasurer and Chairman
                                        (Principal Executive Officer)

Date:    March 27, 2002                 /S/  Mark J. Weicher
                                        --------------------
                                        Mark J. Weicher
                                        Chief Financial Officer
                                       (Principal Financial Accounting Officer)

Date:    March 27, 2002                 /S/   Pierre Narath
                                        -------------------
                                        Pierre Narath
                                         Director

Date:    March 27, 2002                 /S/   Thomas Van Hare
                                        ---------------------
                                        Thomas Van Hare
                                         Director

Date:    March 27, 2002                 /S/   Charles Menefee
                                        ---------------------
                                        Charles Menefee
                                         Director

Date:    March 27, 2002                 /S/   Edward McCartin
                                        ---------------------
                                        Edward McCartin
                                         Director

Date:    March 27, 2002                 /S/   Kenneth Corriea
                                        ---------------------
                                        Kenneth Corriea
                                         Director


                                       49
<PAGE>








                                     ANNEX I

          PARTSBASE, INC. (formerly PARTSBASE.COM, INC.) AND SUBSIDIARY
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                           Page

Independent Auditors' Report ..............................................F-2

Consolidated Balance Sheets as of December 31, 2001 and 2000...............F-3

Consolidated Statements of Operations for the Years Ended
 December 31, 2001, 2000 and 1999..........................................F-4

Consolidated Statements of Stockholders' Equity for the Years Ended
     December 31, 2001, 2000 and 1999......................................F-5

Consolidated Statements of Cash Flows for the Years Ended
 December 31, 2001, 2000 and 1999 .........................................F-6

Notes to Consolidated Financial Statements.................................F-7


                                      F-1
<PAGE>




INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
   PartsBase, Inc.
Boca Raton, Florida

We have audited the accompanying  consolidated balance sheets of PartsBase, Inc.
(formerly PartsBase.com, Inc.) and subsidiary (the "Company") as of December 31,
2001  and  2000,  and  the  related   consolidated   statements  of  operations,
stockholders'  equity,  and cash flows for each of the three years in the period
ended December 31, 2001. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2001
and 2000,  and the results of its  operations and its cash flows for each of the
three years in the period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.

/s/ Deloitte and Touche LLP

Certified Public Accountants

Fort Lauderdale, Florida
March 15, 2002


                                      F-2
<PAGE>


<TABLE>

<CAPTION>

                       PARTSBASE, INC. (formerly PARTSBASE.COM, INC.) AND SUBSIDIARY
                                            Consolidated Balance Sheets


                                                                                    December 31,
                                                                    -----------------------------------------
                              ASSETS                                          2001                 2000
                                                                    -------------------- --------------------
Current assets:
<S>                                                                      <C>                  <C>
Cash and cash equivalents                                                $  23,851,593        $  23,045,491
Accounts receivable, net                                                       403,969            1,641,092
Investments, at amortized cost                                                 900,073            7,139,052
Prepaid expenses and other current assets                                      330,966              671,221
                                                                          -------------        -------------
    Total current assets                                                    25,486,601           32,496,856
Property and equipment, net                                                  2,570,330            3,655,310
Certificates of deposit - restricted cash                                    1,070,000              500,000
Other assets                                                                    36,839              629,387
                                                                          -------------        -------------
     Total assets                                                        $  29,163,770        $  37,281,553
                                                                          =============        =============


               LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                                         $      87,060        $   1,075,032
Accrued expenses and other current liabilities                                 406,147              419,696
Deferred revenue, net                                                        2,231,076            3,349,869
                                                                          -------------        -------------
   Total current liabilities                                                 2,724,283            4,844,597
Other liabilities                                                                   --               89,055
                                                                          -------------        -------------
   Total liabilities                                                         2,724,283            4,933,652

Commitments and contingencies (Note 6)                                              --                   --

Stockholders' equity:
Preferred stock, $0.001 par value in 2001 and no par value in
  2000; 2,000,000 shares authorized, 0 shares issued and outstanding
   in 2001 and 2000                                                                 --                   --
Common stock, $0.001 par value in 2001 and no par value in 2000
  (Note 7); 30,000,000 shares authorized, issued and outstanding
   14,003,620 in 2001 and 14,255,480 in 2000                                    14,004                   --
Additional paid-in capital                                                  53,255,465           55,478,819
Treasury stock, 0 shares in 2001 and 136,685 shares in 2000
  at cost                                                                           --             (330,202)
Accumulated deficit                                                        (26,828,892)         (21,216,659)
Unearned compensation                                                           (1,090)          (1,584,057)
                                                                          -------------        -------------
   Total stockholders' equity                                               26,439,487           32,347,901
                                                                          -------------        -------------
     Total liabilities and stockholders' equity                          $  29,163,770        $  37,281,553
                                                                          =============        =============


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

                                      F-3
<PAGE>


<TABLE>

<CAPTION>

                             PARTSBASE, INC. (formerly PARTSBASE.COM, INC.) AND SUBSIDIARY
                                       Consolidated Statements of Operations

                                                                          Year Ended December 31,
                                                            -----------------------------------------------------
                                                                    2001               2000              1999
                                                             ---------------- ------------------- ----------------
<S>                                                           <C>                <C>                <C>
Net revenues                                                  $  5,619,121       $   4,097,585      $    362,224

Cost of revenues                                                 4,451,631           6,140,741         1,412,532
Stock-based compensation expense                                   247,506           2,308,440         1,799,139
                                                               ------------        ------------       -----------
       Total cost of revenues                                    4,699,137           8,449,181         3,211,671
                                                               ------------        ------------       -----------

Gross profit (loss)                                                919,984          (4,351,596)       (2,849,447)

Operating expenses:
General and administrative expenses                              7,224,266           8,920,354         1,293,091
Stock-based compensation expense                                    72,931           1,944,398           899,821
Litigation and other related costs                                 457,500                  --                --
                                                               ------------        ------------       -----------
        Total operating expenses                                 7,754,697          10,864,752         2,192,912
                                                               ------------        ------------       -----------

Operating loss                                                  (6,834,713)        (15,216,348)       (5,042,359)
Other income (expense), net                                      1,222,480           1,762,367         (870,675)
                                                               ------------        ------------       -----------
Net loss before value of preferred stock beneficial
 conversion feature                                             (5,612,233)        (13,453,981)       (5,913,034)
Value of preferred stock beneficial conversion feature                  --                  --        (1,902,375)
                                                               ------------        ------------       -----------
Net loss attributable to common shareholders                  $ (5,612,233)      $ (13,453,981)     $ (7,815,409)
                                                               ============       =============      ============

Basic and diluted net loss per common share                   $      (0.40)      $       (1.03)     $      (0.84)
                                                               ============       =============      ============

Weighted average common shares outstanding                      14,108,895          13,053,755         9,251,250
                                                               ============        ============      ============



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

                                      F-4
<PAGE>


<TABLE>


                                                   PARTSBASE, INC. (formerly PARTSBASE.COM, INC.) AND SUBSIDIARY
                                                                   Consolidated Statements of Stockholders' Equity
                                                          For the Years Ended December 31, 2001, 2000, and 1999


<CAPTION>


                                      PREFERRED STOCK             COMMON STOCK           TREASURY STOCK          ADDITIONAL
                                -------------------------    --------------------   ---------------------         PAID-IN
                                  SHARES        AMOUNT         SHARES      AMOUNT     SHARES      AMOUNT          CAPITAL
                                ---------   -------------   -----------  --------   ---------  ------------   ---------------
<S>               <C> <C>                                                                                     <C>
Balance, December 31, 1998                                                                                    $      392,615

Net loss (January 1-April 26,
 1999)
Contribution from parent                                                                                              22,659
Reorganization                                                                                                      (464,390)
Common stock issued                                          9,000,000
Restricted stock issued                                      1,075,250                                             5,859,383
Preferred stock issued           855,000    $  1,902,375                                                           1,902,375
Exchange of restricted stock
 for stock options                                            (824,000)                                            3,531,441
Unearned compensation related
 to stock options                                                                                                  1,084,414
Recognition of unearned
 compensation
Beneficial conversion feature
 of convertible notes                                                                                                850,000
Warrants issued                                                                                                    2,000,000
Net loss (April 27-
 December 31,   1999)
                                ---------    ------------   -----------  --------   ---------  ------------    -------------
Balance, December 31, 1999.      855,000       1,902,375     9,251,250         --         --            --       15,178,497

Common stock issued                                          3,500,000                                           40,710,595
Conversion of convertible
 preferred stock                (855,000)     (1,902,375)      855,000                                            1,902,375
Conversion of convertible
  notes                                                        481,250                                             (569,516)
Unearned compensation related
 to stock options                                                                                                 1,206,153
Recognition of unearned
 compensation
Reverse unearned compensation
 due to forfeited non-vested
 options                                                                                                         (3,145,536)
Employee non-qualified stock
 options exercised                                             304,665                                              196,251
Purchases of treasury stock                                   (136,685)             (136,685)  $  (330,202)
Net loss
                                ---------    ------------   -----------  --------   ---------  ------------    -------------
Balance, December 31, 2000            --              --    14,255,480         --   (136,685)     (330,202)      55,478,819

Recognition of unearned
 compensation
Reverse unearned compensation
 due to forfeited non-vested
 options                                                                                                         (1,124,795)
Employee non-qualified stock
 options exercised                                             286,260                                              178,926
Purchases of treasury stock                                   (538,120)             (538,120)     (795,544)
Retirement of treasury stock                                                         674,805     1,125,746       (1,125,746)
Reincorporation at $0.001
 par value                                                               $ 14,004                                   (14,004)
Revaluation of non-vested
 options                                                                                                           (137,735)
Net loss
                                ---------    ------------   -----------  --------   ---------  ------------    -------------
Balance, December 31, 2001            --     $        --    14,003,620   $ 14,004         --   $        --     $ 53,255,465
                                =========     ===========   ===========   =======   =========   ===========     ============

The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

                                      F-5
<PAGE>

<TABLE>

                       PARTSBASE, INC. (formerly PARTSBASE.COM, INC.) AND SUBSIDIARY
                          Consolidated Statements of Stockholders' Equity- Continued
                           For the Years Ended December 31, 2001, 2000, and 1999


<CAPTION>

                                                                    TOTAL
                                                                  DIVISIONAL      STOCKHOLDERS'
                                 UNEARNED         ACCUMULATED       EQUITY           EQUITY
                               COMPENSATION         DEFICIT      (DEFICIENCY)      (DEFICIENCY)
                               -------------   --------------    ------------   ---------------
<S>               <C> <C>                                         <C>           <C>
Balance, December 31, 1998                                        $ (411,659)   $      (19,044)

Net loss (January 1-April 26,
 1999)                                                               (52,731)          (52,731)
Contribution from parent                                                                22,659
Reorganization                                                       464,390                --
Common stock issued                                                                         --
Restricted stock issued        $ (5,859,383)                                                --
Preferred stock issued                         $  (1,902,375)                        1,902,375
Exchange of restricted stock
 for stock options               (3,531,441)                                                --
Unearned compensation related
 to stock options                (1,084,414)                                                --
Recognition of unearned
 compensation                     2,698,960                                          2,698,960
Beneficial conversion feature
 of convertible notes                                                                  850,000
Warrants issued                                                                      2,000,000
Net loss (April 27-
 December 31,   1999)                             (5,860,303)                       (5,860,303)
                                -------------  --------------      ----------    --------------
Balance, December 31, 1999.       (7,776,278)     (7,762,678)             --         1,541,916

Common stock issued                                                                 40,710,595
Conversion of convertible
 preferred stock                                                                            --
Conversion of convertible
  notes                                                                               (569,516)
Unearned compensation related
 to stock options                 (1,206,153)                                               --
Recognition of unearned
 compensation                      4,252,838                                         4,252,838
Reverse unearned compensation
 due to forfeited non-vested
 options                           3,145,536                                                --
Employee non-qualified stock
 options exercised                                                                     196,251
Purchases of treasury stock                                                           (330,202)
Net loss                                         (13,453,981)                      (13,453,981)
                                -------------  --------------      ----------    --------------
Balance, December 31, 2000        (1,584,057)    (21,216,659)             --        32,347,901

Recognition of unearned
 compensation                        320,437                                           320,437
Reverse unearned compensation
 due to forfeited non-vested
 options                           1,124,795                                                --
Employee non-qualified stock
 options exercised                                                                     178,926
Purchases of treasury stock                                                           (795,544)
Retirement of treasury stock                                                                --
Reincorporation at $0.001
 par value                                                                                  --
Revaluation of non-vested
 options                                                                                    --
Net loss                                          (5,612,233)                       (5,612,233)
                                -------------  --------------      ----------    --------------
Balance, December 31, 2001      $     (1,090)  $ (26,828,892)      $      --     $  26,439,487
                               ==============  ==============      ==========    ==============

The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

                                      F-5a
<PAGE>


<TABLE>


<CAPTION>

                                      PARTSBASE, INC. (formerly PARTSBASE.COM, INC.) AND SUBSIDIARY
                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                         Year Ended December 31,
                                                                            -----------------------------------------------------
                                                                                  2001               2000                 1999
                                                                            -------------      --------------        -------------
   Cash flows from operating activities:
<S>                                                                         <C>                <C>                   <C>
      Net loss                                                              $  (5,612,233)     $ (13,453,981)        $ (5,913,034)
      Adjustments to reconcile net loss to cash used in
        operating activities
      Depreciation and amortization                                               868,807            752,314              410,918
      Loss on property disposals                                                       --                 --                  583
      Provision for doubtful accounts                                             705,904            142,254                   --
      Provision for litigation and other related costs                            457,500                 --                   --
      Recognition of stock based compensation                                     320,437          4,252,838            2,698,960
      Noncash interest on convertible notes                                            --                 --              850,000
      Noncash costs allocated from former parent                                       --                 --               15,037
      Changes in assets and liabilities
        Accounts receivable, net                                                 (195,531)        (1,355,015)            (297,884)
        Prepaid and other current assets                                          373,035           (666,674)            (504,547)
        Deferred financing costs and other assets                                      --             (5,226)             (56,282)
        Accounts payable                                                         (704,888)           347,401              716,054
        Other accrued liabilities                                                (437,549)           186,426              233,270
        Deferred revenue, net                                                    (392,043)         1,955,444            1,241,319
        Accounts payable-related party                                                 --                 --                9,108
                                                                             -------------      -------------         -----------
            Net cash used in operating activities                              (4,616,561)        (7,844,219)           (596,498)
                                                                             -------------      -------------         -----------

   Cash flows from investing activities:
      Capital expenditures                                                       (155,576)        (2,925,475)         (1,022,049)
      Purchase of investment securities                                       (19,689,018)        (7,643,140)                 --
      Website development costs                                                        --            (24,000)           (216,075)
      Maturities of marketable debt securities                                  6,918,743                 --                  --
      Proceeds from sale of investment securities                              19,355,348                 --                  --
      Loss on sale of marketable securities                                       155,776                 --                  --
      Redemption of certificate of deposit-restricted cash                      1,119,008                 --                  --
      Purchase of certificate of deposit-restricted cash                       (1,665,000)                --                  --
                                                                             -------------      -------------         -----------
             Net cash provided by (used in) investing activities                6,039,281        (10,592,615)         (1,238,124)
                                                                             -------------      -------------         -----------

   Cash flows from financing activities:
      Issuance of convertible notes                                                    --                 --             962,500
      Issuance of common stock                                                         --         40,881,000                  --
      Debt issue costs                                                                 --                 --            (138,700)
      Issuance of preferred stock                                                      --                 --           1,902,375
      Deferred offering costs                                                          --                 --            (163,899)
      Exercise of employee non-qualified stock options                            178,926            196,251                  --
      Purchase of treasury stock                                                 (795,544)          (330,202)                 --
      Paid-in capital                                                                  --                 --               7,622
                                                                             -------------      -------------         -----------
             Net cash provided by (used in) financing activities                 (616,618)        40,747,049           2,569,898
                                                                             -------------      -------------         -----------

   Net increase in cash and cash equivalents                                      806,102         22,310,215             735,276
   Cash and cash equivalents at the beginning of the period                    23,045,491            735,276                  --
                                                                             -------------      -------------         -----------
   Cash and cash equivalents at the end of the period                       $  23,851,593      $  23,045,491         $   735,276
                                                                             =============      =============         ===========

   Noncash financing activities:
      Warrants issued in connection with the issuance of the
         convertible notes                                                  $          --      $          --         $ 2,000,000
                                                                             =============      =============         ===========
      Retirement of treasury stock                                          $   1,125,746      $          --         $        --
                                                                             =============      =============         ===========
      Stock option forfeitures                                              $   1,124,795      $   3,145,536         $        --
                                                                             =============      =============         ===========
      Revaluation of non vested stock options                               $     137,735      $          --         $        --
                                                                             =============      =============         ===========
      Reincorporation affecting par value of stock                          $      14,004      $          --         $        --
                                                                             =============      =============         ===========

The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>


                                      F-6
<PAGE>

          PARTSBASE, INC. (formerly PARTSBASE.COM, INC.) AND SUBSIDIARY
                   Notes to Consolidated Financial Statements


Note 1 - BACKGROUND AND ORGANIZATION

     PartsBase,  Inc.  ("PartsBase"  or the "Company")  operates in two business
segments;  an online provider of aviation e-commerce business and a supplemental
nurse staffing agency.

     Prior to April 1999, the Company operated as a division (the "Division") of
Aviation Laboratories,  Inc. ("Aviation Labs"). In April 1999, the assets of the
Division were conveyed to Mr. Robert A. Hammond, Jr. in consideration for, among
other things, Mr. Hammond's equity interest in Aviation Labs. On April 27, 1999,
Mr.  Hammond  transferred  the  assets  of the  Division  into and  incorporated
PartsBase as a Texas  corporation.  The accounting for the  contribution  of the
Division  into  PartsBase  has  been  reported  in  the  accompanying  financial
statements  as a  reorganization  of entities  under common  control in a manner
similar  to  a  pooling  of  interests.  At  the  Company's  Annual  Meeting  of
Stockholders  held on June 20, 2001, the  stockholders  approved an amendment to
affect a change in the  state of  incorporation  of the  Company  from  Texas to
Delaware  and  changed  the name of the  Company  from  PartsBase.com,  Inc.  to
PartsBase, Inc.

     Partsbase's global e-marketplace provides a means for aviation parts buyers
and sellers to buy and sell new, repaired or overhauled  aviation parts and list
products and services.

     In  September  2001,  the  Company  formed  RNpartners,   Inc.,  a  Florida
corporation,  as a wholly owned  subsidiary  of PartsBase,  which  operates as a
supplemental nurse staffing agency.  RNpartners  commenced operations on October
1,  2001  as a  provider  of  critical  care  registered  nurses  for  temporary
assignment  to  hospitals  in Palm Beach and  Broward  counties  of the State of
Florida.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

     The accompanying  consolidated financial statements include the accounts of
PartsBase,  Inc.  and  its  wholly  owned  subsidiary,   RNpartners,   Inc.  All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.

Revenue Recognition

     PartsBase recognizes subscription,  banner advertising,  and other revenues
over the life of the  respective  subscription,  which is  typically  12 months.
Sales costs, including  commissions,  are expensed as incurred, and are included
in  the  cost  of  revenues.   Gross  revenue  represents  total   subscription,
advertising and other sales made during the period presented, of which a portion
is deferred.  Deferred  revenue as of December 31, 2001 and 2000 was  $2,231,076
and  $3,349,869,  respectively.  Net revenue  represents  that  portion of gross
revenue that was earned during the period presented. Nurse staffing revenues and
the related  labor costs and payroll  taxes are  recorded in the period in which
staffing services are performed.


                                      F-7
<PAGE>



Cash and Cash Equivalents

     Cash and cash equivalents  consist of highly liquid  investments  purchased
with an original maturity of three months or less.

Concentration of Credit Risk

     Financial  instruments that potentially  subject the Company to credit risk
consist  primarily  of  uninsured  cash  and  cash  equivalents.  Cash  and cash
equivalents are deposited with federally insured  commercial banks in the United
States and in institutional money market funds. At December 31, 2001 the Company
had all of its cash and cash  equivalents  in three  financial  institutions  of
which the excess  over  $100,000  is not  covered by FDIC  insurance  and which,
therefore,  did not limit the Company's amount of credit  exposure.  The Company
believes  it is not  exposed  to any  significant  credit  risk on cash and cash
equivalents.

     The Company's  global  e-marketplace  segment  sells  primarily to aviation
related companies and does not require  collateral.  The Company's  supplemental
nurse staffing  agency sells the services of its registered  nurse  employees to
hospitals  in South  Florida.  The Company  analyzes  the need for  reserves for
potential credit losses and records a provision for bad debts when necessary. As
of December 31, 2001 and 2000, the Company  maintained an allowance for doubtful
accounts related to its receivables of $149,922 and, $221,559, respectively.

     The  Company  e-marketplace  segment  has  subscribers  in  more  than  115
countries. The e-marketplace segment did not derive more than 10% of its revenue
from any single foreign country during 2001, 2000 or 1999. Prior to 1999, all of
the  Company's  revenue was  derived  from  domestic  customers.  The  Company's
supplemental  nurse  staffing  agency has 15  hospital  clients.  Two  hospitals
comprised approximately 41% of the segment's revenues for the three months ended
December 31, 2001, its initial period of operation.

Fair Value Of Financial Instruments

     The Company's financial  instruments,  including cash and cash equivalents,
investments, accounts receivable and accounts payable are carried at cost, which
approximates  their  fair  value  because of the  short-term  maturity  of these
instruments.

Property and Equipment

     Property and  equipment is stated at cost.  Costs  incurred for  additions,
improvements and betterments are capitalized as incurred.  Costs for maintenance
and repairs are charged to expense as incurred.  Gains or losses on dispositions
of  property  and  equipment  are  included  in the  statements  of  operations.
Leasehold  improvements are amortized over the shorter of their estimated useful
life  or the  lease  term  using  the  straight-line  method.  Depreciation  and
amortization  are computed  using the  straight-line  method over the  following
estimated service lives of the related assets:

       Computer software......................................  3 years
       Automobiles............................................  5 years
       Computer equipment.....................................  5 years
       Communication equipment................................  7 years
       Furniture and fixtures.................................  7 years

                                      F-8
<PAGE>


Impairment of Long-Lived Assets

     The Company evaluates the  recoverability of long-lived  assets, as well as
depreciation and  amortization  periods,  to determine  whether an adjustment to
carrying  values  or a  revision  to  estimated  useful  lives  is  appropriate.
Recoverability is determined  through evaluation of anticipated cash flows on an
undiscounted  basis. If the estimated future cash flows are projected to be less
than the carrying value, an impairment write-down would be recorded, measured by
the amount of the asset's carrying value in excess of fair value.



Web Site Development Costs

     The  Company  follows  the  provisions  of  Statements  of  Position  98-1,
"Accounting  for the  Costs of  Computer  Software  Developed  or  Obtained  for
Internal Use" ("SOP 98-1").  SOP 98-1 requires that entities  capitalize certain
costs related to internal use software once certain criteria have been met.

     Web site  development  costs,  which are  enhancements  intended  to extend
and/or improve  significantly  the  marketability of the original  product,  are
capitalized;  all other costs are expensed as incurred and classified as cost of
revenues.  Web site development costs of $0 and $24,000 were capitalized  during
the years ended  December  31, 2001 and 2000,  respectively.  As of December 31,
2001 and 2000 capitalized web site development costs, net of amortization,  were
$0  and  $90,020,  respectively,  and  are  included  in  other  assets  in  the
accompanying consolidated balance sheets. For the years ended December 31, 2001,
2000 and 1999,  amortization  of web site  development  costs  totaled  $90,020,
$122,132 and $27,923, respectively.

     Amortization is computed on an  enhancement-by-enhancement  basis utilizing
the  straight-line  method over the estimated  economic life of the enhancement,
which at December 31, 2001 and 2000, is estimated to be 24 months.

Accounting for Stock-based Compensation

     The  Company   accounts  for  stock-based   compensation   arrangements  in
accordance  with the provisions of Accounting  Principles  Board ("APB") Opinion
No. 25,  "Accounting  for Stock  Issued to  Employees,"  and  complies  with the
disclosure  provisions of Statement of Financial  Accounting  Standards ("SFAS")
No.  123,   "Accounting  for  Stock-Based   Compensation."  Under  APB  No.  25,
compensation expense for employees,  is based on the difference,  if any, on the
date of the  grant,  between  the fair  value  of the  Company's  stock  and the
exercise price.  For  non-employees,  compensation  expense is based on the fair
value of the option granted as defined in SFAS No. 123.

Income Taxes

     Income  taxes are  accounted  for under  the  asset and  liability  method.
Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax


                                      F-9
<PAGE>

consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases and net operating loss and tax credit carry-forwards.  Deferred tax assets
and  liabilities  are  measured  using  enacted  tax rates  expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled.  The effect on deferred tax assets and liabilities of a
change  in tax rates is  recognized  in the tax  provision  in the  period  that
includes the enactment date. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount to be recovered.

Net Loss Per Share

     Basic  net  income/(loss)  per  share  is  calculated  on the  basis of the
weighted  average  number of shares  outstanding  during the  period,  excluding
dilution.  Diluted net  income/(loss)  per share is computed on the basis of the
weighted average number of shares  outstanding  during the period plus potential
common shares  arising from the assumed  exercise of stock options and warrants,
if dilutive.  The dilutive  impact of potential  common  shares is determined by
applying the treasury stock method.

Reclassifications

     Certain  amounts  in  the  prior  years'  financial  statements  have  been
reclassified to conform to the current year presentation.

Use of Estimates

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

New Accounting Guidance

     In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Accounting  Standards ("SFAS") No. 133,  "Accounting for Derivative
Instruments and Hedging  Activities".  SFAS No. 133  establishes  accounting and
reporting  standards  requiring  that  every  derivative  instrument  (including
certain derivative  instruments  embedded in other contracts) be recorded in the
balance sheet as either an asset or liability  measured at its fair value.  SFAS
No. 133  requires  that  changes in the  derivative's  fair value be  recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying  hedges allows for a derivative's  gains and losses to
offset  related  results on the hedged item in the statement of  operations  and
requires  that a company  must  formally  document,  designate  and  assess  the
effectiveness  of  transactions  that receive hedge  accounting  treatment.  The
Company  adopted the  provisions of SFAS No. 133, as amended by SFAS No. 138, in
the first  quarter of 2001 and its  adoption  had no impact to its  consolidated
financial statements.

     In June 2001,  the FASB issued SFAS No. 141,"  Business  Combinations"  and
SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires that


                                     F-10
<PAGE>

the  purchase  method  of  accounting  be  used  for all  business  combinations
completed  after  June 30,  2001.  SFAS No.  141 also  specifies  criteria  that
intangible  assets acquired in a purchase method business  combination must meet
to be recognized and reported  apart from  goodwill.  SFAS No. 142 requires that
goodwill  and  intangible  assets  with  indefinite  useful  lives no  longer be
amortized, but instead be tested for impairment at least annually on a basis set
forth in SFAS No. 142, and that intangible assets with estimatable  useful lives
be amortized  over their  respective  useful lives to their  estimated  residual
values, and reviewed for impairment.  The Company adopted the provisions of SFAS
No. 141 and SFAS No. 142 on January 1, 2002.  Adoption of these two standards is
not expected to have a material effect on the Company's results of operations or
financial position.

     In June  2001,  the  FASB  issued  SFAS  No.  143,  "Accounting  for  Asset
Retirement Obligations",  which addresses financial accounting and reporting for
legal obligations  associated with the retirement of tangible  long-lived assets
that result from acquisition,  construction,  development,  and/or normal use of
the asset,  and the associated asset retirement cost. SFAS No. 143 requires that
the fair value of a liability for an asset  retirement  obligation be recognized
in the period in which it is incurred if a reasonable estimate of fair value can
be made. The fair value of the liability is added to the carrying  amount of the
related  asset and  depreciated  over the life of the asset.  The  liability  is
accreted each period through charges to operating expense.  If the obligation is
settled for other than the carrying  amount of the  liability,  the Company will
recognize a gain or loss on  settlement.  The  Company is required  and plans to
adopt the  provisions of SFAS No. 143 for the quarter ending March 31, 2002. The
adoption  of SFAS No.  143 is not  expected  to have a  material  effect  on the
Company's financial position or results of operations.

     In  August  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment  or  Disposal  of  Long-Lived   Assets,"  which  addresses  financial
accounting  and reporting for the  impairment or disposal of long-lived  assets.
This  statement  supersedes  SFAS No. 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets  and  for  Long-Lived  Assets  to be  Disposed  Of"  and  the
accounting  and  reporting  provisions  of APB  Opinion No. 30,  "Reporting  the
Results of  Operations-Reporting  the  Effects of a Disposal  of a Business  and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions," for
the disposal of a segment of a business.  This statement also amends ARB No. 51,
"Consolidated Financial Statements," to eliminate the exception to consolidation
for a subsidiary  for which control is likely to be  temporary.  SFAS No. 144 is
effective for the fiscal year ending  December 31, 2002, and the interim periods
within fiscal 2002, with early  application  encouraged.  The provisions of this
statement  generally are to be applied  prospectively.  The Company is currently
evaluating  whether  adoption of SFAS No. 144 will have a material effect on its
financial position or results of operations.


Note 3 - INVESTMENTS

     The Company's investments in U.S. government and corporate debt securities,
whose   maturities   are  typically  one  year  or  less,   are   classified  as
held-to-maturity  and valued at amortized cost, which  approximates  fair value.
Investments  in  securities  are  summarized as follows at December 31, 2001 and
2000:

                                     F-11
<PAGE>

<TABLE>


<CAPTION>

                                     Market       Gross Unrealized    Gross Unrealized       Amortized
                                     Value         Holding Gain         Holding Loss            Cost
                                   ---------      ----------------    ----------------     --------------
December 31, 2001:
Current:
<S>                              <C>               <C>                 <C>                   <C>
Corporate debt securities        $   896,735       $         --        $       3,338         $   900,073
                                  ==========        ============        =============         ==========

December 31, 2000:
Current:
U.S. government agencies         $   774,162       $        939        $          --         $   773,223
Corporate debt securities          6,440,416             74,587                   --           6,365,829
                                  ----------        -----------         -------------         ----------
Totals                           $ 7,214,578       $     75,526        $          --         $ 7,139,052
                                  ==========        ===========         =============         ==========

Non-Current:
Corporate debt securities        $   500,110       $         --        $      (1,741)        $   501,851
                                  ==========        ===========         =============         ==========
</TABLE>



     The  non-current  portion of investments is included in other assets in the
accompanying  consolidated  balance sheet at December 31, 2000.  The Company did
not own any  investments  whose  maturity  exceeded  one year as of December 31,
2001.  Investments  totaling  $12,488 and $2,237,  represented  the balance in a
brokerage  cash  account at December  31, 2001 and 2000,  respectively,  are not
included in the summary above.

     On January 15, 2001, corporate debt securities owned by the Company, issued
by a State of California  electrical utility (the "Utility"),  with a face value
of $400,000  and maturing on January 15, 2001,  were  defaulted  on. In February
2002,  the Company has  collected  all accrued  interest  due,  according to the
contractual  terms of the debt security and the bond was redeemed by the Utility
on March 1, 2002.

     During  2001,  the  Company  realized a net  capital  loss of $155,776 as a
result of the sale of investment grade bond funds in conjunction with a strategy
to minimize  state taxes.  No such losses were  realized  during fiscal 2000 and
1999.

Note 4 - PROPERTY AND EQUIPMENT

     Property and equipment consisted of the following:


                                           2001             2000
                                     ---------------- -----------------
        Computer Equipment            $ 1,844,150        $ 1,829,161
        Computer Software                 991,962          1,493,035
        Telephone Equipment               289,230            289,230
        Furniture and Fixtures            343,688            336,363
        L/H Improvements                   14,606             11,808
        Automobiles                       131,583                 --
                                       -----------        -----------
                                        3,615,219          3,959,597
        Accumulated Depreciation       (1,044,889)          (304,287)
                                       -----------        -----------
                                      $ 2,570,330        $ 3,655,310
                                       ===========        ===========

                                     F-12
<PAGE>

     Depreciation  and  amortization  expense for the years ended  December  31,
2001, 2000, and 1999 was $794,950, $279,641, and $22,193, respectively.

     As a result of the Company's  sublease being vacated by a bankruptcy court,
as more fully described in Note 6, the Company  provided for the loss of the net
book value of its  leasehold  improvements  associated  with the  sublease as of
December 31, 2001 totaling $11,357.


Note 5 - SEGMENT INFORMATION

     Based on the  criteria  established  by SFAS No.  131,  "Disclosures  about
Segments of an Enterprise and Related Information,"  management assesses Company
performance  and allocates  resources  principally on the basis of two segments:
(i) aviation e-commerce segment which develops and markets an online marketplace
for the purchasing and distribution of aviation products,  globally and (ii) the
supplemental nurse staffing agency currently in South Florida.  This segment was
formed  in  September  2001 as a  wholly-owned  subsidiary  of the  Company  and
commenced operations in October 2001.  Accordingly,  the Company operated in one
business line in the years ended December 31, 2000 and 1999, respectively.

     The online  marketplace  for the  purchasing and  distribution  of aviation
products  provides a means for aviation parts buyers and sellers to buy and sell
new,  repaired  or  overhauled  aviation  parts,  list  products,  services  and
catalogs.  The primary  source of  revenues is from the sales of  subscriptions,
generally  one year in term and  recognized  over the life of the  subscription.
Additionally, the Company recognizes revenue from advertising sales, principally
banner ads which run from three months to one year in duration of which  revenue
is  recognized  ratably  over  the run  period.  Cost of  revenues  include  the
commissions paid to salespersons who sell  subscriptions and banner  advertising
and direct costs of operating  the web site,  the related  depreciation  and the
overhead associated with managing the website.

     The  supplemental  nurse  staffing  agency  provides  registered  nurses to
hospitals  in Broward  and Palm Beach  counties of Florida to  supplement  their
existing  nursing  staffs  based on need.  The sole source of revenue is derived
from the hourly fees charged to the hospitals  for the services  rendered by the
Company's  registered nurse employees.  Cost of revenues include the wages paid
to these nurses as well as the cost of recruitment, the related depreciation and
the overhead of managing the segment.

     Revenues,  expenses and assets are  accounted  for in  accordance  with the
accounting policies set forth in Note 1. Revenues and non-overhead  expenses for
each business line are those that directly relate to those operations.  Overhead
expenses,  such as  administrative  expenses are allocated to each business line
based on management's best estimate of the resources  utilized in the management
and  operations of each business  line.  Total assets are those assets  directly
used in the Company's operations in each line of business. Other than the online
marketplace  funding the operations of the  supplemental  nurse staffing agency,
there are no significant transfers between segments.

                                     F-13
<PAGE>

<TABLE>


<CAPTION>

                                                                For the year ended December 31, 2001
                                                 ------------------------------------------------------------------
                                                 Aviation
                                                e-commerce        Supplemental    Corporate and
(In thousands)                                   business        Nurse Staffing        Other                 Total
                                              -------------      --------------   --------------           ----------
<S>                                            <C>                                                         <C>
Subscription revenues                          $   5,151                                                   $   5,151
Advertising                                          344                                                         344
Nurse staffing services                               --             $  98                                        98
Other                                                 26                --                                        26
                                                 --------             -----                                 ---------
   Total revenues                                  5,521                98                                     5,619
                                                 --------             -----                                 ---------
Cost of revenues                                   4,397               111                                     4,509
General and
  administrative                                   5,313               260            $  1,048                 6,621
Depreciation and amortization                        795                --                  --                   795
Stock based
  compensation                                        72                --                  --                    72
Litigation and other
  related costs                                       --                --                 458                   458
                                                 --------             -----            --------             ---------
Total costs and
  operating expenses                              10,577               371               1,506                12,454
                                                 --------             -----            --------             ---------
Operating loss                                 $  (5,056)            $(273)           $ (1,506)            $  (6,835)
                                                =========             =====            ========             =========
Interest income                                $      --             $  --            $    995             $     995
                                                =========             =====            ========             =========
Other income, net                              $      --             $  --            $    228             $     228
                                                =========             =====            ========             =========
Capital expenditures                           $     151             $   5            $     --             $     156
                                                =========             =====            ========             =========
Total assets                                   $  29,018             $ 146            $     --             $  29,164
                                                =========             =====            ========             =========
</TABLE>

     All of the Company's  long-lived assets are  geographically  located in the
United States. Management does not review revenues by geographical locations.


Note 6 - COMMITMENTS AND CONTIGENCIES

     In  September  2000 the Company  sued a third party  financial  institution
because  such  financial  institution  paid a check in the  amount  of  $161,000
despite a stop payment  order duly issued by the  Company.  The payee cashed the
check, along with a replacement check. Before the Company learned that the payee
had cashed both checks,  the Company entered into a binding  settlement with the
payee  ending the  Company's  business  relationship  with the payee.  The payee
refused to return the amounts and the financial institution failed to credit the
Company's account. The Company filed suit, and discovery has commenced. The only
claim against the Company in this matter is the financial  institution's  demand
for legal fees if the  financial  institution  prevails.  In a separately  filed
lawsuit,  the payee of the  checks has filed an action  for  declaratory  relief
against the  financial  institution  and the Company  requesting  that the court
declare its settlement  agreement  with the Company to be valid and binding.  In
this declaratory relief action, the payee has requested that the Company and the
financial  institution  reimburse  it for  costs  and fees  associated  with the
action.  In July 2001, the separately filed lawsuit against the Company filed by
the  payee  of  the  checks  was  dismissed,  without  prejudice,  for  lack  of
jurisdiction. This matter is scheduled for mediation in April 2002.

                                     F-14
<PAGE>

       In December 2000, a third party (the "Third  Party"),  unaffiliated  with
the Company,  instituted  arbitration against the Company in Dallas, Texas based
upon  allegations  that the Company  breached a February  18, 2000  professional
services   agreement.   The  Third  Party  claimed   damages  of  $308,083  plus
un-liquidated damage amounts for copyright  infringement,  interest,  attorneys'
fees and costs. The Company filed a counterclaim denying the breach and claiming
entitlement  to a refund of  $73,496  previously  paid to the Third  Party  plus
damages of $250,000  because of the Third Party's  breach of its  obligations to
the  Company.  This  matter was  settled on June 30,  2001,  resulting  with the
Company  making a  $175,000  payment  to the Third  Party.  This  settlement  is
classified as a litigation  expense in the statement of operations  for the year
ended December 31, 2001.

       In April and May 2001, the Company received notice of, or had been served
with, four purported class action lawsuits (Foderaro vs. PartsBase.com,  Inc. et
al, Case No.: 01-8319 CIV- FERGUSON;  IKCYBERINVESTMENTS vs. PartsBase.com, Inc.
et al, Case No.: 01-8368  CIV-SEITZ;  and Webb vs.  PartsBase,  et.al.  Case No.
01-8376  CIV- GRAHAM and Jesus  Martin vs.  PartsBase.com,  Inc. et al, Case No.
01-8526-CIV-UNGARO-BENAGES).  These  cases  were  consolidated  into one  action
entitled,  In  re:   PartsBase.com,   Inc.  Securities   Litigation,   Case  No.
01-8319-CIV-UNGARO-BENAGES/BROWN   currently   before   the   Honorable   Ursula
Ungaro-Benages.  The  consolidated  lawsuit  names as  defendants  the  Company,
certain of its current and former officers and directors,  and the  underwriters
of its initial public offering of securities.  The consolidated  lawsuit alleges
violations  of Sections 11,  12(a)(2) and 15 of the  Securities  Act of 1933 and
alleges the  Company's  March 2000  registration  statement  misrepresented  and
failed to disclose  matters  related to the Company's  business  operations  and
membership sales. The complaint alleges damages of nearly $42 million. The Court
has recently  certified a class consisting of purchasers of the Company's common
stock in the offering  during the period from March 22, 2000  through  April 25,
2000.  The Company  continues to believe that the  allegations  contained in the
consolidated  lawsuit are without  merit and intends to  vigorously  defend this
action.  Nevertheless,  an unfavorable resolution of these lawsuits could have a
material  adverse  effect on the  Company  in one or more  future  periods.  The
Company  maintains a director  and  officer's  liability  insurance  policy that
provides $3 million of coverage,  with retention of $200,000. As of December 31,
2001, the Company has incurred  legal  expenses equal to the $200,000  retention
which are included in litigation  and other  related  costs in the  consolidated
statement of operations  for the year ended  December 31, 2001.  The parties are
currently  engaged in  settlement  discussions.  The  results of the  settlement
discussions and ultimate resolution of this matter are uncertain.

     In July 2001, the Company was served with a lawsuit filed by an information
technology  vendor claiming damages  resulting from the Company's alleged breach
of a  software  sales  and  service  contract  in the  amount of  $126,631  plus
interest,   cost  and  fees.  The  Company  intends  to  vigorously  defend  the
allegations  contained  in this  lawsuit.  In July 2001,  the  Company  sued the
manufacturer  of such  software  for  damages  totaling  $220,000 as a result of
software  malfunction.  The Company  believes the resolution of this matter will
not have a material impact upon the Company's consolidated financial statements,
results of operations or cash flows.

     In March 2001 the  Company  received  notice from  counsel to the  Business
Software Alliance (the "BSA"), an industry watchdog group representing  software
manufacturers,  in connection with the BSA's  investigation  of possible illegal
duplication of certain software companies'  proprietary software products by the
Company.  Through  subsequent  correspondence  from the BSA, the BSA has alleged
that the  Company  has  installed  unauthorized  copies of BSA  member  software
products on Company computers. The correspondence from the BSA provides that the
Company's  potential exposure in this matter could be over $1,950,000 if willful
copyright  infringement is shown. The Company is currently in negotiations  with
the BSA in attempt to resolve  the  matter.  To date the Company is not aware of
any legal proceedings initiated by BSA in this matter.

     The Company is not currently aware of any other legal proceedings or claims
that the Company  believes are likely to have a material  adverse  effect on the
Company's financial position, results of operations, or cash flows.

                                     F-15
<PAGE>

     On February 15, 2002, the Company  received notice from the NASDAQ National
Market warning that the Company's stock may be delisted because its common stock
has failed to  maintain a minimum  bid price of $1 over the last 30  consecutive
trading  days and failed to maintain a minimum  market  value of public float of
$5,000,000.  In accordance with  MarketPlace  Rules,  the Company is provided 90
calendar  days,  or until May 15, 2002 to regain  compliance.  If the Company is
unable to  demonstrate  compliance on or before May 15, 2002,  NASDAQ staff will
provide  the Company  with  written  notification  that its  securities  will be
delisted.  At any time,  the Company  may appeal  NASDAQ  Staff's  decision to a
NASDAQ Listing Qualifications Panel.

     The  Company is party to a Content  License  and  Reseller  Agreement  (the
"Agreement") with USA Information Systems Inc. ("USAIS"),  an exclusive owner of
an  Internet-based  government  parts,  logistic and digital document  database,
whereby USAIS provides access to that database to paid subscribers through a Web
site owned, operated and maintained by USAIS (the "Subscription Services").  Per
the Agreement,  as amended on March 15, 2001,  USAIS licenses to the Company the
non-exclusive rights to resell the Subscription  Services and to offer access to
certain segments of the USAIS content to the Company's existing  customers.  The
Agreement  commenced on June 1, 2000 and has an initial term of three years. The
Agreement will be  automatically  renewed for two one-year terms,  unless either
party  notifies the other in writing of its intention not to renew the Agreement
within ninety (90) days prior to the  expiration of the  then-current  term. The
Company is  obligated  to pay USAIS the sum of $100,000 in monthly  installments
during  the first year of the  Agreement.  Beginning  with the  second  year and
continuing  until the expiration of the  Agreement,  the Company is obligated to
pay USAIS  $60,000 in monthly  installments.  In  conjunction  with the  amended
Agreement,  the Company  obtained and delivered to USAIS,  on March 21, 2001, an
irrevocable,  transferable standby Letter of Credit in the amount of $1,665,000,
collateralized  by a  certificate  of  deposit  of the  same  amount  that is to
diminish on a dollar for dollar  basis as payments are made in  accordance  with
the  amended  Agreement.  As of  December  31,  2001,  the  Company  owed  USAIS
$1,020,000.  The excess of the  certificate  amount plus accrued  interest as of
December 31, 2001, $704,249, has been classified as cash and cash equivalents on
the consolidated balance sheet at December 31, 2001.

     During  May 2000 the  Company  entered  into a sublease  agreement  with an
unaffiliated  third party for 35,668 square feet of general  office  space.  The
sublease  agreement  expired on October 31, 2006. In lieu of a security deposit,
the Company entered into an irrevocable standby letter of credit in favor of the
sublessor in the amount of $500,000.  In December 2001, the sublessor  filed for
bankruptcy  protection  and  as a  result,  the  sublease  was  vacated  by  the
bankruptcy court and the standby letter of credit was returned to the Company by
the  sublessor.  In  January  2002,  the  Company  entered  into a new  sublease
agreement ("New Sublease  Agreement") with another  unaffiliated third party for
6,600  square  feet of general  office  space in Boca  Raton.  The New  Sublease
Agreement expires on February 28, 2003.

     In  September  2001,  the Company  entered into a lease  agreement  with an
unaffiliated  third party for 1,000 square feet of general  office space in Fort
Lauderdale,  Florida for the operations of a supplemental  nurse staffing agency
office. The lease commenced in November 2001 and expires in November 2004.

                                     F-16
<PAGE>

     In  November  2001,  the Company  entered  into a lease  agreement  with an
unaffiliated  third party for 1,260 square feet of general  office space in West
Palm Beach,  Florida for the operations of a supplemental  nurse staffing agency
office.  The lease  commenced in December 2001 and expires on November 2004. The
Company may terminate this lease at the end of the first year or the second year
and be liable for 50% of rent due for the balance of the term of the lease.

     The following  represents  the minimum annual  contractual  rent during the
term of these latter three leases:

                                                  Minimum
            Year Ending December 31,            Annual Rent
            ------------------------           ------------
                    2002                         $  854,978
                    2003                            344,766
                    2004                             32,106
                                                  ---------
                                                 $1,231,850
                                                  =========


     The  minimum  annual  rent above  includes  the  amounts  due under the New
Sublease  Agreement which was entered into in January 2002. Rent expense for the
years ended  December 31,  2001,  2000,  and 1999 was  $888,946,  $573,527,  and
$44,859, respectively.


Note 7 - STOCKHOLDERS' EQUITY

Common Stock and Preferred Stock

     In March 2000, the Company  completed,  through an initial public  offering
("IPO"),  the  issuance of an  aggregate  of  3,500,000  shares of no par common
stock,  including  over-allotment  options granted to the underwriters.  The net
proceeds  of the  offering  to the  Company  were  $40.9  million  and were used
primarily for working capital,  information  technology,  expansion of sales and
marketing activities,  and other general corporate purposes. Between November 1,
1999 and  November 17,  1999,  the Company  sold 855,000  shares of its Series A
Convertible  Preferred  Stock at $2.50 per share for  aggregate  net proceeds of
$1,902,375 after commissions of $235,125.  The Convertible Preferred Stock had a
beneficial  conversion feature totaling  $1,902,375,  measured as the difference
between  the  conversion  price of $2.50  per  share  and the fair  value of the
underlying common stock at the time of issuance. In connection with the IPO, all
preferred  shares were  redeemed  into  855,000  shares of the  Company's no par
common stock.

     At the Company's Annual Meeting of Stockholders  held on June 20, 2001, the
stockholders  approved  an  amendment  to  affect  a  change  in  the  state  of
incorporation of the Company from Texas to Delaware. As a Texas corporation, the
Company's  shares of preferred and common stock had no par value. As a result of
the  reincorporation  in Delaware,  the Company's shares of preferred and common
stock, each have a $0.001 par value and $14,004 was reclassified from Additional
Paid-In Capital to Common Stock to reflect the par value of the shares of common
stock  outstanding.  No shares of preferred  stock were issued or outstanding at
December 31, 2001 and 2000, respectively.

                                     F-17
<PAGE>

     In accordance with the Company's share  repurchase  program  implemented in
the fourth  quarter of 2000,  and second  quarter of 2001,  538,120  and 136,685
shares of the Company's  common stock were repurchased at a cost of $795,544 and
$330,202 in fiscal 2001 and 2000, respectively. These shares were retired by the
Company in fiscal 2001.

Unearned Compensation

     Unearned  compensation  of $0,  $1,206,153 and  $10,475,238  was charged to
additional paid-in capital in 2001, 2000 and 1999,  respectively,  in connection
with the  issuance of stock  options and  restricted  stock  grants based on the
market value of the Company's common stock at the date of grant.  This charge is
amortized to the  statements of operations  as the  underlying  options vest. As
unamortized  options are forfeited,  the  unamortized  unearned  compensation is
reversed against additional paid-in capital.  During fiscal years 2001, 2000 and
1999, respectively,  $1,124,795, $3,145,536 and $0 was reversed due to forfeited
options.  Compensation expense of $320,437, $4,252,838 and $2,698,960 related to
these options was recognized in the consolidated statements of operations during
2001, 2000 and 1999, respectively.

     In October  2001,  the  Company  entered  into an  agreement  with a former
officer,  whereby in consideration  of the officer making himself  available and
rendering  consultation  services relative to financial and legal matters during
his  tenure,  the  Company  would  allow  his  outstanding  options  to  vest in
accordance  with their grant and to waive any forfeiture  provisions as a result
of his  departure.  As a result of the former  officer's  change in status,  the
Company revalued 12,510  outstanding  options as of the date of the agreement to
their  fair  value  resulting  in  a  reduction  of  unearned  compensation  and
additional paid-in capital of $137,735.

Warrants

     In  1999,   the  Company,   through  a  Private   Placement  (the  "Private
Placement"),  sold and  issued  8%  Convertible  Secured  Subordinated  Notes to
several investors. In connection with the closing of the private placement,  the
placement agent was granted warrants to purchase 200,000 shares of no par common
stock of the  Company at an  exercise  price  equal to $2.00 per share until the
expiration  date of September  1, 2002.  Subsequent  to December  31,  1999,  an
agreement  was  reached  with the  placement  agent that  reduced  the number of
warrants from 200,000 to 175,000.  As of December 31, 2001 and 2000, no warrants
had been exercised.  In the event of certain  consolidations  or sales affecting
the  Company,  the Company is required to call the  warrants for cash at a price
based on the greater of the trading price of the  Company's  common stock or the
value paid by a purchaser for it's no par common stock.

     In connection with the IPO in March 2000,  stock purchase  warrants,  at an
exercise  price of $21.45 per share,  for 262,500 shares of the Company's no par
common stock were issued to representatives of the underwriters.  As of December
31, 2001, none of these warrants have been exercised.

1999 Stock Option Plan

     On  November  2, 1999 the Board of  Directors  (the  "Board")  adopted  the
PartsBase.com, Inc. 1999 Stock Option Plan (the "Plan"). The Plan is a qualified


                                     F-18
<PAGE>

stock option plan in  accordance  with Section 422 of the Internal  Revenue Code
and provides for the issuance of both incentive and non-qualified stock options.
The  maximum  number  of  shares of  common  stock  that may be issued  upon the
exercise of all options shall not exceed  2,000,000  shares of common stock. The
per share option price of the common stock shall be determined by the Board. The
per share price with respect to any  incentive  stock  options shall not be less
than the fair market value of the common stock on the date of grant. Each option
granted vests in accordance with a vesting schedule  established by the Board or
a Committee of the Board.  Absent a specific  determination of vesting,  options
granted shall vest over a forty-eight month period and the period of exercise of
each option shall not exceed ten (10) years from date of grant.

     At the Company's Annual Meeting of Stockholders  held on June 20, 2001, the
stockholders  adopted the PartsBase,  Inc. 2001 Stock Plan (the "2001 Plan") The
2001 Plan is a qualified stock option plan in accordance with Section 422 of the
Internal  Revenue  Code and  provides  for the  issuance of both  incentive  and
non-qualified  stock options and stock grants.  The maximum  number of shares of
common stock that may be issued or issued upon the exercise of all options under
the 2001 Plan shall not exceed  1,000,000  shares of Common Stock. The per share
option price of the common stock shall be determined by the Board. The per share
price with respect to any  incentive  stock  options  shall not be less than the
fair market value of the common stock on the date of grant.  Each option granted
vests in  accordance  with a  vesting  schedule  established  by the  Board or a
Committee of the Board.  As of December 31, 2001, no options to purchase  shares
of common stock and no shares of common  stock had been  granted  under the 2001
Plan.

     A summary of the status of the Company's stock option activity, and related
information for the years ended December 31, 2001, and 2000 is presented below:

                                                                Weighted-Average
                                                                    Exercise
                                                  Shares              Price
                                               -----------      ----------------
     Outstanding December 31, 1999                919,375          $  0.63
     Granted                                      983,625             5.13
     Exercised                                   (303,415)            0.63
     Forfeited                                   (536,720)            3.16
                                               -----------          ------
     Outstanding December 31, 2000              1,062,865             3.52
     Granted                                      762,660             3.33
     Exercised                                   (286,260)            0.63
     Forfeited                                   (856,973)            5.18
                                               -----------          ------
     Outstanding December 31, 2001                682,292          $  3.10
                                               ===========          ======

     Options exercisable at December 31, 2001     448,563          $  3.14
                                               ===========          ======
     Options exercisable at December 31, 2000     464,166          $  2.22
                                               ==========           ======


                                     F-19
<PAGE>

     The following table summarizes  information about stock options outstanding
and exercisable as of December 31, 2001:
<TABLE>

<CAPTION>

                                      Options Outstanding                          Options Exercisable
   -----------------------------------------------------------------------    ----------------------------------

                                        Weighted-Average
                                            Remaining
       Range of           Number          Contractual     Weighted-Average       Number         Weighted-Average
    Exercise Prices     Outstanding        Life (Years)     Exercise Price    Exercisable        Exercise Price
    ---------------     -----------     ----------------  ----------------   ------------       ----------------
<S> <C>      <C>           <C>                <C>               <C>              <C>               <C>
    $0.63 to $0.65         54,382             7.98              $0.63            51,246            $0.63
    $2.00 to $3.00        401,160             9.51               2.08           228,149             2.11
    $5.00 to $6.38        226,750             8.82               5.54           169,168             5.37
                        ---------            -----               ----           -------             ----
                          682,292             9.15              $3.10           448,563            $3.14
                        =========            =====               ====           =======             ====
</TABLE>



     The  Company  applies  the  provisions  of  APB  No.  25  and  its  related
interpretations   in  accounting  for  its  stock  option  plans.   Accordingly,
compensation  expense  recognized  was  different  than  what  would  have  been
otherwise  recognized under the fair value based method defined in SFAS No. 123.
Had the Company  accounted for these plans under SFAS No. 123, the Company's net
loss and net loss per share  would have been  impacted  as follows for the years
ended December 31, 2001, 2000 and 1999:

<TABLE>

<CAPTION>

                                                       ------------------- --------------------- -------------------
                                                               2001                  2000                 1999
                                                       ------------------- --------------------- -------------------
Net loss attributable to common stockholders:
<S>                                                        <C>                   <C>                 <C>
  As reported                                              $(5,612,233)          $(13,453,981)       $(7,815,409)
                                                            ===========           ============        ===========
  Proforma                                                 $(8,344,679)          $(18,546,041)       $(6,004,972)
                                                            ===========           ============        ===========

Basic and diluted loss per share:
   As reported                                                 $(0.40)               $(1.03)             $(0.84)
                                                                ======                ======              ======
   Proforma                                                    $(0.59)               $(1.42)             $(0.65)
                                                                ======                ======              ======
</TABLE>


     Pro forma information regarding net loss and net loss per share is required
by SFAS 123 and has been  determined  as if the  Company had  accounted  for its
employee stock options under the fair value method provided for in SFAS 123. The
fair value of options was estimated at the date of grant using the Black-Scholes
option pricing model with the following weighted-average assumptions for options
granted during the years ended December 31, 2001, 2000 and 1999:

<TABLE>


<CAPTION>
                                          --------------------- --------------------- -----------------------
                                                  2001                  2000                   1999
                                          --------------------- --------------------- -----------------------
<S>                                                <C>                  <C>                    <C>
  Risk-free interest rate                          4.22%                5.06%                  5.88%
  Expected life (in years)                            4                    3                      3
  Volatility                                         88%                 125%                     0%
  Dividend yield                                      0%                   0%                     0%
</TABLE>


     For  purposes of pro forma  disclosures,  the  estimated  fair value of the
options is amortized to expense over the vesting  period of the options  using a


                                     F-20
<PAGE>

graded  vesting  method.  The  effects  of  applying  SFAS  123  for  pro  forma
disclosures are not likely to be  representative  of the effects on reported net
loss for future years.

Note 8 - INCOME TAXES

     The Company did not record any benefits for income taxes for the year ended
December  31,  2001  because  it  incurred  a  current  net  operating  loss  of
approximately  $6,985,000.  In years prior to  December  31,  2001,  the Company
incurred a net operating  loss of  approximately  $9,041,000.  The Company's net
operating  losses will fully expire in the year 2021. The Company also has a net
capital loss carryforward of approximately $172,000 which will expire in 2006.

     The  Company's  effective  tax rate for the years ended  December 31, 2001,
2000 and 1999 is comprised of the following items:

<TABLE>

<CAPTION>

                                       Year Ended              Year Ended              Year Ended
                                   December 31, 2001       December 31, 2000       December 31, 1999
                                 ---------------------   -----------------------  ----------------------
Statutory U.S. income
<S>                               <C>      <C>            <C>       <C>             <C>      <C>
 tax rate                         34.00 %  $(1,908,159)   34.00 %   $(4,574,353)    34.00 %  $(2,010,432)
Stock compensation                 0.00 %           --     0.00 %            --      4.50 %     (266,137)
Operations prior to
 inception                         0.00 %           --     0.00 %            --     (0.33)%       19,774
Nondeductible
 permanent
 differences                       1.40 %      (78,331)    (0.09)%       12,286     (0.00)%           --
Change in valuation
 allowance                       (35.40)%    1,986,490    (33.95)%    4,567,071    (41.66)%    2,463,662
Other                              0.00 %           --      0.04 %       (5,004)     3.49 %     (206,867)
                                 --------   -----------   --------   -----------   --------   -----------
                                   0.00 %  $        --      0.00 %  $        --      0.00 %  $        --
                                 ========   ===========   ========   ===========   ========   ============
</TABLE>


                                     F-21
<PAGE>

     Temporary  differences and carryforwards that cause significant portions of
deferred tax assets and liabilities are as follows:

                                           December 31,          December 31,
                                               2001                  2000
                                           -------------         -------------
     Deferred tax assets:
      Net operating loss                   $  6,559,028          $  3,401,807
      Deferred revenue                          835,130             1,211,468
      Stock compensation                         11,686             2,349,149
      Allowance for bad debts                        --                83,373
      Capital loss                               64,705                    --
      Provision for losses                       21,772                    --
      Deferred rent                              36,732                33,512
                                            ------------          ------------
       Total deferred tax assets              7,529,053             7,079,309
                                            ------------          ------------

     Deferred tax liabilities:
      Property and equipment                    154,038                 7,068
        Web development costs                        --                33,878
                                            ------------          ------------
       Total deferred tax liabilities           154,038                40,946
                                            ------------          ------------

       Less: Valuation allowance             (7,375,015)           (7,038,363)
                                            ------------          ------------

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

     Management  believes  there is no assurance  that the Company will generate
sufficient taxable income to utilize all of its deferred tax assets.  Therefore,
a  valuation  allowance  has been  established  to offset the net  deferred  tax
assets.


Note 9 - RELATED PARTY TRANSACTIONS

Contract Services

     A company owned and operated by one of the Company's  former  directors and
minority  stockholders  provided  significant services designing and maintaining
the Company's web site during 1999.  Services  performed  totaled  $260,000,  of
which  approximately  $216,075 was capitalized as web site development costs and
approximately  $40,000 was expensed as cost of sales for the year ended December
31, 1999.  Such  company did not provide any  services  during 2001 and 2000 and
there  were no  amounts  owed this  company as of  December  31,  2001 and 2000,
respectively.

     In  addition,  a company  owned and  operated  by another of the  Company's
directors  provided  services  in  connection  with the design of the  Company's
advertising  brochures  and  other  marketing  materials.  The  total  amount of
payments  made by the Company for such  services  performed  for the years ended
December 31, 2001, 2000 and 1999 was $0, $34,200 and $53,263  respectively,  and
there  were no  amounts  owed this  company as of  December  31,  2001 and 2000,
respectively.

                                     F-22
<PAGE>


NOTE 10 -                 Quarterly Financial Information (Unaudited)
                                (000's, except per share data)



                       First        Second         Third          Fourth
                      Quarter       Quarter       Quarter         Quarter
                     ---------     ---------     ---------       ---------
Net revenues:
  2001               $  1,599      $  1,354      $  1,344        $  1,322
  2000                    550           935         1,200           1,413
  1999                     14            23            85             240
Gross profit (loss):
  2001                    110           278           459              73 *
  2000                   (845)          (13)         (434)         (3,060)**
  1999                      4           (41)         (427)         (2,385)***
Operating loss:
  2001                 (2,197)       (2,365)       (1,081)         (1,192)*
  2000                 (3,593)       (3,131)       (3,993)         (4,499)**
  1999                    (43)         (137)       (1,380)         (3,483)***
Net loss:
  2001                 (1,699)       (2,066)         (778)         (1,069)
  2000                 (3,577)       (2,531)       (3,341)         (4,005)
  1999                    (43)         (137)       (2,178)         (3,555)
Net loss per share:
Basic
  2001                  (0.12)        (0.15)        (0.06)          (0.07)
  2000                  (0.36)        (0.18)        (0.24)          (0.25)
  1999                  (0.00)        (0.01)        (0.24)          (0.59)
Diluted
  2001                  (0.12)        (0.15)        (0.06)          (0.07)
  2000                  (0.36)        (0.18)        (0.24)          (0.25)
  1999                  (0.00)        (0.01)        (0.24)          (0.59)


*   Includes   reclassification   of  approximately   $248,000  of   stock-based
    compensation expense from operating expenses to cost of revenues.

**  Includes   reclassification  of  approximately   $2,308,000  of  stock-based
    compensation expense from operating expenses to cost of revenues.

*** Includes  reclassification  of approximately  $1,799,000 of stock-based
    compensation expense from operating expenses to cost of revenues.

NOTE 11 - Convertible Notes Payable

     For the period from June 9, 1999 to August 31, 1999, the Company, through a
Private Placement, sold and issued 8% Convertible Secured Subordinated Notes due
and payable  December 31, 2001 totaling  $900,000 (the  "Convertible  Notes") to
several  investors.  Terms of the Convertible  Notes provided for interest at 8%
payable quarterly.  Each note was convertible at any time into common stock at a
conversion  price of $2.00 per share at the  holder's  option.  The  Convertible
Notes  automatically  convert  upon the filing and closing of an initial  public
offering of the Company's common stock with gross proceeds of $5 million or more
or upon certain mergers and consolidations of the Company. The Convertible Notes


                                     F-23
<PAGE>

had  a  beneficial  conversion  feature  totaling  $787,500,   measured  as  the
difference between the conversion price of $2.00 per share and the fair value of
the  underlying  common  stock at the time of issuance  limited to the amount of
proceeds  received.  The  beneficial  conversion  feature has been recorded as a
charge to interest  expense with a  corresponding  credit to additional  paid-in
capital.  The  value  of  the  beneficial   conversion  feature  was  recognized
immediately  because the Convertible  Notes were immediately  convertible at the
option of the holder. The Convertible Notes were secured by substantially all of
the Company's assets.

     In November 1999, the Company issued an additional  $62,500 of notes having
substantially  identical terms to the  Convertible  Notes to an aggregate of two
investors,  including  $50,000  sold  to the  father  of  one  of the  Company's
executive officers.  These Notes had a beneficial  conversion feature of $62,500
measured as the difference  between the conversion  price of $2.00 per share and
the fair  value of the  underlying  stock at time of  issuance,  limited  to the
amount of proceeds.  At the time of issuance,  the beneficial conversion feature
was recorded as a charge to interest expense and with a corresponding  credit to
additional paid-in capital.  The value of the beneficial  conversion feature was
recognized immediately because the Convertible Notes are immediately convertible
at the option of the holder.

     As a result of the IPO discussed in Note 7 herein,  all of the  Convertible
Notes were  converted  into shares of common stock of the Company  during fiscal
2000.


Note 12 - Restricted Stock Bonus Plan

     In May 1999, the Company adopted the PartsBase.com,  Inc.  Restricted Stock
Bonus Plan ("Stock  Bonus  Plan").  Under the Stock Bonus Plan,  the Company was
authorized to award or grant to employees,  consultants,  officers and directors
(except  persons  serving as directors only) shares of common stock subject to a
substantial risk of forfeiture. The Board of Directors had the sole authority to
select  participants,  to  establish  the terms  and  conditions  of the  stock,
including  vesting  provisions,  and to grant the stock.  The maximum  number of
shares of common stock which could have been granted  under the Stock Bonus Plan
was 1,200,000 shares.  In the event a stock grant recipient was terminated,  any
unvested  portion  of the  shares  that  were  subject  to the  stock  grant was
canceled.  Each stock grant  recipient has all the rights of a shareholder  with
respect to stock received pursuant to the Stock Bonus Plan,  including the right
to vote such shares and receive all dividends and other distributions.

     On November 17, 1999 the Company  entered into an agreement with all of the
employees  who received  restricted  stock awards.  The agreement  calls for the
employee to return all shares  received and the  termination  of the  Restricted
Stock  Agreement  between  the  employee  and the  Company  as it relates to the
restricted  stock award. As part of the terminated  restricted  stock award each
employee  participating  in the  restricted  stock grant plan  received  one (1)
nonqualified  option  to  purchase  one (1)  share  of  common  stock  for  each
restricted stock terminated.  The options granted are part of the PartsBase.Com,
Inc. 1999 Stock Option Plan and vested over a  twenty-four  month period and the
period of exercise  shall not exceed ten (10) years from date of the grant.  The
options  were  granted  at $0.63 per share.  The number of shares of  restricted
stock and options granted as part of this agreement totaled 824,000. As a result
of the  termination  of the  restricted  stock and issuance of the  nonqualified
stock options,  additional unearned compensation of approximately $3,500,000 was


                                     F-24
<PAGE>

charged to  stockholders'  equity in  November  1999.  The  additional  unearned
compensation  was  determined as the amount by which the intrinsic  value of the
options issued  exceeded the amount of unearned  compensation  recorded prior to
the  termination  of the  restricted  stock  based  on the  market  value of the
Company's common stock at the date of grant. Prior to termination,  stock grants
totaling  1,075,250  were  outstanding.   An  aggregate  of  251,250  shares  of
restricted  stock remain  outstanding  under the Stock Bonus Plan. Such stock is
held by a  total  of four  persons,  including  250,000  shares  held by  Steven
Spencer,  a former director and former  executive  officer.  Mr. Spencer's stock
grant vested with respect to 50,000 shares upon  commencement of employment.  Of
the remaining  200,000 shares,  100,000 shares vested upon the IPO and the other
100,000 shares vest in 24 equal monthly installments.

     The  Company  applies  the  provisions  of  APB  No.  25  and  its  related
interpretations  in accounting  for its employee  stock grant plan. As the stock
grants  were  recorded  at their fair  value at the date of grant,  compensation
expense  recognized  was no  different  than  what  would  have  been  otherwise
recognized under the fair value based method defined in SFAS No. 123.


                                     F-25
<PAGE>


EXHIBIT INDEX

EXHIBIT
NUMBER     DESCRIPTION
------     --------------------------------------------------------------------

1.1(3)     Form of Underwriting Agreement

3.1(3)     Form of Amended and Restated Articles of Incorporation

3.2(3)     Form of Amended and Restated Bylaws

3.3(7)     Form of Certificate of Incorporation

3.4(7)     Form of Bylaws

3.5(8)     Form of Articles of Incorporation- Olympus Staffing, Inc.

3.6(8)     Form of Amendment to Articles of Incorporation-Olympus Staffing, Inc.

3.7(8)     Form of Bylaws- Olympus Staffing, Inc.

4.1(3)     Form of Common Stock Certificate

4.2(3)     Form of Representative's Warrant

4.3(2)     Form of Warrant Agreement, dated as of August 31, 1998, in favor
              of Gunn Allen

4.4(2)     Form of Subscription Document for August 1999 Private Placement

4.5(2)     Form of Subscription Document for November 1999 Private Placement

4.6(2)     Form of convertible Promissory Note

10.1(2)    PartsBase.com, Inc. Amended Restricted Stock Bonus Plan

10.2(1)    PartsBase.com, Inc. Stock Option Plan

10.3(2)    Lease Agreement with respect to office space in Boca Raton,
              Florida

10.4(3)    Form of Indemnification Agreement

10.5(2)    Employment Agreement of Robert Hammond, Jr.

10.6(2)    Employment Agreement of Steven Spencer

                                       1
<PAGE>

EXHIBIT INDEX- continued

EXHIBIT
NUMBER     DESCRIPTION
------     --------------------------------------------------------------------

10.7(2)    Employment Agreement of Kevin Steil

10.8(2)    Employment Agreement of Michael Siegel

10.9(2)    Employment Agreement of Yves Duplan

10.10(2)   Consulting Agreement with Plan Three Solutions, L.L.C.

10.11(2)   Software License Agreement with Tradex Technologies, Inc.

10.12(2)   Software License Agreement with Trading Dynamics, Inc.

10.13(4)   Sublease Agreement dated April 2000 between Alamo Rent-A-Car LLC
              and the Company

10.14(4)   Content License and Reseller Agreement between USA Information
              Systems, Inc. and the Company

10.15(6)   Amendment to the Content License and Reseller Agreement between
              USA Information Systems, Inc. and the Company

17.1(5)    Resignation letter of Louis W. Storms IV as a member of the
              company's Board of Directors

21.1(8)    List of Subsidiaries

23.1(8)    Independent Auditors' Consent

99.1(7)    Audit Committee Charter

--------------------------------------------------

(1)  Incorporated  by reference to the  Registrant's  Registration  Statement on
       Form S-1 (File No.  333-94337),  filed on  January  10,  2000.

(2)  Incorporated  by  reference  to  the  Registrant's  Amendment  No.1  to the
     Registration Statement on Form S-1 (File No. 333-94337), filed on
     February 2, 2000.

(3)  Incorporated  by  reference  to  the  Registrant's  Amendment  No.2  to the
     Registration Statement on Form S-1 (File No. 333-94337), filed on
     March 16, 2000.

                                       2
<PAGE>


EXHIBIT INDEX- continued

(4)  Incorporated  by  reference  to the  Registrant's  Form 10-Q for the period
     ended June 30, 2000 filed on August 14, 2000.

(5)  Incorporated by reference to the Registrant's Form 8-K dated
     October 26, 2000.

(6)  Incorporated by reference to the Registrant's Form 10-K for the fiscal year
     ended December 31, 2000.

(7)  Incorporated by reference to the Registrant's Definitive Proxy Statement
     dated May 22, 2001.

(8)  Filed herewith.


                                       3
<PAGE>