AVIATION DISTRIBUTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - INTERIM CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited consolidated financial statements of the Company contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 2001, and the results of its operations for the three and six month periods ended June 30, 2001, and 2000, and cash flows for the three and six month periods ended June 30, 2001 and 2000. The results of operations and cash flows for the six month period ended June 30, 2001 are not necessarily indicative of the results of operations or cash flows which may be reported for the remainder of 2001.
The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for reporting on Form 10-Q. Pursuant to such rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The accompanying unaudited interim consolidated financial statements should be read in connection with the Company’s December 31, 2000 financial statements and the notes thereto included in the Company’s Annual Report on Form 10-KSB.
NOTE 2 - REALIZATION OF ASSETS
The Company is highly leveraged. Furthermore, the Company’s liquidity and ability to meet its obligations as they become due for the remainder of 2001 are subject to, among other things, continued access to the Company’s Credit Facility and compliance with the terms and covenants of the Company’s Credit Facility.
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company sustained substantial losses in 1999, 2000 and 2001; has used, rather than provided, cash in its operations in 1999, 2000 and 2001; and has deficits in working capital and stockholders’ equity at December 31, 2000 and June 30, 2001.
Recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets are dependent upon continued operations of the Company. This in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, and to succeed in its future operations. A breach of any of the financial covenants in the Company’s Credit Facility could result in a default under this Credit Facility. Upon the occurrence of an event of default under the Credit Facility, the lender could elect to declare all amounts outstanding, together with accrued interest, to be immediately due and payable.
Management has taken steps to revise its operations and financial requirements, which it believes are sufficient to provide the Company with the ability to continue in existence. In 2000, the Company extended its Credit Facility due date to June 24, 2010 and the maximum availability under its line of credit to $26.8 million.
NOTE 3 - CLASS ACTION LAWSUITS AND GOVERNMENT INVESTIGATIONS:
In October 1997, the Company, its founder, its directors, certain of its officers, a former officer and director, its former auditor and its
underwriter were named in three civil suits filed as class actions on behalf of individuals claiming to have purchased the Company's Common Stock during the period from March 1997 to September 1997, and seeking damages for violation of federal securities laws. The federal court approved the settlement of these three suits in March 1999. In connection with the settlement, the Company incurred a total expense of $620,000 in 1999, of which $140,000 was paid in cash and $480,000 was the value of 80,000 shares of Common Stock issued to the plaintiffs at the time of the settlement.
In May 2000, in connection with an investigation by the Securities and Exchange Commission (the "SEC") of alleged violations of federal securities laws by the Company, the Company consented to the entry of a federal court injunction enjoining the Company from future violations of the federal securities laws. The Company did not admit or deny any allegations made by the SEC in the investigation.
In October 2000, the Company entered into a plea agreement with the U.S. Attorney's Office in Los Angeles, California under which the Company entered a guilty plea to a three-count criminal information alleging that the Company conspired to violate Title 15, United States Code, Sections 77q(a)and 77x, and violated Title 15, United States Code, Sections 77x,78m(b)(2)(A), 78m(b)(5) and 78ff, and Title 17, Code of Federal Regulations, Section 240.13b2-1 in connection with the preparation of the Company's financial records and the filing of the Company's financial statements during the period through approximately August 1997. As a part of the plea agreement, the Company agreed to pay a total fine of $750,000 payable $50,000 at the time of sentencing (which occurred in November 2000), $150,000 on March 31, 2001, $250,000 on March 31, 2002, and $300,000 on March 31, 2003. In addition, the Company was placed on probation until the fine is paid in full or until December 31, 2002, whichever is later. The settlement fine has been recorded as $642,016, in the Company's statement of operations as of September 30, 2000 based on the present value on that date of the proposed payments (using a 10% interest assumption). The Company has paid the first two installments on this settlement as of June 30, 2001.
The U.S. Attorney’s Office in Los Angeles has indicted the Company’s founder, Osamah S. Bakhit, and Mr. Bakhit's trial is pending. Any judgment against Mr. Bakhit may have a material adverse effect on the Company’s business.
The Company is involved in certain legal and administrative proceedings and threatened legal and administrative proceedings arising in the normal course of its business. While the outcome of such proceedings and threatened proceedings cannot be predicted with certainty, management believes the ultimate resolution of these matters individually or in the aggregate will not have a material adverse effect on the Company.
NOTE 4 – DEBT ARRANGEMENTS
On February 23, 2000, the Company amended its Credit Facility with GMAC to extend the loan maturity date to June 24, 2010. In conjunction with this amendment, GMAC was issued 208,762 warrants. These warrants and 126,600 warrants issued to GMAC in 1998 gave GMAC warrants equal to 9.9% of the outstanding stock of the Company or 335,362 warrants. The exercise price of the warrants is $0.25 and the warrants expire on February 28, 2010. The fair value of the total warrants issued to GMAC was determined to be $818,000 and such warrants are being amortized to interest expense over a ten-year period beginning in 2000.
As a condition for the extension of the credit facility, the Company entered into a $2,000,000 promissory note, due in a balloon payment on the earlier of February 1, 2010, or if the Company’s stock reaches a $6.00 per share value over 10 consecutive trading days, or the occurrence of one of several events, none of which have occurred. The $2,000,000 has been reflected as debt issue costs in the accompanying consolidated balance sheet and is being amortized to interest expense over the ten-year term of the promissory note. The note bears interest at GMAC’s Alternate Base Rate and interest is payable semi-annually. GMAC has a fully perfected security interest against all assets of the Company and to a personal guarantee and pledge of 1,000,000 shares of the Company’s common stock from the Company’s founder.
On September 12, 2000 the Company received approval from GMAC for a $10 million working capital line to finance the purchase of inventory related to the servicing of the Company’s contracts with major foreign airlines. The Company implemented the use of this line in October, 2000 which is guaranteed by the export-import Bank of the United States, the official export credit agency of the U.S. government and which carries an interest rate of Prime plus 1.0%. The working capital line is used in conjunction with the Company’s $26.8 million Credit Facility.
At June 30, 2001, the Company was not in compliance with certain of the covenants of its line of credit with GMAC including an overadvance on its line of credit exceeding the Company’s asset borrowing base of $2,206,695. GMAC has waived the covenant violations for the quarter ended June 30, 2001.
NOTE 5 –SALES
As can be seen in the table below, the Company derives the majority of its revenue from distributed services sales. These sales involve the Company taking possession of inventory purchased in order to fulfill a customer sales order. The purchases are generally received and inspected by the Company before being shipped on to the customer. The remainder of the Company’s revenue is derived through the sale of inventory the Company has purchased in bulk purchases and put into stock. As can be seen below, these bulk purchases have historically had gross margins substantially higher than the Company’s distributed services sales. See Note 6 Inventory for further discussion on these inventories purchased for stock.
| | Three Months Ended
June 30, | | Six Months Ended
June 30, | |
| | 2001 | | 2000 | | 2001 | | 2000 | |
| | (in 000’s) | | (in 000’s) | |
| Distributed Services Sales | $ | 5,734 | | $ | 8,963 | | $ | 16,642 | | $ | 16,547 | |
| Costs of Distributed Services Sales | 5,069 | | 7,118 | | 13,882 | | 12,991 | |
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| Gross Margin | 664 | | 1,845 | | 2,760 | | 3612 | |
| Gross Margin% | 11.6 | % | 20.6 | % | 16.6 | % | 21.8 | % |
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| Bulk Purchased Inventory Sales | $ | 967 | | $ | 1,035 | | $ | 1,771 | | $ | 1,725 | |
| Costs of Bulk Purchased Inventory Sales | 611 | | 346 | | 920 | | 690 | |
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| Gross Margin | 356 | | 690 | | 851 | | 1,035 | |
| Gross Margin% | 36.8 | % | 66.6 | % | 48.1 | % | 60.0 | % |
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The Company’s return policy allows customers up to ten days to return parts if proper regulatory documentation has not been included. Returns occurring after that are at the Company’s discretion and include restocking fees. Historically, returns have not been material to gross revenue.
For the six months ended June 30, 2001 and 2000, approximately 59.3% and 68.5%, respectively, of the Company’s net sales were export sales. Export sales by region were approximately as follows:
| | June 30, | |
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| | 2001 | | 2000 | |
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| Pacific Rim | 4.2 | % | 2.7 | % |
| Europe | 20.2 | | 31.8 | |
| Latin/South America | 30.5 | | 24.6 | |
| Africa/Middle East | 4.4 | | 9.4 | |
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| | 59.3 | % | 68.5 | % |
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NOTE 6 –INVENTORY
Historically, the Company has made bulk purchases of inventory. In general, bulk inventory purchases allow the Company to obtain large inventories of aircraft parts at a lower cost than can ordinarily be obtained by purchasing such parts on an individual basis. Inventory acquired through bulk purchases is often not expected to be sold immediately and will often take many years to dispose. However, the Company normally yields a higher margin on sales of inventory acquired through bulk purchases as opposed to inventory acquired for immediate sale. The Company determines a reserve for obsolescence or excess inventory by comparing the carrying value of inventory to current broker prices, by getting periodic appraisals and by reviewing sales activities of bulk purchased inventory by purchase class. The Company has a reserve for excess and/or obsolete inventory of $1,136,000 at June 30, 2001.
In the current quarter, the Company has changed an accounting policy as it relates to inventory classifications. Due to the nature of the inventory on-hand as described above, the Company believes it is more appropriate to make an estimation based on historical averages of inventory to be sold within one year and classify the remaining balances of inventory as non-current. In the current quarter, the Company has classified $10,398,000 as non-current.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion includes the operations of the Company for each of the periods discussed. This discussion and analysis should be read in conjunction with the Company's consolidated financial statements and the related notes thereto, which are included elsewhere in this document.
This discussion contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Such forward looking statements involve risks and uncertainties and actual results could differ from those described herein and future results may be subject to numerous factors, many of which are beyond the control of the Company.
Overview
Net sales consist primarily of gross sales, net of allowance for returns and other adjustments. Cost of sales consists primarily of product costs, freight charges and an inventory provision for damaged, excess and obsolete products. Product costs consist of the acquisition costs of the products and costs associated with repairs, maintenance and certification.
Net sales and gross profit fluctuate based on the volume and timing of sales orders received during the period and the mix of aircraft parts contained in the Company's inventory. The timing of bulk inventory purchases can impact sales and gross profit. In general, bulk inventory purchases allow the Company to obtain large inventories of aircraft parts at a lower cost than can ordinarily be obtained by purchasing such parts on an individual basis.
Continuing Developments in the Company’s Market Environment
Economic and other factors that are affecting the airline industry have negatively impacted, and may continue to negatively impact, the Company’s business. Pricing of the inventory the Company needs for its business is affected to a degree by the overall economic condition of the airline industry, which has historically been volatile. The demand for after-market aircraft engines and parts is driven primarily by flying hours or cycles. These parts must be serviced or replaced at scheduled intervals. As a result, the demand for after-market parts is a function of the volume of worldwide air traffic. Additionally, factors such as the price of fuel affect the aircraft parts market, since older aircraft (into which repaired or overhauled aircraft parts are most often placed) become less economically viable as the price of fuel increases. During a downturn in the aviation industry, there may be reduced overall demand for the products the Company provides, lower selling prices for its products and increased credit risk associated with doing business with industry participants.
The aircraft parts aftermarket experienced a downturn during 2000, which has continued into 2001. As a result, a number of companies in the industry have encountered financial difficulties. Consequently, many companies within the industry have been forced to sell inventory at reduced prices in order to generate cash. The Company's gross margin and fair value of inventory have been negatively affected by these deteriorating conditions. Additionally, according to reports by a few large airlines, during the first half of 2001, the airline industry has begun to experience a slowdown in overall traffic, which the Company's management believes has reduced demand for aftermarket parts. The Company has experienced the affects of this downturn in the second quarter of 2001. As a result, the Company has recorded an inventory write-down of $650,000 for excess quantities and lower of cost or market writedowns. Further, the Company’s revenues are down 43% from the first quarter of 2001.
The following table sets forth certain information relating to the Company's operations for the three months ended June 30, 2001 and 2000 (dollars in thousands):
| | THREE MONTHS ENDED JUNE 30, | | |
| | 2001 | | 2000 | |
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| Net sales | $ | 6,702 | | 100.0 | % | $ | 9,998 | | 100.0 | % |
| Cost of sales | $ | 6,327 | | 94.4 | % | 7,463 | | 74.6 | % |
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| | $ | 375 | | 5.6 | % | 2,535 | | 25.4 | % |
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| Selling and administrative expenses | $ | 2,840 | | 42.4 | % | 1,596 | | 16.0 | % |
| Non-recurring expenses | $ | - | | 0.0 | % | 17 | | 0.2 | % |
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| Income (loss) from operations | $ | (2,466 | ) | (36.8 | %) | 922 | | 9.2 | % |
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| Interest expense, net | $ | 730 | | 10.9 | % | 846 | | 8.5 | % |
| Other income | | | 0.0 | % | 5 | | 0.1 | % |
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| Net income (loss) | $ | (3,196 | ) | (47.7 | %) | $ | 81 | | 0.8 | % |
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Net sales. Net sales decreased from $10.0 million for the three months ended June 30, 2000 to $6.7 million for the three months ended June 30, 2001, a decrease of $3.3 million or 33.0%. This decrease was mainly the result of an overall slowdown in the aviation industry as a whole causing a decrease in demand for the Company’s inventory sales.
Cost of sales. Cost of sales decreased from $7.5 million for the three months ended June 30, 2000 to $6.3 million for the three months ended June 30, 2001, a decrease of $1.1 million or 15.2%. This decrease was primarily attributable to the 33.0% decrease in net sales, increases in the Company’s reserves for excess and obsolete inventory and the overall decrease in gross margins due to the decline in the aviation market as a whole.
Gross profit. Gross profit decreased from $2.5 million or 25.4% of net sales for the three months ended June 30, 2000 to $.4 million or 5.6% of net sales for the three months June 30, 2001, a decrease of $2.2 million or 85.2%. The decrease in gross profit dollars and percentage of net sales is due to the substantial increase in inventory reserves and pricing pressures due to the overall industry slowdown.
Selling and administrative expenses. Selling and administrative expenses consisted primarily of wages and commission expense, bad debt expense, rent expense, professional fees, consulting expenses and travel expenses. The Company’s selling and administrative expense increased from $1.6 million for the three months ended June 30, 2000 to $2.8 million for three months ended June 30, 2001, an increase of $1.2 million or 78%. This increase is due primarily to increased reserves for bad debt caused by both customers’ and vendors’ financial statuses deteriorating through the aviation industry slow-down, professional fees and travel expenses as the Company has tried to increase sales through new distribution channels.
Income from operations. The Company had income from operations of $.9 million for the three months ended June 30, 2000 compared to a loss from operations of $2.5 million for the three months ended June 30, 2001, a decrease of $3.4 million or 367.5%. The decrease in operating income is due to the decrease in gross margins and increases in selling and administrative expenses.
Interest expenses. Net interest expense decreased from $846,000 for the three months ended June 30, 2000 to $730,000 for the three months ended June 30, 2001. This decrease was due to decreases in the Company’s lending rate experienced in the second quarter.
Net income. The Company had net income of $81,000 for the three months ended June 30, 2000 compared to a loss of $3.2 million for the three months ended June 30, 2001, due to the foregoing factors.
The following table sets forth certain information relating to the Company’s operations for the six months ended June 30, 2001 and 2000 (dollars in thousands):
| | SIX MONTHS ENDED JUNE 30, | | |
| | 2001 | | 2000 | |
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| Net sales | $ | 18,413 | | 100.0 | % | $ | 18,272 | | 100.0 | % |
| Cost of sales | 15,448 | | 83.9 | % | 13,681 | | 74.9 | % |
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| | 2,965 | | 16.1 | % | 4,591 | | 25.1 | % |
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| Selling and administrative expenses | 4,536 | | 24.6 | % | 3,024 | | 16.5 | % |
| Non-recurring expenses | - | | 0.0 | % | 22 | | 0.1 | % |
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| Income (loss) from operations | (1,571 | ) | (8.5 | %) | 1,545 | | 8.5 | % |
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| Interest expense, net | 1,549 | | 8.4 | % | 1,406 | | 7.7 | % |
| Other income | - | | 0.0 | % | 5 | | 0.0 | % |
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| Income (loss) before provision for income taxes | (3,120 | ) | (16.9 | %) | 144 | | 0.8 | % |
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| Provision for income taxes | 1 | | 0.0 | % | - | | 0.0 | % |
| Net income (loss) | $ | (3,121 | ) | (16.9 | %) | $ | 144 | | 0.8 | % |
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Net sales. Net sales were $18.3 million for the six months ended June 30, 2000 and $18.4 million for the six months ended June 30, 2001. There have been substantial changes in the Company’s customer base due to the overall decline in the aviation industry. The Company has increased its market share in South America and has incurred slowdowns in its European sales.
Cost of sales. Cost of sales increased from $13.7 million for the six months ended June 30, 2000 to $15.4 million for the six months ended June 30, 2001, an increase of $1.8 million or 12.9%. This increase was primarily attributable to pricing pressures due to the industry slow-down realized in the second quarter of 2001 and increases in reserves for inventories.
Gross profit. Gross profit decreased from $4.6 million or 25.1% of net sales for the six months ended June 30, 2000 to $3.0 million or 16.1% of net sales for the six months June 30, 2001, a decrease of $1.6 million or 35.4%. The decrease in gross profit dollars and percentage of net sales is due to the substantial increase in inventory reserves and pricing pressures due to the overall industry slowdown.
Selling and administrative expenses. Selling and administrative expenses consisted primarily of wages and commission expense, bad debt expense, rent expense, professional fees, consulting expenses and travel expenses. The Company’s selling and administrative expense increased from $3.0 million for the six months ended June 30, 2000 to $4.5 million for six months ended June 30, 2001, an increase of $1.5 million or 50.0%. This increase is due primarily to increased bad debt expenses caused by both customers and vendors financial status deteriorating through the aviation industry slow-down, professional fees and travel expenses as the Company has tried to increase sales through new distribution channels.
Income from operations. The Company had income from operations of $1.5 million for the six months ended June 30, 2000 compared to a loss from operations of $1.6 million for the six months ended June 30, 2001. The loss from operations is due to the decrease in gross margins and increases in selling and administrative expenses.
Interest expenses. Interest expense increased from $1.4 million for the six months ended June 30, 2000 to $1.5 million for the six months ended June 30, 2001. This increase was due to the Company’s greater use of the Company’s line of credit somewhat offset by decreases in the Company’s lendor’s lending rate.
Net income. The Company had net income of $144,000 for the six months ended June 30, 2000 compared to a loss of $3.1 million for the six months ended June 30, 2001, due to the foregoing factors.
Liquidity and Capital Resources
The Company’s operating activities used $5.9 million and provided $.1 million in the six months ended June 30, 2000 and 2001, respectively. The largest cash uses in the 2000 period were an increase in accounts receivable of $3.7 million, an increase in inventory of $3.4 million which includes a bulk purchase of $3.6 million, offset by an increase in accounts payable and checks issued not yet presented for payment totalling $.9 million. For the 2001 period, cash was provided by operating activities primarily from increases in accounts payable of $1.5 million and a decrease in inventory (predominantly due to increased excess, obsolete and lower of cost or market reserves) and accounts receivable of $1.2 million and $.4 million, respectively.
The 2000 financing activities provided cash of $5.9 million, resulting from an increase in line of credit borrowings of $6.6 million offset by principal payments on long-term debt of $.7 million. The 2001 financing activities used $16,000 of cash due to principal payments on long-term debt and capital leases of $394,000 offset by a $378,000 increase on the Company’s line of credit borrowings.
The Company had a working capital deficit of $19.5 million and $17.3 million as of June 30,2001 and 2000, respectively. This was primarily due to increases in borrowings on the Company’s line of credit and accounts payable resulting from the cash requirements for increases in the Company’s operating losses and increases in the Company’s reserves for excess and obsolete inventory and bad debts.
On February 23, 2000, the Company amended its Credit Facility with GMAC to extend the loan maturity date to June 24, 2010. In conjunction with this amendment, GMAC was issued 208,762 warrants. These warrants and 126,600 warrants issued to GMAC in 1998 gave GMAC warrants equal to 9.9% of the outstanding stock of the Company or 335,362 warrants. The exercise price of the warrants is $.25 and the warrants expire on February 28, 2010. The fair value of the total warrants issued to GMAC was determined to be $818,283 and such warrants are being amortized to interest expense over a ten year period beginning in 2000.
As a condition for the extension of the credit facility, the Company entered into a $2,000,000 promissory note, due in a balloon payment on the earlier of February 1, 2010, or if the Company’s stock reaches a $6 per share value over 10 consecutive days, or the occurrence of one of several events, none of which have occurred. The $2,000,000 has been reflected as debt issue costs in the accompanying Consolidated balance sheet and is being amortized to interest expense over the term of the promissory note. The note bears interest at GMAC’s Alternate Base Rate and interest is payable semi-annually.
On September 12, 2000 the Company received approval from GMAC for a $10 million working capital line to finance the purchase of inventory related to the servicing of the Company’s contracts with major foreign airlines. The Company implemented the use of this line in October, 2000 which is guaranteed by the export-import Bank of the United States the official export credit agency of the U.S. government and which carries an interest rate of Prime plus 1%. The working capital line is used in conjunction with the Company’s $26.8 million Credit Facility.
The Company's long–term debt consists of the following at June 30, 2001: (i) term loan of $625,000 to GMAC, due in quarterly principal installments of $125,000 with an interest rate of 2.0 percent above the lenders alternate base rate; (ii) note payable of $100,000 to the founder of the Company (iii) capital lease obligations of $15,472, (v) settlement fee debt of $449,752, (iv) note payable of $2,000,000 to GMAC, due in February 2001, and (v) note payable of $300,000 to corporations', secured by specific inventory.
The Company’s credit facility with GMAC is an asset-based line of credit secured by account receivable and inventory and is the primary source for the Company to finance its operations and growth. At June 30, 2001 the balance on the credit facility was $24,070,171. The Company may need to increase its capital base in order to continue to meet its growth objectives. There can be no assurance that such additional capital will be available on a timely basis or at acceptable terms.
See note 2 to the consolidated financial statements included in this form 10-Q regarding realization of assets and steps management has taken with respect to its operations and financing requirements.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is involved in certain legal and administrative proceedings and threatened legal and administrative proceedings arising in the normal course of its business. While the outcome of such proceedings and threatened proceedings cannot be predicted with certainty, management believes the ultimate resolution of these matters individually or in the aggregate will not have a material adverse effect on the Company. Also, see Note 3 to the consolidated financial statements in Part I.
Item 2. CHANGES IN SECURITIES
Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
| 3.1 | | Amended and Restated Certificate of Incorporation of the Registrant. (1) | |
| 3.2 | | Bylaws, as amended, of the Registrant. (1) | |
| 3.3 | | Amendment to Amended and Restated Certificate of Incorporation of the Registrant. (1) | |
| 4.1 | | Specimen Common Stock Certificate. (1) | |
| 9.1 | | Voting Trust Agreement, dated November 17, 1997, by and among Osamah Bakhit, Aviation Distributors, Inc., and Dirk O. Julander, as trustee. (2) | |
| 10.2 | | 1996 Stock Option and Incentive Plan. (1) | |
| 10.3 | | Aircraft Purchase Agreement, dated August 8, 1995, by and between Alia The Royal Jordanian Airlines and Aviation Distributors, Inc.. (1) | |
| 10.4 | | Credit and Security Agreement, dated June 25, 1997, by and between Aviation Distributors, Inc. and BNY Financial Corporation.(3) | |
| 10.5 | | Amendment dated December 15, 1999 between the Company and GMAC Commercial Credit LLC to the June 25, 1997 Credit and Security Agreement between the company and BNY Financial Corporation, including related Common Stock Purchase Warrant for 335,362 shares dated February 28, 2000 issued to GMAC Commercial Credit LLC.(4) | |
| 10.6 | | Amended and Restated Employment Agreement, dated as of July 16, 1996, by and between Osamah S. Bakhit and Aviation Distributors, Inc. (1) | |
| 10.7 | | Employment Agreement, dated as of January 5, 2000 by and between William D. King and Aviation Distributors, Inc.. (4) | |
| 10.8 | | Employment Agreement, dated as of July 16, 1996, by and between Jeffrey G. Ward and Aviation Distributors, Inc. (1) | |
| 10.9 | | Amendment to Employment Agreement, dated November 17, 1997, by and between Osamah S. Bakhit and Aviation Distributors, Inc.(3) | |
| 10.10 | | Lease, dated as of July 9, 1997, by and between Olen Properties Corp. and Aviation Distributors, Inc. (3) | |
| 10.11 | | Amended and Restated Promissory Note from Osamah S. Bakhit to Aviation Distributors, Inc., dated as of December 31, 1995. (1) | |
| 10.12 | | Form of Indemnity Agreement. (1) | |
| 10.13 | | Promissory Note between Aviation Distributors, Inc. and Osamah S. Bakhit, dated December 31, 1996. (1) | |
| 10.16 | | Employment Agreement dated as of June 1, 1998 by and between Gary L. Joslin and Aviation Distributors, Inc. (4) | |
(1) Filed with the Company’s Registration Statement on Form SB-2 dated March 3, 1997.
(2) Filed with the Company’s Current Report on Form 8-K dated August 29, 1997.
(3) Filed with the Company’s Registration Statement on Form 10-KSB dated April 20, 1998.
(4) Filed with the Company’s Form 10-KSB dated April 11, 2000
(b) Reports on Form 8-K.
SIGNATURES
Pursuant to the requirements 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.
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| Date | June 30, 2001 | | | | AVIATION DISTRIBUTORS, INC. |
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| | | | | | By: | /s/ William D. King |
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| | | | | | | William D. King |
| | | | | | | Chief Executive Officer |
| | | | | | | Chairman and Director |
| | | | | | | (Principal Executive Officer) |
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| | | | | | By: | /s/ Gary Joslin |
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| | | | | | | Gary L. Joslin |
| | | | | | | Chief Financial Officer |
| | | | | | | and Director (Principal |
| | | | | | | Accounting Officer) |
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