SCHEDULE 14A
                                 (RULE 14A-101)
                     INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION

                    PROXY STATEMENT PURSUANT TO SECTION 14(A)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]

Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission only
      (as permitted by Rule 14a-6(e)(2)).
[_] Definitive Proxy Statement.
[_] Definitive Additional Materials.
[_] Soliciting Material Pursuant to Rule 14a-12

                                 PartsBase, Inc.
      _____________________________________________________________________
                (Name of Registrant as Specified In Its Charter)


      _____________________________________________________________________
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

     (1) Title of each class of securities to which transaction applies:
          Common Stock, par value $0.001 per share.

     (2) Aggregate number of securities to which transaction  applies:
          5,012,302 shares of Common Stock, par value $0.001 per share.

     (3) Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
         filing fee is calculated and state how it was determined):

          The filing fee was determined based upon the (a) product of  5,012,302
          shares of Common Stock and the merger consideration of $1.41 per share
          or $7,067,346 and (b) the product of options to purchase 20,000 shares
          of common stock and the merger  consideration  of $1.41 per share less
          the applicable exercise price per share or $15,600. In accordance with
          Rule 0-11 under the  Securities  Exchange Act of 1934, as amended, the
          filing  fee  was  determined  by  multiplying  the  amount  calculated
          pursuant to the preceding sentence by 1/50 of one percent.

     (4) Proposed maximum aggregate value of transaction: $7,082,945.82

     (5) Total fee paid:   $1,417

         [_] Fee paid previously with preliminary materials.
         [_] Check box if any part  of the fee is offset as provided by Exchange
             Act   Rule   0-11(a)(2)  and  identify  the filing  for  which  the
             offsetting fee was paid previously. Identify the previous filing by
             registration statement number, or the Form or Schedule and the date
             of its filing.

             (1) Amount Previously Paid: _____________
             (2) Form, Schedule or Registration Statement No.: _____________
             (3) Filing Party: _____________
             (4) Date Filed: _____________



                   Preliminary Copy, filed on November 7, 2002


NEITHER  THE  SECURITIES  AND  EXCHANGE  COMMISSION  NOR  ANY  STATE  SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THIS TRANSACTION,  PASSED UPON THE MERITS
OR FAIRNESS OF THE  TRANSACTION  OR PASSED UPON THE  ADEQUACY OR ACCURACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT.  ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.


                                 PARTSBASE, INC.
                              905 Clint Moore Road
                              Boca Raton, FL 33487

                 PROPOSED MERGER -- YOUR VOTE IS VERY IMPORTANT

To Our Stockholders:

     You are cordially  invited to attend a special meeting of the  stockholders
of PartsBase, Inc. ("PRTS" or the "Company") to be held on __________,  2002, at
____ _.m.,  local time, at 905 Clint Moore Road,  Boca Raton,  Florida  33487. A
notice of the special meeting,  a proxy statement and a proxy card are enclosed.
Please read the enclosed proxy  statement  carefully as it sets forth details of
the proposed merger and other important  information  relating to the merger and
the special meeting.

     As is more fully described in the enclosed proxy statement,  the purpose of
the meeting is as follows:

      (1) to consider  and vote upon an Agreement and Plan of Merger,  dated  as
          of August 26,  2002,  among the  Company and  affiliates  of Robert A.
          Hammond,   Jr.,  Chairman  of  the  Board,  Chief  Executive  Officer,
          President, Secretary, Treasurer, and majority stockholder, pursuant to
          which the Company  will be merged with a company  affiliated  with and
          controlled by Mr. Hammond, and each outstanding share of the Company's
          common stock,  other than shares  controlled by Mr.  Hammond and those
          shares held by stockholders  who become  entitled to appraisal  rights
          will be converted into the right to receive $1.41 in cash; and

      (2) to consider and  vote upon such other  matters as  may  properly  come
          before the  meeting,  including  the  approval of any  adjournment  or
          postponement of the meeting.

     Stockholders  of the Company  will be entitled to  appraisal  rights  under
Delaware law as described in the enclosed proxy statement.

     A copy of the  merger  agreement  is  attached  to the proxy  statement  as
Appendix  A and we urge  you to  read it in its  entirety.  As a  result  of the
merger,  Mr.  Hammond and his  affiliates  will  acquire all of the  outstanding
shares  of the  Company's  common  stock  not  already  owned  by  them  and the
stockholders of the Company unaffiliated with Mr. Hammond will no longer have an
equity interest in the Company.

     The Board of  Directors  of PRTS  formed a Special  Committee,  composed of
independent  directors who are not officers or employees of PRTS and who have no
financial  interest in the  proposed  merger  different  from PRTS  stockholders
generally,  in order to  eliminate  any  conflict  of  interest  in  evaluating,
negotiating and  recommending  the merger  proposal,  including the terms of the
merger agreement.

                                       1


     The Board of  Directors,  acting  on the  unanimous  recommendation  of the
Special Committee, has approved the merger agreement and the merger. The Special
Committee,  and, based in part upon the determination and  recommendation of the
Special Committee, the Board of Directors,  believe that the terms of the merger
agreement  and the proposed  merger are fair from a financial  point of view to,
and in the best interests of, PRTS stockholders other than Mr. Hammond,  Hammond
I  ("Hammond  I"),  a  Florida  corporation  formed  by Mr.  Hammond,  and their
affiliates.  Therefore,  the Board of Directors,  based in part on the unanimous
recommendation  of the  Special  Committee,  recommends  that  you  vote FOR the
approval and adoption of the merger agreement and the merger.

     In  reaching  their  decisions,  the  Board of  Directors  and the  Special
Committee  considered,  among  other  things,  their  understanding  of the PRTS
business,  their general  business  knowledge,  the written  opinion of vFinance
Investments, Inc. ("vFinance"), the Special Committee's financial advisor, that,
based upon and subject to the  considerations  and limitations set forth in that
opinion,  as of August 26, 2002,  the $1.41 per share cash  consideration  to be
received  by  PRTS  stockholders  in  the  proposed  merger  was  fair  to  PRTS
stockholders  other than  Hammond I, Mr.  Hammond  and their  affiliates  from a
financial  point of view.  The  opinion of  vFinance  is  attached  to the proxy
statement as Appendix B.

     The  enclosed  proxy  statement  provides  information  about the  proposed
merger,  the merger  agreement  and the special  meeting.  In addition,  you may
obtain  additional   information  about  PRTS  from  documents  filed  with  the
Securities  and  Exchange  Commission.  Please read the entire  proxy  statement
carefully, including the appendices.

     Your vote is very  important.  The merger  cannot be  completed  unless the
merger agreement and the merger are approved and adopted by the affirmative vote
of the holders of a majority of the outstanding shares of PRTS common stock, and
a majority of the shares held by stockholders other than Mr. Hammond,  Hammond I
and their affiliates are not voted AGAINST the merger and the merger  agreement.
Regardless of whether you plan to attend the special  meeting,  please complete,
sign and return the enclosed proxy card.

     If you complete, sign and return your proxy card without indicating how you
wish to vote,  your proxy will be counted as if a vote IN FAVOR OF approval  and
adoption  of the merger  agreement  and the  merger.  If you fail to return your
proxy card and fail to vote at the special meeting,  the effect will be the same
as a vote AGAINST  approval and adoption of the merger  agreement and the merger
for purposes of obtaining the  affirmative  vote of the holders of a majority of
the outstanding  shares,  however,  it will NOT be considered a vote against the
merger and merger  agreement  for purposes of  calculating  the number of shares
held by stockholders other than Mr. Hammond, Hammond I, and their affiliates who
vote against the merger and the merger agreement in the vote referred to above.

     Returning  the proxy card does not  deprive you of your right to attend the
special meeting and vote your shares in person.

     If  the  merger  is  consummated,   you  will  receive   instructions   for
surrendering your PRTS stock certificates and a letter of transmittal to be used
for this  purpose.  You should NOT submit your stock  certificates  for exchange
until you have received the instructions and the letter of transmittal.

                                   Sincerely,

                           /s/ Robert A. Hammond, Jr.
                           ---------------------------
                       Chairman of the Board of Directors,
                             Chief Executive Officer

Boca Raton, Florida
______________, 2002

                                       2


        This proxy statement is dated __________, 2002 and is first being
         mailed to stockholders of PRTS on or about _____________, 2002.


                                       3



                                 PARTSBASE, INC.
                              905 Clint Moore Road
                              Boca Raton, FL 33487
                            _________________________

                    NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
                        TO BE HELD ON _____________, 2002

To Our Stockholders:

     A special  meeting  of the  stockholders  of  PartsBase,  Inc.,  a Delaware
corporation  ("PRTS" or the "Company")  will be held on ________,  2002, at ____
_.m.,  local time, at 905 Clint Moore Road, Boca Raton,  Florida 33487,  for the
following purposes:

      1.  To  consider  and vote  upon a  proposal  to  adopt  and  approve  the
          Agreement  and Plan of  Merger,  dated as of August 26,  2002,  by and
          among  Robert A.  Hammond,  Jr.,  the  Chairman  of the  Board,  Chief
          Executive  Officer,  President,   Secretary,  Treasurer  and  majority
          stockholder  of the Company;  Hammond I, Inc.,  a Florida  corporation
          ("Hammond  I"),  formed  by Mr.  Hammond;  Hammond  Acquisition  Corp.
          ("HAC"),  a Delaware  corporation  and a  wholly-owned  subsidiary  of
          Hammond I; and the Company  pursuant to which: (i) HAC will merge into
          the Company,  with the Company continuing as the surviving corporation
          and (ii) each outstanding  share of the Company's common stock will be
          canceled and converted into the right to receive $1.41 in cash, except
          for shares  controlled by Mr. Hammond and shares held by  stockholders
          who perfect their  appraisal  rights under Delaware law. A copy of the
          merger agreement is attached to the proxy statement as Appendix A; and

      2.  To  consider  and vote upon such other  matters as may  properly  come
          before the  meeting,  including  the  approval of any  adjournment  or
          postponement of the meeting.

     Stockholders  of PRTS who do not vote in favor of approval  and adoption of
the merger agreement and the merger will have the right to seek appraisal of the
fair value of their shares if the merger is completed, but only if they submit a
written demand for an appraisal before the vote is taken on the merger agreement
and  the  merger  and  they  comply  with  Delaware  law  as  explained  in  the
accompanying proxy statement.

     We have specified  _______,  2002, at the close of business,  as the record
date for the purpose of determining the Company's  common  stockholders  who are
entitled to receive notice of and to vote at the special meeting.  A list of the
Company's  common  stockholders  entitled to vote at the special meeting will be
available for  examination by any  stockholder at the special  meeting.  For ten
days prior to the special meeting,  this stockholder list will also be available
for inspection by stockholders at our corporate offices at 905 Clint Moore Road,
Boca Raton, Florida 33487, during ordinary business hours.

                                       1


     Each share of our common  stock will be  entitled  to one vote.  The merger
agreement  requires (i) that the merger must be approved by the affirmative vote
of at least a majority of the outstanding shares of our common stock entitled to
vote at the special meeting and (ii) that a majority of the Company's  shares of
common stock other than shares  controlled by Mr.  Hammond are not voted against
the merger.  A quorum for the meeting requires that holders of a majority of the
outstanding shares of common stock must be present in person or by proxy.

     The Acquisition Group, which consists of Hammond I, Mr. Hammond and certain
of their  affiliates,  owned,  as of the record date,  an aggregate of 9,000,000
shares of common stock,  constituting  approximately  64.23% of the  outstanding
shares  of  common  stock  entitled  to vote  at the  special  meeting,  and has
indicated to our Board of Directors  their intention to vote all of their shares
in  favor  of the  merger  and  the  merger  agreement.  The  Acquisition  Group
beneficially  owns a sufficient  number of shares of our common stock to approve
the merger and the merger agreement under the first voting requirement.

     For a more complete statement regarding the matters to be acted upon at the
special  meeting,  please  read the  proxy  statement  and the  other  materials
concerning the Company and the merger, which are included with this notice.

     The Board of  Directors,  acting  on the  unanimous  recommendation  of the
Special Committee, has approved the merger agreement and the merger. The Special
Committee,  and, based in part upon the determination and  recommendation of the
Special Committee, the Board of Directors,  believe that the terms of the merger
agreement  and the proposed  merger are fair from a financial  point of view to,
and in the best interests of, PRTS stockholders other than Mr. Hammond,  Hammond
I and their affiliates.  Therefore, the Board of Directors, based in part on the
unanimous recommendation of the Special Committee,  recommends that you vote FOR
the approval and adoption of the merger agreement and the merger.

     Your vote is very  important.  The merger  cannot be  completed  unless the
merger agreement and the merger are approved and adopted by the affirmative vote
of the holders of a majority of the outstanding shares of PRTS common stock, and
a majority of the shares held by stockholders other than Mr. Hammond,  Hammond I
and their affiliates are not voted against the merger and the merger agreement.

     Whether or not you plan to attend the special meeting and regardless of the
number of shares of the Company's  common stock that you own,  please  complete,
sign and date the accompanying  proxy card and return it in the enclosed prepaid
envelope.  Failure  to  return a  properly  executed  proxy  card or vote at the
special  meeting  will have the same effect as a vote AGAINST the merger and the
merger agreement.  However,  it will NOT be considered a vote against the merger
and merger  agreement for purposes of  calculating  the number of shares held by
stockholders  other than Mr. Hammond,  Hammond I, and their  affiliates who vote
against the merger and the merger agreement in the vote referred to above.

     Your proxy is revocable and will not affect your right to vote in person if
you decide to attend the special meeting.  Simply attending the special meeting,
however,  will not revoke your proxy.  For an  explanation of the procedures for
revoking  your  proxy,  see page 20  setting  forth  the  section  of the  proxy
statement  captioned  "The Special  Meeting".  Returning your proxy card without
indicating  how you want to vote will have the same  effect as a vote  "FOR" the
adoption and approval of the merger agreement.

     The merger is  described  in the enclosed  proxy  statement,  which you are
urged to read  carefully.  In  addition,  you may obtain  information  about the
Company  from  documents  that the  Company  has filed with the  Securities  and


                                       2


Exchange Commission, including the Schedule 13E-3 transaction statement filed in
connection with the merger.

     No  person  has  been  authorized  to give  any  information  or  make  any
representation other than those contained in this proxy statement, and, if given
or made, such  information or  representation  must not be relied upon as having
been  authorized.  This proxy  statement does not constitute a solicitation of a
proxy in any jurisdiction from any person to whom it is unlawful to make a proxy
solicitation in such  jurisdiction.  The information in this proxy statement may
only be accurate on the date of this proxy statement.

     THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE  COMMISSION,  NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF THE  TRANSACTION  NOR  UPON  THE  ACCURACY  OR  ADEQUACY  OF THE  INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

                       By Order of the Board of Directors,


                              /s/ Robert A. Hammond
                              ---------------------
                       Chairman of the Board of Directors
                             Chief Executive Officer

Boca Raton, Florida
_____________, 2002


                                       3



                                TABLE OF CONTENTS

SUMMARY TERM SHEET............................................................ 1
QUESTIONS AND ANSWERS ABOUT THE MERGER........................................ 3
SUMMARY....................................................................... 9
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS....................17
SELECTED FINANCIAL INFORMATION................................................18
SPECIAL MEETING...............................................................20
  DATE, TIME AND PLACE........................................................20
  MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING.............................20
  RECORD DATE, OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS................20
  REQUIRED VOTES..............................................................21
  APPRAISAL RIGHTS............................................................21
  PROXIES; REVOCATION OF PROXIES..............................................21
  EXPENSES OF PROXY SOLICITATION..............................................22
  ADJOURNMENTS................................................................22
THE PARTIES TO THE MERGER.....................................................22
  PARTSBASE, INC..............................................................22
  ROBERT A. HAMMOND, JR.......................................................23
  HAMMOND I, INC..............................................................23
  HAMMOND ACQUISITION CORP....................................................23
SPECIAL FACTORS...............................................................24
  BACKGROUND OF THE MERGER....................................................24
    Generally.................................................................24
    Events Leading Up to the Signing of the Merger Agreement..................24
    Certain Events Following the Signing of the Merger Agreement..............34
  THE SPECIAL COMMITTEE.......................................................37
  RECOMMENDATION OF THE BOARD OF DIRECTORS; FAIRNESS OF THE MERGER............38
    Reasons for the Special Committee's Determination.........................38
    Reasons for the Board of Directors' Determination.........................40
    Position of Board of Directors as to Fairness of the Merger...............41
  POSITION OF THE ACQUISITION GROUP AS TO THE FAIRNESS OF THE MERGER..........42
  OPINION OF SPECIAL COMMITTEE'S FINANCIAL ADVISOR............................43
    Introduction..............................................................43
    Selected Comparable Company Analysis......................................45
    Summary of Analyses and Other Evaluations.................................46
  PURPOSE AND STRUCTURE OF THE MERGER.........................................47
    The Company...............................................................47
    Acquisition Group.........................................................47
  CERTAIN EFFECTS OF THE MERGER...............................................48
  RISKS THAT THE MERGER WILL NOT BE COMPLETED.................................49
  INTERESTS OF CERTAIN PERSONS IN THE MERGER..................................50
  INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE...........................51
  FINANCING OF THE MERGER.....................................................51
  FEES AND EXPENSES OF THE MERGER.............................................51
  ACCOUNTING TREATMENT OF THE MERGER..........................................52
  MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES...............................52
  CONDUCT OF THE COMPANY'S BUSINESS AFTER THE MERGER..........................52
  REGULATORY APPROVALS........................................................53
  LITIGATION CHALLENGING THE MERGER...........................................53


                                       i


  OTHER SECURITIES LITIGATION.................................................54
  EFFECTIVE TIME OF THE MERGER................................................54
  PAYMENT OF MERGER CONSIDERATION AND SURRENDER OF STOCK CERTIFICATES.........54
  APPRAISAL RIGHTS............................................................55
THE MERGER AGREEMENT..........................................................58
  GENERALLY...................................................................58
  EFFECTIVE TIME OF THE MERGER................................................58
  CONVERSION OF SECURITIES....................................................58
  STOCK OPTIONS AND WARRANTS..................................................59
  REPRESENTATIONS AND WARRANTIES..............................................59
  COVENANTS...................................................................59
  SPECIAL MEETING.............................................................61
  INDEMNIFICATION.............................................................61
  CONDITIONS..................................................................61
  TERMINATION OF THE MERGER AGREEMENT.........................................62
  AMENDMENT TO THE MERGER AGREEMENT...........................................63
MARKETS AND MARKET PRICE......................................................64
COMMON STOCK PURCHASES........................................................65
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................65
BUSINESS OF THE COMPANY.......................................................67
  INDUSTRY OVERVIEW...........................................................67
  BUSINESS STRATEGY...........................................................71
  SALES AND MARKETING.........................................................72
  SCREENING/QUALITY MANAGEMENT................................................73
  SALES AND MARKETING TO HOSPITALS AND HEALTHCARE FACILITIES..................74
  ACCOUNT MANAGEMENT..........................................................74
  PLACEMENT...................................................................74
  REGISTERED NURSE PAYROLL....................................................75
  REGISTERED NURSE BENEFITS...................................................75
  COMPETITION.................................................................76
  INTELLECTUAL PROPERTY.......................................................77
  GOVERNMENT REGULATION.......................................................77
  EMPLOYEES...................................................................78
  PROPERTIES..................................................................78
INDEPENDENT AUDITORS..........................................................78
OTHER MATTERS FOR ACTION AT THE SPECIAL MEETING...............................78
STOCKHOLDER PROPOSALS.........................................................78
WHERE YOU CAN FIND MORE INFORMATION...........................................79
INFORMATION INCORPORATED BY REFERENCE.........................................79
OTHER BUSINESS................................................................80

APPENDIX A  Agreement and Plan of Merger.....................................A-1
APPENDIX B  Opinion and Consent of vFinance Investments, Inc.................B-1
APPENDIX C  Section 262 of the Delaware General Corporation Law..............C-1
APPENDIX D  Annual Report on Form 10-K for the Year Ended December 31, 2001..D-1
APPENDIX E  Quarterly Report on Form 10-Q for the Six Months Ended
             June 30, 2002...................................................E-1


                                       ii



                               SUMMARY TERM SHEET

     This Summary Term Sheet highlights  certain material  information from this
proxy statement and does not contain all of the information that is important to
you. To understand the merger fully, you should read carefully this entire proxy
statement, the appendices and the additional documents referred to in this proxy
statement. In this proxy statement, the terms "PRTS", "Company",  "we", "us" and
"our" refer to PartsBase,  Inc. In this proxy  statement,  "Hammond I" refers to
Hammond I, Inc, a Florida  corporation,  and "HAC" refers to Hammond Acquisition
Corp., a Delaware corporation and wholly-owned  subsidiary of Hammond I. In this
proxy  statement,  the terms the  "Acquisition  Group"  and  "Hammond  I and its
affiliates"  refer to Hammond I, Robert A.  Hammond,  Jr. and any entity that is
controlled by Hammond I or Robert A. Hammond, Jr.

      o   Parties  to the  Merger - Hammond I, the  proposed  acquirer  of PRTS,
          formed HAC as its wholly  owned  subsidiary  solely for the purpose of
          effecting the merger.  The sole  stockholder and director of Hammond I
          is Robert A.  Hammond,  Jr.,  who is also  Chairman,  Chief  Executive
          Officer,  President,  Secretary  and Treasurer of PRTS.  Mr.  Hammond,
          Hammond I and certain of their affiliates  together own  approximately
          64.23% of the  outstanding  shares of PRTS common stock. In this proxy
          statement,  the term  "Acquisition  Group"  refers to  Hammond  I, Mr.
          Hammond and any entity that is controlled by Hammond I or Mr. Hammond.
          See "The Parties to the Merger" beginning on page 22.

      o   The Merger - At the special meeting,  you are being asked to adopt and
          approve the merger agreement pursuant to which HAC will be merged into
          PRTS. PRTS will continue as the surviving corporation.  For additional
          information  about the merger and the merger agreement see "The Merger
          Agreement" on page 58.

      o   Stockholder  Vote - The merger requires the approval by a majority of
          all of the outstanding shares of PRTS common stock entitled to vote at
          the special meeting  including  shares owned and/or  controlled by Mr.
          Hammond,  and it also  requires  that a  majority  of the  outstanding
          shares  of  PRTS  common  stock  owned  by  stockholders   other  than
          stockholders   affiliated   with  Mr.   Hammond   (the   "Unaffiliated
          Stockholders")  are not voted  against  the  merger.  Abstentions  and
          broker non-votes will have the effect of a vote "AGAINST" the adoption
          and approval of the merger  agreement  for  purposes of obtaining  the
          affirmative  vote of the  holders  of a  majority  of the  outstanding
          shares. However, they will NOT be considered a vote against the merger
          and merger  agreement for purposes of calculating the number of shares
          held by  stockholders  other  than Mr.  Hammond,  Hammond I, and their
          affiliates who vote against the merger and the merger agreement in the
          vote referred to above.  See "The Special  Meeting"  beginning on page
          20.

      o   Consideration -  At the effective time of the merger, each outstanding
          share of common  stock  held by an  Unaffiliated  Stockholder  will be
          canceled and converted into the right to receive $1.41 in cash, except
          for shares held by  stockholders  who perfect their  appraisal  rights
          under  Delaware  law,  shares of common stock held by the  Acquisition
          Group and any shares of common stock held in our treasury.  Each share
          of common stock of HAC then issued and outstanding  will, by virtue of
          the merger and without any action on the part of HAC, become one fully
          paid and  non-assessable  share of common stock of PRTS, the surviving
          corporation.

      o   Voting Stock, Record Date - Only holders of record of shares of common
          stock of PRTS at the close of business on _________, 2002 are entitled
          to notice of and to vote at the special  meeting.  On that date, there
          were  _________  holders  of record of common  stock,  and  14,012,302
          shares of our  common  stock  outstanding.  Each such  share of common
          stock entitles the holder to cast one vote at the special meeting. For
          additional  information about the record date for voting, see "Special
          Meeting" on page 20.

      o   Special  Committee -  The Special  Committee  is the  committee of our
          Board of  Directors,  consisting  of three  non-employee,  non-officer
          directors  of PRTS,  formed to  eliminate  any conflict of interest in


                                       1


          evaluating,   negotiating  and   recommending   the  merger  proposal,
          including the terms of the merger  agreement  and the proposed  merger
          with HAC. The Special  Committee  consists solely of directors who are
          not officers or  employees of PRTS and who have no financial  interest
          in the proposed  merger  different from PRTS  stockholders  other than
          stockholders  affiliated with Mr. Hammond.  The members of the Special
          Committee are Pierre Narath, Edward McCartin, and Thomas Van Hare. See
          "Special Factors - The Special Committee" on page 37.

      o   Fairness of the Merger -  The  Special  Committee  and,  based in part
          upon the  determination and  recommendation of the Special  Committee,
          the Board of Directors of PRTS have each  determined that the terms of
          the merger agreement and the proposed merger are fair from a financial
          point of view to, and in the best  interests  of,  PRTS  stockholders,
          based on the  factors  described  in page 38 (See  "Special  Factors -
          Recommendations  of the Board of Directors;  Fairness of the Merger").
          The  Special   Committee   also  received  an  opinion  from  vFinance
          Investments,  Inc. ("vFinance"),  its financial advisor, to the effect
          that as of the date of such  opinion and based upon and subject to the
          considerations  and limitations  set forth in such opinion,  the $1.41
          per share  merger  consideration  to be received  by the  Unaffiliated
          Stockholders in the proposed merger is fair to such  stockholders from
          a financial point of view. The members of the  Acquisition  Group also
          believe that the terms of the merger agreement and the proposed merger
          are fair from a financial  point of view to PRTS  stockholders.  For a
          more  detailed  discussion  of the  material  factors upon which these
          beliefs are based,  see "Special Factors - Position of the Acquisition
          Group as to the Fairness of the Merger" beginning on page 42.

      0   Tax  Consequences - The receipt of cash by you in the merger will be a
          taxable  transaction  to  you.  See  "Special  Factors--Material  U.S.
          Federal Income Tax Consequences" beginning on page 52.

      o   Conditions  -- The merger  agreement  and the  merger  are  subject to
          several conditions, including, among other things:

             (i) the  adoption  and  approval  of the  merger  agreement  by the
                 affirmative   vote  of  the   holders  of  a  majority  of  our
                 outstanding  shares entitled to vote thereon,  and holders of a
                 majority  of the  non-Acquisition  Group  shares of PRTS common
                 stock  entitled to vote  thereon not voting  against the merger
                 agreement. The Acquisition Group owns 64.23% of the outstanding
                 shares of PRTS common stock,  and has indicated to our Board of
                 Directors  its  intention  to  adopt  and  approve  the  merger
                 agreement and the merger;

             (ii)stockholders  asserting their appraisal  rights with respect to
                 PRTS common stock shall  constitute  less than 5% of all shares
                 of PRTS  common  stock  outstanding  immediately  prior  to the
                 effective time;

             (iii) there being no  material  litigation  or similar  proceedings
                 pending or  threatened  against PRTS at the time of the closing
                 seeking to restrain the  consummation  of the merger or seeking
                 damages which would result in a material adverse effect;

             (iv) obtaining any necessary third party consents and approvals.

             See "The Merger Agreement - Conditions" beginning on page 61.

      o   After the Merger -- Upon  completion  of the merger,  the  Acquisition
          Group is expected to own 100% of the surviving  corporation's  capital
          stock outstanding immediately after the merger. In addition, PRTS will
          no longer be a public  company and our common  stock will no longer be
          listed on the Nasdaq National Market. See "Special Factors - Interests
          of Certain Persons in the Merger" beginning on page 50.

                                       2



                     QUESTIONS AND ANSWERS ABOUT THE MERGER

     The following  questions  and answers are intended to address  briefly some
commonly asked questions  regarding the merger.  These questions and answers may
not address all questions that may be important to you as a stockholder.  Please
refer  to the  more  detailed  information  contained  elsewhere  in this  proxy
statement, the appendices to this proxy statement, and the documents referred to
or incorporated by reference in this proxy  statement.  In this proxy statement,
the terms "PRTS", "Company", "we", "us" and "our" refer to PartsBase, Inc.

Q:  WHAT ARE WE VOTING ON?

A:  Whether to adopt and  approve an  Agreement  and Plan of Merger by and among
    Mr.  Hammond,  Hammond I, HAC (a  newly-formed,  wholly-owned  subsidiary of
    Hammond  I) and the  Company,  pursuant  to which  HAC will  merge  into the
    Company, with the Company continuing as the surviving corporation.

Q:  WHAT ARE THE RELATIONSHIPS AMONG THE PARTIES TO THE MERGER AGREEMENT?

A:  Hammond I, the  proposed  acquirer of PRTS,  formed HAC as its  wholly-owned
    subsidiary  solely for the purpose of  effecting  the  merger.  Hammond I is
    wholly-owned by Mr. Hammond, who is the sole director and officer of Hammond
    I and HAC, and who is also Chairman,  Chief  Executive  Officer,  President,
    Secretary and Treasurer of the Company.  Hammond I, Mr. Hammond, and certain
    of their affiliates,  together own  approximately  64.23% of the outstanding
    shares of the Company's  common  stock.  In this proxy  statement,  the term
    "Acquisition  Group" refers to Hammond I, Mr. Hammond and any entity that is
    controlled by Hammond I or Mr. Hammond.

Q:  ARE THERE CONDITIONS TO THE COMPLETION OF THE MERGER?

A:  Yes.  Before  completion  of the  transactions  contemplated  by the  merger
    agreement,  PRTS  and  Hammond  I must  fulfill  or  waive  several  closing
    conditions,  including  adoption and approval of the merger agreement by the
    holders of common stock, the accuracy of representations and warranties made
    by the parties,  the absence of certain material adverse effects on PRTS and
    other customary closing conditions. If these conditions are not satisfied or
    waived, the merger will not be completed even if the holders of common stock
    vote to adopt and approve the merger agreement and the merger.

Q:  WHAT VOTE IS  REQUIRED TO ADOPT AND  APPROVE  THE MERGER  AGREEMENT  AND THE
    MERGER?

A:  The merger  requires  the  approval by a majority of all of the  outstanding
    shares  of  PRTS  common  stock  entitled  to vote  at the  special  meeting
    including  shares owned or controlled by Mr.  Hammond,  and it also requires
    that  a  majority  of  the  shares  of  PRTS  common  stock  owned  by  PRTS
    stockholders  other  than  stockholders  affiliated  with Mr.  Hammond  (the
    "Unaffiliated Stockholders") are not voted against the merger.

Q:  WHAT WILL BE THE EFFECT OF THE MERGER?

A:  After the merger,  PRTS will no longer be a publicly held  corporation,  you
    will no longer own any PRTS stock,  and the Acquisition  Group will own 100%
    of our common stock.

Q:  IF THE MERGER IS COMPLETED, WHAT WILL I RECEIVE FOR MY PRTS COMMON STOCK?

A:  If the merger is completed, each of the shares of PRTS common stock owned by
    the Unaffiliated  Stockholders will be automatically  canceled and converted
    into the  right to  receive  $1.41 in cash,  without  interest  or any other
    payment  thereon,  except that if you perfect your  appraisal  rights,  your
    shares will be subject to appraisal in  accordance  with  Delaware  law. See


                                       3


    page 54 ("Special Factors - Payment of Merger Consideration and Surrender of
    Stock Certificates") and page 55 ("Special Factors - Appraisal Rights").

Q:  IF THE MERGER IS COMPLETED,  WHAT WILL THE ACQUISITION GROUP RECEIVE FOR ITS
    PRTS COMMON STOCK?

A:  If the  merger is  completed,  each share of PRTS  common  stock held by the
    Acquisition Group will remain outstanding and the Acquisition Group will not
    receive any cash consideration for its shares of PRTS common stock.

Q:  HOW WILL HAC FINANCE THE MERGER?

A:  HAC  intends to finance  all of the merger  consideration  through  the cash
    reserves  of  PRTS  which  will  become   available   immediately  upon  the
    effectiveness of the merger.

Q:  WHAT DOES OUR BOARD OF DIRECTORS RECOMMEND REGARDING THE MERGER AGREEMENT?

A:  After  receiving  the  unanimous  recommendation  of the Special  Committee,
    consisting  solely of  directors  who are not officers or employees of PRTS,
    our  Board of  Directors  unanimously,  with  Mr.  Hammond  abstaining  from
    participating  in the discussion  and/or voting on the proposal,  determined
    that the terms of the merger are advisable,  fair from a financial  point of
    view to, and in the best  interests of the  Unaffiliated  Stockholders.  Our
    Board of Directors  unanimously  recommends that you vote "FOR" the adoption
    and approval of the merger and the merger agreement.

Q:  WHY DID OUR BOARD OF DIRECTORS FORM THE SPECIAL COMMITTEE?

A:  Hammond I will own all of the  outstanding  shares of the  Company's  common
    stock  immediately  following  the  completion  of the merger.  The Board of
    Directors believed that a Special Committee of independent directors who are
    not  officers  or  employees  of the  Company  or  Hammond I and who have no
    financial   interest  in  the  merger   different   from  the   Unaffiliated
    Stockholders  should be formed to  eliminate  any  conflict  of  interest in
    evaluating,  negotiating  and  recommending  the merger and the terms of the
    merger  agreement  to the full Board of  Directors.  The  Special  Committee
    independently selected and retained legal counsel and a financial advisor to
    assist it in deliberations.  The Special Committee  received an opinion from
    its financial advisor, vFinance Investments, Inc. ("vFinance"), dated August
    26, 2002, and reaffirmed as of the date of this proxy  statement,  which the
    Special  Committee and the Board of Directors  adopted,  and in  conjunction
    with  their  understanding  of the  Company's  business  and  their  general
    business knowledge,  that as of November ____, 2002, the $1.41 per share you
    will  receive  in the merger is fair from a  financial  point of view to the
    Unaffiliated Stockholders.

Q:  HAS THE SPECIAL COMMITTEE CONCLUDED THAT THE MERGER IS FAIR TO THE COMPANY'S
    UNAFFILIATED STOCKHOLDERS?

A:  Yes. The Special  Committee  has  determined  that the merger is fair from a
    financial point of view to the Unaffiliated Stockholders.

Q:  HAS THE COMPANY'S  BOARD OF DIRECTORS  DETERMINED THAT THE MERGER IS FAIR TO
    THE UNAFFILIATED STOCKHOLDERS?

                                       4


A:  Yes. The Board of Directors  has  determined  that the merger is fair to the
    Unaffiliated Stockholders.

Q:  WHY IS THE BOARD OF DIRECTORS RECOMMENDING THAT I VOTE FOR THE MERGER?

A:  The Board of Directors,  based in part on the  recommendation of the Special
    Committee,  had  approved the merger and the merger  agreement  and voted to
    recommend  that  you  vote  "FOR"  approval  of the  merger  and the  merger
    agreement.  The Board of Directors is recommending that you vote in favor of
    the merger agreement because it believes that the merger is a more desirable
    alternative for you than to have the Company continue to operate as a public
    company. In reaching this conclusion,  the Board of Directors, based in part
    on the  recommendation  of the  Special  Committee,  considered  among other
    factors:

    o   The Special  Committee's and the Board of Directors'  familiarity  with,
        and presentation by vFinance with regard to, the Company's  business and
        prospects and current economic and market  conditions and the opinion of
        vFinance,  as  adopted  by  the  Special  Committee  and  the  Board  of
        Directors,  that $1.41 per share was fair from a financial point of view
        to the Unaffiliated Stockholders.

    o   The  expenses of  maintaining  the Company as a public  entity,  such as
        those  expenses  associated  with  its  compliance  with  the  reporting
        requirements and public filing requirement of a public company.

    o   The fact that  $1.41 per share  represents  a premium  of 95.8% over the
        $0.72  closing  sale price for the  Company's  Common Stock as traded on
        Nasdaq  on April 9,  2002,  the last  trading  day  before  the  Company
        announced  the  initial  offer by Hammond I; a premium of  approximately
        22.6% over the $1.15  average  closing sale price of the common stock on
        August 23, 2002, the last trading day prior to the August 26, 2002 Board
        meeting  at which the  merger  was  approved;  and 60% over the  average
        reported  closing price of $0.88 for the one-year period prior to August
        26, 2002.

    o   The  possibility  that if the  Company  remains  a  public  corporation,
        because  of a decline in the  market  price of the  common  stock or the
        stock  market  in  general,  the  price  received  by  the  Unaffiliated
        Stockholders in the open market or in a future transaction might be less
        than $1.41 per share.

Q:  DID THE  SPECIAL  COMMITTEE  RECEIVE  ANY OFFERS  FROM OTHERS TO ACQUIRE THE
    COMPANY AT PRICES HIGHER THAN $1.41 PER SHARE?

A:  Yes.  The Company did receive  offers from each of Mr.  Harold Van Arnem and
    Aviall Inc.  ("Aviall")  to acquire the Company at prices  higher than $1.41
    per  share.  However,  after  consultation  with Mr.  Hammond,  Mr.  Hammond
    informed  the Company he would not vote in favor of either of these  offers.
    Accordingly,  the Special Committee and the Board of Directors believed that
    despite  the fact that Mr.  Hammond's  $1.41  per share  offer was less than
    either of Harold  Van  Arnem's  or  Aviall's  offers,  Mr.  Hammond's  offer
    represented  the only  offer  which had a  reasonable  expectation  of being
    consummated.

Q:  WHAT ARE THE CONSEQUENCES OF THE MERGER TO PRESENT MEMBERS OF MANAGEMENT AND
    THE BOARD OF DIRECTORS?

A:  Current  members of the Board of Directors  will resign  effective  upon the
    closing of the merger, and the directors of HAC will become the directors of
    the  Company.  Other  than this  change in the  composition  of the Board of
    Directors,  it is expected  that,  in general,  all members of the Company's
    current  management  will  continue as  management  of the Company after the
    merger. As is the case with all the other Company  stockholders,  members of
    management,  other  than Mr.  Hammond,  and the Board of  Directors  will be
    entitled  to  receive  $1.41 per  share in cash for each of their  shares of
    common stock.

                                       5


Q:  IS THE MERGER SUBJECT TO THE SATISFACTION OF ANY CONDITIONS?

A:  Yes. Before  completion of the merger,  certain  closing  conditions must be
    satisfied  or waived.  These  conditions  include,  among other  conditions,
    obtaining  required  consents  and  approvals,  adoption and approval of the
    merger  agreement  (by a majority  of all of the  outstanding  shares of the
    Company's  Common Stock  entitled to vote at the special  meeting  including
    shares owned or controlled by Mr. Hammond, and a requirement that a majority
    of the Company's  shares of common stock held by  Unaffiliated  Stockholders
    are  not  voted   against  the   merger),   the  accuracy  of  each  party's
    representations  and  warranties,  each party's  compliance  in all material
    respects with its respective  obligations under the merger agreement,  there
    being no material  litigation or similar  proceedings  pending or threatened
    against PRTS at the time of the closing seeking to restrain the consummation
    of the merger or seeking  damages  which would result in a material  adverse
    effect;  and the absence of laws or governmental  orders that would make the
    merger  illegal  or  prohibit  the  consummation  of the  merger.  If  these
    conditions  are not  satisfied  or waived,  the merger will not be completed
    even if the  requisite  stockholder  vote to adopt and  approve  the  merger
    agreement is obtained.

    In April, May and June 2002, several of our PRTS stockholders,  individually
    and as purported  representatives  of all of the stockholders of PRTS except
    the Acquisition Group, filed a total of four purported class action lawsuits
    against PRTS,  the members of the Board of Directors and specified  officers
    of PRTS alleging,  among other things, a breach of the defendants' fiduciary
    duties to the  stockholders  of PRTS in  connection  with the  merger on the
    terms then  proposed,  and seeking an injunction,  damages,  costs and other
    relief.  In October 2002, the parties in the two lawsuits filed in the State
    of Florida entered into a Memorandum of Understanding, which provides for an
    agreement-in-principle  to settle the class action lawsuits.  The Memorandum
    of Understanding  provides for the parties to enter a joint  stipulation and
    such other  documentation as may be required to obtain final approval of the
    court.  The  settlement  of the class  action  lawsuits  is  subject  to the
    approval of the court.  The  settlement  hearing is scheduled  for ________,
    2002.  If the court  enters a  settlement  order at that time,  the lawsuits
    filed in Florida,  as well as the two lawsuits  filed in  Delaware,  will be
    dismissed with  prejudice.  Assuming the  fulfillment or waiver of all other
    conditions to the merger,  we expect to complete the merger  promptly  after
    the special meeting.

Q:  CAN THE MERGER AGREEMENT BE TERMINATED PRIOR TO COMPLETION OF THE MERGER?

A:  Yes.  The parties may agree to  terminate  the merger  agreement at any time
    before the merger is  completed.  In addition,  the merger  agreement may be
    terminated:

    o   by either  Hammond I or the Company if the merger is not completed on or
        prior to January 31, 2003;

    o   if approval of the  stockholders of the Company  necessary to consummate
        the merger has not been obtained; or

    o   by the  non-breaching  party in the  event of a  material  breach by the
        other  party which is not cured  after ten (10) days  written  notice is
        given to the breaching party.

Q:  WHAT HAPPENS IF THE MERGER  AGREEMENT IS  TERMINATED  PRIOR TO COMPLETION OF
    THE MERGER?

A:  If the merger agreement is terminated prior to the completion of the merger,
    the Company will remain a public company as it is today and each stockholder
    will  continue to hold its shares of common stock in the  Company.  Further,
    unless the  merger  agreement  is  wrongfully  terminated,  there will be no
    liability on the part of the Company,  Hammond I or any of their  affiliates
    as a result of the termination.

Q:  WHAT WILL HAPPEN TO THE MARKET FOR COMMON STOCK AFTER THE MERGER?

                                       6


A:  At the effective  time of the merger,  trading in the common stock on Nasdaq
    will cease and there will no longer be a public market for the common stock.
    Price  quotations for the Company's common stock will no longer be available
    and the  registration  of the  Company's  common stock under the  Securities
    Exchange Act of 1934, as amended, will be terminated.

Q:  WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER?

A:  The receipt of cash for shares of the  Company's  common stock in the merger
    will be a taxable  transaction for U.S. federal income tax purposes and also
    may be a taxable transaction under applicable state, local, foreign or other
    laws. You will recognize gain or loss equal to the difference  between $1.41
    per share and your tax basis for the shares of the  Company's  common  stock
    that you owned immediately before completion of the merger. For U.S. federal
    income tax purposes,  this gain or loss  generally will be a capital gain or
    loss if you held the share of common stock as a capital  asset.  Tax matters
    are very  complicated  and the tax  consequences  of the  merger to you will
    depend on the facts of your own  situation.  You should consult your own tax
    advisor for a full  understanding  of the tax  consequences of the merger to
    you.

Q:  WHO CAN VOTE ON THE MERGER?

A:  If  you  are a  stockholder  of  record  as of  the  close  of  business  of
    _______________,  2002,  you will be entitled to be noticed of, and vote at,
    the special meeting to approve the merger and merger agreement.

Q:  WHAT SHOULD I DO NOW? HOW DO I VOTE?

A:  After you read and  consider  carefully  the  information  contained in this
    proxy  statement,  please  fill out,  sign and date your proxy card and mail
    your signed proxy card in the enclosed  return  envelope as soon as possible
    so that your shares may be  represented at the special  meeting.  Failure to
    return your proxy or vote in person at the meeting will have the same effect
    as a vote  against the  adoption  and  approval of the merger and the merger
    agreement.

Q:  WHAT RIGHTS DO I HAVE TO DISSENT FROM THE MERGER?

A:  If you wish,  you may dissent  from the merger and seek an  appraisal of the
    fair value of your shares of PRTS common stock,  but only if you comply with
    the  requirements of Delaware law which are attached to this proxy statement
    as  Appendix  C and  which  are  summarized  on pages 55 - 57.  Based on the
    determination of the Delaware Court of Chancery, the appraised fair value of
    your shares of PRTS common  stock,  which will be paid to you if you seek an
    appraisal,  may be more  than,  less  than,  or equal to the $1.41 per share
    price of common stock to be paid in the merger.

Q:  IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER,  WILL MY BROKER VOTE MY
    SHARES FOR ME?

A:  Yes, but only if you provide instructions to your broker on how to vote. You
    should fill out, sign,  date and return the proxy card and otherwise  follow
    the directions provided by your broker regarding how to instruct your broker
    to vote your shares. See page 21 ("Special Meeting - Proxies;  Revocation of
    Proxies").  Without  instructions,  your  shares  will  not be voted by your
    broker and the  failure to vote will have the same  effect as a vote for the
    merger on the outcome of the second voting requirement.

Q:  CAN I CHANGE MY VOTE OR REVOKE MY PROXY AFTER I HAVE MAILED MY SIGNED  PROXY
    CARD?

                                       7


A:  Yes,  you can change your vote at any time before your proxy is voted at the
    special meeting. You can do this in one of three ways. First, you can send a
    written notice stating that you would like to revoke your proxy. Second, you
    can  complete  and submit a new proxy  card.  If you choose  either of these
    methods,  we must receive your notice of  revocation  or your new proxy card
    before the vote is taken at the special  meeting.  Third, you can attend the
    special meeting and vote in person.  Simply attending the meeting,  however,
    will not  revoke  your  proxy;  you must  vote at the  meeting.  If you have
    instructed a broker to vote your shares, you must follow directions received
    from your  broker to  change  your  vote.  See page 21  ("Special  Meeting -
    Proxies; Revocation of Proxies").

Q:  SHOULD I SEND IN MY STOCK CERTIFICATES NOW?

A:  No. If the merger agreement is adopted and approved,  then shortly after the
    merger  is  completed,  you  will  receive  a  letter  of  transmittal  with
    instructions informing you how to send in your stock certificates to Hammond
    I's payment agent. You should use the letter of transmittal to exchange your
    stock certificates for the merger consideration to which you are entitled as
    a result of the merger. YOU SHOULD NOT SEND ANY STOCK CERTIFICATES WITH YOUR
    PROXY CARD. You should follow the procedures  described on page 54 ("Special
    Factors  -  Payment  of  Merger   Consideration   and   Surrender  of  Stock
    Certificates").

Q:  WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?

A:  We are working  towards  completing the merger as soon as possible.  For the
    merger to occur,  it must be adopted and  approved by our  stockholders  and
    certain other customary  closing  conditions must be fulfilled or waived (to
    the extent  permitted by law). In addition,  the merger is conditioned  upon
    there  being no  material  litigation  or  similar  proceedings  pending  or
    threatened  against PRTS at the time of the closing.  In April, May and June
    2002,  several  of our  PRTS  stockholders,  individually  and as  purported
    representatives  of all of the  stockholders  of PRTS except the Acquisition
    Group,  filed a total of four purported class action lawsuits  against PRTS,
    the  members  of the  Board of  Directors  and  specified  officers  of PRTS
    alleging,  among other things, a breach of the defendants'  fiduciary duties
    to the  stockholders of PRTS in connection with the merger on the terms then
    proposed,  and seeking an injunction,  damages,  costs and other relief.  In
    October 2002,  the parties in the two lawsuits filed in the State of Florida
    entered  into  a  Memorandum  of   Understanding,   which  provides  for  an
    agreement-in-principle  to settle the class action lawsuits.  The Memorandum
    of Understanding  provides for the parties to enter a joint  stipulation and
    such other  documentation as may be required to obtain final approval of the
    court. The settlement of the class action lawsuit is subject to the approval
    of the court. The settlement hearing is scheduled for ________, 2002. If the
    court enters a settlement  order at that time, and assuming the  fulfillment
    or waiver of all other  conditions to the merger,  we expect to complete the
    merger promptly after the special meeting.

Q:  WHAT OTHER MATTERS WILL BE VOTED ON AT THE SPECIAL MEETING?

A:  We do not  expect  any  other  matters  will be  voted  upon at the  special
    meeting.

Q:  WHO CAN HELP ANSWER MY OTHER QUESTIONS?

A:  If you have more  questions  about  the  merger,  you  should  contact  Mark
    Weicher,  our Chief Financial Officer,  at PartsBase,  Inc., 905 Clint Moore
    Road, Boca Raton, Florida 33487, Telephone: (561) 953-0700.


                                       8


                                     SUMMARY
                                     -------

     This  summary  highlights  certain  material  information  from this  proxy
statement and does not contain all of the information  that is important to you.
To understand  the merger  fully,  you should read  carefully  this entire proxy
statement, the appendices and the additional documents referred to in this proxy
statement. In this proxy statement, the terms "PRTS", "Company",  "we", "us" and
"our" refer to PartsBase,  Inc. In this proxy  statement,  "Hammond I" refers to
Hammond I, Inc., a Florida corporation,  and "HAC" refers to Hammond Acquisition
Corp.,  a  Delaware  corporation.   In  this  proxy  statement,   the  term  the
"Acquisition  Group"  and  "Hammond  I and its  affiliates"  refer to Hammond I,
Robert A. Hammond,  Jr. and any entity that is controlled by Hammond I or Robert
A. Hammond, Jr.

THE PARTIES TO THE MERGER (PAGE 22)

     PartsBase,  Inc. - PRTS, a Delaware  corporation,  is an online provider of
Internet business-to-business e-commerce services for the aviation industry. Our
global e-commerce market place,  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 matter. Since October 2001, we have
provided,  for a fee,  registered  nurses to our hospital  clients to supplement
their staff  through  RNpartners,  Inc., a Florida  corporation  wholly owned by
PRTS. Hospitals generally obtain supplemental staffing from local temporary (per
diem)  agencies.  Our common stock is quoted on the Nasdaq National Market under
the symbol "PRTS".

     Robert A.  Hammond,  Jr. - Robert A.  Hammond,  Jr. is the  Chairman of the
Board of Directors, Chief Executive Officer, President,  Secretary and Treasurer
of PRTS (with which he has been associated since its inception in 1998), and the
Chairman of the Board of Directors and the Chief Executive Officer of Hammond I.
As of the record date, Mr. Hammond or his affiliates  owned 9,000,000  shares of
PRTS common stock,  which  represents  approximately  64.23% of our  outstanding
common stock.  Mr.  Hammond owns 100% of Hammond I. For  additional  information
about Mr. Hammond,  see page 50 ("Special Factors - Interests of Certain Persons
in the Merger").

     Hammond I -  The principal activity of Hammond I, a Florida corporation, is
the acquisition,  ownership and operation through its wholly-owned  entities and
other affiliates,  of the common stock of PRTS. As of the record date, Hammond I
and its affiliates own 9,000,000 shares of our outstanding  common stock,  which
represents approximately 64.23% of our outstanding common stock.

     HAC -  HAC is a  Delaware  corporation  and a  wholly-owned  subsidiary  of
Hammond I that was formed solely for the purpose of effecting  the  transactions
contemplated  by the  merger  and has not  engaged  in any  business  except  in
furtherance of this purpose.

     The Acquisition  Group - The  Acquisition  Group consists of Hammond I, Mr.
Hammond and any entity that is controlled by Hammond I or Mr.  Hammond.  Hammond
I's sole director and executive officer, Mr. Hammond, is also Chairman and Chief
Executive  Officer of PRTS. As of the record date, the  Acquisition  Group owned
9,000,000 shares of PRTS common stock, which represents  approximately 64.23% of
our outstanding  common stock. Upon completion of the merger,  pursuant to which
Hammond I's wholly-owned subsidiary,  HAC, will merge into PRTS, the certificate
of incorporation  and bylaws of Hammond I's wholly-owned  subsidiary will become
our  certificate of  incorporation  and bylaws,  and the ownership of our common
stock by the Acquisition Group will increase from approximately 64.23% to 100%.

     For additional  information,  see page 50 ("Special  Factors - Interests of
Certain Persons in the Merger").


                                       9




THE SPECIAL MEETING (PAGE 20)

     Date, Time and Place - The special  meeting of common  stockholders of PRTS
will be held on  ________,  2002 at _____ _.m.  local  time,  at 905 Clint Moore
Road, Boca Raton, Florida 33487.

     Matters to be Considered at the Special Meeting -  At the special  meeting,
you are being asked to adopt and approve the merger agreement  pursuant to which
HAC, a  wholly-owned  Hammond I  subsidiary,  formed  solely for the  purpose of
effecting  the  merger,  will be merged  into PRTS.  PRTS will  continue  as the
surviving  corporation.  For additional  information about the merger, see pages
24 -57  ("Special  Factors").   For  additional  information  about  the  merger
agreement, see page 58  (The Merger Agreement).

     Record  Date  and  Voting  Information  - You are  entitled  to vote at the
special  meeting if you owned shares of voting stock at the close of business on
____________,  2002, which is the record date for the special meeting.  You will
have one vote at the special meeting for each share of common stock you owned at
the close of  business  on the  record  date.  On the  record  date,  there were
14,012,302 shares of common stock entitled to be voted at the special meeting.

     Required Vote -  Under  Delaware law, the presence,  in person or by proxy,
of the holders of a majority of all  outstanding  shares of PRTS common stock as
of the record date is necessary to  constitute a quorum at the special  meeting.
Mr.  Hammond and his  affiliates,  who, as of the record date,  had the right to
vote approximately  64.23% of the Company's  outstanding shares of common stock,
therefore have sufficient votes to ensure the presence of a quorum.

     The approval and adoption of the merger  agreement and the merger  requires
the  approval  by a majority  of the  outstanding  shares of PRTS  common  stock
entitled  to  vote  at  the  special  meeting,  including  shares  owned  and/or
controlled  by Mr.  Hammond,  and it also requires that a majority of the shares
held  by the  Unaffiliated  Stockholders  are  not  voted  against  the  merger.
Abstentions  and  broker  non-votes  will have the  effect  of a vote  "FOR" the
adoption and approval of the merger agreement.

APPRAISAL RIGHTS (PAGE 55)

     PRTS is a corporation  organized  under  Delaware law. Under Section 262 of
the Delaware General  Corporation Law, if you do not vote in favor of the merger
and instead  follow the  appropriate  procedures  for demanding  and  perfecting
appraisal rights as described on pages 55 through 57 and in Appendix C, you will
receive a cash payment for the "fair value" of your shares of voting  stock,  as
determined  by the Delaware  Court of  Chancery,  instead of the $1.41 per share
merger  consideration to be received by the PRTS stockholders in connection with
the merger.  The price  determined by the Delaware Court of Chancery may be more
than,  less  than or equal to the $1.41  merger  consolidation  you  would  have
received  for each of your  shares of common  stock in the merger if you had not
exercised  your  appraisal  rights.  Generally,  in order to exercise  appraisal
rights, among other things:

        o   you must not vote for approval and adoption of the merger  agreement
            and the merger; and

        o   you must make  written  demand  for  appraisal  in  compliance  with
            Delaware  law  prior to the  vote on the  merger  agreement  and the
            merger.

     Merely voting against the merger agreement and the merger will not preserve
your  appraisal  rights under Delaware law.  Appendix C to this proxy  statement
contains the Delaware statute relating to your appraisal  rights. IF YOU WANT TO
EXERCISE YOUR APPRAISAL RIGHTS,  PLEASE READ AND CAREFULLY FOLLOW THE PROCEDURES
DESCRIBED  ON PAGES 55 THROUGH 57 AND IN APPENDIX C.  FAILURE TO TAKE ALL OF THE
STEPS  REQUIRED  UNDER  DELAWARE  LAW MAY  RESULT IN THE LOSS OF YOUR  APPRAISAL
RIGHTS.


                                       10


THE MERGER (PAGE 24)

     At the effective time of the merger, HAC will merge with and into PRTS, and
each outstanding  share of PRTS common stock will be canceled and converted into
the right to receive $1.41 in cash,  except for shares held by stockholders  who
perfect their  appraisal  rights under Delaware law, shares of common stock held
by the Acquisition Group and any shares of common stock held in our treasury.

     Each share of common  stock of HAC then  issued and  outstanding  will,  by
virtue of the merger and without any action on the part of HAC, become one fully
paid  and   non-assessable   share  of  common  stock  of  PRTS,  the  surviving
corporation.

PAYMENT FOR STOCK CERTIFICATES (PAGE 54)

     Promptly  after the  merger,  the paying  agent for the merger  will send a
letter  of  transmittal  to you to be used  for  surrendering  your  PRTS  stock
certificates  in exchange for the merger  consideration.  You should not send in
your PRTS stock certificates until you receive the letter of transmittal.

PURPOSES AND STRUCTURE OF THE MERGER (PAGE 47)

     The  principal  purposes of the merger are to permit PRTS  stockholders  to
realize cash for their shares in an amount substantially in excess of the market
price at which their shares traded just prior to the announcement of the signing
of the merger  agreement  and to permit the  Acquisition  Group to increase  its
ownership of PRTS from  approximately  64.23% to 100%. The proposed  transaction
has been  structured as a going private cash merger of HAC into PRTS.  PRTS will
be the surviving  corporation in the merger and, upon  completion of the merger,
will be a privately-held,  wholly-owned subsidiary of Hammond I. The transaction
has been  structured as a going private  transaction  to permit the  Acquisition
Group to own 100% of a privately-held  corporation and as a cash merger in order
to provide the Unaffiliated Stockholders with cash for all of their shares.

RECOMMENDATIONS  OF THE SPECIAL  COMMITTEE AND OUR BOARD OF DIRECTORS  (PAGE 38)

     The  Special  Committee  of our  Board of  Directors,  consisting  of three
non-employee, non-officer directors of PRTS, was formed to consider and evaluate
the proposed merger.  The Special Committee has determined  unanimously that the
merger  consideration is fair from a financial point of view to our Unaffiliated
Stockholders  and  recommended  to our Board of  Directors  that it declare  the
merger  advisable  and in the  best  interests  of  PRTS  and  our  Unaffiliated
Stockholders, approve the merger agreement, and recommend to our stockholders to
vote to adopt and approve the merger agreement. Our Board of Directors, based in
part on the unanimous  recommendation of the Special Committee,  has unanimously
(with Mr.  Hammond not  participating  in the  discussion  and  abstaining  from
voting) determined that the merger  consideration is fair from a financial point
of view to our stockholders  other than the Acquisition Group (the "Unaffiliated
Stockholders"),  and that the merger is advisable  and in the best  interests of
PRTS and  Unaffiliated  Stockholders  and declared that the merger  agreement is
advisable. Accordingly, our Board of Directors has approved the merger agreement
and unanimously  (other than Mr. Hammond,  who abstained from voting) recommends
that you vote "FOR" the proposal to adopt and approve the merger agreement.

     For a  discussion  of  the  material  factors  considered  by  the  Special
Committee  and our Board of  Directors  in reaching  their  conclusions  and the
reasons why the Special Committee and our Board of Directors determined that the
merger is fair, see page 38 ("Special  Factors - Recommendation  of the Board of
Directors;  Fairness of the Merger") and page 47 ("Special Factors - Purpose and
Structure of the Merger").


                                       11



OPINION OF FINANCIAL ADVISOR TO SPECIAL COMMITTEE (PAGES 43 - 47)

     In deciding to approve  the terms of the merger  agreement  and the merger,
one of the various factors that the Special Committee and the Board of Directors
considered  was the opinion of the  Special  Committee's  independent  financial
advisor, vFinance Investments, Inc. ("vFinance").  Based upon and subject to the
considerations  and limitations set forth in the vFinance  opinion  delivered on
August 26, 2002 and reaffirmed as of the date of this proxy statement, the $1.41
per share  merger  consideration  to be  received  by PRTS  stockholders  in the
proposed merger was fair,  from a financial  point of view, to our  Unaffiliated
Stockholders.  The complete vFinance opinion,  including applicable  limitations
and assumptions, describes the basis for the opinion and is attached as Appendix
B to this proxy statement.  YOU ARE URGED TO READ THE ENTIRE OPINION  CAREFULLY.
vFinance's  opinion is directed to the Special Committee and does not constitute
a recommendation to any stockholder as to any matter relating to the merger.

INTERESTS OF CERTAIN PERSONS IN THE MERGER (PAGE 50)

     In considering the recommendation of the Special Committee and our Board of
Directors  with  respect to the merger and the merger  agreement,  you should be
aware that Mr. Hammond, a director, executive officer and the controlling person
of PRTS,  has interests in the merger that are different  from or in addition to
the interests of our stockholders generally,  and which present actual, apparent
or potential conflicts of interest in connection with the merger. For example:

     As a result of the completion of the merger, Mr. Hammond and his affiliates
will  beneficially  own 100% of our  outstanding  common  stock,  his  aggregate
interest  in our net book value will  increase  from  approximately  64% to 100%
(from $1.11 to $1.73 of our net book value per share as of June 30,  2002);  and
he will have the ability to benefit solely from our future earnings and profits,
if  any,  and  any  divestitures,   strategic  acquisition  or  other  corporate
opportunities that may be pursued by us in the future;

     Mr. Hammond,  Chairman of the Board,  Chief Executive  Officer,  President,
Secretary and Treasurer of PRTS,  will continue as Chairman of the Board,  Chief
Executive Officer,  President,  Secretary and Treasurer of PRTS after the merger
and the other members of the current management of PRTS will continue as members
of management of the surviving corporation; and

     In  connection  with the  merger,  all  outstanding  options  and  warrants
(including those held by our directors and executive  officers) will be canceled
to the  extent  not  exercised  prior to the  effective  time of the  merger  in
exchange  for an amount  of cash,  if any,  determined  by  multiplying  (i) the
excess,  if any,  of $1.41  over the per  share  exercise  price of the  option,
multiplied by (ii) the number of shares of common stock subject to the option or
warrant,  net  of  any  applicable   withholding  taxes,  except  for  currently
outstanding warrants which do not expire by their terms.

     The  Special  Committee  and the  Board of  Directors  were  aware of these
interests and considered  them,  among other factors,  when approving the merger
agreement.   These   interests   are  more  fully   described   under   "Special
Factors-Interests of Certain Persons in the Merger" beginning on page 50.

THE COMPANY'S POSITION AS TO THE FAIRNESS OF THE MERGER (PAGE 41)

     We  believe  the  merger  and the  merger  consideration  to be fair from a
financial point of view to our stockholders,  other than the Acquisition  Group.
In reaching this determination we have relied on numerous factors, including:

        o   the merger consideration of $1.41 per share represents a 23% premium
            over $1.15, the closing sale price of our common stock on August 23,
            2002, the last trading day prior to our August 26, 2002 announcement
            of the proposed  merger;  a 60% premium to the average closing price
            of $0.88 per  share for our  common  stock for the  one-year  period
            prior to August 26,  2002;  and a 96% premium  over  $0.72,  the per


                                       12


            share  closing sale price of our common stock on April 9, 2002,  the
            last trading day prior to the  announcement of Mr.  Hammond's offer.
            For additional  information,  see page 64 (Comparative  Market Price
            Data);

        o   the  approval  of the merger by all of the  members  of the  Special
            Committee  and the fact that the members of the  Special  Committee,
            based  on the  factors  described  in page 38  ("Special  Factors  -
            Recommendation of the Board of Directors;  Fairness of the Merger"),
            determined that the merger is fair and in the best interests of PRTS
            and our  Unaffiliated  Stockholders and  declared  that  the  merger
            agreement is advisable;

        o   the  merger  agreement  was  extensively   negotiated   between  the
            representatives of the Special Committee and the  representatives of
            Hammond I; and

        o   the members of the Special  Committee who negotiated the transaction
            on behalf of our  stockholders are not officers or employees of PRTS
            and are not affiliated with Hammond I.

THE ACQUISITION GROUP'S POSITION AS TO THE FAIRNESS OF THE MERGER (PAGE 42)

     The Acquisition  Group believes the merger  consideration to be fair to the
PRTS   stockholders,   other  than  the  Acquisition  Group.  In  reaching  this
determination,  the  Acquisition  Group relied on numerous  factors,  including,
among other  things,  the per share price to be paid on PRTS common stock in the
merger  represents a 23% premium  over the reported  closing sale price of $1.15
for shares of PRTS common  stock on August 23,  2002,  which was the last day on
which  shares  of  PRTS  common  stock  traded  prior  to our  August  26,  2002
announcement  of the  execution  of the merger  agreement,  a 60% premium to the
average  closing  price of $0.88 per share for our common stock for the one year
period  prior to August 26, 2002,  and a 96% premium  over the reported  closing
price of $0.72 for shares of PRTS common  stock on April 9, 2002,  the day prior
to the initial offer by the Acquisition Group.

     For a detailed  discussion of the material factors upon which these beliefs
are based, see page 42 ("Special  Factors - Position of the Acquisition Group as
to the Fairness of the Merger").

FINANCING OF THE MERGER; FEES AND EXPENSES OF THE MERGER (PAGE 51)

     The total  amount of funds  required  to  consummate  the merger and to pay
related  fees and  expenses is estimated  to be  approximately  $8 million.  The
Acquisition Group, through the cash reserves of PRTS which will become available
immediately upon the effectiveness of the merger, has sufficient funds available
to pay the merger  consideration  and pay its  portion of the fees and  expenses
incurred in connection  with the merger.  The merger is not  conditioned  on any
financing arrangements.

THE MERGER AGREEMENT (PAGE 58)

     Generally -- The merger  agreement  provides for HAC to merge with and into
PRTS. PRTS will be the surviving  corporation in the merger, and, as a result of
the merger,  the Acquisition Group will own 100% of the common stock of PRTS. In
the merger,  HAC's certificate of incorporation,  as in effect immediately prior
to the  effective  time,  shall be the  certificate  of  incorporation  of PRTS,
provided,  that  HAC's  certificate  of  incorporation  will be  amended  by the
certificate  of merger to read as  follows:  "The  name of the  corporation  is:
PartsBase,  Inc." As of the completion of the merger,  the bylaws of HAC will be
the bylaws of PRTS.

     Effective Time - The merger will be consummated and become effective at the
time a  certificate  of merger is filed with the Secretary of State of the State
of Delaware or such later time as specified in the certificate of merger.

                                       13


     Competing  Transactions - Nothing  contained in the merger  agreement shall
prohibit us from, prior to the date of the stockholder's  meeting,  doing any of
the following:

        o   furnishing  information or entering into discussions with any person
            that makes an unsolicited  written  proposal to us with respect to a
            competing transaction,  which could reasonably be expected to result
            in a superior proposal (as defined in the merger agreement),  if the
            failure to take such action would be inconsistent  with the Board of
            Directors'  and the  Special  Committee's  fiduciary  duties to PRTS
            stockholders.  Prior to furnishing  information to, or entering into
            negotiations with, such person, we will provide reasonable notice to
            Hammond I that we are furnishing  information  or  negotiating  with
            such  person,  and  will  have  received  from  such  person a fully
            executed confidentiality agreement;

        o   complying  with  Rule  14d-9  or Rule  14e-2  under  the  Securities
            Exchange  Act of 1934,  as amended  with regard to a tender offer or
            exchange offer;

        o   failing to make or  withdrawing or modifying our  recommendation  to
            the PRTS common  stockholders that they adopt and approve the merger
            agreement; or

        o   recommending  an  unsolicited,  bona fide proposal with respect to a
            competing  transaction  which could reasonably be expected to result
            in a superior proposal,  if the failure to take such action would be
            inconsistent   with  the  Board  of   Directors'   and  the  Special
            Committee's fiduciary duties to the stockholders.

     Taking these actions,  however, may result in reimbursement for expenses of
Hammond I. See page 51 ("Special Factors - Fees and Expenses of the Merger").

     Conditions -- The  completion of the merger  depends on several  conditions
being satisfied or waived, including, among others, the following:

        o   the adoption and approval of the merger agreement by the affirmative
            vote of the holders of a majority of our outstanding shares entitled
            to  vote  thereon,  and  a  majority  of  the  shares  held  by  the
            Unaffiliated  Stockholders  entitled  to vote  thereon are not voted
            against the merger  agreement.  The Acquisition Group owns 64.23% of
            the  outstanding  shares of PRTS common stock,  and has indicated to
            our Board of Directors its intention to adopt and approve the merger
            agreement and the merger;

        o   the absence of any legal prohibition against the merger;

        o   the material accuracy of the  representations  and warranties of the
            parties   contained  in  the  merger   agreement  and  the  material
            compliance with the obligations of the parties to be performed under
            the merger agreement;

        o   our  stockholders  asserting their appraisal  rights with respect to
            PRTS  common  stock shall  constitute  less than 5% of all shares of
            PRTS common stock  outstanding  immediately  prior to the  effective
            time;

        o   a material  adverse  effect with respect to our  operations  has not
            occurred, and no facts or circumstances arising have occurred which,
            individually  or in the aggregate,  could  reasonably be expected to
            have a material adverse effect on us;

        o   obtaining any necessary third party consents and approvals; and

                                       14


        o   no restraining  order or permanent  injunction or other order issued
            by any court of competent  jurisdiction  or other legal  prohibition
            preventing the  consummation  of the merger are in effect;  provided
            that,  subject to the merger  agreement,  we and HAC use  reasonable
            efforts to have any such injunction, order, restraint or prohibition
            vacated.


     Fees, Expenses and Other Payments - If the merger is consummated, all costs
and expenses incurred in connection with the merger agreement are to be borne by
the party which incurs those costs and expenses. We have agreed to pay Hammond I
an amount  equal to all of Hammond  I's  expenses,  if the merger  agreement  is
terminated:

        o   because our common  stockholders do not adopt and approve the merger
            and the merger  agreement  at the  stockholders'  meeting and at the
            time of the  stockholders'  meeting  there  exists a  proposal  with
            respect to a  competing  transaction  which  either (1) our Board of
            Directors or the Special  Committee has not publicly  opposed or (2)
            is  consummated  or  a  definitive   agreement  providing  for  such
            competing transaction is entered into at any time prior to or within
            12 months after the termination of the merger agreement;

        o   because we entered  into an  agreement  with  respect to a competing
            transaction  which  the  Board  of  Directors  has  determined  is a
            superior proposal (as defined in the merger agreement);

        o   by Hammond I, if the Special Committee or our Board of Directors has
            withdrawn,   modified  or   adversely   changed   its   approval  or
            recommendation of the merger and the merger agreement or recommended
            or approved a competing  transaction or superior  proposal,  entered
            into  an  agreement  with  respect  to a  competing  transaction  or
            superior  proposal  (as defined in the merger  agreement),  or shall
            have resolved to do any of the foregoing;

        o   by Hammond I, if we fail to reject a tender offer or exchange  offer
            proposal by a third party within ten days of its commencement or the
            date such proposal is first publicly disclosed; and

        o   by us,  upon the  Special  Committee  and our  Board  of  Directors'
            authorization  to enter into a written  agreement  with respect to a
            competing  transaction  that the Special  Committee and our Board of
            Directors have determined to be a superior proposal.

CERTAIN EFFECTS OF THE MERGER (SEE PAGE 48)

     Upon the effective  time of the merger,  current PRTS  stockholders,  other
than the Acquisition  Group,  will cease to have ownership  interests in PRTS or
rights as PRTS stockholders.  Therefore, the current stockholders of PRTS, other
than the  Acquisition  Group,  will not  participate  in any future  earnings or
growth of PRTS and will not benefit from any appreciation in value of PRTS. Upon
completion of the merger,  the Acquisition  Group is expected to own 100% of the
capital stock of the surviving  corporation  outstanding  immediately  after the
merger.  As a result of the merger,  PRTS will be a privately-held  corporation,
and there will be no public market for its common stock.  After the merger,  the
common stock will cease to be quoted on the Nasdaq  National  Market,  and price
quotations  with respect to sales of shares of common stock in the public market
will no longer be available. In addition, registration of the common stock under
the  Securities  Exchange Act of 1934,  as amended,  referred to as the Exchange
Act, will be terminated.


                                       15


ACCOUNTING TREATMENT (PAGE 52)

     The merger will be accounted  for under the purchase  method of  accounting
whereby  the  majority  interest  will be recorded  at  historical  cost and the
minority interest as prescribed by Statement of Financial  Accounting  Standards
No. 141,  Business  Combinations  and Emerging Issues Task Force Abstract 88-16,
Basis in  Leveraged  Buyout  Transactions.  For a discussion  of the  accounting
treatment for the merger see page __ ("Special Factors - Accounting Treatment of
the Merger").

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO OUR STOCKHOLDERS (PAGE 52)

     The  receipt of $1.41 in cash for each  outstanding  share of common  stock
will be a taxable  transaction  for U.S.  federal  income tax purposes and under
most state,  local,  foreign  and other tax laws.  For U.S.  federal  income tax
purposes,  each of our stockholders  generally will realize taxable gain or loss
as a result of the merger  measured by the difference,  if any,  between the tax
basis of each share of our common stock owned by such  stockholder and $1.41 for
each share of common stock owned by such stockholder. For additional information
regarding  material U.S.  federal income tax  consequences  of the merger to our
stockholders,  see page 52 ("Special  Factors - Material U.S. Federal Income Tax
Consequences").

LITIGATION CHALLENGING THE MERGER (PAGE 53)

     In April, May and June 2002, several PRTS stockholders, individually and as
purported  representatives  of  all of  the  stockholders  of  PRTS  except  the
Acquisition Group, filed a total of four purported class action lawsuits against
PRTS, the members of the Board of Directors and specified  officers of PRTS. Two
of the  lawsuits  were filed in the Court of Chancery in the State of  Delaware,
and the other two were filed in the Circuit Court of the 15th  Judicial  Circuit
in Palm Beach County,  Florida (the "Florida  Court").  These  lawsuits  allege,
among other things,  that the defendants  breached their fiduciary duties to the
stockholders  of PRTS in connection  with the merger on the terms then proposed,
that the proposed  merger is unfair and that the PRTS  directors  breached their
fiduciary duties by failing to fully disclose  material  non-public  information
related to the value of PRTS and by engaging in self-dealing. Generally, each of
the complaints  seeks an injunction,  damages,  costs and other relief.  The two
lawsuits filed in Delaware have been informally stayed pending the resolution of
the lawsuits  filed in Florida.  In October  2002,  the Florida  court  approved
consolidation  of the two  lawsuits  filed in Florida into a single  action.  In
October 2002, the parties in the Florida  lawsuits  entered into a Memorandum of
Understanding,  which provides for an agreement-in-principle to settle the class
action  lawsuits.  The Memorandum of  Understanding  provides for the parties to
enter a joint  stipulation  and such other  documentation  as may be required to
obtain final  approval of the Florida  Court.  The  Memorandum of  Understanding
specifies the terms of the settlement to be:

        o   the per share consideration for the merger shall be $1.41;

        o   the  merger  shall  require  the  approval  by the  majority  of the
            outstanding  shares of PRTS  common  stock  entitled  to vote at the
            special  meeting   including  shares  owned  or  controlled  by  the
            Acquisition  Group and it also shall  require that a majority of the
            shares owned by Unaffiliated  Stockholders are not voted against the
            merger; and

        o   the defendants may, at their sole discretion, terminate the proposed
            settlement in the event PRTS  stockholders who own five percent (5%)
            of the shares of PRTS common stock,  in aggregate,  elect to opt-out
            of the settlement.

     The  settlement  of the  class  action  lawsuits  is  subject  to the final
approval  of the Florida  Court.  If  approved  by the  Florida  Court,  the two
lawsuits filed in Delaware,  as well as the two lawsuits filed in Florida,  will
be dismissed with  prejudice,  and the  settlement of the class action  lawsuits
will release the defendants in such actions from further  liability  relating to
the merger.

                                       16


           CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

     This proxy statement contains certain forward-looking  statements.  Because
these forward-looking statements are being made by us in connection with a going
private transaction,  the safe harbor created by Section 21E of the Exchange Act
does not apply to these  statements.  Such  forward-looking  statements  involve
risks  and  uncertainties  and  include,  but are  not  limited  to,  statements
regarding future events and our plans, goals and objectives. Such statements are
generally  accompanied  by  words  such as  "intend,"  "anticipate,"  "believe,"
"estimate,"  "expect" or similar terms. Our actual results may differ materially
from such statements. Factors that could cause or contribute to such differences
include, without limitation, the following:

        o   our plans, strategies,  objectives,  expectations and intentions are
            subject to change at any time at its discretion; and

        o   other  risks and  uncertainties  indicated  from time to time in our
            filings with the Securities and Exchange Commission (the "SEC").

     Although we believe that the  assumptions  underlying  our  forward-looking
statements are reasonable,  any of the assumptions  could prove  inaccurate and,
therefore,  we cannot make any assurances that the results  contemplated in such
forward-looking   statements   will  be   realized.   The   inclusion   of  such
forward-looking  information  should not be regarded as a representation by PRTS
or any other person that the future events,  plans or expectations  contemplated
by PRTS will be achieved.  Furthermore,  past  performance is not necessarily an
indicator of future performance.  Except for our ongoing obligations to disclose
material information as required by the federal securities laws, we undertake no
obligation to release publicly any revisions to any  forward-looking  statements
to reflect events or circumstances  after the date of this proxy statement or to
reflect the occurrence of unanticipated events.


                                       17



                         SELECTED FINANCIAL INFORMATION

     The following selected historical consolidated financial data as of and for
the years ended December 31, 2001,  2000,  1999,  1998 and 1997 has been derived
from our audited  consolidated  financial  statements.  The  unaudited  selected
consolidated financial information presented below, as of and for the six months
ended June 30, 2002,  is from our  unaudited  condensed  consolidated  financial
statements.  The selected consolidated  financial data set forth below should be
read along with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the financial  statements and notes thereto contained
in our Annual  Report on Form 10-K for the year ended  December 31, 2001 and our
Quarterly  Report on Form 10-Q for the quarterly ended June 30, 2002,  which are
attached to this proxy statement as Appendix D and Appendix E, respectively, and
are deemed to be a part  hereof.  Please  note that  historical  results are not
necessarily indicative of the results to be expected in the future.



                                              Consolidated Statements of Operations Data



                                           Six Months                       For The Years Eneded December 31,
                                             ended             -----------------------------------------------------------------
                                         June 30, 2002            2001            2000             1999           1998       1997
                                        ----------------     -------------    -----------      ----------      ---------  ---------

                                                                                                        
Net revenues                                 $4,149,094      $ 5,619,121     $  4,097,585     $   362,224    $   3,504    $   2,861
                                          --------------     ------------    -------------    ------------   ----------    ---------

Cost of revenues                              3,504,507        4,451,631        6,140,741       1,412,532       43,462      104,041
Stock-based compensation expense                    ---          247,506        2,308,440       1,799,139          ---          ---
                                          --------------     ------------    -------------    ------------   ----------    ---------
   Total cost of revenues                     3,504,507        4,699,137        8,449,181       3,211,671       43,462      104,041
                                          --------------     ------------    -------------   -------------   ----------    ---------

   Gross profit (loss)                          644,587          919,984       (4,351,596)     (2,849,447)     (39,958)    (101,180)
                                          --------------     ------------    -------------   -------------   ----------    ---------

Operating expenses:
   General and administrative expenses        2,448,544        7,224,266        8,920,354       1,293,091      108,163       90,452
   Stock-based compensation expense               1,090           72,931        1,944,398         899,821          ---          ---
   Litigation and other related costs           150,000          457,500              ---             ---          ---          ---
   Relocation expenses and
      abandonment costs                         281,906              ---              ---             ---          ---          ---
                                          --------------     ------------    -------------   -------------   ----------    ---------
        Total operating expenses              2,881,540        7,754,697       10,864,752       2,192,912      108,163       90,452
                                          --------------     ------------    -------------   -------------   ----------    ---------

Operating loss                               (2,236,953)      (6,834,713)     (15,216,348)     (5,042,359)    (148,121)    (191,632)
Privatization expenses                          270,000             ---               ---             ---          ---          ---
Other income (expense), net                     242,906        1,222,480        1,762,367        (870,675)         ---          ---
                                          --------------    -------------    -------------   -------------   ----------    ---------

Net loss before value of preferred stock
   beneficial conversion feature             (2,264,047)      (5,612,233)     (13,453,981)     (5,913,034)    (148,121)    (191,632)
Value of preferred stock beneficial
   conversion feature                               ---              ---              ---      (1,902,375)         ---        ---
                                          --------------    -------------    --------------   -------------   ----------  ---------
Net loss attributable to common
   stockholders                             $(2,264,047)     $(5,612,233)    $(13,453,981)    $(7,815,409)   $(148,121)   $(191,632)
                                          ==============    =============    =============   =============   ==========   ==========

Basic and diluted net loss per share             $(0.16)          $(0.40)          $(1.03)         $(0.84)        $---         $---
                                          ==============    ==============   =============   =============   ==========   ==========

Weighted average of common shares
   outstanding                               13,988,718        14,108,895      13,053,755       9,251,250          ---          ---
                                          ==============    ==============   =============   =============   ==========  ===========


                                       18


                                                                 Consolidated Balance Sheet Data

                                                                                 As of December 31,

                                             June 30,         ----------------------------------------------------------------------
                                               2002               2001            2000             1999          1998         1997
                                         ---------------    --------------   -------------   -------------   ----------  -----------
 Cash and cash equivalents                 $ 23,135,315      $ 23,851,593    $ 23,045,491     $   735,276     $     ---   $     ---
 Investments at amortized cost
  (current portion)                                 ---           900,073       7,139,052             ---           ---         ---
 Working capital (deficiency)                21,358,129        22,762,318      27,652,259        (687,172)      (19,044)     (1,709)
 Total assets                                27,367,201        29,163,770      37,281,553       4,729,295         6,084       7,848

 Accumulated deficit                        (29,092,939)      (26,828,892)    (21,216,659)     (7,762,678)     (411,659)   (263,538)
 Total stockholders' equity
(deficiency)                                 24,175,352        26,439,487      32,347,901       1,541,916       (19,044)      6,139




                                       19



                                 SPECIAL MEETING
                                 ---------------

DATE, TIME AND PLACE

     This proxy  statement is furnished in connection  with the  solicitation of
proxies by our Board of Directors for a special  meeting of common  stockholders
to be held on  ________,  2002 at _______  _.m.  local time,  at 905 Clint Moore
Road, Boca Raton,  Florida 33487, or at any adjournment of the special  meeting.
Shares of our common stock  represented by properly executed proxies received by
us will be  voted at the  special  meeting  or any  adjournment  of the  special
meeting in accordance with the terms of such proxies, unless revoked.

MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING

     The  purpose of the  special  meeting is to vote upon a proposal to approve
the merger and the merger agreement.  If the merger and the merger agreement are
approved  by our  stockholders  and  the  other  conditions  to the  merger  are
satisfied  or  waived,  HAC will  merge with and into PRTS and each share of our
common stock currently held by our stockholders  will be converted into $1.41 in
cash to be issued by us in  payment  of the  merger  consideration,  other  than
shares owned by the Acquisition  Group and shares as to which  appraisal  rights
have been  validly  exercised.  The merger  agreement  is attached to this proxy
statement  as Appendix A. See also "The Merger  Agreement"  - beginning  on page
58 of this proxy  statement.  The Special  Committee and the Board have approved
the  merger and the merger  agreement  and  recommend  a vote FOR  adoption  and
approval of the merger and the merger agreement.

     Representatives of our independent  auditors are not expected to be present
at the special meeting.

     THE BOARD OF  DIRECTORS,  ACTING  ON THE  UNANIMOUS  RECOMMENDATION  OF THE
SPECIAL  COMMITTEE,  HAS  APPROVED  THE TERMS OF THE  MERGER  AGREEMENT  AND THE
PROPOSED  MERGER.  THE  BOARD  OF  DIRECTORS,  BASED  IN PART  ON THE  UNANIMOUS
RECOMMENDATION  OF THE  SPECIAL  COMMITTEE,  RECOMMENDS  THAT  YOU  VOTE FOR THE
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER.

RECORD DATE, OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS

     The Board has set the close of business on ______________2002 as the record
date (the "Record Date") for determining stockholders of the Company entitled to
notice of and to vote at the special meeting.  As of the Record Date, there were
______  holders of record of PRTS common stock,  and  14,012,302  shares of PRTS
common  stock  outstanding,  9,000,000  of which were  owned by the  Acquisition
Group, representing  approximately 64.23% of the total number of shares entitled
to vote at the special  meeting.  The  Acquisition  Group has indicated  that it
intends to vote all of the PRTS common  stock owned by it "FOR" the adoption and
approval of the merger agreement and the transactions contemplated by the merger
agreement at the special meeting.

     Each outstanding share of PRTS common stock entitles its holder to one vote
on all matters  properly  coming  before the special  meeting.  Any  stockholder
entitled  to vote may vote  either in person or by properly  executed  proxy.  A
majority of the outstanding shares of common stock entitled to vote, represented
in  person  or by  proxy,  will  constitute  a quorum  at the  special  meeting.
Abstentions and broker non-votes (i.e., shares held by brokers in "street name",
voting on certain matters due to  discretionary  authority or instructions  from
the owner,  but not voting on other  matters due to lack of authority to vote on
such matters without instructions from the owner) are counted for the purpose of
establishing a quorum at the special  meeting.  The merger requires the approval
by holders of a majority of the outstanding shares of PRTS common stock entitled
to vote at the  special  meeting,  and it also  requires  that a majority of the
shares held by Unaffiliated  Stockholders entitled to vote are not voted against
the merger.

                                       20


Required Votes

     The merger  agreement  provides  that the merger  must be  approved  by two
separate votes:

     1. the  affirmative  vote by the  holders  of at  least a  majority  of the
        outstanding shares of PRTS common stock, and

     2. a majority  of the  shares of PRTS  common  stock  held by  Unaffiliated
        Stockholders are not voted against the merger and the merger agreement.

     Approximately  64% of  the  outstanding  shares  of our  common  stock  are
beneficially  owned by the Acquisition  Group, who have indicated that they will
vote all of their  shares in favor of the merger and the merger  agreement.  The
Acquisition Group  beneficially owns a sufficient number of shares of our common
stock to approve  the merger and the  merger  agreement  under the first  voting
requirement.

     Because the first voting  requirement on the merger and merger agreement is
based  upon the total  number of  outstanding  shares of our common  stock,  the
failure to submit a proxy card (or to vote in person at the special  meeting) or
the abstention from voting by a stockholder  (including  broker  non-votes) will
have the same  effect as a vote  "Against"  the  merger  and  merger  agreement.
Because the second voting  requirement on the merger and the merger agreement is
based upon the votes  actually cast  "Against" the proposal by the  Unaffiliated
Stockholders,  the  failure  to submit a proxy card (or to vote in person at the
special  meeting)  or the  abstention  from voting by a  stockholder  (including
broker  non-votes)  will have the effect as a "FOR" the merger on the outcome of
the second voting requirement.

APPRAISAL RIGHTS

     Holders of PRTS common stock who do not vote in favor of the merger and who
perfect their  appraisal  rights under  Delaware law will be entitled to receive
from the surviving corporation in the merger a cash payment in the amount of the
"fair value," determined in accordance with Delaware law, of such shares.  After
the merger,  such  shares  will not  represent  any  interest  in the  surviving
corporation, other than the right to receive such cash payment. You will be able
to avail yourself of your appraisal  rights only (i) if you do not vote in favor
of the merger and (ii) if you follow  precisely the procedures set forth herein.
If you wish to exercise your appraisal  rights or wish to preserve your right to
do so, you should review carefully the procedures of Section 262 of the Delaware
General  Corporation  Law, a copy of which is attached hereto as Appendix C, and
seek the advice of legal counsel. See "Special Factors--Appraisal Rights."

PROXIES; REVOCATION OF PROXIES

     Shares that are entitled to vote and are  represented  by a proxy  properly
signed and  received at or prior to the  special  meeting,  unless  subsequently
properly  revoked,  will be voted in accordance with the instructions  indicated
thereon.  If a proxy is  signed  and  returned  without  indicating  any  voting
instructions,  shares represented by the proxy will be voted for the proposal to
approve  and  adopt  the  merger  agreement  and the  merger.  The  Board is not
currently  aware of any business to be acted upon at the special  meeting  other
than as described in this proxy statement.

     If you have given a proxy, you may revoke it by:

        o   on or  before  the  business  day  prior  to  the  special  meeting,
            delivering a later dated,  signed proxy card or a written revocation
            of such  proxy to Mark  Weicher,  Chief  Financial  Officer,  at our
            executive  offices at 905 Clint  Moore  Road,  Boca  Raton,  Florida
            33487;

        o   delivering a later dated,  signed proxy card or a written revocation
            to us at the special meeting;

                                       21


        o   attending the special meeting and voting in person; or

        o   if you have  instructed a broker to vote your shares,  following the
            directions  received from your broker to change those  instructions.
            Revocation of the proxy will not affect any vote  previously  taken.
            Attendance at the special meeting will not in itself  constitute the
            revocation  of a proxy;  to  revoke  you must  vote in person at the
            meeting.

EXPENSES OF PROXY SOLICITATION

     We will bear the expenses in connection  with the  solicitation of proxies.
Upon request,  we will reimburse brokers,  dealers and banks, or their nominees,
for reasonable  expenses  incurred in forwarding copies of the proxy material to
the beneficial  owners of shares of PRTS common stock which such persons hold of
record.  Solicitation of proxies will be made  principally by mail.  Proxies may
also be solicited in person,  or by telephone or facsimile,  by our officers and
regular  employees.  Such persons will receive no  additional  compensation  for
these services,  but will be reimbursed for any transaction expenses incurred by
them in connection with these services.

ADJOURNMENTS

     Although it is not expected,  the special  meeting may be adjourned for the
purpose of soliciting additional proxies. Any adjournment of the special meeting
may be made without notice,  other than by an  announcement  made at the special
meeting,  by approval of the holders of a majority of the outstanding  shares of
voting stock present in person or represented  by proxy at the special  meeting,
whether  or  not  a  quorum  exists.   PRTS  is  soliciting   proxies  to  grant
discretionary  authority to vote in favor of adjournment of the special meeting.
In  particular,  discretionary  authority  is  expected to be  exercised  if the
purpose of the  adjournment  is to provide  additional  time to solicit votes to
approve and adopt the merger agreement and the merger.

     THE BOARD OF DIRECTORS  RECOMMENDS THAT PRTS  STOCKHOLDERS VOTE IN FAVOR OF
THE PROPOSAL TO GRANT DISCRETIONARY AUTHORITY TO ADJOURN THE MEETING. No proxies
marked  "AGAINST" the proposal to adopt and approve the merger agreement will be
voted in favor of a motion to adjourn or postpone  the  special  meeting for the
purpose of soliciting  further  proxies in favor of adoption and approval of the
merger agreement.

     PLEASE DO NOT SEND IN STOCK  CERTIFICATES  AT THIS  TIME.  IN THE EVENT THE
MERGER IS COMPLETED,  PRTS WILL DISTRIBUTE INSTRUCTIONS REGARDING THE PROCEDURES
FOR EXCHANGING EXISTING PRTS STOCK CERTIFICATES FOR THE MERGER CONSIDERATION.


                            THE PARTIES TO THE MERGER
                            -------------------------

PARTSBASE, INC.

     PRTS,  a  Delaware   corporation,   is  an  online   provider  of  Internet
business-to-business  e-commerce services for the aviation industry.  Our global
e-commerce market place,  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
efficient,  competitive and cost-effective  matter.  Since October 2001, we have
provided,  for a fee,  registered  nurses to our hospital  clients to supplement
their staff through RNpartners, Inc, a Florida corporation wholly owned by PRTS.
Hospitals generally obtain supplemental staffing from local temporary (per diem)
agencies.  Our common  stock is quoted on the Nasdaq  National  Market under the
symbol  "PRTS".  The address and  telephone  number of our  principal  executive
offices are:

                                       22


    PartsBase, Inc.
    905 Clint Moore Road
    Boca Raton, Florida 33487
    Telephone: (561) 953-0700

ROBERT A. HAMMOND, JR.

     Robert A.  Hammond,  Jr. is the Chairman of the Board of  Directors,  Chief
Executive Officer, President, Secretary and Treasurer of PRTS (with which he has
been associated  since its inception in 1998),  and the Chairman of the Board of
Directors and the Chief Executive Officer of Hammond I and HAC. As of the Record
Date, Mr. Hammond or his affiliates owned 9,000,000 shares of PRTS common stock,
which  represents  approximately  64.23% of our  outstanding  common stock.  Mr.
Hammond also owns 100% of Hammond I. The business  address and telephone  number
of Mr. Hammond are the same as the Company's.

HAMMOND I, INC.

     The  principal  activity  of  Hammond  I,  a  Florida  corporation,  is the
acquisition   and  ownership   through  its  wholly  owned  entities  and  other
affiliates,  of the common  stock of PRTS.  Mr.  Hammond  is its sole  director,
officer and  stockholder  and is also Chief Executive  Officer,  President,  and
Chairman of the Board of Directors.  As of the Record Date,  Mr. Hammond and his
affiliates  owned  9,000,000  shares  of our  outstanding  common  stock,  which
represents approximately 64.23% of our outstanding common stock. The address and
telephone number of Hammond I's principal  executive offices are the same as the
Company's.

HAMMOND ACQUISITION CORP.

     HAC is a Delaware  corporation  organized on May 15, 2002,  wholly-owned by
Hammond I and  formed  solely  for the  purpose of  effecting  the  transactions
contemplated  by the  merger  and has not  engaged  in any  business  except  in
furtherance  of this  purpose.  Mr.  Hammond is its sole  director,  officer and
stockholder and is also Chief Executive  Officer,  President and Chairman of the
Board of  Directors.  The  address  and  telephone  number  of  HAC's  principal
executive offices are the same as the Company's.

     For additional  information,  see page 50 ("Special  Factors - Interests of
Certain Persons in the Merger").


                                       23




                                 SPECIAL FACTORS
                                 ---------------

BACKGROUND OF THE MERGER

     Generally
     ---------

     We originally incorporated as a Texas corporation in 1997 as PartsBase.com,
Inc. Prior to such time, we commenced  operations in April 1996 as a division of
Aviation  Labs.  In  June  2001  at  our  annual   stockholders'   meeting,  the
stockholders voted to change our name to PartsBase, Inc. and to reincorporate in
Delaware.   PRTS'  core   business   is  as  an  online   provider  of  Internet
business-to-business  e-commerce services for the aviation industry.  Our global
e-marketplace provides a means to buy and sell new, used and overhauled aviation
parts in an efficient, competitive, and cost-effective manner.

     In September  2000,  we initiated and  subsequently  completed a buyback of
500,000 shares of our outstanding common stock at prevailing market prices in an
effort to stimulate  interest in our common  stock.  In May 2001, we initiated a
second  buyback  program of an additional  500,000 shares of our common stock at
prevailing market prices for the same reasons.  Neither buyback program improved
the market for our common stock.

     In  September  2001,  we  incorporated  in  Florida,  RNpartners,  Inc.,  a
wholly-owned  subsidiary,  as a provider of critical care registered  nurses for
temporary  assignment to hospitals in  Miami/Dade,  Hillsborough,  Orange,  Palm
Beach  and  Broward  counties  of the  State of  Florida.  RNpartners  commenced
operations in October 2001.

     In August 2001, we received  notice from the Nasdaq National Market warning
that our common  stock may be  delisted  because it 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 the public float of  $5,000,000.  We were provided 90
calendar days, or until November 12,  2001, to regain  compliance.  On September
27,  2001,  Nasdaq  announced  an  across-the-board  moratorium  on minimum  bid
requirements and public float  requirements for continued  listing on Nasdaq. On
February 15, 2002,  we again  received  notice from the Nasdaq  National  Market
warning  that our stock may be delisted  because it 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.  On May 15,  2002,  we
regained  compliance  with the Nasdaq  Market  Place Rule to  maintain a minimum
market value of the public float of $5,000,000  and a minimum bid price of $1.00
and as a result Nasdaq National Market withdrew its delisting  notification.  We
believe  that had Mr.  Hammond not made offers to purchase  our shares of common
stock, we may not have regained compliance with the Nasdaq Market Place Rules.

     We believe that the public market has not responded to our positive actions
to reduce costs and our efforts to stimulate  interest in our common stock. As a
result,  our common stock has remained  very thinly  traded and provides  little
liquidity for our stockholders.  In addition,  because of the low trading volume
and  illiquidity of our common stock,  we have been unable to utilize our common
stock effectively as a source of financing.

     Events Leading Up to the Signing of the Merger Agreement
     --------------------------------------------------------

     On April 7, 2002, Mr. Hammond  presented to the Company a written  proposal
for a "going  private"  cash out merger  that would pay to the  stockholders  of
PRTS, other than the Acquisition  Group, $1.02 per share and would result in the
acquisition  of all  shares of PRTS  capital  stock  other than  shares  held or
controlled by the Acquisition Group.

     All members of the Special Committee and Board of Directors,  respectively,
were  present at each Board of  Directors  meeting  referenced  below,  with the
exception of Mr.  Hammond,  who was only present at the July 11, 2002 meeting of
the Board of Directors, and Mr. Van Hare, who was not present at the October 11,
2002 Board of Directors meeting.

                                       24


     At an  April 9,  2002  meeting  of the  Board of  Directors,  the  Board of
Directors concluded that it would be open to such a going private proposal.  The
Board of Directors'  determination  to evaluate the going  private  proposal was
based on:

        o   our small public float and limited institutional following;
        o   our low trading volume;
        o   limited research coverage from securities analysts;
        o   our inability, at the time, to cause our common stock to trade above
            the  $1.00  minimum  bid  price  on  the  Nasdaq   National   Market
            notwithstanding our efforts undertaken as described above; and
        o   the Board of Directors' belief that there was little likelihood that
            the liquidity of our common stock would improve in the future.

     At the April 9, 2002  meeting,  the Board of Directors  concluded  that Mr.
Hammond's  proposal  would  involve  a  transaction  in which  Mr.  Hammond  had
interests  that are in addition  to, or  different  from,  the  interests of the
Unaffiliated Stockholders.  Accordingly, the Board created the Special Committee
and appointed Pierre Narath,  Edward  McCartin,  and Thomas Van Hare to serve as
members.  None of Messrs.  Narath,  McCartin  or Van Hare is an  employee of the
Company or an  employee  of Mr.  Hammond or any of his  affiliates.  The Special
Committee  was  authorized  to review,  evaluate and recommend to the Board what
actions,  if any, should be taken with respect to Mr. Hammond's  proposal and to
engage in  negotiations  with Mr.  Hammond  with  respect to the proposal and to
consider  strategic  alternatives  that might be  available  to PRTS.  The Board
authorized the Special Committee to engage such third party advisors,  including
legal  counsel  and  financial   advisors,   as  the  Special  Committee  deemed
appropriate.

     The  Board  of  Directors  agreed  to pay to  each  member  of the  Special
Committee  $25,000 for his services as a member of the Special  Committee and to
reimburse  the  members  for  their  out  of  pocket  expenses  incurred  in the
performance of their duties on the Special Committee.

     In  determining  whether to form an independent  committee,  the Board took
into  consideration  Mr. Narath's  beneficial  ownership of 40,000 shares of our
common  stock and 20,000  options  and Mr. Van Hare's  beneficial  ownership  of
10,000 options; Mr. McCartin does not have any beneficial ownership of shares of
our common stock or options.  The Board  determined that Messrs.  Narath and Van
Hare's  beneficial  ownership  of our common  stock would not prevent  them from
providing  independent  advice  on behalf of the  Unaffiliated  Stockholders  in
connection with their service on the Special  Committee.  The Special  Committee
elected Mr. Narath its Chairman and thereafter engaged vFinance as its financial
advisor and Epstein Becker & Green, P.C. ("EBG") as its legal counsel.  vFinance
was selected as the Special  Committee's  financial  advisor  because of its (i)
expertise and experience; (ii) perceived ability to meet the Special Committee's
requirements;  and (iii) lack of any previous business relationship with PRTS or
Mr. Hammond.  EBG was selected as the Special  Committee's legal counsel because
of its  corporate  securities  experience  and  because  it had  not  previously
represented either PRTS or Mr. Hammond.

     On April  10,  2002,  we  issued  a press  release  announcing  that we had
received the proposal from Mr.  Hammond and disclosed the proposed terms and the
creation of the Special  Committee to review the proposal and to negotiate  with
the Acquisition Group.

     On April 16 and 17,  2002,  we were served  with two of the four  purported
class  action  lawsuits.  The  lawsuits  alleged  that the  Company's  directors
breached their fiduciary duty to the plaintiffs in the purported  class;  sought
to enjoin PRTS from entering into the transactions  proposed by Mr. Hammond; and
sought to recover  unspecified  damages  resulting  from the  alleged  breach of
fiduciary duties.

     On April 24,  2002,  we  received  a  proposal  from  AirOperations.com,  a
wholly-owned  subsidiary of  AirOperations  International  Corp.  (collectively,
"AirOperations.com"),  to acquire all of the outstanding  shares of Common Stock
of  PRTS  at a  price  of  $1.22  per  share,  or  to  pay  the  same  aggregate
consideration  to PRTS to acquire all of the assets of PRTS.  Later that day, we


                                       25


issued a press  release  announcing  that we had received the  AirOperations.com
proposal,  setting forth the proposed terms and that it had been referred to the
Special  Committee to review,  ascertain  its  validity  and to  negotiate  with
AirOperations.com on behalf of the Company.

     On April 26,  2002,  the Special  Committee  met to discuss  the  proposals
received  from  the  Acquisition  Group  and  AirOperations.com  as  well as the
purported class action lawsuits.  The Special Committee determined to enter into
confidentiality  agreements with  AirOperations.com  and any other third parties
interested  in discussing a possible  transaction  regarding  PRTS.  The Special
Committee  determined to meet with the Acquisition  Group regarding its proposal
as well as to  determine  its  interest  in a  possible  sale of PRTS to a third
party,  since  Mr.  Hammond  owned  or  controlled   approximately  65%  of  the
outstanding  common stock of PRTS. The Special Committee asked vFinance to begin
the  process  of  valuing  PRTS in order to  assess  the  fairness  of any offer
received by PRTS.

     On April 30, 2002, the Special Committee met to receive status reports from
its members and  vFinance.  The Special  Committee  decided to engage in further
discussions with the Acquisition  Group and  AirOperations.com.  Mr. Narath also
reported that he expected to receive a proposal from a third party regarding the
possible acquisition of the Company's  e-marketplace assets, rather than PRTS as
a whole.

     On May 1, 2002, legal counsel for the Acquisition Group,  Adorno & Yoss, P.
A.  ("AY"),  delivered  to EBG, on behalf of the Special  Committee,  a proposed
agreement and plan of merger in connection with the Acquisition Group's offer to
acquire all of the outstanding shares of Common stock not owned or controlled by
the Acquisition  Group.  Later that day, Leonard Sokolow and Richard  Rosenblum,
both of  vFinance,  and Pierre  Narath met with Jose  Bared,  the  President  of
AirOperations.com,  and Kevin Fitzgerald,  its financial  advisor,  to ascertain
AirOperations.com's  financial strength and its ability to consummate its offer.
Mr. Bared provided Mr. Narath with a letter from Republic  Bank,  indicating its
willingness to provide financing for AirOperations.com's offer.

     On May 6,  2002,  Messrs.  Bared,  Fitzgerald  and Elias  Rodriguez,  Chief
Financial Officer of AirOperations.com,  met with Messrs. Narath,  Rosenblum and
Hammond at PRTS' offices to discuss in further detail AirOperations.com's offer.
Additionally,  AirOperations.com  provided Mr. Narath with a due diligence  list
requesting pertinent financial and operational data about PRTS which was subject
to an executed confidentiality agreement.

     On May 9, 2002, we were served with the third of the four  purported  class
action lawsuits.

     On or about May 9, 2002,  Mr.  Narath met with Mr.  Hammond to discuss  the
potential merger and general economic and market conditions.

     On May 10, 2002,  the Special  Committee met to receive status reports from
its members, vFinance and EBG.

     During May, we provided due diligence materials to AirOperations.com.

     From May through  August 2002,  EBG and AY negotiated the terms of proposed
merger agreement between PRTS and the Acquisition Group.

     On May 15, 2002,  AirOperations.com  notified  vFinance  that its offer for
$1.22 would  remain open while  AirOperations.com  continued  its due  diligence
review of PRTS.

     On May 16, 2002, the Special Committee met. vFinance reported on the status
of  discussions  with  AirOperations.com  and the  due  diligence  review  being
undertaken by  AirOperations.com.  EBG summarized the status of the  outstanding
purported class action litigation.  The Special Committee also reviewed a letter
from a purported  stockholder  proposing  that PRTS  declare a special  dividend
rather than entering into a transaction  with the  Acquisition  Group.  vFinance


                                       26


noted that a  liquidation  analysis  for PRTS would be  included  as part of its
evaluation  report. EBG reported on the status of negotiations with AY regarding
a draft merger agreement with the Acquisition Group.

     On May 29, 2002, PRTS received a letter from AirOperations.com  reaffirming
its offer of $1.22 per share for all of the  outstanding  shares of PRTS  common
stock.

     On May 30, 2002,  the Special  Committee met to receive status reports from
Mr.  Narath  and  vFinance,   and  to  discuss  further  the  proposal  made  by
AirOperations.com. The Special Committee determined that Mr. Narath should speak
with Mr. Hammond regarding the proposal from AirOperations.com.

     On May 31, 2002, the Special  Committee  received a letter from Mr. Hammond
increasing  the  Acquisition  Group's  offer to $1.25  per  share for all of the
outstanding  shares  of PRTS  common  stock not  owned by or  controlled  by the
Acquisition Group.

     On June 3, 2002,  the Special  Committee  met to receive  updates  from its
members and vFinance. The Special Committee determined to give AirOperations.com
until June 7, 2002 to respond to the increased offer from the Acquisition Group.

     On June 3, 2002, Mr. Narath spoke with Kevin Fitzgerald,  financial advisor
to  AirOperations.com,  who advised  Mr.  Narath  that  AirOperations.com  would
respond to the Special  Committee prior to June 6. In addition,  on June 3, 2002
vFinance  sent a letter to  AirOperations.com  asking if  AirOperations.com  was
interested  in  continuing   discussions   regarding  the   acquisition  of  the
outstanding  shares  common  stock of PRTS at a price in excess of the $1.25 per
share offered by the Acquisition Group.

     On  June  5,  2002,   the   Special   Committee   received  a  letter  from
AirOperations.com  increasing  its  offer  to  $1.30  per  share  for all of the
outstanding shares of PRTS common stock.

     On June 6,  2002,  Messrs.  Narath,  and Rosenblum  spoke  with Mr.  Bared,
President    of    AirOperations.com     and    Kevin    Fitzgerald    regarding
AirOperations.com's revised offer. Mr. Narath asked AirOperations.com to provide
comments  before  June 11,  2002 to a proposed  form of merger  agreement  to be
supplied by EBG.  Later that day, the Special  Committee met to receive  updates
from its advisors,  vFinance and EBG. vFinance  reported that  AirOperations.com
had  increased  its offer from $1.22 per share to $1.30 per share for all of the
outstanding  shares  of  PRTS  common  stock.  EBG  reported  on the  status  of
negotiations   with  AY  regarding  the  proposed  merger   agreement  with  the
Acquisition Group. The Special Committee  discussed the possibility of including
a  provision  in the merger  agreement  which  would  provide the holders of the
outstanding  shares of PRTS common stock not owned or controlled by Mr.  Hammond
with some influence over the outcome of any vote on a merger  agreement with the
Acquisition  Group. The Special  Committee  determined to provide a draft merger
agreement to AirOperations.com for comment by  AirOperations.com,  to enable the
Special Committee to better compare the offers between the Acquisition Group and
AirOperations.com.

     On  June  7,   2002,   EBG   delivered   a  draft   merger   agreement   to
AirOperations.com and its financial advisor,  Kevin Fitzgerald.  Later that day,
the Special  Committee met to receive  updates from its  advisors,  vFinance and
EBG. The Special Committee discussed requiring a provision in any agreement with
the Acquisition Group, which would provide the holders of the outstanding shares
of PRTS common stock not owned or controlled by the Acquisition  Group with some
influence  over  the  outcome  of  any  vote  on a  merger  agreement  with  the
Acquisition  Group. The Special  Committee met for a second time on June 7, 2002
to review the status of negotiations with  AirOperations.com and the Acquisition
Group regarding their  respective  offers.  EBG reported that AY had conveyed to
EBG  that  Mr.   Hammond   was  not   interested   in   selling   his  stock  to
AirOperations.com  at  $1.30  per  share  and  would  not  vote in  favor of the
AirOperations.com  transaction at any stockholder meeting. The Special Committee
determined  to give  AirOperations.com  until June 11 to respond to the  Special


                                       27


Committee's   request  for  comments  to  the  proposed  merger  agreement  with
AirOperations.com.  On this date,  Mr. Narath also suggested to Mr. Hammond that
he extend the deadline set forth in his offer letter.

     At the June 7, 2002 Special Committee meeting,  Mr. Rosenblum reported that
he had a telephone conversation with Kevin Fitzgerald,  the financial advisor to
AirOperations.com,  regarding the draft merger  agreement which had been sent to
AirOperations.com.  Mr. Narath  informed the Special  Committee that the Special
Committee  received a letter from Harold Van Arnem,  offering to purchase all of
the outstanding  shares of PRTS common stock at a price of $1.30 per share.  EBG
informed  the  Special  Committee  that it had  received  an e-mail  from  Kevin
Fitzgerald advising that legal counsel for  AirOperations.com  was reviewing the
proposed merger agreement and would provide  comments on the proposed  agreement
in the near future.

     On June 11, 2002,  AY reported to EBG that Mr.  Hammond had spoken with Mr.
Van Arnem and told Mr. Van Arnem that Mr.  Hammond was not interested in selling
his shares of PRTS common stock at $1.30 per share.

     On June 12, 2002,  the Special  Committee  met to discuss the status of the
outstanding  offers from the Acquisition  Group,  AirOperations.com  and Mr. Van
Arnem.  vFinance reported to the Special Committee that the Acquisition  Group's
offer of $1.25 per share fell below the range of prices which vFinance  believed
would be fair from a financial standpoint to the remaining stockholders of PRTS.
The Special  Committee  determined to set the close of business on June 14, 2002
as the deadline by which all three potential  acquirers should submit their best
and final  proposals and also indicate  what  comments,  if any, they had to the
form of merger agreement provided to them by the Special Committee.  The Special
Committee also  discussed the idea that any proposal  recommended by the Special
Committee to the Board of Directors  should be made subject to settlement of all
outstanding  purported  class action suits on terms  acceptable  to PRTS and any
successful bidder.

     On or about June 12,  2002,  Mr.  Narath  discussed  with Mr.  Hammond  the
possibility of Mr. Hammond increasing his proposed purchase price per share.

     On June 13, 2002,  EBG provided to Drew  Levitt,  legal  counsel to Mr. Van
Arnem,  a proposed  form of merger  agreement  and advised  Mr.  Levitt that the
Special  Committee  had  established  a deadline  of 5:00 p.m.  Eastern  Time on
Friday,  June 14,  2002 for each  interested  party to submit its best and final
offer,  together with the merger  agreement  that the party would be prepared to
sign without further changes.

     On June 13, 2002, EBG had telephone  conference with AY to advise AY of the
Special Committee's June 14 deadline.

     On June 14,  2002,  the  Special  Committee  received a letter form Mr. Van
Arnem in which  Mr.  Van  Arnem  increased  his  offer  to  purchase  all of the
outstanding  shares of PRTS common stock not owned by Mr.  Hammond to a range of
$1.50 to $1.75 per share,  with the actual  price to be based on the  results of
Mr. Van Arnem's due diligence review of PRTS. Mr. Van Arnem separately increased
his offer to  purchase  all of the  shares  of PRTS  common  stock  owned by Mr.
Hammond  to  $1.75  per  share.  Also on June  14,  2002,  PRTS  entered  into a
confidentiality  agreement  with Mr. Van  Arnem.  Later  that day,  the  Special
Committee  received a letter  from Mr.  Hammond in which the  Acquisition  Group
increased  its offer to purchase  all of the  outstanding  shares of PRTS common
stock not owned and controlled by the Acquisition  Group to $1.31 per share. The
Acquisition  Group's offer was  conditioned  upon  settlement of all outstanding
purported class action lawsuits and a vote of only a majority of all outstanding
shares being required for approval of a proposed merger agreement.  In addition,
on June 14, 2002, the Special Committee received a letter from AirOperations.com
in  which  AirOperations.com   increased  its  offer  to  purchase  all  of  the
outstanding  shares of PRTS common stock to $1.41 per share.  The letter  stated
that  AirOperations.com  saw no material issues with the form and content of the
proposed merger  agreement but would want to add a termination fee to the merger
agreement.  On June 14,  2002,  EBG asked  Mr.  Levitt to  provide  the  Special
Committee  with a financial  statement or some other evidence that Mr. Van Arnem


                                       28


had reasonable basis to believe that he could obtain the financing  necessary to
complete  his  proposed  acquisition  of all of the  outstanding  shares of PRTS
common stock.

     During June and July 2002, PRTS provided due diligence materials to Mr. Van
Arnem and his representatives.

     On June 17,  2002,  the  Special  Committee  met to review the  outstanding
proposals from the Acquisition Group,  AirOperations.com  and Mr. Van Arnem. The
Special  Committee  determined  that it  would be in the  best  interest  of the
stockholders of PRTS to continue discussions with all three interested parties.

     On or about June 18,  2002,  Messrs.  Narath and  Rosenblum  discussed  the
AirOperation.com  offer with Mr. Hammond and whether this offer was made as part
of a roll-up of various aviation businesses.

     On June 19,  2002,  the Special  Committee  met to discuss  procedures  for
moving forward with discussions with the three interested  bidders.  The Special
Committee determined to require each bidder to deposit $200,000 as a refundable,
good  faith  deposit  to be held by EBG as escrow  agent no later  than June 24,
2002,  and to advise the three bidders that any bidder which failed to make such
a deposit would be treated by the Special Committee as having withdrawn its bid.

     From June 19, 2002 through June 24, 2002,  EBG  negotiated the terms of the
deposit escrow agreements with legal counsel for the three bidders.

     On June 20,  2002,  PRTS was served  with the fourth of the four  purported
class action lawsuits.

     On June 24, 2002,  EBG received an e-mail from Mr. Levitt  setting forth an
additional proposal from Mr. Van Arnem. Pursuant to Mr. Levitt's e-mail, Mr. Van
Arnem, as an alternative to his offer to acquire all of the  outstanding  shares
PRTS common stock, offered to acquire all of the assets related to the Company's
e-marketplace, including goodwill, cash, customers, contracts, and other assets.
The proposed purchase price was $5,000,000,  which could be adjusted downward to
reflect results from this business for the period ending June 30, 2002.

     On June 24,  2002,  the  Special  Committee  received  an  executed  escrow
agreement  from Mr.  Hammond.  On June 25,  2002,  EBG  received  Mr.  Hammond's
$200,000 good faith deposit.

     On June 24, 2002,  EBG received a letter from Juan Diaz,  legal counsel for
AirOperations.com.  Mr.  Diaz's  letter  stated that  AirOperations.com  did not
object to  depositing  $200,000 as a good faith  refundable  deposit,  but would
require that Mr. Diaz serve as escrow agent.

     On June 25,  2002,  vFinance  delivered  to the  Special  Committee a draft
valuation analysis of PRTS.

     On June 25, 2002, the Special Committee  received a signed escrow agreement
from Mr. Van Arnem.  On June 26, 2002,  EBG  received  Mr. Van Arnem's  $200,000
deposit.

     On June 25,  2002,  EBG  received  a  letter  from Mr.  Diaz  stating  that
AirOperations.com  was  prepared  to  move  forward  with a  mutually  agreeable
acquisition  agreement  and advised EBG that  AirOperations.com  had delivered a
check in the amount of  $200,000  made  payable  to Mr.  Diaz's  attorney  trust
account, to be held by Mr. Diaz. On June 25, 2002, EBG sent a letter to Mr. Diaz
advising  Mr. Diaz that the deposit of  $200,000 by  AirOperations.com  into Mr.
Diaz's trust account did not meet the requirements of the Special Committee. EBG
further  advised Mr. Diaz that Mr. Hammond and Mr. Van Arnem had each signed the
escrow  agreement and deposited  $200,000 with EBG as escrow agent,  and that if
AirOperations.com  did not  execute  the same  escrow  agreement  and  deliver a
$200,000 deposit by June 26, 2002, the Special Committee, in accordance with its
guidelines  established for all interested parties,  would consider the proposal
made by  AirOperations.com  to be withdrawn.  EBG reiterated  this position in a
second letter to Mr. Diaz dated June 26, 2002. On June 26, 2002,  EBG received a
letter from Mr. Diaz again stating that  AirOperations.com was going to have the


                                       29


$200,000  deposit held by Mr. Diaz. On June 26, 2002, EBG sent a third letter to
Mr.  Diaz  stating  that the Special  Committee  required  that all  deposits by
prospective bidders be held by EBG.

     On June 27,  2002,  the Special  Committee  met to review the status of the
three  outstanding  bidders.  EBG  reported  that it had  received  deposits and
executed escrow agreements from Mr. Hammond (on behalf of the Acquisition Group)
and Mr. Van  Arnem,  but that  AirOperations.com  had failed to deliver a signed
escrow  agreement  or a deposit to EBG.  According to its  previously  announced
policy, the Special Committee  determined to treat  AirOperations.com  as having
withdrawn its proposal to acquire the  outstanding  shares of PRTS common stock,
and directed EBG to convey this decision to counsel for  AirOperations.com.  Mr.
Narath  reported on his attempts to contact Mr. Van Arnem and also reported that
Mr. Van Arnem and Mr. Hammond had a direct discussion  regarding Mr. Van Arnem's
offers.  The Special Committee  discussed Mr. Van Arnem's two outstanding offers
to acquire all of the outstanding shares of PRTS common stock and to acquire the
e-marketplace assets.

     On June 27,  2002,  EBG sent a letter to Mr.  Diaz  advising  Mr. Diaz that
since  AirOperations.com  had  decided  not to execute an escrow  agreement  and
deposit  $200,000  with EBG as a good  faith,  refundable  deposit,  the Special
Committee had considered the proposal made by AirOperations.com to be withdrawn.

     On July 1, 2002,  the Special  Committee  received a letter from AY stating
that the Acquisition  Group intended to withdraw its offer to acquire all of the
outstanding  shares  of  PRTS  common  stock  not  owned  or  controlled  by the
Acquisition  Group  unless  PRTS  and  the  Acquisition  Group  entered  into  a
definitive merger agreement by July 8, 2002.

     On July 3, 2002, the Special  Committee met to review the status of ongoing
negotiations  with the Acquisition  Group and Mr. Van Arnem, and Mr. Van Arnem's
due diligence review of PRTS. The Special Committee reviewed with Berman Rennert
Vogel & Mandler,  P.A.  ("BRVM"),  legal counsel to PRTS and Mark  Weicher,  the
Chief Financial  Officer of PRTS, some of the information to be delivered to Mr.
Van Arnem.  The Special  Committee  determined that Messrs.  McCartin and Narath
would call Mr.  Hammond to  continue  negotiations  with the  Acquisition  Group
regarding two outstanding issues, the stockholder vote that would be required to
approve any proposed  merger  agreement  with Mr.  Hammond,  and the proposal to
require the settlement of the outstanding purported class action litigation as a
condition to the closing of any transaction.

     At some point between July 3 and July 8, 2002,  Mr. Narath  discussed  with
Mr.  Hammond  the  stockholder  vote.  During  this  conversation,  Mr.  Hammond
indicated that he wanted  settlement of this class action to be a  pre-condition
to closing.

     On July 8, 2002, in a telephone  conversation with Mr. Narath,  Mr. Hammond
agreed to extend his July 8, 2002 deadline to July 10, 2002.

     On July 9, 2002,  EBG, BRVM and Mr.  Weicher had a telephonic  meeting with
Mr. Levitt,  legal counsel to Mr. Van Arnem, and Andy Plyler, a business advisor
to Mr. Van Arnem and a former  employee  of PRTS,  to  continue  the  process of
providing due diligence material to Mr. Van Arnem.

     On July 10,  2002,  EBG sent an e-mail to Mr.  Levitt  asking  that Mr. Van
Arnem  provide to the  Special  Committee  by the close of  business on July 12,
2002, any final changes to Mr. Van Arnem's outstanding offers, together with any
comments or changes to the proposed merger agreement previously delivered by EBG
to Mr. Levitt.  Mr. Levitt responded to EBG by e-mail  suggesting a deadline for
Mr. Van Arnem's final proposal of July 19, 2002.

     On July 10,  2002,  the  Special  Committee  met to  discuss  the status of
negotiations with the Acquisition Group and Mr. Van Arnem. In addition, EBG sent
an  e-mail to Mr.  Levitt  asking  that Mr.  Van Arnem  provide  to the  Special
Committee,  no later than 9:00 a.m. Monday,  July 15, 2002, any final changes to
Mr. Van Arnem's  outstanding offers together with any comments or changes to the
proposed  merger  agreement  previously  provided  to Mr.  Levitt.  The  Special


                                       30


Committee  also  determined  that  Messrs.  McCartin  and Narath  would call Mr.
Hammond to request  that he extend the  Acquisition  Group's  offer  through the
close of business  July 15, 2002 so the Special  Committee  could  evaluate  the
offers  from both Mr. Van Arnem and the  Acquisition  Group.  In  addition,  the
Special  Committee  determined  to recommend to the Board of Directors  that the
Board authorize BRVM to commence  settlement  discussions with legal counsel for
the plaintiffs in the various purported class action suits.

     On July 11,  2002,  the Board of Directors  met to authorize  BRVM to begin
settlement  discussions  regarding the four  outstanding  purported class action
lawsuits.

     On July 11, 2002, EBG received  messages from Mr. Levitt,  in which Mr. Van
Arnem amended his offer to acquire all of the outstanding  shares of PRTS common
stock by offering $1.50 per share for all of the  outstanding  shares  including
those owned or controlled by Mr. Hammond.

     On or about July 12, 2002, Mr. Van Hare met with Mr. Hammond  regarding the
status of the offer made by Mr. Van Arnem. Mr. Narath,  subsequently on July 12,
2002, also discussed with Mr. Hammond the revised offer from Mr. Van Arnem,  and
Mr.  Hammond  indicated  that he was not  willing  to sell his shares to Mr. Van
Arnem for a price of $1.50 per share.

     On July 13,  2002,  Mr.  Levitt  communicated  to EBG that he believed  his
comments on the proposed merger agreement would be minor.

     On July 15, 2002, the Special Committee received a letter from Atlas II, LP
("Atlas") and Marathon Partners, LP ("Marathon"),  two New York-based investment
groups.  In the letter,  Atlas and Marathon stated their intention to oppose the
previously  announced  offers of the  Acquisition  Group and  AirOperations.com,
based on their  belief  that  the sale of parts of PRTS on a  liquidation  basis
would  provide a higher return to  investors.  Also on July 15, 2002,  Atlas and
Marathon  filed a  Schedule  13-D  Statement  with the SEC  reporting  that they
collectively   beneficially   owned  1,471,200  shares  of  PRTS  common  stock,
representing approximately 10.5% of the outstanding shares of PRTS common stock.
In the Schedule 13-D  Statement,  Atlas and Marathon  stated their  intention to
oppose the  Acquisition  Group's and  AirOperations.com's  previously  announced
proposals  to acquire  all of the  outstanding  shares of PRTS  common  stock at
prices of $1.25 and $1.30 per share, respectively.

     On July 16, 2002,  the Special  Committee  met to discuss the Schedule 13-D
Statement filing and letter from Atlas and Marathon, including the suggestion to
consider the sale of portions of the business coupled with liquidation or a cash
distribution to the shareholders of PRTS. The Special Committee  determined that
Mr. Narath, together with vFinance,  would contact Atlas and Marathon to discuss
the issues  raised in their  letter,  and directed EBG to contact Mr.  Levitt to
determine  if Mr. Van Arnem's  offer to purchase  the  e-marketplace  assets was
still outstanding.

     On July 17, 2002,  EBG contacted  Mr.  Levitt to determine  whether Mr. Van
Arnem's proposal to acquire the e-marketplace  asserts was still outstanding and
to determine  Mr. Van Arnem's  availability  to meet with members of the Special
Committee.

     On July 18, 2002,  vFinance met with Mario  Cibelli of Marathon and Richard
Jacinto  of Atlas to  discuss  the  concerns  raised  in Atlas'  and  Marathon's
Schedule 13-D Statement filing. Mr. Narath  participated  telephonically in this
meeting.

     On July 19, 2002,  EBG received an e-mail from Mr. Levitt  stating that Mr.
Van  Arnem was still  interested  in a  purchase  of the  e-marketplace,  assets
including all accounts  receivable and $1,500,000 in cash. In exchange for these
assets,  Mr. Van Arnem proposed a purchase price of $4,000,000 of which $500,000
would be paid at closing;  $1,000,000  on December 31, 2002;  $1,000,000  on the
first anniversary of the closing;  and $1,500,000 on December 31, 2003. Also, on
July 19, 2002,  the Special  Committee met to discuss the revised offer from Mr.
Van Arnem to purchase the  Company's  e-marketplace  assets,  and to discuss the
meeting between Mr. Narath,  vFinance,  Mr. Cibelli and Mr. Jacinto. The Special


                                       31


Committee   requested   vFinance  to  include  in  its  valuation  analysis  the
possibility of selling portions of the PRTS business. The Special Committee also
asked  vFinance  to  contact a certain  firm  engaged  in  operating  e-business
networks  which  allow  buyers  and  sellers in  various  industries  to conduct
business  through  the  internet,  and which firm had  previously  indicated  an
interest in purchasing the Company's  e-marketplace assets (hereinafter referred
to as  "Company  X"),  and  AirOperations.com,  to inform  them that the Special
Committee was  considering  the impact of a possible  sale of the  e-marketplace
assets  and  determine  what  interest,  if any,  those  parties  would  have in
acquiring that business. On July 19, 2002, vFinance sent an e-mail to Mr. Levitt
seeking  additional  information  regarding  Mr. Van  Arnem's  revised  offer to
purchase the  e-marketplace  assets.  On July 19, 2002, Mr. Levitt  responded to
vFinance  with further  information  regarding  Mr. Van Arnem's  revised  offer.
vFinance was contacted by Company X's financial  advisor,  RBC Capital  Markets,
and  discussed  with RBC Capital  Markets,  Company  X's  interest in a possible
acquisition  of the Company's  e-marketplace  assets.  Later that day,  vFinance
spoke  with  Kevin  Fitzgerald,  financial  advisor  to  AirOperations.com,  who
indicated that AirOperations.com  might be interested in making an offer for the
e-marketplace  assets if that business  generated  positive cash flow.  Also, on
July 19, 2002,  Mr.  Narath sent an e-mail to Paul  Fulchino,  the  President of
Aviall,  Inc.  ("Aviall"),  an  operator  of  an  online  provider  of  Internet
business-to-business  e-commerce  services for the aviation industry,  inquiring
whether  Aviall had an interest in  acquiring  all of PRTS or the  e-marketplace
assets.

     On July 24, 2002,  the Special  Committee  met. Mr. Narath  reported on his
discussions with Company X, Aviall and AirOperations.com  regarding the possible
acquisition  of  the  Company's   e-marketplace  business.  The  Committee  then
discussed  with  vFinance  the status of  vFinance's  financial  analysis of the
possible sale of the e-marketplace business followed by a liquidation of PRTS.

     On July 29,  2002,  the Special  Committee  met to discuss the  outstanding
offers  from Mr. Van Arnem and the  Acquisition  Group.  The  Special  Committee
received a  presentation  from BRVM  regarding the status of  negotiations  with
counsel for the plaintiffs in the purported class action litigation. The Special
Committee   discussed   vFinance's   analysis  of  the  possible   sale  of  the
e-marketplace  business. Mr. Narath reported on his discussions with Mr. Hammond
regarding a possible  increase in the price offered by the Acquisition Group for
all of the  outstanding  shares of PRTS common stock not owned or  controlled by
the Acquisition  Group. The Special Committee  determined that Mr. Narath should
continue negotiations with Mr. Hammond.

     Between July 29 and August 1, Mr. Narath had discussions  with Mr. Hammond,
during which he suggested to Mr. Hammond that he increase the proposed  purchase
price per share.

     On August 1, 2002, the Special  Committee  received a letter from Company X
in which  Company  X  proposed  to  acquire  the  e-marketplace  assets of PRTS,
including all accounts  receivable.  Company X proposed a cash purchase price of
$3 - $4 million, with the actual price to be determined following due diligence.
The Company X offer stated that an  undetermined  portion of the purchase  price
would be held in escrow  following  any  closing.  The  Company X offer was also
contingent upon execution of an agreement by Mr. Hammond agreeing to vote shares
owned or  controlled  by him in  favor of the  Company  X  proposal,  as well as
certain other conditions.

     On August 2, 2002,  vFinance  delivered  to the  Special  Committee a draft
analysis of the value of the Company's  e-marketplace  business on a stand-alone
basis.

     Between August 2 and August 9, 2001, Messrs. Rosenblum, Narath and Fulchino
had  a  telephone   conversation,   during  which  Mr.  Fulchino  indicated  his
familiarity  with the Company and that, if Aviall were inclined to make an offer
to purchase the Company, it would be for less then cash value.

     On August 9, 2002,  the Special  Committee  was informed  that a consultant
engaged by the  plaintiff's  counsel in the  purported  class action  litigation
concluded  that  based upon  publicly  available  information,  the value of the
outstanding shares of PRTS common stock was no less than $1.41 per share.

                                       32


     On August 13, 2002, the Special  Committee met to discuss the status of the
settlement   discussions   regarding  the  outstanding  purported  class  action
litigation  and the  proposal  received  from  Company X. The Special  Committee
determined to discuss with Mr. Hammond his  willingness  to consider  offers for
the e-marketplace assets from Mr. Van Arnem and Company X.

     On August 14, 2002,  Messrs.  Narath,  Rosenblum and Calicchia met with Mr.
Jacinto.  During this meeting they  discussed the  appropriate  valuation of the
Company and the possibility of Atlas and Marathon  supporting a transaction with
the  Acquisition  Group if it would  increase  the proposed  purchase  price per
share.

     On August 15, 2002, Messrs. Narath and Rosenblum met with Mr. Hammond. They
relayed to him their discussions the day before with Mr. Jacinto.

     On August 19,  2002,  the  Special  Committee  received  a letter  from Mr.
Hammond  increasing the Acquisition  Group's offer to $1.41 per share for all of
the  outstanding  shares of PRTS  common  stock not owned or  controlled  by the
Acquisition Group.

     On August 20, 2002,  the Special  Committee met to review the status of the
settlement  discussions  regarding  the  purported  class action  lawsuits.  The
Special  Committee  discussed  the  revised  offer for $1.41 per share  from the
Acquisition  Group for all of the  outstanding  shares of PRTS common  stock not
owned or controlled by the Acquisition  Group. The Special  Committee noted that
since  Acquisition  Group's  offer  was  contingent  upon  a  settlement  of the
outstanding purported class action litigation,  the Special Committee determined
to defer  further  discussion  of  Acquisition  Group's  offer.  Mr.  Narath and
vFinance  reported on their  discussions  with Atlas and Marathon and noted that
Atlas and Marathon  indicated that they would support a price of $1.41 per share
for all the  outstanding  shares  of  PRTS  common  stock,  subject  to  certain
contingencies.

     From August 20 through August 26, 2002, EBG and AY negotiated provisions of
the draft merger agreement.

     On August 23,  2002,  the  Special  Committee  received  a letter  from Mr.
Hammond stating that in his capacity as a stockholder of PRTS, Mr. Hammond would
oppose and vote  against any offer  currently  being  considered  by the Special
Committee  other  than the  Acquisition  Group's  own offer,  including  but not
limited to  outstanding  offers from Company X and Mr. Van Arnem to purchase the
Company's e-marketplace business.

     On  August  26,  2002,  vFinance  delivered  a  valuation  analysis  of the
e-marketplace business to the Special Committee and Board of Directors.

     On August 26, 2002, the Special  Committee met. The Committee  reviewed the
terms of the tentative settlement of the purported class action litigation.  The
Special  Committee  then reviewed the  outstanding  offers from the  Acquisition
Group, Company X and Mr. Van Arnem. The Special Committee noted that none of the
proposals,  with the exception of the Acquisition Group's proposal, could result
in a completed  transaction,  given Mr. Hammond's  written  communication to the
Special Committee that Mr. Hammond,  in his as capacity as majority  stockholder
of PRTS, would vote against any competing transaction currently being considered
by the  Special  Committee.  The Special  Committee  also  discussed  the report
prepared by vFinance.  vFinance  summarized  the report and  delivered  its oral
opinion that the Acquisition  Group's proposed purchase price of $1.41 per share
for all of the  outstanding  shares of PRTS common stock not owned or controlled
by the  Acquisition  Group  was fair,  from a  financial  point of view,  to the
stockholders  of PRTS other  than Mr.  Hammond.  The  Special  Committee,  after
considering the matters,  then voted to recommend to the Board of Directors that
the  Board  of  Directors   approve  the  proposed  merger  agreement  with  the
Acquisition  Group and recommend that the PRTS  stockholders  approve the merger
agreement.

                                       33


     On August 26, 2002,  the Board of Directors of the Company met and received
a report and recommendation from the Special Committee regarding the Acquisition
Group's offer to purchase all of the outstanding shares of PRTS common stock not
owned or  controlled  by the  Acquisition  Group for $1.41 per  share.  vFinance
reviewed its  financial  analysis and its opinion that the  Acquisition  Group's
offer was fair, from a financial point of view, to the PRTS  stockholders  other
than Mr. Hammond. EBG reviewed the activities of the Special Committee since its
formation.  EBG also reviewed for the Board of Directors the terms and condition
of  the  proposed  merger  agreement  with  the  Acquisition  Group,  which  had
previously been distributed to the Board of Directors. BRVM advised the Board of
Directors with respect to the fiduciary  duties of the  Directors.  The Board of
Directors  discussed  the  terms of the  merger  agreement,  and  BRVM,  EBG and
vFinance  responded to  questions  from the  Directors.  After  considering  the
matters presented to the Board of Directors, the Board of Directors,  other than
Mr. Hammond,  who was not present at the meeting,  unanimously resolved that the
terms of the merger were advisable, and fair to and in the best interest of, the
stockholders of PRTS other than Mr. Hammond;  approved the merger agreement; and
determined to recommend to the  stockholders  of PRTS that the merger  agreement
and the  transactions  contemplated  by the merger  agreement  be  approved  and
adopted.

     On August 26, 2002,  vFinance delivered its written opinion to the Board of
Directors that the merger agreement was fair, from a financial point of view, to
the stockholders of PRTS other than Mr. Hammond.

     On August 26, 2002,  PRTS,  the  Acquisition  Group entered into the merger
agreement.  On August 26,  2002,  PRTS  issued a press  release  announcing  the
execution of the merger agreement.

     Certain Events Following the Signing of the Merger Agreement
     ------------------------------------------------------------

     The  following   describes  certain  events  that  occurred  following  the
execution of the merger agreement on August 26, 2002.

     On  August  30,  2002,  Mr.  Narath  received  a  telephone  call from Paul
Fulchino,  the  President  of Aviall,  requesting  that Mr.  Narath  contact the
Special Committee's counsel so that Mr. Fulchino,  counsel to Aviall, Mr. Narath
and counsel to the Special  Committee could have a conference  call.  Later that
day,  Mr.  Narath and EBG had a  conference  call with Mr.  Fulchino and Jeffrey
Murphy,  in-house  counsel to Aviall.  During that  conversation,  Mr.  Fulchino
stated that Aviall  wished to submit an offer to purchase PRTS and that he would
fax the written proposal to Mr. Narath and EBG.

     On August 30, 2002, the Special  Committee  received an unsolicited  letter
from Aviall, in which Aviall offered to acquire all of the outstanding shares of
PRTS common stock at a price  between  $1.55 and $1.65 per share.  Aviall stated
that it was prepared to begin due  diligence.  Aviall's offer was subject to the
negotiation  of  a  definitive  acquisition  agreement  and  the  settlement  or
dismissal of the purported class action  litigation.  Aviall sent copies of this
letter to Atlas,  Marathon and counsel for the plaintiffs in the purported class
action  litigation.  Later that day,  PRTS sent a letter to Mr.  Hammond  and AY
notifying  them that PRTS had  received an  unsolicited  written  proposal  from
Aviall  with  respect  to a  competing  transaction  (as  defined  in the merger
agreement) which could  reasonably be expected to result in a superior  proposal
(as defined in the merger agreement), and advising them that PRTS may enter into
discussions or negotiations with Aviall regarding its proposal.

     On August 30, 2002, the Special Committee and Board of Directors received a
letter from Mr.  Hammond  stating that in his capacity as a stockholder of PRTS,
he would oppose and vote against the proposal made by Aviall.

     On September 6, 2002,  the Special  Committee met to discuss the offer from
Aviall to acquire all of the outstanding  shares of PRTS common stock at a price
between $1.55 and $1.65 per share.  The Special  Committee noted the significant
range in Aviall's  offer and the fact that Aviall's  offer could not result in a
completed  transaction  without Mr. Hammond voting in favor of it, and discussed
the possible impact of Aviall's offer on the outstanding  purported class action
litigation.  The Special  Committee  discussed  Aviall's  request to begin a due
diligence review of PRTS.

                                       34


     On September 6, 2002, the Board of Directors,  other than Mr. Hammond,  who
did not attend the meeting,  met to receive a report from the Special  Committee
and to discuss the Aviall proposal.  The Board of Directors  discussed  Aviall's
request to begin a due diligence review of PRTS.

     On September 6, 2002,  EBG sent a letter to Aviall on behalf of the Special
Committee acknowledging receipt of Aviall's August 30, 2002 proposal and stating
that the Special Committee was considering the proposal.

     On September 6, 2002,  Haynes and Boone,  LLP, counsel to Aviall (sometimes
referred  to as  "HB"),  sent to EBG a copy of a  complaint  filed by  Inventory
Locator Service, LLC ("ILS"), a subsidiary of Aviall, against PRTS in the United
States District Court for the District of Tennessee.  The complaint alleged that
PRTS had improperly gained access to ILS's database and used such information to
solicit ILS customers.  The complaint  alleged  violations of the Computer Fraud
and  Abuse  Act,  tortuous  interference  with  ILS's  business  relations,  and
misappropriation  of ILS's  trade  secrets,  and  sought  injunctive  relief and
unspecified  damages.  Later  that  day,  PRTS  received  a letter  from  Aviall
demanding  the right to  inspect  and copy the  Company's  stockholder  list and
information  related to the beneficial  ownership of the Company's common stock,
as well as the Company's certificate of incorporation and bylaws.

     On  September  9, 2002,  the  Special  Committee  met to discuss the Aviall
proposal to acquire  all of the  outstanding  shares of PRTS  common  stock at a
price between  $1.55 and $1.65 per share.  The Special  Committee  determined to
provide due  diligence  materials to Aviall upon the execution and delivery of a
nondisclosure  agreement,  and to require Aviall to submit a definitive proposal
in writing,  at a fixed price,  and containing no further due diligence or other
conditions, no later than September 20, 2002.

     On September 10, 2002, EBG sent a letter to Aviall stating that the Special
Committee  was  prepared  to provide  due  diligence  materials  to Aviall  upon
Aviall's execution of a nondisclosure agreement provided by EBG. The letter from
EBG also set forth the Special  Committee's  requirement  that  Aviall  submit a
definitive  written  proposal at a fixed price with no further due  diligence or
other  conditions no later than  September 20, 2002.  The letter also enclosed a
copy of the merger  agreement  between PRTS and the Acquisition  Group and asked
that any proposal  made by Aviall  include  specific  references  to any changes
Aviall would require to the form of merger agreement in the event Aviall entered
into a definitive merger agreement with PRTS.

     On  September  11 and  12,  2002,  EBG and HB  negotiated  the  terms  of a
nondisclosure agreement between PRTS and Aviall.

     On September  11,  2002,  HB told EBG that Aviall was prepared to begin due
diligence  but was  reluctant to do so unless Mr.  Hammond was aware of Aviall's
proposal and had indicated that he was open to discussions with Aviall.

     On  September  11,  2002,  EBG sent a letter to HB noting  that the Special
Committee had advised Mr.  Hammond of Aviall's  offer and the Special  Committee
had  determined  to provide due diligence  materials to Aviall.  The letter also
noted  that  while the  Special  Committee  did not speak for Mr.  Hammond,  Mr.
Hammond had advised the Special  Committee that in his capacity as a stockholder
of PRTS, he was opposed to the current Aviall proposal. The letter further noted
that the Special  Committee was prepared to continue the due  diligence  process
with Aviall and consider any offer Aviall might make.  The letter  further noted
that under the terms of the merger agreement  between PRTS and Mr. Hammond,  the
ability of a competitive  offeror to complete a proposed  transaction was one of
the factors that the Special  Committee and Board of Directors  were required to
consider,  and that Aviall might wish to contact Mr. Hammond directly to discuss
its offer with Mr. Hammond in his capacity as a PRTS stockholder.

     On  September  12,  2002,  HB sent a letter to EBG stating  that Aviall was
moving forward with its due diligence based on the following assumption: that if
Aviall's  proposal  (i)  reflected  a cash price per share for each  outstanding
share of PRTS  Common  stock in excess of the $1.41  provided  for in the merger
agreement  with  Mr.  Hammond,  (ii) was not  subject  to any  financing  or due
diligence  contingency,  and (iii) was likely of being  completed  given  legal,


                                       35


financial and regulatory aspects of the proposal,  the Special Committee and the
Board of Directors  would  terminate the merger  agreement  with Mr. Hammond and
enter  into a  written  acquisition  agreement  with  Aviall  regardless  of Mr.
Hammond's position. HB asked for an immediate notification if its assumption was
not correct. HB also returned a confidentiality  agreement executed by Aviall to
EBG, and stated that HB would provide a due diligence  checklist  under separate
cover;  that Aviall would  commence its due diligence on September 13, 2002; and
that HB would contact PRTS and vFinance to coordinate the due diligence process.

     On September 12, 2002,  EBG sent an e-mail to HB stating that HB should not
make any assumptions about future decisions that either the Special Committee or
the Board of  Directors  may make.  EBG  pointed  out that the merger  agreement
defined  "superior  proposal"  as one "likely of being  completed  (taking  into
account all legal, financial,  regulatory and other aspects of the proposal, the
person making the proposal and the expected timing to complete the proposal...)"
EBG noted that the ability of PRTS to terminate  the merger  agreement  with the
Acquisition  Group to enter  into an  alternative  agreement  also  depended  on
determining that the alternative  agreement was for a "superior  proposal",  and
asked for HB's opinion on how the Special  Committee or Board of Directors could
conclude that a proposal opposed by Mr. Hammond in his capacity as a stockholder
could be determined to be "likely of being completed".

     On September  13, 2002,  HB sent a letter to EBG stating that Aviall had no
basis for knowing what the language  cited by EBG in the definition of "superior
proposal" in the merger  agreement  between PRTS and Mr. Hammond was intended to
mean.  HB stated that Aviall saw little  reason to  commence  the due  diligence
process and submit a definitive  proposal unless the Special Committee  obtained
Mr. Hammond's concurrence that he would proceed and be supportive of an offer by
Aviall in excess of $1.41 per share.

     On September 15, 2002, Messrs. Rosenblum and Narath met with Mr. Jacinto to
discuss  Atlas  and  Marathon's  possible  support  of a  transaction  with  the
Acquisition Group.

     On  September  18,  2002,  PRTS sent a letter to HB stating that PRTS would
make  available  to Aviall,  on  September  25,  2002,  stockholder  information
previously requested by Aviall.

     On  September  19,  2002,  PRTS  received a letter  from HB  regarding  the
stockholder information demanded by Aviall.

     On September  21,  2002,  Messrs.  Rosenblum  and Narath again met with Mr.
Jacinto to discuss Atlas and Marathon's  possible  support of a transaction with
the Acquisition Group.

     On September 23, 2002, EBG received an e-mail from Cauley, Geller, Bowman &
Coates, counsel to the plaintiffs in the purported class action litigation.  The
e-mail asked what steps, if any, the Special Committee was taking with regard to
the proposal by Aviall.

     On September  23, 2002,  EBG received an e-mail from Drew Levitt asking EBG
to explain why the Special Committee recommended Mr. Hammond's offer rather than
Mr. Van Arnem's offer.

     Between September 23 and September 26, 2002,  Messrs.  Narath and Rosenblum
discussed with Mr. Hammond a possible  increase in the proposed  purchase price.
During this period,  they also discussed with Mr. Jacinto,  Atlas and Marathon's
support of a transaction  with the  Acquisition  Group if it was to increase its
offer.

     On  September  26, 2002,  the Board of  Directors  met twice to discuss the
status of the Aviall  proposal as well as receive a report  from Mr.  Narath and
vFinance regarding ongoing  negotiations among Mr. Hammond,  Atlas and Marathon.
At the September 26, 2002 Board of Directors meeting,  Mr. Narath summarized for
the  Board  discussions  he had  with  representatives  of  Atlas  and  Marathon
regarding the Merger  Agreement  and informed the Board of Directors  that Atlas
and Marathon were considering entering into an agreement with Mr. Hammond which,
in  consideration  for the Acquisition  Group agreeing to increase the per share


                                       36


consideration in the merger from $1.41 to $1.50,  Atlas and Marathon would agree
to support the merger agreement and vote their shares for the merger. Mr. Narath
emphasized  that  he  believed  these  discussions  were  preliminary.  vFinance
informed the Board that the increase in the merger price to $1.50 had not caused
vFinance to change its opinion  dated August 26, 2002  regarding the fairness of
the transaction covered by the merger agreement.

     On  September  30,  2002,  the  Board  of  Directors  met to  discuss  what
information,  if any, its members had learned  regarding  Atlas' and  Marathon's
intent  regarding  the  merger  agreement.  Mr.  Narath  informed  the  Board of
Directors  that Mr.  Hammond  indicated  to him that the  Acquisition  Group was
prepared to increase its offer to acquire all of the outstanding  shares of PRTS
not owned or  controlled by  Acquisition  Group from $1.41 to $1.50 if Atlas and
Marathon  would  each  agree to vote  their  PRTS  shares in favor of the Merger
Agreement. At the September 30, 2002 meeting, the Board of Directors resolved to
accept the $1.50 per share if offered by the Acquisition Group.

     Between  October 1 and October 10, 2002,  the Board was generally  informed
that  negotiations  were taking place regarding Atlas and Marathon's  support of
the merger agreement.  At a Board of Directors meeting held on October 11, 2002,
Mr. Narath informed the Board of Directors that discussions regarding Atlas' and
Marathon's  support of the merger agreement had terminated  without an agreement
with Mr. Hammond and,  accordingly,  the  Acquisition  Group was not prepared to
increase its offer.  The Board of Directors voted to ratify the merger agreement
with the Acquisition Group, which, included, among other terms, per share merger
consideration of $1.41 to be paid for all shares of PRTS other than shares owned
or controlled by the Acquisition Group.

     On  ________,  2002,  vFinance  reaffirmed  as of the  date of  this  proxy
statement its fairness opinion previously delivered to the Special Committee and
Board of Directors.

THE SPECIAL COMMITTEE

     The Special Committee consists of three non-employee, non-officer directors
of PRTS,  Messrs.  Pierre Narath,  Edward  McCartin and Thomas Van Hare, none of
whom is affiliated with Mr. Hammond.

     Pierre A.  Narath.  Mr.  Narath has been a member of the Board of Directors
since March 2000.  Since January 1999, Mr. Narath has served as Chairman,  Chief
Executive  Officer and President of Touchstone  Software  Corp., an OTC Bulletin
Board  listed  developer  and  publisher  of  utility  software  used to set up,
maintain and manage personal  computers and networks.  From May 1997 to November
1998, Mr. Narath served as Vice President of Award Software International, Inc.,
a developer  and  marketer of system  enabling and  management  software for the
global computing market that was acquired by Phoenix Technologies, Inc. in 1998.
From  February  1990 to May 1997,  Mr.  Narath  served as  President  of Unicore
Software,  Inc., a software  company  acquired by Touchstone  Software  Corp. in
1999.

     Thomas  C. Van  Hare.  Mr.  Van Hare  has  been a  member  of the  Board of
Directors since November 1999 and has extensive  experience in commercial design
and Internet  marketing.  Mr. Van Hare served as General Manager (USA) for Clear
Winter, Inc., an internet systems integration company during 2001 and he was the
President and Chief Executive  Officer of Capstone  Internet  Services,  Inc., a
graphic design and marketing company, from 1994 to 2000. Prior to such time, Mr.
Van Hare served in both the Reagan and Bush  Administrations  in the Departments
of State and Defense,  respectively,  in various  capacities.  Mr. Van Hare is a
commercial  pilot with  multi-engine  and  instrument  ratings and has extensive
search and rescue experience.

     Edward  McCartin.  Since  1999,  Mr.  McCartin  has been a Senior  Business
Development  Manager for the Electroptic  Transmission  Division at JDS Uniphase
Corporation.  From 1997  through  1999,  Mr.  McCartin was Director of Sales and
Operations of Ramar Corp., a fiber optic manufacturer of transmission components
supporting the telecommunications industry. From 1985 through 1997, he served as
General Manager of Aviation Laboratories.

                                       37


RECOMMENDATION OF THE BOARD OF DIRECTORS; FAIRNESS OF THE MERGER

     On August  26,  2002,  the  Special  Committee  of the  Board of  Directors
unanimously  determined  that the proposed  merger and the merger  agreement are
fair from a  financial  point of view to,  and in the best  interests  of,  PRTS
stockholders other than the Acquisition Group. The Special Committee unanimously
recommended to the Board of Directors  that the merger  agreement and the merger
be approved and adopted.  The Special Committee  considered a number of factors,
as  more  fully  described  above  under  "--Background  of the  Merger"  and as
described below under "--Reasons for the Special Committee's  Determination," in
determining to make its  recommendation.  The Board of Directors,  based in part
upon the unanimous recommendation of the Special Committee,  determined that the
terms of the merger  agreement and the proposed merger are fair from a financial
point of view to, and in the best  interests of, the  Unaffiliated  Stockholders
and approved the merger agreement and the merger. The Board of Directors,  based
in part upon the unanimous  recommendation of the Special Committee,  recommends
that  PRTS  stockholders  vote  FOR the  approval  and  adoption  of the  merger
agreement and the merger.

     Reasons for the Special Committee's Determination
     -------------------------------------------------

     In  recommending  approval  and  adoption of the merger  agreement  and the
merger to the Board of  Directors,  the  Special  Committee  consulted  with the
Company's management, as well as Special Committee's financial advisor and legal
counsel,  and  considered the short and long-term  prospects of the Company.  In
view of the wide variety of factors considered in connection with the evaluation
of Mr. Hammond's  offer,  the Special  Committee did not find it practicable to,
and did not,  quantify or otherwise  attempt to assign  relative  weights to the
specific factors they considered in reaching their recommendations.  In reaching
its determination, the Special Committee considered a number of factors both for
and against  recommending  the merger,  including  the  following  factors which
weighed in favor of the merger:

        o   the  merger  will  provide  the  Unaffiliated  Stockholders  with an
            opportunity  to  realize a  substantial  premium  for  their  shares
            compared  to  current  and  historical  prices;  specifically,   the
            Unaffiliated Stockholders can realize a premium of approximately (a)
            96% over the $0.72 per share  closing sale price of our common stock
            on April 9, 2002, the last trading day prior to the  announcement of
            Mr. Hammond's offer; (b) 86% over the average reported closing price
            of $0.76 for the twenty  (20)  trading  days prior to Mr.  Hammond's
            offer; (c) 23% over the $1.15 closing sale price on August 23, 2002,
            the last  trading  day prior to the  Special  Committee  making  its
            determination;  (d) 19% over the average  reported closing price for
            the twenty (20) trading days prior to the Special  Committee  making
            its determination to recommend the transaction; and (e) 60% over the
            average  reported  closing  price of $0.88 for the  one-year  period
            prior to August 26, 2002.

        o   PRTS stock is highly  illiquid  and PRTS has  experienced  declining
            sales growth and continuing operating losses for the past two fiscal
            years;

        o   the  consideration to be received by PRTS stockholders in the merger
            will consist  entirely of cash and eliminates any  uncertainties  in
            valuing the merger  consideration  to be  received by the  Company's
            stockholders;

        o   the  likelihood  of the  consummation  of the merger,  the  proposed
            structure of the  transaction,  the anticipated  closing date of the
            merger, and the availability of funds to complete the merger;

        o   as a result of  negotiations  between the Special  Committee and Mr.
            Hammond,  the  price  offered  for  the  shares  in the  merger  was
            increased;

                                       38


        o   the costs and factors previously identified as being associated with
            remaining  a  public  company  would  likely  not be  offset  by the
            benefits of providing stockholders with a liquid investment;

        o   the opinion of vFinance as to the fairness,  from a financial  point
            of  view,   of  the  merger   consideration   to  the   Unaffiliated
            Stockholders;

        o   the  Special  Committee's  knowledge  of our  business,  operations,
            assets,  financial  condition,  operating results and prospects,  as
            well as the Special Committee's knowledge of the industries in which
            the Company operates;

        o   the  limitations  PRTS suffered and would likely  continue to suffer
            financially  as a public  company,  including  its  limited  trading
            volume,  lack of  institutional  sponsorship  and  lack of  research
            attention from analysts,  all of which adversely  affect the trading
            market and the value of the PRTS stock;

        o   the Special Committee's belief that the merger agreement,  including
            the  reimbursement  of  out-of-pocket  expenses payable to Hammond I
            (with no  additional  termination  fee) if the merger  agreement  is
            terminated  for any of the reasons  discussed in page __ (The Merger
            Agreement - Fees,  Expenses and Other  Payments),  should not unduly
            discourage  superior  third party  offers and that PRTS,  subject to
            certain conditions,  may enter into a superior proposal with another
            party  simultaneously  with the termination of the merger  agreement
            upon reasonable notice to Hammond I of its intent to enter into such
            negotiations and superior proposal;

        o   the Special Committee's belief that, after extensive negotiations by
            and on  behalf  of the  Special  Committee  with  Hammond  I and its
            representatives,  PRTS has obtained the highest price per share that
            Hammond I is willing to pay and that further  negotiation  would not
            result in an increase to the proposed  purchase price per share (the
            preliminary  discussions  concerning  Hammond I's increasing the per
            share  consideration to $1.50 were conditional on Atlas and Marathon
            entering  into an  agreement  with  Hammond I to support  the merger
            agreement,   and  these  discussions  terminated  without  any  such
            agreement);

        o   Mr.  Hammond's  controlling  equity  interest  in the  Company,  his
            corresponding  ability to veto any proposed  transactions  requiring
            majority  stockholder  approval  and the fact that Mr.  Hammond  had
            advised  the Special  Committee  that he and his  affiliates  had no
            interest in selling their shares to a third party in the foreseeable
            future which would likely deter  potential  strategic  and financial
            third party buyers and would otherwise  limit the  possibility  that
            our  stockholders  would be presented with an alternative  method to
            obtain liquidity;

        o   the Special  Committee's  concern  that the debt and equity  markets
            could  deteriorate  further in the future,  with the effect that the
            per share price offered to our stockholders in the merger may not be
            available in the foreseeable future; and

        o   Delaware law entitles the Company's  stockholders who do not vote in
            favor of the merger to file a written  objection with the Company to
            obtain the "fair  value" of their  shares and  otherwise  follow the
            procedures  prescribed by Delaware law, as determined by a court, if
            the merger is completed.

     The Special  Committee also determined that the merger is procedurally fair
because, among other things:

        o   the Board of Directors  established a Special  Committee to consider
            Mr.  Hammond's  proposal  and  negotiate  the  terms  of the  merger
            agreement;

                                       39


        o   the Special Committee is composed of three independent directors who
            have  no  financial  interest  in  the  merger  different  from  the
            Unaffiliated Stockholders;

        o   the Special  Committee was given  exclusive and unlimited  authority
            to, among other things, evaluate,  negotiate and recommend the terms
            of any proposed transaction;

        o   the Special  Committee  retained  and  received  advice from its own
            independent  legal  counsel  and  financial  advisor in  evaluating,
            negotiating and recommending the merger;

        o   the Special  Committee  reviewed the  pleadings and  information  in
            various class action law suits; and

        o   the  merger  is  conditioned  on  a  majority  of  the  Unaffiliated
            Stockholders not voting against the merger.

     The  Special  Committee  also  considered  a  variety  of risks  and  other
potentially   negative  factors  concerning  the  merger.   These  included  the
following:

        o   Mr. Hammond has potential  conflicts of interests,  including equity
            interests and  continued  employment by the Company as the surviving
            corporation;

        o   the fact that, while the merger  consideration  represents a premium
            to our historical  trading price, the stock market has not performed
            well over the past year,  particularly the ".com"  companies,  which
            may contribute to the trading price of our common stock; and

        o   our  current  public   stockholders  will  not  have  the  right  to
            participate in our future growth, if any.

     While the Special  Committee  reviewed with vFinance its various  financial
analyses and reviewed with the executive officers of PRTS its historical results
and discussed the Company's  business  prospects,  the Special Committee did not
independently  generate its own separate  financial  analysis of the merger.  In
adopting the opinion of vFinance, the Special Committee noted that the per share
merger  consideration  offered to the public  stockholders is within the average
per share  price  range  implied by three  valuations  in the  analyses  done by
vFinance.  See  "Special  Factors - Opinion  of  Special  Committee's  Financial
Advisor" on page 43.

     After considering these factors,  the Special Committee  concluded that the
positive factors relating to the merger outweighed the negative factors. Because
of the  variety of factors  considered,  the Special  Committee  did not find it
practicable  to quantify or otherwise  assign  relative  weights to, and did not
make specific  assessments of, the specific  factors  considered in reaching its
determination. In addition, individual members of the Special Committee may have
assigned different weights to various factors.  The determination of the Special
Committee was made after consideration of all of the factors together.

     Reasons for the Board of Directors' Determination
     -------------------------------------------------

     The PRTS Board of  Directors  consists of six (6)  directors,  three (3) of
whom serve on the Special  Committee.  Of the  remaining  directors,  one is Mr.
Hammond,  a member  of the  Acquisition  Group.  In  reporting  to the  Board of
Directors regarding its determination and recommendation, the Special Committee,
with its independent  legal and financial  advisors  participating,  advised the
other members of the Board of Directors of the course of  negotiations  with the
Acquisition Group and its legal counsel,  its review of the merger agreement and
the factors it took into account in reaching its determination that the terms of
the merger  agreement,  including  the offer  price of $1.41 per share,  and the
merger are fair from a financial point of view to, and in the best interests of,
the Unaffiliated Stockholders. In view of the wide variety of factors considered


                                       40


in its evaluation of the proposed merger,  the Board did not find it practicable
to quantify or otherwise  assign relative  weights to, and did not make specific
assessments of, the specific factors  considered in reaching its  determination.
Rather,  the  Board  based  its  position  on the  totality  of the  information
presented  and  considered.   In  connection  with  its   consideration  of  the
determination  by the  Special  Committee,  as  part of its  determination  with
respect to the merger,  the Board of Directors  adopted the conclusion,  and the
analysis  underlying such  conclusion,  of the Special  Committee based upon its
view as to the reasonableness of that analysis.

     At a special  meeting of the Board on August 26, 2002, at which all members
were present other than Mr. Hammond,  who did not attend the meeting,  the Board
unanimously approved the merger agreement,  concluded that the merger is fair to
the  Unaffiliated  Stockholders  and  recommended  that it be  submitted  to the
Company's stockholders for approval.

POSITION OF BOARD OF DIRECTORS AS TO FAIRNESS OF THE MERGER

     The Board of Directors  believes that the merger agreement and the proposed
merger are  substantively  and procedurally  fair from a financial point of view
to,  and in the best  interests  of,  Unaffiliated  Stockholders  for all of the
reasons set forth above. In addition,  with respect to procedural fairness,  the
Board established the Special Committee,  consisting of three directors of PRTS,
none  of whom is an  officer  or  employee  of  PRTS or has an  interest  in the
proposed merger different from that of Unaffiliated Stockholders generally.

     In  reaching  these  conclusions,  the  Board of  Directors  considered  it
significant that:

        o   the historical  trading activity of our common stock,  including the
            fact that the average daily  trading  volume of our common stock for
            the 12 months  prior to April 9,  2002 was  17,731  shares  per day,
            which makes it unlikely  that we can issue new equity and  therefore
            we cannot recognize one of the benefits of being a public company;

        o   we  have  a  small  public  float,  our  market  capitalization  was
            approximately  $9.8 million as of April 8, 2002, and we have limited
            prospects  for  creating  institutional  interest  in our  stock  or
            coverage  by  analysts  which  makes it  difficult  to  attract  new
            investor interest in us;

        o   our stock price has not performed  well since it started  trading on
            the Nasdaq  National  Market in March 2000 until April 10, 2002, the
            date of our press release regarding the Acquisition  Group's initial
            offer.  During  that  period  our common  stock  closed at a high of
            $14.00  per share on March 24,  2000 and at a low of $0.40 per share
            on September  25,  2001.  During the 12 month  trading  period ended
            April 9, 2002, the shares closed at a high of $1.77 per share on May
            29,  2001,  and at a low of $.40 per share on  September  25,  2001,
            which makes it unlikely  that  stockholders  could  receive a higher
            price in the market for their shares;

        o   the $1.41 cash  consideration for a single share of our common stock
            represents a 70% premium over the average price for our common stock
            on the Nasdaq National Market for the 12 month period ended April 9,
            2002, the date before we announced we had received an offer from Mr.
            Hammond and R.  Hammond,  L.P.,  and a 96% premium  over the closing
            price  April 9,  2002,  the date  prior to the  announcement  of the
            proposed merger;

        o   the written opinion of vFinance  delivered to the Special  Committee
            on August 26, 2002,  stating that, as of August 26, 2002,  and based
            on and subject to the  assumptions,  limitations and  qualifications
            contained   in  that   opinion,   the  merger   consideration   each
            Unaffiliated  Stockholder  will  have the  right to  receive  in the


                                       41


            proposed  merger is fair,  from a financial  point of view,  to that
            stockholder  and  the  Special   Committee   expressly   adopts  the
            discussion contained therein;

        o   the limited alternative  transactions  available in view of the fact
            that Mr. Hammond,  individually and in his capacity as a stockholder
            of PRTS,  advised the Special  Committee  that he had no interest in
            selling his shares to a third party,  which  limits the  possibility
            that our public  stockholders would be presented with an alternative
            method to obtain liquidity;

        o   the significant  costs of remaining a public company,  including the
            legal,  accounting and transfer agent fees and expenses and printing
            costs necessary to satisfy the reporting obligations of the Exchange
            Act (which were  approximately  $300,000 in fiscal year 2001), which
            will be reduced if we are a private company;

        o   the judgment of the Special Committee that the merger  consideration
            is  fair  from  a  financial  point  of  view  to  our  Unaffiliated
            Stockholders;

        o   the Special  Committee's  conclusions  based upon the opinion of its
            financial  advisor as to the  fairness,  from a  financial  point of
            view, of the merger consideration to the Unaffiliated Stockholders;

        o   the Special Committee's belief that, after extensive negotiations by
            and on behalf of the Special  Committee with the  Acquisition  Group
            and its representatives, the merger consideration payable in cash of
            $1.41 per share was the  highest  price that the  Acquisition  Group
            would  offer and that  further  negotiation  would not  result in an
            increase to the proposed  purchase price per share (the  preliminary
            discussions   concerning   Hammond  I's  increasing  the  per  share
            consideration  to  $1.50  were  conditional  on Atlas  and  Marathon
            entering  into an  agreement  with  Hammond I to support  the merger
            agreement,   and  these  discussions  terminated  without  any  such
            agreement);

        o   the merger will allow our  Unaffiliated  Stockholders an opportunity
            to receive a cash  payment at a fair price and  provide a prompt and
            orderly transfer of ownership of PRTS to the Acquisition Group; and

        o   the  right  of any  of our  Unaffiliated  Stockholders  to  exercise
            appraisal  rights  under  Delaware law if he or she does not believe
            the merger consideration to be fair.


THE BOARD OF DIRECTORS,  ACTING ON THE UNANIMOUS  RECOMMENDATION  OF THE SPECIAL
COMMITTEE,  HAS  APPROVED  THE TERMS OF THE MERGER  AGREEMENT  AND THE  PROPOSED
MERGER. THE BOARD OF DIRECTORS, BASED IN PART ON THE UNANIMOUS RECOMMENDATION OF
THE SPECIAL COMMITTEE, RECOMMENDS THAT YOU VOTE FOR THE APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT AND THE MERGER.

POSITION OF THE ACQUISITION GROUP AS TO THE FAIRNESS OF THE MERGER

     Each of the parties comprising the Acquisition Group has concluded that the
merger is fair from a financial point of view to the  Unaffiliated  Stockholders
based upon the following factors: (i) their familiarity with the Company and its
prospects; (ii) the conclusions and recommendations of the Special Committee and
the Board;  and (iii) the fact that  vFinance  issued a fairness  opinion to the
Special  Committee  to the effect  that the  merger is fair to the  Unaffiliated
Stockholders from a financial point of view. In reaching the conclusion that the
merger is fair to the Unaffiliated  Stockholders,  the Acquisition  Group placed
significant   reliance  upon  the  fact  that  $1.41  represents  a  premium  of


                                       42


approximately  96% over the $0.72  closing sale price for the  Company's  common
stock on the last trading day before the Company  announced the initial offer by
Mr. Hammond.

     The  Acquisition  Group  believes  that the  manner in which the merger was
considered by the Company was procedurally fair to the Unaffiliated Stockholders
because  (i) the  Special  Committee  was  formed to  promote  and  protect  the
interests  of the  Unaffiliated  Stockholders;  (ii) the Special  Committee  was
comprised  solely of  directors  who were  neither  employees of the Company nor
affiliated  with any entities  affiliated  with Mr.  Hammond;  (iii) the Special
Committee  concluded that the merger was  substantially and procedurally fair to
the Unaffiliated Stockholders and voted in favor of the merger; (iv) the Special
Committee  retained  an  independent  financial  advisor and  independent  legal
counsel;   (v)  the  merger  requires  that  a  majority  of  the   Unaffiliated
Stockholders not vote against the merger; and (vi) the merger agreement provides
the Special Committee with the right to respond to other unsolicited  offers for
the  purchase  of PRTS prior to the common  stockholders'  meeting to which this
proxy statement  relates,  and, subject to the payment of Hammond I's reasonable
expenses,  the right to accept such offer if, in the  exercise of its  fiduciary
duties, the Special Committee  determines that the acceptance of the alternative
offer would be in the best interest of the PRTS stockholders.

     The Acquisition  Group believes that these analyses and factors  considered
together  provide a  reasonable  basis for them to  believe  that the  merger is
substantively  and  procedurally  fair to the  Unaffiliated  Stockholders,  even
though no disinterested representative, other than the Special Committee and its
advisors, was retained to act solely on behalf of the Unaffiliated Stockholders.
In view of the variety of factors  considered  in  reaching  its  decision,  the
Acquisition  Group did not find it  practicable  to,  and did not,  quantify  or
otherwise assign relative weights to the specific  factors  considered  reaching
its conclusions and recommendations. The Acquisition Group recognized that their
interests  in the merger are not the same as the  interest  of the  Unaffiliated
Stockholders  and that the foregoing should not be construed as a recommendation
by the Acquisition Group to vote to approve the merger.

OPINION OF SPECIAL COMMITTEE'S FINANCIAL ADVISOR

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

     In connection with the proposed merger,  the Special Committee of the Board
of Directors  engaged  vFinance to render an opinion as to the fairness,  from a
financial point of view, to our stockholders (other than the Acquisition Group),
of the proposal by the  Acquisition  Group.  On August 26, 2002, at a meeting of
the Special  Committee,  vFinance  delivered  its opinion that, as of such date,
based  upon  and  subject  to the  assumptions  made,  matters  considered,  and
limitations on its review as set forth in the opinion,  the  consideration to be
received  in the  merger  is fair to the  stockholders  of PRTS  other  than the
Acquisition  Group,  from a  financial  point  of view.  Subsequently,  vFinance
delivered its written fairness opinion. vFinance reaffirmed its fairness opinion
as of _________, 2002, the date of this proxy statement.

     THE FULL TEXT OF THE WRITTEN  OPINION OF  vFINANCE,  DATED AS OF AUGUST 26,
2002 AND REAFFIRMED AS OF THE DATE HEREOF (THE "vFINANCE OPINION"),  IS ATTACHED
AS  APPENDIX  B AND IS  INCORPORATED  BY  REFERENCE.  YOU ARE  URGED TO READ THE
vFINANCE  OPINION  CAREFULLY  AND  IN  ITS  ENTIRETY  FOR A  DESCRIPTION  OF THE
ASSUMPTIONS MADE, MATTERS CONSIDERED, PROCEDURES FOLLOWED AND LIMITATIONS ON THE
REVIEW  UNDERTAKEN  BY vFINANCE IN  RENDERING  ITS  OPINION.  THE SUMMARY OF THE
vFINANCE  OPINION SET FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.

     No   limitations   were  imposed  by  PRTS  on  the  scope  of   vFinance's
investigation  or the  procedures  to be followed by vFinance in  rendering  its
opinion.  vFinance was not requested to and did not make any  recommendation  to
the Special Committee as to the form or amount of consideration  received in the
merger,   which,   vFinance  assumed,   was  determined   through   arm's-length
negotiations  between parties.  The vFinance opinion was for the use and benefit
of the Special  Committee in connection with its consideration of the merger and
was  not  intended  to be  and  does  not  constitute  a  recommendation  to any
stockholder of PRTS as to how such  stockholder  should vote with respect to the


                                       43


merger.  vFinance  was not  requested  to opine as to, and its opinion  does not
address,  our underlying business decision to proceed with or effect the merger.
Further,  vFinance was not asked to consider,  and its opinion does not address,
the  relative  merits of the  merger as  compared  to any  alternative  business
strategy that might exist for PRTS.

     In arriving at its opinion,  vFinance  took into account its  assessment of
general economic,  market and financial  conditions as well as its experience in
connection with similar transactions and securities valuations  generally,  and,
among other things:  (i) reviewed drafts of the merger agreement;  (ii) reviewed
publicly  available  financial  information and other data with respect to PRTS,
including its Annual Report on Form 10-K for the fiscal year ended  December 31,
2001,  its Quarterly  Report on Form 10-Q for the quarters  ended March 31, 2002
and June 30,  2002,  the Schedule  13D, as amended,  filed April 10, 2002 by Mr.
Hammond,  and certain other  relevant  financial and operating  data relating to
PRTS made available to vFinance;  (iii) reviewed and analyzed certain  financial
characteristics  of companies  that were deemed to be comparable  to PRTS;  (iv)
reviewed and analyzed the premium to be paid in the merger and premiums  paid in
certain other transactions;  (v) reviewed and discussed with  representatives of
the management of PRTS certain financial and operating  information furnished by
them,  including  financial analyses and related assumptions with respect to the
business,  operations  and prospects of PRTS;  (vi)  considered  the  historical
financial  results and  present  financial  condition  of PRTS;  (vii)  reviewed
certain  publicly  available  information  concerning  the  trading  of, and the
trading  market  for,  the  common  stock of PRTS;  (viii)  inquired  about  and
discussed the merger and other matters related thereto with PRTS management, the
Special Committee and its legal counsel;  and (ix) performed such other analyses
and examinations as were deemed appropriate.

     In arriving at its opinion,  vFinance  relied upon and assumed the accuracy
and  completeness  of all of the financial and other  information  that was used
without assuming any responsibility for any independent verification of any such
information and further relied upon the assurances of PRTS management that it is
not aware of any facts or  circumstances  that would  make any such  information
inaccurate  or  misleading.  . In arriving at its  opinion,  vFinance did make a
physical  inspection of the corporate  headquarters of PRTS, but did not make or
obtain any evaluations or appraisals of the assets and  liabilities  (contingent
or otherwise) of PRTS. vFinance assumed that the merger will be consummated in a
manner that  complies in all  respects  with the  applicable  provisions  of the
Securities Act of 1933, as amended,  the Exchange Act, and all other  applicable
federal and state statues,  rules and  regulations.  In addition,  it is assumed
that the merger will be a taxable event to the PRTS  stockholders.  The vFinance
Opinion is necessarily based upon market,  economic and other conditions as they
existed on, and could be evaluated as of, August 26, 2002. Accordingly, although
subsequent  developments  may affect its  opinion,  vFinance has not assumed any
obligation to update, review or reaffirm its opinion.

     Each of the  analyses  conducted  by  vFinance  was carried out in order to
provide a different  perspective on the merger,  and to enhance the total mix of
information  available.  vFinance  did not form a  conclusion  as to whether any
individual analysis, considered in isolation,  supported or failed to support an
opinion as to the  fairness,  from a financial  point of view,  of the merger to
PRTS stockholders other than the Acquisition  Group.  vFinance did not place any
particular reliance or weight on any individual analysis,  but instead concluded
that its analyses,  taken as a whole, supported its determination.  Accordingly,
vFinance  believes  that its  analyses  must be  considered  as a whole and that
selecting  portions  of its  analyses  or the  factors  it  considered,  without
considering  all analyses and factors  collectively,  could create an incomplete
and misleading view of the process underlying the analyses performed by vFinance
in connection with the preparation of its opinion.

     The  summary  of  vFinance's  analysis  described  below is not a  complete
description of the analysis underlying  vFinance's opinion. The preparation of a
fairness opinion is a complex process involving various determinations as to the
most appropriate and relevant methods of financial  analysis and the application
of those methods to the  particular  circumstances  and,  therefore,  a fairness
opinion is not readily  susceptible to partial analysis or summary  description.
In  arriving at its  opinion,  vFinance  made  qualitative  judgments  as to the
relevance of each analysis and factor that it considered.  Accordingly, vFinance
believes  that its analysis  must be  considered  as a whole and that  selecting
portions of its analysis and factors,  without  considering  all of the analysis
and factors contained in the narrative description that follows, could result in
an incomplete and misleading  view of the processes  underlying its analysis and
opinion.



                                       44


     Selected Comparable Company Analysis
     ------------------------------------

     Market Cap Analysis.  vFinance  decided that a comparable  analysis  should
look at companies that attempt to facilitate e-commerce within specific industry
segments,  or are online  databases  that can be searched  and data  mined.  The
companies  utilized in this analysis cut across many different industry segments
and vary in size in terms of market capitalization and revenues.

     vFinance   selected  a  universe  of  companies   that  fit  their  defined
parameters,  and were included in the comparable sample. The companies ranged in
market  capitalization  size from $2.2  million to $619.3  million,  with a mean
market  capitalization  of $100  million.  The majority of the  companies in the
sample  fell  within  the  venue of  e-commerce  enabling,  with  the  remainder
comprised  of  Database/Print/  Media  companies.  The  range of  year-end  2001
revenues generated by this group varied from $1.43 million to $148 million, with
a mean of $41.6  million,  as compared to the $6.0 million  generated by PRTS in
2001.

     vFinance  reviewed  the  operating  demographics  of  the  sample  set  and
determined  that  PartsBase fell within the parameters of the group and began to
set  forth  the  basis of their  analysis.  In the end,  they  settled  on three
analytical   techniques;   Comparable   Company  Analysis,   Buy-Out/Acquisition
Analysis,  and  Liquidation  Analysis,  to arrive at what they felt was a proper
valuation range for PRTS.

     Comparable Analysis. vFinance saw that given certain valuation constraints,
(i.e. sample universe of companies not generating cashflow or earnings) it would
have to derive multiples based upon Market Price and Enterprise Value. These two
items were compared to each company's Revenue, EBITDA (Earnings before Interest,
Taxes,  Depreciation & Amortization),  EBIT (Earnings before Interest and Taxes)
and Net Assets.  Based on this analysis,  the range of per share prices for PRTS
stock was determined to be $1.44 to $2.05 per share.

     vFinance, Investments, Inc. went back to its sample set and determined that
some of the  companies,  by virtue of their much larger  market  capitalization,
were skewing the analysis.  They then evaluated the comparables and price ranges
excluding  these  companies  from the analysis  and the effect was drastic.  The
range  fell to $1.02 to $1.65  per  share,  when the  analysis  reflected  those
companies closer in market  capitalization  to PRTS.  vFinance,  Inc, decided to
utilize both sets of comparable analyses,  as each is a valid manner by which to
examine the value of PRTS.

     Buyout Analysis.  Consistent with the form of analyses normally prepared in
support of an opinion,  vFinance  analyzed buyouts of similar sized companies in
related   sectors..   The  analysis  showed  the  transaction   prices,   market
capitalizations,  premiums  paid above the market  price from the date of offer,
and the amount of cash listed on the target  company's  books as a percentage of
it's market capitalization. The target companies that were examined were similar
to slightly larger in size in market  capitalization to PRTS. The buyouts ranged
in size from $10.8 million to $93.5 million.  Given the small size of the sample
(many  e-commerce  enabling  companies  went  bankrupt,  with the  assets  being
acquired at  substantially  discounted  prices.),  it was difficult to infer any
statistical  trends from the data, as each transaction  differed  significantly.
However,  the data did reveal that  transactions  did occur at a value less than
the actual  cash  listed on the  balance  sheet.  In those  scenarios  where the
enterprise value,  defined as the market value of the company's equity plus debt
less the cash on the balance  sheet is negative,  the  implication  was that the
operating business should not be valued on a going concern basis. vFinance could
not  ascertain  if  the  implication  was  due  to  a  flawed  operating  model,
ineffective   management,   slower  than   expected   development   of  industry
fundamentals, or lack of demand for product reflective of decreased spending for
technology investments.  Irrespective of the reason, the analysis indicated that
the mean  premium to market price paid for the  acquisitions  in this sample set
was 54%,  which applied to the initial  market price,  yielded a price of $1.11.
vFinance  applied the mean  percentage of balance  sheet cash to offering  price
(75%) and  arrived at a price of $1.28,  effectively  making the range  $1.11 to
$1.28 for their sample buyout set.

     Liquidation  Analysis.  vFinance  took into  consideration  the  concept of
negative  enterprise  value,  where the market value of the debt and equity less
cash on the balance sheet was negative,  implying  little or no operating  value
should be  assigned  to the  operating  business.  While they did not attempt to
evaluate the merits of the PRTS operating model, their analysis assumed that the


                                       45


assets of the PRTS  were to be  liquidated,  and  vFinance  attempted  to assign
values  to  arrive  at a per  share  liquidation  price.  For the basis of their
analysis,  they decided to take a conservative approach and look at the value of
the assets on a "worst case" scenario,  typified when one is a motivated seller,
in a low demand  market.  They  examined  the assets on the balance  sheet as of
March 31, 2002 and made certain assumptions as to the recoverability of value of
the assets.

     Based on their  analysis  of the  recovery  value of the  assets,  plus the
paydown of liabilities,  vFinance  calculated the total amount of recovery to be
$21,401,000, which equated to approximately $1.53 per share.

     Summary of Analyses and Other Evaluations
     -----------------------------------------

     vFinance  examined three  valuation  methodologies,  with two iterations on
Comparable  Analysis,  and  arrived at ranges of $1.44 to $2.05 for  Comparables
which included large market cap  competitors,  $1.02 to $1.65 for Comparables of
like  market  cap,  $1.11 to $1.28 for  buyout  valuations,  and  $1.53  under a
possible liquidation scenario. The average of these methodologies was a range of
$1.28  per share to $1.63 per  share,  which  they  represented  to the  Special
Committee  as the  acceptable  range of offers to be  considered  for a possible
acquisition or going private transaction for PRTS.

     Pursuant  to a request by the  Special  Committee,  and in answer to a 13-D
filing by two of the largest  institutional  holders of PRTS, vFinance was asked
to  arrive at a value  for the  portal  assets  and  collectively  work with the
Special  Committee  to  solicit  bids  for  those  assets  to  determine  if the
combination of an asset sale with a distribution  of cash from the Company could
result  in a  larger  overall  value  with a  greater  degree  of  certainty  to
stockholders rather than an outright sale to any one bidder.

     vFinance  valued  the  portal  assets  using  two  methodologies;  Specific
identification  of portal  assets,  and  valuation of the portal assets based on
subscription  revenues.  The  subscription  valuations  were base on a review of
trailing twelve months and a forecast of a  forward-looking  twelve months.  The
figure  arrived  at for the  portal  based on  balance  sheet  assets,  was $3.4
million,  while the range of values  based on  subscription  revenue was $3.6 to
$4.0 million.

     At the request of the  Special  Committee,  vFinance  contacted a number of
interested  parties who had expressed interest in the portal assets. One bid was
submitted  by Harold  Van Arnem and  another  by Company X. The offer by Mr. Van
Arnem was stated as $4 million,  but when netted against accounts receivable and
working capital  givebacks,  the value of the offer equaled  approximately  $1.5
million,  and would have required  that the Company hold an 18-month  promissory
note.  The  second  offer,  by  Company  X, was  valued at a range of $3 million
dollars to $4 million dollars, with no financing contingencies,  but was subject
to  adjustments  upon  completed due diligence.  As such,  vFinance  advised the
Special  Committee  that in its  opinion,  if there  could not be  assurance  of
getting additional value on an asset sale, the Special Committee should conclude
that it was not in the best interest of stockholders to pursue this path.

     vFinance performed a variety of financial and comparative  analyses for the
purpose of rendering the vFinance Opinion. While the foregoing summary describes
all  material  analyses  and  factors  reviewed  by  vFinance  with the  Special
Committee of the Board, it does not purport to be a complete  description of the
presentations by vFinance to the Special  Committee of the Board or the analyses
performed by vFinance in arriving at the vFinance Opinion.  The preparation of a
fairness  opinion is a complex  process and is not  necessarily  susceptible  to
partial  analysis or summary  description.  vFinance  believes that its analyses
must be considered as a whole and that selecting portions of its analyses and of
the factors  considered  by it,  without  considering  all analyses and factors,
could create a misleading view of the processes underlying the vFinance Opinion.
In addition,  vFinance may have given various  analyses more or less weight than
other analyses,  and may have deemed various  assumptions  more or less probable
than  other  assumptions,  so that the range of  valuations  resulting  from any
particular analysis described above should not be taken to be vFinance's view of
the actual value of PRTS.  In performing  its  analyses,  vFinance made numerous
assumptions with respect to industry performance,  general business and economic
conditions and other matters,  many of which are beyond the control of PRTS. The
analyses  performed by vFinance are not necessarily  indicative of actual values


                                       46


or actual future results, which may be significantly more or less favorable than
suggested  by such  analyses.  In  addition,  analyses  relating to the value of
businesses or assets do not purport to be appraisals or  necessarily  to reflect
the prices at which  businesses  or assets may  actually be sold.  The  analyses
performed were prepared solely as part of vFinance's analysis of the fairness of
the consideration to be received in the merger,  from a financial point of view,
to the stockholders of PRTS other than the Acquisition  Group, and were provided
to the Special  Committee of the Board solely in connection with the delivery of
the vFinance Opinion.

     In connection with advisory services related to the merger and the issuance
of the vFinance  Opinion,  vFinance  has  received a fee of  $130,000.  PRTS has
agreed to reimburse vFinance for its reasonable  expenses incurred in connection
with its engagement and to indemnify vFinance and its affiliates against certain
liabilities that may arise out of the rendering of the vFinance Opinion.

     vFinance is an investment  banking firm that is engaged in the valuation of
businesses  and their  securities in connection  with mergers and  acquisitions,
competitive biddings, secondary distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.

PURPOSE AND STRUCTURE OF THE MERGER

     The Company
     -----------

     The purpose of the Merger is to allow our stockholders to realize the value
of their  investment  in PRTS in cash at a price that  represents a premium over
the market price of the Common Stock before the public announcement of the offer
by the Acquisition  Group to take PRTS private.  The Board believes that because
of the limited  liquidity of the shares of the common stock and the valuation of
the common stock in the public  markets,  we have not been able to realize fully
the benefits of our status as a public company.  At the same time, our status as
a public  company has imposed a number of limitations on PRTS and our management
in conducting our operations.  Accordingly, one of the purposes of the merger is
to  afford  greater   operating   flexibility  by  allowing  our  management  to
concentrate on the Company's long-term  viability instead of  quarter-to-quarter
performance  often  emphasized  by the public  markets.  Further,  the merger is
intended to enable us to use in our operations  those funds that would otherwise
be expended in complying with those  requirements of the federal securities laws
applicable to public companies.

     Our purpose in submitting the merger to a vote of its  stockholders  with a
favorable   recommendation  at  this  time  is  to  allow  our  stockholders  an
opportunity  to receive a cash  payment at a fair price and provide a prompt and
orderly transfer of ownership of PRTS to the Acquisition Group.

     Acquisition Group
     -----------------

     The Acquisition Group is engaging in the merger for the following reasons:

        o   PRTS  over  the  last  three  years  has  explored  other  strategic
            alternatives (including the possible sale of, assets) to improve its
            financial  viability given the financial pressure on the Company and
            the valuations of similar companies in the public markets.  However,
            after  due  study  and  deliberation  of  each  option,   the  Board
            determined  that none of such options could be  recommended  for the
            Company.  Some time after the Board ruled out these  other  options,
            Mr.  Hammond  approached  the Board  with his  proposal  to take the
            Company  private.  Taking  the  Company  private  is  viewed  by the
            Acquisition  Group as the  Company's  best  option  to  improve  its
            financing alternatives and lower its compliance costs.

        o   The Acquisition Group believes that PRTS, as a private company, will
            have  greater   operating   flexibility  to  incur  expenses,   hire
            personnel, incur debt and expand its business without the constraint
            of the public markets' emphasis on short-term quarterly results.

                                       47


        o   The Acquisition  Group also believes that the costs incurred by PRTS
            to maintain  itself as a public  company,  including  filing reports
            under  the  Exchange  Act,   providing   annual  reports  and  proxy
            statements  to PRTS  stockholders,  listing its common  stock on the
            Nasdaq National Market,  directors and officers insurance  premiums,
            investor relations expenses and outside board member fees (estimated
            to be an aggregate of $300,000 per year),  are not  justified  given
            the size of PRTS,  the thin trading  market for its Common Stock and
            the lack of a  significant  following of PRTS by research  analysts.
            The  Acquisition  Group believes these  resources could be used more
            effectively in the business operations of PRTS as a private company.

     Mr. Hammond and the Acquisition Group were interested in a transaction that
enabled  them to obtain  control  of PRTS as a  private  company.  However,  the
Acquisition  Group  was also  aware  that the  proposed  merger  and the  merger
consideration  offered by the  Acquisition  Group would be  publicly  announced,
giving any interested third party an opportunity to discuss with the Acquisition
Group or PRTS a business  combination  transaction  that  might  yield more than
$1.41 per share for Unaffiliated Stockholders. The Acquisition Group was willing
to  consider  any  third-party  proposals  made to PRTS that  would  enable  the
Unaffiliated  Stockholders  to realize  more than $1.41 for its shares of Common
Stock.

     The Acquisition  Group  structured the transaction as a merger to enable it
to acquire all of the common stock in a single transaction.  This structure also
allows any Unaffiliated  Stockholder who does not believe that the cash price of
$1.41 per share is fair to exercise  appraisal  rights under  Delaware  law. The
primary  reasons  for the timing of the  transaction  were with the  competitive
disadvantages  that PRTS confronted as a public  company,  the costs incurred by
PRTS as a public  company,  the lack of  liquidity  in PRTS  common  stock,  the
depressed  price of PRTS common  stock and our  inability  to access the capital
markets.

CERTAIN EFFECTS OF THE MERGER

     Upon the effective time of the merger,  the Unaffiliated  Stockholders will
cease  to have  ownership  interests  in PRTS or  rights  as PRTS  stockholders.
Therefore,  the current  Unaffiliated  Stockholders  will not participate in any
future earnings or growth of PRTS and will not benefit from any  appreciation in
value of PRTS. Upon completion of the merger,  the Acquisition Group is expected
to own  100% of the  capital  stock  of the  surviving  corporation  outstanding
immediately after the merger. The Acquisition Group and any other future holders
of the surviving  corporation's  equity interests will be the sole beneficiaries
of the future earnings and growth of PRTS, if any.

     Our common  stock is  currently  registered  under the  Exchange Act and is
quoted on the Nasdaq National Market under the symbol "PRTS". As a result of the
merger,  PRTS will be a privately held corporation,  and there will be no public
market for our common stock. After the merger, the common stock will cease to be
quoted on the Nasdaq National Market, and price quotations with respect to sales
of shares of common stock in the public market will no longer be  available.  In
addition,  registration  of the  common  stock  under the  Exchange  Act will be
terminated.  This termination will make certain  provisions of the Exchange Act,
such as the  short-swing  profit  recovery  provisions  of Section 16(b) and the
requirement  of furnishing a proxy or information  statement in connection  with
stockholders'  meetings,  no longer applicable to PRTS. After the effective time
of the merger,  PRTS will also no longer be required  to file  periodic  reports
with the SEC.

     At the  effective  time of the merger,  the officers  and  directors of HAC
immediately  prior to the effective  time of the merger will become the officers
and directors of the surviving corporation. At the effective time of the merger,
the certificate of incorporation of PRTS as in effect  immediately  prior to the
effective time of the merger will be amended to be identical to the  certificate
of  incorporation  of HAC  (except  that  the  name of HAC  will be  changed  to
PartsBase,  Inc.)  and will  become  the  certificate  of  incorporation  of the
surviving  corporation.  The by-laws of HAC in effect  immediately  prior to the
effective  time  of  the  merger  will  become  the  by-laws  of  the  surviving
corporation.

                                       48


     It is expected that,  following completion of the merger, the operations of
PRTS will be conducted  substantially  as they are  currently  being  conducted.
Neither PRTS,  Hammond I nor Mr. Hammond has any present plans or proposals that
relate to or would result in an extraordinary  corporate  transaction  following
completion of the merger that would involve our corporate structure, business or
management,  such as a merger,  reorganization,  liquidation,  relocation of any
operations or sale or transfer of a material  amount of assets.  However,  PRTS,
the Acquisition Group and Mr. Hammond will continue to evaluate our business and
operations  after the merger and may develop new plans and proposals  that PRTS,
Hammond  I, the  Acquisition  Group or Mr.  Hammond  consider  to be in the best
interests of PRTS and its stockholders.

     All outstanding options and warrants (including those held by our directors
and executive  officers)  will be canceled to the extent not exercised  prior to
the  effective  time of the merger in  exchange  for an amount of cash,  if any,
determined by  multiplying  (i) the excess,  if any, of $1.41 over the per share
exercise price of the option,  multiplied by (ii) the number of shares of common
stock subject to the option or warrant, net of any applicable withholding taxes,
except for currently outstanding warrants which do not expire by their terms.

     The following  table sets forth for Mr.  Hammond,  Hammond I and affiliates
their  interest  in the net book  value  and net loss of  PRTS,  based  upon the
approximate  percentage of their beneficial ownership of PRTS common stock as of
June 30, 2002:




    Name                                    Ownership Percent        Net Book Value (1)          Net Loss (2)
    ----------------------------------      -----------------        ------------------          ------------
    Robert A. Hammond, Jr., Hammond I,
                                                                                         
    Inc. and affiliates                           64.23%                   $1.11                  $1,454,197
    ---------------------------
    (1)  Based on PRTS stockholders' equity as of June 30, 2002.
    (2)  Based on PRTS net loss for the six months ended June 30, 2002.



     The following  table sets forth for Mr.  Hammond,  Hammond I and affiliates
their  interest  in the net book  value and net loss of PRTS  after the  merger,
based upon the approximate  percentage of his expected  ownership of the capital
stock of the surviving corporation outstanding immediately after the merger:




    Name                                    Ownership Percent        Net Book Value (1)          Net Loss (2)
    ----------------------------------      -----------------        ------------------          ------------
    Robert A. Hammond, Jr., Hammond I,
                                                                                         
    Inc. and affiliates                          100.00%                   $1.73                  $2,264,047
    -----------------------------
    (1)  Based on the surviving  corporation's  net book value of  approximately
         $24,175,352 as of June 30, 2002, which gives effect to the merger as if
         it occurred on June 30, 2002.
    (2)  Based  on the  surviving   corporation's  net   loss  of  approximately
         $2,264,047 for the six months ending June 30, 2002,  which gives effect
         to the merger as if it occurred on June 30, 2002.



RISKS THAT THE MERGER WILL NOT BE COMPLETED

     Completion of the merger is subject to various  risks,  including,  but not
limited to, the following:

        o   that more than a majority of the Unaffiliated Stockholders will vote
            against the merger;

                                       49


        o   that PRTS will experience a circumstance,  event, occurrence, change
            or effect  that,  individually  or in the  aggregate  has,  or would
            reasonably be expected to have, a material adverse effect on PRTS;

        o   that the parties will not have  performed  in all material  respects
            their obligations contained in the merger agreement at or before the
            effective time of the merger;

        o   that PRTS will not  secure  required  governmental  and  third-party
            consents to and authorizations for the merger;

        o   that there is material  litigation or similar proceedings pending or
            threatened against PRTS at the time of the closing;

        o   that the  representations  and warranties made by the parties in the
            merger agreement will not be true and correct to the extent provided
            in the merger agreement immediately before the effective time of the
            merger; and

        o   that there may be brought or pending any action or  proceeding  that
            has, or would  reasonably  be expected to have,  a material  adverse
            effect on PRTS.

     As a result of various risks to the completion of the merger,  there can be
no assurance that the merger will be completed even if the requisite stockholder
approval is obtained.  It is expected that, if PRTS  stockholders do not approve
and adopt the merger  agreement and the merger or if the merger is not completed
for any other reason, the current management of PRTS, under the direction of the
Board of Directors, will continue to manage PRTS as an ongoing business.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

     In  considering  the  recommendations  of  the  Board  of  Directors,  PRTS
stockholders  should be aware that some of our executive officers and members of
our Board of Directors  have  interests in the  transaction  that are  different
from, or in addition to, the interests of PRTS stockholders generally. The Board
of Directors appointed the Special Committee, consisting solely of directors who
are not officers or employees of PRTS and who have no financial  interest in the
proposed  merger  different  from the  Unaffiliated  Stockholders,  to evaluate,
negotiate and recommend the merger  agreement and to evaluate whether the merger
is in the  best  interests  of the  Unaffiliated  Stockholders  other  than  the
Acquisition Group. The Special Committee was aware of these differing  interests
and considered  them,  among other matters,  in evaluating and  negotiating  the
merger  agreement and the merger and in  recommending  to the Board of Directors
that the merger agreement and the merger be approved and adopted.

     Robert A. Hammond,  Jr. - As of August 26, 2002, Mr.  Hammond  beneficially
owned 9,000,000 shares of our common stock, or 64.23% of our shares. Mr. Hammond
is the sole  stockholder of Hammond I, and, as a result of the completion of the
merger,  Mr. Hammond will beneficially own 100% of our outstanding common stock,
and  his   aggregate   interest  in  our  net  book  value  will  increase  from
approximately  64% to 100% (from  $1.11 to $1.73 of our net book value per share
as of June 30, 2002). In addition,  Mr. Hammond will have the ability to benefit
solely from our future  earnings  and  profits,  if any,  and any  divestitures,
strategic acquisition or other corporate opportunities that may be pursued by us
in the future.

     PRTS - We will  avoid a  significant  portion of the costs of  remaining  a
public  company,  including the legal,  accounting  and transfer  agent fees and
expenses and printing  costs  necessary to satisfy the reporting  obligations of
the Exchange Act (which were approximately $300,000 in fiscal year 2001).

                                       50


     The  Special  Committee;  Board of  Directors  - Each member of the Special
Committee has received fees aggregating  $25,000 from PRTS for services rendered
through ________, 2002 in connection with the merger plus reimbursable expenses.
All fees  incurred  by the  Special  Committe,  Board of  Directors  and PRTS in
connection  with the merger,  including but not limited to the fees and expenses
of its  special  counsel  and  financial  advisors  which  are  projected  to be
approximately  $932,654,  will be paid by PRTS. Mr.  Narath,  a board member and
member of the Special Committee, will receive $56,400 in merger consideration as
result of his  beneficial  ownership  of 40,000  shares of our common  stock and
20,000 shares underlying currently exercisable stock options.

     Option Holders - In connection  with the merger,  all  outstanding  options
(including those held by our directors and executive  officers) will be canceled
to the  extent  not  exercised  prior to the  effective  time of the  merger  in
exchange  for an amount  of cash,  if any,  determined  by  multiplying  (i) the
excess,  if any,  of $1.41  over the per  share  exercise  price of the  option,
multiplied  by (ii) the number of shares of common stock  subject to the option,
net of any applicable withholding taxes.

INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE

     From and after the effective time, the surviving  corporation shall provide
exculpation, indemnification and advancement of expenses for all persons who had
served or are  serving as officers  or  directors  of PRTS prior to or as of the
effective  time,  including Mr.  Hammond,  on terms no less  favorable  than the
provisions with respect to indemnification and advancement of expenses that were
provided to such persons as of the effective  time.  Hammond and PRTS agree that
the directors and officers of PRTS covered by these  provisions  are intended to
be third party  beneficiaries  of these  provisions  and shall have the right to
enforce the obligations of the surviving corporation and under these provisions.
The surviving corporation shall maintain in effect from the effective time until
five (5) years thereafter  directors' and officers'  liability  insurance with a
term,  coverage  amount and other terms and  conditions as least as favorable as
those of the directors'  and officers'  liability  insurance  maintained by PRTS
immediately prior to the effective time.

FINANCING OF THE MERGER

     The total  amount of funds  required  to  consummate  the merger and to pay
related  fees and  expenses is estimated  to be  approximately  $8 million.  The
Acquisition Group, through the cash reserves of PRTS which will become available
immediately upon the effectiveness of the merger, has sufficient funds available
to pay the merger  consideration  and pay its  portion of the fees and  expenses
incurred in connection  with the merger.  The merger is not  conditioned  on any
financing arrangements.

FEES AND EXPENSES OF THE MERGER

     Regardless  of whether the merger is  completed,  in general,  all fees and
expenses  incurred  in  connection  with the  merger  will be paid by the  party
incurring  those fees and  expenses.  Under certain  circumstances  described in
"Summary - The Merger Agreement - Fees,  Expenses and Other Payments," PRTS will
reimburse  Hammond  I for its  reasonable  out-of-pocket  expenses  incurred  in
connection  with the merger.  Fees and  expenses of the merger are  estimated at
this time to be as follows:

    Description                                                          Amount
    -----------------                                                   --------
    SEC filing fees.......................................................$1,417
    Financial advisor fees including reimbursable expenses..............$135,000
    Legal, accounting and other professional fees.......................$575,000
    Printing, proxy solicitation and mailing costs.......................$23,000
    Special Committee fees including reimbursable expenses..............$100,000
    Other fees...........................................................$98,237
                                                                        --------
         Total..........................................................$932,654
    -------------------------
    These  expenses will not reduce the merger  consideration  to be received by
    the PRTS stockholders.

                                       51


ACCOUNTING TREATMENT OF THE MERGER

     The merger will be accounted  for under the purchase  method of  accounting
whereby  the  majority  interest  will be recorded  at  historical  cost and the
minority interest as prescribed by Statement of Financial  Accounting  Standards
No. 141,  Business  Combinations  and Emerging Issues Task Force Abstract 88-16,
Basis in Leveraged Buyout  Transactions,  whereby the value of the consideration
paid in the merger will be allocated based upon the estimated fair values of the
assets acquired and liabilities assumed at the effective time of the merger.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

     The following  discussion  summarizes the material U.S.  federal income tax
consequences  of the merger that are  generally  applicable to  stockholders  of
PRTS. This discussion is based on currently existing  provisions of the Internal
Revenue Code of 1986,  as amended (the "Code"),  existing and proposed  Treasury
Regulations  promulgated under the Code, and current  administrative rulings and
court decisions,  all of which are subject to change.  Any change,  which may or
may  not  be  retroactive,   could  alter  the  tax  consequences  to  the  PRTS
stockholders.

     The following  discussion  does not address tax issues  relevant to certain
classes of taxpayers, such as banks, insurance companies,  tax-exempt investors,
S  corporations,  entities  classified as  partnerships  for federal  income tax
purposes  or  taxpayers  who hold PRTS  shares as  dealers.  It does not address
issues  raised for  taxpayers  who hold PRTS shares as part of a  "straddle,"  a
"hedge" or a "conversion transaction" as those terms are defined under the Code.
It does not  address  tax  consequences  to warrant  holders,  stockholders  who
acquired their shares through the exercise of employee or director stock options
or other compensation arrangements, stockholders whose stock is "qualified small
business  stock" within the meaning of Section 1202 of the Code, or stockholders
subject  to the  alternative  minimum  tax.  Nor does it deal  with  tax  issues
relevant to  stockholders  who are neither  citizens nor residents of the United
States. ALL SUCH STOCKHOLDERS  SHOULD CONSULT THEIR OWN TAX ADVISORS  CONCERNING
THE  FEDERAL  INCOME  TAX   CONSEQUENCES  OF  THE  MERGER  IN  THEIR  PARTICULAR
SITUATIONS.

     Stockholders  of PRTS who receive cash for their shares will recognize gain
or loss for federal income tax purposes  equal to the  difference  between their
basis for their shares and the amount of cash received.  If a stockholder  holds
PRTS shares as a capital  asset,  the gain or loss will be capital gain or loss.
If the  stockholder  has held the shares for one year or less,  the gain or loss
will be short-term gain or loss. If the stockholder has held the shares for more
than one year, the gain or loss will be long-term gain or loss.

     It is intended  that the  exchange of PRTS common stock in the merger for a
continuing  equity interest in PRTS by the  Acquisition  Group will constitute a
reorganization  within the meaning of Section  368(a)(1)(E) of the Code. Subject
to the  limitations  and  exceptions  discussed  above  with  respect to certain
classes  of  stockholders,  and  assuming  that  the  exchange  qualifies  as  a
reorganization  within  the  meaning of Section  368(a)(1)(E)  of the Code,  the
Acquisition  Group,  who will not receive cash for their shares  pursuant to the
merger, will generally not recognize gain (or loss) as a result of the merger.

     The  merger  may  result  in state  and/or  local  income  (or  other)  tax
consequences  to stockholders  of PRTS. ALL  STOCKHOLDERS  ARE STRONGLY URGED TO
CONSULT THEIR TAX ADVISOR WITH RESPECT TO THEIR PERSONAL TAX CONSEQUENCES OF THE
MERGER TRANSACTION.

CONDUCT OF THE COMPANY'S BUSINESS AFTER THE MERGER

     Officers of the Acquisition  Group are continuing to evaluate the Company's
business,  outlook,  assets,  practices,   operations,   properties,   corporate
structure,  capitalization,  management  and  personnel  and  to  consider  what
changes, if any, will be desirable or necessary.  Subject to the foregoing,  the
Company and the Acquisition Group expect that the day-to-day business operations


                                       52


of the Company following the merger will be conducted  substantially as they are
currently  being  conducted  by the  Company.  The  Acquisition  Group  does not
currently  intend to  dispose of any  assets of the  Company,  other than in the
ordinary course of business. Current members of the PRTS Board of Directors will
resign  effective upon the closing of the merger,  and the directors of HAC will
become the directors of the surviving corporation. Other than this change in the
composition of the Board,  the Acquisition  Group expects that, in general,  all
members of the Company's  current  management will continue as management of the
Company after the merger.

REGULATORY APPROVALS

     We are not aware of any license or other regulatory  permit that appears to
be material to our business that might be adversely affected by the merger or of
any   approval  or  other   action  by  any   federal  or  state   governmental,
administrative or regulatory authority or agency that would be required prior to
the merger.  Should any such  approval or other  action be  required,  it is our
present  intention to seek such approval or action.  We do not currently intend,
however,  to delay the merger  pending  the  outcome  of any such  action or the
receipt of any such approval (subject to our right and the right of Hammond I to
decline to proceed  with the merger if any of the  conditions  described in "The
Merger Agreement - Conditions to the Merger" shall have occurred).  There can be
no  assurance  that any such  approval  or other  action,  if  needed,  would be
obtained  without  substantial  effort or that  adverse  consequences  might not
result to our business,  or that certain parts of our business might not have to
be disposed of or held separate or other substantial conditions complied with in
order to obtain such approval or other action or in the event that such approval
was not obtained or such other action was not taken.

LITIGATION CHALLENGING THE MERGER

     In April, May and June 2002, several PRTS stockholders, individually and as
purported  representatives  of  all of  the  stockholders  of  PRTS  except  the
Acquisition Group, filed a total of four purported class action lawsuits against
PRTS, the members of the Board of Directors and specified  officers of PRTS. Two
of the  lawsuits  were filed in the Court of Chancery in the State of  Delaware,
and the other two were filed in the Circuit Court of the 15th  Judicial  Circuit
in Palm Beach County,  Florida (the "Florida  Court").  These  lawsuits  allege,
among other things,  that the defendants  breached their fiduciary duties to the
stockholders  of PRTS in connection  with the merger on the terms then proposed,
that the proposed  merger is unfair and that the PRTS  directors  breached their
fiduciary duties by failing to fully disclose  material  non-public  information
related to the value of PRTS and by engaging in self-dealing. Generally, each of
the complaints  seeks an injunction,  damages,  costs and other relief.  The two
lawsuits filed in Delaware have been informally stayed pending the resolution of
the lawsuits  filed in Florida.  In October  2002,  the Florida  Court  approved
consolidation  of the two  lawsuits  filed in  Florida  as a single  action.  In
October 2002, the parties to the Florida  lawsuits  entered into a Memorandum of
Understanding,  which provides for an agreement-in-principle to settle the class
action  lawsuits.  The Memorandum of  Understanding  provides for the parties to
enter a joint  stipulation  and such other  documentation  as may be required to
obtain final  approval of the Florida  Court.  The  Memorandum of  Understanding
specifies the terms of the settlement to be:

        o   the per share consideration for the merger shall be $1.41;

        o   the merger shall  require the approval by the majority of all of the
            outstanding  shares of PRTS  common  stock  entitled  to vote at the
            special  meeting   including  shares  owned  or  controlled  by  the
            Acquisition  Group and it also shall  require that a majority of the
            Unaffiliated Stockholders do not vote against the merger; and

        o   defendants  may, at their sole  discretion,  terminate  the proposed
            settlement in the event PRTS  stockholders who own five percent (5%)
            of  the  shares  of  PRTS  common  stock  elect  to  opt-out  of the
            settlement.

                                       53


     The  settlement  of the  class  action  lawsuits  is  subject  to the final
approval  of the Florida  Court.  If  approved  by the  Florida  Court,  the two
lawsuits filed in Delaware,  as well as the two lawsuits filed in Florida,  will
be dismissed with  prejudice,  and the  settlement of the class action  lawsuits
will release the defendants in such actions from further  liability  relating to
the merger.

OTHER SECURITIES LITIGATION

     In April and May 2001,  the Company was served  with four  purported  class
action lawsuits,  which cases were consolidated into one action entitled, In re:
PartsBase.com,       Inc.       Securities       Litigation,       Case      No.
01-8319-CIV-UNGARO-BENAGES/BROWN.  The consolidated  lawsuit named 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 alleged violations of Sections 11, 12(a)(2) and 15 of the Securities Act
of  1933  and  alleged  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  alleged  damages of nearly $42
million.  The Court 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.

     In September  2002,  final judgment was entered by the U.S.  District Court
for the Southern  District of Florida  dismissing the case with  prejudice.  The
settlement  releases the defendants from further liability  relating to the IPO,
however, stockholders of 119,000 shares of PRTS purchased during the period from
March 22, 2000 through April 25, 2000 opted out of the settlement,  and one such
stockholder has filed a lawsuit in California State Court.

EFFECTIVE TIME OF THE MERGER

     The  merger  will  be  consummated  and  become  effective  at  the  time a
certificate  of  merger  is filed  with the  Secretary  of State of the State of
Delaware or such later time as specified in the certificate of merger.  We refer
to this time as the "effective  time". If the merger agreement is adopted by our
stockholders  and the other conditions to the merger agreement are satisfied (or
waived to the extent  permitted by law),  we expect to complete the merger on or
about  ________,  2003, and in any event, no later than five business days after
the  satisfaction  or  waiver  (to the  extent  permitted  by law) of the  other
conditions. The Acquisition Group possesses sufficient voting power to adopt and
approve the merger and the merger agreement,  and has told us that it intends to
do so.

     The merger  agreement may be terminated  prior to the effective time of the
merger by PRTS or Hammond I in certain  circumstances,  whether  before or after
the adoption and  approval of the merger  agreement by our common  stockholders.
See page 62 ("The Merger Agreement - Termination of the Merger Agreement").

PAYMENT OF MERGER CONSIDERATION AND SURRENDER OF STOCK CERTIFICATES

     Hammond I has designated  ________________________  to act as payment agent
for purposes of making the cash payments  contemplated by the merger  agreement.
Immediately  prior to the effective time of the merger,  there will be deposited
in trust with the  payment  agent cash in U.S.  dollars in an  aggregate  amount
equal to the  merger  consideration  for all PRTS  stockholders  other  than the
Acquisition Group. The payment agent will, pursuant to irrevocable instructions,
deliver to you your merger  consideration  according to the procedure summarized
below.

     As soon as reasonably  practicable  after the effective time of the merger,
the  payment  agent will mail to you a letter of  transmittal  and  instructions
advising  you  of  the  effectiveness  of  the  merger  and  the  procedure  for
surrendering  to the payment agent your  certificates in exchange for the merger
consideration.  Upon the surrender for  cancellation to the paying agent of your
certificates,  together with a letter of transmittal,  executed and completed in
accordance with its instructions, and any other items specified by the letter of
transmittal,   the  payment   agent  will   promptly  pay  to  you  your  merger
consideration.  No interest  will be paid or accrued in respect of cash payments
of merger  consideration.  Payments of merger consideration also will be reduced


                                       54


by applicable  withholding taxes. In the event that you have lost or misplaced a
certificate,  you  will  have  to  send  an  affidavit  of  loss  in lieu of the
applicable certificate along with your transmittal letter.

     If the merger  consideration (or any portion of it) is to be delivered to a
person  other  than you,  it will be a  condition  to the  payment of the merger
consideration  that your  certificates  be properly  endorsed or  accompanied by
appropriate  stock powers and  otherwise in proper form for  transfer,  that the
transfer  otherwise  be proper and not violate any  applicable  federal or state
securities  laws,  and that you pay to the payment  agent any  transfer or other
taxes payable by reason of the transfer or establish to the  satisfaction of the
payment agent that the taxes have been paid or are not required to be paid.

     You should not forward your stock certificates to the payment agent without
a letter of transmittal,  and you should not return your stock certificates with
the enclosed proxy.

     At and after the effective  time of the merger,  you will cease to have any
rights as our stockholder, except for the right to surrender your certificate in
exchange  for  payment of the merger  consideration,  or, if you  exercise  your
appraisal  rights,  the right to perfect your right to receive  payment for your
shares  pursuant to Delaware law, and no transfer of PRTS common will be made on
the stock  transfer  books of PRTS.  Certificates  presented  to PRTS  after the
effective time will be canceled and exchanged for cash as described above.

APPRAISAL RIGHTS

     Pursuant to Delaware  law, if (1) you properly  file a demand for appraisal
of your PRTS  common  stock in writing  prior to the vote  taken at the  special
meeting and (2) your  shares of PRTS common  stock are not voted in favor of the
merger,  you will be  entitled  to  appraisal  rights  under  Section 262 of the
General Corporation Law of the State of Delaware.

     Section  262 is  reprinted  in its  entirety  as  Appendix  C to this proxy
statement.  The  following  discussion  is not a complete  statement  of the law
relating to  appraisal  rights and is  qualified in its entirety by reference to
Appendix C. This  discussion and Appendix C should be reviewed  carefully by you
if you wish to exercise  statutory  appraisal rights or you wish to preserve the
right to do so, as failure to comply  with the  procedures  set forth in Section
262 will result in the loss of your appraisal rights.

     If you make the demand described below with respect to your shares, and (i)
are  continuously the record holder of your shares through the effective time of
the merger; (ii) otherwise comply with the statutory requirements of Section 262
of the General  Delaware  Corporation Law of the State of Delaware;  (ii) do not
vote your shares of common stock in favor of the merger  agreement;  and (iv) do
not  consent,  with  respect to your  shares of common  stock,  to the merger in
writing; you shall be entitled to an appraisal by the Delaware Court of Chancery
of the "fair  value" of your  shares,  exclusive  of any  element of value which
might  arise from  either  the  accomplishment  or  expectation  of the  merger,
together  with a fair rate of interest,  if any, as  determined  by the Delaware
Court of Chancery.

     Under  Section  262,  where a merger is to be  submitted  for  adoption and
approval at a meeting of stockholders,  as in the special meeting, not less than
20 days  prior to the  meeting  we must  notify  you that  appraisal  rights are
available and include in the notice a copy of Section 262. This proxy  statement
constitutes your notice of your appraisal rights,  and the applicable  statutory
provisions are attached to this proxy statement as Appendix C.

     As a holder of PRTS common stock,  if you desire to exercise your appraisal
rights you must not vote in favor of the merger  agreement or the merger and you
must deliver a separate  written demand for appraisal to us prior to the vote on
the merger  agreement  and the merger at the  special  meeting.  If you sign and
return a proxy without  expressly  directing by checking the applicable boxes on
the reverse  side of the enclosed  proxy card that your shares be voted  against
the proposal or that an abstention be registered  with respect to your shares in
connection with the proposal,  you will  effectively  have waived your appraisal
rights  as  to  those  shares  because,  in  the  absence  of  express  contrary
instructions,  your shares will be voted in favor of the proposal.  Accordingly,
if you desire to perfect appraisal rights with respect to any of your shares you


                                       55


must, as one of the  procedural  steps involved in such  perfection,  either (1)
refrain from  executing and returning the enclosed proxy card and from voting in
person in favor of the  proposal  to adopt  the  merger  agreement  or (2) check
either the "AGAINST" or the "ABSTAIN" box next to the proposal on the proxy card
or  affirmatively  vote in person  against the proposal or register in person an
abstention with respect to the proposal.

     Only a holder of record is  entitled  to assert  appraisal  rights  for the
shares of our common  registered in that  holder's  name. A demand for appraisal
must be executed  by or on behalf of the  holders of record and must  reasonably
inform  us of the  holder of  record's  identity  and that the  holder of record
intends to demand  appraisal  of the holder's  shares.  If you have a beneficial
interest in shares that are held of record in the name of another  person,  such
as a broker,  fiduciary  or other  nominee,  you must act  promptly to cause the
record  holder to follow  properly  and in a timely  manner to perfect  whatever
appraisal  rights are available,  and your demand must be executed by or for the
record owner. If your shares are owned of record by more than one person,  as in
a joint tenancy or tenancy in common, your demand must be executed by or for all
joint  owners.  An  authorized  agent,  including an agent for two or more joint
owners, may execute the demand for appraisal;  however,  the agent must identify
the record owner and expressly disclose the fact that, in exercising the demand,
the agent is acting as agent for the record owner.

     A record owner,  such as a broker,  fiduciary or other  nominee,  who holds
shares as a nominee for others,  may exercise  appraisal  rights with respect to
the shares held for all or less than all beneficial owners of shares as to which
the person is the record owner.  In such case, the written demand must set forth
the number of shares  covered by the  demand.  Where the number of shares is not
expressly stated, the demand will be presumed to cover all shares in the name of
such record owner.

     If you elect to exercise  appraisal rights, you should mail or deliver your
written demand to:

        PartsBase, Inc.
        905 Clint Moore Road
        Boca Raton, FL  33487
        Attention: Mark Weicher, Chief Financial Officer

     The  written  demand for  appraisal  should  specify  your name and mailing
address,  the number of shares owned,  and that you are  demanding  appraisal of
your  shares.  A proxy or vote against the merger  agreement  will not by itself
constitute a demand.  Within ten days after the  effective  date,  PRTS,  as the
surviving  corporation,  must provide notice of the effective time of the merger
to you if you have complied with Section 262.

     Within 120 days after the effective  date,  either PRTS or you, if you have
complied with the required  conditions of Section 262 and are otherwise entitled
to appraisal rights, may file a petition in the Delaware Court of Chancery,  and
if you file a petition you must serve a copy on PRTS,  demanding a determination
of the fair value of the shares of all stockholders demanding an appraisal. PRTS
does not have any present  intention to file any such petition in the event that
a stockholder  makes a proper written demand for appraisal of PRTS common stock.
Accordingly, if you desire to have your shares appraised you should initiate any
petitions  necessary for the perfection of your appraisal rights within the time
periods and in the manner  prescribed  in Section 262. If  appraisal  rights are
available  and if you have complied  with the  applicable  provisions of Section
262,  within  120 days  after  the  effective  date of the  merger,  you will be
entitled,  upon written request,  to receive from PRTS a statement setting forth
the aggregate  number of shares not voting in favor of the merger  agreement and
with  respect to which we received  demands  for  appraisal,  and the  aggregate
number of holders of such shares.  The statement  must be mailed within ten days
after the written  request for the statement has been received by PRTS or within
ten days  after the  expiration  of the  period  for  delivery  of  demands  for
appraisal rights whichever is later.

     If a petition  for an  appraisal  is timely filed by a holder of our shares
and a copy thereof is served upon PRTS,  PRTS will then be  obligated  within 20
days to file  with the  Delaware  Register  in  Chancery  a duly  verified  list


                                       56


containing  the names and  addresses of all  stockholders  who have  demanded an
appraisal of their shares of PRTS common  stock and with whom  agreements  as to
the  value  of  their  shares  have  not been  reached.  After  notice  to those
stockholders  as  required  by the Court,  the  Delaware  Court of  Chancery  is
empowered to conduct a hearing on the petition to determine  those  stockholders
who have  complied  with  Section 262 and who have become  entitled to appraisal
rights  thereunder.  If you have  demanded an appraisal,  the Delaware  Court of
Chancery may require you to submit your certificates to the Register in Chancery
for notation on the  certificates  of the pendency of the appraisal  proceeding;
and if you fail to comply with the direction, the Delaware Court of Chancery may
dismiss the  proceedings as to you.  Where  proceedings  are not dismissed,  the
Delaware  Court of  Chancery  will  appraise  the shares  owned by  stockholders
demanding an appraisal,  determining  the "fair value" of such shares,  together
with a fair rate of interest,  if any, to be paid upon the amount  determined to
be the fair value. In such event, the Delaware Court of Chancery's appraisal may
be more than, less than, or equal to the merger  consideration  and stockholders
should  be  aware  that  financial  advisors'  opinions  as to  fairness  from a
financial  point of view are not opinions as to "fair value" under  Section 262.
In  determining  fair  value,  the  Delaware  Court of  Chancery is to take into
account all relevant  factors.  In relevant case law, the Delaware Supreme Court
discussed the factors that could be considered in  determining  fair value in an
appraisal proceeding,  stating that "proof of value by any techniques or methods
which  are  generally  considered  acceptable  in the  financial  community  and
otherwise  admissible  in court"  should be  considered,  and that  "fair  price
obviously requires  consideration of all relevant factors involving the value of
a company".  The Delaware Supreme Court stated that in making this determination
of fair value the court must  consider  market  value,  asset value,  dividends,
earnings   prospects,   the  nature  of  the  enterprise  and  any  other  facts
ascertainable  as of the date of the merger that throw light on future prospects
of the merged corporation. The Delaware Supreme Court also stated that "elements
of future  value,  including  the nature of the  enterprise,  which are known or
susceptible  of  proof  as of the  date of the  merger  and not the  product  of
speculation,  may be considered." Section 262, however, provides that fair value
is to be "exclusive of any element of value arising from the  accomplishment  or
expectation of the merger." In addition,  Delaware  courts have decided that the
statutory appraisal remedy,  depending on factual circumstances,  may or may not
be a dissenting stockholder's exclusive remedy.

     The Court will also  determine  the amount of interest,  if any, to be paid
upon the amounts to be received by persons whose shares of our common stock have
been  appraised.  The cost of the appraisal  proceeding may be determined by the
Delaware Court of Chancery and taxed against the parties,  as the Delaware Court
of  Chancery  deems  equitable  in  the  circumstances.  Upon  application  of a
stockholder  who has demanded an appraisal,  the Delaware  Court of Chancery may
order that all or a portion  of the  expenses  incurred  by any  stockholder  in
connection  with  the  appraisal  proceeding,   including,  without  limitation,
reasonable  attorney's fees and the fees and expenses of experts, be charged pro
rata against the value of all shares of stock entitled to appraisal.

     If you have demanded appraisal in compliance with Section 262 you will not,
after the effective time of the merger,  be entitled to vote for any purpose any
shares  subject to your  demand or to  receive  payment  of  dividends  or other
distributions on your shares,  except for dividends or distributions  payable to
holders of record as of a date prior to the effective time of the merger. At any
time within 60 days after the  effective  date of the merger,  you will have the
right to withdraw your demand for appraisal; after this period, you may withdraw
your  demand for  appraisal  only with the consent of PRTS.  If no petition  for
appraisal is filed with the Delaware Court of Chancery within 120 days after the
effective  date of the merger,  your rights to appraisal  shall  cease.  You may
withdraw your demand for appraisal by delivering to PRTS a written withdrawal of
your demand for appraisal  and an acceptance of the merger,  except that (1) any
attempt  to  withdraw  made more than 60 days  after the  effective  time of the
merger will require written approval of PRTS, and (2) no appraisal proceeding in
the Delaware  Court of Chancery  shall be dismissed  without the approval of the
Delaware Court of Chancery,  and the approval may be conditioned upon such terms
as the Delaware Court of Chancery deems just.

     If you fail to  comply  fully  with the  statutory  procedure  set forth in
Section 262 you will forfeit  your rights of  appraisal  and will be entitled to
receive the merger consideration for your shares.


                                       57



                              THE MERGER AGREEMENT
                              --------------------

     The  following  is a  summary  of the  material  provisions  of the  merger
agreement  and is qualified in its  entirety by the merger  agreement.  The full
text of the merger  agreement is included in this proxy  statement as Appendix A
and is  incorporated  herein by  reference.  Stockholders  are urged to read the
entire merger agreement.


GENERALLY

     The  Company,  Hammond I, HAC and Mr.  Hammond have entered into the merger
agreement.  The  merger  agreement  provides  for HAC to merge with and into the
Company,  which will be the surviving  corporation in the merger. As a result of
the merger,  the Acquisition Group will own 100% of the Company's stock, and the
separate  existence of HAC will cease. Each outstanding share of common stock of
the Company issued and  outstanding  immediately  prior to the effective time of
the merger,  other than those  shares held by the  Acquisition  Group,  shall be
converted into the right to receive an amount in cash,  without interest,  equal
to $1.41.

EFFECTIVE TIME OF THE MERGER

     The  merger  will  be  effective  as  soon  as  practicable  following  the
satisfaction  or waiver of all  conditions set forth in Article VI of the merger
agreement,  including stockholder approval,  and at such time as the certificate
of merger is duly filed with the  Secretary of State of the State of Delaware or
such  other time  thereafter  as is  provided  in the  certificate  of merger in
accordance with the Delaware General Corporation Law (the "DGCL").

     In the merger,  HAC's certificate of incorporation as in effect immediately
prior to the effective  time shall be the  certificate of  incorporation  of the
surviving corporation,  provided that HAC's certificate of incorporation will be
amended by the Certificate of Merger to change its name to "PartsBase,  Inc." As
of the  completion  of the  merger,  the bylaws of HAC will be the bylaws of the
Company.

CONVERSION OF SECURITIES

     At the effective time, subject to the terms,  conditions and procedures set
forth in the merger agreement, each share of common stock issued and outstanding
will be converted  into the right to receive  $1.41 in cash,  without  interest,
other than any  outstanding  share of common stock that is held by  stockholders
who perfect their  appraisal  rights under the DGCL,  any  outstanding  share of
common stock that is held by the Acquisition  Group and any outstanding share of
common stock held in the Company's  treasury or by any subsidiary of the Company
immediately prior to the effective time.

     Each share of common  stock  issued and held in the  Company's  treasury or
held by any  subsidiary of the Company  immediately  prior to the effective time
shall cease to be outstanding and shall be cancelled and retired without payment
of any consideration therefore. Each share of common stock held by any member of
the  Acquisition  Group  immediately  prior to the  effective  time shall remain
outstanding.  Except for the right to receive the merger  consideration,  and as
set forth  above,  or, with  respect to those  shares held by  stockholders  who
become entitled to appraisal  rights,  the right to receive payment as set forth
in the DGCL,  from and after the effective  time,  all shares,  by virtue of the
merger  and  without  any action on the part of the  holders,  will no longer be
outstanding and will be canceled and retired and will cease to exist.

     Each share of common  stock of HAC then  issued and  outstanding  will,  by
virtue of the merger and without any action on the part of HAC, become one fully
paid and nonassessable share of common stock of the surviving corporation.


                                       58



STOCK OPTIONS AND WARRANTS

     All outstanding  stock options and warrants of the Company,  whether or not
then exercisable,  will be canceled at the effective time of the merger,  except
for  currently  outstanding  warrants  which do not expire by their  terms.  The
Company may permit holders of such options or warrants to exercise them prior to
the effective  time by accepting as payment  therefor a portion of the number of
shares issuable upon such exercise with a value equal to the aggregate  exercise
price of such options or warrants valued at the merger consideration.

REPRESENTATIONS AND WARRANTIES

     The Company has made various  representations  and warranties in the merger
agreement to Hammond I and HAC relating to, among other  matters,  the Company's
and its subsidiary's  organization,  standing, power, and capital structure; the
Company's  authority  to enter into and  consummate  its  obligations  under the
merger agreement and the  enforceability of the merger  agreement;  the required
consents and approvals of governmental entities and the absence of conflict with
the Company's governing documents and certain agreements and permits; the making
and accuracy of SEC filings (including  financial  statements);  the accuracy of
this Proxy  Statement and the Schedule  13E-3;  the absence of certain  material
changes  since  December  31,  2001 that may  reasonably  be  expected to have a
material  adverse  effect on the  Company  and its  subsidiary;  the  absence of
material  litigation;  the  inapplicability of any state takeover statute or any
anti-takeover provision in the Company's certificate of incorporation or bylaws;
and the  receipt  by the  Special  Committee  of the  opinion  of its  financial
advisor, vFinance.

     The merger agreement also contains various  representations  and warranties
by Mr.  Hammond,  Hammond I, and HAC to the  Company,  relating  to, among other
matters, Hammond I's and HAC's organization, standing and power; Hammond I's and
HAC's corporate  authority to enter and consummate their  obligations  under the
merger agreement and the  enforceability of the merger  agreement;  the veracity
and  completeness  of  information  provided  by them  in  connection  with  the
preparation of this Proxy Statement; and the interim operations of HAC.

     Please see Article III of the merger  agreement for a full statement of the
representations   and  warranties  of  the  parties.   The  representations  and
warranties terminate upon the effective time of the merger.

COVENANTS

     Pursuant to the merger agreement,  the Company has agreed that prior to the
effective  time, the Company shall:  conduct its businesses and operations  only
according to its ordinary course of business, consistent with past practice, and
use reasonable best efforts to preserve intact its business  organization;  keep
available the services of its present officers,  employees and consultants;  and
maintain existing relationships with suppliers,  creditors,  business associates
and others having business dealings with the Company.

     The Company  also agrees  that,  except as  expressly  contemplated  by the
merger  agreement or  consented to in writing by Hammond I, until the  effective
time of the merger, it will not and will not permit its subsidiary to:

        o   declare  or pay any  dividends  on or make  other  distributions  in
            respect of any of its own or its subsidiaries'  capital stock, other
            than cash dividends payable by a subsidiary to the Company or one of
            its subsidiaries;

        o   split,  combine or reclassify any of the Company's  capital stock or
            issue or authorize  or propose the issuance of any other  securities
            in  respect  of,  in lieu of or in  substitution  for the  Company's
            shares of capital stock; or

                                       59


        o   repurchase,  redeem or  otherwise  acquire any shares of its capital
            stock or permit  any  subsidiary  to  acquire  any shares of capital
            stock or any securities  convertible  into or exercisable for any of
            the Company's capital stock;

        o   issue,  deliver  or sell,  or  authorize  or propose  the  issuance,
            delivery or sale of, any shares of the  Company's  capital  stock of
            any  class,  any debt  securities  having  the  right to vote or any
            securities  convertible  into  or  exercisable  for or  any  rights,
            warrants or options to acquire  any such  shares or debt  securities
            having the right to vote, or enter into any  agreement  with respect
            to the  foregoing,  other than issuances of common stock pursuant to
            exercises  of stock  options or common  stock  awards  listed in the
            Company's disclosure letter;

        o   amend  or   propose   to  amend   the   Company's   certificate   of
            incorporation, bylaws or other governing documents;

        o   acquire or agree to acquire (by merger, consolidation, purchase of a
            substantial equity interest in or purchase of a substantial  portion
            of the  assets  of,  or by any other  manner)  any  business  or any
            corporation, limited liability company, partnership,  association or
            other business organization or division thereof;

        o   other than in the ordinary course of business, otherwise acquire any
            assets which are material,  individually or in the aggregate, to the
            Company;

        o   sell,  lease,  encumber or  otherwise  dispose of any of or agree to
            sell, lease,  encumber or otherwise dispose of the Company's assets,
            except as disclosed in its disclosure letter and for dispositions in
            the ordinary  course of business and  consistent  with past practice
            and of  substantially  the same  character,  type and  magnitude  as
            dispositions in the past;

        o   incur any  indebtedness  for borrowed  money or  guarantee  any such
            indebtedness  or issue or sell any debt  securities  or  warrants or
            rights to acquire any of the  Company's  or its  subsidiaries'  long
            term debt securities,  or guarantee any long term debt securities of
            others or enter into or amend any contract, agreement, commitment or
            arrangement  with  respect  to any of the  foregoing,  other than in
            replacement  for existing or maturing debt,  indebtedness  of any of
            the Company's  subsidiaries  or other borrowing under existing lines
            of credit in the ordinary  course of business  consistent with prior
            practice;

        o   make any  loans,  advances  or capital  contributions  to any person
            other than a  subsidiary,  except for advances to Company  employees
            for  travel  or other  business  expenses  in  accordance  with past
            practice;

        o   enter  into,  adopt,  amend  (except as may be  required  by law) or
            terminate any employee  benefit plan or any agreement,  arrangement,
            plan or policy  between the Company or any of its  subsidiaries,  on
            the one hand,  and one or more of its directors or officers,  on the
            other hand;

        o   except for normal  increases in the ordinary  course of business and
            consistent  with  past  practice  and  of  substantially   the  same
            character,  type and  magnitude as increases in the past that in the
            aggregate,  do not  result in a material  increase  in  benefits  or
            compensation  expense  to the  Company  or any of its  subsidiaries,
            increase in any manner the  compensation  or fringe  benefits of any
            director, officer or employee or pay any benefit not required by any
            plan and  arrangement  as in  effect  as of the  date of the  merger
            agreement,  or enter into any  contract,  agreement,  commitment  or
            arrangement to do any of the foregoing;

                                       60


        o   enter  into  or  renew  any  contract,   agreement,   commitment  or
            arrangement providing for the payment to any of the Company's or its
            subsidiaries'  directors,  officers or employees of  compensation or
            benefits  contingent,  or the terms of which are materially altered,
            upon the occurrence of any  transaction  contemplated  by the merger
            agreement;

        o   change the Company's methods of accounting in effect at December 31,
            2001, except as required by changes in generally accepted accounting
            principles as concurred by its independent auditors;

        o   except in the ordinary  course of business and consistent  with past
            practice and of substantially the same character, type and magnitude
            as  elections  made in the past,  make any  material tax election or
            settle or compromise any material federal,  state,  local or foreign
            income  tax claim or  liability  or amend any  previously  filed tax
            return in any respect; or

        o   take any action that would or is reasonably  likely to result in any
            of the conditions to the merger not being satisfied.

SPECIAL MEETING

     The merger  agreement  provides that as promptly as  practicable  after the
date of the merger  agreement,  the Company  shall call a special  meeting to be
held, for the purpose of voting upon the adoption and approval of the merger and
the merger agreement.

INDEMNIFICATION

     From and after the effective time, the surviving  corporation shall provide
exculpation, indemnification and advancement of expenses for all persons who had
served or are  serving as officers  or  directors  of PRTS prior to or as of the
effective  time,  including Mr.  Hammond,  on terms no less  favorable  than the
provisions with respect to indemnification and advancement of expenses that were
provided to such persons as of the effective time.

CONDITIONS

     Each party's  respective  obligation to effect the merger is subject to the
satisfaction prior to the closing date of a number of conditions,  including the
following:  (a)  the  adoption  and  approval  of the  merger  agreement  by the
affirmative vote of the holders of a majority of our outstanding shares entitled
to  vote  thereon,  and a  majority  of the  shares  held  by  the  Unaffiliated
Stockholders  shall not have been voted  against the merger;  (b) the absence of
any actual or pending  temporary  restraining  order,  preliminary  or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal  restraint  or  prohibition  preventing  the  consummation  of the  merger
agreement; (c) the absence of any action taken, or any statute, rule, regulation
or order enacted,  entered,  enforced or deemed applicable to the merger,  which
makes consummation of the merger illegal; and (d) all authorizations,  consents,
orders or approvals of, or  declarations or filings with, and all expirations or
any  terminations of waiting periods imposed by any governmental  entity,  which
are necessary for consummation of the merger shall have been filed,  occurred or
been obtained and in full force and effect.

     The  obligation  of the Company to effect the merger is subject to a number
of conditions,  unless waived by the Company, including, without limitation, the
following:  (a) the representations and warranties of Mr. Hammond, Hammond I and
HAC shall be true and correct in all respects as of the effective time as though
made on or as of such time except for those  representations and warranties that
address  matters only as of a particular date or only with respect to a specific
period of time which need only be true and  correct in all  respects  as of such
date or with  respect to such period of time which need only be true and correct
in all respects as of such date or with respect to such period; (b) Mr. Hammond,
Hammond I and HAC shall have  performed  and complied in all  material  respects


                                       61


with all  obligations  under the merger  agreement,  and the Company  shall have
received a certificate  signed on behalf of Hammond I by its President and Chief
Executive  Officer or by its Corporate  Vice  President,  and by its Senior Vice
President or Chief  Financial  Officer or by its  Corporate  Vice  President and
Treasurer to such effect;  and (c) as of the  effective  time, no action suit or
proceeding shall be pending (i) seeking to restrain or prohibit the consummation
of the merger,  (ii)  seeking to obtain from the  Company,  Hammond I or HAC any
damages  which would  reasonably  be  expected  to result in a Material  Adverse
Effect  (as  defined  in the  merger  agreement)  or  (iii)  seeking  to  impose
conditions  that would  materially  adversely  impact the  economic  or business
benefits of the transactions contemplated in the merger agreement .

     The obligations of Mr. Hammond,  Hammond I and HAC to effect the merger are
subject to a number of conditions,  unless waived by Mr. Hammond,  Hammond I and
HAC,  including the  following:  (a) the  representations  and warranties of the
Company  shall be true and correct in all respects as of the  effective  time as
though  made  on or  as of  such  time  except  for  those  representations  and
warranties  that  address  matters  only as of a  particular  date or only  with
respect to a specific  period of time which need only be true and correct in all
respects as of such date or with  respect to such period of time which need only
be true and  correct  in all  respects  as of such date or with  respect to such
period;  (b) the Company  shall have  performed  and  complied  in all  material
respects with all of its obligations under the merger  agreement,  and Hammond I
shall have received a certificate signed on the Company's behalf to such effect;
(c) the Company's stockholders asserting their appraisal rights shall constitute
less than 5% of all shares of the Company's common stock outstanding immediately
prior to the  effective  time;  (d)  there  has  been no  action  taken,  or any
regulation enacted or deemed applicable to the merger by any governmental entity
which would impose  requirements  upon Hammond I, the surviving  corporation  or
their  subsidiaries  that would  materially  adversely  impact the  economic  or
business benefits of the merger agreement or that would require Hammond I or any
of its  subsidiaries to dispose of any asset that is material to Hammond I prior
to the  effective  time;  (e) a  material  adverse  effect  with  respect to the
Company's  operations has not occurred,  and no facts or  circumstances  arising
after August 26, 2002 have occurred  which,  individually  or in the  aggregate,
could  reasonably be expected to have a material  adverse effect on the Company;
(f) all  proceedings  to be  taken  on our part in  connection  with the  merger
agreement and all documents incident to the merger agreement shall be reasonably
satisfactory  to Hammond I, and Hammond I shall have received copies of all such
documents and other  evidences as Hammond I may  reasonably  request in order to
establish  the  consummation  of  such   transactions  and  the  taking  of  all
proceedings  in  connection  therewith;  (g) there has been no  action,  suit or
proceeding instituted,  pending or threatened seeking to materially restrain the
merger or seeking to obtain from the  Company,  Hammond I or HAC  damages  which
would have a materially  adverse  effect with  respect to the  Company;  and (h)
except for those consents or approvals for which failure to obtain could not, in
the aggregate or individually, reasonably be expected to have a material adverse
effect on the  Company,  each  person  whose  consent or approval is required in
order to permit the succession pursuant to the merger to any of the Company's or
its  subsidiaries'  obligations,  rights or  interests  under any loan or credit
agreement,  note,  mortgage,  indenture,  lease,  license or other  agreement or
instrument, shall have been obtained and shall be in full force and effect.

TERMINATION OF THE MERGER AGREEMENT

     At any time  prior to the  effective  time,  the  merger  agreement  may be
terminated if:

        o   consented to by the Company and Hammond I in writing;

        o   the  merger  does not occur on or before  January  31,  2003 and the
            terminating  party  has not  caused  the  failure  of the  merger by
            failing to perform an obligation under the merger agreement to occur
            by such date;

        o   a governmental  entity issues a final and  non-appealable  permanent
            injunction or action that prevents the  consummation  of the merger;
            or

                                       62


        o   any approval of the Company's common  stockholders  required for the
            consummation  of the merger is not obtained by reason of the failure
            to obtain the required vote at special meeting.

     Hammond I may  terminate  the  merger  agreement  at any time  prior to the
effective time if:

        o   there is a material breach of any representation, warranty, covenant
            or agreement set forth in the merger agreement by the Company, which
            is not cured within ten (10) days after written  notice,  or, any of
            the  representations or warranties set forth in the merger agreement
            shall have become  untrue,  such that the Company would be incapable
            of satisfying  the conditions  precedent to the merger  agreement by
            January  31,  2003,  in each case only if Mr.  Hammond  did not have
            actual knowledge of, and did not cause, such breach or untruth;

        o   the Company's Special Committee or Board of Directors shall have (a)
            withdrawn, modified or changed its approval or recommendation of the
            merger or merger agreement in any manner which is adverse to Hammond
            I or HAC;  or (b)  approved or  recommended  to its  stockholders  a
            competing  transaction  or a superior  proposal  or entered  into an
            agreement with respect thereto or have resolved to do so; or

        o   a tender  offer or exchange  offer or a proposal by a third party to
            acquire   the   Company   or  its  shares   pursuant   to  a  merger
            consideration,  share  exchange,  business  combination,  tender  or
            exchange  offer or similar  transaction  is  commenced  or  publicly
            proposed  which  contains a proposal  as to price,  and the  Company
            shall have not made a  recommendation  to its stockholders to reject
            such proposal  within ten business days of its  commencement  or the
            date such proposal becomes publicly disclosed, if sooner.

     The Company may  terminate the merger  agreement,  at any time prior to the
effective time if:

        o   there  is a  material  breach  by  Hammond  I or HAC of any of their
            representations,  warranties,  covenants or agreements  set forth in
            the merger agreement,  which is not cured within ten (10) days after
            written notice,  or, any of their  representations or warranties set
            forth in the merger  agreement  shall have become untrue,  such that
            Hammond I and HAC would be incapable of  satisfying  the  conditions
            precedent to the merger agreement by January 31, 2003; or

        o   if the Special  Committee  and the Board of Directors  authorize the
            Company  to  enter  into  a  written  agreement  with  respect  to a
            competing  transaction  that the Special  Committee and the Board of
            Directors have determined to be a superior proposal;  provided, that
            the  Company  may not  terminate  the  agreement  and enter  into an
            agreement for a competing  transaction  until the expiration of five
            (5) business days following  Hammond I's receipt of a written notice
            advising it that the Company has  received a superior  proposal  (as
            such  term  is  defined  in the  merger  agreement)  specifying  the
            material terms and conditions of such proposal and  identifying  the
            person making such superior proposal. After providing Hammond I with
            notice, the Company will provide a reasonable opportunity to Hammond
            I during the five (5) business day period to make adjustments in the
            terms and  conditions  of the merger  agreement,  which would enable
            Hammond I to proceed with the merger on such adjusted terms.

     Upon termination,  the merger agreement will become void and there shall be
no liability  or  obligation  on, as set forth  above,  the part of any party or
their respective officers or directors except as set forth therein.

AMENDMENT TO THE MERGER AGREEMENT

     The merger  agreement may be amended by the parties to the merger agreement
in writing,  by action taken by their respective  Boards of Directors and by the
Special Committee,  at any time before or after the adoption and approval by the


                                       63


Company's  common  stockholders  of  the  merger.   However,   once  the  common
stockholders have adopted and approved the merger, no amendment shall be made to
the  merger  agreement   which,  by  law,   requires  the  further  approval  of
stockholders, without obtaining that further approval.


         MARKETS AND MARKET PRICES OF AND DIVIDENDS OF THE COMMON STOCK
         --------------------------------------------------------------
                         AND RELATED SHAREHOLDER MATTERS
                         -------------------------------


Common Stock
------------

     The table below sets forth the high and low  closing  prices for our common
stock (ticker symbol "PRTS"),  as reported on the Nasdaq National Market through
October ___, 2002 for the fiscal quarters indicated:

                                                 HIGH                      LOW
                                               ------                     ------
     Year Ended December 31, 2002
     ----------------------------
     Fourth Quarter through ______, 2002       $ ____                     $_____
     Third Quarter                               1.40                       1.08
     Second Quarter                              1.27                       0.70
     First Quarter                               1.03                       0.68

     Year Ended December 31, 2001
     Fourth Quarter                            $ 0.95                     $ 0.41
     Third Quarter                               1.00                       0.40
     Second Quarter                              1.77                       0.79
     First Quarter                               2.56                       1.00

     Year Ended December 31, 2000
     Fourth Quarter                            $ 3.88                       1.69
     Third Quarter                               8.75                       2.75
     Second Quarter                             10.88                       4.25
     First Quarter                              14.88                       9.00

     On August 23,  2002,  the last day on which shares of our common stock were
traded prior to our announcement of the execution of the merger  agreement,  the
closing price of the PRTS common stock was $1.15.  On _________,  2002, the most
recent trading day prior to the date of this proxy statement,  the closing price
of the PRTS common stock was $________.


Stockholders
------------

     The  approximate  number of  holders  of record of our  common  stock as of
__________,  2002 is ______,  inclusive of those brokerage firms and/or clearing
houses  holding  shares of common  stock for  their  clientele  (with  each such
brokerage house and/or clearing house being considered as one holder).

Dividend Policy
---------------

     We have never  declared any cash  dividends on our common stock and have no
present  intention  to declare or pay cash  dividends on our common stock in the
foreseeable  future.  While there are no  restrictions on our ability to declare
dividends,  we  anticipate  that in the  future,  earnings  will be  retained to
finance our operations.  Any decision as to the future  declaration of dividends


                                       64


on our common stock will depend on the results of  operations  and our financial
condition and such other factors as our Board of Directors,  in its  discretion,
deems relevant.


                             COMMON STOCK PURCHASES
                             ----------------------

REPURCHASES BY PRTS

     During the period January l1, 2000 to March 31, 2002, we purchased  700,505
shares of our common stock on the open market for an aggregate purchase price of
$1,148,584.  The prices at which the shares were purchased ranged from $0.60 per
share to $3.33 per share.  The average  price per share paid during each quarter
during that period was as set forth in the following table:

    Calendar Year 2000
      Quarter ended March 31, 2000........................................ *
      Quarter ended June 30, 2000......................................... *
      Quarter ended September 30, 2000.................................... *
      Quarter ended December 31, 2000..................................$2.40

    Calendar Year 2001
      Quarter ended March 31, 2001.....................................$1.78
      Quarter ended June 30, 2001......................................$1.12
      Quarter ended September 30, 2001.................................... *
      Quarter ended December 31, 2001..................................... *

    Calendar Year 2002
      Quarter ended March 31, 2002.....................................$0.89
      Quarter ended June 30, 2002......................................... *
      Quarter ended September 30, 2002.................................... *
    -----------------------
    *No purchases  during the quarter.  We have not  purchased any shares of our
     common stock since March 15, 2002.

PURCHASES BY PRTS EXECUTIVE OFFICERS AN DIRECTORS

     Based on our records and on information provided to us by our directors and
executive officers,  none of our directors or executive officers,  including Mr.
Hammond, nor any associates or affiliates of any of the foregoing, have effected
any  transactions  involving our shares of common stock during the 60 days prior
to the date of this proxy statement.


         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         --------------------------------------------------------------

     The following table sets forth information  regarding shares of PRTS common
stock  beneficially  owned as of the date  hereof,  by: (i) each person or group
known to us that  beneficially  owns more than five  percent of our  outstanding
common stock; (ii) our directors and the named executive  officers listed in the
Summary  Compensation  Table  included in the Annual Report on Form 10-K for the
year ended December 31, 2001 attached as Appendix B to this proxy statement; and
(iii) all of our executive officers and directors as a group.

     Beneficial  ownership is calculated in accordance  with Rule 13d-3(d) under
the Exchange  Act.  Shares of common stock  subject to options and warrants that
were  exercisable on or before the date 60 days after the date hereof are deemed
outstanding  for  purposes  of the  following  table with  respect to the person


                                       65


holding those options but were not deemed  outstanding for purposes of computing
the percentage ownership of any other person.  Except as noted below, 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)            64.8%
    Brian Tolley                          61,039 (3)              *
    Pierre A. Narath                      60,000 (4)              *
    Mark Weicher                          18,000 (3)              *
    Thomas Van Hare                       10,000 (3)              *
    Charles Menefee                            0                  *
    Edward McCartin                            0                  *
    Kenneth Corriea                            0                  *
    Atlas II, LP (5)(6)                1,471,200                10.5%
    Marathon Partners, LP (5)(7)       1,471,200                10.5%
    All directors and executive
     officers as group (8 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;  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;  and
        150,000 shares  underlying stock options that are currently  exercisable
        or will  become  exercisable  within  60 days of the  date  hereof.
    (3) Consists  of  shares   underlying   stock  options  that  are  currently
        exercisable  or will  become  exercisable  within  60  days of the  date
        hereof.
    (4) Mr.   Narath's   address  is  1538  Turnpike   Street,   North  Andover,
        Massachusetts 01845. 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 of the date hereof.  Excludes 260,000
        shares of common stock owned by Touchstone  Software Corp., a company of
        which Mr. Narath is an  officer, director  and significant  stockholder.
        Mr. Narath has no voting or dispositive powers regarding these shares.
    (5) Based  solely on  information  reported  by Atlas  II,  LP and  Marathon
        Partners, LP in their jointly filed Schedule 13D on July 15, 2002.
    (6) 1,471,200 shares of which have shared voting power and 866,000 shares of
        which have sole dispositive power.
    (7) 1,471,200  shares of which have shared voting power and 605,200 of which
        have sole dispositive power.


                                       66




                             BUSINESS OF THE COMPANY
                             -----------------------

     We   currently   operate   two   businesses:   (i)  we   provide   Internet
business-to-business e-commerce services for the aviation and aerospace 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 Proxy Statement.

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  partsand  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
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 aviation  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


                                       67


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 customers' Enterprise Resource Planning (ERP) systems.  Because
of the aviation  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.

     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 nurse  staffing  business  revenues;  no other  single
client,  including affiliated groups,  comprised more than 10% of our registered
nurse employees on assignment or 10% of our nurse staffing business 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
mid-1990s, several factors prompted the increased usage of temporary staffing at
hospitals.  A principal  factor was cost  containment.  Managed care,  Medicare,


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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:

        o   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.

        o   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.

        o   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 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:

        o   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%.

        o   Nurses  Leaving  Patient Care  Environments  for Less  Stressful and
            Demanding  Careers.  Career  opportunities  for nurses have expanded
            beyond  the  traditional  bedside  role.  Pharmaceutical  companies,


                                       69


            insurance companies,  HMOs and hospital service and supply companies
            increasingly  offer nurses  attractive  positions which involve less
            demanding work schedules and physical requirements.

        o   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.

        o   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.

        o   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.

        o   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.

        o   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.

        o   Elimination  of  Mandatory  Overtime.   Many  healthcare  facilities
            require their  permanent  staff to work  overtime to cover  staffing
            shortages.  Maine and Oregon recently passed legislation that limits
            mandatory overtime for nurses,  and similar  legislation has already
            been introduced in several other states.

     Supply Drivers:

        o   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.

        o   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.

        o   More Nurses  Choosing  Supplemental  Assignments  Due to the Nursing
            Shortage. In times of nursing shortages,  nurses with permanent jobs


                                       70


            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
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;


                                       71


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.

     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:

        o   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.

        o   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.

        o   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  client's  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.

                                       72


     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.

     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 tracks a transaction through a variety of information
sources.

     Our sales and marketing group consisted of  approximately 43 individuals as
of  September  30,  2002,  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:

        o   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.

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

                                       73


        o   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 39 active clients as of
September 30, 2002 . All of our registered  nurse  assignments are at acute-care
hospitals located in Hillsborough,  Miami-Dade,  Orange,  Broward and Palm Beach
counties of 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
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.

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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.

        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


                                       75


            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 based on:

        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.

     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


                                       76


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

     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
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.

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.

                                       77


EMPLOYEES

     The following details  information  regarding our employees as of September
30, 2002 for our aviation e-commerce business and our nurse staffing business:

                                                              Employees
                                                              ---------
Aviation E-commerce Business:
  Sales and marketing                                             43
  Corporate finance, IT and administration                        17
                                                                 ---
     Total                                                        60
                                                                 ---

Nurse Staffing Business:
  Registered Nurses                                              103
  Sales and Marketing                                             25
  Administration                                                   5
                                                                 ---
     Total                                                       133
                                                                 ---

     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.

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
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.

                              INDEPENDENT AUDITORS
                              --------------------

     Deloitte & Touche,  LLP has served as our independent  auditors since 1997.
The  consolidated  balance  shaeets  as of  December  31,  2001 and 2000 and the
consolidated  statements of operations,  stockholders' equity and cash flows for
each of the fiscal years ended December 31, 2001,  2000 and 1999,  respectively,
included in the Annual Report on Form 10-K for the year ended  December 31, 2001
attached as Appendix B to this proxy  statement  have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports,  which is included
and incorporated by reference in this proxy  statement.  It is not expected that
representatives  of  Deloitte  &  Touche,  LLP will be  present  at the  special
meeting.

                 OTHER MATTERS FOR ACTION AT THE SPECIAL MEETING
                 -----------------------------------------------

     Our Board of  Directors  is not aware of any  matters to be  presented  for
action at the special meeting other than described herein and does not intend to
bring any other matters before the special  meeting;  however,  if other matters
should  come  before the special  meeting,  it is  intended  that the holders of
proxies solicited hereby will vote thereon in their discretion.


                                       78


                              STOCKHOLDER PROPOSALS
                              ---------------------

     If the merger is completed,  there will be no public  participation  in any
future  meetings  of  stockholders  of  PRTS.  However,  if  the  merger  is not
completed,  PRTS  stockholders  will  continue  to be  entitled  to  attend  and
participate in PRTS stockholders' meetings. If the merger is not completed, PRTS
will  inform  its  stockholders,  by press  release  or other  means  determined
reasonable by PRTS, of the date by which stockholder  proposals must be received
by PRTS for  inclusion in the proxy  materials  relating to the annual  meeting,
which  proposals  must comply with the rules and  regulations of the SEC then in
effect.

                       WHERE YOU CAN FIND MORE INFORMATION
                       -----------------------------------

     We are subject to the informational filing requirements of the Exchange Act
and, in  accordance  therewith,  are required to file  periodic  reports,  proxy
statements  and  other  information  with  the  SEC  relating  to our  business,
financial  condition  and other  matters.  Information  as of  particular  dates
concerning our directors and officers, their remuneration, the principal holders
of our securities and any material interest of such persons in transactions with
us is required to be  disclosed  in periodic  reports  filed with the SEC.  Such
reports,  proxy  statements  and  other  information  should  be  available  for
inspection  at the public  reference  facilities  maintained  by the SEC at Room
1024, 450 Fifth Street, N.W.,  Washington,  D.C. 20549. Copies of such materials
may also be obtained  by mail,  upon  payment of the SEC's  customary  fees,  by
writing to its principal  office at 450 Fifth  Street,  N.W.,  Washington,  D.C.
20549.  These  materials  filed  by us with the SEC are  also  available  to the
website of the SEC at www.sec.gov.

     Because the merger is a "going  private"  transaction,  the  Company,  HAC,
Hammond I and Mr.  Hammond  have  filed  with the SEC a Rule  13e-3  Transaction
Statement  on Schedule  13e-3 under the Exchange Act with respect to the merger.
This proxy  statement does not contain all of the  information  set forth in the
Schedule  13e-3 and the exhibits  thereto.  Copies of the Schedule 13e-3 and the
exhibits  thereto are  available  for  inspection  and copying at our  principal
executive offices during regular business hours by any of our stockholders, or a
representative  who has been so designated in writing,  and may be inspected and
copied,  or  obtained by mail,  by written  request  directed  to Mark  Weicher,
PartsBase,  Inc., 905 Clint Moore Road,  Boca Raton,  Florida  33487;  telephone
(551) 953- 0700, extension 2702, or from the SEC as described above.

     Upon completion of the merger,  we will seek to terminate the  registration
of our  common  stock  under the  Exchange  Act,  which  will  relieve us of any
obligation  to file reports and forms with the SEC under the Exchange  Act, such
as an Annual Report on Form 10-K.

                      INFORMATION INCORPORATED BY REFERENCE
                      -------------------------------------

     The SEC allows us to "incorporate by reference" information into this proxy
statement,  which means that we can disclose important  information by referring
you to another document filed  separately with the SEC. The following  documents
previously  filed by us with the SEC are incorporated by reference in this proxy
statement and are deemed to be a part hereof.

        o   Our Annual Report on Form 10-K for the year ended  December 31, 2001
            (included at Appendix D); and
        o   Our  Quarterly  Report on Form 10-Q for the  quarterly  period ended
            June 30, 2002 (included at Appendix E).

     However,  any  references  in these  documents  to the  Private  Securities
Litigation  Reform  Act  and  "safe  harbor"   protection  for   forward-looking
statements are specifically not included in this proxy statement.

     Any  statement  contained in a document  incorporated  by reference in this
proxy statement shall be deemed to be modified or superseded for all purposes to
the extent  that a  statement  contained  in this proxy  statement  modifies  or


                                       79


replaces the  statement.  Any statement so modified or  superseded  shall not be
deemed,  except as so modified or superseded,  to constitute  part of this proxy
statement.

     We undertake to provide by first class mail, without charge upon receipt of
any  written  or oral  request,  to any  person  to  whom a copy  of this  proxy
statement has been delivered,  a copy of any or all of the documents referred to
above which have been  incorporated by reference in this proxy statement,  other
than  exhibits  to  the   documents,   unless  the  exhibits  are   specifically
incorporated by reference  therein.  If you would like to request documents from
us,  please do so at least five  business  days  before the date of the  special
meeting in order to  receive  timely  delivery  of such  documents  prior to the
special  meeting.  Requests  for  copies  should be  directed  to Mark  Weicher,
PartsBase,  Inc., 905 Clint Moore Road,  Boca Raton,  Florida  33487;  telephone
(561) 953-0700 extension 2702.

     No persons  have been  authorized  to give any  information  or to make any
representations  other than those  contained,  or incorporated by reference,  in
this proxy statement,  and if given or made, such information or representations
must not be relied upon as having been authorized by us or any other person. You
should rely only on the  information  contained in this proxy  statement to vote
your shares at the special meeting. We have not authorized anyone to provide you
with  information  that is  different  from  what  is  contained  in this  proxy
statement. This proxy statement is dated __________, 2002.

     You  should  not  assume  that  the  information  contained  in this  proxy
statement  is accurate  as of any date other than that date,  and the mailing of
this proxy  statement to  stockholders  does not create any  implication  to the
contrary.  This proxy  statement does not constitute an offer to sell or to buy,
or a  solicitation  of an  offer  to  sell  or to buy,  any  securities,  or the
solicitation of a proxy, in any jurisdiction to or from any person to whom it is
not lawful to make any offer or solicitation in such jurisdiction.

                                 OTHER BUSINESS
                                 --------------

     We know of no other  business  to be  acted  upon at the  Special  Meeting.
However,  if any other business properly comes before the Special Meeting, it is
the  intention of the persons  named on the  enclosed  proxy card and to vote on
such matters in accordance  with their best judgment.  The prompt return of your
proxy  will  be  appreciated  and  helpful  in  obtaining  the  necessary  note.
Therefore,  whether or not you expect to attend the Special Meeting, please sign
the proxy and return it in the enclosed envelope.

                       By Order of the Board of Directors,


                           /s/ Robert H. Hammond, Jr.
                           --------------------------
                             Robert H. Hammond, Jr.


                                       80








                                   APPENDIX A
                          Agreement and Plan of Merger

 AGREEMENT AND PLAN OF MERGER


                           DATED AS OF AUGUST 26, 2002

                                      AMONG

                   HAMMOND I, INC., HAMMOND ACQUISITION CORP.,
                             ROBERT A. HAMMOND, JR.

                               AND PARTSBASE, INC.







                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE I THE MERGER....................................................      2
  1.1   The Merger......................................................      2
  1.2   Closing.........................................................      2
  1.3   Effective Time of the Merger....................................      2
  1.4   Effects of the Merger...........................................      2
  1.5   Certificate of Incorporation; Bylaws............................      3
  1.6   Directors; Officers.............................................      3

ARTICLE II CANCELLATION OF THE CAPITAL STOCK OF THE COMPANY
            AND PAYMENT WITH RESPECT THERETO............................      3
  2.1   Effect on Capital Stock.........................................      3
  2.2   Delivery of Merger Consideration................................      4
  2.3   Stock Options and Warrants with
          Respect to Company Common Stock...............................      6

ARTICLE III REPRESENTATIONS AND WARRANTIES..............................      6
  3.1   Representations and Warranties of the Company...................      6
  3.2   Representations and Warranties of Hammond,
          Hammond I, Inc. and Merger Sub................................     11

ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS....................     13
  4.1   Covenants of Company............................................     13
  4.2   Covenants of Hammond, Hammond I, Inc. and Merger Sub............     16
  4.3   Competing Transactions..........................................     16

ARTICLE V ADDITIONAL AGREEMENTS.........................................     17
  5.1   Preparation of the Proxy Statement and Schedule 13E-3...........     17
  5.2   Stockholders' Meeting...........................................     17
  5.3   Legal Conditions to Merger......................................     18
  5.4   Brokers or Finders..............................................     18
  5.5   Shareholder Lists...............................................     19
  5.6   Shareholder Litigation..........................................     19
  5.7   Communication to Employees......................................     19

ARTICLE VI CONDITIONS PRECEDENT.........................................     19
  6.1   Conditions to Each Party's Obligation To Effect the Merger......     19
  6.2   Conditions to Obligations of Hammond, Hammond I, Inc. and
          Merger Sub....................................................     20
  6.3   Conditions to Obligations of Company............................     21


                                       A- i



ARTICLE VII TERMINATION AND AMENDMENT...................................     22
  7.1   Termination.....................................................     22
  7.2   Effect of Termination...........................................     23
  7.3   Fees, Expenses and Other Payments...............................     23
  7.4   Amendment.......................................................     24
  7.5   Extension; Waiver...............................................     25

ARTICLE VIII GENERAL PROVISIONS.........................................     25
  8.1   Survival of Representations, Warranties and Agreements...........    25
  8.2   Notices..........................................................    25
  8.3   Certain Definitions..............................................    26
  8.4   Interpretation...................................................    27
  8.5   Counterparts.....................................................    28
  8.6   Entire Agreement; No Third Party Beneficiaries;
          Rights of Ownership............................................    28
  8.7   Governing Law; Consent to Jurisdiction...........................    28
  8.8   Severability; No Remedy in Certain Circumstances.................    28
  8.9   Publicity........................................................    29
  8.10  Assignment.......................................................    29
  8.11  Adjustment.......................................................    29

EXHIBIT A Certificate of Incorporation of Merger Sub.....................    31

EXHIBIT B Bylaws of Merger Sub...........................................    34


                                       A-ii



     AGREEMENT  AND PLAN OF MERGER  (this  "Agreement"),  dated as of August 26,
2002, among Hammond I, Inc., a Florida corporation ("Hammond I, Inc."),  Hammond
Acquisition  Corp.,  a Delaware  corporation  and a  wholly-owned  Subsidiary of
Hammond  I,  Inc.  ("Merger  Sub"),  Robert  A.  Hammond,  Jr.  ("Hammond")  and
PartsBase, Inc., a Delaware corporation (the "Company").

                                    RECITALS

     WHEREAS,  Hammond I, Inc. together with its affiliates,  including Hammond,
are the beneficial  owners of 9,150,000  shares of Common Stock, par value $.001
per share,  of the  Company  (the  "Company  Common  Stock"),  which  represents
approximately  64.7% of the  outstanding  shares of  Company  Common  Stock (not
including  outstanding  shares  held by the  Company in its  treasury  or by its
Subsidiaries).

     WHEREAS,  Hammond I, Inc.  has proposed  that Hammond I, Inc.  acquire (the
"Acquisition")  all of the issued and outstanding shares of the Company's Common
Stock not  beneficially  owned (within the meaning of Rule 13d-3 of the Exchange
Act (as defined below)) (the "Shares") by Hammond I, Inc.,  Merger Sub,  Hammond
or any other  Affiliate (as  hereinafter  defined),  other than the Company,  of
Hammond I, Inc. (collectively, the "Acquisition Group").

     WHEREAS, in furtherance of the Acquisition,  it is proposed that Merger Sub
shall be merged with and into the Company,  with the Company  continuing  as the
surviving corporation (the "Merger"), in accordance with the General Corporation
Law of the State of Delaware  (the "DGCL") and upon the terms and subject to the
conditions set forth herein.

     WHEREAS,  a special committee of the Board of Directors of the Company (the
"Board"), consisting entirely of non-management directors of the Company who are
not  Affiliates (as defined below) of the  Acquisition  Group (the  "Independent
Committee"),   was  established  for,  among  other  purposes,  the  purpose  of
evaluating the Acquisition and making a recommendation  to the Board with regard
to the Acquisition.

     WHEREAS,  the  Independent  Committee  has received the opinion of vFinance
Investments,  Inc. (the "Independent Advisor"), an independent financial advisor
to the Independent  Committee,  which was selected by it, that, as of August 26,
2002, the  consideration to be received by the holders of Shares pursuant to the
Merger is fair to such holders from a financial point of view.


                                      A- 1



     WHEREAS,  the  Independent  Committee,  has,  after  consultation  with the
Independent Advisor and Epstein Becker & Green, P.C.,  independent legal counsel
selected by the Independent Committee,  and in light of and subject to the terms
and   conditions  set  forth  herein,   (i)  determined   that  (x)  the  Merger
Consideration  (as defined below),  is fair to the holders of Shares and (y) the
Merger is advisable and in the best  interests of the Company and the holders of
Shares;  (ii)  approved,  and declared the  advisability  of, this Agreement and
(iii) determined to recommend that the Board and the stockholders of the Company
vote to adopt this Agreement.

     WHEREAS,  the Board, based on the unanimous  recommendation and approval of
the  Independent  Committee,  has,  in light of and  subject  to the  terms  and
conditions set forth herein,  (i) determined  that (x) the Merger  Consideration
(as  defined  below),  is fair to the  holders  of Shares  and (y) the Merger is
advisable  and in the best  interests  of the Company and the holders of Shares;
(ii)  approved,  and  declared the  advisability  of, this  Agreement  and (iii)
determined to recommend that the  stockholders of the Company vote to adopt this
Agreement.  The Board also has consulted with Epstein  Becker & Green,  P.C., as
counsel for the Independent Committee.

     WHEREAS,  the respective  boards of directors of Hammond I, Inc. and Merger
Sub have approved this Agreement; and Hammond I, Inc. as the sole stockholder of
Merger Sub, has adopted this Agreement.

     WHEREAS, the Company, Hammond I, Inc. and Merger Sub desire to make certain
representations,  warranties,  covenants and  agreements in connection  with the
Merger and also to prescribe various conditions to the Merger.

     NOW,  THEREFORE,  in  consideration  of the  premises  and  of  the  mutual
covenants,  representations,  warranties and agreements  contained  herein,  the
parties hereto agree as follows:

                                    ARTICLE I

                                   THE MERGER
     1.1 The Merger.  Upon the terms and subject to the  conditions set forth in
this Agreement, and in accordance with the DGCL, Merger Sub shall be merged with
and into the Company at the Effective  Time. At the Effective Time, the separate
existence  of Merger Sub shall  cease,  and the  Company  shall  continue as the
surviving corporation (the "Surviving Corporation") and shall continue under the
name "PartsBase, Inc."

     1.2 Closing.  Unless this Agreement shall have been terminated  pursuant to
Section  7.1 and subject to the  satisfaction  or waiver of the  conditions  set
forth in Article VI, the closing of the Merger (the  "Closing")  will take place
as  promptly  as  practicable  (and in any  event  within  five  business  days)
following  satisfaction or waiver of the conditions set forth in Article VI (the
"Closing  Date"),  at the  offices  of  Adorno & Yoss,  P.A.,  350 East Las Olas
Boulevard, Suite 1700, Fort Lauderdale, Florida 33301, unless another date, time
or place is agreed to in writing by the parties hereto.



     1.3  Effective  Time of the Merger.  As soon as  practicable  following the
satisfaction  or waiver of the conditions set forth in Article VI, the Surviving
Corporation shall file a certificate of merger conforming to the requirements of
Subchapter  IX of the DGCL (the  "Certificate  of Merger") with the Secretary of
State of the State of Delaware and make all other filings or recordings required
by the DGCL in connection with the Merger.  The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Secretary of State


                                       A- 2


of the State of Delaware,  or such other time  thereafter  as is provided in the
Certificate of Merger in accordance with the DGCL (the "Effective Time").

     1.4 Effects of the Merger.  The Merger  shall have the effects set forth in
this Agreement and in the applicable provisions of the DGCL.

     1.5 Certificate of Incorporation; Bylaws.

         (a) The certificate of incorporation of Merger Sub which is attached as
Exhibit A hereto, as in effect immediately prior to the Effective Time, shall be
the certificate of incorporation of the Surviving  Corporation  until thereafter
changed or amended as  provided  therein or by  applicable  law;  provided  that
Article I of the certificate of incorporation of the Surviving Corporation shall
be amended by the  Certificate  of Merger to read as  follows:  "The name of the
corporation is: PartsBase, Inc."

         (b) The  bylaws of Merger  Sub which are  attached  as Exhibit B hereto
shall be the bylaws of the Surviving  Corporation  until  thereafter  changed or
amended as provided therein or by applicable law.

     1.6 Directors; Officers.

         (a) The  directors  of Merger  Sub at the  Effective  Time shall be the
directors of the Surviving  Corporation,  until the earlier of their resignation
or removal or until their respective  successors are duly elected and qualified,
as the case may be.

         (b) The  officers  of Merger  Sub at the  Effective  Time  shall be the
officers of the Surviving Corporation, until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified,  as
the case may be.

                                   ARTICLE II

                CANCELLATION OF THE CAPITAL STOCK OF THE COMPANY
                        AND PAYMENT WITH RESPECT THERETO

     2.1  Effect on  Capital  Stock.  At the  Effective  Time,  by virtue of the
Merger, and without any action on the part of the holder thereof:

         (a)  subject  to Section  2.1(e),  each  Share  issued and  outstanding
immediately  prior to the Effective  Time,  shall be converted into the right to
receive  an  amount  in cash,  without  interest,  equal to $1.41  (the  "Merger
Consideration") in the manner provided in Section 2.2 hereof;



                                     A- 3




         (b) each share of Company Common Stock issued and held in the Company's
treasury  or held by any  Subsidiary  of the  Company  immediately  prior to the
Effective  Time,  shall,  by virtue of the Merger,  cease to be outstanding  and
shall be cancelled and retired without payment of any consideration therefor;

         (c) each  share of  Company  Common  Stock  held by any  member  of the
Acquisition   Group  immediately  prior  to  the  Effective  Time  shall  remain
outstanding;

         (d) each share of common  stock,  par value $.001 per share,  of Merger
Sub ("Merger Sub Common Stock") issued and outstanding  immediately prior to the
Effective   Time  shall  be  converted  into  and  become  one  fully  paid  and
nonassessable share of common stock of the Surviving Corporation; and

         (e) notwithstanding  anything in this Agreement to the contrary, to the
extent provided by the DGCL, Hammond I, Inc. will not make any payment of Merger
Consideration  with  respect  to  Shares  held  by  any  person  (a  "Dissenting
Stockholder")  who elects to demand  appraisal of such Dissenting  Stockholder's
Shares  and  duly  and  timely  complies  with  all the  provisions  of the DGCL
concerning  the right of holders of Shares to require  appraisal of their shares
("Dissenting Shares"), but such Dissenting  Stockholders shall have the right to
receive  such  consideration  as may be  determined  to be due  such  Dissenting
Stockholders  pursuant  to the laws of the  State of  Delaware.  If,  after  the
Effective Time, a Dissenting Stockholder withdraws such Dissenting Stockholder's
demand for  appraisal  or fails to perfect or  otherwise  loses such  Dissenting
Stockholder's  right  of  appraisal,  in any case  pursuant  to the  DGCL,  such
Dissenting  Stockholder's  Shares  will  be  deemed  to be  converted  as of the
Effective  Time into the right to receive the Merger  Consideration  pursuant to
Section  2.1(a).  The Company will give Hammond I, Inc. (i) prompt notice of any
demands for appraisal of Dissenting  Shares received by the Company and (ii) the
opportunity to participate in all  negotiations  and proceedings with respect to
any such demands.  The Company will not,  without the prior  written  consent of
Hammond  I,  Inc.,  make  any  payment  with  respect  to,  or  enter  into  any
negotiations or discussions or a binding settlement  agreement or make an offer,
written or oral, to settle, any such demands.

     2.2 Delivery of Merger Consideration.

         (a) Payment  Agent.  As of the Effective  Time,  Hammond I, Inc.  shall
deposit, or shall cause to be deposited, with a bank or trust company designated
by Hammond I, Inc.  (the  "Payment  Agent"),  and  reasonably  acceptable to the
Company,  for the  benefit of the holders of Shares,  for payment in  accordance
with this Article II through the Payment Agent,  the Merger  Consideration to be
paid in respect of all Shares (such funds deposited with the Payment Agent,  the
"Payment  Fund").  If requested in writing by Hammond I, Inc.,  the Payment Fund
shall be made  available  by the  Company  to the  Payment  Agent  from  Company
available cash.

         (b)  Payment  Procedures.  Within  five (5)  business  days  after  the
Effective  Time,  the  Payment  Agent  shall mail to each  holder of record of a
certificate  or  certificates  which  immediately  prior to the  Effective  Time
represented Shares (the "Certificates"),  the following documents:  (i) a letter


                                      A- 4


of transmittal (which shall specify that delivery shall be effected, and risk of
loss and  title to the  Certificates  shall  pass,  only  upon  delivery  of the
Certificates  to the Payment Agent and shall be in such form and have such other
provisions as Hammond I, Inc. may reasonably specify); and (ii) instructions for
use in effecting the surrender of the  Certificates in exchange for payment with
respect thereto. Upon surrender of a Certificate for cancellation to the Payment
Agent together with such letter of  transmittal,  duly  executed,  the holder of
such  Certificate  shall be entitled to receive in exchange  therefor the Merger
Consideration payable with respect to the Shares represented by such Certificate
pursuant  to  the  provisions  of  this  Article  II,  and  the  Certificate  so
surrendered shall forthwith be cancelled. In the event that a holder has lost or
misplaced  a  Certificate,  an  affidavit  of  loss  thereof  (together  with an
appropriate  indemnity  and/or  bond if Hammond I, Inc. so requires by notice in
writing to the holder of such Certificate) satisfactory in form and substance to
the Company's  transfer agent and the Payment Agent shall  accompany such letter
of transmittal in lieu of the applicable Certificate. In the event of a transfer
of ownership of Shares which is not  registered  in the transfer  records of the
Company,  payment  of the  applicable  Merger  Consideration  may be  made  to a
transferee  if the  Certificate  representing  such Shares is  presented  to the
Payment Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence  that any  applicable  stock  transfer  taxes have been
paid.  Until  surrendered as contemplated by this Section 2.2, each  Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the Merger  Consideration with respect thereto as
contemplated  by this  Section  2.2. No interest  shall accrue or be paid to any
beneficial  owner of Shares or any holder of any Certificate with respect to the
Merger Consideration payable upon the surrender of any Certificate.

         (c) No Further Ownership Rights in the Shares. The Merger Consideration
paid with respect to the  cancellation  of Shares in  accordance  with the terms
hereof  shall be deemed to have been  paid in full  satisfaction  of all  rights
pertaining  to such  Shares  and  there  shall  be no  further  registration  of
transfers on the stock transfer books of the Surviving Corporation of the Shares
which were  outstanding  immediately  prior to the Effective Time. If, after the
Effective Time,  Certificates are presented to the Surviving Corporation for any
reason,  they shall be cancelled  and  exchanged as provided in this Article II,
subject to applicable law in the case of Dissenting Shares.

         (d)  Termination of Payment Fund. Any portion of the Payment Fund which
remains  undistributed to the stockholders of the Company for one (1) year after
the Effective Time shall be delivered to the Surviving Corporation, upon demand,
and any stockholders of the Company who have not theretofore  complied with this
Article II shall  thereafter look only to the Surviving  Corporation for payment
of their claim for the Merger  Consideration.  Upon  termination  of the Payment
Fund pursuant to this subsection and upon delivery to the Surviving  Corporation
of the balance thereof, the Surviving Corporation shall have the right to invest
any such amount delivered to it in its sole discretion.

         (e) None of the Surviving  Corporation,  Hammond I, Inc. or the Payment
Agent shall be liable to any holder of a Certificate  or the shares  represented


                                    A- 5


thereby for any Merger Consideration delivered in respect of such Certificate or
the shares  represented  thereby to a public official  pursuant to any abandoned
property, escheat or other similar law.

         (f) Investment of Payment Fund. The Payment Agent shall invest any cash
included in the Payment Fund as directed by the  Surviving  Corporation,  in (i)
obligations  of or guaranteed by the United  States,  and (ii)  certificates  of
deposit,  bank  repurchase  agreements  and bankers'  acceptances of any bank or
trust company  organized  under federal law or under the law of any state of the
United  States or of the  District of  Columbia  that has  capital,  surplus and
undivided  profits of at least $500  million or in money  market funds which are
invested substantially in such investments,  none of which shall have maturities
of greater  than one year.  Any  interest or other  income  resulting  from such
investments shall be paid to the Surviving Corporation.

         (g) Withholding  Rights.  Hammond I, Inc. or the Payment Agent shall be
entitled  to  deduct  and  withhold  from the  consideration  otherwise  payable
pursuant to this Agreement to any holder of Certificates  or Shares  represented
thereby  such  amounts  (if any) as  Hammond  I, Inc.  or the  Payment  Agent is
required to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "Code"),  or any provision of
state,  local or foreign tax law. To the extent that  amounts are so withheld by
Hammond I, Inc. or the Payment Agent, such withheld amounts shall be treated for
all  purposes of this  Agreement as having been paid to the holder of the Shares
in respect of which such deduction and  withholding  was made by Hammond I, Inc.
or the Payment Agent.

     2.3 Stock  Options and Warrants with Respect to Company  Common Stock.  The
Company shall take all actions necessary pursuant to the terms and provisions of
any outstanding  options and warrants to acquire shares of Company Common Stock,
to  cause  the  following:  except  as  specifically  disclosed  in the  Company
Disclosure Letter (as hereinafter defined), all outstanding options and warrants
to acquire shares of Company Common Stock granted under the Company Stock Option
Plans (the "Company Stock Plan") or otherwise (the "Company Stock Options") will
terminate  and expire as of the Effective  Time.  The Company shall give written
notice to the holders of all Company  Stock  Options of the  foregoing  and each
such Company Stock Option shall thereafter be canceled.  All actions required to
be taken  pursuant to this Section  2.3(a) with respect to Company Stock Options
has been,  or prior to the  Effective  Time will be, taken by the  Company.  The
Company may permit  holders of Company  Stock  Options to exercise  such Company
Stock  Options prior to the  Effective  Time by accepting as payment  therefor a
portion of the number of shares  issuable  upon such exercise with a value equal
to the aggregate  exercise  price of such Company  Stock  Options  valued at the
merger consideration.


                                     A- 6



                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     3.1 Representations  and Warranties of the Company.  The Company represents
and  warrants  to Hammond I, Inc.  and Merger Sub that,  except as  specifically
disclosed  in the letter  dated the date hereof and  delivered by the Company to
Hammond I, Inc. simultaneously with the execution and delivery of this Agreement
(the "Company Disclosure Letter"):

         (a)  Organization,  Standing  and Power.  Each of the  Company  and its
Subsidiaries  is a  corporation  duly  organized,  validly  existing and in good
standing  under  the  laws of the  jurisdiction  of its  incorporation,  has all
requisite power and authority and all necessary  governmental  approvals to own,
lease and operate its properties and assets and to conduct its business as it is
now being  conducted and is duly qualified and in good corporate  standing to do
business  in each  jurisdiction  in which  the  nature  of its  business  or the
ownership  or leasing of its  properties  and  assets  makes such  qualification
necessary,  other  than in such  jurisdictions  where the  failure so to qualify
would not,  individually or in the aggregate,  be reasonably  expected to have a
Material  Adverse  Effect on the  Company.  The  Company has made  available  to
Hammond I, Inc. true and complete copies of its certificate of incorporation and
bylaws  and  the  certificate  of   incorporation   and  bylaws  (or  equivalent
organizational  documents) of each Subsidiary of the Company, each as amended to
date. Such  certificates of incorporation,  bylaws or equivalent  organizational
documents  are in full  force  and  effect,  and  neither  the  Company  nor any
Subsidiary of the Company is in violation of any provision of its certificate of
incorporation, bylaws or equivalent organizational documents.

         (b) Subsidiaries.  The Company owns, directly or indirectly, all of the
outstanding  capital stock or other equity interests in each of its Subsidiaries
free and clear of any claim, lien,  encumbrance,  security interest or agreement
with respect  thereto.  Other than the capital stock or other  interests held by
the Company in such  Subsidiaries,  neither the Company nor any such  Subsidiary
owns any direct or indirect equity interest in any person,  domestic or foreign.
All of the  outstanding  shares  of  capital  stock  in  each  of its  corporate
Subsidiaries are duly authorized,  validly issued,  fully paid and nonassessable
and were issued free of  preemptive  rights and in  compliance  with  applicable
securities  laws and  regulations.  There are no irrevocable  proxies or similar
obligations  with  respect to such  capital  stock of such  Subsidiaries  and no
equity  securities  or other  interests  of any of its  Subsidiaries  are or may
become  required to be issued or purchased  by reason of any options,  warrants,
rights to subscribe to, puts,  calls or commitments of any character  whatsoever
relating to, or  securities  or rights  convertible  into or  exchangeable  for,
shares of any capital stock or any other equity interest of any such Subsidiary,
and  there  are  no  agreements,  contracts,   commitments,   understandings  or
arrangements by which any such Subsidiary is bound to issue additional shares of
its capital stock or other equity interests,  or options,  warrants or rights to
purchase or acquire any  additional  shares of its capital stock or other equity
interests or  securities  convertible  into or  exchangeable  for such shares or
other equity interests.

                                    A- 7


         (c) Capital Structure.

             (i)  The  authorized  capital  stock  of the  Company  consists  of
30,000,000 shares of Company Common Stock,  2,000,000 shares of Preferred Stock,
none of which are outstanding.  As of the date hereof,  (A) 13,977,920 shares of
Company Common Stock were outstanding,  (B) 1,007,938 Company Stock Options were
outstanding, each such option entitling the holder thereof to purchase one share
of Company  Common  Stock,  (C)  1,839,887  shares of Company  Common  Stock are
authorized  and reserved for issuance upon the exercise of  outstanding  Company
Stock  Options,  and (D) no  shares of  Company  Common  Stock  were held by the
Company in its treasury or by its Subsidiaries.

             (ii) No bonds,  debentures,  notes or other indebtedness having the
right to vote (or  convertible  into or exercisable  for  securities  having the
right to vote) on any matters on which  stockholders may vote ("Voting Debt") of
the Company are issued or outstanding.

             (iii) All  outstanding  shares of the  Company's  capital stock are
validly issued,  fully paid and nonassessable and free of preemptive rights. All
shares of Company  Common Stock subject to issuance upon the exercise of Company
Stock  Options,  upon  issuance  on the terms and  conditions  specified  in the
instruments  pursuant  to which  they  are  issuable,  will be duly  authorized,
validly issued, fully paid and nonassessable and free of preemptive rights.

             (iv) Except for this  Agreement,  the Company  Stock Plans,  as set
forth in the  Company's  annual  report on  Form10-K  for the fiscal  year ended
December 31, 2001 and as disclosed in the Company Disclosure  Letter,  there are
no options,  warrants,  calls, rights,  convertible  securities,  subscriptions,
stock appreciation  rights,  phantom stock plans or stock equivalents,  or other
rights,  commitments  or agreements of any character to which the Company or any
Subsidiary  of the  Company  is a party or by which it is bound  obligating  the
Company or any Subsidiary of the Company to issue,  deliver or sell, or cause to
be issued,  delivered or sold,  additional shares of capital stock or any Voting
Debt of the  Company  or of any  Subsidiary  of the  Company or  obligating  the
Company or any Subsidiary of the Company to grant, extend or enter into any such
option,  warrant,  call,  right,  commitment or agreement for  consideration per
share  of  less  than  the  Merger  Consideration.   There  are  no  outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries.

         (d) Authority.

             (i) The Company has all requisite  corporate power and authority to
enter into this Agreement and,  subject to approval by the  stockholders  of the
Company, to consummate the transactions  contemplated  hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary  corporate  action on the part
of the Company,  other than such  approval by the  stockholders  of the Company.
This  Agreement  has  been  duly  executed  and  delivered  by the  Company  and
constitutes  a valid  and  binding  obligation  of the  Company  enforceable  in


                                      A- 8


accordance  with its  terms,  except  as  affected  by  bankruptcy,  insolvency,
fraudulent  conveyance,  reorganization,   moratorium  and  other  similar  laws
relating to or  affecting  creditors'  rights  generally  and general  equitable
principles  (whether  considered  in a  proceeding  in  equity  or at law).  The
affirmative  vote of holders of a majority of the outstanding  shares of Company
Common Stock entitled to vote at a duly called and held meeting of  stockholders
(the  "Stockholders'  Meeting") is the only vote of the  Company's  stockholders
necessary  to approve  this  Agreement,  the  Merger and the other  transactions
contemplated  by this  Agreement,  provided that a majority of the Shares do not
vote  against  approval  of this  Agreement,  the  Merger  and the  transactions
contemplated  thereby.  The  Independent  Committee has been duly authorized and
constituted  and the Board,  based on the  approval  and  recommendation  of the
Independent Committee at a meeting duly called and held, has (A) determined that
(x) the Merger Consideration is fair to the holders of Shares and (y) the Merger
is advisable and in the best interests of the Company and the holders of Shares,
and (B) approved and declared the  advisability  of this Agreement in accordance
with the  provisions  of the DGCL.  The  Independent  Committee has received the
written  opinion  (the  "Fairness  Opinion") of the  Independent  Advisor to the
effect that,  as of the date of this  Agreement the Merger  Consideration  to be
paid to  holders of Shares is fair to such  holders  from a  financial  point of
view, and, as of the date hereof, such Fairness Opinion has not been withdrawn.

             (ii) Subject to compliance with the applicable  requirements of the
Exchange  Act and the filing of the  Certificate  of Merger as  contemplated  by
Section 1.3, the execution and delivery of this Agreement and the Certificate of
Merger,  the consummation of the transactions  contemplated  hereby and thereby,
and compliance of the Company with any of the provisions  hereof or thereof will
not breach,  constitute an ultra vires act under, or result in any violation of,
or default  (with or without  notice or lapse of time,  or both) under,  or give
rise to a right of  termination,  cancellation or acceleration of any obligation
or the loss of a material  benefit  under,  or the  creation of a lien,  pledge,
security interest, charge or other encumbrance on assets (any such breach, ultra
vires act, violation, default, right of termination, cancellation, acceleration,
loss  or  creation,  a  "Violation")  pursuant  to,  (x)  any  provision  of the
certificate  of  incorporation  or  bylaws  of  the  Company  or  the  governing
instruments  of any  Subsidiary  of the Company or (y) subject to  obtaining  or
making  the  consents,   approvals,   orders,   authorizations,   registrations,
declarations  and filings referred to in paragraph (iii) below or in the Company
Disclosure  Letter,  any loan or credit agreement,  note,  mortgage,  indenture,
lease,  or  other  agreement,   obligation,   instrument,   permit,  concession,
franchise,  license,  judgment,  order, decree, statute, law, ordinance, rule or
regulation  applicable to the Company or any  Subsidiary of the Company or their
respective  properties or assets except  Violations under clause (y) which would
not be reasonably expected to have a Material Adverse Effect on the Company.

             (iii)  No  consent,   approval,   order  or  authorization  of,  or
registration,  declaration or filing with, any court,  administrative  agency or
commission  or other  governmental  authority  or  instrumentality,  domestic or
foreign (a "Governmental Entity"), is required by or with respect to the Company
or any  Subsidiary of the Company in connection  with the execution and delivery
of this Agreement and the Certificate of Merger by the Company, the consummation
by  the  Company  of the  transactions  contemplated  hereby  and  thereby,  and


                                      A- 9


compliance  of the Company  with any of the  provisions  hereof or thereof,  the
failure to obtain which would be reasonably  expected to have a Material Adverse
Effect  on the  Company,  except  for (A) the  filing  with the  Securities  and
Exchange  Commission  (the "SEC") of (1) a Proxy  Statement in  definitive  form
relating to the meeting of the Company's  stockholders  to be held in connection
with the Merger,  (2) a Transaction  Statement on Schedule 13E-3 (as hereinafter
defined) and (3) such other filings under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby, (B) the
filing  of the  Certificate  of  Merger  as  contemplated  by  Section  1.1  and
appropriate  documents  with the  relevant  authorities  of  states in which the
Company is qualified to do  business,  and (c) filings  pursuant to the rules of
the NASDAQ Stock Market.

         (e) SEC Documents.  All the documents (other than preliminary material)
that the  Company  was  required  to file with the SEC for the past three  years
including, without limitation, each report, schedule, registration statement and
definitive  proxy  statement  filed by the Company (as such documents have since
the time of their filing been amended,  the "Company SEC Documents"),  have been
timely  filed.  As of their  respective  dates,  (i) the Company  SEC  Documents
complied  as to form in all  material  respects  with  the  requirements  of the
Securities Act of 1933, as amended (the  "Securities  Act") or the Exchange Act,
as the  case  may be,  and  the  rules  and  regulations  of the SEC  thereunder
applicable  to such  Company  SEC  Documents,  and (ii) none of the  Company SEC
Documents  at the time of filing  contained  any untrue  statement of a material
fact or  omitted  to state a  material  fact  required  to be stated  therein or
necessary to make the statements  therein,  in light of the circumstances  under
which they were made, not misleading,  except to the extent such statements have
been  modified  or  superseded  by  later  Company  SEC  Documents  filed  on  a
non-confidential  basis  as of the  date of  this  Agreement.  The  consolidated
financial  statements  of the Company  included  in the  Company  SEC  Documents
(including, without limitation, the audited balance sheet and related statements
of  operations,  stockholders'  equity  and cash  flows of the  Company  and its
Subsidiaries for the fiscal year ended December 31, 2001, as audited by Deloitte
& Touche,  LLP (such  balance sheet is referred to  hereinafter  as the "Balance
Sheet" and the Balance Sheet and related  statements are referred to hereinafter
as the "Year-End Financial Statements")), complied in all material respects with
applicable accounting  requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods  involved and fairly present in all material  respects the  consolidated
financial  position of the Company and its  consolidated  Subsidiaries as at the
dates thereof and the consolidated  results of their  operations,  stockholders'
equity and cash flows for the periods then ended in accordance  with GAAP. As of
December  31,  2001,  neither the Company  nor any of its  Subsidiaries  had any
liabilities or obligations of any nature, whether or not accrued,  contingent or
otherwise,  that would be required  by GAAP to be  reflected  on a  consolidated
balance sheet of the Company and its Subsidiaries  (including the notes thereto)
and which were not  reflected  on the Balance  Sheet.  Since  December 31, 2001,
except as and to the extent set forth in the  Company's SEC Documents and except
for  liabilities  or  obligations  incurred in the  ordinary  course of business
consistent with past practice and of substantially the same character,  type and
magnitude  as  incurred  in  the  past,  neither  the  Company  nor  any  of its


                                     A-10


Subsidiaries has incurred any liabilities or obligations of any nature,  whether
or not accrued,  contingent or otherwise,  that would be reasonably  expected to
have a Material  Adverse Effect on the Company.  All  agreements,  contracts and
other  documents  required  to be filed as  exhibits  to any of the  Company SEC
Documents  have been so filed.  No Subsidiary of the Company is required to file
any form, report or other document with the SEC.

         (f)  Information   Supplied.   None  of  the  information  included  or
incorporated  by reference in the Proxy  Statement or the Schedule  13E-3 (other
than information  concerning Hammond,  Hammond I, Inc. or Merger Sub provided in
writing by  Hammond I, Inc.  or Merger  Sub or their  counsel  specifically  for
inclusion or incorporation by reference therein) will, at the date of mailing to
stockholders of the Company and at the time of the meeting of stockholders to be
held in connection with the Merger,  contain any untrue  statement of a material
fact or omit to state  any  material  fact  required  to be  stated  therein  or
necessary in order to make the statements therein, in light of the circumstances
under which they were made,  not  misleading.  The Proxy  Statement and Schedule
13E-3 (except for information concerning Hammond,  Hammond I, Inc. or Merger Sub
provided in writing by Hammond,  Hammond I, Inc. or Merger Sub or their  counsel
specifically for inclusion or incorporation by reference therein) will comply as
to form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.

         (g) Absence of Certain  Changes or Events.  Except as  contemplated  by
this  Agreement  or as  disclosed  in the  Company  Disclosure  Letter or in the
Company SEC Documents, since December 31, 2001, the Company and its Subsidiaries
have  conducted  their  respective  businesses  only in the ordinary  course and
consistent  with prior  practice  and there has not been any event,  occurrence,
fact, condition,  change, development or effect that has had or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company.

         (h) Litigation.  Except as set forth on the Company  Disclosure Letter,
there  are no  material  claims,  actions,  suits  or  legal  or  administrative
arbitrations  or other  proceedings  or  investigations  ("Litigation")  pending
against the Company or any of its Subsidiaries,  or, to the Company's knowledge,
threatened  against or affecting the Company or any of its  Subsidiaries,  or to
which  the  Company  or any of its  Subsidiaries  is a party,  before  or by any
Federal,  foreign,  state,  local  or  other  governmental  or  non-governmental
department,  commission,  board, bureau, agency, court or other instrumentality,
or by any  private  person  or  entity.  There are no  existing  or, to the best
knowledge of the Company,  threatened  material orders,  judgments or decrees of
any court or other Governmental  Entity which specifically apply to the Company,
any of its Subsidiaries or any of their respective properties or assets.

         (i) Section 203 of the DGCL and the Certificate of  Incorporation.  The
Board and the Independent  Committee has approved the Merger and this Agreement,
and such  approval is sufficient  to comply with or render  inapplicable  to the
Merger and this Agreement, and the transactions  contemplated by this Agreement,
the  provisions of Section 203 of the DGCL. No other state  takeover  statute or
similar statute or regulation  applies or purports to apply to the Merger,  this


                                     A-11


Agreement or the  transactions  contemplated by this Agreement.  No provision of
the certificate of incorporation,  bylaws and/or other governing  instruments of
the Company or any of its  Subsidiaries  would restrict or impair the ability of
Hammond I, Inc. to vote,  or otherwise  to exercise the rights of a  stockholder
with respect to, shares of the Company and any of its  Subsidiaries  that may be
acquired or controlled by Hammond I, Inc.

         (j)  Opinion  of  Financial  Advisor.  The  Independent  Committee  has
received the opinion of the Independent  Advisor dated as of August 26, 2002, to
the effect  that,  as of such date,  the  consideration  to be  received  by the
holders  of the  Shares  pursuant  to this  Agreement  is fair to holders of the
Shares from a financial  point of view, a signed copy of which  opinion has been
delivered to Hammond I, Inc.

         (k) Merger  Consideration.  If requested to do so in writing by Hammond
I, Inc.,  the Company  will provide to the Payment  Agent,  for deposit into the
Payment Fund, funds in an amount equal to the Merger Consideration to be paid in
respect of all Shares.

     3.2 Representations  and Warranties of Hammond,  Hammond I, Inc. and Merger
Sub. Hammond, Hammond I, Inc. and Merger Sub jointly and severally represent and
warrant to the Company as follows:

         (a)  Organization,  Standing  and Power.  Each of  Hammond I, Inc.  and
Merger  Sub is a  corporation,  duly  organized,  validly  existing  and in good
standing  under  the  laws of the  jurisdiction  of its  incorporation,  has all
requisite power and authority and all necessary  governmental  approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted,  and is duly  qualified  and in good  standing to do business in each
jurisdiction  in which the nature of its business or the ownership or leasing of
its  properties  makes  such  qualification   necessary,   other  than  in  such
jurisdictions where the failure so to qualify would not,  individually or in the
aggregate,  reasonably be expected to have a Material  Adverse Effect on Hammond
I, Inc. or Merger Sub.

         (b) Authority.

             (i)  Hammond I, Inc.  and Merger Sub have all  requisite  corporate
power  and  authority  to  enter  into  this  Agreement  and to  consummate  the
transactions  contemplated  hereby. The execution and delivery of this Agreement
and the  consummation  of the  transactions  contemplated  hereby have been duly
authorized by all necessary  corporate  action on the part of Hammond I, Inc. or
Merger  Sub,  as the case may be.  This  Agreement  has been duly  executed  and
delivered by Hammond, Hammond I, Inc. and Merger Sub and constitutes a valid and
binding  obligation  of Hammond,  Hammond I, Inc. or Merger Sub, as the case may
be, enforceable in accordance with its terms,  except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization,  moratorium and other similar
laws relating to or affecting  creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).

                                     A-12


             (ii) Subject to compliance with the applicable  requirements of the
Exchange Act and the filing of the  Certificate  of Merger,  the  execution  and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not result in any  Violation  pursuant to (x) any  provision  of the
certificate of  incorporation or bylaws of Hammond I, Inc., any provision of the
certificate  of  incorporation  or  bylaws  of  Merger  Sub,  or  the  governing
instruments  of any  other  Subsidiary  of  Hammond  I,  Inc.  or (y)  except as
disclosed in the letter  dated the date hereof and  delivered by Hammond I, Inc.
to the Company  simultaneously with the execution and delivery of this Agreement
(the "Hammond I, Inc. Disclosure Letter") and subject to obtaining or making the
consents,  approvals, orders,  authorizations,  registrations,  declarations and
filings  referred  to in  paragraph  (iii)  below  or in  the  Hammond  I,  Inc.
Disclosure  Letter,  any loan or credit agreement,  note,  mortgage,  indenture,
lease,  benefit  plan  or  other  agreement,  obligation,   instrument,  permit,
concession,   franchise,   license,   judgment,  order,  decree,  statute,  law,
ordinance, rule or regulation applicable to Hammond, Hammond I, Inc., Merger Sub
or any other  Subsidiary  of Hammond I, Inc. or their  respective  properties or
assets  except  Violations  under  clause  (y)  above  which do not or would not
reasonably be expected to have a Material Adverse Effect on Hammond I, Inc.

             (iii)  No  consent,   approval,   order  or  authorization  of,  or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Hammond,  Hammond I, Inc., Merger Sub or any other Subsidiary
of Hammond  I, Inc.  in  connection  with the  execution  and  delivery  of this
Agreement  by Hammond,  Hammond I, Inc.  and Merger  Sub,  the  consummation  by
Hammond,  Hammond I, Inc. or Merger Sub, as the case may be, of the transactions
contemplated  hereby, and compliance by Hammond,  Hammond I, Inc. and Merger Sub
with any of the provisions  hereof, the failure to obtain which would reasonably
be expected to have a Material  Adverse Effect on Hammond I, Inc. except for (A)
such filings under the Exchange Act as may be required in  connection  with this
Agreement and the transactions  contemplated hereby, including the filing of the
Schedule 13E-3,  and (B) the filing of the Certificate of Merger as contemplated
by Section 1.3 and appropriate documents with the relevant authorities of states
in which Hammond I, Inc. and Merger Sub are qualified to do business.

         (c) Information Supplied.  None of the information  concerning Hammond,
Hammond I, Inc.  or Merger Sub  provided  by or on behalf of Hammond I, Inc.  or
Merger Sub specifically for inclusion or incorporation by reference in the Proxy
Statement or the Schedule 13E-3 will, at the date of mailing to stockholders and
at the times of the meetings of  stockholders  to be held in connection with the
Merger,  contain any untrue  statement  of a material  fact or omit to state any
material  fact  required to be stated  therein or necessary in order to make the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.

         (d) Interim  Operations of Merger Sub.  Merger Sub was  incorporated on
May 15, 2002, has engaged in no other business  activities and has conducted its
operations only as contemplated hereby.

                                      A-13


                                   ARTICLE IV

                    COVENANTS RELATING TO CONDUCT OF BUSINESS

     4.1 Covenants of Company. During the period from the date of this Agreement
and continuing until the Effective Time, the Company agrees as to itself and its
Subsidiaries  that  (except  as  expressly  contemplated  or  permitted  by this
Agreement  or to the extent  that  Hammond I, Inc.  shall  otherwise  consent in
writing):

         (a) Ordinary Course.  The Company and its  Subsidiaries  shall carry on
their  respective  businesses in the usual,  regular and ordinary course and use
commercially  reasonable  efforts to  preserve  intact  their  present  business
organizations,  maintain  their rights and  preserve  their  relationships  with
employees,  officers,  customers,  suppliers and others having business dealings
with  them.  The  Company  and its  Subsidiaries  shall  maintain  in force  all
insurance  policies and Consents (as defined in Section 6.1) with respect to the
Company and its Subsidiaries and shall maintain all assets and properties of the
Company  and  its  Subsidiaries  in  customary  repair,   order  and  condition,
reasonable  wear and tear  excepted.  The Company shall not, nor shall it permit
any of its  Subsidiaries to, (i) enter into any new material line of business or
(ii) incur or commit to any significant capital  expenditures or any obligations
or liabilities  other than capital  expenditures  and obligations or liabilities
incurred or  committed to as disclosed  in the Company  Disclosure  Letter.  The
Company  and  its  Subsidiaries   will  comply  with  all  applicable  laws  and
regulations wherever its business is conducted, including without limitation the
timely  filing of all reports,  forms or other  documents  with the SEC required
pursuant  to  the  Securities  Act  or  the  Exchange  Act,  except  where  such
noncompliance would not be reasonably expected to have a Material Adverse Effect
on the Company.

         (b)  Dividends;  Changes in Stock.  The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall the Company propose to, (i) declare
or pay any  dividends  on or make other  distributions  in respect of any of its
capital stock,  other than cash dividends payable by a Subsidiary of the Company
to the Company or one of its Subsidiaries, (ii) split, combine or reclassify any
of its capital  stock or issue or authorize or propose the issuance of any other
securities  in  respect  of,  in lieu of or in  substitution  for  shares of its
capital stock, or (iii) except as set forth on the Company Disclosure  Schedule,
repurchase, redeem or otherwise acquire, or permit any Subsidiary to purchase or
otherwise acquire any shares of its capital stock or any securities  convertible
into or exercisable for any shares of its capital stock.

         (c) Issuance of Securities.  The Company shall not, nor shall it permit
any of its Subsidiaries to, issue,  deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class, any
Voting Debt or any securities convertible into or exercisable for (including any
stock appreciation  rights,  phantom stock plans or stock  equivalents),  or any
rights, warrants or options to acquire, any such shares or Voting Debt, or enter
into any agreement with respect to any of the foregoing, other than issuances of
Company  Common Stock  pursuant to exercises of Company Stock Options or Company
Common Stock awards to directors listed in the Company Disclosure Letter.

                                     A-14


         (d)  Governing  Documents.  The  Company  shall not amend or propose to
amend,  nor shall it permit any of its  Subsidiaries to amend,  their respective
certificates of incorporation, bylaws or other governing instruments.

         (e) No Acquisitions.  The Company shall not, nor shall it permit any of
its Subsidiaries to, (i) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets  of, or by any other  manner,  any  business  or any  corporation,
limited   liability   company,   partnership,   association  or  other  business
organization  or division  thereof or (ii) other than in the ordinary  course of
business, otherwise acquire or agree to acquire any assets which, in the case of
this  clause  (ii),  are  material,  individually  or in the  aggregate,  to the
Company.

         (f) No Dispositions.  The Company shall not, nor shall it permit any of
its Subsidiaries to, sell, lease,  encumber or otherwise dispose of, or agree to
sell,  lease,  encumber  or  otherwise  dispose of any of its assets  (including
capital stock of  Subsidiaries),  except as disclosed in the Company  Disclosure
Letter and for  dispositions  in the ordinary  course of business and consistent
with past practice and of substantially  the same character,  type and magnitude
as dispositions in the past.

         (g) Indebtedness. The Company shall not, nor shall it permit any of its
Subsidiaries  to, (i) incur any indebtedness for borrowed money or guarantee any
such  indebtedness or issue or sell any debt securities or warrants or rights to
acquire any long-term debt securities of the Company or any of its  Subsidiaries
or guarantee any long-term debt  securities of others or enter into or amend any
contract,  agreement,  commitment  or  arrangement  with  respect  to any of the
foregoing,  other than (x) in  replacement  for existing or maturing  debt,  (y)
indebtedness  of any  Subsidiary  of the  Company  to the  Company or to another
Subsidiary of the Company or (z) other  borrowing under existing lines of credit
in the  ordinary  course of  business  consistent  with  prior  practice  and of
substantially  the same character,  type and magnitude as borrowings made in the
past or (ii) make any loans,  advances  or capital  contributions  to any person
other than a Subsidiary,  except for advances to Company employees for travel or
other business expenses in accordance with past practice.

         (h) Other  Actions.  The Company  shall not, nor shall it permit any of
its Subsidiaries to, take any action that would, or might reasonably be expected
to,  result  in any of its  representations  and  warranties  set  forth in this
Agreement  being or becoming  untrue in any material  respect,  or in any of the
conditions to the Merger set forth in Article VI not being  satisfied,  or which
would adversely affect the ability of any of them to obtain any of the Requisite
Regulatory  Approvals  without  imposition of a condition or  restriction of the
type referred to in Section  6.2(e) and the Company  shall,  in the event of, or
promptly after the occurrence of, or promptly after  obtaining  knowledge of the
occurrence of or the impending or  threatened  occurrence  of, any fact or event
which  would  cause or  constitute  a breach of any of the  representations  and
warranties  set  forth in this  Agreement,  the  non-satisfaction  of any of the
conditions  to the Merger  set forth in Article VI or the  failure to obtain the
Requisite Regulatory  Approvals,  in each case at any time after the date hereof


                                     A-15


and through the Closing Date,  give detailed  notice thereof to Hammond I, Inc.,
and the Company shall use its best efforts to prevent or promptly to remedy such
breach, non-satisfaction or failure, as the case may be.

         (i) Advice of Changes;  Government Filings. The Company shall confer on
a regular basis with Hammond I, Inc., report on operational matters and promptly
advise Hammond I, Inc.,  orally and in writing,  of any material change or event
or any change or event which would cause or constitute a material  breach of any
of the representations, warranties or covenants of the Company contained herein.
The Company shall file all reports  required to be filed by the Company with the
SEC between the date of this  Agreement and the Effective Time and shall deliver
to Hammond I, Inc. copies of all such reports promptly after the same are filed.
The Company  shall  cooperate  with Hammond I, Inc. in  determining  whether any
filings are required to be made with, or consents  required to be obtained from,
or fees or  expenses  required  to be paid to, any third  party or  Governmental
Entity prior to the  Effective  Time in  connection  with this  Agreement or the
transactions contemplated hereby, and shall cooperate in making any such filings
promptly  and in seeking  to obtain  timely any such  consents  and,  subject to
Hammond I, Inc.'s approval,  paying any such fees or expenses. The Company shall
promptly  provide  Hammond I, Inc.  with copies of all other filings made by the
Company with any  Governmental  Entity in connection  with this  Agreement,  the
Merger or the other transactions contemplated hereby.

         (j)  Accounting  Methods.  The Company  shall not change its methods of
accounting in effect at December 31, 2001, except as required by changes in GAAP
as concurred in by the Company's independent auditors.

         (k) Benefit  Plans.  During the period from the date of this  Agreement
and continuing until the Effective Time, the Company agrees as to itself and its
Subsidiaries  that it will not,  without the prior written consent of Hammond I,
Inc.  except as set forth in the Company  Disclosure  Letter or  contemplated by
this Agreement,  (i) enter into, adopt, amend (except as may be required by law)
or terminate any employee  benefit plan or any agreement,  arrangement,  plan or
policy between the Company or any of its Subsidiaries,  on the one hand, and one
or more of its or their  directors or officers,  on the other hand,  (ii) except
for normal increases in the ordinary course of business and consistent with past
practice  and of  substantially  the  same  character,  type  and  magnitude  as
increases  in the  past  that in the  aggregate,  do not  result  in a  material
increase  in  benefits  or  compensation  expense  to the  Company or any of its
Subsidiaries,  increase in any manner the compensation or fringe benefits of any
director,  officer or employee  or pay any benefit not  required by any plan and
arrangement as in effect as of the date hereof (including,  without  limitation,
the granting of stock options,  stock  appreciation  rights,  restricted  stock,
restricted  stock  units or  performance  units  or  shares)  or enter  into any
contract,  agreement,  commitment or arrangement to do any of the foregoing,  or
(iii) enter into or renew any contract,  agreement,  commitment  or  arrangement
providing for the payment to any director, officer or employee of the Company or
any of its Subsidiaries of compensation or benefits contingent,  or the terms of
which are materially  altered,  upon the  occurrence of any of the  transactions
contemplated by this Agreement.

                                     A-16


         (l) Tax  Elections.  Except  in the  ordinary  course of  business  and
consistent with past practice and of substantially the same character,  type and
magnitude as elections made in the past, the Company shall not make any material
tax election or settle or  compromise  any  material  federal,  state,  local or
foreign income tax claim or liability or amend any  previously  filed tax return
in any respect.

     4.2  Covenants  of  Hammond,  Hammond  I, Inc.  and Merger  Sub.  Except as
expressly contemplated by this Agreement, after the date hereof and prior to the
Effective Time, without the prior written consent of the Company:

         (a) Other  Actions.  Neither  Hammond,  Hammond I, Inc.  nor Merger Sub
shall,  nor shall  Hammond I, Inc. or Merger Sub permit any of their  respective
Subsidiaries to, take any action that would, or might reasonably be expected to,
result in any of their or the Company's representations and warranties set forth
in this Agreement being or becoming untrue in any material respect, or in any of
the  conditions  to the Merger set forth in Article VI not being  satisfied,  or
which  would  adversely  affect the  ability of any of them or of the Company to
obtain  any  of the  Requisite  Regulatory  Approvals  without  imposition  of a
condition or  restriction  of the type  referred to in Section  6.2(e).  Without
limiting the generality of the  foregoing,  Hammond I, Inc. and Hammond agree to
vote all shares of Company Common Stock held by them in favor of the Merger.

         (b)  Government  Filings.  Hammond  I, Inc.  shall  cooperate  with the
Company in  determining  whether any filings  are  required to be made with,  or
consents  required to be obtained from, any third party or  Governmental  Entity
prior  to  the  Effective  Time  in  connection   with  this  Agreement  or  the
transactions contemplated hereby, and shall cooperate in making any such filings
promptly  and in seeking to obtain  timely  any such  consents.  Hammond I, Inc.
shall promptly  provide the Company with copies of all other filings made by the
Hammond I, Inc. with any state or Federal Governmental Entity in connection with
this Agreement, the Merger or the other transactions contemplated hereby.

     4.3  Competing  Transactions.  Nothing  contained in this  Agreement  shall
prohibit the Company from,  prior to the date of the  Stockholder's  Meeting (i)
furnishing  information to, or entering into  discussions or negotiations  with,
any person that makes an unsolicited written,  bona fide proposal to the Company
with respect to a Competing  Transaction  which could  reasonably be expected to
result in a Superior Proposal,  if, (A) the failure to take such action would be
inconsistent with the Board's and the Independent  Committee's  fiduciary duties
to the Company's  stockholders under applicable law, and (B) prior to furnishing
such  information to, or entering into  discussions or  negotiations  with, such
person,  the Company (x) provides at least two (2) business days prior notice to
Hammond I, Inc. to the effect that it is furnishing  information to, or entering
into  discussions or  negotiations  with, such person and (y) receives from such
person a fully  executed  confidentiality  agreement,  (ii)  complying with Rule
14d-9 or Rule 14e-2  promulgated  under the Exchange Act with regard to a tender
or exchange  offer,  or (iii)  failing to make or  withdrawing  or modifying its
recommendation referred to in Section 5.2, or recommending an unsolicited,  bona
fide proposal with respect to a Competing  Transaction which could reasonably be


                                    A-17


expected  to result in a  Superior  Proposal,  following  the  receipt of such a
proposal,  if the failure to take such  action  would be  inconsistent  with the
Board's  and the  Independent  Committee's  fiduciary  duties  to the  Company's
stockholders under applicable law.

                                    ARTICLE V

                              ADDITIONAL AGREEMENTS

     5.1 Preparation of the Proxy Statement and Schedule 13E-3.

         (a) The Company  shall as promptly  as  practicable  prepare and file a
proxy or information  statement relating to the Stockholders'  Meeting (together
with all amendments,  supplements and exhibits thereto,  the "Proxy  Statement")
with the SEC and will use its best efforts to respond to the comments of the SEC
and to cause the Proxy  Statement to be mailed to the Company's  stockholders at
the earliest practical time. The Company will notify Hammond I, Inc. promptly of
the receipt of any comments  from the SEC or its staff and of any request by the
SEC or its staff for  amendments or  supplements  to the Proxy  Statement or for
additional  information  and will  supply  Hammond  I, Inc.  with  copies of all
correspondence  between  the Company or any of its  representatives,  on the one
hand,  and the SEC or its staff,  on the other hand,  with  respect to the Proxy
Statement or the Merger. If at any time prior to the Stockholders' Meeting there
shall occur any event that should be set forth in an amendment or  supplement to
the  Proxy  Statement,  the  Company  will  promptly  prepare  and  mail  to its
stockholders  such an  amendment  or  supplement.  The Company will not mail any
Proxy  Statement,  or any amendment or supplement  thereto,  to which Hammond I,
Inc.  reasonably  objects.  The Company hereby  consents to the inclusion in the
Proxy  Statement of the  recommendation  of the Board  described in Section 5.2,
subject to any  modification,  amendment or withdrawal  thereof,  and represents
that the Independent  Advisor has, subject to the terms of its engagement letter
with the Company, consented to the inclusion of references to its opinion in the
Proxy Statement.

         (b) The Company, Hammond I, Inc., and Merger Sub shall together prepare
and file a Transaction Statement on Schedule 13E-3 (together with all amendments
and exhibits  thereto,  the  "Schedule  13E-3")  under the Exchange Act. Each of
Hammond, Hammond I, Inc. and Merger Sub shall furnish all information concerning
it, its  affiliates and the holders of its capital stock required to be included
in the Schedule 13E-3 and,  after  consultation  with each other,  shall respond
promptly to any comments made by the SEC with respect to the Schedule 13E-3.

     5.2  Stockholders'  Meeting.  Subject  to the  Committee's  receipt  of the
written opinion of the  Independent  Advisor dated as of the date of the mailing
of  the  Proxy  Statement  to  the   stockholders  of  the  Company,   that  the
consideration to be received by such stockholders  pursuant to this Agreement is
fair,  from a  financial  point  of view,  to such  stockholders  (the  "Updated
Fairness Opinion"),  the Company shall call the Stockholders' Meeting to be held
as promptly as  practicable  for the purpose of voting upon the approval of this
Agreement,  the  Merger  and the other  transactions  contemplated  hereby.  The
Company will, through its Board and the Independent Committee,  recommend to its


                                     A-18


stockholders approval of such matters, unless the taking of such action would be
inconsistent with the Board's and the Independent  Committee's  fiduciary duties
to stockholders  under  applicable  laws. The Company shall solicit from Company
stockholders  entitled to vote at the Stockholders'  Meeting proxies in favor of
such approval and shall take all other action  necessary  or, in the  reasonable
judgment  of  Hammond  I,  Inc.,  helpful  to secure the vote or consent of such
holders required by the DGCL or this Agreement to effect the Merger. The Company
shall  coordinate  and cooperate with Hammond I, Inc. with respect to the timing
of such meeting.

     5.3 Legal Conditions to Merger. Each of the Company, Hammond and Hammond I,
Inc. shall, and shall cause its Subsidiaries to, use all reasonable best efforts
(i) to take, or cause to be taken, all actions necessary to comply promptly with
all legal  requirements  which may be imposed on such party or its  Subsidiaries
with respect to the Merger and to consummate the  transactions  contemplated  by
this Agreement, subject to the approval of stockholders of the Company described
in Section 6.1 (a), and (ii) to obtain (and to cooperate with the other party to
obtain) any consent,  authorization,  order or approval of, or any exemption by,
any Governmental  Entity and of any other public or private third party which is
required  to be  obtained  or made by such party or any of its  Subsidiaries  in
connection with the Merger and the transactions  contemplated by this Agreement.
Each of the Company and Hammond I, Inc. will promptly cooperate with and furnish
information  to the other in  connection  with any such burden  suffered  by, or
requirement imposed upon, any of them or any of their Subsidiaries in connection
with the foregoing.

     5.4 Brokers or Finders.  Except as  disclosed to the other party in writing
prior to the date hereof, each of Hammond I, Inc. and the Company represents, as
to  itself,  its  Subsidiaries  and  its  affiliates,  that  no  agent,  broker,
investment  banker,  financial  advisor  or other  firm or  person is or will be
entitled to any broker's or finder's fee or any other  commission or similar fee
in  connection  with any of the  transactions  contemplated  by this  Agreement,
except the  Independent  Advisor,  whose fees and  expenses  will be paid by the
Company in  accordance  with the Company's  agreement  with such firm (a copy of
which has been  delivered by the Company to Hammond I, Inc. prior to the date of
this Agreement), and each party agrees to indemnify the other party and hold the
other  party  harmless  from and  against  any and all  claims,  liabilities  or
obligations with respect to any other fees,  commissions or expenses asserted by
any  person on the basis of any act or  statement  alleged  to have been made by
such first party or its affiliates.

     5.5  Shareholder  Litigation.  The Company  shall give  Hammond I, Inc. the
opportunity  to  participate  in the defense or  settlement  of any  shareholder
litigation  against the Company and its directors  relating to the  transactions
contemplated by this Agreement; provided, however, that no such settlement shall
be agreed to without the  Company's and Hammond I, Inc.'s  consent,  which shall
not be unreasonably withheld.

     5.6  Communication  to  Employees.  The Company  and  Hammond I, Inc.  will
cooperate  with each other with  respect to, and endeavor in good faith to agree
in advance upon the method and content of, all written or oral communications or


                                    A-19


disclosure to employees of the Company or any of its  Subsidiaries  with respect
to the Merger and any other  transactions  contemplated by this Agreement.  Upon
reasonable  notice,  the Company  shall  provide  Hammond I, Inc.  access to the
Company's and its Subsidiaries' employees and facilities.

     5.7 Indemnification; Directors' and Officers' Insurance.

         (a) From and after the Effective Time, the Surviving  Corporation shall
provide exculpation, indemnification and advancement of expenses for each person
who is now or has been at any time prior to the date hereof or who becomes prior
to the  Effective  Time,  an officer or  director  of the  Company or any of its
Subsidiaries (the  "Indemnified  Parties") which is the same as the exculpation,
indemnification  and advancement of expenses provided to the Indemnified Parties
by the Company (including  advancement of expenses,  if so provided) immediately
prior to the Effective  Time in its  Certificate  of  Incorporation,  Bylaws and
existing  contractual  agreements  as in effect at the close of  business on the
date hereof; provided, that such exculpation, indemnification and advancement of
expenses  covers actions on or prior to the Effective Time,  including,  without
limitation, all transactions contemplated by this Agreement.

         (b) The Surviving  Corporation shall maintain in effect for a period of
five (5) years from the Effective Time "tail" directors' and officers' liability
insurance with a term,  coverage amount and other terms and conditions as are at
least as favorable as those of the directors' and officers'  liability insurance
presently  maintained  by  the  Company  (the  "Tail  Policy").   The  Surviving
Corporation  shall provide the Company with a true and complete copy of a binder
with respect to the Tail Policy prior to the Effective  Time,  and shall use its
best  efforts  to provide to the  Company a true and  complete  copy of the Tail
Policy as proposed to be issued prior to the Effective Time. The premium for the
Tail Policy shall be paid in full prior to the Effective Time.

                                   ARTICLE VI

                              CONDITIONS PRECEDENT

     6.1  Conditions  to Each  Party's  Obligation  To Effect  the  Merger.  The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:

         (a) Stockholder  Approval.  This Agreement shall have been approved and
adopted by the affirmative  vote of the holders of a majority of the outstanding
shares of Company  Common  Stock  entitled to vote thereon and a majority of the
Shares  entitled to vote thereon shall not have voted  against  adoption of this
Agreement.

         (b) Other Approvals. All authorizations,  consents, orders or approvals
of, or declarations  or filings with, and all expirations or early  terminations
of waiting  periods  imposed by, any  Governmental  Entity  (all the  foregoing,
"Consents")  which are necessary for the  consummation  of the Merger shall have


                                     A-20


been filed, occurred or been obtained (all such permits, approvals,  filings and
consents  and the lapse of all such  waiting  periods  being  referred to as the
"Requisite  Regulatory  Approvals") and all such Requisite  Regulatory Approvals
shall be in full force and effect.

         (c) No Injunctions or Restraints;  Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent  jurisdiction or other legal  restraint or prohibition  preventing the
consummation  of the Merger shall be in effect,  nor shall any proceeding by any
Governmental Entity seeking any of the foregoing be pending.  There shall not be
any action taken, or any statute,  rule,  regulation or order enacted,  entered,
enforced or deemed applicable to the Merger, which makes the consummation of the
Merger illegal.

     6.2 Conditions to  Obligations of Hammond,  Hammond I, Inc. and Merger Sub.
The obligations of Hammond,  Hammond I, Inc. and Merger Sub to effect the Merger
are subject to the  satisfaction  of the following  conditions  unless waived by
Hammond, Hammond I, Inc. and Merger Sub:

         (a) Representations and Warranties.  The representations and warranties
of the  Company  set forth in this  Agreement  shall be true and  correct in all
respects as of the Effective  Time as though made on or as of such time,  except
for those  representations  and  warranties  that  address  matters only as of a
particular  date or only with  respect to a  specific  period of time which need
only be true and correct in all respects as of such date or with respect to such
period.

         (b)  Performance  of  Obligations  of Company.  The Company  shall have
performed and complied in all material respects with all obligations required to
be  performed  or complied  with by it under this  Agreement  at or prior to the
Closing Date,  and Hammond I, Inc.  shall have received a certificate  signed on
behalf of the Company by an officer of the  Company  and by the Chief  Financial
Officer of the Company to such effect.

         (c) Appraisal  Rights.  Dissenting Shares shall constitute less than 5%
of all shares of  Company  Common  Stock  outstanding  immediately  prior to the
Effective Time.

         (d) Consents  Under  Agreements.  The Company  shall have  obtained the
consent or approval of, except for those consents or approvals for which failure
to  obtain  such  consents  or  approvals  could  not,  individually  or in  the
aggregate,  reasonably  be  expected  to have a Material  Adverse  Effect on the
Company,  each Person  (other than the  Requisite  Regulatory  Approvals)  whose
consent or approval  shall be required in order to permit the  succession by the
Surviving  Corporation  pursuant  to the  Merger  to any  obligation,  right  or
interest  of the  Company or any  Subsidiary  of the  Company  under any loan or
credit agreement, note, mortgage,  indenture,  lease, license or other agreement
or instrument.

         (e) Burdensome  Condition.  There shall not be any action taken, or any
statute,  rule,  regulation  or  order  enacted,  entered,  enforced  or  deemed


                                    A-21


applicable to the Merger,  by any Governmental  Entity which, in connection with
the grant of a  Requisite  Regulatory  Approval,  imposes any  requirement  upon
Hammond I, Inc.,  the Surviving  Corporation  or their  respective  Subsidiaries
which would so materially  adversely impact the economic or business benefits of
the  transactions  contemplated  by this  Agreement as to render  uneconomic the
consummation of the Merger, or which would require Hammond I, Inc. or any of its
Subsidiaries  to dispose of any asset which is material to Hammond I, Inc. prior
to the Effective Time.

         (f) Material  Adverse Effect.  Since the date of this Agreement,  there
shall not have occurred any Material  Adverse Effect with respect to the Company
and no facts or  circumstances  arising after the date of this  Agreement  shall
have occurred  which,  individually  or in the  aggregate,  could  reasonably be
expected to have a Material Adverse Effect with respect to the Company.

         (g) Proceedings. All proceedings to be taken on the part of the Company
in  connection  with the  transactions  contemplated  by this  Agreement and all
documents  incident  thereto  shall  be  reasonably  satisfactory  in  form  and
substance to Hammond I, Inc., and Hammond I, Inc. shall have received  copies of
all such documents and other evidences as Hammond I, Inc. may reasonably request
in order to establish the  consummation of such  transactions  and the taking of
all proceedings in connection therewith.

         (h) No Action. As of the Effective Time, no action,  suit or proceeding
shall be pending (i) seeking to restrain in any material respect or prohibit the
consummation of the Merger, (ii) seeking to obtain from the Company,  Hammond I,
Inc. or Merger Sub any damages which would reasonably be expected to result in a
Material   Adverse   Effect  or  (iii)  seeking  to  impose  the   restrictions,
prohibitions  or limitations  referred to in subsection  (e) above,  except such
actions, suits or proceedings,  the settlement of which shall be effective as of
the Effective Time.

     6.3 Conditions to Obligations of Company.  The obligation of the Company to
effect the Merger is subject to the  satisfaction  of the  following  conditions
unless waived by the Company:

         (a) Representations and Warranties.  The representations and warranties
of Hammond,  Hammond I, Inc. and Merger Sub set forth in this Agreement shall be
true and correct in all respects as of the  Effective  Time as though made on or
as of such time,  except for those  representations  and warranties that address
matters only as of a particular  date or only with respect to a specific  period
of time which need only be true and  correct in all  respects as of such date or
with respect to such period.

         (b)  Performance of Obligations of Hammond,  Hammond I, Inc. and Merger
Sub.  Hammond,  Hammond I, Inc. and Merger Sub shall have performed and complied
in all material  respects with all obligations  required to be performed by them
under this Agreement at or prior to the Closing Date, and the Company shall have
received a certificate  signed on behalf of Hammond I, Inc. by the President and
Chief  Executive  Officer of Hammond I, Inc. or a Corporate  Vice  President  of


                                     A-22


Hammond I, Inc., and by the Senior Vice President and Chief Financial Officer of
Hammond I, Inc. or the Corporate Vice President and Treasurer of Hammond I, Inc.
to such effect.

         (c) No Action. As of the Effective Time, no action,  suit or proceeding
shall be pending (i) seeking to restrain in any material respect or prohibit the
consummation of the Merger, (ii) seeking to obtain from the Company,  Hammond I,
Inc. or Merger Sub any damages which would reasonably be expected to result in a
Material   Adverse   Effect  or  (iii)  seeking  to  impose  the   restrictions,
prohibitions  or limitations  referred to in Section  6.2(e) above,  except such
actions, suits or proceedings,  the settlement of which shall be effective as of
the Effective Time; provided,  however, that the parties hereto acknowledge that
certain other actions,  suits or  proceedings  not of the type described in this
section may be pending as of the Effective Time.


                                   ARTICLE VII

                            TERMINATION AND AMENDMENT

     7.1 Termination.  This Agreement may be terminated at any time prior to the
Effective  Time,  whether before or after  approval of the matters  presented in
connection with the Merger by the stockholders of the Company:

         (a) by mutual  consent of Hammond I, Inc.  and the Company in a written
instrument,  whether or not the Merger has been approved by the  stockholders of
the Company;

         (b) by Hammond I, Inc.  on behalf of itself,  Hammond  and Merger  Sub,
upon a material breach of any representation, warranty, covenant or agreement on
the part of the Company set forth in this  Agreement,  which breach is not cured
within ten (10) days after written notice of such breach from Hammond I, Inc. to
the  Company,  or if any  representation  or warranty of the Company  shall have
become  untrue  such that the  conditions  set forth in  Section  6.2,  would be
incapable of being  satisfied by January 31, 2003 (or such later date as Hammond
I, Inc.  may agree to in  writing),  in each case only if  Hammond  did not have
actual knowledge of, and did not cause, such breach or untruth;

         (c) by the  Company,  upon a  material  breach  of any  representation,
warranty, covenant or agreement on the part of Hammond I, Inc. or Merger Sub set
forth in this  Agreement,  which  breach is not cured within ten (10) days after
written  notice of such breach  from the  Company to Hammond I, Inc.,  or if any
representation  or  warranty  of Hammond I, Inc. or Merger Sub shall have become
untrue such that the  conditions set forth in Section 6.3, would be incapable of
being satisfied by January 31, 2003;

         (d) by  either  Hammond  I,  Inc.  or  the  Company,  if any  permanent
injunction or action by any Governmental  Entity  preventing the consummation of
the Merger shall have become final and nonappealable;

                                     A-23


         (e) by either  Hammond I, Inc. or the  Company if the Merger  shall not
have been consummated on or prior to January 31, 2003 (or such later date as may
be agreed to in writing by the Company  and Hammond I, Inc.)  (other than due to
the failure of the party  seeking to  terminate  this  Agreement  to perform its
obligations  under this  Agreement  required to be  performed at or prior to the
Effective Time);

         (f) by either  Hammond I, Inc. or the  Company,  if any approval of the
stockholders  of the Company  required for the  consummation of the Merger shall
not have been obtained by reason of the failure to obtain the required vote at a
Stockholders' Meeting or at any adjournment thereof;

         (g) by Hammond I, Inc., if the Independent Committee or the Board shall
have  (i) withdrawn,  modified or changed its approval or recommendation of this
Agreement,  the Merger or any of the other transactions  contemplated  herein in
any manner  which is  adverse  to  Hammond  I, Inc.  or Merger Sub or shall have
resolved  to do the  foregoing;  or  (ii) approved  or have  recommended  to the
stockholders  of the Company a  Competing  Transaction  or a Superior  Proposal,
entered into an agreement  with respect to a Competing  Transaction  or Superior
Proposal or shall have resolved to do the foregoing;

         (h) by Hammond I, Inc.,  if (i) a tender  offer or exchange  offer or a
proposal by a third  party to acquire  the  Company or the Shares  pursuant to a
merger, consolidation,  share exchange, business combination, tender or exchange
offer or similar  transaction  shall have been  commenced  or publicly  proposed
which contains a proposal as to price (without regard to the specificity of such
price proposal) and (ii) the Company shall not have made a recommendation to the
stockholders  of the Company to reject such proposal  within 10 business days of
its commencement or the date such proposal first becomes publicly disclosed,  if
sooner;

         (i)  by the  Company,  if  the  Independent  Committee  and  the  Board
authorize  the  Company  to enter  into a written  agreement  with  respect to a
Competing  Transaction  that  the  Independent  Committee  and  the  Board  have
determined is a Superior Proposal; provided however, that, the Company shall not
terminate  this  Agreement  pursuant  to this  Section  7.1(i) and enter into an
agreement for such a Competing Transaction until the expiration of five business
days following Hammond I, Inc.'s receipt of a written notice advising Hammond I,
Inc. that the Company has received a Superior  Proposal  specifying the material
terms and  conditions  of such Superior  Proposal (and  including a copy thereof
with all accompanying  written  documentation) and identifying the Person making
such Superior Proposal. After providing such notice, the Company shall provide a
reasonable  opportunity to Hammond I, Inc.  during such five business day period
to agree to such  adjustments  in the terms and  conditions of this Agreement as
would enable  Hammond I, Inc. and the Company to proceed with the Merger on such
adjusted terms.

     7.2 Effect of  Termination.  In the event of  termination of this Agreement
and  abandonment  of the  Merger by either the  Company  or  Hammond I, Inc.  as
provided in Section 7.1,  this  Agreement  shall  forthwith  terminate and there


                                    A-24


shall be no liability or obligation on the part of Hammond I, Inc.,  Merger Sub,
Hammond or the Company or their  respective  officers or  directors  except with
respect to the Sections 5.5 and 7.3;  provided,  however,  that,  subject to the
provisions of Section 8.8,  nothing  herein shall relieve any party of liability
for any  breach  hereof,  except  that in the  event  of a  termination  of this
Agreement,  no party shall have any right to the recovery of expenses  except as
provided in Section 7.3.

     7.3 Fees, Expenses and Other Payments.

         (a) Except as otherwise  provided in this  Section 7.3,  whether or not
the Merger is  consummated,  all costs and expenses  incurred in connection with
this Agreement and the  transactions  contemplated  hereby  (including,  without
limitation,   fees  and  disbursements  of  counsel,   financial   advisors  and
accountants)  shall be borne solely and entirely by the party which has incurred
such costs and expenses (with respect to such party, its "Expenses").

         (b) The  Company  agrees  that if this  Agreement  shall be  terminated
pursuant to:

             (i) Section  7.1(f) because the Agreement and the Merger shall fail
to receive the requisite vote for approval and adoption by the  stockholders  of
the  Company  at a meeting of the  stockholders  of the  Company  called to vote
thereon,  and at the time of such  meeting  there  shall  exist a proposal  with
respect to a Competing Transaction which either (x) the Board or the Independent
Committee  has not  publicly  opposed  or (y) is  consummated,  or a  definitive
agreement  with respect to which is entered  into, at any time during the period
commencing  on the date  hereof  and  ending  twelve  months  after  the date of
termination of this Agreement; or

             (ii) Section 7.1(g), Section 7.1(h) or Section 7.1(i);

then in each such event the Company shall pay to Hammond I, Inc. an amount equal
to Hammond Inc.'s actual out-of-pocket expenses incurred in connection with this
Agreement or the transactions contemplated hereby.

         (c) Any payment  required to be made pursuant to this Section 7.3 shall
be made as promptly as  practicable  but not later than five business days after
termination  of this Agreement and shall be made by wire transfer of immediately
available  funds to an account  designated  by Hammond I, Inc.,  except that any
payment to be made as the result of an event  described in Section  7.3(b)(i) or
clause (y) of Section 7.3(b)(i) shall be made as promptly as practicable but not
later than five  business  days after the date on which a Competing  Transaction
shall have been consummated.

     7.4  Amendment.  This  Agreement may be amended by the parties  hereto,  by
action taken or  authorized  by their  respective  Boards of  Directors  and the
Independent  Committee,  at any time  before or after  approval  of the  matters
presented in connection with the Merger by the stockholders of the Company or of


                                    A-25


Hammond I, Inc., but, after any such approval,  no amendment shall be made which
by law  requires  further  approval by such  stockholders  without  such further
approval.  This  Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.

     7.5 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto,  by action taken or authorized by their  respective  Boards of Directors
and the Independent  Committee,  may, to the extent legally allowed,  (i) extend
the time for the  performance  of any of the  obligations  or other  acts of the
other parties hereto,  (ii) waive any  inaccuracies in the  representations  and
warranties  contained  herein or in any document  delivered  pursuant hereto and
(iii)  waive  compliance  with any of the  agreements  or  conditions  contained
herein.  Any  agreement on the part of a party  hereto to any such  extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party.



                                  ARTICLE VIII

                               GENERAL PROVISIONS

     8.1  Survival  of   Representations,   Warranties   and   Agreements.   The
representations  and warranties made by the parties  contained in this Agreement
and any other  agreement  delivered  pursuant hereto or made in writing by or on
behalf of the parties shall not survive beyond the Effective Time.

     8.2 Notices.  All notices and other  communications  hereunder  shall be in
writing and shall be deemed  given if  delivered  personally,  telecopied  (with
confirmation)  or  mailed  by  registered  or  certified  mail  (return  receipt
requested) to the parties at the  following  addresses (or at such other address
for a party as shall be specified by like notice):

         (a) if to Hammond, Hammond I, Inc. or Merger Sub, to:

                Hammond I, Inc.
                905 Clint Moore Road
                Boca Raton, Florida 33487
                Attention: Robert A. Hammond, Jr.
                Facsimile: (561) 953-0787

              With a copy to:

                Adorno & Yoss, P.A.
                350 East Las Olas Boulevard, Suite 1700
                Fort Lauderdale, Florida 33301
                Attention: Joel D. Mayersohn, Esq.
                Facsimile: (954) 766-7800

                                    A-26


         (b) if to the Company, to:

                PartsBase, Inc.
                905 Clint Moore Road
                Boca Raton, Florida 33487
                Attention: Chief Financial Officer
                Facsimile: (561) 953-0787


              With copies to:

                Epstein Becker & Green, P.C.
                111 Huntington Avenue
                Boston, Massachusetts 02199
                Attention:  Paul D. Broude, Esq.
                Facsimile: (617) 342-4001



     8.3 Certain Definitions. For purposes of this Agreement:

         (a) an  "Affiliate" of any person means another person that directly or
indirectly,  through one or more intermediaries,  controls, is controlled by, or
is under common control with, such first person;

         (b)  "Beneficially  Own" or "Beneficial  Ownership" with respect to any
securities, means having "beneficial ownership" of such securities in accordance
with the  provisions of Rule 13d-3 under the Exchange Act.  Without  duplicative
counting of the same  securities  by the same  holder,  securities  beneficially
owned by a person  include  securities  beneficially  owned by all other persons
with whom such person would constitute a group;

         (c) "Competing Transaction" shall mean any of the following (other than
the transactions  contemplated by this Agreement) involving the Company: (i) any
merger,  consolidation,  share exchange,  exchange offer,  business combination,
recapitalization,   liquidation,   dissolution  or  other  similar   transaction
involving the Company  resulting in the Company's  current  shareholders  owning
less than a majority of the capital stock of the surviving  corporation  in such
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition  of  assets  representing  20% or more of the  total  assets  of the
Company and its Subsidiaries, in a single transaction or series of transactions;
(iii) any  tender  offer or  exchange  offer for 20% or more of the  outstanding
Shares or the filing of a  registration  statement  under the  Securities Act in
connection therewith; (iv) any person or group acquiring Beneficial Ownership of
15% or more, or such person or group having  increased its Beneficial  Ownership
beyond 15%,  of the  outstanding  Shares;  or (v) any public  announcement  of a
proposal,  plan or  intention  to do any of the  foregoing  or any  agreement to
engage in any of the foregoing;

                                     A-27


         (d) "Group" means two or more persons  acting  together for the purpose
of  acquiring,  holding,  voting or disposing of any  securities,  which persons
would be  required  to file a  Schedule  13D or  Schedule  13G with the SEC as a
"person"  within the  meaning of Section  13(d)(3) of the  Exchange  Act if such
persons  beneficially  owned a sufficient  amount of such  securities to require
such a filing under the Exchange Act;

         (e)  "Material"  with respect to any entity  means an event,  change or
effect which is material in relation to the condition  (financial or otherwise),
properties, assets, liabilities, businesses or operations of such entity and its
Subsidiaries taken as a whole;

         (f) "Material  Adverse  Effect"  means,  with respect to the Company or
Hammond I, Inc.,  any change,  event or effect shall have  occurred  that,  when
taken  together  with all other  adverse  changes,  events or effects  that have
occurred would or would  reasonably be expected to (i) be materially  adverse to
the business, assets, properties,  results of operations or condition (financial
or  otherwise)  of such  party and its  Subsidiaries  taken as a whole,  or (ii)
prevent or materially delay the consummation, or increase the cost to Hammond I,
Inc. or Merger Sub, of the Merger;

         (g)  "Person"  means  an  individual,  corporation,  limited  liability
company,  partnership,   joint  venture,   association,   trust,  unincorporated
organization or other legal entity;

         (h) a "Subsidiary" of any person means another person, an amount of the
voting  securities,  other voting ownership or voting  partnership  interests of
which is  sufficient  to elect at least a majority of its Board of  Directors or
other governing body (or, if there are no such voting interests,  50% or more of
the equity  interests of which) is owned  directly or  indirectly  by such first
person;

         (i)  "Superior  Proposal"  means  any bona  fide  written  proposal  to
acquire,  directly or indirectly,  for  consideration  consisting of cash and/or
securities, all of the shares of Company Common Stock then outstanding or all or
substantially  all of the  assets  of the  Company  and  the  assumption  of the
liabilities  and  obligations  of  the  Company  to be  followed  by a pro  rata
distribution of the sale proceeds to  stockholders  of the Company,  that (i) is
not subject to any condition that the party making the proposal obtain financing
for the proposed transaction, (ii) provides holders of Company Common Stock with
per share consideration that the Independent Committee determines in good faith,
after  receipt of advice of its  financial  advisor,  is more  favorable  from a
financial  point of view than the  consideration  to be  received  by holders of
Company  Common  Stock in the Merger,  (iii) is  determined  by the  Independent
Committee in its good faith  judgment,  after receipt of advice of its financial
advisor and outside legal counsel,  to be likely of being completed (taking into
account all legal, financial,  regulatory and other aspects of the proposal, the
Person  making the proposal and the expected  timing to complete the  proposal),
(iv)  does  not,  in the  definitive  agreement,  contain  any  "due  diligence"
conditions,  and (v) has not been  obtained  by or on behalf of the  Company  in
violation of Section 4.3 hereof; and

                                     A-28


         (j) Any  accounting  term that is used in the context of  describing or
referring to an accounting  concept and that is not specifically  defined herein
shall be construed in accordance  with GAAP as applied in the preparation of the
financial  statements  of the Company  included  in the  Company  SEC  Documents
(including,  without  limitation,  the  Year-End  Financial  Statements  and the
Balance Sheet).

     8.4 Interpretation.  When a reference is made in this Agreement to Sections
or  Exhibits,  such  reference  shall  be to a  Section  of or  Exhibit  to this
Agreement unless otherwise indicated. The recitals hereto constitute an integral
part of this  Agreement.  The table of contents and  headings  contained in this
Agreement  are for  reference  purposes only and shall not affect in any way the
meaning or  interpretation  of this  Agreement.  Whenever  the words  "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".  The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such  information  is to be made  available.  The
phrases  "the date of this  Agreement",  "the date  hereof' and terms of similar
import,  unless  the  context  otherwise  requires,  shall be deemed to refer to
August 26, 2002.

     8.5   Counterparts.   This  Agreement  may  be  executed  in  two  or  more
counterparts,  all of which shall be considered  one and the same  agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other  parties,  it being  understood  that all
parties need not sign the same counterpart.

     8.6 Entire Agreement;  No Third Party  Beneficiaries;  Rights of Ownership.
This Agreement  (including the documents and the instruments referred to herein)
(a)  constitutes  the entire  agreement and supersedes all prior  agreements and
understandings,  both  written and oral,  among the parties  with respect to the
subject matter hereof;  and (b) except as provided in Sections 2.2, 2.3 and 5.5,
is not  intended  to confer upon any person  other than the  parties  hereto any
rights or remedies  hereunder.  The parties hereby  acknowledge  that, except as
hereinafter  agreed to in  writing,  no party shall have the right to acquire or
shall be deemed to have  acquired  shares  of  common  stock of the other  party
pursuant to the Merger until consummation thereof.

     8.7 Governing Law; Consent to Jurisdiction.

         (a) This  Agreement  shall be governed by and  construed in  accordance
with the laws of the  State of  Delaware  without  regard to the  principles  of
conflicts of laws thereof.

         (b) Each of the parties  hereto (i)  consents  to submit  itself to the
exclusive personal jurisdiction of any Delaware state court or any federal court
located  in the State of  Florida  in the event any  dispute  arises out of this
Agreement or any of the  transactions  contemplated  by this  Agreement and (ii)
agrees that it shall not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court.

                                     A-29


     8.8 Severability; No Remedy in Certain Circumstances. Any term or provision
of this  Agreement  that is invalid or  unenforceable  in any  situation  in any
jurisdiction  shall not affect the validity or  enforceability  of the remaining
terms and provisions  hereof or the validity or  enforceability of the offending
term or provision in any other  situation or in any other  jurisdiction.  If the
final  judgment of a court of competent  jurisdiction  declares that any term or
provision hereof is invalid or  unenforceable,  the parties agree that the court
making the determination of invalidity or unenforceability  shall have the power
to reduce  the  scope,  duration,  or area of the term or  provision,  to delete
specific words or phrases,  or to replace any invalid or  unenforceable  term or
provision with a term or provision that is valid and  enforceable and that comes
closest to  expressing  the  intention of the invalid or  unenforceable  term or
provision,  and this  Agreement  shall be  enforceable  as so modified after the
expiration  of the time within which the  judgment  may be  appealed.  Except as
otherwise contemplated by this Agreement, to the extent that a party hereto took
an action inconsistent  herewith or failed to take action consistent herewith or
required  hereby  pursuant to an order or judgment of a court or other competent
authority,  such party shall incur no liability or obligation  unless such party
did not in good faith seek to resist or object to the  imposition or entering of
such order or judgment.

     8.9 Publicity.  Except as otherwise required by any applicable law or rules
or  regulations  promulgated  thereunder,  or by the rules of the  NASDAQ  Stock
Market, so long as this Agreement is in effect, neither the Company, Hammond nor
Hammond I, Inc.  shall,  or shall  permit any of its  Subsidiaries  to, issue or
cause the  publication  of any press release or other public  announcement  with
respect to the transactions  contemplated by this Agreement  without the consent
of the other party, which consent shall not be unreasonably withheld or delayed.

     8.10 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise)  without the prior  written  consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable  by the parties and their  respective
successors and assigns.

     8.11  Adjustment.  All dollar  amounts and share  numbers set forth herein,
including  without  limitation  the  Merger  Consideration,  shall be subject to
equitable  adjustment in the event of any stock split,  stock dividend,  reverse
stock split or similar  event  affecting the Company  Common Stock,  between the
date of this Agreement and the Effective Time, to the extent appropriate.


                                      A-30



     IN WITNESS  WHEREOF,  Hammond I, Inc.,  Merger Sub, Hammond and the Company
have caused this Agreement,  to be signed by their respective officers thereunto
duly authorized, all as of August 26, 2002.

                                 HAMMOND I, INC.


                                 By:/s/ Robert A. Hammond, Jr.
                                    --------------------------
                                 Name: Robert A. Hammond, Jr.
                                 Title:President

                                 HAMMOND ACQUISITION CORP.


                                 By:/s/Robert. A. Hammond, Jr.
                                    --------------------------
                                 Name: Robert A. Hammond, Jr.
                                 Title: President

                                 PARTSBASE, INC.


                                 By:/s/ Mark Weicher
                                    ----------------
                                 Name:  Mark Weicher
                                 Title: Chief Financial Officer


                                 /s/ Robert A. Hammond, Jr.
                                 --------------------------
                                     Robert A. Hammond, Jr.


                                     A- 31





                                   APPENDIX B
                Opinion and Consent of vFinance Investments, Inc.


vFinance, Investments, Inc.

August 26, 2002

Board of Directors
PartsBase, Inc.
905 Clint Moore Road
Boca Raton, Florida 33431

Gentlemen:

     You have  requested  that we render our opinion as to the fairness,  from a
financial  point of view,  to the holders  (other  than  Robert  Hammond) of the
common stock of PartsBase,  Inc., a Delaware corporation ( "PartsBase"),  of the
consideration set forth in the proposed  Agreement and Plan of Merger,  dated as
of August 26, 2002 (the  "Merger  Agreement"),  by and among  Hammond I, Inc., a
Florida  corporation (the  "Acquiror"),  Hammond  Acquisition  Corp., a Delaware
corporation  and wholly owned  subsidiary of the Acquiror  ("Merger  Sub"),  and
PartsBase.  Pursuant to the Agreement, Merger Sub will merge (the "Merger") into
PartsBase.

     vFinance Investments,  Inc. (the "Firm"), as part of its investment banking
business,  is engaged in the  valuation of  businesses  and their  securities in
connection  with  mergers  and  acquisitions,  competitive  biddings,  secondary
distributions  of  listed  and  unlisted  securities,   private  placements  and
valuations  for estate,  corporate  and other  purposes.  We are  familiar  with
PartsBase,  having  conducted a due diligence  review of PartsBase in connection
with the rendering of this opinion.

     In connection with the review and analysis performed to render our opinion,
among other things, we have:

     i.  Reviewed the periodic  reports under  Sections 13, 14, and 15(d) of the
         Securities  Exchange  Act of 1934,  as amended  (the  "Exchange  Act"),
         certain  interim  reports  of  PartsBase,  as  well  as  the  financial
         statements prepared by the management of PartsBase;

     ii. Reviewed certain internal  financial analyses for PartsBase prepared by
         its management;

     iii.Held discussions with  representatives  of PartsBase,  the Acquiror and
         their financial and legal advisors,  regarding the strategic  rationale
         for,  and  potential  benefits  of,  the  transaction  and the past and
         current business  operations,  financial condition and future prospects
         of the company;

     iv. Reviewed certain publicly available documents relating to PartsBase;

     v.  Reviewed  internal  detailed  financial  statements  provided  to us by
         PartsBase;

     vi. Reviewed publicly available data and information for companies which we
         have determined to be comparable to PartsBase;

     vii.Reviewed  available data for companies  which we have  determined to be
         comparable to PartsBase;

                                      B - 1


     viii. Reviewed the financial  terms of other recent  similar  transactions;
         and

     ix. Conducted such other financial analyses and examinations and considered
         such  other  financial,   economic  and  market  criteria  as  we  have
         determined to be appropriate for purposes of this opinion.

     x.  Reviewed the draft Merger Agreement and certain related documents.

     We have relied upon the accuracy and  completeness  of all of the financial
and  other  information  reviewed  by us and  have  assumed  such  accuracy  and
completeness  for purposes of rendering  this opinion.  In that regard,  we have
assumed with PartsBase's  consent that the financial  forecasts  provided by the
managements of PartsBase has been reasonably  prepared on a basis reflecting the
best currently available judgments and estimates of the management of PartsBase.
Our  advisory  services  and the opinion  expressed  herein are provided for the
information  and assistance of the Board of Directors of PartsBase in connection
with its consideration of the transaction.

     Based  upon  and  subject  to  the   consideration  of  the   privitization
transaction  offer of $1.41 per share to be received by the holders of shares of
PartsBase  common  stock  (other  than  Robert  Hammond)  pursuant to the Merger
Agreement is fair,  from a financial  point of view, to holders of the PartsBase
common stock other than Robert Hammond.

     This  Opinion is  furnished  solely for your  benefit and may not be relied
upon by any other person  without our express,  prior  written  consent and this
opinion is not intended to be and does not  constitute a  recommendation  to any
stockholder  as to how  such  stockholder  should  vote in  connection  with the
proposed Transaction. This Opinion is delivered to each recipient subject to the
conditions,  scope of engagement,  limitations and  understandings  set forth in
this Opinion and our engagement  letter,  and subject to the understanding  that
the obligations of the Firm hereunder are solely corporate  obligations,  and no
officer,  director,  employee,  agent,  shareholder or controlling person of the
Firm shall be subjected to any personal liability  whatsoever to any person, nor
will any such claim be asserted by or on behalf of you or your affiliates.

     We have  tried to apply  objective  measures  of  value  in  rendering  our
Opinion. You understand,  however, that such a valuation necessarily is based on
some  subjective  interpretations  of  value.  We  understand  that  we are  not
obligated  to  revise  our  opinion  due  to  events  and  fluctuating  economic
conditions occurring subsequent to the date of this Opinion.

     We have been  engaged to render an opinion as to whether the  consideration
in the proposed  transaction  is fair,  from a financial  point of view,  to the
shareholders  of the  Company,  and will  receive a fee in  connection  with the
delivery of this opinion,  which is not contingent upon the  consummation of the
Transaction.  In the ordinary course of business,  we may hold or actively trade


                                      B - 2


the equity  securities  of  PartsBase  for our own account or for the account of
customers and, accordingly may at any time hold a long or short position in such
securities.

     We hereby  consent to the use of this opinion in any public  disclosure  of
PartsBase in which it is required by law, rule, or regulation to be disclosed.

Very Truly Yours,

VFINANCE INVESTMENTS, INC.


By:/s/VFINANCE INVESTMENTS, INC.
   -----------------------------
      Vincent G. Calicchia, CFA
      Principal - Structured Equity Finance Group


                                      B - 3




                                   APPENDIX C
               Section 262 of the Delaware General Corporation Law





                                  DELAWARE CODE
                              TITLE 8. CORPORATIONS
                       CHAPTER 1. GENERAL CORPORATION LAW
               SUBCHAPTER IX. MERGER, CONSOLIDATION OR CONVERSION

                          SECTION 262 APPRAISAL RIGHTS

     (a) Any  stockholder  of a  corporation  of this State who holds  shares of
stock on the date of the making of a demand  pursuant to sub-Section (d) of this
Section with respect to such shares,  who continuously holds such shares through
the effective date of the merger or  consolidation,  who has otherwise  complied
with  sub-Section  (d) of this Section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to Section 228
of this title shall be entitled to an  appraisal by the Court of Chancery of the
fair  value  of the  stockholder's  shares  of  stock  under  the  circumstances
described in subsections  (b) and (c) of this section.  As used in this section,
the word "stockholder"  means a holder of record of stock in a stock corporation
and also a member of record of a nonstock  corporation;  the words  "stock"  and
"share"  mean and  include  what is  ordinarily  meant by those  words  and also
membership or membership interest of a member of a nonstock corporation; and the
words  "depository  receipt"  mean a  receipt  or other  instrument  issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.

     (b)  Appraisal  rights  shall be  available  for the shares of any class or
series of stock of a constituent  corporation in a merger or consolidation to be
effected  pursuant to Sec. 251 (other than a merger effected pursuant to Section
251(g) of this title),  Section  252,  Section  254,  Section 257,  Section 258,
Section 263 or Section 264 of this title:

          1.  Provided,  however,  that no  appraisal  rights under this Section
shall be available for the shares of any class or series of stock,  which stock,
or depository receipts in respect thereof, at the record date fixed to determine
the  stockholders  entitled to receive  notice of and to vote at: the meeting of
stockholders to act upon the agreement of merger or  consolidation,  were either
(i) listed on a national  securities exchange or designated as a national market
system security on an interdealer  quotation system by the National  Association
of Securities  Dealers,  Inc. or (ii) held of record by more than 2,000 holders;
and further  provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require  for  its  approval  the  vote  of the  stockholders  of  the  surviving
corporation as provided in subsection (f) of Section 251 of this title.

          2. Notwithstanding paragraph (1) of this sub-Section, appraisal rights
under this Section  shall be available  for the shares of any class or series of
stock of a constituent  corporation  if the holders  thereof are required by the
terms of an agreement of merger or consolidation  pursuant to Sections 251, 252,
254,  257,  258,  263 and 264 of this title to accept  for such  stock  anything
except:

                                      C-1


             a. Shares of stock of the  corporation  surviving or resulting from
     such merger or consolidation, or depository receipts in respect thereof;

             b. Shares of stock of any other corporation, or depository receipts
     in  respect  thereof,  which  shares of stock (or  depository  receipts  in
     respect thereof) or depository receipts at the effective date of the merger
     or consolidation will be either listed on a national securities exchange or
     designated as a national market system security on an interdealer quotation
     system by the National  Association of Securities Dealers,  Inc. or held of
     record by more than 2,000 holders;

             c.  Cash in lieu of  fractional  shares  or  fractional  depository
     receipts  described  in the  foregoing  subparagraphs  a.  and b.  of  this
     paragraph; or

             d. Any combination of the shares of stock,  depository receipts and
     cash  in  lieu of  fractional  shares  or  fractional  depository  receipts
     described in the foregoing subparagraphs a., b. and c. of this paragraph.

          3. In the event all of the stock of a subsidiary Delaware  corporation
party to a merger  effected  under Section 253 of this title is not owned by the
parent  corporation  immediately prior to the merger,  appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.

     (c) Any corporation may provide in its  certificate of  incorporation  that
appraisal  rights  under this Section  shall be available  for the shares of any
class or series of its stock as a result of an amendment to its  certificate  of
incorporation,  any  merger  or  consolidation  in which  the  corporation  is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation.  If the certificate of incorporation contains such a provision,
the procedures of this Section,  including those set forth in  sub-Sections  (d)
and (e) of this section, shall apply as nearly as is practicable.

     (d) Appraisal rights shall be perfected as follows:

          1. If a proposed merger or  consolidation  for which appraisal  rights
are provided  under this Section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with  respect to shares for which  appraisal  rights are  available  pursuant to
subsection (b) or (c) hereof that appraisal  rights are available for any or all
of the shares of the constituent corporations,  and shall include in such notice
a copy of this  section.  Each  stockholder  electing to demand the appraisal of
such stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation,  a written demand for appraisal of such
stockholder's  shares.  Such demand will be sufficient if it reasonably  informs
the  corporation  of the identity of the  stockholder  and that the  stockholder
intends thereby to demand the appraisal of such stockholder's shares. A proxy or
vote against the merger or  consolidation  shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written demand
as herein  provided.  Within 10 days after the effective  date of such merger or


                                      C-2


consolidation,   the  surviving  or  resulting  corporation  shall  notify  each
stockholder  of  each  constituent   corporation  who  has  complied  with  this
subsection  and  has not  voted  in  favor  of or  consented  to the  merger  or
consolidation of the date that the merger or consolidation has become effective;
or

          2. If the merger or consolidation was approved pursuant to Section 228
or Section 253 of this title, then either a constituent corporation,  before the
effective  date of the merger or  consolidation  or the  surviving  or resulting
corporation  within 10 days thereafter,  shall notify each of the holders of any
class or series of stock of such  constituent  corporation  who are  entitled to
appraisal  rights  of the  approval  of the  merger  or  consolidation  and that
appraisal  rights are available for any or all shares of such class or series of
stock of such constituent  corporation,  and shall include in such notice a copy
of this section.  Such notice may, and, if given on or after the effective  date
of the merger or  consolidation,  shall,  also notify such  stockholders  of the
effective  date of the merger or  consolidation.  Any  stockholder  entitled  to
appraisal  rights may,  within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting  corporation  the appraisal of
such holder's  shares.  Such demand will be sufficient if it reasonably  informs
the  corporation  of the identity of the  stockholder  and that the  stockholder
intends thereby to demand the appraisal of such holder's shares.  If such notice
did  not  notify   stockholders   of  the  effective   date  of  the  merger  or
consolidation,  either (i) each such constituent corporation shall send a second
notice before the effective date of the merger or  consolidation  notifying each
of the holders of any class or series of stock of such  constituent  corporation
that are entitled to  appraisal  rights of the  effective  date of the merger or
consolidation or (ii) the surviving or resulting  corporation  shall send such a
second  notice to all such  holders on or within 10 days  after  such  effective
date;  provided,  however,  that if such second notice is sent more than 20 days
following the sending of the first notice,  such second notice need only be sent
to each  stockholder  who is entitled to  appraisal  rights and who has demanded
appraisal  of such  holder's  shares in  accordance  with this  sub-Section.  An
affidavit of the  secretary or assistant  secretary or of the transfer  agent of
the corporation that is required to give either notice that such notice has been
given  shall,  in the  absence of fraud,  be prima  facie  evidence of the facts
stated therein. For purposes of determining the stockholders entitled to receive
either notice,  each constituent  corporation may fix, in advance, a record date
that  shall be not more  than 10 days  prior to the date the  notice  is  given,
provided,  that if the  notice  is given on or after the  effective  date of the
merger or  consolidation,  the record date shall be such  effective  date. If no
record date is fixed and the notice is given prior to the  effective  date,  the
record date shall be the close of business on the day next  preceding the day on
which the notice is given.

     (e)  Within  120  days   after  the   effective   date  of  the  merger  or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with  sub-Sections (a) and (d) hereof and who is otherwise  entitled to
appraisal  rights,  may file a petition  in the Court of  Chancery  demanding  a
determination   of  the   value  of  the   stock   of  all  such   stockholders.
Notwithstanding  the  foregoing,  at any time within 60 days after the effective
date of the merger or  consolidation,  any  stockholder  shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or  consolidation.  Within 120 days after the effective  date of


                                      C-3


the  merger  or  consolidation,  any  stockholder  who  has  complied  with  the
requirements of sub-Sections (a) and (d) hereof, upon written request,  shall be
entitled to receive from the corporation  surviving the merger or resulting from
the  consolidation a statement  setting forth the aggregate number of shares not
voted in favor of the merger or consolidation  and with respect to which demands
for appraisal  have been  received and the  aggregate  number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting  corporation  or within 10 days after  expiration  of the
period for  delivery  of demands for  appraisal  under  sub-Section  (d) hereof,
whichever is later.

     (f) Upon the filing of any such  petition  by a  stockholder,  service of a
copy thereof  shall be made upon the surviving or resulting  corporation,  which
shall  within 20 days after such  service  file in the office of the Register in
Chancery in which the petition was filed a duly  verified  list  containing  the
names and  addresses of all  stockholders  who have  demanded  payment for their
shares and with whom  agreements  as to the value of their  shares have not been
reached by the  surviving or  resulting  corporation.  If the petition  shall be
filed  by  the  surviving  or  resulting  corporation,  the  petition  shall  be
accompanied  by such a duly  verified  list.  The  Register in  Chancery,  if so
ordered by the  Court,  shall  give  notice of the time and place  fixed for the
hearing of such  petition by  registered  or certified  mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein  stated.  Such notice shall also be given by 1 or more  publications  at
least  1  week  before  the  day of  the  hearing,  in a  newspaper  of  general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems  advisable.  The forms of the notices by mail and by publication
shall be  approved  by the Court,  and the costs  thereof  shall be borne by the
surviving or resulting corporation.

     (g) At the  hearing  on  such  petition,  the  Court  shall  determine  the
stockholders who have complied with this Section and who have become entitled to
appraisal  rights.  The Court may require the  stockholders who have demanded an
appraisal for their shares and who hold stock  represented  by  certificates  to
submit  their  certificates  of stock to the  Register in Chancery  for notation
thereon of the pendency of the  appraisal  proceedings;  and if any  stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.

     (h) After determining the stockholders entitled to an appraisal,  the Court
shall appraise the shares, determining their fair value exclusive of any element
of value  arising  from the  accomplishment  or  expectation  of the  merger  or
consolidation,  together  with a fair rate of interest,  if any, to be paid upon
the amount  determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors,  including the rate of
interest which the surviving or resulting  corporation  would have had to pay to
borrow money  during the pendency of the  proceeding.  Upon  application  by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion,  permit discovery
or other pretrial  proceedings and may proceed to trial upon the appraisal prior
to the final  determination  of the  stockholder  entitled to an appraisal.  Any
stockholder  whose name appears on the list filed by the  surviving or resulting
corporation  pursuant to  sub-Section  (f) of this Section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is


                                      C-4


required,  may  participate  fully  in  all  proceedings  until  it  is  finally
determined that such  stockholder is not entitled to appraisal rights under this
section.

     (i) The Court  shall  direct the  payment of the fair value of the  shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto.  Interest may be simple or compound, as the Court
may direct.  Payment shall be so made to each such  stockholder,  in the case of
holders of  uncertificated  stock  forthwith,  and the case of holders of shares
represented  by  certificates  upon  the  surrender  to the  corporation  of the
certificates  representing  such stock.  The  Court's  decree may be enforced as
other decrees in the Court of Chancery may be enforced,  whether such  surviving
or resulting corporation be a corporation of this State or of any state.

     (j) The costs of the  proceeding  may be  determined by the Court and taxed
upon the  parties  as the  Court  deems  equitable  in the  circumstances.  Upon
application  of a  stockholder,  the Court  may  order  all or a portion  of the
expenses   incurred  by  any   stockholder  in  connection  with  the  appraisal
proceeding,  including,  without limitation,  reasonable attorney's fees and the
fees and  expenses of experts,  to be charged pro rata  against the value of all
the shares entitled to an appraisal.

     (k) From and after the effective  date of the merger or  consolidation,  no
stockholder who has demanded  appraisal rights as provided in sub-Section (d) of
this Section  shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other  distributions  on the stock (except  dividends or
other  distributions  payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that:

if no  petition  for an  appraisal  shall be filed  within the time  provided in
sub-Section  (e) of this section,  or if such  stockholder  shall deliver to the
surviving or resulting  corporation a written  withdrawal of such  stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days  after the  effective  date of the  merger  or  consolidation  as
provided  in  sub-Section  (e) of this  Section or  thereafter  with the written
approval of the corporation,  then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court,  and such approval may be conditioned  upon such terms as the Court deems
just.

     (l) The  shares of the  surviving  or  resulting  corporation  to which the
shares  of such  objecting  stockholders  would  have  been  converted  had they
assented to the merger or consolidation  shall have the status of authorized and
unissued shares of the surviving or resulting corporation.


                                      C-5





                                   APPENDIX D
         Annual Report on Form 10-K for the Year Ended December 31, 2001




                                  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


                                       1


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


     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


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


                                       4


     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


                                       5


     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


                                       6


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:

                                       7


     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


     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


       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


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


    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


       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


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



Employees

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



                                               2001       2000                                            2001
Aviation E-commerce Business:                                       Nurse Staffing Business:
                                                                                                   
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


       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


       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


       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


       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


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


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


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


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


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


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


       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


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


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



                                     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



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.


Consolidated Statements of

   Operations Data:                                            For the Years Ended December 31,
                                            ----------------------------------------------------------------------------
                                                    1997          1998          1999           2000            2001
                                            --------------- -------------- -------------- --------------- --------------
                                                                                           
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


                                       29


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


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.




                                               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
                                   -----       -----      -----      -----      -------    -------     -------
                                                                                   
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
                                     =====      =====      =====      =====



                                       31


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


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



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.




                                       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
                         ------      ------       -----      -----       -------     -------      -------
                                                                              
   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%
                          =====       =====       =====       =====     =========    =======      =======



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


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



   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


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


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



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


                                    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


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.  The
board of directors  subsequently  amended the stipend policy retroactive to June
20, 2001 so that each non employee  director shall be paid $2,500 per quarter if
at least one meeting per quarter is attended in person and $1,250 per quarter if
at least one meeting is attended by phone  provided that at least one meeting is
held per quarter.

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



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.





                                                   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
---------------------------    ----     ---------  --------   ----------   ----------  ----------    -------      ---------
                                                                                          
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.



                                       42



Stock Options

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




                                           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%  ($)
----------------          -----------    -------------------    -----------    ----------        ----------   ----------
                                                                                                
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.



       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.




                                   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)
------------------                ------------         --------    ---------------------------   -----------------------------
                                                                                                 
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.


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


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


       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



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                      10,000 (3)              *
Pierre A. Narath (4)                 60,000 (5)              *
Michael W. Siegel                   151,000 (6)           1.07
Brian Tolley                         61,039 (3)              *
Mark Weicher                         18,000 (3)              *
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) Consists of shares underlying stock options that are currently exercisable
    or will become exercisable within 60 days following March 22, 2002.
(4) Mr. Narath's address is 1538 Turnpike Street, North Andover, Massachusetts
    01845.
(5) 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.  Excludes  260,000 shares of common stock owned by
    Touchstone  Software  Corp.,  a company of which Mr.  Narath is an  officer,
    director  and  significant   stockholder.   Mr.  Narath  has  no  voting  or
    dispositive powers regarding these shares.

(6) 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


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                  None


                                       47




                                     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



                                   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









                                     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





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







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


                                                                                    December 31,
                                                                    -----------------------------------------
                              ASSETS                                          2001                 2000
                                                                    -------------------- --------------------
Current assets:
                                                                                        
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.


                                      F-3







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

                                                                          Year Ended December 31,
                                                            -----------------------------------------------------
                                                                    2001               2000              1999
                                                             ---------------- ------------------- ----------------
                                                                                           
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.


                                      F-4






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





                                      PREFERRED STOCK             COMMON STOCK           TREASURY STOCK          ADDITIONAL
                                -------------------------    --------------------   ---------------------         PAID-IN
                                  SHARES        AMOUNT         SHARES      AMOUNT     SHARES      AMOUNT          CAPITAL
                                ---------   -------------   -----------  --------   ---------  ------------   ---------------
                                                                                                     
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.



                                      F-5




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




                                                                    TOTAL
                                                                  DIVISIONAL      STOCKHOLDERS'
                                 UNEARNED         ACCUMULATED       EQUITY           EQUITY
                               COMPENSATION         DEFICIT      (DEFICIENCY)      (DEFICIENCY)
                               -------------   --------------    ------------   ---------------
                                                                    
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.



                                      F-5a








                                      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:
                                                                                                            
      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.




                                      F-6


          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




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



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


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


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







                                     Market       Gross Unrealized    Gross Unrealized       Amortized
                                     Value         Holding Gain         Holding Loss            Cost
                                   ---------      ----------------    ----------------     --------------
December 31, 2001:
Current:
                                                                                 
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
                                  ==========        ===========         =============         ==========




     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


     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







                                                                For the year ended December 31, 2001
                                                 ------------------------------------------------------------------
                                                 Aviation
                                                e-commerce        Supplemental    Corporate and
(In thousands)                                   business        Nurse Staffing        Other                 Total
                                              -------------      --------------   --------------           ----------
                                                                                                     
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
                                                =========             =====            ========             =========


     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


       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


     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


     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


     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


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


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




                                      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
    ---------------     -----------     ----------------  ----------------   ------------       ----------------
                                                                              
    $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
                        =========            =====               ====           =======             ====




     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:





                                                       ------------------- --------------------- -------------------
                                                               2001                  2000                 1999
                                                       ------------------- --------------------- -------------------
Net loss attributable to common stockholders:
                                                                                            
  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)
                                                                ======                ======              ======



     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:





                                          --------------------- --------------------- -----------------------
                                                  2001                  2000                   1999
                                          --------------------- --------------------- -----------------------
                                                                                      
  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%



     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


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:





                                       Year Ended              Year Ended              Year Ended
                                   December 31, 2001       December 31, 2000       December 31, 1999
                                 ---------------------   -----------------------  ----------------------
Statutory U.S. income
                                                                           
 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 %  $        --
                                 ========   ===========   ========   ===========   ========   ============



                                     F-21


     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



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


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


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



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


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



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.





                                   APPENDIX E
      Quarterly Report on Form 10-Q for the Six Months Ended June 30, 2002



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                     ------------------------------------

                                    FORM 10-Q



[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934


                  For the quarterly period ended June 30, 2002

                                       OR


TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
     ACT OF 1934


             For the transition period from         to

                             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 33487-8242
                    (Address of principal executive offices)

        Registrant's telephone number, including area code: 561.953.0700
--------------------------------------------------------------------------------


     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required 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 [ ]



APPLICABLE ONLY TO CORPORATE ISSUERS:

     The registrant  had an aggregate of 14,012,302  shares of its common stock,
$0.001 par value, outstanding as of the close of business on August 1, 2002.


                                 PARTSBASE, INC.
                                TABLE OF CONTENTS
                               ------------------
                                                                            Page

PART I-   FINANCIAL INFORMATION (UNAUDITED)

   ITEM 1.   Financial Statements ...............................              3

   ITEM 2.   Management's Discussion and Analysis of Financial
              Condition and Results of Operations ...............             12

   ITEM 3.   Quantitative and Qualitative Disclosure about Market
              Risk  .............................................             17


PART II-   OTHER INFORMATION

   ITEM 1.   Legal Proceedings ..................................             17

   ITEM 2.   Changes in Securities ..............................             19

   ITEM 3.   Default Upon Senior Securities  ....................             19

   ITEM 4.   Submission of Matters to a Vote of Security Holders              19

   ITEM 5.   Other Information ..................................             20

   ITEM 6.   Exhibits and Reports on Form 8-K ...................             20

   SIGNATURES ....................................................            21


                                       2



PART I  FINANCIAL INFORMATION

Item 1.  Financial Statements




                                       PARTSBASE, INC. AND SUBSIDIARY

                                   Consolidated Condensed Balance Sheets

                                                 (Unaudited)


                                                    June 30,          December 31,
                                                      2002                2001
                                              -----------------    ------------------

                            ASSETS

Current assets:
                                                                
Cash and cash equivalents                       $  23,135,315         $  23,851,593
Accounts receivable, net                            1,076,823               403,969
Investments, at amortized cost                            -                 900,073
Prepaid expenses and other current assets             337,840               330,966
                                                 -------------         -------------
 Total current assets                              24,549,978            25,486,601
Property and equipment, net                         2,104,500             2,570,330
Certificate of deposit - restricted cash              660,000             1,070,000
Other assets                                           52,723                36,839
                                                 -------------         -------------
 Total assets                                   $  27,367,201         $  29,163,770
                                                 =============         =============


     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable                                $     109,558         $       87,060
Accrued expenses and other current liabilities        874,806                406,147
Deferred revenue, net                               2,207,485              2,231,076
                                                 -------------         --------------
 Total current liabilities                          3,191,849              2,724,283
                                                 -------------         --------------

Commitments and contingencies

Stockholders' equity:
Preferred stock, $0.001 par value, 2,000,000
 shares authorized, shares issued and
 outstanding in 2002 and 2001                             -                      -
Common stock, $0.001 par value; 30,000,000
 shares authorized, issued and outstanding
 14,012,302 in 2002 and 14,003,620 in 2001             14,012                 14,004
Additional paid-in capital                         53,254,279             53,255,465
Accumulated deficit                               (29,092,939)           (26,828,892)
Unearned compensation                                     -                   (1,090)
                                                 -------------         --------------
  Total stockholders' equity                       24,175,352             26,439,487
                                                 -------------         --------------
 Total liabilities and stockholders' equity     $  27,367,201         $   29,163,770
                                                 =============         ==============


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



                                       3







                                            PARTSBASE, INC. AND SUBSIDIARY

                                    CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                                                      (Unaudited)


                                                      Three Months Ended                Six Months Ended
                                                          June 30,                          June 30,
                                                 ----------------------------   ------------------------------
                                                        2002           2001            2002           2001
                                                 -------------   ------------   -------------    -------------
                                                                                     
Net revenues                                     $  2,175,102    $ 1,353,833    $  4,149,094     $  2,953,066
Cost of revenues                                    1,808,734      1,076,041       3,504,507        2,564,801
                                                  ------------   ------------   -------------    -------------
Gross profit                                          366,368        277,792         644,587          388,265
                                                  ------------   ------------   -------------    -------------

Operating expenses:
General and administrative expenses                 1,343,239      2,050,310       2,448,544        4,314,567
Stock-based compensation expense                          -          134,993           1,090          178,004
Litigation and other related costs                    150,000        457,500         150,000          457,500
Relocation expenses and abandonment costs                 -              -           281,906              -
                                                  ------------   ------------   -------------    -------------
Total operating expenses                            1,493,239      2,642,803       2,881,540        4,950,071
                                                  ------------   ------------   -------------    -------------

Operating loss                                     (1,126,871)    (2,365,011)     (2,236,953)      (4,561,806)
Privatization expenses                               (270,000)           -          (270,000)             -
Other income, net                                     105,490        299,014         242,906          797,100
                                                  ------------   ------------   -------------    -------------
Net loss                                         $ (1,291,381)   $(2,065,997)   $ (2,264,047)    $ (3,764,706)
                                                  ============   ============   =============    =============

Basic and diluted net loss per share             $      (0.09)   $     (0.15)   $      (0.16)    $      (0.26)
                                                  ============   ============   =============    =============

Weighted average common shares outstanding         13,978,667     14,155,140      13,988,718       14,219,174
                                                  ============   ============   =============    =============



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




                                       4







                             PARTSBASE, INC. AND SUBSIDIARY

                     CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                                       (Unaudited)

                                                                       SIX MONTHS ENDED
                                                            ------------------------------------
                                                                  JUNE 30,             JUNE 30,
                                                                    2002                 2001
                                                            ---------------     ----------------

Cash flows from operating activities:
                                                                          
   Net loss                                                 $  (2,264,047)      $    (3,764,706)
   Adjustments to reconcile net loss to cash used in
        operating activities:
   Depreciation                                                   385,749               397,216
   Loss on property abandonments                                  251,498                   -
   Provision for doubtful accounts                                 57,318               551,244
   Provision for litigation and other related costs               150,000               158,565
   Recognition of stock based compensation                          1,090               178,004
   Change in assets and liabilities:
      Accounts receivable, net                                   (704,481)              361,063
      Prepaid and other current assets                             (6,873)              227,025
      Other assets                                                (16,259)               62,216
      Accounts payable                                             22,499              (445,123)
      Accrued expenses and other accrued liabilities              318,659               (31,780)
      Deferred revenue, net                                       (49,283)             (488,638)
      Other liabilities                                               -                  19,850
                                                             -------------       ---------------
        Net cash used in operating activities                  (1,854,130)           (2,775,064)
                                                             -------------       ---------------


Cash flows from investing activities:
   Capital expenditures                                          (171,043)              (77,516)
   Maturities of marketable debt securities                       900,073             3,615,147
   Purchase of certificate of deposit-restricted cash                 -              (1,677,864)
   Redemption of certificate of deposit-restricted cash           410,000                   -
                                                             -------------       ---------------
        Net cash provided by investing activities               1,139,030             1,859,767
                                                             --------------      ---------------


Cash flows from financing activities
   Purchase of treasury stock                                     (22,838)             (795,544)
   Exercise of employee non-qualified stock options                21,660               178,926
                                                             -------------       ---------------
        Net cash used in financing activities                      (1,178)             (616,618)
                                                             -------------       ---------------

Net decrease in cash and cash equivalents                        (716,278)           (1,531,915)
Cash and cash equivalents at beginning of period               23,851,593            23,045,491
                                                             -------------       ---------------
Cash and cash equivalents at end of period                  $  23,135,315       $    21,513,576
                                                             =============       ===============


Noncash financing activities:
   Retirement of treasury stock                             $      22,838       $           -
                                                             =============       ===============


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



                                       5




                         PARTSBASE, INC. AND SUBSIDIARY
              Notes to Consolidated Condensed Financial Statements
                                   (Unaudited)


The Company and Basis of Presentation

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

     At the Company's Annual Meeting of Stockholders  held on June 20, 2001, the
stockholders  approved an amendment to change 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,  PartsBase,  Inc.  formed  RNpartners,  Inc., a Florida
corporation,  ("RNpartners"),  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  Miami-Dade,  Palm Beach,  Martin,
Hillsborough and Broward counties of the State of Florida.

     The  accompanying   unaudited   consolidated  condensed  interim  financial
statements  reflect all  adjustments,  (consisting  only of recurring  accruals)
which in the opinion of management are necessary for a fair  presentation of the
consolidated  results of  operations  for the periods  shown.  The  consolidated
results of  operations  for the three month and six month periods ended June 30,
2002 are not necessarily  indicative of the results expected for the full fiscal
year or for any future period.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting  principles generally accepted
in the United  States of America have been  condensed or omitted as permitted by
Article 10 of Regulation S-X of the Securities  and Exchange  Commission.  These
consolidated  condensed financial  statements should be read in conjunction with
the  financial  statements  and notes thereto  included in the Company's  Annual
Report on Form 10-K for the year ended December 31, 2001.

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 and banner advertising revenue over the
life of the subscription,  which is typically 12 months. Sales costs,  including
commissions, are expensed as incurred, and are included in the cost of revenues.
Net revenue  represents that portion of gross revenue that was earned during the
period  presented.  Therefore,  during quarters with  significant  gross revenue
growth,  gross  margins will be  negatively  impacted due to the effect of sales
costs being  expensed in their  entirety,  whereas the  corresponding  sales are
amortized over the subscription  term.  Nurse staffing  revenues and the related
labor  costs and  payroll  taxes are  recorded  in the period in which  staffing
services are performed.


Cash and Cash Equivalents

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

Basic and Diluted Net Loss per Share

     Basic net loss per share is computed  using the weighted  average number of
common shares  outstanding  during the period.  Diluted net loss per share, when
not  anti-dilutive,  is computed using the weighted average number of common and
common equivalent shares outstanding during the period. Common equivalent shares


                                       6


consist of the  incremental  common  shares  issuable upon the exercise of stock
options and warrants  (using the treasury stock  method).  For the three and six
month periods  ended June 30, 2002 and 2001,  common share  equivalents  are not
included in the  computation  of diluted loss per share since  inclusion of such
shares would be anti-dilutive.

Reclassifications

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

Relocation expenses and abandonment costs

     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  was to expire on October 31, 2006.  In December  2001,  the
sublessor  filed for  bankruptcy  protection  and as a result,  the sublease was
vacated by the bankruptcy court. In January 2002, the Company entered into a new
sublease  agreement with another  unaffiliated third party for 6,600 square feet
of general office space in Boca Raton.  In conjunction  with the move to the new
and smaller office space in February 2002, the Company  incurred moving expenses
totaling  $30,408  and a loss on  abandoned  furniture,  fixtures  and  trailing
technology computer equipment and software with a net book value of $251,498.

Segment Information

     Based on the criteria  established  by the Financial  Accounting  Standards
Board,  Statement of Financial Accounting Standards 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  operating in South Florida.  The
latter 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 six months ended June 30, 2001.

     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  during  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 Miami-Dade,  Broward, Hillsborough,  Martin 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 as noted above. Revenues and non-overhead expenses
for each  business  line are those  that  directly  relate to those  operations.
Overhead expenses, such as general,  corporate and 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.

     The following  schedule provides segment  information for the three and six
month periods  ended June 30, 2002.  During the three and six month period ended
June 30, 2001, the Company only operated in one segment and therefore no segment
information is provided for such periods of time.

                                       7








                                                  For the six months ended June 30, 2002
                                      ----------------------------------------------------------------
                                           Aviation
                                          e-commerce        Supplemental       Corporate
(In thousands)                             business        Nurse Staffing      and other      Total
                                      ---------------     ---------------      ----------  ---------
                                                                                     
Subscription revenues                     $  2,156                                         $  2,156
Advertising                                     76                                               76
Nurse staffing services                          -          $    1,903                        1,903
Other                                           14                   -                           14
                                           --------          ----------        --------     --------
   Total revenues                            2,246               1,903                        4,149
                                           --------          ----------        --------     --------
Cost of revenues, excluding
  depreciation and amortization              1,457               1,827                        3,284
General and administrative                     959                 906        $    418        2,283
Depreciation and amortization                  343                  43               -          386
Stock based compensation                         1                   -               -            1
Litigation and other related costs               -                   -             150          150
Relocation and other related costs               -                   -             282          282
                                           --------          ----------        --------     --------
Total cost of revenues and
   operating expenses                        2,760               2,776             850        6,386
                                           --------          ----------        --------     --------
Operating loss                            $   (514)         $     (873)       $   (850)    $ (2,237)
                                           ========          ==========        ========     ========
Privatization costs and expenses          $      -          $        -        $    270     $    270
                                           ========          ==========        ========     ========
Interest income                           $      -          $        -        $     40     $     40
                                           ========          ==========        ========     ========
Other income, net                         $      -          $        -        $    203     $    203
                                           ========          ==========        ========     ========
Capital expenditures                      $     67          $      104        $      -     $    171
                                           ========          ==========        ========     =========
Total assets                              $ 26,228          $    1,139        $      -     $  27,367
                                           ========          ==========        ========     =========










                                                 For the three months ended June 30, 2002
                                      ----------------------------------------------------------------
                                           Aviation
                                          e-commerce        Supplemental       Corporate
(In thousands)                             business        Nurse Staffing      and other      Total
                                      ---------------     ---------------     -----------   --------
                                                                                     
Subscription revenues                     $  1,031                                         $  1,031
Advertising                                     48                                               48
Nurse staffing services                          -          $    1,087                        1,087
Other                                            9                   -                            9
                                           --------          ----------        --------     ---------
Total revenues                               1,088               1,087                        2,175
                                           --------          ----------        --------     ---------
Cost of revenues, excluding
  depreciation and amortization                679               1,020                        1,699
General and administrative                     475                 542        $    243        1,260
Depreciation and amortization                  170                  23               -          193
Litigation and other related costs               -                   -             150          150
                                           --------          ----------        --------     --------
Total cost of revenues and
  operating expenses                         1,324               1,585             393         3,302
                                           --------          ----------        --------     ---------
Operating loss                            $   (236)         $     (498)       $   (393)    $  (1,127)
                                           ========          ==========        ========     =========
Privatization costs and expenses          $      -          $        -        $    270     $     270
                                           ========          ==========        ========     =========
Interest income                           $      -          $        -        $      12    $      12
                                           ========          ==========        =========    =========
Other income, net                         $      -          $        -        $      94    $      94
                                           ========          ==========        =========    ==========
Capital expenditures                      $      3          $       14        $       -    $      17
                                           ========          ==========        =========    ==========




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


                                       8



Commitments and Contingencies

     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  joined the payee as a defendant in the matter. The payee
countersued the Company claiming the financial  institution's  action breached a
settlement agreement between the payee and the Company and that the Company must
indemnify  the payee for any losses that may be  sustained  in the  matter.  The
claims against the Company in this matter are the financial institution's demand
for legal fees if the financial  institution prevails and the payee's claims for
indemnity and legal fees. This matter is scheduled for trial in January 2003.

     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 maintains a director and officer's  liability insurance policy
that provides $3 million of coverage, with retention of $200,000. As of June 30,
2002, the Company has incurred and previously  charged the retention of $200,000
to expense.  In May 2002, the Company  reached an agreement in principle for the
settlement of the consolidated  class action. The plaintiffs in the case and the
defendants,  entered into a Memorandum  of  Understanding  outlining the general
terms of the proposed settlement.  The Memorandum of Understanding provides for,
among other things, a settlement  amount of $1.5 million in cash, plus interest,
payable to the class under an insurance policy and for the plaintiffs' dismissal
of the class  action with  prejudice as well as a broad form of release in favor
of PartsBase and the other  defendants  in the class action  which,  among other
things,  will have the effect of barring  all claims by the  plaintiffs  and the
members of the class other than those who opt out,  arising out of the  purchase
and sale of the Company's common stock in the Company's  initial public offering
of securities.

     The final  settlement of the class action is subject to the preparation and
execution of definitive settlement documents and court approval.  The settlement
also applies to the directors, management personnel, underwriters and securities
firms named as defendants in the litigation.

     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 matter is scheduled  for court  ordered  arbitration
amongst the three parties in September 2002. 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 an attempt to resolve the matter. To date the Company is not aware of


                                       9


any legal proceedings initiated by BSA in this matter. The Company believes that
the resolution of this matter will not have a material impact upon the Company's
consolidated financial position, results of operations and cash flows.

     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  was to expire on October 31, 2006.  In December  2001,  the
sublessor  filed for  bankruptcy  protection  and as a result,  the sublease was
voided by the  bankruptcy  court.  The Company  continued to occupy the premises
until  February  2002, at which time,  the Company moved to new subleased  6,600
square feet office space in Boca Raton from an unaffiliated  party. On March 26,
2002,  the lessor of the former  property  filed a complaint  for damages in the
amount of $92,910 plus interest,  costs and fees,  representing the value of the
time the Company  occupied the premises from the date the sublease was voided by
the  bankruptcy  court  through  the date the Company  vacated  the  premises in
accordance with rent provisions of the voided sublease. 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.

     On  April  8,  2002,   the   Company   received   a  proposal   from   the
Company's Chairman  of the Board,  President,  CEO and majority stockholder (the
"Company's  Chairman")  and a limited  partnership  controlled  by the Company's
Chairman  to  acquire  the  remaining  shares  of the  Company's  common  stock,
approximately  5,000,000  shares or  approximately  36% of the shares  currently
outstanding  that the  Company's  Chairman does not own or control at a price of
$1.02 per share.  The proposal is subject to, among other  things,  a definitive
merger  agreement,  approval of both the Board of Directors and  shareholders of
PartsBase, Inc., receipt of any regulatory approval which may be necessary and a
fairness opinion from the Company's investment banker. The Board of Directors of
the Company has formed a Special Committee ("Special Committee") to consider the
proposed  transaction.  The Special  Committee has retained  legal and financial
advisors to assist them in evaluating the proposed transaction.

     On April 16 and 17, May 8 and June 11,  2002, the  Company received notices
of, or had been served with, four purported class action lawsuits,  two of which
were filed in the Circuit  Court in and for Palm Beach  County,  Florida and the
other two which was filed in the Court of  Chancery  of the State of  Delaware (
Cliff Gordon vs.  PartsBase,  Inc. et.al,  Case No. 024277,  Hughes Rousseau vs.
PartsBase,  Inc.  et.al Case No.  0205368 in Palm Beach County,  Florida and Key
Equity  Investors vs.  PartsBase,  Inc.,  et.al.  C.A. 19546 and Paul Berger vs.
PartsBase,  Inc.  et.al,  C.A.  19693  in  Delaware).  The   lawsuits   name as
defendants   the  Company  and certain of its current   officers and directors.
The  lawsuits  allege the directors  have breached  their  fiduciary duty to the
plaintiffs and the purported  class and seek to enjoin the Company from entering
into a proposed  going-private  transaction,  by the  Company's  Chairman  and a
limited  partnership and  to  recover  unspecified  damages  resulting  from the
alleged breach of fiduciary duty.  The  Company  intends  to  vigorously  defend
these actions.  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
$150,000.  The Company fully expects its legal  expenses to exceed the retention
amount.  Therefore  at June 30,  2002,  the  Company has  recorded a  litigation
reserve for  $150,000 to cover the  expected  retention.  This  reserve has been
classified  as a  litigation  and  other  related  costs  in  the  statement  of
operations for the three and six months ended June 30, 2002.

     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.


     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.  In May 2002,  the
Company regained compliance.


     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 and March 15, 2002,  respectively,
USAIS  licenses  to  the  Company  the   non-exclusive   rights  to  resell  the
Subscription  Services  and to offer  access to  certain  segments  of the USAIS


                                       10


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, 2002, an irrevocable, transferable
standby  Letter  of  Credit  in the  amount  of  $840,000,  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 June 30, 2002, the Company owed USAIS $660,000.

Proposed Privatization Transaction

     On  April  8,  2002,   the   Company   received   a  proposal   from   the
Company's Chairman  of the Board,  President,  CEO and majority stockholder (the
"Company's  Chairman")  and a limited  partnership  controlled  by the Company's
Chairman  to  acquire  the  remaining  shares  of the  Company's  common  stock,
approximately  5,000,000  shares or  approximately  36% of the shares  currently
outstanding  that the  Company's  Chairman does not own or control at a price of
$1.02 per share.  The proposal is subject to, among other  things,  a definitive
merger  agreement,  approval of both the Board of Directors and  shareholders of
PartsBase, Inc., receipt of any regulatory approval which may be necessary and a
fairness opinion from the Company's investment banker. On May 30, 2002 Company's
Chairman increased his offer price to $1.25 per share.

     On April 19, 2002, the Company  received a proposal  from AirOperations.com
("AirOps")  for a going  private  transaction.  According to the  correspondence
received from AirOps,  AirOps'  parent  company,  Air  Operations  International
repairs,  overhauls and markets  aircraft engines and components and through its
website  Airoperations.com  engages in e commerce in the aviation industry.  The
proposed  transaction from AirOps would be either in the form of a merger with a
corporation  owned,  affiliated with and/or controlled by AirOps or the purchase
of substantially  all the assets of PartsBase.  Pursuant to the AirOps proposal,
the stockholders of PartsBase would receive $1.22 per share in exchange for each
share of PartsBase Common Stock outstanding or the same aggregate  consideration
to  PartsBase  in the event of an asset  purchase.  The  proposal is subject to,
among  other  things,  approval  of the  proposed  transaction  by the  Board of
Directors and  stockholders  of PartsBase,  receipt of any regulatory  approvals
which may be necessary,  the receipt of a fairness opinion,  the inapplicability
(either by its terms or as a result of Company Board action) of certain business
combination provisions under Delaware law, the receipt of satisfactory financing
by AirOps to consummate the transaction,  the receipt of all necessary  consents
without payment of any penalty from creditors, lessors or customers of PartsBase
and the termination of all outstanding options and warrants of the Company.  The
proposal  initially expired on May 15, 2002 but was extended,  indefinitely,  by
AirOps. Additionally,  AirOps amended its offer price to $1.30 per share on June
4, 2002. The proposal from AirOps has been referred to the Special  Committee of
the Board of Directors.

     On June 10, 2002,  the Company  received a proposal  from a group headed by
Mr. Harold Van Arnem (the "Van Arnem Group"),  a private  investor,  for a going
private transaction.  The proposed transaction from the Van Arnem Group would be
in the  form of a  merger  with a  corporation  owned,  affiliated  with  and/or
controlled by the Van Arnem Group. Pursuant to the Van Arnem Group proposal, the
stockholders  of PartsBase  would  receive  $1.30 per share in exchange for each
share of PartsBase Common Stock outstanding. The proposed acquisition is subject
to, among other  things,  approval of the proposed  transaction  by the Board of
Directors and  stockholders  of PartsBase,  receipt of any regulatory  approvals
which may be  necessary,  the  receipt of a  fairness  opinion,  the  receipt of
satisfactory financing by Van Arnem to consummate the transaction.  The proposal
from the Van Arnem Group has been referred to the Special Committee of the Board
of Directors.

     On  June  13,  2002,  the  Special  Committee  of the  Board  of  Directors
established a deadline of 5:00 p.m.  Eastern time on Friday,  June 14, 2002, for
all interested  parties to submit their best and final offer.  On June 17, 2002,
the Special  Committee  announced  that it had received a bid from the Company's
Chairman,  AirOps and the Van Arnem  Group,  all of which are  continuing  to be
evaluated as of the date of this Report.

     As of June 30,  2002,  the  Special  Committee  has  incurred  $270,000  in
expenses, primarily for legal and financial advice and a stipend for each of the
three  members of the  Special  Committee  approved  by the  Company's  Board of
Directors.  These expenses have been classified as Privatization Expenses in the
Company's  Statements  of  Operations  for the three months and six months ended
June 30, 2002, respectively.

                                       11


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

     This  Report  contains  forward-looking  statements  within the  meaning of
Section 27A  of the  Securities  Act of 1933 and  Section 21E  of the Securities
Exchange Act of 1934,  including,  without limitation,  statements regarding the
Company's  expectations,  beliefs,  intentions  or  future  strategies  that are
signified  by the words  "expects",  "anticipates",  "intends",  "believes",  or
similar language.  All forward-looking  statements included in this document are
based on  information  available  to the  Company  on the date  hereof,  and the
Company  assumes no  obligation to update any such  forward-looking  statements.
Actual   results   could  differ   materially   from  those   projected  in  the
forward-looking  statements as a result of a number of factors including but not
limited  to those set forth  under  "Risk  Factors"  included  in  Exhibit  99.1
elsewhere in this report.

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,   Miami-Dade   County,
Hillsborough County, Martin 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 change 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  at such time. No shares of
preferred  stock were issued or  outstanding  at June 30, 2002 and  December 31,
2001, respectively.

         The Aviation E-commerce Business and Corporate

Results of Operations

Net Revenues

     Net revenues consist of subscription  fees charged to subscribers and, to a
lesser extent,  banner-advertising  and product listings  revenue.  Net revenues
were  $1,088,237  and  $2,245,982 for the second quarter and first six months of
2002,  respectively,  compared to $1,353,833 and $2,953,066 for the same periods
in 2001, a decrease of 20% and 24%, respectively.  During the second quarter and
first six months of 2002,  PartsBase signed up 171 and 367 new subscribers at an
average  subscription  fee of $1,741 and $2,040,  respectively.  During the same
periods,  429 and 881 subscribers renewed their subscription for another year at
an average  subscription fee of $1,589 and $1,650,  respectively.  The aggregate
average  subscription fee of both new and renewal  subscribers during the second
quarter and first six months of 2002 was $1,632 and $1,765, respectively.

     During the second quarter and first six months of 2001, PartsBase signed up
459 and 1,153 new  subscribers  at an  average  subscription  fee of $1,785  and
$1,730,  respectively.  In  addition,  during the second  quarter  and first six
months of 2001, 291 and 728 members renewed their subscriptions for another year
at the  average  renewal  fee of $1,331 and  $1,232  respectively.  The  average
subscription fee increased during the 2002 six month period over the same period
in 2001, due to higher prices charged for competing  services,  and  PartsBase's
ability to offer  additional  value added services to its  subscribers,  such as
government  procurement  data and enhanced parts search.  The aggregate  average
subscription fee of both new and renewal  subscribers  during the second quarter
and first six  months of 2001 was  $1,609 and  $1,537,  respectively.  Given the
finite size of the aerospace community,  the number of new subscribers signed up
in 2002 decreased compared to 2001.

     At June 30, 2002  PartsBase  had 2,466  paying  subscribers  as compared to
2,749 paying subscribers at March 31, 2002, 2,926 paying subscribers at December
31, 2001,  3,315 paying  subscribers  at  September  30, 2001,  and 4,056 paying
subscribers at June 30, 2001. The subscriber  count decreased  during the second
quarter  of 2002  compared  to the prior  quarter,  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 due
to  non-payment  of their  invoice.  Of the 881  subscribers  who renewed  their


                                       12


subscriptions  during  the  first  six  months  of  2002,  455  represent  those
subscribers  renewing  for  the  second  time,   representing  21%  of  the  new
subscribers  initially signed during the first six months of 2000 and 37% of the
new  subscribers  signed up during  the first six  months of 2001.  The  Company
expects that the renewal rate for third year  subscriptions  will be higher than
that  experienced for second year renewals,  although there can be no assurances
that future  renewal rates will be higher than that  experienced  for the second
year. A paid subscriber is defined as a member of the PartsBase web site who has
purchased a  subscription  that is currently  active,  and  therefore,  does not
include subscribers whose  subscriptions have expired, or potential  subscribers
who are trialing the service.

     Gross  revenues were  $1,035,026  and $2,293,734 for the second quarter and
first six months of 2002,  respectively,  compared to $1,207,019  and $2,867,116
for the same  periods in 2001,  a  decrease  of 14% and 20%,  respectively.  The
decrease  in gross  revenue  during the  current  quarter  and current six month
period as compared to the same quarter and six month period of the prior year is
attributable  to finite number of members in the  aerospace  community and fewer
renewals of initial subscribers in 2002.


     PartsBase  recognizes earned  subscription and banner  advertising  revenue
over the life of the subscription,  which is typically 12 months.  Gross revenue
represents  total  subscription  and  advertising  sales made  during the period
presented,  for which a portion  is  deferred  and  recognized  as  earned.  Net
revenues represent that portion of gross revenues of all periods that was earned
during the current period presented.  Sales costs,  including  commissions,  are
expensed as incurred, and are included in the cost of revenues. Deferred revenue
decreased to $2,207,485 at June 30, 2002, compared to $2,308,109 as of March 31,
2002, and $2,231,076 at December 31, 2001 and $2,730,784 at June 30, 2001.


     The  following  table sets forth gross revenue by product line for the last
five  quarters,  as well as  operating  data and  sequential  quarter-to-quarter
revenue growth (decline) percentages for the same period.






                                                PartsBase, Inc.
                                         Revenue Detail By Quarter (000's)

                               06/30/01      09/30/01      12/31/01      03/31/02      06/30/02
                               --------      --------      --------      --------      --------
                                                                        
New Subscriptions              $   729       $   492       $   381       $   451       $   298
Renewal Subscriptions              387           591           833           772           682
Advertising                         89            27            26            31            46
Other                                2            15             2             5             9
                                -------       -------       -------       -------       -------
Total Gross Revenue            $ 1,207       $ 1,125       $ 1,242       $ 1,259       $ 1,035
                                =======       =======       =======       =======       =======
Sequential Gross Rev. Growth      -27%           -7%           10%            1%          -18%
                                =======       =======       =======       =======       =======
Total Net Revenue              $ 1,354       $ 1,344       $ 1,224       $ 1,158       $ 1,088
                                =======       =======       =======       =======       =======
Sequential Net Rev. Growth        -15%           -1%           -9%           -5%           -6%
                                =======       =======       =======       =======       =======
Salesperson Compensation       $   484       $   398       $   422       $   441       $   394
                                =======       =======       =======       =======       =======
Sales Comp/Gross Revenue           40%           35%           34%           35%           38%
                                =======       =======       =======       =======       =======
Deferred Revenue Balance       $ 2,731       $ 2,413       $ 2,231       $ 2,308       $ 2,207
                                =======       =======       =======       =======       =======



Cost of Revenues

     Cost  of  revenues   consists  of  compensation  for  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. Costs of revenues, exclusive of depreciation and amortization
were  $680,148  and  $1,457,724  for the second  quarter and first six months of
2002,  respectively,  compared to $1,014,288 and $2,473,007 for the same periods
in  2002.  As a  percent  of net  revenues,  costs  of  revenues,  exclusive  of
depreciation and amortization  were 62% and 65% for the second quarter and first
six months of 2002,  respectively,  compared to 75% and 84% for the same periods
in 2001. Salesperson  compensation in the second quarter and first six months of


                                       13


2002 as a  percentage  of  gross  revenue  was 38% and 36%,  respectively.  This
compares  to 40% and 42%,  respectively,  in the  second  quarter  and first six
months of 2001.  Salesperson  compensation  as a percentage  of gross revenue is
continuing to trend back downwards,  as renewals,  for which the commission rate
is  substantially  lower than new  subscriptions,  comprise a greater portion of
gross revenues.

     At June 30,  2002,  PartsBase  employed  33 persons  in sales and  customer
service,  compared to 113 persons at June 30,  2001.  Additionally,  included in
cost of revenues in the second quarter and first six months of 2002 was $189,050
and  $369,050,  respectively,  for  contract  payments  to  a  third  party  for
government  procurement  data as opposed to $260,000  and  $560,000 for the same
periods of 2001.

General and Administrative Expenses

     For the  second  quarter  and six  months  ended  June 30,  2002 and  2001,
respectively, aviation e-commerce general and administrative expenses, excluding
stock-based  compensation  expense  of $0 and  $1,090 in 2002 and  $134,993  and
$178,004 in 2001,  respectively,  depreciation  and  amortization of $60,998 and
$123,003 in 2001 and $158,886 and $305,422 in 2001, respectively and unallocated
corporate general and  administrative  expenses of $242,804 and $418,274 in 2002
and $0 during both periods in 2001, respectively,  were $475,525 and $959,250 in
2002 as compared to $1,891,424 and $4,009,145 in 2001, respectively;  a decrease
of 75% and  $1,415,899  from the second  quarter of 2001 and 76% and  $3,049,895
from the first six months of 2001.

     General  and  administrative  expenses  were 44% of net  revenues,  for the
second  quarter of 2002,  and 140% of net  revenues,  for the second  quarter of
2001,  respectively.  General and administrative expenses consisted primarily of
personnel costs of $361,443 and $1,144,513, rent expense of $5,795 and $166,753,
advertising  costs of $4,688  and  $27,449,  bad debt  expense  of  $21,249  and
$339,091,   and  other  costs  totaling  $82,350  and  $213,618   consisting  of
professional fees, utilities,  supplies and other related  administrative costs,
for the second quarter of 2002 and 2001, respectively.

     General and administrative expenses were 43% of net revenues, for the first
six months of 2002, and 136% of net revenues,  for the first six months of 2001,
respectively.   General  and  administrative  expenses  consisted  primarily  of
personnel costs of $750,211 and $2,573,618, rent expense of $40,427 and $379,358
advertising  costs of $9,054  and  $38,602,  bad debt  expense  of  $37,137  and
$551,244  and  other  costs  totaling   $122,421  and  $466,323   consisting  of
professional fees, utilities,  supplies and other related  administrative costs,
for the first six months of 2002 and 2001, respectively.

     The Company made significant  personnel reductions during 2001 and 2002. In
addition, depending on salary level, all remaining salaried personnel took a pay
reduction,  ranging from 5%-30% during the second  quarter of 2001.  The Company
expects that its personnel  costs will continue to decrease during 2002 but at a
smaller  rate.  The decrease in bad debt expense  compared to the same period of
the  prior  year  relates  to  the  Company's  former  policy  of  paying  sales
commissions  upon signing a Company sales order,  rather than upon cash receipt,
which  increased the  possibility  that sales orders of lesser  quality would be
submitted.   Although  the  Company  can  recover   commissions  paid  to  sales
representatives  if the customer does not pay, the  Company's  high turnover has
made it  difficult  to collect on a portion of  subscriptions  sold.  During the
third quarter of 2001, the Company significantly tightened its deal verification
processes, thereby causing its bad debt expense to decrease in 2002.

     The Company was  comprised of one business  segment  until  October 1, 2001
with the commencement of operations of RNpartners,  Inc. into the nurse staffing
business. As a result , there was no corporate component prior to such time. For
the  quarter  ended and six months  ended June 30,  2002  unallocated  corporate
general and administrative  expenses,  excluding stock-based  compensation of $0
and $1,090,  respectively,  were  $242,804 and $418,274.  Corporate  general and
administrative expenses for the quarter ended and six months ended June 30, 2002
consisted  primarily  of  executive   compensation  of  $124,275  and  $249,528,
professional  and  directors'  fees of $107,161 and $81,087 and  directors'  and
officers' liability insurance premiums of $41,039 and $24,722.

     At  June  30,  2002  and  June  30,   2001,   we  employed  17  persons  in
administrative,   information  technology  and  executive  management  positions
(inclusive of corporate positions).

Depreciation and Amortization

     Depreciation and amortization expenses for the quarter and six months ended
June 30,  2002  totaled  $169,827  and  $342,683,  respectively,  as compared to


                                       14


$220,639 and $397,216  for the similar  2001  periods.  The decrease in the 2002
periods primarily  results from  depreciation and amortization  recorded in 2001
associated with furniture,  fixtures, and trailing technology computer equipment
and software abandoned during the corporate relocation in 2002.


Corporate Relocation Expenses and Abandonment Costs

     As a  result  of the  Company's  former  sublessor  filing  for  bankruptcy
protection in December  2001,  the Company's  sublease for 35,668 square feet of
office space in Boca Raton was vacated by the bankruptcy court. In January 2002,
the Company  entered into a new  sublease  agreement  with another  unaffiliated
third party for 6,600  square  feet of general  office  space in Boca Raton.  In
conjunction  with the move to the new and smaller office space in February 2002,
the Company incurred moving expenses  totaling $30,408 and abandoned  furniture,
fixtures and trailing technology computer equipment and software with a net book
value of $251,498.  Rent savings will be  approximately  $700,000 per annum.  No
additional costs were incurred during the second quarter of 2002.

Stock-Based Compensation Expense

     In connection  with the issuance of employee  stock options issued prior to
our IPO,  stock-based  compensation expense of $0 and $134,993 was recognized in
the second quarter 2002 and 2001,  respectively,  and $1,090 and $178,004 during
the first six  months of 2002 and  2001,  respectively.  There are no  remaining
charges to be recognized in future  periods  related to pre-IPO  grants as there
are no non-vested options  outstanding whose exercise price are below the market
price on the date of grant.

Litigation and Other Related Costs

     Litigation  and  other  related  costs of  $150,000  and  $457,500  for the
quarters ended and six months June 30, 2002 and 2001, respectively, consist of a
provision for $150,000 to cover expected  retention costs  associated with class
action  lawsuits the Company is party to in conjunction  with a proposed  "going
private"  transaction  during the 2002 period.  The 2001 expense  consisted of a
provision for $200,000 to cover  retention  costs  associated  with class action
lawsuits the Company is party to in  conjunction  with the Company's  March 2000
registration  statement as well as $257,500  during the first six months of 2001
to settle or accrue for  litigation  and other related  costs.  The class action
lawsuit  relating to the Company's  March 2000  registration  statement has been
settled pending final approval by the court.

Privatization Expenses

     During the quarter ended June 30, 2002,  the Company  received three offers
from three separate groups,  one headed by the Company's  Chairman and the other
two offers from unrelated  parties,  to take the Company private.  The Company's
Board of Directors ("Board") formed a Special Committee to evaluate these offers
consisting  of three  independent  members of the Board.  The Special  Committee
retained  legal and financial  advisors to assists it with the evaluation of the
respective  offers. The Special Committee has incurred $270,000 during the three
months ended June 30,2002 consisting  primarily of professional fees and a Board
approved stipend for each member of the Special Committee.

Other Income

     Other income,  net,  consisting  primarily of interest and dividend income,
was $105,490  and $242,906 for the second  quarter and six months ended June 30,
2002, respectively, compared to $299,014 and $797,100 for the second quarter and
six months ended June 30, 2001, respectively.  The decrease in other income, net
for the current periods compared to the comparable  periods of the prior year is
attributable  to lower cash balances and interest  rates on the  Company's  cash
equivalents.

Net Loss

     As a result  of the  foregoing,  the net loss  decreased  to  $794,577  and
$1,392,039  for the second  quarter  and first six months of 2002,  compared  to
$2,065,997 and $3,764,706 for same periods in 2001.


                                       15


         The Nurse Staffing Business

Results of Operations

Comparison of Three and Six Months Ended June 30, 2002


Net Revenues

     We commenced our nurse staffing  operations on October 1, 2001.  During the
quarter and six months ended June 30, 2002, we earned  $1,086,865 and $1,903,112
in net revenues from the placement of our registered nurse employees  working as
supplemental nursing staff in hospitals in Miami-Dade County, Palm Beach County,
Broward County, Hillsborough County and Martin County Florida. Approximately 46%
and 48% of these  revenues  for the  respective  periods  were derived from four
clients. As of June 30, 2002 we provided supplemental nurse staffing services to
27 clients; none of the remaining 23 clients individually comprised in excess of
9% of the total revenues for the six months ended June 30, 2002.

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 and six months
ended  June  30,  2002  our  total  cost  of  revenues  totaled  $1,019,757  and
$1,827,103,  respectively,  or 94% and  96% of net  revenues.  Registered  nurse
compensation  as a  percentage  of cost of revenues  totaled 96% and 95% for the
three  months  and six months  ended June 30,  2002.  As of June 30,  2002,  165
registered  nurses,  affiliated  with us,  had worked at least one shift for the
week then ended.

General and Administrative Expenses

     For  the  quarter  and  six  months  ended  June  30,  2002,   general  and
administrative expenses totaled $563,912 and $948,017 respectively.  General and
administrative expenses for the quarter ended and six months ended June 30, 2002
consisted  primarily of personnel costs of $379,791 and $633,576 rent of $27,820
and  $56,639  and other costs  totaling  $156,301  and  $257,802  consisting  of
marketing  expenses,  depreciation,  phone  and  utilities,  supplies  and other
related  administrative  costs,  respectively.  At June 30, 2002, we employed 51
persons in  administrative,  and  executive  management  positions  in our nurse
staffing operations. In April 2002, we opened offices in Hillsborough County and
Martin  County,  Florida  accounting  for the  increases in expenses  during the
quarter ended June 30, 2002.

Operating Loss

     As a result of the  foregoing,  the  operating  loss  incurred  during  the
quarter and six months ended June 30, 2002 totaled $496,804 and $872,008.


Liquidity and Capital Resources

Financial Condition

     As of  June  30,  2002,  the  Company  had  $23,135,315  of cash  and  cash
equivalents and restricted cash totaling $660,000. At June 30, 2002, the Company
had $21,358,129 of working capital.

     The Company  currently  anticipates  that its operating  expenses will be a
material use of its cash resources.  Additionally,  the Company will continue to
evaluate possible acquisitions of, or investments in, businesses,  products, and
technologies,  which may require the use of cash. The Company  believes that its
existing  cash and cash  equivalents  and  marketable  debt  securities  will be
sufficient to meet its  anticipated  cash needs for working  capital and capital
expenditures for at least the next twelve months.

Cash Flows

     Net cash used in operating activities totaled $1,854,130 for the six months
ended  June 30,  2002  compared  to net cash  used in  operating  activities  of
$2,775,064  for the  comparable  period of the prior year.  The  current  period


                                       16


decrease in cash used in  operations as compared to the same period of last year
reflects  a  decrease  in the loss for the  period  of  $1,500,659  offset by an
increase in  accounts  receivable  of  $1,065,544,  primarily  the result of the
operations of  RNpartners.  These items are offset by an increase of $422,624 in
accounts  payable due to an increase in the operations of RNpartners  during the
first half of 2002.

     Net cash provided by investing  activities  totaled  $1,139,030 for the six
months ended June 30, 2002 compared to net cash provided by investing activities
of $1,859,767  for the  comparable  period of the prior year. The current period
decrease of $720,737 in cash provided from  investing  activities as compared to
last year is primarily the result of a decrease in maturities of marketable debt
securities  totaling  $2,715,074 as opposed to the purchase of a certificate  of
deposit-restricted  cash of  $1,677,864  during the first six months of 2001 and
the redemption of  certificates  of  deposit-restricted  cash totaling  $410,000
during the first six months of 2002.

     Net cash used in  financing  activities  totaled  $1,178 for the six months
ended June 30, 2002,  compared to net cash used  financing  activities  totaling
$616,618  for the  comparable  period of 2001.  The decrease of $615,440 in cash
used during the current  period as  compared to last year is  primarily  because
during the six months  ended June 30,  2001,  the  Company  repurchased  538,120
shares of its common stock at a cost of $795,544 whereas the Company repurchased
25,700  shares of its common stock for $22,838  during the six months ended June
30, 2002.


Item 3.  Quantitative and Qualitative Disclosures about Market Risk

     The Company is exposed to the impact of interest rate changes.

Interest Rate Risk

     The primary  objective of investment  activities  is to preserve  principal
while at the same time maximizing yields without significantly  increasing risk.
At  June  30,  2002,   PartsBase's   portfolio   consisted  of   investments  in
institutional  money market funds.  PartsBase's  investment policy is focused on
ensuring  that  PartsBase  has  liquid  cash  balances  available  to  meet  its
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 deposit and
obligations  of major  corporations  and bank holding  companies  such as direct
issue commercial paper, medium term notes and investment grade bond funds.

     The Company intends to hold its investments until maturity;  however, it is
exposed to the impact of interest rate changes.  Investments  in both fixed rate
and floating rate interest earning instruments carries 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,  the
Company's future investment income may fall short of expectations due to changes
in interest rates.


Foreign Exchange Risk

     The  Company has minimal  exposure to foreign  exchange  risk as all of its
sales to customers outside of the United States are collected in U.S. dollars.


PART II---OTHER INFORMATION

Item 1.  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


                                       17


financial  institution  joined the payee as a defendant in the matter. The payee
countersued the Company claiming the financial  institution's  action breached a
settlement agreement between the payee and the Company and that the Company must
indemnify  the payee for any losses that may be  sustained  in the  matter.  The
claims against the Company in this matter are the financial institution's demand
for legal fees if the financial  institution prevails and the payee's claims for
indemnity and legal fees. This matter is scheduled for trial in January 2003.

     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 maintains a director and officer's  liability insurance policy
that provides $3 million of coverage, with retention of $200,000. As of June 30,
2002, the Company has incurred and previously  charged the retention of $200,000
to expense.  In May 2002, the Company  reached an agreement in principle for the
settlement of the consolidated  class action. The plaintiffs in the case and the
defendants,  entered into a Memorandum  of  Understanding  outlining the general
terms of the proposed settlement.  The Memorandum of Understanding provides for,
among other things, a settlement  amount of $1.5 million in cash, plus interest,
payable to the class under an insurance policy and for the plaintiffs' dismissal
of the class  action with  prejudice as well as a broad form of release in favor
of PartsBase and the other  defendants  in the class action  which,  among other
things,  will have the effect of barring  all claims by the  plaintiffs  and the
members of the class other than those who opt out,  arising out of the  purchase
and sale of the Company's common stock in the Company's  initial public offering
of securities.

     The final  settlement of the class action is subject to the preparation and
execution of definitive settlement documents and court approval.  The settlement
also applies to the directors, management personnel, underwriters and securities
firms named as defendants in the litigation.

     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 matter is scheduled  for court  ordered  arbitration
amongst the three parties in September 2002. 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 an attempt to resolve the matter. To date the Company is not aware of
any legal proceedings  initiated by BSA in this matter. 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.

     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  was to expire on October 31, 2006.  In December  2001,  the
sublessor  filed for  bankruptcy  protection  and as a result,  the sublease was
voided by the  bankruptcy  court.  The Company  continued to occupy the premises
until  February  2002, at which time,  the Company moved to new subleased  6,600
square feet office space in Boca Raton from an unaffiliated  party. On March 26,


                                       18


2002,  the lessor of the former  property  filed a complaint  for damages in the
amount of $92,910 plus interest,  costs and fees,  representing the value of the
time the Company  occupied the premises from the date the sublease was voided by
the  bankruptcy  court  through  the date the Company  vacated  the  premises in
accordance with rent provisions of the voided sublease. 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.

     On  April  8,  2002,   the   Company   received   a  proposal   from   the
Company's Chairman  of the Board,  President,  CEO and majority stockholder (the
"Company's  Chairman")  and a limited  partnership  controlled  by the Company's
Chairman  to  acquire  the  remaining  shares  of the  Company's  common  stock,
approximately  5,000,000  shares or  approximately  36% of the shares  currently
outstanding  that the  Company's  Chairman does not own or control at a price of
$1.02 per share.  The proposal is subject to, among other  things,  a definitive
merger  agreement,  approval of both the Board of Directors and  shareholders of
PartsBase, Inc., receipt of any regulatory approval which may be necessary and a
fairness opinion from the Company's investment banker. The Board of Directors of
the Company has formed a Special Committee ("Special Committee") to consider the
proposed  transaction.  The Special  Committee has retained  legal and financial
advisors to assist them in evaluating the proposed transaction.

     On April 16 and 17, May 8 and June 11,  2002, the  Company received notices
of, or had been served with, four purported class action lawsuits,  two of which
were filed in the Circuit  Court in and for Palm Beach  County,  Florida and the
other two which was filed in the Court of  Chancery  of the State of  Delaware (
Cliff Gordon vs.  PartsBase,  Inc. et.al,  Case No. 024277,  Hughes Rousseau vs.
PartsBase,  Inc.  et.al Case No.  0205368 in Palm Beach County,  Florida and Key
Equity  Investors vs.  PartsBase,  Inc.,  et.al.  C.A. 19546 and Paul Berger vs.
PartsBase,  Inc.  et.al,  C.A.  19693  in  Delaware).  The   lawsuits   name as
defendants   the  Company  and certain of its current   officers and directors.
The  lawsuits  allege the directors  have breached  their  fiduciary duty to the
plaintiffs and the purported  class and seek to enjoin the Company from entering
into a proposed  going-private  transaction,  by the  Company's  Chairman  and a
limited  partnership and  to  recover  unspecified  damages  resulting  from the
alleged breach of fiduciary duty.  The  Company  intends  to  vigorously  defend
these actions.  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
$150,000.  The Company fully expects its legal  expenses to exceed the retention
amount.  Therefore  at June 30,  2002,  the  Company has  recorded a  litigation
reserve for  $150,000 to cover the  expected  retention.  This  reserve has been
classified  as a  litigation  and  other  related  costs  in  the  statement  of
operations for the three and six months ended June 30, 2002.

     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.

     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.


Item 2.  Changes in Securities

     During the six months ended June 30, 2002, the Company  repurchased  25,700
shares of its common stock in the open market at an aggregate  purchase price of
$22,838,  inclusive  of brokerage  fees.  All of these shares were retired as of
March 15, 2002.

     In June  2002,  a former  officer of the  Company  exercised  fully  vested
options to purchase  34,382 shares of the  Company s  common stock at a purchase
price of $21,660.

Item 3.  Defaults Upon Senior Securities

         None.

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

         None.


                                       19



Item 5.  Other Information

     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.  In May 2002,  the
Company regained compliance.

Item 6.   Exhibits and Reports on Form 8-K

(1)      Exhibits
(a)      Exhibit 99.1-Safe Harbor Compliance Statement
(b)      Exhibit 99.2-Certification by Chief Executive Officer
(c)      Exhibit 99.3 Certification by Chief Financial Officer



                                       20


                                   Signatures

     In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




Date:  August 14, 2002                 /s/ Robert A. Hammond
                                       ---------------------
                                        ROBERT A. HAMMOND, JR.
                                        President, Chief Executive Officer,
                                         And Chairman
                                        (Principal Executive Officer)



Date:  August 14, 2002                 /s/ Mark Weicher
                                       ----------------
                                        MARK WEICHER
                                        Chief Financial Officer
                                        (Principal Financial Accounting Officer)




                                       21





                                 PARTSBASE, INC.

                                Index to Exhibits


Title                                                               Exhibit No.
---------------------------------------                             ------------
Safe Harbor Compliance Statement                                       99.1
Certification by Chief Executive Officer                               99.2
Certification by Chief Financial Officer                               99.3



                                       22







                                 PARTSBASE, INC.
                    PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
                               ____________, 2002

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

     KNOW  ALL MEN BY  THESE  PRESENTS,  that  the  undersigned  stockholder  of
PARTSBASE,  INC., a Delaware  corporation,  does hereby  constitute  and appoint
Robert  Hammond  and  Mark  Weicher,  or any one of  them,  with  full  power or
substitution,  to act alone and to  designate  substitutes,  the true and lawful
attorneys  and proxies of the  undersigned  for and in the name and stead of the
undersigned, to vote all shares of stock of PartsBase, Inc. that the undersigned
would be  entitled  to vote if  personally  present  at the  Special  Meeting of
Stockholders to be held at ______________, on ______________,  2002 at ___ a.m.,
local time, and at any and all  adjournments,  postponements  and  continuations
thereof, upon and in respect of the following matters and in accordance with the
following  instructions,  with  discretionary  authority as to any and all other
matters that may properly come before the meeting.

UNLESS A  CONTRARY  DIRECTION  IS  INDICATED,  THIS  PROXY WILL BE VOTED FOR THE
PROPOSALS AS MORE  SPECIFICALLY  DESCRIBED IN THE PROXY  STATEMENT.  IF SPECIFIC
INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.


       (CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)


THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.

Please mark your vote as indicated in this example [X]

ITEM 1.  APPROVAL OF AGREEMENT AND PLAN OF MERGER

     To approve and adopt the Agreement  and Plan of Merger,  dated as of August
26,  2002,  by and among  Robert A.  Hammond,  Jr.,  Hammond I, Inc.,  a Florida
corporation  ("Hammond  I"),  Hammond  Acquisition  Corp.  ("HAC"),  a  Delaware
corporation and a wholly-owned subsidiary of Hammond I, and PartsBase, Inc., and
the merger contemplated  thereby,  pursuant to which HAC will be merged with and
into PartsBase, Inc., with PartsBase, Inc. as the surviving corporation.

                  FOR                       AGAINST                    ABSTAIN
                   [_]                           [_]                       [_]


ITEM 2.  POSTPONEMENTS OR ADJOURNMENTS

     In their  discretion,  the proxies are  authorized  to vote in favor of any
postponements or adjournments of the meeting, if necessary.

                  FOR                       AGAINST                    ABSTAIN
                   [_]                           [_]                       [_]

NOTE: PLEASE DATE THIS PROXY,  SIGN YOUR NAME EXACTLY AS IT APPEARS HEREON,  AND
RETURN PROMPTLY USING THE ENCLOSED POSTAGE PAID ENVELOPE.

JOINT  OWNERS   SHOULD  EACH  SIGN.   WHEN   SIGNING  AS   ATTORNEY,   EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. WHEN SIGNING
AS AN ENTITY, PLEASE GIVE NAME OF ENTITY AND HAVE A DULY AUTHORIZED PERSON SIGN,
STATING TITLE.

Signature(s) ___________________________________     Date __________________


Signature(s) ___________________________________     Date __________________