/2H>d 1$&|&A%|Page #*'AirNet Systems, Inc."'Consolidated Balance Sheets"September 30,"September 30,"---------------"---------------  "--------"-------- 'ASSETS'Current assets: 'Cash -eA  A 'Accounts receivable:6 'Trade, less allowances of $14,000 and $2,000 in" '1996 and 1995, respectively  !ZA  WA- 'Shareholder, affiliates, and employees  A  A 'Spare parts and supplies  @#SA  NA'Deposits and prepaids ~FA U@A"------------"------------'Total current assets 0[tyA FhA*'Net property and equipment (Note 3) jA PA'Other assets:A'Intangibles, net of accumulated amortization of $1,267,0004'and $3,404,000 in 1996 and 1995, respectively #:A RJA 'Other R@ @)'Deferred tax asset (Notes 2 and 9) @ #VA "------------"------------'Total assets .A aA"============"============+'LIABILITIES AND SHAREHOLDERS' EQUITY'Current liabilities: 'Accounts payable  LA  3 NA'!'Salaries and related liabilities !2A ! A"'Accrued expenses " A "8A#'Deferred taxes (Note 9) # A #0$'Current portion of notes payable (Note 4) $ $B;UA%"------------%"------------ &'Total current liabilities &UA &I@fA3('Notes payable, less current portion (Note 4) ( ( 5jA&)'Deferred tax liability (Note 9) )IA )%*'Deferred compensation (Note 2) * *HA%,'Shareholders' equity (Note 2):9-'Preferred stock, $.01 par value; 10,000,000 shares7.'authorized; and no shares issued and outstanding . .6/'Common stock, $.01 par value; 40,000,000 shares60'authorized; and 12,317,835 and 5,710,608 shares=1'issued and outstanding in 1996 and 1995, respectively 1@ 1@@!2'Additional paid-in-capital 2eA 2xUA3'Retained earnings 3Jc 3@qsA)4'Notes receivable from shareholders 4 4`5"------------5"------------!6'Total shareholders' equity 6P1qA 6isA8"------------8"------------19'Total liabilities and shareholders' equity 9.A 9aA:"============:"============(<'See notes to financial statements@'AirNet Systems, Inc.,A'Consolidated Statements of Operations C'Years Ended September 30,4D'--------------------------------------------- E E EF"--------F"--------F"--------G'Revenues-H'Air transportation, net of excise tax-I'of $716,000, $1,810,000 and $1,841,000.J'for the years ended September 30, 1996,K'1995 and 1994:L'Check delivery LPA LDȋA LhuʼnAM'Small package delivery MSbA M?_A M-p_AN'Fixed base operations N:0A N.A N1AO"------------O"-----------O"-----------P'Total revenues P$ A PA P@AR'Costs and expensesS'Air transportationT'Wages and benefits TbA TىaA T9_AU'Aircraft fuel UL2_A Ucf\A U2ZAV'Aircraft maintenance V(XA Z'Other Z[A ZXA Z-UA['Fixed base operations [؆/A [ +-A [0A*\'Selling, general and administrative]'Executive compensation ]VJA ]'NA ]EIA,^'Other executive compensation (Note 2) ^15@A ^DA ^b8A)_'Noncompetition agreements (Note 2) _,A _WAA _z;A `'Other `PA `IA `LAa"------------a"-----------a"-----------b'Total costs and expenses bp&A bQQA biĊAc"------------c"-----------c"-----------d'Income from operations d@XiA dA^A dq[Ae'Interest expense e0A e"(6A e~0A7f'Offering related non-recurring expenses (Note 2) f#jA f fg"------------g"-----------g"-----------!h'Income (loss) before taxes hj6 h@9DYA h@WAi'Income tax provision i:A i i9j'Tax provision due to change in tax status (Note 9) jBA j jk"------------k"-----------k"-----------l'Net Income (loss) l@'U l@9DYA l@WAm"============m"===========m"==========='o'Pro forma information (Note 13):,p'Historical income (loss) before taxes pj6 p@9DYA3q'Proforma adjustments other than income taxes qPA q@\Ar"-----------r"-----------$s'Pro forma income before taxes sFA sqjA t'Pro forma taxes on income tSUA t'YUAu"-----------u"-----------"v'Pro forma net income (loss) vvD v`Aw"===========w"===========3y'Pro forma net income (loss) per common share yQѿ yz"===========z"===========1|'Weighted average common shares outstanding |{nbA |c_A}"===========}"===========('See notes to financial statements'AirNet Systems, Inc.,'Consolidated Statements of Cash Flows'Year ended September 307'------------------------------------------------   "--------"--------"--------'Operating activities'Net income (loss) @'U @9DYA @WA='Adjustments to reconcile net income (loss) to net cash('provided by operating activities:8'Offering related non-recurring, non-cash expenses #jA  $'Depreciation and amortization  M`A T]\A eXA"'Amortization of intangibles |qA A A'Deferred taxes PA  2'Provision for losses on accounts receivable /  'Deferred compensation l+A $A D.A$'Loss on disposition of assets @ @ A2'Change in operating assets and liabilities:'Accounts receivable  6A 1''Spare parts and supplies <;+   ȁA'Prepaid expenses & d%  'Accounts payable D& $A V2.A'Accrued expenses %3 A ''Salaries and related liabilities t#A ?A A@'Other, net P @ @"------------"------------"------------0'Net cash provided by operating activities XqA 3mA VlA'Investing activities/'Purchase of property and equipment - net Ck  k  qhC'Purchase of Midway Aviation, net of cash acquired (Note 10) qE  "------------"------------"------------,'Net cash used in investing activities Op  k  qh'Financing activities-'Proceeds from issuance of common stock LnA  1'Proceeds from shareholder notes receivable `A (@ A'Net proceeds (repayment) of borrowings under the revolving'credit facility \ p4A *A"'Repayment of long-term debt `Qk `c *eA3'Proceeds from the issuance of long-term debt 0DA fA QA$'Distributions to shareholders sv }zO aS)'Purchase of Donald Wright warrant =|  "------------"------------"------------:'Net cash provided by (used in) financing activities  :cA ~0 I>"------------"------------"------------&'Net increase (decrease) in cash LeA  p"'Cash at beginning of period  A XlA ^A"------------"------------"------------'Cash at end of period -eA  A XlA"============"============"============,'See notes to the financial statements