JETBORNE INTERNATIONAL, INC.


                          FINANCIAL STATEMENTS


                           APRIL 30, 1996

<PAGE>

                        JETBORNE INTERNATIONAL, INC.

                       INDEX TO FINANCIAL STATEMENTS



Item 8.  FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

  Independent Auditors' Report

  Financial Statements:
    Balance Sheets
      April 30, 1996 and 1995

    Statements of Income (Loss)
      For the years ended April 30, 1996, 1995 and 1994

    Statements of Changes in Stockholders' Equity
      For the years ended April 30, 1996, 1995 and 1994

    Statements of Cash Flows
      For the years ended April 30, 1996, 1995 and 1994

Notes to Financial Statements



<PAGE>

                         Norman A. Eliot & Co.
                      Certified Public Accountants

NORMAN A. ELIOT, C.P.A.                          9400 SOUTH DADELAND BOULEVARD
FLORENCE L. KRANTS, C.P.A.                       MIAMI, FLORIDA  33156
JOHN BLUMENTHAL, C.P.A.                          PH:  (305)670-4444
                                                 FAX: (305)670-0105

                       INDEPENDENT AUDITORS' REPORT



The Board of Directors
Jetborne International, Inc.
Mimai, FL  33166

We have audited the balance sheets of Jetborne International, 
Inc. as of April 30, 1996 and 1995, and the related statements 
of income (loss), changes in stockholders' equity, and cash 
flows for the years ended April 30, 1996, 1995 and 1994.  
These financial statements are the responsibility of the 
Company's management.  Our responsibility is to express an 
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above 
present fairly, in all material respects, the financial 
position of Jetborne International, Inc. at April 30, 1996 and 
1995, and the results of its operations and its cash flows for 
the years ended April 30, 1996, 1995 and 1994 in conformity 
with generally accepted accounting principles.

Miami, Florida
    August 16, 1996, except
    October 14, 1997, as to
    certain matters that took
    place during December 1996,
    March 1997, August 1997 and
    September 1997 and as             /s/Norman A. Eliot
    described in Note 16              Norman A. Eliot & Co.



                                  F-2


<PAGE>

                       JETBORNE INTERNATIONAL, INC.

                             BALANCE SHEETS

                         APRIL 30, 1996 AND 1995

<TABLE>
<CAPTION>
                                 ASSETS

                                               1996       1995    
<S>                                       <C>         <C>
CURRENT ASSETS:
  Cash                                    $  113,867  $   86,235
  Accounts receivable:
    Trade, net of allowance for doubtful
    account ($1,110, and $3,607 1996 
    and 1995, respectively) (Note 1)         174,064     133,567
    Other                                      2,447       3,535
  Stockholder loan receivable                      0       3,000
  Inventories (Notes 1 and 5)              3,033,136   3,248,136
  Prepaid expenses and other
    current assets                             8,862      23,970
  Total Current Assets                    $3,332,376  $3,498,443


PROPERTY AND EQUIPMENT (Notes 1 and 6)    $  644,786  $  633,816
  Less:  Accumulated depreciation and
    amortization                             419,109     389,148

  Net Book Value                             225,677     244,668

OTHER ASSETS:
  Security deposits and other assets      $   13,546  $    6,231





TOTAL ASSETS                              $3,571,599  $3,749,342

</TABLE>




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


                             F-3
<PAGE>

                       JETBORNE INTERNATIONAL, INC.

                             BALANCE SHEETS

                         APRIL 30, 1996 AND 1995

<TABLE>
<CAPTION>
                  LIABILITIES AND STOCKHOLDERS' EQUITY
                                             1996        1995
<S>                                     <C>          <C>
CURRENT LIABILITIES:   
  Notes payable (Note 7)                $     1,691  $   15,828
  Current maturities of long term debt
    (Note 8)                                 78,740      45,463
    Accounts payable                        182,519     159,197
    Stockholder loan payable                 34,774           0
    Customers' deposits                           0       1,552
    Accrued Expenses                        121,983     113,714

Total Current Liabilities               $   419,707  $  335,754

LONG TERM DEBT, Net of current maturities
  (Note 8)                              $    29,585  $   65,825

COMMITMENTS, CONTINGENCIES AND
  SUBSEQUENT EVENTS
   (Notes 9, 12, 14, 15 and 16)
STOCKHOLDERS' EQUITY (Notes 1, 9, 10, 15
  and 16):
    Common stock, $.01 par value 
     (14,000,000  shares authorized;
     11,882,280 shares issued at 
     April 30, 1996 and 1995)           $   118,823  $  118,823
    Additional paid in capital            5,097,251   5,097,251
    Retained earnings (deficit)          (2,093,767) (1,868,311)




  TOTAL STOCKHOLDERS' EQUITY            $ 3,122,307  $3,347,763


  TOTAL LIABILITIES AND 
    STOCKHOLDER'S EQUITY                $3,571,599   $3,749,342

</TABLE>

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


                               F-3A

<PAGE>

                       JETBORNE INTERNATIONAL, INC.


<TABLE>
<CAPTION>
                        STATEMENTS OF INCOME (LOSS)

                  FOR THE YEARS APRIL 30, 1996, 1995 AND 1994

                                 1996        1995        1994
<S>                          <C>         <C>         <C>
NET SALES                    $1,533,366  $1,125,279  $1,755,763

COST OF SALES                   956,655     906,840   1,118,396

GROSS PROFIT                 $  576,711  $  218,439  $  637,367

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES       859,705   1,031,091     830,070

OPERATING LOSS               $ (282,994) $ (812,652) $ (192,703)

OTHER INCOME (EXPENSES):
  Interest and other income  $   62,484  $   96,083  $  316,304
  Interest expense               (4,946)     (5,166)     (6,943)
  Recovery of stockholders' 
    notes and loans receivable
    (Note 4)                          0      12,500           0

  Net Other Income               57,538     103,417     309,361
INCOME (LOSS) FROM CONTINUING
  OPERATIONS BEFORE INCOME
  TAXES (CREDIT)             $ (225,456) $ (709,235) $  116,658

INCOME TAXES (CREDIT)
  (Note 11)                           0      (8,201)          0

INCOME (LOSS) BEFORE
  EXTRAORDINARY ITEM         $ (225,456) $ (701,034) $  116,658

EXTRAORDINARY ITEMS:
  Gain recognition on 
    discharge of debt net
    of $10,000 provision for
    income taxes (Note 1)             0           0     414,033

NET INCOME (LOSS)            $ (225,456) $ (701,034) $  530,691

EARNINGS (LOSS) PER SHARE
  (Note 1)                   $    (0.02) $    (0.06) $     0.05

WEIGHTED AVERAGE COMMON
  SHARES AND COMMON SHARE
  EQUIVALENTS OUTSTANDING 
  (Note 1)                   11,882,280  11,882,280   9,730,636

</TABLE>

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


                               F-4



<PAGE>

                JETBORNE INTERNATIONAL, INC.
        STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
      FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                      Number of shares
                                      of common stock 
                                 Issued          Treasury
                                                   Stock
<S>                            <C>               <C>
BALANCE,
  APRIL 30, 1993
  (Note 1)                     6,235,780            3,500
  Net income                           -                -
 Common stock
    issued (Notes 1, 9
    and 10)                    6,400,000                -
 Common stock
  acquired on
  confirmation
  of plan of
  reorganization
  (Notes 1, 9,
  and 10)                              -           750,000
BALANCE,
  APRIL 30, 1994
  (Note 1)                    12,635,780           753,500
  Net Loss                             -                 -
  Common stock
   retired                      (753,500)         (753,000)
BALANCE,
  APRIL 30, 1995
 (Note 1)                     11,882,280                 0
  Net Loss                             -                 -
BALANCE
  APRIL 30, 1996
  (Note 1)                    11,882,280                 0

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










                                       F-5
<PAGE>

                   JETBORNE INTERNATIONAL, INC.
           STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
         FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994


<TABLE>
<CAPTION>


                                        Additional  Retained       Total
                       Common  Treasury Paid-in     Earnings   Stockholders'
                        Stock   Stock   Capital     (Deficit)      Equity
<S>                 <C>        <C>       <C>        <C>         <C>
BALANCE,
  APRIL 30, 1993
  (Note 1)          $  62,358  $ (3,763) $4,956,280 $(1,697,968) $3,316,907
  Net income                -         -           -     530,691     530,691
 Common stock
    issued (Notes 1, 9
    and 10)            64,000         -     137,200           -     201,200
 Common stock
  acquired on
  confirmation
  of plan of
  reorganization
  (Notes 1, 9,
  and 10)                    -        (1)          -          -          (1)
BALANCE,
  APRIL 30, 1994
  (Note 1)            $126,358  $ (3,764)$5,093,480 $(1,167,277)  4,048,797
  Net Loss                   -          -         -    (701,034)   (701,034)
  Common stock
   retired              (7,535)    3,764      3,771           0           0
BALANCE,
  APRIL 30, 1995
 (Note 1)             $118,823         0 $5,097,251 $(1,868,311) $3,347,763
  Net Loss                   -         -          -    (225,456)   (225,456)
BALANCE
  APRIL 30, 1996
  (Note 1)            $118,823         0 $5,097,251 $(2,093,767) $3,122,307

</TABLE>

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

                                          F-5A


<PAGE>
                     JETBORNE INTERNATIONAL, INC.
                       STATEMENTS OF CASH FLOWS
            FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                    1996       1995       1994
<S>                              <C>        <C>       <C>
CASH FLOWS FROM
  OPERATING ACTIVITIES:
  Net income (loss)              $(225,456) $(701,034)$ 530,691
  Adjustments to reconcile
    net income (loss) to net
    cash provided by (used in)
    operating activities:
    Depreciation & amortization    29,961     29,958    33,774
    Provision for losses on
      trade accounts receivable    (2,497)     3,607         0
    Net write-off(net recovery)
      of trade accounts receivable   (190)    12,880     7,848
    Loss from sale of property
      and equipment                     0          0     1,671
    Recognition of deferred income      0          0  (193,518)
    Forgiveness of debt                 0     (9,300)        0
    Treasury Stock received
      (nominal value)                   0          0        (1)
    Changes in certain 
      assets and liabilities:
    Increase in trade
      accounts receivable         (37,810)   (18,275)   (6,854)
    Decrease in other
      accounts receivable           1,088      4,501     8,508
    (Increase)decrease in
      stockholder loan receivable   3,000     (3,000)        0
    Decrease in inventories       215,000    407,915    11,413
    (Increase)decrease in
      prepaid expenses and
      other current assets         15,108     (4,941)  190,647
    Decrease in net assets of
      discontinued operations           0          0    88,294
    (Increase)decrease in security
      deposits and other assets    (7,315)    36,360   (37,054)
    Increase (decrease) in
      accounts payable             23,322     68,536   (94,454)
    Increase (decrease) in
      indebtedness to stockholder  34,774          0    (3,600)
    Increase (decrease) in
      income taxes payable              0    (10,000)    6,895
    Increase (decrease) in
      customers' deposits          (1,552)     1,552   (15,375)
    Increase (decrease) in
      accrued expenses              8,269     (1,500) (160,912)
    Decrease in net liabilities
      discharged in bankruptcy          0          0  (414,033)
      Net cash provided by (used
        in) operating activities $ 55,702  $(182,741) $(46,060)

</TABLE>

______________

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

                           F-6

<PAGE>

                     JETBORNE INTERNATIONAL, INC.
                         STATEMENTS OF CASH FLOW
               FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                   1996       1995       1994
<S>                             <C>        <C>         <C>
CASH FLOWS FROM
  INVESTING ACTIVITIES:
  Purchase of property 
    and equipment               $(10,970)  $ (24,902)  $ (2,831)

  Net cash used in
    investing activities         (10,970)    (24,902)    (2,831)
CASH FLOWS FROM
  FINANCING ACTIVITIES:
  Proceeds from issuance
    of notes                   $  74,700   $  26,070   $ 20,859
  Principal repayments on
    notes payable                (28,837)    (23,561)   (25,540)
  Principal repayments on
    long-term debt               (62,963)     (9,737)  (101,465)
  Proceeds from private
    placement sale of
    common stock                       0           0    201,200
  Net cash provided by (used
    in) financing activities     (17,100)  $  (7,228)    95,054

NET INCREASE (DECREASE)
  IN CASH                      $  27,632   $(214,871)  $ 46,163

CASH, BEGINNING                   86,235     301,106    254,943

CASH, END                      $ 113,867    $ 86,235   $301,106

Supplemental disclosures of
  cash flow information:
  Cash paid during the year for:
    Interest                   $   4,424    $  5,136   $  6,078
    Income Taxes               $  10,462    $  1,799   $ 41,142

</TABLE>



___________
The accompanying notes to financial statements describe certain
non-cash investing and financing activities (some of which
affect the changes in certain assets and liabilities) and are
taken into consideration in the statements of cash flows.
___________
The accompanying notes are an integral part of these financial
statements.


                                 F-6A


<PAGE>

               JETBORNE INTERNATIONAL, INC.

               NOTES TO FINANCIAL STATEMENTS


Note 1.	  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Business (see Note 16 regarding subsequent 
events)

Jetborne International, Inc. (the "Company") was incorporated 
January 30, 1987 (under the laws of the State of Delaware) as 
a holding company in anticipation of a public offering.  On 
February 2, 1987, the stockholders of Jetborne, Inc. 
(incorporated April 24, 1980 under the laws of the State of 
Florida) contributed all of the outstanding shares of 
Jetborne, Inc. common stock to Jetborne International, Inc. 
(the Company owned no other assets at that date) in exchange 
for 3,123,000 shares of common stock of the Company and 
Jetborne, Inc. transferred to the Company its stock in each of 
its subsidiary companies.  On May 20, 1987, the Company sold 
1,150,000 shares of its common stock to the public, resulting 
in net proceeds to the Company of approximately $3,328,000.  
On September 17, 1993, an order of the United States 
Bankruptcy Court, Southern District of Florida was entered 
confirming the Company's third amended plan of reorganization.  
Prior thereto, $201,200 was deposited to the Company 
attorneys' trust account as payment for 6,400,000 shares of 
Company common stock to be issued in accordance with terms of 
the plan (see below and Notes 9 and 10).

The September 17, 1993 order of the United States Bankruptcy 
Court was entered conditioned upon the ability of the Company 
to maintain the level of allowed unsecured claims against the 
Jetborne International, Inc. estate at a maximum of 
$2,300,000; accomplished on September 27, 1994 when the 
Company objection to the claim of a former principal 
stockholder of the Company was sustained by the United States 
Bankruptcy Court.  Prior thereto, on December 10, 1991, 
creditors of the Company filed with the United States 
Bankruptcy Court, placing the company in an involuntary 
Chapter 11 bankruptcy proceeding (converted by the Company to 
a voluntary proceeding on December 26, 1991); Jetborne, Inc., 
the only then significant operating subsidiary of the Company, 
filed a voluntary petition on December 16, 1991; subsequently, 
the two proceedings were consolidated.  The company filed, 
with the Bankruptcy Court, an Amended Disclosure Statement and 
Plan dated May 14, 1993 whereby a program was established for 
the probable payment to all creditors, over various periods 
not to exceed nine years, of all approved sums due to them 
(the allowed unsecured claims against the Jetborne, Inc. (see 
below) estate are to be paid after the payment of allowed 
unsecured claims against the Jetborne International, Inc. 
estate); payments to the Jetborne International, Inc. 
unsecured creditors commenced during January 1995 (thirty days 
after the December 14, 1994 United States Bankruptcy Court 
appointment of the designee for the Unsecured Creditors 
committee).  The principal source of the funds to pay the 
indebtedness is the January 1, 1993 balance on the note 
received from the December 11, 1990 sale of 100% of the common 
stock of Aircraft Modular Products, Inc. ("AMP") (see Note 4).  
In addition, there are provisions for:

Merging Jetborne, Inc. into the company and the 
cancellation of the Jetborne, Inc. preferred stock (see 
Note 10).  The Company has, however, registered the name 
Jetborne, Inc. under the Fictitious Name Act of the State 
of Florida.

                        F-7

<PAGE>

            NOTES TO FINANCIAL STATEMENTS
            JETBORNE INTERNATIONAL, INC.


Note 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Organization and Business (see Note 16 regarding subsequent 
events)
(continued)


The present stockholders of Jetborne International, Inc. 
maintaining their shares of common stock of the Company 
(the Company will still be publicly owned).

The sale of 6,400,000 shares of the Company's common 
stock to two new principal stockholders of the Company 
(see notes 9 and 10) for $201,200.

The sum of the excess of liabilities transferred to the 
Unsecured Creditors' Committee of Jetborne International, 
Inc., the cancellation of the preferred stock (and the related 
assets and liabilities) of Jetborne, Inc. and the Federal 
"alternative minimum tax" (see Note 11) (based on the excess 
of alternative minimum tax income over the alternative minimum 
tax net operating loss carryforward) over the carrying value 
of the AMP note (see above and Note 4) ($414,033) is reflected 
on the statement of income (loss) for the year ended April 30, 
1994 in the category "gain recognition on discharge of debt, 
net of $10,000 provision for income taxes (Note 1)".

The Company is primarily engaged in the sale of aircraft 
parts.

General/Pledged Assets/Reclassifications

The stockholders' equity section of the balance sheets at 
April 30, 1996 and April 30, 1995 reflect the 6,400,000 shares 
of Company common stock as if issued at those dates (in 
accordance with the confirmed plan of reorganization; see 
above) (issued March 7, 1997; see Note 10) and the 750,000 
shares of Company common stock as if received in the Treasury 
at April 30, 1995 (also in accordance with the confirmed plan 
of reorganization; see Notes 10 and 15) (the 750,000 shares, 
and 3,500 shares of previously acquired stock, were cancelled 
on August 10, 1994 thereby reducing the number  of shares 
issued at April 30, 1995 and April 30, 1996).  The prior year 
financial statements are presented, for comparative purposes, 
as if the Company was not, until September 17, 1993, in re-
organization under Chapter 11 of the United States Bankruptcy 
Code.  The statements of income (loss), changes in 
stockholders' equity and cash flows for the period May 1, 1993 
through September 16, 1993 reflect results of operations and 
cash flows of the Company and its then wholly owned 
subsidiaries while it was Debtor-in Possession.  All material 
inter-company balances and transactions through September 16, 
1993 have been eliminated.

Prior to its emergence from the bankruptcy proceedings, 
substantially all of the Company's assets were pledged as 
collateral for notes payable and other debt.  Effective 
September 17, 1993, the Company transferred the note 
receivable (from the purchaser of 100% of the common stock of 
Aircraft Modular Products, Inc.; see above and Note 4) to the 
Unsecured Creditor's Committee of Jetborne International, Inc. 
(in accordance with 

                            F-8

<PAGE>

                JETBORNE INTERNATIONAL, INC.

                NOTES TO FINANCIAL STATEMENTS


Note 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

General/Pledged Assets/Reclassifications (continued)

the terms of the Company's third amended plan of 
reorganization ?see above?).

Certain amounts in the April 30, 1995 and April 30, 1994 
financial statements have been reclassified to conform with 
the April 30, 1996 presentation.

New (Recent)Accounting Standards

The Company has adopted all applicable recent accounting 
standards and pronouncements issued by the Financial 
Accounting Standards Board (FASB).  The adoption did not cause 
a material effect on the Company's financial statements.

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

Accounts and Notes Receivable, Trade/Allowance for Doubtful 
Accounts

The Company's policy is to establish an allowance for doubtful 
accounts when the collectability of the accounts is doubtful 
and to charge that account, or income, when the accounts are 
determined to be uncollectable ($2,795, $16,487 and $7,848 
(net of recoveries) for the years ended April 30, 1996, 1995 
and 1994, respectively)(see Note 4 regarding the write-off of 
certain non-trade notes and loans receivable).

Inventories

Inventories are stated at the lower of cost or market with 
cost determined using the average cost method (see Note 5).

Property and Equipment

Property and equipment are stated at cost.  Expenditures for 
major betterments and additions are charged to the property 
and equipment accounts while replacements, maintenance and 
repairs, which do not improve or extend the life of the 
respective asset, are charged to expense currently.  The cost 
of assets retired or otherwise disposed of and the accumulated 
depreciation are relieved from the accounts, and the resulting 
gain or loss is included in the statement of income.  The 
Company's policy is to capitalize, and record as property and 
equipment, assets acquired under terms of capital leases.

Depreciation is calculated using the straight line and 
declining balance methods over the estimated useful lives of 
the assets. For income tax purposes, depreciation is 
calculated using the accelerated cost recovery system (MACRS) 
for certain qualifying assets and the straight-line method for 
other assets (see below).

                            F-9

<PAGE>

                 JETBORNE INTERNATIONAL, INC.

                 NOTES TO FINANCIAL STATEMENTS


Note 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes

The Company filed consolidated income tax returns through the 
year ended April 30, 1994 which included the results of its 
operations and the operations of its wholly owned U.S. 
subsidiaries through September 16, 1993.  Income tax expense 
was allocated to the subsidiaries that had net income, 
computed as if each subsidiary were filing a separate return.  
The subsidiaries' liability, along with other inter-company  
indebtedness, was eliminated in consolidation.  The income tax 
returns of the Company including the period September 17, 1993 
through April 30, 1994 and the years ended April 30, 1995 and 
April 30, 1996 reflect the results of operations of the 
Company.

Deferred income taxes (none at April 30, 1996 and 1995) are 
provided in amounts sufficient to five effect to the use of 
net operating loss carryforwards and timing differences 
between financial and income tax reporting (see note 11).  
Investment tax and research and development tax credits are 
treated as a reduction of income tax expense in the year in 
which the related assets are placed in service and when the 
research and development expense is incurred.

Earnings (Loss) Per Share

Earnings (loss) per share have been computed based on the 
weighted average number of common shares and common share 
equivalents outstanding.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments 
purchased with a maturity of three months or less to be cash 
equivalents.

Note 2.   LIQUIDITY  (see Note 1 and Note 16 regarding 
subsequent events including the December 30, 1996 
purchase of aircraft parts inventory totaling 
$2,900,000 (subject to a consignment agreement) and the 
September 1997 $1,000,000 writedown of inventories)

The Company has sustained net cumulative losses of 
approximately $3,930,000 since April 30, 1988 (the net income 
for the two years that did not reflect losses were generated 
from either discontinued operations or extraordinary items) 
and retained earnings have decreased from $1,837,681 to 
retained earnings (deficit) of (2,093,767) at April 30, 2996.  
As referred to in Note 1, the Company emerged from a Chapter 
11 bankruptcy proceeding (which commenced December 10, 1991) 
on September 17, 1993 and, as part of the confirmed plan of 
reorganization, the Company received $201,200 for the issuance 
of 6,400,000 shares of Company common stock.

Since the end of the last fiscal year, the Company's liquidity 
has continued to deteriorate, with increasing rapidity, 
primarily due to a continuing diminishing stock sales trend, 
declining consignment inventory and limited brokerage sales 
opportunities.

                                F-10

<PAGE>

                    JETBORNE INTERNATIONAL, INC.

                    NOTES TO FINANCIAL STATEMENTS


Note 2.  LIQUIDITY  (see Note 1 and Note 16 regarding 
subsequent events including the December 30, 1996 purchase of 
aircraft parts inventory totalling $2,900,000 (subject to a 
consignment agreement) and the September 1997 $1,000,000 
writedown of inventories) (continued)

The Company borrowed $30,000 from its Chief Executive Officer 
on January 18, 1996 (repaid March 7, 1997; see Note 16) for 
the purpose of paying an obligation due that day (see Note 15) 
and, at September 30, 1997, is indebted to the Chairman of its 
Board of Directors for 18 months compensation ($72,000; see 
Note 14) and advances totalling $19,895.

Credit financing is being sought to purchase "fresh" inventory 
lots where the purchased inventory will comprise the 
collateral for the credit extended.  The Company also 
continued to pursue aircraft parts consignment agreements and 
other business opportunities within the expertise of its 
executives.  Consignments, in effect, provide the Company with 
additional inventory without the prior need for purchases 
which adversely affects liquidity.

Management of the Company believes that the referred to 
programs, if accomplished, will provide sufficient working 
capital to meet the Company's obligations as they become due.  
There can be no assurance, however, that the Company will be 
successful in its efforts nor that it will be able to maintain 
its operations on a profitable basis  even though 
substantially all claims and lawsuits have been resolved or 
adequate provision has been made for the ultimate liability 
(see Note 15).

As indicated in Note 3, all operating subsidiaries of the 
Company were sold, or operations were terminated, during the 
past six years except Jetborne, Inc. which was effectively 
merged into the Company September 17, 1993.

Note 3.  SALE/LIQUIDATION OF SUBSIDIARIES

As referred to in Note 1, the Company sold 100% of the common 
stock of Aircraft Modular Products, Inc. during the year ended 
April 30, 1991.  Subsequently, and through the year ended 
April 30, 1993, the operations of three other subsidiaries 
were sold or terminated.  The then only remaining subsidiary 
of the Company (Jetborne, Inc.) was effectively merged into 
the Company when the United States Bankruptcy Court entered an 
order, on September 17, 1993, confirming the Company's third 
amended joint plan or reorganization (see Notes 1 and 2).

Note 4.  NOTES RECEIVABLE (Non-trade)

The Company had, prior to September 17, 1993, ownership of the 
remaining balance on the note receivable from the purchaser of 
100% of the common stock of Aircraft Modular Products, Inc.  
This note (with the remaining balance at January 1, 1993 of 
$2,078,350) has been transferred to the Unsecured Creditors' 
Committee of Jetborne International, Inc.  (see Notes 1 and 3).

                             F-11

<PAGE>

                   JETBORNE INTERNATIONAL, INC.

                  NOTES TO FINANCIAL STATEMENTS


Note 4.     NOTES RECEIVABLE (Non-trade) (continued)

At April 30, 1996 and 1995, the former principal stockholder 
of the Company and two terminated officers (see Notes 9, 10 
and 15) were indebted to the Company as follows:

     Former principal stockholder         $3,310,321 (1)
     Former Vice President                   572,658 (2)
     Former President                         43,738 (3)
     Total                                $3,926,717

These amounts had been written off as uncollectible, or an 
allowance had been established, based on the then possible 
offsets and on the probable uncollectability (see below and 
Notes 9, 10 and 15).
________
(1) On June 10, 1994 a final default judgement for $4,512,600 
was entered, by the United States Bankruptcy Court, 
against the former principal stockholder.

(2) On November 10, 1994 the former Vice President, based on 
his petition, obtained an order from the United States 
Bankruptcy Court discharging his debts; however, on May 
29, 1995, the same Court determined that $514,212 of his 
debt to the Company was not dischargeable and, 
accordingly, entered a final summary judgement against 
him.

(3) The indebtedness of the former President was satisfied on 
September 8, 1994; the Company received $12,500, the 
former President withdrew his claims against the Company, 
and mutual releases were exchanged.

Note 5.  INVENTORIES  (see Notes 1 and 9 and Note 16 regarding 
subsequent events including the December 30, 1996 purchase of 
aircraft parts inventory totalling $2,900,000 (subject to a 
consignment agreement) and the September 1997 $1,000,000 
writedown of inventories).

Inventories of aircraft parts and supplies total $3,033,136 
and $3,248,136 at April 30, 1996 and 1995 respectively, net of 
a reserve for obsolescence of $365,000 at both dates.  These 
amounts do not include inventories received on a consignment 
basis with the Company agreeing to assume all risks and insure 
at no charge to the consignors.  The consignment agreements 
are summarized as follows:

Consignment agreement dated January 26, 1990 with a major 
airline with the Company agreeing to use its best efforts 
to sell the inventory at market value for which it was to 
receive 35% of the selling price.  From inception through 
April 30, 1992, the Company had received approximately 
$2,150,000 (valued at estimated selling prices) of parts.  
As of April 30, 1995 all unsold parts were in the 
Company's warehouse, however, based on negotiations with, 
and instructions from the consignor, all parts were 
returned to the consignor by November 2, 1995.  The 
various remaining unresolved matters between the Company 
and the consignor were in progress until January 9, 1996 
when a settlement agreement was entered into cancelling 
and terminating the original consignment agreement and 
the modifications (see Note 15).

                     F-12

<PAGE>

          JETBORNE INTERNATIONAL, INC.

          NOTES TO FINANCIAL STATEMENTS

Note 5. INVENTORIES (see Notes 1 and 9 and Note 16 regarding 
subsequent events including the December 30, 1996 purchase of 
aircraft parts inventory totalling $2,900,000 (subject to a 
consignment agreement) and the September 1997 $1,000,000 
writedown of inventories)(continued)

Consignment agreement dated December 9, 1992, with a non 
related entity, which required the Company to initially place 
a $125,000 deposit with the consignor (to be reviewed semi-
annually as it relates to the value of the consigned parts; 
reduced to $36,629 at April 30, 1994 ($0 at April 30, 1996 and 
1995) based on the reduced amount of the consigned inventory 
on hand).  The Company agreed to use its best efforts to sell 
the parts for which it receives 40% of the selling price.  
Either party may cancel the agreement with thirty days written 
notice.  An affiliate of the consignor had guaranteed the 
deposit.

Consignment agreement dated December 1, 1994, with a non-
related entity.  The Company agreed to use its best efforts to 
sell the parts for which it receives 40% of the selling price 
(just prior to each sale title to the inventory items are 
transferred from the consignor to the Company and the Company 
sells the parts in its own name).  In addition, the Company is 
to pay a handling fee of 10% of the consignor's acquisition 
costs for any consignment parts returned to the consignor 
during the period of the agreement; the 10% handing fee for 
items returned to the consignor, based on the consignor's 
request, is to be charged to the consignor.  The agreement was 
to expire November 30, 1995, however, it was cancelled by the 
Company August 2, 1995.

Note 6.  PROPERTY AND EQUIPMENT (see Note 1)

At April 30, property and equipment consists of:



<TABLE>
<CAPTION>
                                                          Estimated useful lives/
                               1996         1995          depreciation methods  
<S>                          <C>          <C>
Machinery
  and equipment              $150,038     $142,718        5-10 years/straight line
                                                          and declining balance
Leasehold improvements        361,681      361,681        10-25 years/straight line

Office furniture
  and equipment               114,642      110,992        5-7 years/straight-line

Transportation       
  equipment                    18,425       18,425        5 year straight-line

Total                        $644,786     $633,816

</TABLE>

Depreciation and amortization charged to income was $29,961, 
$29,958 and $33,774 for the years ended April 30, 1996, 1995, 
and 1994, respectively.

                           F-13
<PAGE>

                JETBORNE INTERNATIONAL, INC.

                NOTES TO FINANCIAL STATEMENTS

Note 7. NOTES PAYABLE

At April 30, notes payable ($1,691, 1996 and $15,828, 1995) 
are for insurance premium contracts and are payable in monthly 
installments ($1,523 to $1,706 including interest at various 
rates) through May 18, 1996 and December 15, 1995, 
respectively.  The weighted average interest rate on short 
term borrowings was 14.56% and 6.92% for the years ended April 
30, 1996 and 1995, respectively.

Note 8.  LONG-TERM DEBT (see Notes 1 and 15)

<TABLE>
<CAPTION>

At April 30, long-term debt consist of:
                                                    1996             1995
<S>                                               <C>              <C>
Agreement to pay a creditor in twenty 
remaining quarterly installments commencing 
November 23, 1993 (the first four 
installments of $5,000 through August 23, 
1994 and the remaining sixteen installments 
of $2,500 through August 25, 1998), without 
interest (see Note 15 regarding the 
modification of the amount of the 
indebtedness and the payment terms).               $ 67,000        $ 60,000

Income tax obligation to Internal Revenue 
Service payable in monthly installments 
($1,151 including interest at 7% per annum) 
through August 17, 1999                              40,000          51,288

Total                                              $108,325        $111,228

Less:  Current maturities                            78,740          45,463

Long-term debt, net of current maturities          $ 29,585        $ 65,825

</TABLE>

Maturities of long-term debt in each of the next years are as 
follows:

            Year ending April 30,            __Amount__

                  1997                      $   78,740
                  1998                          12,076
                  1999                          12,974
                  2000                           4,535
                  2001 and thereafter                0

                  Total                     $  108,325


Note 9.  RELATED PARTY TRANSACTIONS (see Notes 1, 4, 10, 14, 
and 15 and Note 16 regarding subsequent events)

Prior to March 9, 1991, when a non-related U.K. Limited 
Liability Company ("U.K. Company") acquired, from the then 
principal stockholder of the Company, the rights to 3,130,000 
shares of the Company's common stock (including options to 


                                F-14

<PAGE>


              JETBORNE INTERNATIONAL, INC.

              NOTES TO FINANCIAL STATEMENTS

Note 9. RELATED PARTY TRANSACTIONS (see Notes 1, 4, 10, 14 and 
15 and Note 16 regarding subsequent events)(continued)

purchase 430,000 shares; the options expired prior to April 
30, 1996), a former employee, officer and chairman of the 
Board of Directors was the principal stockholder of the 
Company.  On December 30, 1990, the then principal stockholder 
of the Company signed a $1,960,492 note to the Company which 
note was not paid and, on June 10, 1994, the Company obtained 
a default final judgement against him, in the amount of 
$4,512,600, in connection with the note and related matters.

Reference is made to Note 1 which describes a provision in the 
bankruptcy confirmation order for the receipt by the Company 
of $201,200 for the issuance of 6,400,000 shares of Company 
common stock (50% to the Chairman of the Board of Directors of 
the Company, as trustee (also the representative of U.K. 
Company; see above and Note 10) and 50% to the Chief Executive 
Officer of the Company)(see Note 16 regarding the December 18, 
1996 issuance of common stock purchase warrants to the 
Chairman of the Board of Directors, the March 7, 1997 
agreements for the sale and transfer of 6,400,000 shares of 
Company's common stock and the subsequent (September 15, 1997) 
resale of 6,057,630 of the shares to an Israeli company that, 
on December 30, 1996, sold to the Company $2,900,000 of 
inventory (subject to a consignment agreement) and on August 
18, 1997 agreed that $200,000 of the purchase price would be 
on open account and further agreed to accept shares of the 
Company's common stock in payment for the remainder of the 
inventory ($2,700,000; equivalent to 11,416,300 April 30, 1996 
shares) and thereby owning approximately 75% of the Company's 
common stock at September 15, 1997).  In connection therewith, 
and as subsequently confirmed by the United States Bankruptcy 
Court, the two stockholders entered into a shareholder 
agreement which contains various provisions including:  voting 
for member of the Board of Directors (as directed by the 
United States Bankruptcy Court, the Board of Directors at 
April 30, 1996 consists of the Chairman of the Board, the 
Chief Executive Officer and non-employee who was previously 
appointed a director by U.K. Company; see Note 16 regarding 
subsequent changes to the composition of the Board of 
Directors),  disposition of shares (including the first right 
of refusal of possible sale and/or transfer) an employment 
agreement for the Chief Executive Officer (see Note 14 and 
Note 16 regarding the March 7, 1997 termination of the 
employment agreement) and compensation for the Chairman of the 
Board of Directors of the Company (see Note 14).

On January 18, 1996, the Company borrowed $30,000 from its 
Chief Executive Officer (see Note 15) (repaid at March 7, 
1997; see above and Note 16) and is indebted to the Chairman 
of its Board of Directors at September 30, 1997 for 18 months 
compensation (totalling $72,000; see Note 14) and advances 
totalling $19,895.

As indicated in Notes 12 and 16, the Company entered into a 
five year lease for new premises (with occupancy commencing 
during the month of October 1997).  The premises will be co-
occupied with subsidiaries of the Israeli company referred to 
above (also a guarantor on the lease) with an allocation of 
the rental and related charges to be made based on use.

                           F-15
<PAGE>


                JETBORNE INTERNATIONAL, INC.

                NOTES TO FINANCIAL STATEMENTS

Note 10. STOCKHOLDERS' EQUITY (see Notes 1, 9 and 15 and Note 16
         regarding subsequent events)

On October 4, 1991, the Company's stock was delisted from NASDAQ.

Effective September 17, 1993, the 5,590 shares of 10% 
cumulative redeemable preferred stock of Jetborne, Inc. was 
cancelled based on the September 17, 1993 order of the United 
States Bankruptcy Court, Southern District of Florida, 
confirming the Company's third amended plan of reorganization 
(see Notes 1 and 3).

In connection with various contractual arrangements, the 
Company had committed to register 946,850 shares of its common 
stock in a registration statement to be filed with the 
Securities and Exchange Commission.  Since the commitments 
were made, significant events have taken place and, presently, 
it is uncertain whether any of the commitments can be, or will 
have to be, fulfilled.

Stock Option Plans

Since inception, the Company adopted several stock option 
plans for the benefit of employees and directors of the 
Company.  The Company believes that, as of April 30, 1996, all 
of the options were cancelled or have expired (see Notes 9 and 
16 regarding the December 18, 1996 issuance of common stock 
purchase warrants to the Chairman of the Board of Directors).

Common Stock Issued/To Be Issued

Through May 1, 1991, the Company had issued 6,235,780 shares 
of its common stock.  The status remained the same, subject to 
outstanding options (see above) until September 17, 1993 when 
6,400,000 shares of the Company's common stock were sold to 
two new principal stockholders of the Company based on an 
order of the United States Bankruptcy Court, Southern District 
of Florida, confirming the Company's third amended plan of 
reorganization (see above and Notes 1, 9 and 16).

On November 10, 1994, the Company was notified that the 
221,850 shares of Company common stock purchased by U.K. 
Company (see Note 9) were transferred to the Chairman of the 
Board of Directors of the Company, as Trustee(U.K. Company 
also confirmed that they conveyed to that person, as trustee, 
all of its ownership interest in the 3,200,000 shares of 
Company's common stock to be acquired by that person as 
trustee (see above and Note 1).  Accordingly, U.K. Company 
only owns the shares of the Company's common stock acquired, 
on March 9, 1991, from the then principal stockholder of the 
Company (see Note 9).

The following is a summary of the common stock issued as of 
April 30, 1996 and the common stock to be issued based on the 
agreements entered into subsequent to April 30, 1996 and 
through August 18, 1997 as if the reverse split of the 
Company's common stock, as approved by the Board of Directors 
on August 12, 1997, had taken place:

                            F-16
<PAGE>

                    JETBORNE INTERNATIONAL, INC.

                   NOTES TO FINANCIAL STATEMENTS

Note 10. STOCKHOLDERS' EQUITY (see Notes 1, 9 and 15 and Note 16
         regarding subsequent events)(continued)

Common Stock Issued/To Be Issued (continued)

                                                    Post-split
                                                      Shares

  Shares issued at April 30, 1996 (11,882,280)      1,188,228
  Agreement entered into
     on August 18, 1997 (for the partial payment
     of the December 30, 1996 inventory 
     purchase)                                      1,141,630

  Total                                             2,329,858

As described in Notes 9 and 16, an Israeli company became the 
owner of 1,747,393 post-split shares (75% of the issued common 
stock) based on the agreements entered into on August 18, 1997 
and September 15, 1997.

Common Stock in Treasury

Prior to May 1, 1991, the Company had purchased, from non-
related persons, 3,500 shares of its common stock for $3,763.  
The Company received 750,000 shares of its common stock from 
the bank that was holding the shares as collateral for an 
obligation of the then principal stockholder of the Company 
(see Note 9).  The return was negotiated as part of the 
settlement with that bank (see Note 15) and accordingly it is 
included in the statement of changes in stockholders' equity 
for the year ended April 30, 1994 at a nominal value of $1.

On August 10, 1994 the 753,500  shares were cancelled (see 
Note 1).

Note 11.  INCOME TAXES (see Note 1 and Note 16 regarding 
          subsequent events)

At May 1, 1992, the Company had, for Federal Income Tax 
purposes, a net operating loss carryforward of $2,741,731.  
The following is a summary of the components of the net 
operating loss carryforward to the fiscal year ending April 
30, 1997:

  Balance at May 1, 1992                               $2,741,731
  Loss applied to taxable income
     of fiscal year ended April 30, 1993                 (125,272)
  Loss applied to taxable income
     of fiscal year ended April 30, 1994               (2,041,621)
  Increase due to reduction in
     charitable contributions carryforward                 11,698
  Loss arising in fiscal year ended April 30, 1995        944,142
  Loss arising in fiscal year ended April 30, 1996        288,252

  Net operating loss carryforward to fiscal 
  years ending April 30, 1997 through April 30, 2011   $1,818,930

Even though the Company was not required to pay Federal income 
tax based on taxable income for the year ended April 30, 1994 
(as the taxable income was offset by the net operating loss 
carryforward), Federal income tax of $1,799 was computed based 
on the "alternative minimum tax" computation.  In the event 

                              F-17

<PAGE>
                  JETBORNE INTERNATIONAL, INC.

                 NOTES TO FINANCIAL STATEMENTS

Note 11. INCOME TAXES (see Note 1, and 16 regarding subsequent 
         events)(continued)

Federal income tax returns for subsequent years reflect 
Federal income taxes due in excess of the alternative minimum 
tax, the alternative minimum taxes paid for years ended April 
1991 ($59,763) and 1994 ($1,799) can be applied against the 
computed Federal income tax (see below).

No provision has been made for the difference between 
financial statement and income tax reporting of certain items 
of revenue and expenses, as the net operating loss 
carryforward at April 30, 1996 substantially exceeds the 
difference; nor has a provision been made for deferred income 
tax credits, based on the possible use of the net operating 
losses being applied against taxable income in future years 
(and the use of the "alternative minimum tax" paid) as there 
is no assurance that the Company's future profitability will 
exceed the difference (see below).

The amount of the net operating loss carryforward that can be 
applied against taxable income, if any, in future years will 
be subject to an annual limitation (based on formulas in the 
Internal Revenue Code and regulations; and not presently 
determinable)due to the significant change in ownership of 
common stock referred to in Note 16.  The amount of the 
alternative minimum tax credit (see above) available is also 
subject to similar limitations.

On September 15, 1997, the Company was notified that the 
Internal Revenue Service would be examining the Company's 
Federal income tax return for the fiscal year ended April 30, 
1995.

Note 12.  LEASES (see Note 16 regarding subsequent events)

The Company leases warehouse facilities and office space under 
a long-term agreement.  On June 30, 1992, the Company 
concluded a settlement with Aircraft Modular Products, Inc. 
("AMP") which included AMP's purchasing the building occupied 
by the Company and entering into a new lease with the Company 
(not including the space then occupied by a former subsidiary) 
covering a period of five years commencing October 1, 1992 
(initially for a six month period with options for six months 
and four years (exercised covering the four years ending 
September 30, 1997)(with a rent reduction) and relieving the 
Company of its $85,387 obligation for prior unpaid rent (see 
Note 16 which describes the lease entered into on September 
15, 1997 for new warehouse facilities and office space).

The following is a schedule of future minimum lease payments 
for premises (including the lease entered into on September 
15, 1997) and office equipment with initial remaining lease 
terms in excess of one year:

               Year ending April 30,
                     1997               $   94,362
                     1998                  111,409
                     1999                  113,718
                     2000                  111,578
                     2001                  116,041
                     Thereafter            171,953
                     Total              $  719,061

                           F-18

<PAGE>

               JETBORNE INTERNATIONAL, INC.

               NOTES TO FINANCIAL STATEMENTS

Note 12. LEASES (see Note 16 regarding subsequent 
         events)(continued)

For the years ended April 30, 1996, 1995 and 1994, rental 
expense for all operating leases was approximately $130,019, 
$111,496 and $104,000, respectively.

Note 13.  MAJOR CUSTOMERS

The Company made sales to major unaffiliated customers of 
approximately $566,730,  $486,000 and $986,000 during the 
years ended April 30, 1996, 1995 and 1994, respectively.

Note 14.  EMPLOYMENT AGREEMENTS (see Note 9 and Note 16 
regarding subsequent events)

During April 1992, the then financial controller of the 
Company was appointed Chief Financial Officer at a salary of 
$65,000 per annum (increased to  $70,000 when an employment 
agreement was entered into on May 1, 1994).  The employee 
resigned on May 31, 1995 effective June 30, 1995.  Another 
employee was appointed financial controller.

On June 15, 1994, modifications to Executive Employment 
Agreements were approved by the United States Bankruptcy Court 
and are summarized as follows:

  A five year employment agreement, effective May 1, 1994 with
  the Chief Executive Officer at a salary of $120,000 per annum, 
  plus fringe benefits (the agreement contains provisions for 
  termination (see Note 16 regarding the March 7, 1997
  termination of the employment agreement) by the Company and/or
  the employee and a non-compete clause), and establishment of
  $48,000 per year compensation to the Chairman of the Board of
  Directors (effective June 15, 1994).

Note 15.  LITIGATION (see Notes 4, 9, and 10)

At April 30, 1996 and 1995, the Company was a party to several 
claims and lawsuits arising out of the conduct of its 
business.  Substantially all of the litigation that was 
unresolved at April 30, 1993 has been resolved by the United 
States Bankruptcy Court prior to, or on, September 17, 1993 
(when the Company's third amended plan of reorganization was 
confirmed) or subsequently by a separate Bankruptcy Court 
order.

The following is a summary of the claims and lawsuits that 
have been resolved as of April 30, 1996:

  On June 1994, a Default Final Judgement was entered against 
the former principal stockholder, in the amount of $4,512,600 
plus interest, based on the lawsuit re-filed in the Bankruptcy 
Court.  Included in the lawsuit were claims against two 
suspended officers of the Company (see below) and claims 
against a third suspended officer (see below) and a former 
sales consultant; these claims have been settled without 
payment of substantial funds by, or to, the Company (see Note 
4).  The former sales consultant had filed a $474,000 claim 
(against Jetborne, Inc.) in the Bankruptcy court and the 
Company had disputed it.


                          F-19
<PAGE>


              JETBORNE INTERNATIONAL, INC.

              NOTES TO FINANCIAL STATEMENTS

Note 15. LITIGATION (see Notes 4, 9 and 10)(continued)

On September 8, 1994, the Company and the former sales 
consultant resolved their disputes and both parties signed a 
stipulation of dismissal (however, the sales consultant still 
had the right to file a claim in the Bankruptcy Court).

An action to recover damages from the Company, as guarantor, 
on an outstanding $750,000 obligation (plus interest and 
costs) payable to a bank by the then principal stockholder of 
the Company.  On September 12, 1991 a judgement was awarded to 
the bank (against the stockholder and the Company, as 
guarantor).  The litigation against the Company was settled on 
September 17, 1993 when an order was entered confirming the 
Company's third amended plan of reorganization.  The 
settlement includes the payment to the bank of approximately 
$100,000 (by the Company), payment to the bank of 
approximately $1,078,000 (from the proceeds of collection of 
the note received from the purchaser of Aircraft Modular 
Products, Inc. (see Notes 1 and 3) and transferred to the 
Unsecured Creditors' committee of Jetborne International, 
Inc.) and the bank's return to the Company of 750,000 shares 
of the Company's common stock (previously held by the bank as 
partial collateral and subsequently purchased by the bank for 
$.05 per share)(see Note 10).

During March 1991, the Company was informed that an 
investigation by the United States Customs Service (which 
commenced on March 7, 1990) had been expanded and the Company 
was a target of an investigation by a Federal Grand Jury for 
possible criminal violations.  The Company was indicted and on 
October 23, 1992, the Company entered into a plea-bargain 
agreement; on December 15, 1992, the Company pleaded guilty to 
two counts and paid $25,260 in fines, to settle all pending 
litigation and matters in connection with the investigation.  
During December 1993, the Company was informed that it had 
been debarred for a period of three years from December 3, 
1992 from participating directly or indirectly in the export 
of defense articles or technical data or in furnishing of 
defense services for which a license or other approval is 
required.  Accordingly, should the Company so desire, it would 
be required to apply for reinstatement.

As referred to in Note 5, there were various unresolved 
matters between the Company and a major airline in connection 
with a consignment agreement dated January 26, 1990.  On 
January 9, 1996, a settlement agreement was entered into 
between the Company and the major airline.  The agreement 
cancelled and terminated the original consignment agreement, 
and the modifications thereto, and the Company agreed to wire 
transfer to the major airline $30,000 by January 18, 1996 
(timely paid) and an additional $7,500 per month commencing 
February 20, 1996 (the first payment was paid February 9, 
1996) with a final 

                          F-20
<PAGE>


              JETBORNE INTERNATIONAL, INC.

              NOTES TO FINANCIAL STATEMENTS

Note 15. LITIGATION (see Notes 4, 9 and 10)(continued)

payment on January 20, 1997 (paid February 17, 1997).  The 
agreement also provides that, when the major airline receives 
the $120,000 they will assign to the Company their claim filed 
in the United States Bankruptcy Court against Jetborne, Inc. 
($80,180)(see Note 1).

The following is a summary of the claims and lawsuits that 
have not been resolved as of April 30, 1996:

A former attorney for the Company (the escrow agent holding 
promissory notes, and collateral therefore (and collateral for 
the payment of Federal income taxes that might have been 
required with respect to a proposed bonus payable to one 
former employee), that the Company received from former 
executives of the Company (see above and Notes 4 and 9) had 
deposited with the Court the promissory notes and collateral 
and had brought an interpleader action requesting that the 
Court accept the promissory notes and collateral pending the 
outcome of the matters involved.  The Company filed an answer 
and cross-claim against the issuers of the promissory notes 
seeking to claim the escrowed promissory notes and collateral.  
Counsel for the Company is presently evaluating the 
possibility of having the default final judgement against the 
former principal stockholder entered into the litigation in 
the Circuit Court in order to obtain the release, and 
subsequent return to the Company, of 1,000,000 (pre-split; see 
Notes 10 and 16) shares of the Company common stock which were 
interplead and which were owned by the former principal 
stockholder of the Company.

A possible substantial liability of a former subsidiary (see 
Note 3) as a result of pollution of its business premises.  
Based on recent studies made on behalf of the Company, a 
provision of $49,500 had been made in a prior year 
(approximately $10,000 of the provision was paid by April 30, 
1996 and 1995)(included in accrued expenses in the balance 
sheets).

Note 16.  SUBSEQUENT EVENTS

On December 18, 1996 the Board of Directors of the Company 
unanimously adopted a resolution for the issuance, to the 
Chairman of its Board of Directors, of restricted common stock 
purchase warrants exercisable (to the close of business on 
June 30, 2001) for the purchase of 24% of the then outstanding 
shares of common stock of the Company for $240,000 (equivalent 
to 285,174 post-split (see below) shares).

On December 30, 1996, the Company purchased from a United 
States subsidiary of an Israeli corporation for $2,900,000, 
one lot of aircraft parts (subject to a consignment agreement; 
see below) based on a purchase order issued by the Company on 
December 25, 1996.  On August 18, 1997, the Company entered 
into an agreement with the Israeli corporation whereby the 
Company issued 1,141,630 (post-split); see below) shares of 
its common stock in payment of $2,700,000 of the $2,900,000 
indebtedness for the December 30, 1996 purchase (see Note 9).  
As an integral part of the

                         F-21
<PAGE>

             JETBORNE INTERNATIONAL, INC.

             NOTES TO FINANCIAL STATEMENTS


Note 16.  SUBSEQUENT EVENTS (continued)

agreement, the Company committed to cause a one (1) for ten 
(10) reverse split of its common stock (see below).

The $2,900,000 of aircraft parts referred to in the preceding 
paragraph is located in Canada and Holland and is being held 
for sale, on a consignment basis, by a Canadian sales agent 
who has been given exclusive rights to sell the inventory in 
Canada, as individual parts or in bulk, at prices as agreed 
upon between the Company and the sales agent.  The agreement 
is for two years from December 10, 1996 and will be extended 
for one year automatically unless a thirty day written notice 
from either party cancels the agreement.  The sales agent is 
responsible for all expenses incurred for shipping of the 
inventory from Holland (where it was originally located) to 
Canada (the location of the warehouses of the sales agent), 
all costs of insurance, storage and subsequent management of 
the inventory at the sales agent's facility.  The sales agent 
initially deposited with the Company $25,000 which, along with 
the shipping costs from Holland to Canada, shall be repaid to 
the sales agent from the sales proceeds or directly.  Proceeds 
of sales to customers located in Canada and worldwide sales by 
the sales agent, shall be divided 50% to the Company; sales 
made by others outside of Canada shall be divided 10% to the 
sales agent and the balance to the Company.  All packing and 
shipping costs are to be paid by the Company.

On March 7, 1997, an agreement was entered into between the 
then President of the Company (also a member of the Board of 
Directors) and the owner of 3,200,000 shares of the Company's 
common stock (acquired pursuant to the Company's Confirmed 
Plan of Reorganization, see Notes 1, 9 and 10), whereby he 
would sell to a then non-affiliated Hong Kong corporation (see 
below)(the transaction closed on August 10, 1997) the 
3,200,000 shares of stock for $150,000.  In connection 
therewith, he resigned as President of the Company (and a 
member of the Board of Directors) and the Company agreed to 
pay him three months vacation pay and the remaining balance of 
the indebtedness due to him (approximately $50,000).  As part 
of the agreement, the Company agreed, and the Board of 
Directors (prior to his resignation) approved the appointment 
of the then Director of the Hong Kong Corporation as a member 
of the Board of Directors of the Company.

On March 7, 1997, an agreement was entered into between the 
Chairman of the Board of Directors, as trustee, and the owner 
of 3,200,000 shares of the Company's common stock (acquired 
pursuant to the Company's Confirmed Plan of Reorganization, 
see Notes 1, 9 and 10), whereby the shares would be 
transferred to the same then non-affiliated Hong Kong 
corporation (the transaction was closed on August 10, 1997; 
see above).  In connection with the agreement the Company 
agreed to pay to the Chairman of the Board of Directors the 
accumulated unpaid fees for services rendered to the Company 
totalling approximately $52,000 at that date).

On August 12, 1997, the Board of Directors unanimously adopted 
a resolution to reverse split the Company's common stock on 
the basis of one share for ten shares effective September 30, 
1997 in accordance with the Company's shareholder record on 
August 15, 1997 and subject to stockholder approval (already 
approved 

                          F-22
<PAGE>


             JETBORNE INTERNATIONAL, INC.

             NOTES TO FINANCIAL STATEMENTS


Note 16.  SUBSEQUENT EVENTS (continued)

by in excess of 50% of the issued shares of common stock)

On September 15, 1997, the Israeli corporation (see above) 
entered into an agreement with the Hong Kong corporation (see 
above) whereby the Israeli corporation agreed to purchase from 
the Hong Kong corporation 605,763 (post-split)shares of 
Jetborne common stock for 700,000 ordinary shares of the 
Israeli corporation.  After this purchase, the Israeli 
corporation owns 1,747,393 (post-split) shares of Jetborne 
common stock (approximately 75% of the issued and outstanding 
shares).

On September 15, 1997, the Company entered into a 5-year lease 
expiring October 31, 2002 with a non-related company for 
18,812 rentable square feet for warehouse facilities and 
office space at a new location.  The monthly rental commencing 
November 1, 1997 is $8,230.25 plus sales tax for the first 
year with annual increases until the 5th year when the rental 
is $9,628.22 plus sales tax.  In addition to the base rental, 
the Company is obligated to maintain the premises (except for 
the structure, exterior paint, landscaping and maintenance of 
the roof) and to pay annual expenses of operating the premises 
in excess of the expenses for the base year (calendar year 
1998).  The lease terms include one 5-year option (with an 
increase in rental of 4% over the rate of the last year of the 
initial term) and a first right of refusal to purchase the 
premises in the event a third party desires to purchase the 
premises.

The premises will be shared with subsidiaries of the Israeli 
corporation (see above; a guarantor of the terms of the lease 
(see Notes 9 and 12; an allocation of the rental and related 
charges will be made based on use).

During September 1997, the Board of Directors adopted a 
resolution confirming management's decision to provide for a 
$1,000,000 writedown of all inventory owned at that date based 
on a re-evaluation of the inventories.

On September 15, 1997, the Company was notified that the 
Internal Revenue Service would be examining the Company's 
Federal income tax return for the fiscal year ended April 30, 
1995.




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