Flight was conducted as instructional flight for the purpose of aerobatic training. Witnesses reported seeing the aircraft 4 miles off shore at approximately 500 feet in an approximate 45 degree nose down attitude diving toward the water. The aircraft was descending at high speed and was not spinning. The upper surfaces of the wings were visible. One witness reported seeing something similar to a banner streaming behind the aircraft. Three other witnesses did not see this. The aircraft impacted the water in this attitude. The aircraft wreckage was not located or recovered. The body of the flight instructor was found north of the crash site on June 3, 1992 and the body of the student was found approximately 75 miles north on June 7, 1992. The instructor's parachute had not been deployed when the body was found. The student's parachute was found deployed. The student had sustained multiple blunt traumatic injuries consistent with having been in the aircraft during water impact according to the medical examiner.