U. S. Securities and Exchange Commission Washington, D.C. 20549

                                   Form 10-KSB

(Mark One)

[x]      ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934

                  For the fiscal year ended September 30, 2002

[ ]      TRANSITION  REPORT  UNDER  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934

            For the transition period from ___________ to ___________


                        Commission file number 000-15216


                             AUTOCORP EQUITIES, INC.
                 (Name of small business issuer in its charter)


            Nevada                                               87-0522501
(State or other jurisdiction                                 (I.R.S. Employer
of incorporation or organization)                            Identification No.)


1701 Legacy Drive
Suite 2200
Frisco, Texas                                                      75034
(Address of principal executive offices)                         (Zip Code)


                    Issuer's telephone number: (214) 618-6400

Securities registered under Section 12(b) of the Exchange Act:

Title of each class                    Name of each exchange on which registered

       None                                                None

Securities registered under Section 12(g) of the Exchange Act:

                   Common Stock, Par Value of $.001 per Share
                                (Title of class)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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
                                                                       ---  ---
<PAGE>

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will 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-KSB
or any amendment to this Form 10-KSB. [ ]

         State issuer's revenues for it's most recent fiscal year: $2,426,763.

         State the aggregate  market value of the voting and  non-voting  common
equity held by  non-affiliates  computed by  reference to the price at which the
common equity was sold, or the average bid and asked price of such common equity
as of a specified date within the past 60 days: $988,795, based on the $0.15 per
share price at which common equity was sold on December 2, 2002.

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:  6,591,968 shares of Common
stock, $0.001 par value, as of December 2, 2002.

         Transitional Small Business Disclosure Format (check one): Yes    No X
                                                                       ---   ---




















                                       ii



<PAGE>

TABLE OF CONTENTS

THE COMPANY....................................................................1

RISK FACTORS...................................................................1

PART I .......................................................................10
     Item 1.  Description of Business.........................................10
     Item 2.  Description of Property.........................................17
     Item 3.  Legal Proceedings...............................................17
     Item 4.  Submission of Items to a Vote of Security Holders...............17

PART II  .....................................................................18
     Item 5.  Market for Common Equity and Related Stockholder Matters........18
     Item 6.  Management's Discussion and Analysis or Plan of Operation.......21
     Item 7.  Financial Statements............................................26
     Item 8.  Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure........................................26

PART III .....................................................................26
     Item 9.  Directors, Executive Officers, Promoters and Control Persons;
              Compliance with Section 16(a) of the Exchange Act...............26
     Item 10. Executive Compensation..........................................28
     Item 11. Security Ownership of Certain Beneficial Owners and
              Management......................................................29
     Item 13. Exhibits and Reports on Form 8-K................................30
     Item 14. Controls and Procedures.........................................31

SIGNATURES....................................................................31

INDEX TO FINANCIAL STATEMENTS................................................F-1










                                       iii



<PAGE>

         This  report  includes  statements  that  are  based on  forecasts  and
intentions  concerning  Company  operations,   capital  requirements,   economic
performance  and  financial  condition,  in  particular,   statements  regarding
intended  plans for  future  operations  and  expectations  of future  operating
performance.  Such  statements  are subject to various risks and  uncertainties.
Actual results may differ,  and could differ  materially,  from those  currently
anticipated  due to a number of factors,  including those under the Risk Factors
set forth below.

THE COMPANY

         AutoCorp  Equities,  Inc. ("the  Company"),  which is  headquartered in
Frisco,  Texas owns and operates one loan servicing center in Dallas,  Texas and
one  independent  automobile  dealership  in Dallas,  Texas and one  independent
automobile  dealership  in Garland,  Texas.  Through the first quarter of fiscal
year 2001, the Company operated one independent automobile dealership in Dallas,
Texas.  Through  used car sales,  the  dealership  originates  non-prime  retail
installment  contracts secured by automobiles and light-duty trucks. As a result
of the  inability  of the  Company  to obtain  financing  to  purchase  used car
inventories, the Company discontinued its automobile operations as of the end of
the fiscal first quarter of 2001. As a result of improving  business  conditions
and the  Company's  ability to raise capital from private  sources,  the Company
re-entered  the  automobile  segment  during the second fiscal  quarter of 2002.
Beginning in the second  quarter of fiscal year 2002 the Company also  purchased
portfolios of non-prime  automobile  receivables,  held them for resale and sold
the notes at a gain.  In both  instances  whether the notes were  originated  or
purchased for resale,  the loan servicing  function is generally retained by the
Company.  (see  Item  1,  Description  of  Business  -  Development  of  Current
Business).

         During the fiscal  year ended  September  30,  1998,  the  Company  was
headquartered in Phoenix,  Arizona,  and had business  operations in Arizona and
New Mexico.  At December 31, 1998,  the Company was  financially  distressed.  A
restructuring  was  effected  on that date in order to create an  organizational
structure  that was  efficient and reflected  the revised  business  plans.  The
company again  restructured on October 1, 2000 in a continuing  effort to create
such an  organizational  and financial  structure  (see Item 1,  Description  of
Business - Recent  Restructuring  Transaction).  The Company  continues  to seek
sources of financing to expand the automobile segment and purchase portfolios of
non-prime automobile receivables for later sale.

RISK FACTORS

         Limited Operating History of Present Business.
         ----------------------------------------------

         The Company's  significantly  restructured current operations commenced
on October 1, 2000. The relatively  brief operating  history of the restructured
operations  provides only a limited basis for evaluation.  The prospects must be
considered in light of the risks, expenses, difficulties and problems frequently
encountered in an industry  characterized by intense competition.  For the years
ended September 30, 2002 and 2001, the net operating losses before  discontinued
operations and extraordinary items were $1,863,819, and $882,311, respectively.


                                        1
<PAGE>


         There can be no assurance of future profitability.
         --------------------------------------------------

         The ability to operate profitably will depend primarily on management's
ability to:

o        generate additional revenue without incurring a proportionate  increase
         in administrative overhead costs;

o        continues to reduce the overall cost structure of the organization;

o        purchase and resell pools of automobile receivables;

o        originate  automobile  receivables  through  automobile  sales  with an
         acceptable level of credit risk;

o        effectively  collect  payments  due on  the  portfolios  of  automobile
         receivables  serviced  and  control  delinquencies  and  losses  on the
         automobile receivables portfolio;

o        obtain   financing  on  acceptable  terms  to  fund  the  expansion  of
         operations;

o        continue to sell, on a loan by loan basis,  the automobile  receivables
         currently owned and serviced or those  automobile  receivables that may
         be purchased and/or serviced in the future;

o        adapt to an increasingly competitive marketplace.

         The failure to achieve and/or  maintain any or all of these  objectives
could have a materially  adverse  impact on the business,  results of operations
and financial condition of the Company.

         Capital Intensive Business.
         ---------------------------

         The Company's  planned future  operations are capital  intensive.  They
require the  expenditure of substantial  amounts of working  capital in order to
purchase additional inventory and to generate retail installment sale contracts.
In order to  finance  operations  in the  ordinary  course  of  business  and to
implement the desired growth strategy, there will be a need to obtain additional
bank or similar  type  financing,  sell  additional  debt or equity (or  hybrid)
securities  in future  private and public  financings,  and continue to sell the
automobile  receivables  generated or  purchased  in the ordinary  course of the
Company's business. There can be no assurance that any such additional financing
will be available or, if available, that its terms will be satisfactory. Failure
to obtain  additional  financing,  if needed,  would have a  materially  adverse
effect on the Company's results of operations. In such event, the Company may be
required to materially curtail all or a portion of its operations.




                                        2

<PAGE>

         Liquidity and Need for Additional Funds.
         ----------------------------------------

         There is a need to  obtain  additional  capital  in  order to  increase
operating  volumes and the related asset base.  Various types of debt  financing
such as  additional  lines of credit may be  pursued.  However,  there can be no
assurance  that  additional  funding  will  be  available  when  needed  or,  if
available, that its terms will be favorable or acceptable.

         Substantial Leverage.
         ---------------------

         Although  substantially  leveraged  at the end of fiscal year 2002,  in
order  to  meet  the  ongoing  working  capital  requirements  of  the  Company,
additional  indebtedness  may have to be incurred,  perhaps  resulting in a more
highly leveraged capital structure.  Substantial indebtedness related to holding
additional  automobile  receivables may also be incurred in the future. A highly
leveraged capital structure could have adverse consequences, including:

o        limiting the ability to obtain additional financing;

o        requiring the use of operating cash flow to meet interest and principal
         repayment obligations;

o        increasing the Company's  vulnerability  to changes in general economic
         conditions and competitive pressures;

o        limiting the  Company's  ability to realize some or all of the benefits
         of significant business opportunities.

         In  addition,  any  indebtedness  that would be incurred is expected to
contain  covenants  that  limit,  among  other  things,  the  ability  to  incur
additional  indebtedness,  engage in mergers and acquisitions,  pay dividends or
take other  actions.  These  covenants  may also  require the meeting of certain
financial  tests and the  maintenance  of a minimum level of collateral  and may
give the lender the right to perform  periodic audits to ensure  compliance with
the terms of the applicable loan.  Non-compliance  with any of the terms of such
covenants may result in a suspension  of funding,  acceleration  and  consequent
demand for repayment and a foreclosure on collateral,  as well as the pursuit of
other rights and remedies,  all of which could have a materially  adverse effect
on the financial condition, results of operations and prospects of the Company.

         Interest Rate Fluctuations.
         ---------------------------

         The  Company's  profitability  is based,  in part, on the interest rate
charged  on  interest  bearing  liabilities.  Interest  rates  with  respect  to
outstanding indebtedness or indebtedness that may be incurred in the future are,
or will be, as the case may be, based on interest rates prevailing in the market
at the time the debt is  incurred.  In some  cases,  the rates  may be  floating
rates.  Increases  in  interest  rates paid on  outstanding  indebtedness  would
adversely affect the profitability of the Company.




                                        3
<PAGE>

         Poor Creditworthiness of Borrowers; High Risk of Credit Losses.
         ---------------------------------------------------------------

         The Company currently owns and services automobile receivables acquired
in connection with the  reorganization of the Company that took place on October
1,  2000,  generated  through  sales of  automobiles  from  its used  automobile
operations or purchased from other  sub-prime  lenders.  These  receivables  are
payable by customers  with  non-prime  credit.  Loans to persons with  non-prime
credit  involve an  increased  probability  of default  and/or  delinquency  and
involve  greater  servicing costs than loans made to borrowers with prime credit
profiles.  The ability to operate  profitably  depends,  in part, on an accurate
evaluation of the  creditworthiness  of customers and the minimization of losses
following defaults. As a result, it is likely that delinquency and loss rates in
the Company's  portfolio  will  fluctuate in the near term and may increase as a
greater  portion  of  the  portfolio  of  automobile   receivables   matures.  A
significant variation in the timing of or increases in credit losses experienced
on the  portfolio of  automobile  receivables  could have a  materially  adverse
effect on the Company.  If greater credit losses are  experienced in the future,
it will be  necessary  to  increase  reserves  for bad debts,  thereby  reducing
overall  profitability.  There  can be no  assurance  that  any  loans  made  to
customers  will be repaid in whole or in part or that  reserves  for such credit
risks will be adequate. Any loans that are in default may need to be charged off
against the reserves.

         The occurrence of any of the foregoing  events could  adversely  affect
the  Company's  ability to obtain or maintain it's  financing  sources and could
have a materially adverse effect on business  activities,  results of operations
and financial condition.

         Risks Inherent in Automobile Finance Business.
         ----------------------------------------------

         It is the intent of the  Company to purchase  or  originate  high yield
loans, usually made to persons with non-prime credit. Extending credit to retail
used car buyers with such credit standing is inherently  risky. The borrowers on
such loans will either be first time buyers or buyers with poor credit  ratings.
Such  buyers may be more  likely to default on their used car loans than  buyers
with higher credit ratings.

         Enforcement of Vehicle Loan Contracts.
         --------------------------------------

         Various  federal and state laws impose  requirements  and  restrictions
applicable to the origination and servicing of retail  installment  vehicle loan
contracts.  Violations  of  certain  of those  laws may give rise to claims  and
defenses by a borrower. In addition, a borrower may be entitled to assert claims
and defenses  that it has against the seller of the financed  vehicles.  Because
the Company will not be originating every loan at its own dealership operations,
it will not be able to fully  minimize  this risk.  Certain  states  also impose
requirements and restrictions  relating to foreclosure sales of used cars and on
obtaining deficiency judgments following such sales. The Company may not realize
the full  amount  due on a used car loan  because  of the  application  of those
requirements and  restrictions or, because of depreciation,  damage or loss to a
financed  used  car,  the  application  of  federal  and  state  bankruptcy  and
insolvency laws, or other factors.



                                        4
<PAGE>

         Risks Relating to Security Interests and Repossession of Collateral.
         --------------------------------------------------------------------

         The automobile receivables that the Company originates,  buys, sells or
services  are  secured by  security  interests  in the  financed  vehicles.  The
procedure  for  perfecting a security  interest on a motor  vehicle  varies from
state to state.  In most  states,  perfection  of security  interests in a motor
vehicle requires that the lien be noted on the vehicle's title certificate.

         Failure to  properly  perfect a lien or to  otherwise  comply  with the
requirements  of the relevant  statute would impair the priority of the security
interest  and the  ability  to  enforce  those  liens  by  either  collecting  a
deficiency  judgment or repossessing the financed vehicle and could also subject
the Company to a claim by the debtor for  tortuous  conversion  in an attempt to
repossess the vehicle.

         In addition, such security interests may also be subject to a number of
federal and state laws,  including the Uniform  Commercial  Code as in effect in
various states.  Under such statutes,  liens of third parties for the storage or
repair of financed vehicles or unpaid taxes, which are beyond the control of the
Company, may have priority over the security interest granted even if such liens
arise  subsequent  to the granting of a security  interest and there has been no
receipt of notice of such liens.

         The value of the vehicle  securing an automobile  receivable is usually
less than the sum of the balance due on such automobile receivable,  the cost of
repossessing,  reconditioning  and  reselling  the  vehicle  and the  expense of
obtaining a deficiency judgment. In addition, the value of a vehicle securing an
automobile  receivable  may  depreciate  at a rate faster than that at which the
automobile receivable is being repaid.

         Further,  limitations  imposed by  bankruptcy  laws or other federal or
state laws may limit or delay the Company's  ability to (a) repossess and resell
used cars in which there is a valid,  perfected security interest, (b) enforce a
deficiency judgment, or (c) collect the amount due. In addition,  there may be a
determination  that a deficiency  judgment is not an appropriate or economically
viable remedy.  The Company may also settle at a significant  discount any claim
or any  deficiency  judgment that is obtained.  There is no intent to obtain any
insurance  covering these risks. In the event that a deficiency  judgment is not
obtained, or is not satisfied, or a claim or deficiency judgment is satisfied at
a discount, or is discharged, in whole or in part in bankruptcy proceedings, the
loss may adversely affect the business  operations or financial condition of the
Company.

         Risk Associated with Expansion.
         -------------------------------

         As part of the  Company's  growth  strategy,  the  intent is to seek to
establish  and/or acquire used automobile  dealerships  and/or finance  offices.
There can be no  assurance  that  management  will  successfully  integrate  the
current operations of the Company with those that may be acquired or established
in the future and effectively  manage the combined  enterprise.  There will be a
need to limit  increasing  overhead as additional  operations are acquired while
still  maintaining  sufficient  staff  to  effectively  collect  any  additional



                                        5
<PAGE>

receivables.  Failure to do so would  have a  materially  adverse  effect on the
business,  financial  condition and results of  operations of the Company.  (See
Item 1, Description of Business - Present Business Operations).

         Unspecified Acquisitions.
         -------------------------

         Although  the  Company  acquired  an  operating  interest  in a new car
dealership in Oklahoma during fiscal 2001 and a small software  development firm
in 2002,  it is the intent to  continue to actively  seek and  investigate  such
opportunities on a limited basis in the future.  Such acquisitions  would likely
be financed with cash; the issuance of equity or debt  securities;  by incurring
additional  indebtedness  or any  combination  of  the  foregoing.  There  is no
assurance  that any  acquisitions  will be made. If any  acquisitions  are made,
there  is no  assurance  they  can be  made on  favorable  terms,  or  that  the
acquisition  will prove to be  profitable.  Failure to make future  acquisitions
would limit the growth potential of the Company.

         Geographic  Concentration.
         --------------------------

         Currently  the  Company  conducts  used  car  financing  and  servicing
operations in Dallas, Texas. Because of this concentration,  business levels may
be  adversely  affected  in the  event of a  downturn  in the  general  economic
conditions existing in Texas.

         Competition.
         ------------

         The automobile industry is highly competitive.  If the Company acquires
or establishes additional used automobile dealerships, it may compete with other
independent used car dealerships,  including ones that make financing  available
to their customers;  national and regional rental car companies;  franchised new
vehicle  dealerships,  which are directing  increased  attention to the used car
market;  companies selling used cars over the Internet;  auction houses;  dealer
groups;  independent  "Buy Here - Pay Here" dealers which sell and finance sales
of used cars to customers  with  non-prime  credit;  and  individual  buyers and
sellers of used cars.

         In  addition,  many new vehicle  dealerships  are  offering  attractive
leasing  transactions  as an  alternative  to prime and just below prime  credit
borrowers. Industry-wide gross profit margins on sales of new and used cars have
been  declining  and  some of the  recent  market  entrants  may be  capable  of
operating on smaller gross margins than existing industry participants.

         There can be no assurance  that the Company will be able to maintain or
increase  its size  relative to that of  competitors  or to maintain or increase
profit margins in the face of increased  competition.  It is expected that there
will be  increasing  competition  in the  acquisition  of other  dealerships  as
industry  participants  become  larger,  which may make it  difficult to acquire
dealerships on acceptable terms.


                                        6

<PAGE>

         Although recent  high-profile  losses in non-prime  lending have caused
many of the most  substantial  conventional  lenders to pull out of this market,
competition for financing customers with non-prime credit is still quite strong.
The  Company's  competitors  include  local,  regional and  national  automobile
dealers,  secondary  finance  companies  and  other  sources  of  financing  for
automobile purchases, such as lease financing and dealer self-financing. Many of
these competitors are larger and have greater financial and marketing  resources
than the Company. Historically, commercial banks, savings and loan associations,
credit unions,  captive  finance  subsidiaries of automobile  manufacturers  and
other consumer lenders have not competed for financing for credit-impaired  used
car buyers.  To the extent that such  lenders  expand  their  activities  in the
credit-impaired market, the Company's financial condition, results of operations
or  cash  flows  could  be  materially  and  adversely  affected  (see  Item  1,
Description of Business -Competition).

         Risks Associated with Short Term Nature of Leases.
         --------------------------------------------------

         Certain of the Company's leases for its automobile sales operations are
for short  occupancy  terms. An inability to renew such leases or to continue to
occupy  premises  on  a   month-to-month   basis  would  require  entering  into
arrangements to occupy new premises.  There can be no assurance that the Company
will be able to identify and enter into arrangements to occupy new premises, and
the failure to do so could have a  materially  adverse  effect on the  business,
financial condition and results of operations.

         General Economic Conditions.
         ----------------------------

         The  Company's  business is directly  related to  financing  used cars.
Financing is affected by employment rates,  prevailing interest rates, and other
general economic conditions. Management believes the current economic conditions
favor continued growth in the used car finance markets served. However, a future
economic   slowdown  or  recession   could  lead  to  increased   delinquencies,
repossessions, and credit losses that could hinder planned expansion. Because of
the Company's focus on non-prime  borrowers,  the actual rate of  delinquencies,
repossessions,  and credit  losses on contracts  could be higher  under  adverse
conditions than those  experienced in the used car finance  industry in general.
Economic changes are uncertain,  and sluggish sales of used cars and weakness in
the economy  could have an adverse  effect on the business and that of the third
party dealers from which contracts may be purchased.

         Seasonality; Variability of Quarterly Operating  Results.
         ---------------------------------------------------------

         The used automobile finance industry is subject to substantial seasonal
variations  in revenues.  Demand for used cars is generally  lower in the winter
than in  other  seasons.  In  addition,  sales  tend  to be  lower  and  payment
delinquency rates higher during the holiday and  back-to-school  seasons,  while
sales tend to be higher  during the late spring and  through the summer  months.
Furthermore,  the planned  growth  strategy may subject the Company's  operating
results to substantial  variables and changes each quarter.  Accordingly,  given
the  possibility  of  such  fluctuations,  management  believes  that  quarterly
comparisons  of the  results  of  operations  during  any  fiscal  year  are not
necessarily meaningful and that results for any one fiscal quarter should not be
relied upon as an indication of future performance.

                                        7
<PAGE>

         Supervision, Regulation and Licensing.
         --------------------------------------

         The  automobile  sales and  financing  industry is subject to extensive
regulation,  supervision  and licensing under various  federal,  state and local
laws. Among other things,  these laws require that dealership  operations obtain
and maintain  certain licenses and  qualifications;  limit or prescribe terms of
sales and financing  contracts;  require specified  disclosures to customers and
borrowers;  impose  finance  charge  ceilings;  limit the right to repossess and
resell collateral; and restrict where used car sales operations may locate.

         There can be no assurance  that the Company will continue to be able to
obtain any required licenses and qualifications,  or, if obtained, to be able to
remain in  compliance  with the laws,  rules and  regulations  under  which such
licenses and qualifications were obtained. Although the intent is to comply with
all laws,  rules and  regulations  applicable to its  operations,  failure to so
comply  with  current  and  future  adoptions  of  additional  laws,  rules  and
regulations  could have a materially  adverse effect on the business,  financial
condition and results of operations of the Company.

         Under most state vehicle dealer licensing laws,  sellers of automobiles
and  light-duty  trucks are  required to be licensed to sell  vehicles at retail
sale. In addition,  with respect to used cars,  the Federal  Trade  Commission's
Rule on Sale of Used  Vehicles  requires  that all sellers of used cars prepare,
complete and display a "Buyer's Guide" which explains the warranty  coverage for
such vehicles.  Furthermore,  Federal Odometer Regulations promulgated under the
Motor Vehicle  Information and Cost Savings Act and the motor vehicle title laws
of most states require that all sellers of used cars furnish a written statement
signed by the seller  certifying  the  accuracy of the  odometer  reading.  If a
seller  is not  properly  licensed  or if  either a  Buyer's  Guide or  Odometer
Disclosure  Statement  was not  provided  to the  purchaser  of a  vehicle,  the
purchaser may be able to assert a defense against the seller of the vehicle. Any
losses  relating  to any such claims  would  result in losses to the Company and
could have a materially  adverse  effect on its ability to meet its  obligations
and could  materially and adversely  affect its business,  results of operations
and financial condition.

         Consumer Protection and Usury Laws.
         -----------------------------------

         Numerous federal and state consumer protection laws impose requirements
upon the origination and collection of retail installment contracts.  State laws
impose finance charge ceilings and other  restrictions on consumer  transactions
and may require certain contract disclosures in addition to those required under
federal law. These  requirements  impose  specific  statutory  liabilities  upon
creditors who fail to comply with these provisions.  Further, to the extent that
the Company acquires retail installment contracts from third parties,  there may
be liability  for any  violations  of law  committed by such third  parties as a
successor-in-interest. Currently, a maximum fixed interest rate of approximately
26% per annum is charged on contracts if originated at a Company dealership. The
state of Texas imposes  limits on the interest  rate a lender may charge.  There
can be no assurance  that Texas and any other  applicable  states will not lower
their usury  limits or that these states or other  jurisdictions  into which the


                                        8
<PAGE>

Company may expand will not (i) by judicial  decision change the  interpretation
of existing  precedents and/or (ii) adopt additional laws, rules and regulations
that could  adversely  effect the business,  financial  condition and results of
operations of the Company.

         Dependence on Management Information  Systems.
         ----------------------------------------------

         The Company's future success depends in part on the ability to continue
to adapt  technology,  on a timely and  cost-effective  basis,  to meet changing
customer  and  industry  standards  and  requirements.  The loan  servicing  and
collection  software  is  depended on to monitor  the  portfolio  of  automobile
receivables.

         Dependence on Key Personnel.
         ----------------------------

         The Company is highly  dependent on the services of Mr. James  Parmley,
the Company's President and Chief Executive Officer. The Company has not entered
into an employment  agreement  with Mr.  Parmley,  and, there is no key-man life
insurance  on Mr.  Parmley.  The loss of Mr.  Parmley's  services  could  have a
materially  adverse  effect on the business and  operations  of the Company (see
Item 9, Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act). In addition,  the future success of the
Company  depends  upon its  ability to attract and retain  qualified  personnel.
Competition to attract and retain such personnel within the industry is intense.
There can be no  assurance  of success in  attracting  and  retaining  qualified
personnel in the future.

         Market for Common Stock; Volatility of Prices.
         ----------------------------------------------

         There has been a limited public trading market for Common Shares of the
Company.  There can be no assurance that a regular trading market for the Common
Shares  will  ever  develop  or, if  developed,  that it will be  sustained.  No
assurance  can be given that the Common Shares will continue to be listed on the
Bulletin  Board.  The market price of the Common Shares could also be subject to
significant  fluctuations  in  response  to such  factors as  variations  in the
anticipated or actual results of operations of the Company or other companies in
the used car sales and finance  industry,  changes in  conditions  affecting the
economy generally,  analyst reports,  general trends in the industry,  and other
political or socioeconomic events or factors.

         Lack of Prospective Dividends.
         ------------------------------

         The  Company  has not  paid  any  dividends  on its  Common  Stock  and
anticipates that future earnings, if any, will be used to reduce debt or finance
future growth and that dividends will not be paid to shareholders.  There can be
no assurance that  operations  will result in sufficient  revenues to enable the
Company to operate at profitable  levels or to generate a positive cash flow. In
addition,  the 1,612,083  Series B Preferred Stock issued in connection with the
October 2000 restructuring has an annual  non-cumulative  dividend preference of
$80,604(5%  of  1,612,083).  Accordingly,  the Company does not  anticipate  the
payment of any dividends on Common Stock for the foreseeable future (see Item 5,
Market for Common Equity and Related Stockholder Matters).


                                        9
<PAGE>

         Forward-Looking Information May Prove Inaccurate.
         -------------------------------------------------

         This report contains various forward-looking  statements that are based
on  management's  beliefs  as well as  assumptions  made  based  on  information
currently  available.  When used in this report, the words "believe,"  "expect,"
"anticipate,"  "estimate,"  and  similar  expressions  are  intended to identify
forward-looking  statements.  Such  statements  are  subject to  certain  risks,
uncertainties,  and  assumptions,  including those  identified  under this "Risk
Factors"   section.   Should  one  or  more  of  these  risks  or  uncertainties
materialize,  or should underlying  assumptions prove incorrect,  actual results
may vary materially from those anticipated,  estimated or projected. In addition
to the other risk factors set forth above, among the key factors that may have a
direct bearing on the Company's  results are  competitive  practices in the used
car financing  industry,  the ability to meet existing financial  obligations in
the event of adverse  industry or economic  conditions  or to obtain  additional
capital to fund future commitments and expansion,  and the impact of current and
future laws and governmental regulations on operations.

         Possible Other Risks.
         ---------------------

         In addition to the above risks,  businesses  are often subject to risks
not foreseen or fully  appreciated  by  management.  In  reviewing  this report,
investors and potential  investors should keep in mind other possible risks that
could be important.

PART I

Item 1.  Description of Business

         Organization and History

         The Company was  incorporated  in Colorado on January 2, 1986 under the
name Vivatae,  Inc. and completed an initial  public  offering in May,  1986. In
November,  1986, all of the outstanding stock of Eagle  Entertainment,  Inc. was
acquired  and the name of the Company was changed to Eagle  Entertainment,  Inc.
Through subsidiaries, performance guarantees for motion picture productions were
provided.  In September,  1990, the subsidiaries were divested and Arizona based
corporations  engaged in the  retailing  and  financing of motor  vehicles  were
acquired.

         On  January  3,  1992,  the name of the  Company  was  changed to Eagle
Holdings,  Inc. and on October 20, 1993, the corporate domicile was changed from
Colorado to Nevada.  This was done by forming a Nevada  corporation  named Eagle
Automotive Enterprises, Inc. and merging "downstream" into it. At that time, the
subsidiary was a shell corporation without any substantial assets or equity.

         On March 28,  1994,  the  automotive  subsidiaries  were  divested  and
Diamond  Entertainment  II,  Inc.,  a Utah  corporation  licensed  by the Samuel
Goldwyn  Company to produce  live  productions  of  "American  Gladiators",  was
acquired.   On  April  6,  1994,   the  company  name  was  changed  to  Chariot
Entertainment, Inc.


                                       10
<PAGE>

         On December 31, 1994, the Goldwyn  Licensing  Agreement expired and the
existing  subsidiaries  were  divested.  The  Company  re-entered  the  business
development stage and began seeking business combination candidates.

         On September 30, 1996,  the name of the Company was changed to AutoCorp
Equities,  Inc.  On  July  21,  1997,  an  acquisition  was  made of 100% of the
outstanding  stock  of  Consumer  Investment  Corporation,   Consumer  Insurance
Services, Inc. (including Consumer Insurance Services Cayman Island subsidiary),
and Lenders Liquidation Centers, Inc. in exchange for 3,677,500 shares of Common
Shares to the  shareholders of the acquired  companies and 300,000 Common Shares
to CIC Fund V, a related  company.  The former  president  of the  Company  also
received  303,500  Common  Shares in  conjunction  with this  transaction.  This
transaction  resulted in the shareholders of the acquired companies becoming the
majority shareholders of the Company. The acquired companies were engaged in the
sales, financing and insurance of used cars.

         During the fiscal  year ended  September  30,  1998,  the  Company  was
headquartered  in Phoenix,  Arizona and operated a combined used car finance and
sales business in Arizona and New Mexico.  Business operations were concentrated
on used cars purchased by non-prime credit purchasers  (persons with low incomes
and  previous  credit  problems)  and the  retail  installment  sales  contracts
evidencing non-prime used car loans.

         Effective  at the end of fiscal  1998,  the  Company  ceased to operate
those  locations and  transferred the management and operation of them to all or
some of the Merritt Group. Ownership of those businesses was transferred to them
on  December  30,  1998,  as part of a  restructuring  transaction  and  related
business reorganization.

         AutoCorp  Equities,  Inc., is a holding company and has been since July
1997. In August 1998, Suburba Acquisition Company was formed. In November,  1998
Suburba split its finance  servicing  activities  into a new  corporation  named
AutoCorp  Financial  Services,  Inc.  ("AFS")  and  changed the name of its used
automobile retail sales operations to ACE Motor Company ("ACE") .

         In November,  1998, AFS acquired  certain  assets of Buyers  Acceptance
Corporation  of  Louisville,  Kentucky,  a loan  servicing  center.  The  assets
included a portfolio of loans  originated in a five-state  area  surrounding the
Louisville servicing center.

         ACE acquired  certain assets related to an Austin,  Texas dealership on
December 30, 1998, from a corporation  owned by William O. Merritt and Dennis W.
Miller.  This  transaction  was separate from,  but related to, a  restructuring
transaction that took place on the same date.

         In April,  1999,  the Company  acquired  certain assets of Horizon Auto
Sales,  Ltd., a Dallas based used car dealership that operated a single lot. The
consideration issued in this transaction was 75,000 shares of AutoCorp Equities,
Inc.  common  stock,  of which  50,000  shares  were  issued at closing  and the
remaining  25,000  shares  were to be issued  prior to April  15,  2000 but were
subsequently issued in December 2001.


                                       11
<PAGE>

         In June,  1999, the Company  acquired  certain assets of Angelina Motor
Company in Lufkin,  Texas.  The assets  acquired  included a single lot used car
dealership and two  portfolios of automobile  installment  loans,  both of which
have been subsequently closed.

         In June, 1999, the Company  relocated its headquarters to Plano,  Texas
and rented  approximately 2,600 square feet of office space from AutoPrime.  The
Company  then moved into a separate  office  facility in Plano,  Texas in April,
2000.  In March of 2001 the  company  moved to a  temporary  office  facility in
Richardson,  TX. In July 2002,  the Company moved into  permanent  facilities in
Frisco, TX where it currently resides.

         Through ACE, the Company owned and operated three used car  dealerships
in Texas.  Through July of 2000, the company  operated five used car dealerships
in Texas - three in Dallas, one in Lufkin and one in Austin and consolidated its
dealerships  into the single  Dallas  location in August 2000.  Through used car
sales,  these  dealerships  originated  non-prime used car loan  contracts.  The
Company discontinued its used automobile operations in the second fiscal quarter
of 2001. In January 2002 the Company  re-entered the used automobile  segment as
an  operating  division  of AFS with one  dealership  in  Dallas,  TX and one in
Garland,  TX. In addition,  through AFS,  portfolios of non-prime  used car loan
contracts are purchased and one loan servicing center is operated. During fiscal
year 2000 the Company also  consolidated the four loan servicing  centers to one
facility in Dallas,  Texas.  That servicing center has been relocated to Frisco,
TX.  The  Company  retains  the  loan  servicing  function  on all of the  loans
originated or purchased.

         In July 2002,  the Company  acquired 100% of the  outstanding  stock of
CompuSolutions,  Inc.  ("CSI")  in  exchange  for  600,000  shares  of  AutoCorp
Equities,  Inc. common shares. CSI is a developer and marketer of Internet based
software  solutions  for  new and  used  automobile  dealers  and  servicers  of
installment  loan  contracts  secured by  automobile  loans.  CSI  maintains its
offices  with the  Company  at the office  facility  in  Frisco,  TX.  Since the
acquisition and continuing through September 30, 2002, the software developed by
CSI has been tested with several dealers in the Dallas,  TX area. Based upon the
results  of  that  testing  a  determination  has  been  made  that  substantial
additional  development is required in order make the software fully marketable.
As this  additional  development  was not expected,  during the first quarter of
fiscal  2003,  the  Company  determined  that the amount of capital  required to
complete  development of the software was  unreasonable and decided to terminate
the project and its continuing investment in Compusolutions and was returned the
600,000 share originally issued in exchange for the CSI shares received.

         Restructuring Transaction
         -------------------------

         At  September  30,  2000 the Company was  financially  distressed.  The
Company completed a restructuring transaction effective October 1, 2001 in order
to create an  organizational  and  financial  structure  that is  efficient  and
reflects the current business plans of the Company.


                                       12

<PAGE>

         How the Purpose of the Restructuring Was Achieved
         -------------------------------------------------

         The purpose of the restructuring achieved the following:

         o        Substantially  reduced  debt and made  arrangements  to reduce
                  exposure to future liability.

                  This was  achieved  by  exchanging  a new series of  Preferred
                  Stock in exchange for the  extinguishment  of all debt, either
                  direct  or  indirect,  of the  Company  owed  AutoPrime  as of
                  September 30, 2000. Additionally,  as part of the transaction,
                  the Company was released and/or indemnified against any future
                  liability  arising  as a result of the  extinguishment  of the
                  debt.

         o        Made  arrangements  for short term working  capital to provide
                  the Company  funding to continue  operations  in the near term
                  without acquiring new debt.

                  This  was  achieved  by  including   in  the   transaction   a
                  substantial  number  of  re-possessed   automobiles  owned  by
                  AutoPrime  as a  result  of  their  security  interest  in the
                  underlying  finance  contract.  This  provided the  automobile
                  dealership an inventory which was  unencumbered as of the date
                  of  the   transaction.   Additionally,   servicing   fees  for
                  collection of the AutoPrime portfolio were increased five-fold
                  to  provide  additional  working  capital  in  the  near  term
                  (approximately   six  months).   These  fees  will  return  to
                  predetermined levels in the longer term.

         o        Changed the capital structure of the company.

                  This took place through:

                  (a)      The  designation  of a new series of Preferred  Stock
                           (re-designated from Series A to Series B).

                  (b)      Issued  1,612,083  shares of Series B Preferred Stock
                           that resulted in exchange for working  capital in the
                           form  of  cash  (on a  deferred  basis),  repossessed
                           automobiles, a portfolio of customer notes receivable
                           (secured by  automobiles)  owned but considered to be
                           "active' by the seller, a portfolio of customer notes
                           receivable  owned but  considered  "inactive"  by the
                           seller   and   the   elimination   of   approximately
                           $24,000,000 of debt,  recourse and other  obligations
                           and liabilities owed by the Company.

                  (c)      Transferred 1,817,000 common shares from the Exchange
                           Trust created in the December 30, 1998 transaction to
                           the  Company's   treasury   previously   tendered  to
                           AutoPrime and other parties on December 30, 1998.


                                       13
<PAGE>

                  This  was  accomplished  by  including  in the  transaction  a
                  portfolio of retail installment  contracts from AutoPrime that
                  had been  classified as "Active",  "Past Due" or "Written Off"
                  by AutoPrime. These notes had an adjusted basis on AutoPrime's
                  books of  approximately  $9,600,000 which when serviced by the
                  Company may enhance the asset base of the Company.

                  Renegotiated  servicing fees and  reimbursements to enable the
                  Company to recover  expenses not recouped  under  previous fee
                  arrangements.

                  This  was   accomplished   by  including   provisions  in  the
                  transaction that allowed the Company to increase its servicing
                  fee and  reimbursement  structure to allow recovery of certain
                  taxes and  repossession  costs not  included in  previous  fee
                  arrangements.

         Present Business Operations
         ---------------------------

         Currently,  the Company operates one loan servicing center,  and a used
car lot in Dallas,  Texas and a used car lot in Garland,  TX.  Although some car
loan contracts were purchased during the fiscal year ended September 30, 2001 in
connection with  discontinuing the operations of Ace Motor Co., the Company also
buys,  services and sells  portfolios of non-prime  used car loan contracts as a
part of its current  business  plan. As the loan  servicer,  record  keeping and
collection of payments and general enforcement of the used car loan contracts is
assumed.

         ACE Motor Company,  Inc.("ACE") was sold at the end of the first fiscal
quarter of 2001 and has been reported as discontinued operations from that date.
In January 2002, as a result of improving business  conditions and the Company's
ability to obtain floor plan credit,  the Company re-entered the used automobile
segment as an operating division of its subsidiary, AutoCorp Financial Services,
Inc.("AFS").  AFS  leases a car lot in Dallas and a car lot in  Garland,  TX and
sells used cars to non-prime  purchases and originates  non-prime used car loans
as a result of those sales.  In  addition,  AFS will sell used cars on behalf of
third parties  earning a sales fee in the process.  In these cases the owners of
the cars will  originate and service the loans  originated by the sale. In other
cases, depending on the credit score of the purchaser(s),  AFS may purchase cars
from these third parties and originate and service the loans itself.  During the
fiscal year ended September 30, 2002, AFS generated  approximately  $1.9 million
in revenue from the sales of used automobiles and originated  approximately $1.8
million in installment loans as a result of activity in this segment

         AFS,  prior  to the  fiscal  year  ended  September  30,  2000,  bought
portfolios of loan contracts at a discount from net principal  balance,  usually
ranging  between 35% and 45%. Due to severe  shortages of working capital during
the fiscal years ended  September 30, 2000 and 2001m  respectively,  the Company
did not purchase any new loan portfolios.  The Company did,  however,  acquire a
number of new loans from the new owners of ACE Motors and sold a number of those
loans  during the fiscal  year ended  September  30,  2001 for  working  capital
purposes.

                                       14

<PAGE>

         Prior to October 1, 2000,  there were additional  Servicing  Agreements
with AutoPrime under which the Company serviced portfolios,  owned by AutoPrime,
for a fee. The servicing fee retained on payments  collected  ranges between 10%
to 37%.  The intent is to actively  seek and  investigate  other such  servicing
opportunities as they become available.  The current staffing infrastructure and
systems will allow the  servicing of multiple  portfolios  for outside  lenders.
Because the collection of retail consumer loans is highly regulated, the Company
employs experienced collection managers and staff.

         Satisfactory  collection performance depends largely on the maintenance
of a balanced collection effort,  personal  interaction with the customers,  and
the exercise of good  judgment in the selection of the action to be taken on any
individual  account.  Since each of the successive  steps is more  expensive,  a
proper administration of collection procedures  concentrates the emphasis on the
early steps as essential to the success of the total collection effort.

         At  September  30,  2000,  the  Company  was the  servicing  agent  for
approximately  $6,019,382 of active automobile  receivables.  As a result of the
October 1, 2000 transaction,  that amount decreased to $3,464,840. In October of
2001,  the Company  terminated  its servicing  agreement  with AutoPrime and the
amount decreased to approximately  $1,200,000. At September 30, 2002 as a result
of the Company's  re-entry into the used automobile  segment and the purchase of
notes held for subsequent  resale, the amount of serviced loans has increased to
approximately  $2,500,000.  Servicing  fees are  based on the  unpaid  principal
balance of the  portfolio or on the amounts  collected on a monthly  basis where
fees may be as much as 20% of the amounts collected. Accordingly, the results of
operations and financial  condition depends, in part, on the ability to properly
service  these  automobile  receivables  in order to reduce credit losses and as
discussed elsewhere, to increase it's serviced portfolio.

         The  Company's   computer  system  is  designed  to  promptly  identify
customers whose accounts have become past due. Upon identification of a customer
with a delinquent account,  that customer is immediately  contacted by telephone
to demand  payment,  or, if the  customer  cannot be  reached by this  means,  a
Company  employee is dispatched to the customer's home or place of employment to
collect  payment.  If payment cannot be obtained from the customer at that time,
the  Company  will seek to make  alternative  arrangements  for  payment.  Early
detection of a customer's delinquencies, as well as a commitment to working with
customers to resolve payment issues,  reduces credit loss and promotes  customer
satisfaction.  Many finance  companies  serving the prime  market,  in contrast,
including  credit card  companies,  may wait up to 30 days before  contacting  a
customer in connection with a delinquent payment.

         If a customer's  account  becomes  more than two  payments  past due, a
process begins to protect the collateral.  In certain instances, a customer will
work with the Company to coordinate a "voluntary  repossession"  of the vehicle.
In the case of an "involuntary repossession," an independent firm is retained to
repossess the vehicles pursuant to prescribed legal procedures.  If a vehicle is
repossessed,  the  customer is allowed a minimum ten days to redeem the vehicle.
In some circumstances,  the customer may be allowed the opportunity to redeem at
any time until the vehicle has been sold to a third party.


                                       15
<PAGE>

In  July  2002,  the  Company   acquired  100%  of  the  outstanding   stock  of
CompuSolutions,  Inc.  ("CSI")  in  exchange  for  600,000  shares  of  AutoCorp
Equities,  Inc. common shares. CSI is a developer and marketer of Internet based
software  solutions  for  new and  used  automobile  dealers  and  servicers  of
installment  loan  contracts  secured by  automobile  loans.  CSI  maintains its
offices  with the  Company  at the office  facility  in  Frisco,  TX.  Since the
acquisition and continuing through September 30, 2002, the software developed by
CSI has been tested with several dealers in the Dallas,  TX area. Based upon the
results of that testing a  determination  was made that  substantial  additional
development is required in order make the software fully marketable.  During the
first quarter of fiscal 2003, the Company  determined that the amount of capital
required to complete development of the software was unreasonable and decided to
terminate the project and its continuing investment in Compusolutions.

         As of September 30, 2002, the Company had drawn  approximately  $45,977
on a warehouse line of credit with a maximum  allowable  outstanding  balance of
$2,000,000  and is secured by automobile  installment  contracts  with a maximum
advance rate of 65% of the  principal  balance of the contract as of the date of
the draw.  The purpose of the line of credit is to provide  working  capital for
inventory acquisitions and operating expenses.

         Competition
         -----------

         The  Company  competes  with  other  independent   finance   companies,
including ones that make financing available to their customers, and "Buy Here -
Pay Here" dealers that provide the financing themselves.  In addition,  many new
vehicle  dealerships are competing for used car buyers with non-prime credit and
are offering attractive leasing transactions as an alternative to prime and just
below prime credit borrowers.

         Generally,  the captive finance arms of major automotive  manufacturers
increase their  marketing  efforts in the non-prime  segment only when inventory
control and/or production scheduling  requirements of their parent organizations
dictate a need to focus on this  market.  They then exit this  market once these
sale volumes are  satisfied.  In addition,  the focus of these  captive  finance
companies  remains on new car  financing,  which is not commonly the purchase of
the higher-risk buyer. Moreover, many financial organizations electing to remain
in the automotive  finance  business have migrated  toward higher credit quality
customers to reduce their processing and collection costs.

         As a result of these  conditions,  the  non-prime  consumer  automotive
finance market is highly  fragmented,  and primarily serviced by smaller finance
organizations  that solicit business when and as their capital resources permit.
Due to such a lack of a major, consistent financing source, a number of lenders,
including  well-capitalized  public  companies,  have  abandoned  this market in
recent years.

         Despite the enormous income potential in the non-prime consumer market,
many traditional  financing sources,  such as banks,  savings and loans,  credit
unions,  captive  finance  companies and leasing  companies do not  consistently
provide  financing to, or have from time to time  withdrawn  from,  this market.
However,  many of these same  institutions  will buy loans on this type of buyer
once the initial, higher-risk period of the first three months have passed.


                                       16
<PAGE>

         Employees.  At  September  30, 2002 the Company  employed a total of 21
people;  17 in AFS and 4 at the headquarters in Frisco,  Texas. No employees are
covered  by  a  collective  bargaining  agreement.  The  Company  considers  its
relations  with its  employees to be good.  In addition,  the Company  employs a
number of part-time employees in its collection operations.

         Seasonality.  The sub-prime  finance industry is subject to substantial
seasonal variations in revenues.  Demand for used cars is generally lower in the
winter than in other  seasons.  In addition,  sales tend to be lower and payment
delinquency rates higher during the holiday and  back-to-school  seasons,  while
sales tend to be higher during the late spring and through the summer months.

         Inflation. Higher interest rates, which generally occur with inflation,
would tend to  increase  the cost of credit  used by the  Company and would thus
decrease  profits.  Such effects can be limited by increasing the prices of used
cars sold, and negotiating purchases of loan contracts from third parties with a
higher  discount or interest rate (APR).  Inflation  has not had any  noticeable
effect on the Company's operations.

Item 2.  Description of Property

         The  principal  executive  offices of the  Company  are located at 1701
Legacy Dr., Suite 2200, Frisco, Texas 75034.  Approximately 5,000 square feet of
leased  premises are at this location.  The rent is  approximately  $120,000 per
year. The lease expires in July 2007.

         As of  December  4, 2002,  The  Company  has two leased  properties  in
addition to the corporate headquarters.  They are leased for AFS operations, and
are listed in the following table together with the year the lease expires:

         1.  624 So. Buckner Blvd., Dallas, Texas            5,600 sq ft    2004
         2.  2719 S. Garland Rd., Garland, Texas             2,300 sq ft    2004
         3.  1701 Legacy Dr. Suite 2200, Frisco, TX          5,700 sq ft    2007

         Management believes the Company's  facilities and equipment are in good
repair and are adequate for current needs.

ITEM 3.  Legal Proceedings

         There are no current material legal proceedings.



Item 4.  Submission of Matters to a Vote of Security Holders

         Not Applicable.



                                       17
<PAGE>

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

         The  Common  Stock of the  Company  is  quoted  on the NASD  Electronic
Bulletin  Board  and  traded in the  over-the-counter  market  under the  symbol
"ACOR". Trading is only sporadic and there is no established trading market. The
tables  below list the high and low bid prices for each  quarter of the last two
fiscal years,  as best can be determined by combining  information  from several
sources.


                                                 Bid Quotations
                                                 --------------
                                              Low             High



           Fiscal 2002:
                  First Quarter              $0.075          $0.19
                  Second Quarter              0.05            0.55
                  Third Quarter               0.05            0.51
                  Fourth Quarter              0.05            0.25


           Fiscal 2001:
                 First Quarter                0.10            0.25
                 Second  Quarter              0.07            0.15625
                 Third Quarter                0.05            0.59
                 Fourth Quarter               0.075           0.17


--------------------

*        These quotations reflect inter-dealer  prices,  without retail mark-up,
         mark-down,   or   commission   and  thus  may  not   represent   actual
         transactions.

         At September 30, 2002, there were  approximately  417 holders of record
of the Common Shares of the Company.

         The  Company  has not  paid  any  dividends  on its  Common  Stock  and
anticipates  that future  earnings,  if any, will be retained to finance  future
growth. In addition,  the 1,612,083 shares of Series "B" Preferred Stock, issued
on November 14, 2000,  as a result of the October 1, 2000  transaction,  have an
annual  non-cumulative  dividend  preference  of  $80,204  (5%  of  $1,612,083).
Accordingly,  the Company  does not  anticipate  paying any  dividends on Common
Stock for the foreseeable future.

         From October 1, 1997 through September 30, 2002, the Company issued the
following securities without registration under the Securities Act of 1933:


                                       18
<PAGE>

         (1)      On several  occasions  from January 13, 1998 to September  30,
                  1999,  a total of 512,076  Common  Shares  were  delivered  to
                  approximately  47 of  the  approximately  115  holders  of CIC
                  notes,  in return for the  cancellation  of those notes.  As a
                  result of those  exchanges,  CIC notes in the principal amount
                  of $1,488,570,  together with accrued interest $255,297,  were
                  canceled.  These  Common  Shares were issued under the Section
                  4(2) exemption of the Securities Act.

         (2)      219,706 Common  Shares,  in April,  May,  June,  September and
                  October 1998, for accounting and consulting services valued at
                  $202,939.  These Common Shares were issued under the Section 4
                  (2) exemption of the Securities Act.

         (3)      50,000 Common  shares on April 15, 1999, to George  Mueller in
                  connection  with  the  acquisition  by ACE  Motor  Company,  a
                  subsidiary  of the  Company,  of two  promissory  notes in the
                  aggregate  principal  of  approximately   $2,500,000  and  the
                  underlying  collateral and guarantees executed by an affiliate
                  of Mr.  Mueller.  These  shares were issued  under the Section
                  4(2) exemption of the Securities Act.

         (4)      52,787 Common  Shares on November 4, 1999,  to George  Mueller
                  for his services  (and  agreement  to render  services) to the
                  Company  as an  independent  consultant  from  April 1 through
                  December  31,  1999,  on the  terms  set  forth in a  Business
                  Consulting  Agreement.  Through September 30, 2000 Mueller has
                  performed no consulting services of any nature for the company
                  under the terms of the  agreement.  These  shares  were issued
                  under the Section 4(2) exemption of the Securities Act.

         (5)      217,391  Common Shares during the third fiscal quarter 2001 to
                  Roy Pardini in an exchange of a $150,000 note  receivable from
                  Jim Miles  Chevrolet/Oldsmobile  in Guthrie,  OK. These shares
                  were issued under the Section 4(2) exemption of the Securities
                  Act.

         (6)      103,569  Common Shares during the third fiscal quarter 2001 to
                  various  employees  for services  rendered  during the current
                  valued at $6,215.  These  shares were issued under the Section
                  4(2) exemption of the Securities Act.

         (7)      100,000  Common Shares during the first fiscal quarter of 2002
                  to Roy Pardini for  consulting  services  and 25,000 to George
                  Mueller for consulting  services  rendered during the quarter.
                  These shares we issued under the Section 4(2) exemption of the
                  Securities Act.

         (8)      830,000 Common Shares during the second fiscal quarter of 2002
                  to Company  executives  as bonuses.  These  shares were issued
                  under the Section 4(2) exemption of the Securities Act.


                                       19
<PAGE>

         (9)      727,600  Common  Shares  during  the third  fiscal  quarter to
                  Company  executives  as bonuses and 100,000  common  shares to
                  Venture  Capital  Partners as incentive bonus to raise capital
                  On behalf of the  Company.  These shares were issued under the
                  Section 4(2) exemption of the Securities Act.

                  150,000  Common Shares during the fourth fiscal quarter to the
                  principals  of  CompuSolutions,  Inc. for computer  consulting
                  services  rendered  prior  to  the  Company's  acquisition  of
                  CompuSolutions,  Inc.  These  shares  were  issued  under  the
                  Section 4(2) exemption of the Securities Act.

         (10)     600,000  Common  Shares  during the fourth  fiscal  quarter in
                  connection with the acquisition of CompuSolutions,  Inc. These
                  shares were issued  under the Section  4(2)  exemption  of the
                  Securities Act.

         (11)     100,000  Common Shares  during the fourth fiscal  quarter to a
                  Company  Executive as a bonus.  100,000  Common Shares to Bill
                  Hardy for services rendered as a consultant. These shares Were
                  issued und the Section 4(2) exemption of the Securities Act.

Summary of the Terms of  Convertibility  of the Series "B" Preferred  Shares. As
part of the October 1, 2000  transaction,  of the  10,000,000  Preferred  Shares
authorized  in the Company's  bylaws,  a total of 2,000,000 of those shares were
designated as Series "B" of which 1,612,083 Preferred Shares were issued as part
of the October 1, 2000 transaction. Additionally, the 6,578,485 Preferred Series
"A"  shares  that were to be issued to  AutoPrime  were  never  issued  and were
cancelled as a part of that transaction

         The terms of the Series "B" Preferred Shares are:

         o        They pay non-cumulative dividends at the rate of 5% per year;

         o        They have a liquidation preference of $14.64 per share;

         o        They  have  no  voting  rights,  sinking  fund  provisions  or
                  redemption rights;

         o        They are convertible  into Common Shares on a 1-for-1 basis at
                  any time. They will also become  convertible  automatically if
                  any of certain specified events take place. The following is a
                  summary of the events that can accelerate convertibility:

                  (a)      When or if the Company's Common Stock is accepted for
                           trading in the NASDAQ National Marketing System, or

                  (b)      When or if the  Company's  Common  Stock is  publicly
                           traded at a price equal to $14.64 per share or more.



                                       20

<PAGE>

Item 6.  Management's Discussion and Analysis or Plan of Operation

Forward Looking Statements:

         This report contains forward looking statements.  Additional written or
oral forward looking  statements may be made by the Company from time to time in
filings with the Securities and Exchange  Commission or otherwise.  Such forward
looking  statements  are within the  meaning of that term in Section  27A of the
Securities  Act,  and Section 21E of the  Securities  Exchange  Act of 1934,  as
amended (the "Exchange  Act").  Such statements may include,  but not be limited
to, projections of revenue,  income, or loss, estimates of capital expenditures,
plans for future operations, products, or services, financing needs or plans, as
well as assumptions  relating to the foregoing.  The words "believe",  "expect",
"anticipate",  "estimate",  "project",  and similar expressions identify forward
looking statements, which speak only as of the date the statement was made.

         Forward  looking   statements  are  inherently  subject  to  risks  and
uncertainties,  some of which cannot be predicted or  quantified.  Future events
and actual results could differ materially from those set forth in, contemplated
by, or underlying  the forward  looking  statements.  The Company  undertakes no
obligation to publicly update or revise any forward looking statements,  whether
as a result of new  information,  future  events,  or  otherwise.  The following
disclosures,  as  well  as  other  statements  in this  Report  on Form  10-KSB,
including those in the notes to the Company's consolidated financial statements,
describe  factors,  among  others,  that  could  contribute  to  or  cause  such
differences, or that could affect the Company's stock price.

Results of Operations

Overview.

Through the first quarter of fiscal 2001,  the Company  operated "Buy Here - Pay
Here" used car  dealerships  which  underwrote,  financed  and  serviced  retail
installment  contracts  generated  by  sales  of  used  cars  by  the  Company's
dealerships.  The installment contracts were sold, at a 45% discount to AutoCorp
Financial  Services,  a subsidiary  of the  Company,  which  retains  principal,
interest and earned  discount on the contracts.  Effective  January 1, 2001, the
Company sold the assets of the used car  dealerships  but  continued to purchase
contracts  under the same terms.  During the second fiscal  quarter of 2002, the
Company  re-entered  the used  automobile  segment as an  operating  division of
AutoCorp Financial Services and expects to remain active in this segment for the
long term.

Also  during the second  quarter  of fiscal  2002,  the  Company  increased  its
activity in the purchase and sale of  automobile  installment  notes.  Generally
these are seasoned notes that are purchased at 60% to 70% of principal value and
sold to third parties at 80% to 100% of principal value.  The service  functions
are generally  retained by the Company for fees  averaging  three percent of the
outstanding  principal  balance of the serviced  portfolio.  Servicing  fees are
charged and  collected on a monthly basis when  collections  are remitted to the
owner of the  portfolio.  Management  believes  that this  segment will become a
major contributor to its margins in both the near and long term.

                                       21
<PAGE>

In the fourth quarter of fiscal 2002, the Company acquired CompuSolutions,  Inc.
a developer  and marketer of automobile  sales and  installment  note  servicing
software.  The  acquisition  was  accomplished  through an  exchange  of 600,000
Company  common  shares for 100% of the  outstanding  shares of  CompuSolutions.
Management  believed that the acquisition could be a significant  contributor to
its  revenue  growth over both the near and long terms.  However,  after  market
testing  the  product  with a number  of  dealers  in the  Dallas  area,  it was
determined  that the  software  products  were not  ready for  general  release.
Because of the  unexpected  significant  amounts of capital that are required to
develop the software to a point ready for general release to the end users,  the
Company terminated its investment in CompuSolutions  during the first quarter of
2003 by  returning  the shares of  CompuSolutions  received  and  obtaining  the
Company's shares issued in the acquisition. The return of the shares resulted in
a loss of approximately  three cents per share ($18,000) and will be reported in
the Company's 10-QSB filing for the first fiscal quarter of 2003.

General Discussion

Revenues  for the fiscal year ended  September  30, 2002 were  $2,426,763  which
consisted of  approximately  $1,981,712 in used  automobile  sales,  $443,622 in
servicing fees and loans sales and $1,429 in other. This is compared to $762,492
of servicing  fees and finance  income for the fiscal year ended  September  30,
2001.  The increase in revenue over the prior year is  attributable  to re-entry
into the used automobile segment and increased activity in the note purchase and
sale segments  beginning in the second fiscal  quarter.  Servicing  fees for the
year ended September 30, 2002 were comparable to those of the prior year.

Gross profit for the year ended  September 30, 2002 was  $1,207,575  compared to
$724,888 for the year ended September 30, 2001. Gross margins for the year ended
September 30, 2002 consisted of  approximately  $793,000 for the used automobile
segment and $413,000 for the loan sale and servicing segment.  Gross profit as a
percentage of net revenues was 40% and 93% for the year ended September 30, 2002
for the auto and  servicing  segments,  respectively.  For the prior year,  this
figure was 95%. The margin in total for the current year are substantially lower
than as those in the prior year as a result of the  Company's  re-entry into the
used automobile segment which typically has significantly lower margins than the
servicing segment.

Selling,  general and other administrative  operating expenses were 74.4% of net
revenues for the year ended  September 30, 2002 compared to 207.7% for the prior
year. The decrease in the percentage is a result of increased revenues in fiscal
2002 over fiscal  2001.  These  numbers  reflect an overall  improvement  in the
year-over-year percentage of sales relationship.  However, the absolute level of
spending  increased from  approximately  $1,584,000 for the year ended September
30, 2001 to $1,806,000 for the year ended  September 30, 2002 as a result of the
additional overhead incurred as a result of the Company's re-entry into the used
automobile  sector.  These  expenses  should remain  relatively  constant in the
future  in  line  with  the  Company's  continued  stabilization  in  personnel,
facilities, and general operating costs.


                                       22
<PAGE>

Interest  expense  increased  from  $11,937 in fiscal 2001 to $58,460 for fiscal
2002 as a direct result of the Company's continuing need to borrow funds for its
working capital requirements during the current fiscal year.

The provision for uncollectible  accounts  increased from zero in fiscal 2001 to
$1,056,064  in fiscal  2002.  This is a result of a write-off  of the  remaining
automobile  receivables  acquired by the Company in connection  with the October
2000  restructuring  transaction with AutoPrime.  These receivables were held by
AutoPrime as past due or  delinquent  accounts.  Management  believed that these
notes could be fully or partially  collected based on its collection  results in
the past. Of the approximately  $3,000,000 in notes acquired from AutoPrime, the
Company collected or sold at a substantial discount approximately $2,000,000 and
has written off the remaining balance at September 30, 2002.

As a result of various limitations placed on its ability to acquire new capital,
the  Company  entered  into an  agreement  with its primary  creditor  effective
October 1, 2000 to exchange  virtually all of its debt for preferred  stock. The
transaction  resulted in a gain on the  extinguishments of debt of approximately
$26,500,000.  In connection  with this  agreement the Company  issued  1,612,083
non-cumulative  5% preferred  shares with an estimated fair value of $352,643 in
exchange for the extinguishments of debt and the contribution of certain assets.
The  preferred  shares  have a  liquidation  value of  $14.64  per share and are
convertible  into  common  shares  at any time at the  option  of the  preferred
shareholders  on a one for one basis.  The shares  must be  converted  to common
shares if the  Company's  common  shares are  accepted for trading on the NASDAQ
National Market System or if the Company's  common shares are publicly traded at
a price of $14.64 per share or more. The agreement  provided for the forgiveness
of debt and assumption of liabilities of $24,269,147 by AutoPrime. In connection
with the agreement,  the Company also received  notes and  automobile  inventory
with an estimated fair value of $3,508,086 and the return of 1,817,000 shares of
the Company's common stock with an estimated fair value of $399,740.

As a result of continuing long-term losses, the Company sold its used automobile
dealership(s) to the existing management of this segment in exchange for a $716,
190  note  receivable.  The  transaction  resulted  in a net gain on the sale of
$330,231  in the fiscal  second  quarter of 2001.  During the fourth  quarter of
fiscal  2001 the  purchaser  of the  automobile  operations  was  dissolved  and
defaulted  on the  aforementioned  note  receivable.  As a result,  the  Company
ultimately  realized  a net loss on the  sale of the  automobile  operations  of
$318,844. Due to its inability to raise capital to purchase additional inventory
and resulting  declining sales as a result of limited  inventories,  the Company
believed  that  continued  operations in this segment would result in continuing
losses. As a result, the operations of this segment were discontinued.

One year later during the second quarter of fiscal 2002, the Company was able to
obtain  floor plan  financing  from  private  sources  and  re-entered  the used
automobile segment.


                                       23
<PAGE>

Liquidity

As a result  of the  Company's  continuing  need to  improve  its cash  flow and
overall  liquidity,  the Company  completed the transaction with AutoPrime and a
subsidiary  of  its  parent,   Pacific   Financial   Group  (PFG),  to  exchange
substantially  all of its debt other than trade  accounts  payable  and  accrued
expenses for Preferred  Stock.  In  contemplating  the  transaction,  a thorough
review of the Company's  business model was  performed.  The conclusion was that
the Company's  business model with  AutoPrime was unable to generate  sufficient
cash flow to support the ongoing viability of the Company.


As a result of the completion of the exchange with AutoPrime and PFG, management
believes there will be opportunities  to acquire capital from alternate  sources
and  proceed to  implement  its  current  plan of  establishing  small used auto
dealerships  locally,  acquiring  and selling  note  portfolios  and  increasing
servicing income by offering  collection  services to third parties.  During the
course of fiscal  2001 the Company had  negotiated  agreements  with a number of
private  institutional and individual  investors to raise additional working and
investment capital. However, as a result of the events on September 11, 2001 and
thereafter,  most of those  agreements were not  consummated.  In its continuing
effort to raise additional  capital,  as of the date of this filing, the Company
has held discussions with several private  individuals and venture capital firms
regarding  investment  but no  definitive  agreements  have  been  completed  In
addition, the Board of Directors continues to consider additional  possibilities
for developing new business  opportunities and acquiring new capital for working
capital  purposes  and the  acquisition  of  interests  in  existing  profitable
businesses  whose long term plans are attractive to and consistent with those of
the Company.

The Company's  revenues have declined during the first two months of fiscal 2003
as a result of the seasonal  decline in the  automobile  segment.  The Company's
sources of revenues at the present  time are used  automobile  sales,  servicing
fees on contracts  owned by third parties and finance income on notes  purchased
from third parties.  Additional revenues have arisen from the sale of notes that
were included in the Company's note portfolio at September 30, 2002

Cash used by  continuing  operations  during the year ended  September  30, 2002
increased to $387,869  from cash provided by operations of $98,931 for the prior
year.  This  reflects  the  impact of the  re-capitalization  that took place in
October 2000,  the Company's  re-entry  into the used  automobile  segment which
requires  significant  amounts of cash, and an overall increase in the Company's
operating levels. Net cash used in investing  activities decreased from $237,627
to $37,489 as a result of the decrease in  repayments  on the related party note
receivable  and the  purchase of various  fixed assets  during  fiscal year 2002
primarily for office and computer equipment relating to the Company's relocation
to new offices in  Frisco,TX . Net cash  provided by  financing  activities  was
$403,414 for fiscal 2002 compared to $125,000 in fiscal 2001 primarily resulting
from increases in borrowings from shareholders to supplement operating capital.


                                       24
<PAGE>

The Company's debt to its  shareholders at September 30, 2002 was  approximately
$492,500 which is due at various dates through  October 2003 with interest rates
ranging from 12% to 14%.  The Company  expects to renew the debt as it comes due
during fiscal 2003 or replace it with  borrowings from  conventional  commercial
sources.  The Company also has a line of credit that  provides  advances for the
acquisition  of notes  receivable.  The line bears  interest  at the rate of the
underlying notes and does not have a specified maturity date.

The Company expects to meets its operating cash needs of approximately  $400,000
in  fiscal  2003  through   additional   borrowings  from  its  shareholders  or
debt/equity funding(s) from conventional sources.

There can be no assurance  that the Company  will be able to meet its  operating
capital needs without the  acquisition of significant  additional  capital.  The
Company continues to investigate  sources of additional capital to supplement is
current  operating  capital  requirements  and to fully  implement  its  current
business  plan.  There  is no  assurance  the  Company  will be able to  acquire
additional capital, or obtain it on terms favorable to the Company.



CRITICAL ACCOUNTING POLICIES

The Company's critical accounting policies are as follows:

Revenue Recognition
-------------------

Revenues from automobile sales were generally  recognized when possession of the
automobile  was effected.  Service fees are based on a percentage of collections
and are  earned  over the life of the  notes.  In  accordance  with the  service
contracts,  service fee revenue is recognized as notes are  collected.  Interest
income is recognized as collected rather than on the interest income method,  as
ultimate collection of notes receivable are uncertain.

Notes Receivable
----------------

Specific valuation allowances are provided for impaired notes receivable when it
becomes probable that all of the respective principal and interest payments will
not be received as  scheduled  in the loan  agreement  (excluding  insignificant
delays or payment  shortfalls).  In addition to specific  allowances,  a general
allowance  may be  provided  for  future  losses  based on  evaluations  of note
portfolios  and  prevailing  market  conditions.  Additions to the allowance are
charged to expense.

Stock Based Compensation
------------------------

The Company  accounts  for stock based  employee  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  SFAS  No.   123,   "Accounting   for  Stock  Based


                                       25
<PAGE>


Compensation."  Under APB Opinion No. 25, compensation  expense for employees is
based on the excess, if any on the date of grant,  between the fair market value
of the stock over the exercise price.

The  Company  accounts  for  equity   instruments  issued  to  non-employees  in
accordance  with the  provisions of SFAS No. 123 and Emerging  Issues Task Force
("EITF") Issued No. 96-18, "Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring,  or in  Conjunction  with Selling,  Goods or
Services."  All  transactions  in which goods or services are the  consideration
received for the issuance of equity  instruments  are accounted for based on the
fair  value  of the  consideration  received  or the fair  value  of the  equity
instrument issued,  whichever is more reliably measurable.  The measurement date
of the fair value of the equity  instrument issued is the earlier of the date on
which the  counter  party's  performance  is complete or the date on which it is
probable that performance will occur.


EFFECT OF INFLATION

         The Company does not expect any material  negative effect to operations
from an increase in the inflation rate.

Item 7.  Financial Statements

         The following financial statements are attached to and filed as part of
this report:

         Consolidated Balance Sheets - September 30, 2002 and 2001

         Consolidated Statements of Operations For the Years Ended September 30,
         2002 and 2001.

         Consolidated Statement of Changes in Shareholders' Equity For the Years
         Ended September 30, 2002 and 2001.

         Consolidated Statements of Cash Flows For the Years Ended September 30,
         2002 and 2001.

         Notes to Consolidated Financial Statements

Item  8.  Changes  in and  disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure - N/A

PART III

Item 9.  Directors,   Executive   Officers,   Promoters  and  Control   Persons;
         Compliance with Section 16(a) of the Exchange Act.


                                       26

<PAGE>

         The executive officers and Directors of the Company,  as of December 7,
2002, are:

    Name             Age           Position                       Director Since
    ----             ---           --------                       --------------

James Parmley        58       President and Chief Executive             2002
                               Officer; Director*

William O. Merritt   58       Director**                                2000

Terri Ashley         48       Vice President - Investor                 2001
                              Relations***

William G. Hamilton  52       Chief Financial Officer, Director****     2001

-----------------
*        Elected President and a Director in May 2002.
**       Elected a Director in May 2000.
***      Elected Vice President - Investor Relations in Jan 2001.
****     Elected Chief Financial  Officer in December 2000,  elected Director in
         September 2001

         A brief  statement  setting forth the principal  occupation and certain
other information for each of them is set forth below.

         James  Parmley began his career  working in a number of positions  with
GMAC.  He then became  owner and general  manager of Murphy  Oldsmobile/Cadillac
until that business was sold and became vice  president of lending with Republic
Bank and then Bank of Texas to manage their installment loan divisions. In 1994,
Mr. Parmley formed National Loan Star Acceptance,  a company that originated and
serviced  over  $50  million  in  non-prime  auto  loans  for  major   financial
institutions  like Ft.  Worth  National  Bank,  Legacy Bank and Unity  Bank.  As
president of National  Loan Star,  Mr.  Parmley  forged new  relationships  with
groups of  regional  credit  unions  and  helped  them to  create a unique  loan
purchasing  participation  strategy.  During the last few years at Loan Star, he
generated in excess of $25 million in credit union participations in auto loans.
Mr.  Parmley  brought  his  system and  several  million  dollars  in  portfolio
servicing business to the Company.

         William O.  Merritt  has been with the  Company  in various  capacities
since 1998 and was  formerly  president  of the  Merritt  Group  which owned and
operated used  automobile  dealerships  in Arizona and New Mexico.  He served as
Chief Executive  Officer of the Company from July through December 1997 and from
June though August 1998.

         Terri Ashley has been with the Company  since  November 1998 and became
an officer in January 2001. From January 1997 through October of 1998 she was an
executive  assistant for Gatehouse  Capital.  From January 1996 through December
1996 Ms.  Ashley was an  administrative  assistant  with Sony  Pictures and from
August 1995 through December 1995 Ms Ashley was an administrative assistant with
Phoenix Ventures, Inc.

                                       27
<PAGE>
<TABLE>
<CAPTION>

         William  Hamilton,  a CPA,  has been with the Company  since April 2000
primarily as an independent contractor to help the Company with its SEC filings.
He was  elected  as an  officer in  December  of 2000 and  became a director  in
September 2001. Mr. Hamilton had been an independent accounting contractor since
June of 1996.

         The Company's  governing  documents provide that there must be at least
one Director. In addition, the Bylaws authorize the Board of Directors to act by
resolution to increase or decrease the number of Directors.  The present  number
of authorized Directors is three.

         We  presently   contemplate  that  should  a  2003  Annual  Meeting  of
Shareholders  be held,  the newly elected  Directors  will hold a regular annual
meeting  of the Board of  Directors.  If a  regular  meeting  is not  held,  the
Directors will sign a unanimous  consent in lieu of holding the meeting and will
re-elect the current officers to the same positions for the coming year.

Item 10. Executive Compensation

         Executive  Officers.  The table below shows cash and stock compensation
paid  during the last  three  years to each of the three  persons  who served as
Chief  Executive  Officer  since fiscal 2000.  None of the next four most highly
compensated  officers serving on September 30, 2002, received more than $100,000
for fiscal 2002.

                                                                                  Long Term Compensation
                                                                                    Awards              Payouts
                                                                         -----------------------------------------
                                                                                        Securities
                                          Annual Compensation              Restricted   Underlying
                               -------------------------------------------
Name and                Fiscal                             Other Annual       Stock     Options/         LTIP       All Other
Principal Position       Year      Salary        Bonus     Compensation      Awards          SARs       Payouts   Compensation
---------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>    <C>           <C>          <C>            <C>            <C>           <C>        <C>
James R. Parmley         2002   $ 80,000      $   --       $      --      $19,000        $   --        $   --     $       --
CEO

Charles Norman           2002   $ 93,135      $   --       $      --      $16,380        $   --        $   --     $       --
CEO & President          2001   $225,500      $100,000     $     7,200    $  --          $   --        $   --     $       --
                         2000   $144,500      $ 48,266     $      --      $  --          $   --        $   --     $       --
</TABLE>

On December 30, 1998, the Company  established Voting Trust I with Mr. Norman as
Trustee,  and placed  350,000 Common Shares in it for the benefit of officers of
the Company to be named in the future.  The Board of  Directors  has  determined
that the need for this trust has expired and  therefore  returned  the shares to
the Company.

The Company has a non-qualified  stock option plan (the "Plan") that was adopted
by the Board of Directors in March 1997. The Plan, as  authorized,  provides for
the issuance of up to 2,000,000 shares of the Company's stock.  Persons eligible
to  participate  in the Plan as  recipients  of stock  options  include full and
part-time employees of the Company, as well as officers,  directors,  attorneys,
consultants and other advisors to the Company or affiliated corporations.

                                       28
<PAGE>

Options  issued under the Plan are  exercisable at a price that is not less than
twenty percent (20%) of the fair market value of such shares (as defined) on the
date the options are granted.  The  non-qualified  stock  options are  generally
non-transferable  and are exercisable over a period not to exceed ten (10) years
from the date of the grant.  Earlier  expiration is operative due to termination
of employment or death of the issuee. The entire Plan expires on March 20, 2007,
except as to non-qualified stock options then outstanding,  which will remain in
effect until they have expired or have been exercised.

As of  September  30,  2002,  1,920,426  shares had been issued  under the Plan,
75,869  options were  outstanding,  and 3,705 shares were  available  for future
issuance.

         Compensation  of Directors.  No Directors  fees were paid during fiscal
2001.

         Section 16(a) Beneficial Ownership Reporting Compliance.  Section 16(a)
of the  Securities  Exchange  Act of 1934 and the rules  promulgated  thereunder
require that  directors  and  executive  officers of the Company and  beneficial
owners of greater than 10% of the  Company's  Common Stock file various  reports
with the  Securities  and  Exchange  Commission  (the  "SEC").  The  Company has
reviewed its files with respect to fiscal 2002. The following persons and trusts
did not file a Form 3 but did report the same  information  on a Form 5 that was
timely filed: William Hamilton when he became an officer;  Terri Ashley when she
became an officer;  and Voting Trust I, Voting Trust II and Exchange  Trust when
they  became a  beneficial  owner of greater  than 10% of the  Company's  Common
Stock.

Item 11. Security Ownership of Certain Beneficial Owners and Management

         On December  30, 1998,  the Company  established  three  trusts  naming
Charles  Norman  as  Trustee  of  each  of  them.  This  was  done  as part of a
restructuring transaction and certain shares of stock were placed in each of the
three  trusts.  As a result,  Mr.  Norman  acquired  control of our Company from
William O.  Merritt,  Dennis W.  Miller and others in the  Transaction.  Messrs.
Merritt and Miller continue to have  beneficial  ownership of a total of 600,000
(or 13.7%) of the outstanding  Common Shares.  The trusts were terminated during
the first quarter of fiscal 2002 and the shares returned to the treasury.

         As of September 30, 2001, Mr. Norman, in his capacity as Trustee of the
three trusts,  beneficially owns a total of 834,563 Common Shares. This is 17.8%
of the 4,683,234  Common Shares that,  according to the Company's stock transfer
agent, were outstanding as of September 30, 2001. As a result of the termination
of the trust(s),  these shares were  returned to the Company  during fiscal year
2002.

         The following table sets forth certain information, as of September 30,
2001,  concerning the beneficial  ownership of Common Stock by all Directors and
nominees,  certain executive  officers,  all Directors and executive officers of
the Company,  as a group, and each person who beneficially  owns more than 5% of
the  4,683,234  outstanding  shares of Common  Stock,  $.001 par  value.  Unless
otherwise indicated, each person named has sole voting and investment power over
the shares indicated.

                                       29
<PAGE>

         Name and Address              Amount and Nature of         Percent
         of Beneficial Owner           Beneficial Ownership (1)     of Class (1)
         -------------------           ------------------------     ------------

         Charles Norman, Trustee            834,563 (1)                17.8%
         300 N. Coit Rd.
         Suite 830
         Richardson, Texas 75080

(1)      As part of a transaction on December 31, 1998, the Company entered into
         three trust  agreements dated as of December 30, 1998, with Mr. Norman,
         as Trustee  under Voting Trust  Agreement I, Voting Trust  Agreement II
         and Exchange Trust Agreement.  Certain shares were placed in each trust
         on that date. As of April 12, 1999,  the parties  created an additional
         purpose  for  Exchange  Trust and  allocated  certain  of the shares in
         Exchange  Trust to it.  Mr.  Norman was the sole  trustee  and had sole
         voting  power.  As a result of the  October  1, 2000  transaction  with
         AutoPrime,  the purpose for the trusts no longer exists.  Therefore the
         trusts have been terminated and the shares returned to the Company.

The following  table sets forth certain  information,  as of September 30, 2002,
concerning  the  beneficial  ownership  of  Common  Stock by all  Directors  and
nominees,  certain executive  officers,  all Directors and executive officers of
the Company,  as a group, and each person who beneficially  owns more than 5% of
the  6,591,968  outstanding  shares of Common  Stock,  $.001 par  value.  Unless
otherwise indicated, each person named has sole voting and investment power over
the shares indicated;



             Title of
               Class             Name and          Amount and
                                Address of          Nature of       Percent
                                Beneficial         Beneficial         of
                                  Owner               Owner          Class
             ------------------------------------------------------------------

             Common   James R Parmley, CEO          500,000          7.58%
                      1701 Legacy Dr.
                      Suite 2200
                      Frisco, TX 75034

             Common   Certain Executive           1,007,886         15.28%
                      Officers as a Group

Item 13. Exhibits and Reports on Form 8-K

(a)      Exhibits - N/A


                                       30
<PAGE>


(b)      Reports on Form 8-K
         Form 8-K filed June 25, 2002 regarding  resignation of Charles  Norman,
         President & CEO for personal health reasons.


Item 14. Controls and Procedures

         Based on their  evaluation,  as of a date  within 90 days of the filing
date of this  Form  10-KSB,  our Chief  Executive  Officer  and Chief  Financial
Officer have concluded  that our disclosure  controls and procedures (as defined
in Rule 13a-14(c) and 15d-14(c)  under the  Securities  Exchange Act of 1934, as
amended)  are  effective.  There have been no  significant  changes in  internal
controls or in other  factors that could  significantly  affect  these  controls
subsequent to the date of their  evaluation,  including any  corrective  actions
with regard to significant deficiencies and material weaknesses.


                                   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 thereto duly authorized.

Date:  January 10, 2003                   AUTOCORP EQUITIES, INC.

                                          (Registrant)

                                           /s/ James Parmley
                                          --------------------------------------
                                          Chief Executive Officer


                                           /s/ Jerry Hamilton
                                          --------------------------------------
                                          Chief Financial Officer



                                       31
<PAGE>

CERTIFICATIONS

I, James Parmley, Chief Executive Officer, certify that:

1. I have reviewed this annual report on Form 10-KSB of AutoCorp Equities,  Inc.
a Nevada corporation;

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions  about the  effectiveness  of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: January 10, 2003

/s/ James Parmley
--------------------------------------
James Parmley, Chief Executive Officer
Principal Executive Officer




                                       32
<PAGE>

I, Jerry Hamilton, Chief Financial Officer, certify that:

1. I have reviewed this  quarterly  report on Form 10-KSB of AutoCorp  Equities,
Inc, a Nevada corporation;

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this annual report is being prepared;

b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions  about the  effectiveness  of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: January 10, 2003

/s/ Jerry Hamilton
---------------------------------------
Jerry Hamilton, Chief Financial Officer
Principal Financial Officer




                                       33





<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 2002 and 2001



                                                                        Page No.
                                                                        --------

INDEPENDENT AUDITORS' REPORT                                               F-2

CONSOLIDATED FINANCIAL STATEMENTS

   Consolidated Balance Sheets                                             F-3

   Consolidated Statements of Operations                                   F-5

   Consolidated Statement of Changes in
     Shareholders' Equity (Deficit)                                        F-7

   Consolidated Statements of Cash Flows                                   F-9

   Notes to Consolidated Financial Statements                              F-12















                                       F-1



<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------


The Board of Directors
AutoCorp Equities, Inc.

We have  audited  the  accompanying  consolidated  balance  sheets  of  AutoCorp
Equities,  Inc. and  subsidiaries  (the  "Company") as of September 30, 2002 and
September  30,  2001 and the  related  consolidated  statements  of  operations,
changes in  shareholders'  equity  (deficit),  and cash flows for the years then
ended.  These  consolidated  financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the consolidated financial position of AutoCorp Equities,
Inc. and  subsidiaries  as of September 30, 2002 and 2001, and the  consolidated
results of their  operations  and their cash flows for the years then ended,  in
conformity with accounting principles generally accepted in the United States.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to the
consolidated  financial  statements,  the Company has suffered  recurring losses
from operations and has a working  capital deficit at September 30, 2002.  These
conditions raise  substantial doubt about the Company's ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in Note 3. The consolidated  financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


                                                 /s/ KING GRIFFIN & ADAMSON P.C.
                                                 -------------------------------

Dallas, Texas
December 13, 2002







                                       F-2



<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           September 30, 2002 and 2001


                                     ASSETS
                                     ------

                                                          2002           2001
                                                       ----------     ----------
CURRENT ASSETS:
   Cash and cash equivalents                           $   18,016     $   39,960
   Notes receivable held for sale,
     net of allowances of $48,475
     and $4,178,297                                       234,308      1,442,592
   Automobile inventory                                    35,751           --
   Prepaid expenses                                        31,272           --
                                                       ----------     ----------

       Total current assets                               319,347      1,482,552

PROPERTY AND EQUIPMENT:
   Furniture and fixtures                                   3,448          3,448
   Office equipment                                       230,061        191,597
   Computer equipment                                      11,067         20,356
   Automobiles                                               --           31,500
   Leasehold improvements                                  17,053          8,739
                                                       ----------     ----------

                                                          261,629        255,640
   Less accumulated depreciation
     and amortization                                     223,764        186,254
                                                       ----------     ----------

       Total property and equipment, net                   37,865         69,386

NOTE RECEIVABLE - OTHER                                    30,587        150,000

PURCHASED SOFTWARE                                        108,000           --

OTHER ASSETS                                                2,812          2,812
                                                       ----------     ----------

           Total assets                                $  498,611     $1,704,750
                                                       ==========     ==========


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

                                       F-3


<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (Continued)
                           September 30, 2002 and 2001



                 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
                 ----------------------------------------------

                                                        2002            2001
                                                   ------------    ------------
CURRENT LIABILITIES:
   Line of credit                                  $     45,978    $       --
   Notes payable to shareholders                        297,437         125,000
   Accounts payable and accrued expenses                146,875         247,251
   Sales tax payable                                     22,616          78,187
   Servicing collections payable                        131,238            --
                                                   ------------    ------------

       Total current liabilities                        644,144         450,438

NON-CURRENT NOTE PAYABLE TO SHAREHOLDER                 195,000            --

COMMITMENTS AND CONTINGENCIES (NOTES 3 AND 11)

SHAREHOLDERS' EQUITY (DEFICIT):
Convertible preferred stock, no par value,
   5% non-cumulative; liquidation preference
   of $14.64 per share; 10,000,000 shares
   authorized, 1,612,083 shares issued and
   outstanding                                          352,643         352,643
Common stock, par value $.001; 110,000,000
   shares authorized, 8,408,968 and 6,510,931
   shares issued at September 30, 2002 and 2001           8,408           6,511
Additional paid-in-capital                           11,740,886      11,701,309
Treasury stock, at cost, 1,817,000 shares              (399,740)       (399,740)
Accumulated deficit                                 (12,042,730)    (10,178,911)
Shares in trust                                            --          (227,500)
                                                   ------------    ------------

       Total shareholders' equity (deficit)            (340,533)      1,254,312
                                                   ------------    ------------

           Total liabilities and shareholders'
              equity (deficit)                     $    498,611    $  1,704,750
                                                   ============    ============


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

                                       F-4

<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                 For the Years Ended September 30, 2002 and 2001

                                                        2002            2001
                                                   ------------    ------------
NET REVENUES
   Used automobiles                                $  1,981,712    $       --
   Note receivable sales and servicing                  443,622         762,492
   Other                                                  1,429            --
                                                   ------------    ------------
       Total net revenues                             2,426,763         762,492

COST OF REVENUES
   Used automobiles                                   1,188,305            --
   Note receivable sales and servicing                   30,883          37,604
                                                   ------------    ------------

       Total cost of revenues                         1,219,188          37,604
                                                   ------------    ------------

       Gross profit                                   1,207,575         724,888

SELLING, ADMINISTRATIVE AND OTHER
   OPERATING EXPENSES                                 1,806,182       1,583,870

PROVISION FOR UNCOLLECTIBLE NOTES                     1,056,064            --
                                                   ------------    ------------

       Total operating expenses                       2,862,246       1,583,870
                                                   ------------    ------------

       Operating loss                                (1,654,671)       (858,982)

INTEREST EXPENSE                                        (58,460)        (11,937)

WRITE DOWN OF NOTE RECEIVABLE - OTHER                  (119,413)           --

OTHER INCOME (EXPENSES), net                            (31,275)        (11,392)
                                                   ------------    ------------

LOSS BEFORE DISCONTINUED OPERATIONS AND
   EXTRAORDINARY ITEM                                (1,863,819)       (882,311)

EXTRAORDINARY GAIN ON EXTINGUISHMENT OF DEBT               --        26,535,028

LOSS OF SALE OF ASSETS OF DISCONTINUED
   SEGMENT, net of income taxes of $0                      --          (318,844)

LOSS FROM DISCONTINUED OPERATIONS, net of
   income taxes of $0                                      --           (92,950)
                                                   ------------    ------------

       Net income (loss)                           $ (1,863,819)   $ 25,240,923
                                                   ============    ============

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

                                           F-5


<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

                 For the Years Ended September 30, 2002 and 2001




NET LOSS FROM CONTINUING OPERATIONS PER SHARE,
   basic and diluted                             $       (0.36)   $       (0.20)

LOSS FROM DISCONTINUED OPERATIONS                         --              (0.09)

EXTRAORDINARY GAIN ON EXTINGUISHMENT OF DEBT              --               5.90
                                                 -------------    -------------

NET INCOME (LOSS) PER SHARE, basic and diluted   $       (0.36)   $        5.61
                                                 =============    =============

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING,
   basic and diluted                                 5,138,943        4,495,468
                                                 =============    =============




















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

                                       F-6




<PAGE>
<TABLE>
<CAPTION>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES

       CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)

                 For the Years Ended September 30, 2002 and 2001


                             Preferred Stock                Common Stock
                       ---------------------------   ---------------------------    Additional         Stock
                                           Par                            Par        Paid-in       Subscriptions
                          Shares          Value         Shares           Value       Capital        Receivable
                       ------------   ------------   ------------   ------------   ------------    ------------
<S>                    <C>            <C>               <C>         <C>            <C>             <C>
Balance at
September 30, 2000             --     $       --        6,189,971   $      6,190   $ 11,555,415    $    (10,000)

Shares issued
in exchange for
note receivable                --             --          217,391            217        149,783            --

Shares issued
for services                   --             --          103,569            104          6,111            --

Shares returned from
AutoPrime (see Note 5)         --             --             --             --             --              --

Shares issued to
AutoPrime (see Note 5)    1,612,083        352,643           --             --             --              --

Write-off of
subscriptions
receivable                     --             --             --             --          (10,000)         10,000

Net income                     --             --             --             --             --              --
                       ------------   ------------   ------------   ------------   ------------    ------------

Balance at
September 30, 2001        1,612,083   $    352,643      6,510,931   $      6,511   $ 11,701,309    $       --
                       ============   ============   ============   ============   ============    ============

                          Shares
                            in          Treasury     Accumulated
                          Trust          Stock         Deficit         Total
                       ------------   ------------   ------------   ------------

Balance at
September 30, 2000     $   (227,500)  $       --     $(35,419,834)  $(24,095,729)

Shares issued
in exchange for
note receivable                --             --             --          150,000

Shares issued
for services                   --             --             --            6,215

Shares returned from
AutoPrime (see Note 5)         --         (399,740)          --         (399,740)

Shares issued to
AutoPrime (see Note 5)         --             --             --          352,643

Write-off of
subscriptions
receivable                     --             --             --             --

Net income                     --             --       25,240,923     25,240,923
                       ------------   ------------   ------------   ------------

Balance at
September 30, 2001     $   (227,500)  $   (399,740)  $(10,178,911)  $  1,254,312
                       ============   ============   ============   ============


The  accompanying  notes are an  integral  part of this  consolidated  financial
statement.

                                       F-7


<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) (Continued)

                 For the Years Ended September 30, 2002 and 2001




                             Preferred Stock                Common Stock
                       ---------------------------   ---------------------------    Additional
                                           Par                           Par         Paid-in
                          Shares          Value         Shares          Value        Capital
                       ------------   ------------   ------------   ------------   ------------

Balance at
September 30, 2001        1,612,083   $    352,643      6,510,931   $      6,511   $ 11,701,309

Cancel remaining
shares in trust                --             --         (834,563)          (835)      (226,665)

Shares issued
for services                   --             --        2,132,600          2,132        158,842

Shares issued in
                                connection with
CompuSolutions
acquisition                    --             --          600,000            600        107,400

Net loss                       --             --             --             --             --
                       ------------   ------------   ------------   ------------   ------------

Balance at
September 30, 2002        1,612,083   $    352,643      8,408,968   $      8,408   $ 11,740,886
                       ============   ============   ============   ============   ============


                          Shares
                            in          Treasury     Accumulated
                          Trust          Stock         Deficit         Total
                       ------------   ------------   ------------   ------------

Balance at
September 30, 2001     $   (227,500)  $   (399,740)  $(10,178,911)  $  1,254,312

Shares issued
Cancel remaining
shares in trust             227,500           --             --             --

Shares issued
for services                   --             --             --          160,974

Shares issued in
                                connection with
CompuSolutions
acquisition                    --             --             --          108,000

Net loss                       --             --       (1,863,819)    (1,863,819)
                       ------------   ------------   ------------   ------------

Balance at
September 30, 2002     $       --     $   (399,740)  $(12,042,730)  $   (340,533)
                       ============   ============   ============   ============
</TABLE>



The  accompanying  notes are an  integral  part of this  consolidated  financial
statement.

                                       F-8

<PAGE>
<TABLE>
<CAPTION>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 For the Years Ended September 30, 2002 and 2001


                                                           2002            2001
                                                      ------------    ------------
<S>                                                   <C>             <C>
Cash Flows From Operating Activities:
Net income (loss)                                     $ (1,863,819)   $ 25,240,923
Income (loss) from discontinued operations                    --           (92,950)
Adjustments to reconcile net income (loss) to net
   cash provided (used) by operating activities:
     Depreciation and amortization                          47,233          48,508
     Loss (gain) on disposal of assets                      26,775         (11,392)
     Write down of note receivable - other                 119,413            --
     Gain on extinguishment of debt                           --       (26,535,028)
     Loss on sale of assets of discontinued
       segment                                                --          (318,844)
     Stock issued for services                             160,974           6,215
     Provision for uncollectible notes                   1,056,064            --
     Changes in:
       Notes receivable                                    152,220       1,659,568
       Prepaid expenses                                    (31,272)          7,123
       Automobile inventory                                (35,571)           --
       Other assets                                           --             1,150
       Accounts payable and accrued expenses               (95,553)         15,471
       Sales tax payable                                   (55,571)         78,187
       Servicing collections payable                       131,238            --
                                                      ------------    ------------

   Net cash provided (used) by continuing
     operating activities                                 (387,869)         98,931

     Net cash used in discontinued operations                 --           (52,518)
                                                      ------------    ------------

   Net cash provided (used) by operating activities       (387,869)         46,413

Cash flows from investing activities:
   Capital expenditures                                    (37,489)        (45,588)
   Net repayments on note receivable, related party           --          (192,039)
                                                      ------------    ------------

   Net cash used in investing activities                   (37,489)       (237,627)
</TABLE>

The accompanying notes are an integral part of this consolidated financial
statement.

                                       F-9
<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

                 For the Years Ended September 30, 2002 and 2001


                                                           2002         2001
                                                         ---------    ---------
Cash flows from financing activities:
   Principal payments on notes payable to
     shareholders                                        $ (77,564)   $    --
   Proceeds from notes payable to shareholders             435,000      125,000
   Net advances on line of credit                           45,978         --
                                                         ---------    ---------

   Net cash provided by financing activities               403,414      125,000
                                                         ---------    ---------

Net decrease in cash and cash equivalents                  (21,944)     (66,214)

Cash and cash equivalents, beginning of year                39,960      106,174
                                                         ---------    ---------

Cash and cash equivalents, end of year                   $  18,016    $  39,960
                                                         =========    =========

Supplemental disclosures of cash flow information:
   Cash paid for interest                            $  58,460    $  11,937
                                                     =========    =========

   Cash paid for income taxes                        $    --      $    --
                                                     =========    =========

Non-cash investing and financing transactions:

         During the year ended September 30, 2002, the Company issued  2,732,600
         shares of common  stock  valued at  $268,974  of which  $86,225 was for
         employee compensation, $74,749 for consulting services and $108,000 was
         for acquisitions.

         During the year ended  September  30, 2001 and in  connection  with the
         restructuring  transaction with AutoPrime, the Company issued 1,612,083
         shares of preferred stock with a fair value of $352,643 in exchange for
         forgiveness of debt and the  assumption of liabilities of  $24,269,147.
         The Company  received  notes  receivable and auto inventory with a fair
         value of  $2,218,784.  The Company  received,  1,817,000  shares of its
         common stock which were placed in treasury. These returned shares had a
         fair value of  $399,740  at October 1, 2000.  This  entire  transaction
         resulted in a gain of $26,535,028.

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

                                      F-10


<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

                 For the Years Ended September 30, 2002 and 2001



         Also during the year ended  September  30, 2001,  the Company  acquired
         notes  receivable  of  $314,385  in  exchange  for  reduction  in notes
         receivable, related party.

         The Company also  received a $716,190 note  receivable  during the year
         ended September 30, 2001 in connection with the disposition of its used
         car operations segment.




















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

                                      F-11



<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2002


NOTE 1. ORGANIZATION

AutoCorp Equities,  Inc. (the "Company") was incorporated in Colorado on January
2, 1986 under the name Vivatae,  Inc. and completed its initial public  offering
in May, 1986.  After several name changes,  in 1996 the Company changed its name
to AutoCorp  Equities,  Inc. and began  selling and financing  automobiles.  The
Company,  headquartered in Frisco,  Texas,  currently owns and operates one loan
servicing center in Dallas, Texas and one independent  automobile  dealership in
Dallas,  Texas and one  independent  automobile  dealership  in Garland,  Texas.
Through used car sales, the dealership  originates  non-prime retail installment
contracts  secured by  automobiles  and  light-duty  trucks.  As a result of the
inability of the Company to obtain  financing to purchase used car  inventories,
the Company  discontinued its automobile  operations as of the end of the fiscal
first  quarter of 2001.  As a result of improving  business  conditions  and the
Company's ability to raise capital from private sources,  the Company re-entered
the automobile  purchasing and selling  segment during the second fiscal quarter
of 2002.


NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents
-------------------------

Cash and cash equivalents  include cash on hand and on deposit and highly liquid
debt instruments with original maturities of three months or less.

Notes Receivable
----------------

All notes  receivable are classified as held for sale (except Note  Receivable -
Other) and are stated at the lower of cost or net realizable value.

Specific valuation allowances are provided for impaired notes receivable when it
becomes probable that all of the respective principal and interest payments will
not be received as  scheduled  in the loan  agreement  (excluding  insignificant
delays or payment  shortfalls).  In addition to specific  allowances,  a general
allowance  may be  provided  for  future  losses  based on  evaluations  of note
portfolios  and  prevailing  market  conditions.  Additions to the allowance are
charged to expense.

Property and Equipment
----------------------

Property and equipment are recorded at cost.  Depreciation  and  amortization is
computed on  property  and  equipment  using the  straight-line  method over the
expected  useful  lives of the  assets,  which  are  generally  three  years for
automobiles,  five years for office and computer equipment,  and seven years for
furniture  and  fixtures  and the  lesser of seven  years or the lease  term for
leasehold improvements.


                                      F-12

<PAGE>

Concentrations
--------------

There is  significant  credit risk with respect to notes  receivable  due to the
sub-prime credit of the Company's  customers and its  concentration of servicing
activity primarily with one client.

Revenue Recognition
-------------------

Revenues from automobile  sales are generally  recognized when possession of the
automobile  changes.  Service fees are based on a percentage of collections  and
are earned as the underlying notes are collected.  Interest income is recognized
as collected rather than on the interest income method,  as ultimate  collection
of notes receivable and related interest is uncertain.

Income Taxes
------------

The  Company  records  its  taxes in  accordance  with  Statement  of  Financial
Accounting  Standards No. 109  "Accounting for Income Taxes." Under this method,
deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amount of existing  assets and  liabilities  and their  respective tax
bases,  including  operating  loss and tax credit  carryforwards.  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.  Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized.

Stock Based Compensation
------------------------

The Company  accounts  for stock based  employee  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  SFAS  No.   123,   "Accounting   for  Stock  Based
Compensation."  Under APB Opinion No. 25, compensation  expense for employees is
based on the excess, if any on the date of grant,  between the fair market value
of the stock over the exercise price.

The  Company  accounts  for  equity   instruments  issued  to  non-employees  in
accordance  with the  provisions of SFAS No. 123 and Emerging  Issues Task Force
("EITF") Issued No. 96-18, "Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring,  or in  Conjunction  with Selling,  Goods or
Services."  All  transactions  in which goods or services are the  consideration
received for the issuance of equity  instruments  are accounted for based on the
fair  value  of the  consideration  received  or the fair  value  of the  equity
instrument issued,  whichever is more reliably measurable.  The measurement date
of the fair value of the equity  instrument issued is the earlier of the date on
which the  counter  party's  performance  is complete or the date on which it is
probable that performance will occur.



                                      F-13

<PAGE>

Net Loss Per Common Share
-------------------------

Basic  net loss per  share is  computed  by  dividing  net loss by the  weighted
average number of shares of common stock  outstanding  during the year.  Diluted
net loss per share is  computed by dividing  the net loss  applicable  to common
shareholders  by the  weighted  average  number  of  common  shares  and  common
equivalent shares outstanding during the year.

Common  equivalent  shares are not included in the diluted net loss per share as
the effect would be anti-dilutive for both periods presented.

Fair Value of Financial Instruments
-----------------------------------

The carrying amount of cash and cash equivalents is assumed to be the fair value
because of the liquidity of these  instruments.  The notes  receivable have been
reduced to their estimated fair value. The recorded balance of notes payable and
line of credit  are  estimated  to be fair  value  since  the rates  approximate
current market rates.

Use of Estimates
----------------

The preparation of the Company's consolidated financial statements in conformity
with generally accepted accounting principles necessarily requires management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the consolidated  financial  statements and the reported amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

Servicing Collections Payable
-----------------------------

Servicing  collections payable represents amounts collected by the Company under
servicing agreements that are to be submitted to the note holder.

Consolidated Basis
------------------

The  consolidated  financial  statements of the Company  include the accounts of
AutoCorp  Equities,  Inc.,  ("AutoCorp"),  AutoCorp  Financial Services ("AFS"),
Circus Motors ("Circus") through December 31, 2000 and ACE Motors,  Inc. ("ACE")
through December 31, 2000. All material  intercompany  accounts and transactions
have been eliminated in consolidation.

Reclassifications
-----------------

Certain  reclassifications  have been made to the 2001  financial  statements to
conform with the 2002 presentation.



                                      F-14
<PAGE>

NOTE 3. GOING CONCERN UNCERTAINTY

During the years ended  September 30, 2002 and 2001,  the  Company's  operations
were  negatively  impacted by the poor  performance of its automobile  sales and
financing  subsidiaries.  The  Company's  loss from  continuing  operations  was
$1,863,819  and  $882,311  for the  years  ended  September  30,  2002 and 2001,
respectively,  and the Company used cash in  operations  of $387,869  during the
year ended September 30, 2002.  Additionally,  at September 30, 2002 the Company
has a working capital deficit of $519,797.

Management  plans to return to  profitability by continuing its efforts to raise
additional capital to purchase,  service and sell new sub-prime notes and obtain
new  servicing  clients.  In  addition  the  Company  has  re-entered  the  used
automobile segment.

It is not  possible to predict the  success of  management's  efforts to achieve
profitability.  If  management  is unable to achieve its goals,  the Company may
find it necessary to undertake  other actions as may be  appropriate to continue
operations and meet its commitments.

The  accompanying   consolidated   financial   statements  do  not  include  any
adjustments  relating to the  recoverability  and classification of the recorded
asset amounts or the amounts and  classification  of  liabilities  that might be
necessary should the Company be unable to continue in existence.


NOTE 4. RESTRUCTURING TRANSACTION

On October 1, 2000,  the  Company  entered  into an  agreement  with its primary
financing  company,  AutoPrime,  Inc.  ("AutoPrime").  In  connection  with this
agreement the Company issued 1,612,083  non-cumulative  5% preferred shares with
an estimated fair value of $352,643 in exchange for the  extinguishment  of debt
and the contribution of certain assets resulting in a net gain on extinguishment
of debt of $26,535,028.  The preferred shares have a liquidation value of $14.64
per share and are  convertible  into common  shares at any time at the option of
the preferred  shareholders on a one for one basis. The shares must be converted
to common shares if the Company's  common shares are accepted for trading on the
NASDAQ  National  Market System or if the  Company's  common shares are publicly
traded at a price of $14.64 per share or more.

This agreement  provided for the  forgiveness of debt and related  assumption of
liabilities of $24,269,147 by AutoPrime.  In connection with the agreement,  the
Company also received  notes and  automobile  inventory  with an estimated  fair
value of $3,508,086 and the return of 1,817,000  shares of the Company's  common
stock with an estimated fair value of $399,740.


                                      F-15

<PAGE>

NOTE 5. DISCONTINUED OPERATIONS

Effective  January 1, 2001 the Company sold  substantially  all of the assets of
ACE,  its used car  operations,  to the existing  management  of this segment in
exchange for a $716,190 note receivable.  During the quarter ended September 30,
2001, the Company  determined this note to be uncollectible  and therefore wrote
off the remainder of approximately $650,000 that had not yet been collected. The
disposition took place as a result of continuing  losses in that segment and the
Company's  inability to raise the capital required to continue the operations of
the segment on a profitable  basis. This disposition has been accounted for as a
discontinued  operation  and the results of  operations  have been excluded from
continuing  operations in the  consolidated  statements  of  operations  for all
periods presented. The sale of the assets and transfer of the liabilities to the
purchaser resulted in a net loss of approximately $319,000.

At January 1, 2001 (the date of the disposition), the net current assets and net
long-term assets of the discontinued segment were as follows:

                                                                      January 1,
                                                                         2001
                                                                      ----------

Cash                                                                  $    9,060
Accounts receivable                                                      245,636
Inventory                                                                274,504
Other assets                                                              29,387
                                                                      ----------

   Total current assets                                                  558,587

Accounts payable                                                          37,105
Accrued expenses                                                         147,433
                                                                      ----------

   Total current liabilities                                             184,538
                                                                      ----------

   Total net current assets of discontinued
     operations                                                       $  374,049
                                                                      ==========


Property & equipment, net                                             $   11,910

Contingent liabilities                                                      --
                                                                      ----------

   Total net long-term assets of discontinued
     operations                                                       $   11,910
                                                                      ==========


                                      F-16


<PAGE>

The operating results of this segment are:

                                                                        Three
                                                                        months
                                                                        ended
                                                                      January 1,
                                                                         2001
                                                                      ----------

Net revenues                                                          $  361,069
Cost of revenues                                                         266,429
                                                                      ----------

Gross profit                                                              94,640

Selling, administrative and other operating expenses                     187,590
                                                                      ----------

Net loss from discontinued operations                                 $   92,950
                                                                      ==========


NOTE 6. NOTES RECEIVABLE

Notes receivable consist of the following at September 30, 2002 and 2001:

                                                         2002           2001
                                                     -----------    -----------

Notes receivable from individuals, secured
by autos, interest from 24% to 27% in
36-month terms                                       $   282,883    $ 5,620,889

Provision for doubtful accounts and discounts            (48,575)    (4,178,297)
                                                     -----------    -----------

                                                     $   234,308    $ 1,442,592
                                                     ===========    ===========

Note receivable from third party, unsecured,
interest free through December 31, 2001; 12%
annually  thereafter,  due in full  July 13,
2005  (net  of   reserve  of   $119,413   at
September 30, 2002 as discussed in Note 16)          $    30,587   $    150,000
                                                     ===========   ============


                                      F-17


<PAGE>

NOTE 7. SALES TAX PAYABLE

In the process of selling cars,  sales tax is added to the financing  agreements
between the Company and its customers.  The Company estimates, and has recorded,
a sales tax  liability  of $22,616 and $78,187 at  September  30, 2002 and 2001,
respectively,  for the remaining  balances due on the related  installment  note
portfolio.  The Company  currently  pays sales taxes as proceeds  are  collected
under the financing agreements.


NOTE 8. INCOME TAXES

The Company  has  incurred  net tax losses of  approximately  $12,000,000  since
inception.  The  Company has not yet filed tax returns for the years ended after
September 30, 1997 and therefore has not determined the amount of loss which may
be used to offset future taxable income.

The deferred tax asset recorded at statutory rates for the net operating  losses
is  approximately  $4,000,000 at September 30, 2002. The Company's net operating
loss  carryforwards  expire  by 2022.  The  Company  has  provided  a  valuation
allowance  for the total  amount of the deferred tax asset since the Company has
not yet developed a history of profitable operations and utilization of the loss
carryforwards cannot be reasonably assured.


NOTE 9. LINE OF CREDIT

During fiscal year 2002, the Company entered into a line of credit agreement not
to exceed $2,000,000 with an institutional  lender.  Advances under the line are
collateralized  by notes  receivable  executed  by the Company for sales of used
automobiles.  The  line  bears  interest  at the same  rates  as the  underlying
contracts  which vary  between 18% and 24%, has no stated  maturity  date and is
repaid from  collections on or sales of the underlying  notes.  At September 30,
2002 $45,978 has been advanced to the Company under the agreement.


NOTE 10. NOTES PAYABLE TO SHAREHOLDERS

Notes payable to shareholder  consist of the following at September 30, 2002 and
2001:

                                                               2002       2001
                                                             --------   --------
Note payable, original principal amount $125,000,
   interest only at 12%, principal payable on
   demand. Secured by 181,159 shares of the
   Company's common stock.                                   $125,000   $125,000

Note  payable,   original  principal  amount $100,000,
   14% interest,  payable in 24 equal installments
   of $4,465  including  interest, final  installment
   due 12/12/02.  Secured by 200,000  shares  of  the
   Company's   common stock.                                 $ 22,437      --



                                      F-18


<PAGE>

Note payable, original principal amount $200,000,
   interest only at 12%, principal payable in full
   October 11, 2003. Secured by 200,000 shares of
   the Company's common stock, installment
   contracts equal to the principal value of the
   note and automobiles purchased with the proceeds
   of the note.                                              $195,000      --

Note payable, original principal amount $150,000,
   interest only at 12%, principal due in full
   August 31, 2003. Secured by shares of the
   Company's common stock or installment contracts
   equal to the unpaid principal balance of the note.        $150,000      --
                                                             --------   --------
                                                             $492,437   $125,000
                                                             ========   ========


NOTE 11. COMMITMENTS AND CONTINGENCIES

The Company leases office space, a collection center and certain equipment under
non-cancelable  operating lease agreements which expire on various dates through
July 2007.  Future  minimum  annual  payments  required  under the leases are as
follows as of September 30, 2002:

        Years ending
        September 30,

            2003                                             $ 248,261
            2004                                               192,362
            2005                                               123,625
            2006                                               123,625
            2007                                                82,417
                                                             ---------

                                                             $ 770,290
                                                             =========

Rent expense  totaled  $113,601 and $199,841 for the years ended  September  30,
2002 and 2001, respectively.

From time to time in the ordinary course of business, the Company is involved in
litigation. In the estimation of both management and legal counsel, the ultimate
result  of any  litigation  would  not have a  material  adverse  effect  on the
consolidated financial statements.


NOTE 12. STOCK OPTION PLAN

The Company has a non-qualified  stock option plan (the "Plan") that was adopted
by the Board of Directors in March 1997. The Plan, as  authorized,  provides for
the issuance of up to 2,000,000 shares of the Company's stock.  Persons eligible
to  participate  in the Plan as  recipients  of stock  options  include full and
part-time employees of the Company, as well as officers,  directors,  attorneys,
consultants  and other advisors to the Company or affiliated  corporations.  The
Plan expires on March 20, 2007,  except as to  non-qualified  stock options then


                                      F-19
<PAGE>

outstanding,  which will remain in effect  until they have  expired or have been
exercised.  During the year ended  September 30, 2002, the Company issued 75,869
in options to an  employee.  These  options  have an exercise  price of $.03 per
share, are immediately exercisable, and do not have a specified expiration date.
The Company has recorded  compensation expense of $8,346 based on the fair value
of the options.  As of September 30, 2002, there were 75,869 options outstanding
and there were  3,705  options  available  for  future  issuance.  There were no
options outstanding as of September 30, 2001.

The fair value of the options  granted during the year ended  September 30, 2002
was computed on the grant date using the Black-Scholes option pricing model with
the following  assumptions:  risk free interest  rate of 5%;  expected  dividend
yield of 0%, expected volatility of 217%, and an expected term of one year.

Had  compensation  expense for the Company's stock option been determined  using
SFAS No. 123, the Company's net loss would not have differed materially from the
net loss presented.


NOTE 13. SHARES HELD IN TRUST

Effective  December  31,  1998,  the Company  created a trust  account  that was
granted  350,000  shares of voting common stock which were recorded at $0.65 per
share (approximate market price at December 31, 1998) and were to be distributed
to employees of AutoPrime for services. The purpose of the trusts had expired at
September 30, 2002 and the underlying shares eliminated.


NOTE 14.  ACQUISITIONS

During the fourth  quarter of fiscal  2002,  the  Company  acquired  100% of the
outstanding shares of CompuSolutions,  Inc. in exchange for 600,000 share of the
Company's  common  shares.  The entire  purchase price was allocated to software
acquired.  The  transaction was valued at the fair market value of the Company's
shares on the date of the  transaction,  $108,000.  During the first  quarter of
fiscal 2003, the Company and  CompuSolutions,  Inc.  rescinded this transaction.
The Company  will realize a loss of  approximately  $18,000 on the return of the
Company's  shares  during  the first  quarter  of fiscal  2003 based on the fair
market value of the stock on the date of the rescission.


NOTE 15.  BUSINESS SEGMENTS

At September 30, 2002 the Company had three business  segments,  used automobile
sales, serving and sales of notes receivable and software development and sales.
At September 31, 2001, the Company had one segment, servicing and sales of notes
receivable.

                                      F-20

<PAGE>

                                    Revenues      Income (Loss)        Assets
                                 -------------    -------------    -------------
Year ended
September 30, 2002
  Used automobile sales          $   1,981,712    $     239,764    $      48,762
  Servicing and loan sales             443,622       (2,034,464)         335,982
  Software sales                         1,429          (69,119)         113,867
                                 -------------    -------------    -------------

                                 $   2,426,763    $  (1,863,819)   $     498,611
                                 =============    =============    =============


NOTE 16.  SUBSEQUENT EVENT

On November 1, 2002, the Company  assigned its interest in a note  receivable to
one of its  shareholders  in exchange  for the  shareholder  loaning the Company
approximately  $88,750  for  its  working  capital  needs.  The  receivable  was
originally acquired from the shareholder for approximately 217,000 shares of the
Company's common shares. The shareholder returned those shares to the Company as
part of the loan  transaction.  As a result,  at September  30,  2002,  the note
receivable has been written down to the fair value of the shares returned to the
Company of $30,587.


                                      F-21