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 December 31, 2003

[_]      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                                              86-0892913
  (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: $1,259,376.

         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:  $2,753,708,  based on the $0.24
per share price at which common equity was sold on May 4, 2004 .

         State the number of shares  outstanding of each of the issuer's classes
of common  equity,  as of the latest  practicable  date:  106,463,671  shares of
Common stock, $0.001 par value, as of May 4, 2004.

         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
     Item 8A. Controls and Procedures.........................................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 12. Certain Relationships and Related Transactions..................30
      Item 13. Exhibits and Reports on Form 8-K...............................30

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.

PART I

Item 1. Description of Business

THE COMPANY

         AutoCorp  Equities,  Inc.  ("the  Company"  or  "AutoCorp"),  which  is
headquartered  in  Frisco,   Texas  originates  non-prime  or  sub-prime  retail
installment  contracts  secured by automobiles and light-duty  trucks  primarily
through  independent used car dealerships for sale to third-party buyers of such
contracts.

         On June 30, 2003,  Pacific Auto Group, Inc. (PAG) became a wholly-owned
subsidiary of AutoCorp,  and the AutoCorp securities described below were issued
to Pacific  Holdings Group (PHG),  the sole  stockholder of PAG. The form of the
transaction  was  a  reverse   triangular   merger,   whereby  a  newly  formed,
wholly-owned,  acquisition subsidiary of AutoCorp merged with and into PAG, with
PAG being the surviving corporation in the merger and a subsidiary of AutoCorp.

         PAG has its executive  office in Plano,  Texas and is a holding company
for American Finance Company,  Inc. (AFCO).  AFCO is a point-of-sale  automobile
loan  originator with a national  market  presence.  AFCO has developed a unique
business  model  with  the  introduction  of an  automated  internet-based  loan
origination  system that enables  automobile dealers to underwrite motor vehicle
retail installment sale contracts via the Internet.

         The merger  provided  the  Company  with  approximately  $3,000,000  of
additional liquidity to, among other things,  expand its existing collection and
account  servicing  business and loan purchases and sales through  participation
programs and will also establish  AutoCorp as a  point-of-sale  automobile  loan
originator. The merger will also provide AutoCorp with administrative management
support  from  PHG  and  access  to PAG and  AFCO's  banking  relationships  and
strategic partners in the automotive finance industry.

         Pacific  Financial  Group,  Inc.  a  Delaware   corporation  (PFG),  an
affiliate  of PHG,  has  owned  1,621,642  shares  of  Series  B  Non-Cumulative
Convertible Preferred Stock of AutoCorp,  par value $.001 per share (the "Series
B Preferred Shares") since October 1, 2000. Those Series B Preferred Shares were
and are  convertible at any time, at the option of the holder,  on a one-for-one
basis, into 1,621,642  AutoCorp Common Shares.  Had PFG converted those Series B
Preferred Shares prior to the June 30, 2003 merger  transaction,  PFG would have
owned  1,621,642  AutoCorp Common Shares (or about 19.62% of the AutoCorp Common
Shares  that  would have been  outstanding  after the  conversion.  The Series B
Preferred is non-voting  stock,  and PFG has not  exercised  any influence  over
AutoCorp.


                                       1
<PAGE>

         Immediately  subsequent to the June 30 merger  transaction, on a fully-
diluted basis, PFG  beneficially  owned 1,621,642  AutoCorp  Common Shares,  and
PHG beneficially owned 140,868,560  AutoCorp  Common  Shares. On a fully-diluted
basis, PHG and PFG  together  beneficially  owned  142,490,202  AutoCorp  Common
Shares which represents  95.66% of the  148,953,873  AutoCorp Common Shares that
would then be outstanding.

RISK FACTORS

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

         The Companys  significantly  restructured its business strategy in 2000
to include  originations,  sale,  collection and servicing activities related to
non-prime retail installment contracts in the automobile industry. Additionally,
the Company effected the reverse  triangular merger described above in 2003. 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.

         There can be no Assurance of Future Profitability.
         --------------------------------------------------

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

o        profitably  originate  and  sell,  on a loan by loan  basis,  non-prime
         retail  installment  contracts  secured by  automobiles  and light duty
         trucks;

o        produce  sufficient  volume of  profitable  contracts  to  operate  the
         Company on a profitable basis;

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

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

o        continue to reduce the overall cost structure of the organization; and

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 the financial condition of the Company.



                                       2
<PAGE>

         Bankruptcy Related Issues
         -------------------------

         Pacific USA Holdings Corp. (PUSA), the sole stockholder of PHG and PFG,
is  currently  attempting  to obtain  approval of a plan of  reorganization  and
obtain funding for negotiated  settlements of debts with creditors in connection
with Chapter 11 bankruptcy  proceedings.  Unless PUSA achieves these  objectives
and successfully emerges from Chapter 11 bankruptcy proceedings, there is a risk
that  PUSA's  bankruptcy  case  could be  converted  to a Chapter 7  liquidation
status. If this occurs,  there is a risk that the Bankruptcy Trustee could force
the liquidation of the Company if the Trustee were to consolidate  PHG, PFG, and
the Company into Chapter 7 proceedings.  Alternatively,  the Bankruptcy  Trustee
could  sell  PHG's  and  PFH's  stock  holdings  in the  Company.  Further,  the
$10,000,000 Revolving Loan and Security Agreement with a financial  institution,
which was obtained on November 24, 2003 for the company's finance  subsidiary to
provide funding for origination  and purchase of retail  installment  contracts,
the loan  agreement  for this  credit  facility  stipulates  that the  financial
institution  has the option to terminate  the credit  facility in the event that
the Company  enters  bankruptcy  proceedings.  If the Company  does not have the
availability of an adequate credit facility, its ability to produce a sufficient
volume  of  contracts  necessary  to  operate   profitability  is  significantly
impaired.

         Liquidity and Need for Additional Funding.
         ------------------------------------------

         Due to recurring  operating  losses and the Company's  current  working
capital deficit, there is a need to obtain additional funding of working capital
for the  Company to  continue to operate as a going  concern.  Various  types of
additional  funding such as issuance of  additional  common or preferred  stock,
additional  lines of credit,  or issuance of  subordinated  debentures  on other
forms  of  debt  will  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.

         On May 4, 2004,  the  Company  entered  into a series of  transactions,
certain of which may have an impact on the  liquidity of the  Company.  However,
these transactions are subject to rescission as described in Footnote 19.


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

         Although  substantially  leveraged  at the end of fiscal year 2003,  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.  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


                                       3
<PAGE>

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.

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

         The Company currently owns and services automobile receivables acquired
in connection  with the Credit Union loan  participation  program.  Six of these
Credit Union loan participation  program  transactions are with recourse.  These
receivables  are payable by customers  with non-prime  credit.  Loans to persons
with  non-prime  credit involve an increased  probability of delinquency  and/or
default 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.  Further,  any default that is with  recourse to a Credit
Union may require  the  Company to  repurchase  the  receivable  from the Credit
Union.

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



                                       4
<PAGE>

         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.

         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.



                                       5
<PAGE>

         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.
         -------------------------------

         The  Company's  growth  strategy  may include  future  acquisitions  or
mergers,  or  expansion  of  services  and  products  offered.  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  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.
         -------------------------

         The  Company  expects to  continue  to  actively  pursue  new  business
opportunities, including potential mergers and acquisitions, in the future. Such
mergers or acquisitions  would likely be financed with the issuance of equity or
debt  securities;  by  incurring  additional  indebtedness;  with  cash  or  any
combination  of the  foregoing.  There  is no  assurance  that  any  mergers  or
acquisitions  will occur. If any mergers or acquisitions are effected,  there is
no assurance they can be made on favorable  terms, or that they will prove to be
profitable.  Failure  to effect  future  mergers or  acquisitions  may limit the
growth potential of the Company.

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

         Currently  the  Company   originates  retail   installment   automobile
receivables in 15 states.  The Company is exploring the  possibility of entering
additional  states.  Because  of  this  concentration,  business  levels  may be
adversely affected in the event of a downturn in the general economic conditions
existing in the 15 states in which we are currently active.


















                                       6
<PAGE>

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

         Although recent  high-profile  losses in non-prime  lending have caused
many  of  the  most  substantial  conventional  lenders  to  exit  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).

         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



                                       7
<PAGE>

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.

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

         The automobile  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.

         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.  There can be no assurance  that any state will not lower
their usury  limits or that these states or other  jurisdictions  into which the
Company  presently  lends,  or may lend in the future,  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.



                                       8
<PAGE>

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

         The Company is highly  dependent on the services of certain  employees.
The  Company has not  entered  into an  employment  agreement  with  certain key
employees.  The loss of certain key employees'  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
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  and  9,559  shares  issued in satisfaction of cash
advances from  PFG  totalling  1,621,642 has an annual  non-cumulative  dividend
preference of  $81,082  (5%  of  1,621,642).  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).


         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.



                                       9
<PAGE>

         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.


         Organization and History

         AutoCorp  Equities,  Inc.  ("the  Company"  or  "AutoCorp"),  which  is
headquartered in Frisco, Texas originates non-prime retail installment contracts
secured by automobiles and light-duty trucks primarily through  independent used
car dealerships for sale to third-party buyers of such contracts.

         On June 30, 2003,  Pacific Auto Group, Inc. (PAG) became a wholly owned
subsidiary of AutoCorp,  and the AutoCorp securities described below were issued
to Pacific  Holdings Group (PHG),  the sole  stockholder of PAG. The form of the
transaction  was  a  reverse   triangular   merger,   whereby  a  newly  formed,
wholly-owned,  acquisition subsidiary of AutoCorp merged with and into PAG, with
PAG being the surviving corporation in the merger and a subsidiary of AutoCorp.

         PAG has its executive  office in Plano,  Texas and is a holding company
for American Finance Company,  Inc. (AFCO).  AFCO is a point-of-sale  automobile
loan  originator with a national  market  presence.  AFCO has developed a unique
business  model  with  the  introduction  of an  automated  Internet-based  loan
origination  system that enables  automobile dealers to underwrite motor vehicle
retail installment sale contracts via the Internet.

         The merger  provided  the  Company  with  approximately  $3,000,000  of
additional liquidity to, among other things,  expand its existing collection and
account  servicing  business and loan purchases and sales through  participation
programs and will also establish  AutoCorp as a  point-of-sale  automobile  loan
originator. The merger will also provide AutoCorp with administrative management
support  from  PHG  and  access  to PAG and  AFCO's  banking  relationships  and
strategic partners in the automotive finance industry.

         The June 30, 2003 merger  transaction  reported above has resulted in a
change of control of  AutoCorp  Equities,  Inc.  In this  transaction,  AutoCorp
issued securities to PHG. The securities consisted of: (1) 100,000,000 shares of
AutoCorp common stock, par value $.001 per share (the "AutoCorp Common Shares"),
and (2) 4,086,856  shares of a new Series A  Convertible  Preferred  Stock,  par
value $.001 per share of AutoCorp  (the  "Series A Preferred  Shares")  that are
convertible  at any  time,  at the  option  of the  holder,  into not less  than
40,868,560  AutoCorp  Common Shares.  The conversion  rate is 10 AutoCorp Common
Shares for each Series A  Preferred  Share.  The Series A  Preferred  Shares are
non-voting.  However,  if all the Series A Preferred Shares were converted,  PHG
would own 140,868,560 AutoCorp Common Shares.

         Pacific  Financial  Group,  Inc.  a  Delaware   corporation  (PFG),  an
affiliate  of PHG,  has  owned  1,621,642  shares  of  Series  B  Non-Cumulative
Convertible Preferred Stock of AutoCorp,  par value $.001 per share (the "Series
B Preferred Shares") since October 1, 2000. Those Series B Preferred Shares were
and are  convertible at any time, at the option of the holder,  on a one-for-one
basis, into 1,621,642  AutoCorp Common Shares.  Had PFG converted those Series B


                                       10
<PAGE>

Preferred Shares prior to the June 30, 2003 merger  transaction,  PFG would have
owned  1,621,642  AutoCorp Common Shares (or about 28.28% of the AutoCorp Common
Shares  that  would have been  outstanding  after the  conversion.  The Series B
Preferred is non-voting  stock,  and PFG has not  exercised  any influence  over
AutoCorp.

         Immediately  subsequent to the  June 30,2003 merger  transaction,  on a
fully-diluted basis, PFG beneficially owned  1,621,642  AutoCorp Common  Shares,
and   PHG  beneficially owns  140,868,560  AutoCorp  Common  Shares. On a fully-
diluted basis, PHG and PFG together beneficially own 142,490,202 AutoCorp Common
Shares which  represents  95.66% of the 148,953,873  AutoCorp Common Shares that
would then be outstanding.


         At September 30, 2000 the Company completed a restructuring transaction
effective  October 1, 2000 in order to create an  efficient  organizational  and
financial structure reflective of the current business plans of the Company. The
restructuring substantially reduced debt and sought to reduce exposure to future
liability.  This was achieved by exchanging  1,612,083 shares of a new series of
Preferred  Stock  Series B for the Series A Preferred  Stock in exchange for the
extinguishment  of all debt,  either  direct or  indirect,  of the Company  owed
AutoPrime as of  September  30, 2000.  As a condition  of the  transaction,  the
Company was released and/or indemnified  against any future liability arising as
a result of the extinguishment of the debt.

         The  nature  and  amount of the  consideration  given by  AutoCorp  and
received by PHG is detailed below.  The amount of such  consideration  was based
upon the  estimated  valuations  of PAG and  AutoCorp  immediately  prior to the
merger, as determined by their respective boards of directors. The nature of the
relationships  between  AutoCorp,  PHG and PHGs' various  affiliates (other than
AFCO) are described below.


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

         The Company operates from a centralized production and servicing center
in Frisco, Texas. The Company's current core business is to originate,  service,
and sell non-prime retail automobile installment contracts.

         In  November  2003,  the  Company  obtained  a credit  facility  with a
financial institution in the amount of $10,000,000.  The line of credit bears an
interest rate of prime plus two percent and matures in November 2004.

         The  Company's  automobile  lending  programs  are  designed  to  serve
customers  who have limited  access to  traditional  automobile  financing.  The
Company's typical  borrowers have experienced prior credit  difficulties or have
modest income.  Because the Company serves  customers who are unable to meet the
credit standards required by most traditional  automobile financing sources, the
Company  generally  charges  higher  rates  than those  charged  by  traditional
financing  sources.  As the Company provides financing in a relatively high risk
market, the Company also expects to sustain a higher level of credit losses than
traditional automobile financing sources.



                                       11
<PAGE>

         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.

         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. 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.


         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 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.


                                       12
<PAGE>

   Employees.

At December 31, 2003,  the Company  employed a total of 21 people.  No employees
are covered by a collective  bargaining  agreement.  The Company  considers  its
relations with its employees to be good.

   Seasonality.

The sub-prime or non-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,  collections,  underwriting and loan servicing
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 $137,000 per year. The lease expires in July 2007.

         The Company also leases one property for AFCO  operations.  The rent is
approximately  $9,000 per month and  expires  September  2004.  The  property is
listed in the following table together with the year the lease expires:

         1. 2677 North Main, Suite 250, Santa Ana, California 14,500 sq ft

         Management does not intend to renew this lease.

         The  Company  also  leases two  properties  located  in  Dallas,  Texas
requiring  monthly rent of approximately  $10,000 expiring through June 2004 for
operations of its wholly owned subsidiary, Ace Motor Company, for the purpose of
retailing used automobiles. Management does not intend to renew this lease.

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



                                       13
<PAGE>

ITEM 3. Legal Proceedings

The Company is a  defendant  in a lawsuit for  non-payment  of a total  purchase
price paid for certain  retail  motor  vehicle loan  contracts.  The company has
accrued approximately $116,000 for this potential liability.

The Company is also a defendant  in a lawsuit for breach of lease under a theory
of Alter ego. A motion for Summary Judgement has been filed against the Company.
Management  believes  there will be a  settlement and  contends ultimately there
will be no material liability.

The Company and its  subsidiaries  are also subject to  litigation in the normal
course of business.  Management  considers  the  aggregate  liability  which may
result from such litigation not material at December 31, 2003.

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

         Not Applicable.

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 2003:
                  First Quarter              $0.16           $0.37
                  Second Quarter              0.14            0.45
                  Third Quarter               0.16            0.28
                  Fourth Quarter              0.11            0.16


           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

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

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

         At December 31, 2003, there were approximately 443 holders of record of
the Common Shares of the Company.



                                       14
<PAGE>

         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.

         From January 1, 2001 through  December 31, 2003, the Company issued the
following securities without registration under the Securities Act of 1933:

         (1)      217,391  Common Shares were issued in 2001 to a Director in an
                  exchange  for a $150,000  note  receivable.  These shares were
                  issued under the Section 4(2) exemption of the Securities Act.

         (2)      103,569 Common Shares were issued in 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.

         (3)      125,000  Common  Shares  were  issued  in 2001 for  consulting
                  services  rendered during the quarter.  These shares we issued
                  under the Section 4(2) exemption of the Securities Act.

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

         (5)      1,160,000  Common  Shares  were  issued  in  2002  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.

         (6)      100,000  Common  Shares  were  issued  in  2002  to a  Company
                  Executive  as a bonus.  250,000  Common  Shares  for  services
                  rendered  as a  consultant.  These  shares were issued und the
                  Section 4(2) exemption of the Securities Act.

         (7)      50,000 Common Shares were issued in 2003 to the Chairman of
                  the Board for services rendered as a consultant.

Summary of the Terms of  Convertibility  of the Series "A" Preferred  Shares. As
part of the June 30, 2003 merger transaction, of the 10,000,000 Preferred Shares
authorized in the Company's Articles of  Incorporation,  a total of 4,086,856 of
those  shares were  designated as Series "A" of which 4,086,856 Preferred Shares
were issued as part of the June 30, 2003 merger transaction.

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

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

         o        They are convertible into Common Shares on a 10-for-1 basis at
                  any time.

         The Company has  authorized   2,000,000  shares of Series "B" Preferred
Stock of which 1,621,642 shares have been issued.



                                       15
<PAGE>

         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.

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.


Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations should be read in conjunction with the Audited Consolidated Financial
Statements and related notes, which are contained in Item 7 herein.

Results of Operations

Revenues  for the fiscal  year ended  December  31, 2003 were  $1,259,376  which
consisted of  approximately  $1,026,810 of interest income and $232,566 in other
income.  This is compared to $1,345,267 of interest income and $503,938 in other


                                       16
<PAGE>

income for the fiscal year ended December 31,2002.  The reduction of revenues is
attributable  to a decrease of interest earned on finance  receivables  from the
sale of a significant portion of the loan portfolio in the first half of 2003 to
generate  liquidity and to reposition PAG to operate as an originator and seller
of automobile  retail  contracts on a fee basis rather than a portfolio  lender.
The  Company  also  received  revenues  from  origination  fees,  service  fees,
participation income and other income of $232,566 in 2003 and $503,938 in 2002.

The loss from  operations  for the year ended  December 31, 2003 was  $6,348,165
compared to $3,077,655 for the year ended December 31, 2002. Operating loss as a
percentage  of net revenues  was (504%) and (166%) for the years ended  December
31, 2003 and December 31, 2002, respectively. The loss from operations increased
in 2003 due to the  merger  of  AutoCorp  and PAG,  and  reflects  the loss from
operations of AutoCorp  following the merger which accounted for $880,527 of the
increase in the loss. Also, the loss from operations  increased due to increased
loan  losses  incurred by PAG in  liquidating  its loan  portfolio  prior to the
merger and an increased provision for loan losses recorded by AutoCorp following
the merger.  The provision for loan loss  increased from  $1,018,757,in  2002 to
$1,658,307 in 2003.  Interest expense  increased to $604,329 in fiscal 2003 from
$436,734  for  fiscal  2002 as a direct  result of the  Company's  repayment  of
long-term debt. Other income and deductions increased by approximately  $700,000
primarily  due to  impairment of goodwill.  Additionally,  the Company  reported
other deductions in 2003, including the impairment of goodwill of $1,185,907 and
the write-off of deferred  financing costs of $241,905  related to the payoff of
the Company's credit facility which funded PAG's loan portfolio. In December 31,
2003, the entire amount  attributable  to goodwill was determined to be impaired
and written off.

Operating  expenses  were 604% of revenues for the year ended  December 31, 2003
compared to 267% for the prior year.  The absolute  level of spending  increased
from approximately $4,926,860 for the year ended December 31, 2002 to $7,607,541
for the year ended December 31, 2003.  Operating  expenses increased in 2003 due
to the merger of  AutoCorp  and PAG,  and  reflects  the  operating  expenses of
AutoCorp following the merger which accounted for $1,251,796 of this increase in
operating expenses.

Liquidity

Net cash used by operations during the year ended December 31, 2003 decreased to
$3,437,380 from cash used by operations from $1,936,010 for the prior year. This
decrease is  primarily  due to the merger of AutoCorp  and PAG, and includes the
use of cash  totaling  $1,138,599 by AutoCorp for its  operations  following the
merger. Net cash provided by investing  activities  increased to $7,797,737 from
cash used in investing  activities of  $11,010,740 in 2002 primarily as a result
of the sale of a  significant  portion of PAG's loan  portfolio  to a  financial
institution  prior to the  merger.  Net cash used in  financing  activities  was
$6,137,942  for  fiscal  year  2003  compared  to  cash  provided  by  financing
activities  of  $14,628,234  in fiscal year 2002  primarily  resulting  from the
repayment of PAG's credit  facility  which funded PAG's loan  portfolio,  net of
proceeds generated from the sale of securitization assets of $3,000,000.



                                       17
<PAGE>

In  November  2003,  the  Company  was able to secure a new  $10,000,000  credit
facility with a financial  institution to provide funding for the origination of
automobile  finance  contracts held on a short-term  basis for sale to buyers of
such  contracts.  These  contracts will serve as collateral  securing the credit
facility until they are sold. The contracts  funded by this credit  facility are
also secured by default insurance obtained by the Company for the benefit of the
lending institution. This credit facility is not available for any purpose other
than the origination or purchase of automobile  finance  contracts that meet the
underwriting  criteria required by the company providing the default  insurance.
If the Company does not have the  availability of an adequate  credit  facility,
its ability to produce a  sufficient  volume of  contracts  necessary to operate
profitability is significantly impaired.

The  Company's  debt to its  directors  at December  31, 2003 was  approximately
$351,000 which is due at various dates through  October 2004 with interest rates
at 12% and 18%.  The  Company  expects  to renew the debt as it comes due during
fiscal 2004, or replace it with borrowings from conventional commercial sources.

The Company will not be able to meet its working capital needs without obtaining
significant  additional  funding.  The Company  continues  to pursue  sources of
additional  funding to meet its  liquidity  needs.  Various  types of additional
funding such as issuance of  additional  common or preferred  stock,  additional
lines of credit,  or issuance of subordinated  debentures on other forms of debt
will be  pursued.  Various  types of  additional  funding  such as  issuance  of
additional common or preferred stock, additional lines of credit, or issuance of
subordinated  debentures  on other  forms of debt will be  pursued.  There is no
assurance the Company will be able to obtain additional funding, or obtain it on
terms favorable to the Company.

On May 4, 2004, the Company  entered into a series of  transactions,  certain of
which  may have an  impact  on the  liquidity  of the  Company.  However,  these
transactions are subject to rescission as described in Footnote 19.

CRITICAL ACCOUNTING POLICIES

The Company's critical accounting policies are as follows:

         Finance Receivables
         -------------------

         Finance receivables consist of purchased installment  contracts,  which
are assigned to the Company  upon  acquisition.  The titles to the  automobiles,
which serve as security for the payment of the purchased  contracts,  are either
held by the company or the financial  institution which the Finance  receivables
serve as collateral.

         Finance  receivables that management has the intent and ability to hold
for the  foreseeable  future or until  maturity of payoff are  reported at their
outstanding gross contractual balances, net of allowance for losses and unearned
finance  revenue.  Unearned  finance revenue  consists of unearned  interest and
discounts realized on contract purchases.



                                       18
<PAGE>

         Allowance for credit losses is increased by allocating a portion of the
discount recorded on the acquisition of contracts. The Company performs periodic
evaluations   of  the  adequacy  of  the   allowance   for  losses  taking  into
consideration  the  past  loss  experience,  known  and  inherent  risks  in the
portfolio,  adverse  situations that may affect the borrower's ability to repay,
the estimated value of any underlying collateral,  as well as recovery potential
of any underlying  collateral and current economic conditions.  Any increases in
the  allowance  for losses  subsequent  to the  acquisition  of the contract are
charged to earnings.  In  conjunction  with the  Company's  contract  purchases,
dealers make certain  representations  and warranties  regarding the validity of
the contract  and the  enforceability  of the  security  interest in the related
vehicle.  Consequently,  the Company has recourse to the dealer in the event the
dealer's  representations and warranties are false.  Furthermore,  the Company's
standard  form  agreement  with all of its  dealers  requires  that  the  dealer
repurchase  any  contract  where the  borrower  has failed to make the first two
payments.  In such  cases,  it is the  Company's  responsibility  to return  the
related vehicle to the dealer.  Consumer loans are charged off when they are 120
days contractually past due.


         Undivided Interest in Securitization Assets
         -------------------------------------------

         Undivided  interest in  securitization  assets  represents a $2,000,000
         interest  in  loans  previously  securitized  by  PUSA.  This  asset is
         accounted for at the lower of cost or market.

The  rights  to these  assets  were  contributed  to the  Company  by its  major
shareholder,  PHG in October 2001 and December  2001. In May, 2003, PAG returned
an undivided  interest of  $4,000,000 of this asset to PHG. In June,  2003,  PAG
sold  $3,000,000 to a third party at no gain or loss.  The total  securitization
asset held by all related  entities was valued at  approximately  $16,721,000 at
December 31, 2003. This securitization asset is pledged as collateral on certain
obligations of PUSA.

         Intangible Assets
         -----------------

Software development costs, recorded at cost, are amortized over five years, the
expected useful life of the asset. Intangible assets are reviewed for impairment
whenever events or  circumstances  indicate  impairment might exist, or at least
annually.  The Company assesses the  recoverability  of its assets in accordance
with SFAS No. 142 "Goodwill and Other Intangible  Assets,"  comparing  projected
undiscounted  cash flows  associated with those assets against their  respective
carrying  amounts.  Impairment,  if any, is based on the excess of the  carrying
amount over the fair value of those assets. The Company determined that there is
no impairment of these assets.

         Impairment of Goodwill
         ----------------------

The acquisition in June 2003 was  accounted  for  using the  purchase  method of
accounting. As such, the assets and liabilities of AutoCorp  have been  recorded
at their estimated  fair value and the results of operations have been  included
in the  consolidated  results of  operations from the date of  acquisition.  The
excess  purchase  price  over  the fair  value of the  tangible  and  intangible
assets  acquired in the  acquisition  totaled  $1,185,907 and  was  allocated to
goodwill.

In December  2003,  Goodwill was tested by management  for impairment due to the
continuing significant losses of AutoCorp and the expectations that AutoCorp may
undergo a  change of  control.  See Notes 2  and 19  included  in the  financial
statements in Item 7.

As a result of the foregoing,  management  has  determined  Goodwill to be fully
impaired and wrote off the balance in its entirety.





                                       19
<PAGE>

         Deferred Tax Valuation
         ----------------------

The Company has Federal and State tax net operating losses (NOL's)  available to
carryforward  and offset future  taxable income of  approximately  $11.6 million
expiring  through 2023.  These NOL's were generated,  principally as a result of
the tax losses  resulting  from the  operations  of the Company.  A deferred tax
asset  results from the benefit of  utilizing  the NOL  carryforwards  in future
years.

Due to the  current  uncertainty  of  realizing  the  benefits  of the  tax  NOL
carry-forward,  a valuation allowance equal to the tax benefits for the deferred
taxes has been  established  for the benefit.  The full  realization  of the tax
benefit  associated  with  the  carry-forward  depends  predominately  upon  the
Company's ability to generate taxable income during future periods.  The Company
has  provided a full  valuation  allowance  for the  deferred  tax assets  since
management has not been able to adequately determine that the realization of the
asset is more likely than not.


EFFECT OF INFLATION

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

OFF BALANCE SHEET ARRANGEMENTS

The Company is at times a party to financial  instruments with off-balance sheet
risk in the  normal  course  of  business  to meet  the  financing  needs of its
customers.  These  financial  instruments  consist  primarily of  commitments to
extend credit. These instruments involve, to varying degrees, elements of credit
risk in excess of the amount recognized in the consolidated balance sheet. As of
December 31, 2003, there were no such commitments.

The Company leases two office  facilities under operating leases which expire in
September  2004 and May 2007.  The  Company  also leases two  automobile  retail
facilities under operating leases which expire in February 2004 and June 2004.

Item 7. Financial Statements

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

         Consolidated Balance Sheet - December 31, 2003

         Consolidated  Statements of Operations For the Years Ended December 31,
         2003 and 2002.

         Consolidated Statement of Changes in Shareholders' Equity (Deficit) For
         the Years Ended September 30, 2003 and 2002.



                                       20
<PAGE>

         Consolidated Statements of Cash Flows For the Years Ended September 30,
         2003 and 2002.

         Notes to Consolidated Financial Statements

Item  8.  Changes  in and  disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

(a.)     The Company has dismissed  its  Certifying  Accountant,  KBA Group LLP,
         effective October 29, 2003.

(b.)     The  principal  accountant's  reports for the last two fiscal years did
         not contain adverse opinions as to the Company's  financial  statements
         but were  modified to express  concern as to the  Company's  ability to
         continue as a going concern.

(c.)     The decision to change the  Company's  accountants  was approved by the
         Company's Board of Directors.

(d.)     During  the last  two most  recent  fiscal  years or in the  subsequent
         period ended June 30, 2003, there have been no  disagreements  with the
         former accountants on any matter of accounting principles or practices,
         financial statement disclosure, or auditing scope or procedure.

(e.)     The Company has engaged the accounting  firm of Ehrenkrantz  Sterling &
         Co. LLC of Livingston, New Jersey effective October 30, 2003.

(f.)     Effective  October 29, 2003,  Ehrenkrantz  Sterling & Co., LLC has been
         retained as the  independent  auditor of AutoCorp  Equities,  Inc., the
         Registrant,  and was retained as independent  auditor of the registrant
         for the fiscal year ending December 31, 2003.  Prior to the engagement,
         Registrant did not consult with regarding the application of accounting
         principles  to a specified  transaction,  or the type of audit  opinion
         that  may  be  rendered  with  respect  to the  Registrant's  financial
         statements,  as well did not consult with  Ehrenkrantz  Sterling & Co.,
         LLC,  as to the  application  of  accounting  principles  to a specific
         completed or  contemplated  transaction,  or the type of audit  opinion
         that  might  be  rendered  on the  small  business  issuer's  financial
         statements  and either  written or oral advice was provided that was an
         important factor  considered by the small business issuer in reaching a
         decision as to the accounting, auditing or financial reporting issue.

Item 8A. Controls and Procedures

Our Chief Executive  Officer and our Chief Financial  Officer,  after evaluating
the  effectiveness  of the  Company's  "disclosure  controls and  procedures"(as
defined in Rules  13a-15(e) and 15d-15(e)  under the Securities  Exchange Act of
1934,  as  amended)  as of the end of the period  covered by this  report,  have
concluded  that our  disclosure  controls and  procedures  are effective and are
designed to ensure that the information we are required to disclose is recorded,
processed, summarized and reported within the necessary time periods.



                                       21
<PAGE>

Internal Control Over Financial Reporting

Our Chief Executive  Officer and our Chief Financial  Officer have evaluated the
changes of the Company's internal control over financial reporting that occurred
during our fiscal  quarter ended December 31, 2003, as required by paragraph (d)
of Rules 13a-15(e) and 15d-15(e)  under the Securities  Exchange Act of 1934, as
amended,  and have  concluded  that there were no such changes  that  materially
affected,  or are reasonably likely to materially  affect,  our internal control
over financial reporting.
































                                       22
<PAGE>


PART III

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

         The executive  officers and  Directors of the Company,  as of May 4,
2004, are:

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


Charles Norman       46       President and Chief Executive        2003
                               Officer; Director*

Roy Pardini          57       Director**                           2002


Peter Ubaldi         58       Executive Vice President***

Mike McCraw          51       Chief Financial Officer****

Jack Takacs          64       Chairman of the Board*****           2004
-----------------
*        Elected President in April 2003 and a Director in June 2003.
**       Elected a Director in October 2002.
***      Elected Executive Vice President in March 2004.
****     Elected Chief Financial Officer in July 2003.
*****    Elected Chairman of the Board in April 2004

Members of the Board of  Directors  are  elected to serve  until the next annual
meeting or until their  successor is elected and  qualified.  As of May 4, 2004,
the date of the next annual meeting has not been selected.

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

Jack Takacs was appointed  President and Chief Executive Officer of PUSA in June
2001. He is  responsible  for  developing US business  strategies  and operating
plans.  He directs all US operations and coordinates the activities of PUSA with
each  operating  subsidiary.  Before  joining PUSA, Mr. Takacs was a Partner and
Managing Director of Stone Pine Companies, a principal investor,  private equity
money  manager and fund  administrator.  Mr. Takacs  directed the  activities of
Stone Pine in  structured  finance  and  consumer  receivables  securitizations.
Throughout  his  career,  he has placed in excess of $8 billion  debt and equity
securities in a variety of real estate,  corporate  finance and consumer finance
transactions. Prior to joining Stone Pine, he was associated with the Broadstone


                                       23
<PAGE>

Group,  a diversified  holding group with more than $500 million in assets.  Mr.
Takacs' duties included originating and structuring investment opportunities and
acquisitions of that group. During his five years with Broadstone,  he initiated
and assisted in debt and equity  financing in excess of $300  million.  Prior to
joining  Broadstone,  Mr.  Takacs was the  Director  of  Corporate  Finance  for
Cornerstone  Partners,  a subsidiary  of GKM, a New York  Exchange  member firm.
While directing Cornerstone Partners, he was responsible for the origination and
structuring of corporate financing  transactions exceeding $40 million in equity
and $150 million in debt. Prior to working for Cornerstone, Mr. Takacs headed an
investment  group based in Paris,  France,  which bought,  managed and sold five
major hotels.

Charles  Norman has been  engaged  in the  financing  aspects of the  automobile
industry  since 1986.  Mr. Norman served as Executive Vice President of David S.
Financial, L.P., an entity engaged in indirect consumer lending in the sub-prime
arena from 1986 to 1991. He was Regional Director of the Dealer Banking Division
of Union Federal  Savings Bank from 1992 to 1993,  Vice  President of Operations
and Marketing at Leadership  Financial  Group from 1993 to 1994 and President of
Auto Finance Express,  Inc.,  thereafter until 1995. He also served as President
of Allied  Auto Credit from 1995 to 1997 and  Director  of Asset  Management  of
AutoPrime,  Inc.  thereafter  until  1998.  From 1998 to 2002,  and from 2003 to
present, Mr. Norman also served as CEO of AutoCorp Equities, Inc.

In May 2003,  (amended  January  2004) the Company  entered  into an  employment
agreement with Charles Norman,  which provides for an annual salary of $250,000.
The  agreement  provides  that Mr.  Norman  shall  serve as our Chief  Executive
Officer through May 2005. Mr. Norman's  employment  agreement may be renewed for
successive  two  year  periods  commencing  on the  termination  date by  mutual
agreement.  There is no provision for any bonus or stock based  compensation  or
stock  options.  The Board of  Director's  shall  award any bonus or stock based
compensation  exclusively.  If the Company terminates the agreement,  Mr. Norman
shall be entitled to receive salary and benefits through the termination date in
the agreement plus six months  severance.  If the agreement is not renewed,  Mr.
Norman shall be entitled to six months severance.

Roy Pardini was Vice President of Corporate Sales with Zales Corporation,  Leafe
Jewelry Division,  from 1967 through 1975. In 1975, Mr. Pardini transferred from
retail  jewelry  sales  to  the  jewelry  manufacturing  business  as a  jewelry
representative  for the largest jewelry  manufacturer in the United States.  Mr.
Pardini  was also the owner of a jewelry  manufacturing  and  diamond  importing
business,  Prime  Source  International,  from 1981  through  1987.  During  the
ownership of Mr. Pardini's  manufacturing  business,  he developed a rent to own
finance  jewelry  business  which grew to 800 stores.  During that  period,  Mr.
Pardini  also  founded  A  Thru  Z in  1994  to  take  advantage  of  purchasing
receivables  at a  discount.  A Thru Z  purchased  a wide  range of  receivables
including  jewelry store  receivables,  health club  receivables  and automobile
receivables.  In 2001,  A Thru Z became more focused on the  automobile  finance
arena.



                                       24
<PAGE>

Peter Ubaldi has been in the auto finance and auto leasing  industry since 1970.
Prior to that,  he was employed as a  Commercial  Credit  Analyst with  Security
National Bank of Long Island and as an Accountant with  Touche Ross & co. In the
early 1970's,  Mr. Ubaldi was the  Controller  and Financial Vice President of a
publicly traded auto leasing company, Industralease Corporation.  Throughout the
1980's and 1990's,  Mr.  Ubaldi was  employed by several  auto  finance and auto
leasing  companies  with full  responsibility  of arranging  lines of credit and
preparing for  securitizations.  Most  recently,  he was a principal in Hamilton
Capital  Group  which  provided  services  for auto  dealers  nationwide  in the
non-prime auto finance business.

Michael  K.  McCraw is the  President  and Chief  Financial  Officer  of Pacific
Holdings Group, the majority  shareholder of the Company. Mr. McCraw is also the
President and Chief Financial  Officer of Pacific USA Holdings  Corp.,  the sole
shareholder of Pacific Holdings Group,  and has  continuously  served in various
capacities for Pacific USA and its  subsidiaries  since 1989. From 1989 to 1991,
Mr.  McCraw was Chief  Financial  Officer of Pacific  Southwest  Bank, a federal
savings bank and from 1995 through  2000,  Mr.  McCraw  served as President  and
Chief  Operating  Officer of Pacific Realty Group,  Inc. and Chairman of Newmark
Homes Corp., one of Pacific Realty's  leading  subsidiaries.  From 1974 to 1989,
Mr. McCraw was employed by KPMG. Mr. McCraw was elected Chief Financial  Officer
of the Company in July 2003  following the  Company's  merger  transaction  with
Pacific Auto Group, Inc.

         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  2004  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.

         We have not  adopted a  code of  ethics that  applies to our  principal
executive officer, principal financial officer, principal accounting officer, or
controller, or persons performing similar functions.  We  anticipate  adopting a
code of ethics as soon as practical.

Item 10. Executive Compensation

         Executive  Officers.  The following  table sets forth,  for each of the
last three fiscal years, cash and certain other compensation paid by our company
for our Chief Executive Officer,  of which two persons have served as such. None
of the next four most highly compensated  officers serving on December 31, 2003,
received more than $100,000 for fiscal 2003.



                                       25
<PAGE>
<TABLE>
<CAPTION>
 Long Term Compensation


                               Annual Compensation                Awards and Payouts
                           -----------------------------   -------------------------------
 Name/Principal   Fiscal   Salary     Bonus       Other     Stock   Options/   LTIP   All
 Position          Year                          Compen-    Awards    SARs           Other
                                                  sation
 -----------------------------------------------------------------------------------------
<S>                       <C>        <C>        <C>        <C>       <C>       <C>    <C>
 James R. Parmley  2003   $ 14,970   $   --     $    --    $  --     $  --     $ --   $--
 CEO               2002   $ 80,000   $   --     $    --    $19,000   $  --     $ --   $--

 Charles Norman    2003   $135,958   $ 25,000   $    --    $  --     $  --     $ --   $--
 CEO & President   2002   $ 93,135   $   --     $    --    $16,380   $  --     $ --   $--
                   2001   $225,500   $100,000   $  7,200   $  --     $  --     $ --   $--
</TABLE>


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.

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 December 31, 2003,
1,966,158   shares  had  been  issued  under  the  Plan,   75,869  options  were
outstanding, and 33,842 shares were available for future issuance.

                                              2003              Options
                                                                Weighted
                                                                Average
                                                                Exercise
                                              Shares            Price
--------------------------------------------------------------------------------
Outstanding, beginning of year                75,859             0.03

Granted                                         --                --

Forfeited                                       --                --

Exercised                                       --                --
--------------------------------------------------------------------------------
Outstanding, end of year                      75,869             0.03
                                            ====================================
Options exercisable at year-end               75,869             0.03
                                            ====================================

No options were granted during 2003.  There were no warrants  authorized  during
2003.

Compensation of Directors. No Directors fees were paid during fiscal 2003.




                                       26
<PAGE>

Item 11. Security Ownership of Certain Beneficial Owners and Management

The  following  table  sets  forth  certain  information,  as of  May  4,  2004,
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  106,463,671  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            Name and                 Amount and
   Class            Address of                Nature of         Percent
                    Beneficial                Beneficial           of
                      Owner                     Owner            Class
 -------------------------------------------------------------------------------

Common       Charles Norman                    572,500            0.38%
              1701 Legacy Dr.
              Suite 2200
              Frisco, TX 75034

Common       Roy Pardini                       417,391            0.28%
              1701 Legacy Dr.
              Suite 2200
              Frisco, TX 75034

Common       Jack Takacs                          --              0.00%
              1701 Legacy Dr.
              Suite 2200
              Frisco, TX 75034

--------------------------------------------------------------------------------
Director's and Executive Officers
          as a Group                           989,891            0.66%


Common       Pacific Holdings Group        134,868,560           90.54%
              2901 N. Dallas Parkway
              Suite 100
              Plano, TX 75093

Common       Pacific Financial Group         1,621,642            1.09%
              2901 N. Dallas Parkway
              Suite 100
              Plano, TX 75093
--------------------------------------------------------------------------------
All beneficial owners                      137,480,093           90.34
--------------------------------------------------------------------------------

         Pacific  Financial  Group,  Inc.  a  Delaware   corporation  (PFG),  an
affiliate of PHG, owns 1,621,642 shares of Series B  Non-Cumulative  Convertible
Preferred Stock of AutoCorp,  par value $.001 per share (the "Series B Preferred
Shares").  Those Series B Preferred Shares were and are convertible at any time,
at the option of the holder,  on a one-for-one  basis,  into 1,621,642  AutoCorp
Common  Shares.  On a  fully-diluted  basis,  PFG  beneficially  owns  1,621,642
AutoCorp Common Shares,  and PHG beneficially  owns 134,868,560  AutoCorp Common
Shares.  On a  fully-diluted  basis,  PHG  and  PFG  together  beneficially  own
136,490,202  AutoCorp Common Shares which  represents  90.34% of the 148,953,873
AutoCorp Common Shares that would then be outstanding.



                                       27
<PAGE>

         These  transactions may have an impact on the capital  structure of the
Company.  However,  the  transactions  are subject to rescission as described in
Footnote 19.

         Pacific USA Holdings  Corp.  (PUSA) is the sole  stockholder of PFG and
PHG and as such  beneficially owns 136,490,202  AutoCorp Common Shares.  Pacific
Electric  Wire and  Cable  (PEWC)  is the sole  shareholder  of PUSA and as such
beneficially owned 136,490,202 AutoCorp Common Shares which represents 90.34% of
the  148,953,873   AutoCorp  Common  Shares  that  would  then  be  outstanding.
Additionally,  the  Company  entered into a series of  transactions,  certain of
which may have an impact on the capital structure of the Company. However, these
transactions are subject to rescission as described in Footnote 19.

         Section 16(a) Beneficial Ownership Reporting Compliance.  Section 16(a)
of the  Securities  Exchange Act of 1934 and the rules  promulgated  there under
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 2003. The following persons and trusts
did not file a Form 3,  Form 4 or Form 5  timely:  None.

Equity Compensation Plan Information

<TABLE>
<CAPTION>

Plan category                             Number of securities     Weighted average          Number of securities
                                          to be issued upon        exercise price of         remaining available for
                                          exercise of              outstanding options,      future issuance
                                          outstanding options,     warrants and rights
                                          warrants and rights
                                          (a)                      (b)                       (c)
<S>                                       <C>                      <C>                       <C>
Equity compensation plans approved by             --                        --                        --
security holders
Equity compensation plans not approved           75,869                 $   0.03                   133,842
by security holders for AutoCorp Common
Stock
Equity compensation plans not approved           85,000                 $   10.00                   15,000
by security holders for AFCO Common
Stock
Total                                            160,868                $    5.30                  148,842
</TABLE>


Item 12. Certain Relationships & Related Transactions

         On June 30, 2003,  Pacific Auto Group, Inc. (PAG) became a wholly-owned
subsidiary of AutoCorp,  and the AutoCorp securities described below were issued
to Pacific  Holdings Group (PHG),  the sole  stockholder of PAG. The form of the
transaction  was  a  reverse   triangular   merger,   whereby  a  newly  formed,
wholly-owned,  acquisition subsidiary of AutoCorp merged with and into PAG, with
PAG being the surviving corporation in the merger and a subsidiary of AutoCorp.



                                       28
<PAGE>

         Pacific  Financial  Group,  Inc.  a  Delaware   corporation  (PFG),  an
affiliate of PHG, owns 1,621,642 shares of Series B  Non-Cumulative  Convertible
Preferred Stock of AutoCorp,  par value $.001 per share (the "Series B Preferred
Shares").  Those Series B Preferred Shares were and are convertible at any time,
at the option of the holder,  on a one-for-one  basis,  into 1,621,642  AutoCorp
Common  Shares.  The Series B Preferred  is  non-voting  stock,  and PFG has not
exercised any influence over AutoCorp.

         Immediately  subsequent  to the June 30 merger transaction, on a fully-
diluted basis, PFG beneficially  owned 1,621,642 AutoCorp Common Shares, and PHG
beneficially owned 136,490,202 AutoCorp Common Shares. On a fully-diluted basis,
PHG and PFG together beneficially owned 142,490,202 AutoCorp Common Shares which
represents 92.0% of the 148,953,873 AutoCorp  Common  Shares that  would then be
outstanding.

         Pacific USA Holdings  Corp.  (PUSA) is the sole  stockholder of PFG and
PHG and as such beneficially owned 142,490,202  AutoCorp Common Shares.  Pacific
Electric  Wire and  Cable  (PEWC)  is the sole  shareholder  of PUSA and as such
beneficially owned 142,490,202 AutoCorp Common Shares which represents 95.66% of
the 148,953,873 AutoCorp Common Shares that would then be outstanding.

         On May 4, 2004,  the  Company  entered  into a series of  transactions,
certain of which may have an impact on the  capital  structure  of the  Company.
However,  these  transactions are subject to rescission as described in Footnote
19.

Item 13. Exhibits and Reports on Form 8-K

(a)      Exhibits

The following  exhibits are filed herewith or are  incorporated  by reference to
exhibits previously filed with the Commission.  The Company shall furnish copies
of exhibits for a reasonable  fee (covering  the expense of  furnishing  copies)
upon request.

Exhibit Number      Exhibit Title
--------------      -------------

2.1                 Copy of  Agreement  and Plan of Merger by and among  Pacific
                    Auto  Group,   Inc.,   AutoCorp   Equities,   Inc.  and  PAG
                    Acquisition  Corp. dated as of June 20, 2003.  (Exhibit 2.1)
                    (1)

3.1                 Certificate  of  Designation  for  the  Series  A  Preferred
                    Shares. (Exhibit 3.1) (1)

3.2                 New By-Laws adopted September 1, 2003.

10.1                Standstill  Agreement  dated  as of June  30,  2003  between
                    Pacific Holdings Group and AutoCorp Equities,  Inc. (Exhibit
                    2.2) (1)

10.2                Revolving  Loan and Security  Agreement  Dated  November 24,
                    2003

21.1                List of Subsidiaries

31.1                Rule 13a-14(a) Certification by the Chief Executive Officer

31.2                Rule 13a-14(a) Certification by the Chief Financial Officer

31.1                Section 1350 Certification by the Chief Executive Officer

31.2                Section 1350 Certification by the Chief Financial Officer
------------------------------


                                       29
<PAGE>

(1) Incorporated  by reference to the indicated  exhibit numbers to the exhibits
    to the Form 8-K filed on July 15, 2003.

(b)      Reports on Form 8-K

         During the fiscal quarter ended December 31, 2003, the Registrant filed
         Form 8-K on the  following  dates,  reporting on the items listed below
         opposite the dates (no financial information was filed):

         October 14, 2003 - Item 8 October 31, 2003 - Item 4, Item 7 November 6,
         2003 - Item 4, Item 7 (Form 8-K/A)

Item 14. Principal Accountants Fees and Services

Audit Fees

Fees for audit services  totaled  approximately  $67,750 and $61,803 in 2003 and
2002,  respectively,  including  fees  associated  with the annual audit and the
reviews of the Company's quarterly reports on Form 10-Q.

Tax Fees

Fees for tax  services  totaled  approximately  $4,000  and $0 in 2003 and 2002,
respectively. These fees were paid to a former officer of the Company.

Audit Related Fees

None.

All Other Fees

None.


























                                       30
<PAGE>

                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned thereto duly authorized.

         Date:  May 17, 2004              AutoCorp EQUITIES, INC.

                                          (Registrant)

                                           /s/ Charles Norman
                                          --------------------------------------
                                          By: Charles Norman
                                          Chief Executive Officer


                                           /s/ Michael K. McCraw
                                          --------------------------------------
                                          By: Michael K. McCraw
                                          Chief Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated:


                                           /s/ Jack Takacs
                                          --------------------------------------
                                          Jack Tacaks, May 17, 2004
                                          (Chairman)

                                           /s/ Charles Norman
                                          --------------------------------------
                                          Charles Norman, May 17, 2004
                                          (Director)

                                           /s/ Roy Pardini
                                          --------------------------------------
                                          Roy Pardini, May 17, 2004
                                          (Director)















                                       31
<PAGE>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002



                                                                        Page No.
                                                                        --------

INDEPENDENT AUDITORS' REPORT                                               F-2

CONSOLIDATED FINANCIAL STATEMENTS

   Consolidated Balance Sheet                                              F-3

   Consolidated Statements of Operations                                   F-5

   Consolidated Statement of Changes in
     Shareholders' Equity (Deficit)                                        F-6

   Consolidated Statements of Cash Flows                                   F-7

   Notes to Consolidated Financial Statements                              F-9





























                                       F-1


<PAGE>

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


The Board of Directors
AutoCorp Equities, Inc.

We  have  audited  the  accompanying  consolidated  balance  sheet  of  AutoCorp
Equities,  Inc. and subsidiaries (the "Company") as of December 31, 2003 and the
related consolidated  statements of operations,  changes in shareholders' equity
(deficit),  and cash flows for the years ended December 31, 2003 and 2002. 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 audit.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the 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 December 31, 2003, and the  consolidated  results of
their  operations  and  their  cash  flows for the years ended December 31, 2003
and 2002, in  conformity  with  accounting  principles generally accepted in the
United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated  financial  statements,  the Company has suffered  recurring losses
from operations and has a working  capital  deficit at December 31, 2003.  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 2. The consolidated  financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


                                               /s/ EHRENKRANTZ STERLING & CO LLC
                                               ---------------------------------

Livingston, New Jersey
February 27, 2004 except as to
Notes 1, 2, 8 and 19 as to which the date
is May 13, 2004









                                       F-2


<PAGE>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                     ASSETS
                                     ------
                                December 31, 2003
                                -----------------


CURRENT ASSETS:

   Cash                                                               $  995,773
   Finance receivables, net of allowances
    of $974,000                                                        1,498,715
   Accounts receivable-affiliates                                         43,392
   Other current assets                                                  311,557
                                                                      ----------

       Total current assets                                            2,849,437

PROPERTY AND EQUIPMENT, NET OF ACCUMULATED
  DEPRECIATION OF $383,000                                                82,370

CAPITALIZED SOFTWARE, NET OF ACCUMULATED
  AMORTIZATION OF $514,000                                               811,348

UNDIVIDED INTEREST IN SECURITIZATION ASSET                             2,000,000

OTHER ASSETS                                                              33,864
                                                                      ----------

           Total assets                                               $5,777,019
                                                                      ==========
























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

                                          F-3




<PAGE>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEET (Continued)

                                DECEMBER 31, 2003

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

CURRENT LIABILITIES:
    Current portion of long-term debt due to third parties         $     13,675
    Accounts payable and accrued expenses                               603,023
    Notes payable to directors                                          350,538
    Amounts payable to credit unions                                  2,284,030
    Line of credit                                                        9,996
    Accounts payable-affiliates                                          28,589
                                                                   ------------

          Total current liabilities                                   3,289,851


LONG-TERM DEBT due to third parties, less current portion                64,931
   LONG-TERM DEBT due to affiliated entity                            3,440,197
                                                                   ------------
          Total Long-term liabilities                                 3,505,128

COMMITMENTS AND CONTINGENCIES                                              --

SHAREHOLDERS' EQUITY (DEFICIT):

Series A cumulative convertible preferred stock,
   $.001 par value, 10,000,000 shares authorized,
   4,086,856 issued and outstanding                                       4,087
Series B convertible preferred stock, no par value,
   5% non-cumulative; liquidation preference
   of $14.64 per share; 10,000,000 shares
   authorized, 1,621,642 shares issued and
   outstanding                                                          352,643
Common stock, par value $.001; 110,000,000
   shares authorized, 106,463,671 shares issued
   and outstanding                                                      106,464
Additional paid-in-capital                                           12,080,035
Accumulated deficit                                                 (13,161,449)
                                                                   ------------
                                                                       (618,220)
   Less treasury at cost, 1,817,000 shares                             (399,740)
                                                                   ------------
   Total shareholders' equity (Deficit)                              (1,017,960)
                                                                   ------------

           Total liabilities and shareholders'
              Equity (Deficit)                                     $  5,777,019
                                                                   ============













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 December 31,
                                               --------------------------------
                                                       2003             2002
                                               --------------    --------------
REVENUES
   Interest Income                             $    1,026,810    $    1,345,267
   Other income                                       232,566           503,938
                                               --------------    --------------
       Total revenues                               1,259,376         1,849,205

COST OF REVENUES
   Interest expense                                   604,329           436,734
   Compensation and Benefits                        2,767,345         2,657,025
   Office Occupancy and Equipment                     673,504           464,926
   Professional Fees                                  345,704           242,986
   Loan Servicing                                     281,310           372,363
   Depreciation and Amortization                      340,321           355,404
   Provision for Loan Losses                        1,658,307              --
   Other Operating Expense                            936,721           397,422
                                               --------------    --------------

       Total cost of revenues                       7,607,541         4,926,860
                                               --------------    --------------

LOSS FROM OPERATIONS                               (6,348,165)       (3,077,655)

OTHER INCOME (DEDUCTIONS)
   Forgiveness of indebtedness                        150,000              --
   Impairment of goodwill                          (1,185,907)             --
   Write-off of deferred financing costs             (241,905)         (472,417)
                                               --------------    --------------
       Total other deductions                      (1,277,812)         (472,417)
                                               --------------    --------------
NET LOSS                                       $   (7,625,977)   $   (3,550,072)
                                               ==============    ==============

NET LOSS PER SHARE, basic and diluted          $        (0.07)   $        (0.03)
                                               ==============    ==============

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING,
   basic and diluted                              106,452,986       105,677,651
                                               ==============    ==============






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

                                       F-5



<PAGE>
<TABLE>
<CAPTION>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES

       CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Deficit)

                 For the Years Ended December 31, 2003 and 2002

                                                                                             Preferred Stock
                                                   Common Stock          Additional             Series A
                                          ---------------------------     Paid-in      ---------------------------
                                             Shares         Amount        Capital         Shares         Amount
                                          ------------   ------------   ------------   ------------   ------------
<S>                                       <C>            <C>            <C>            <C>            <C>
Balance at December 31, 2001               106,463,671   $    106,464   $ 13,962,137      4,086,856          4,087

Capital contribution                              --             --        2,997,467           --             --

Net Loss                                          --             --             --             --             --
                                           -----------        -------     ----------      ---------          -----
Balance at December 31, 2002               106,463,671        106,464     16,959,604      4,086,856          4,087

Return of capital                                 --             --       (1,000,000)          --             --

Capital contribution                              --             --          120,431           --             --

Return of capital of Undivided Interest
 in Securitization assets                         --             --       (4,000,000)          --             --

Net Loss                                          --             --             --             --             --
                                          ------------   ------------   ------------   ------------   ------------
Balance at December 31, 2003               106,463,671   $    106,464   $ 12,080,035      4,086,856   $      4,087
                                          ============   ============   ============   ============   ============

                                               Preferred Stock                                                           Total
                                                  Series B                    Treasury Stock                         Stockholders'
                                          ---------------------------   ---------------------------    Accumulated      Equity
                                             Shares         Amount         Shares         Amount        Deficit        (Deficit)
                                          ------------   ------------   ------------   ------------   ------------    ------------

Balance at December 31, 2001                 1,621,642   $    352,643      1,817,000   $   (399,740)  $ (1,985,400)   $ 12,040,191

Capital contribution                              --             --             --             --             --         2,997,467

Net Loss                                          --             --             --             --       (3,550,072)     (3,550,072)
                                             ---------        -------      ---------       ---------    -----------     -----------
Balance at December 31, 2002                 1,621,642        352,643      1,817,000       (399,740)    (5,535,472)     11,487,586

Return of capital                                 --             --             --             --             --        (1,000,000)

Capital contribution                              --             --             --             --             --           120,431

Return of capital of Undivided Interest
 in Securitization assets                         --             --             --             --             --        (4,000,000)

Net Loss                                          --             --             --             --       (7,625,977)     (7,625,977)
                                          ------------   ------------   ------------   ------------   ------------    ------------
Balance at December 31, 2003                 1,621,642   $    352,643      1,817,000   $   (399,740)  $(13,161,449)   $ (1,017,960)
                                          ============   ============   ============   ============   ============    ============
</TABLE>

Due to the reverse  merger on June 30, 2003 (Notes 1 and 10),  the  stockholders
equity of AutoCorp Equities, Inc. (AutoCorp) was restated as of January 1, 2002.
Included in the restated balance are the following transactions;

During 2002,  AutoCorp issued  2,440,000 shares of its common stock for services
and bonuses valued at $155,500.  During 2003,  AutoCorp  issued 50,000 shares of
its common stock for services valued at $11,000.

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





                                       F-6


<PAGE>
<TABLE>
<CAPTION>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                         For the Years Ended December 31,
                                                         --------------------------------
                                                              2003              2002
                                                         --------------    --------------
<S>                                                      <C>               <C>
Cash Flows From Operating Activities:
Net loss                                                 $   (7,625,977)   $   (3,550,072)
Adjustments to reconcile net loss to net
   cash used by operating activities:
    Loss on sale of loans sold                                  172,530              --
    Forgiveness of debt                                        (150,000)             --
    Depreciation and amortization                               857,561           831,612
    Provision for loan loss                                   1,658,307         1,018,757
    Impairment of goodwill                                    1,185,907              --
   Changes in:
    Other current assets                                        499,305              --
    Other assets                                                 (8,677)         (484,479)
    Accounts payables and accrued expenses                      (26,336)          248,172
                                                         --------------    --------------
   Net cash used by operating activities                     (3,437,380)       (1,936,010)

Cash flows from investing activities:
    Capitalized software costs                                   (1,700)         (341,786)
    Proceeds from loans sold                                  8,228,222              --
    Consumer loans originated                                (2,794,190)      (12,201,712)
    Principal payments collected on consumer loans            3,371,584         1,863,330
    Payments to Credit Unions                                  (525,736)             --
    Purchases of property and equipment                         (26,193)           (9,906)
    Deferred financing fees                                    (511,190)         (340,478)
    Acquisitions, net of cash acquired                           56,940              --
                                                         --------------    --------------
   Net cash provided by (used in) investing activities        7,797,737       (11,010,740)

Cash flows from financing activities:
    Borrowings (repayment) under line of credit                 (14,909)             --
    Advances from affiliated entities                           467,650         2,927,033
    Proceeds of long-term debt                                     --          11,530,476
    Principal payments of long-term debt                     (8,703,734)       (2,826,742)
    Proceeds from sale of securitization assets               3,000,000              --
    Notes payable-directors                                      (7,387)             --
    Capital contributions                                       120,438         2,997,467
    Return of capital                                        (1,000,000)             --
                                                         --------------    --------------
   Net cash provided by (used in) financing activities       (6,137,942)       14,628,234
                                                         --------------    --------------
Net decrease in cash                                         (1,777,585)       (1,661,672)

Cash, beginning of year                                       2,773,358         1,111,686
                                                         --------------    --------------
Cash, end of year                                        $      995,773    $    2,773,358
                                                         ==============    ==============
</TABLE>


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

                                       F-7


<PAGE>
<TABLE>
<CAPTION>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                         For the Years Ended December 31,
                                                         --------------------------------
                                                              2003              2002
                                                         --------------    --------------
<S>                                                      <C>               <C>
Supplemental disclosures of cash flow information:
   Cash paid for interest                                $      493,355    $      391,286
                                                         ==============    ==============


Supplemental disclosures of non-cash flow information:
In March 2003, the Company issued 50,000 shares
 to a Director for services rendered                     $       11,000    $         --

Return of undivided interest in securitization
     assets to PHG                                       $    4,000,000    $         --
                                                         ==============    ==============
</TABLE>


























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

                                       F-8


<PAGE>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

Organization and Business

AutoCorp  Equities,  Inc. and its  wholly-owned  subsidiaries,  collectively the
"Company",  provides  financial  products and related  services to the pre-owned
automotive industry and the finance industry, including the purchase and sale of
automobile  finance  receivables,   collateralized  by  used  automobiles,  from
primarily independent automobile retailers throughout the United States to banks
and credit unions.

PAG is a wholly owned subsidiary of AutoCorp Equities,  Inc.  ("AutoCorp") which
is a significant subsidiary of Pacific Holdings Group, Inc. ("PHG"). PHG is 100%
owned by Pacific USA Holdings Group,  Inc.  ("PUSA").  On December 2, 2002, PUSA
filed a voluntary  petition  under Chapter 11 of the U.S.  Bankruptcy  Code. The
ultimate parent company is Pacific  Electric Wire & Cable Co. in Taiwan.  PAG is
the holding company for its  wholly-owned  subsidiary  American Finance Company,
Inc. ("AFCO"). AFCO's principal operations consist of the purchase of automobile
finance  receivables,  collateralized by used  automobiles,  from franchised and
independent automotive dealers throughout the United States.  AutoCorp Financial
Services, Inc. ("AFS") is a wholly-owned subsidiary of AutoCorp whose operations
consist of providing financial services to the finance industry.

Pacific USA (PUSA) is the ultimate  company of the entire  group,  owning all of
the outstanding stock of PHG.

Effective June 30, 2003,  AutoCorp issued 100,000,000 shares of its common stock
and  4,086,586  shares of its  Series A  convertible  stock to PHG,  the  parent
company of PAG, resulting in PHG owning  approximately  94.0% of the outstanding
AutoCorp shares.  The form of the transaction was a reverse  triangular  merger,
whereby a newly-formed,  wholly-owned  acquisition subsidiary of AutoCorp merged
with and into PAG, with PAG being the surviving  corporation in the merger.  The
accompanying December 31, 2003 balance sheet includes the assets and liabilities
of AutoCorp and PAG. The operations of AutoCorp are included in the consolidated
financial statements effective July 1, 2003.

On May 4, 2004, the Company has entered into a series of  transactions which may
have an  impact on  control of the  Company and its  financial  position.  These
transactions are subject to rescission due to certain bankruptcy  proceedings of
PUSA as described in Note 19.

Consolidated Basis

The consolidated  financial  statements  include the accounts of the Company and
its wholly  owned  subsidiaries.  All  material  intercompany  transactions  and
intercompany balances have been eliminated in consolidation.

Use of Estimates

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


                                       F-9

<PAGE>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003

Finance Receivables

Finance  receivables  consist  of  purchased  installment  contracts,  which are
assigned to the Company upon acquisition.  The titles to the automobiles,  which
serve as security for the payment of the purchased contracts, are either held by
the Company or by the financial institution to which the Finance receivables are
pledged as collateral.

Finance  receivables  that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at their outstanding
gross  contractual  balances,  net of allowance for losses and unearned  finance
revenue.  Unearned finance revenue  consists of unearned  interest and discounts
realized on contract  purchases.  Finance Receivables that are held for sale are
reported at the lower of cost or market value.

Allowance for credit losses is increased by allocating a portion of the discount
recorded  on  the  acquisition  of  contracts.  The  Company  performs  periodic
evaluations   of  the  adequacy  of  the   allowance   for  losses  taking  into
consideration  the  past  loss  experience,  known  and  inherent  risks  in the
portfolio,  adverse  situations that may affect the borrower's ability to repay,
the  estimated  value of as well as the  recovery  potential  of any  underlying
collateral and current economic  conditions.  Any increases in the allowance for
losses  subsequent to the  acquisition  of the contract are charged to earnings.
When the Company purchases contracts , dealers make certain  representations and
warranties  regarding the validity of the contract and the enforceability of the
security interest in the related vehicle. Consequently, the Company has recourse
to the  dealer in the event the  dealer's  representations  and  warranties  are
false.  Furthermore,  the  Company's  standard  form  agreement  with all of its
dealers requires that the dealer  repurchase any contract where the borrower has
failed  to make the  first or  first  two  payments.  In such  cases,  it is the
Company's  responsibility to return the related vehicle to the dealer.  Consumer
loans are charged off when they are 120 - 180 days contractually past due.

Undivided Interest in Securitization Assets

Undivided interest in securitization  assets represents  $2,000,000  interest in
loans  previously  securitized by PUSA. This asset is accounted for at the lower
of cost or market value.

Depreciation and Amortization

Furniture  and equipment  are carried at cost net of  accumulated  depreciation.
Depreciation and amortization is calculated using the straight-line  method over
the estimated useful life of the assets.


                                      F-10

<PAGE>

The Company  capitalizes  certain computer software costs,  after  technological
feasibility   has  been   established,   which  are   amortized   utilizing  the
straight-line  method over the economic life of the related  software  which has
been estimated at five years.

Deferred  financing  costs are amortized  over the term of the  associated  debt
using the straight-line method.

Depreciation  and  amortization  expense was  $340,321  and $355,404 in 2003 and
2002.

Revenue Recognition

Interest  income from  finance  receivables  are  recognized  using the interest
method. Accrual of income on finance receivables is suspended when a contract is
contractually  delinquent  for ninety days or more.  The accrual is resumed when
the contract becomes  contractually  current, and past due interest and discount
income is recognized at that time.

Origination   Fees  are  recognized  for  services   provided  during  the  loan
origination  process at the point in time the loan is funded by the  third-party
lender.

Service Fees are based on a percentage  of  collections  and are  recognized  as
collected on a monthly basis from the owner of the receivable.

Participation  income is based on a percentage of collections and are recognized
as collected on a monthly basis from the owner of the receivable.

Income Taxes

PUSA files a consolidated tax return that includes all subsidiaries that are 80%
or more owned. PUSA and its subsidiaries operate under a formal intercompany tax
sharing  arrangement,  which  treats  PUSA and its  subsidiaries  on a  separate
company basis.

Income taxes are accounted for under the asset and liability method.  Under this
method,  deferred tax assets and  liabilities  are generally  recognized for the
future tax  consequences  attributable  to  differences  between  the  financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective tax basis, and net operating loss carry forwards.

Deferred  tax  assets and  liabilities  are  measured  using  enacted  tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in income in the
period that includes the enactment date. In addition,  a valuation  allowance is
established to reduce any deferred tax asset in which the Company is not able to
determine  on a more likely than not basis that the  deferred  tax asset will be
realized.


                                      F-11

<PAGE>

Long-Lived Assets

It is the Company's policy to review the carrying value of long-lived assets for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying  value  of such  assets  may  not be  recoverable.  Measurement  of the
impairment  loss is based on the fair value of the asset.  Generally  fair value
will be  determined  using  valuation  techniques  such as the present  value of
expected future cash flows.

Fair Value of Financial Instruments

The fair  value of a  financial  instrument  represents  the amount at which the
instrument could be exchanged in a current  transaction between willing parties,
other  than a forced  sale or  liquidation.  Significant  differences  can arise
between the fair value and  carrying  amount of financial  instruments  that are
recognized at  historical  cost amounts.  The carrying  value of cash,  accounts
payable and accrued liabilities  approximate the fair value because of the short
maturity of those  instruments.  The finance  receivables  have been  reduced to
their  estimated  fair value.  The carrying  value of the undivided  interest in
securitization assets have been independently appraised and have been reduced to
their estimated fair value.  The carrying amount of long-term debt  approximates
the fair value since these debt instruments have variable interest rates similar
to those that are currently available to the Company.

Concentrations of Credit Risk

The Company maintains its cash with high credit quality financial  institutions.
Each  account is secured by the  Federal  Deposit  Insurance  Corporation  up to
$100,000.

The Company is at times a party to financial  instruments with off-balance sheet
risk in the  normal  course  of  business  to meet  the  financing  needs of its
customers.  These  financial  instruments  consist  primarily of  commitments to
extend credit. These instruments involve, to varying degrees, elements of credit
risk in excess of the amount recognized in the consolidated balance sheet. As of
December 31, 2003, there were no such commitments.

The Company  currently  owns and  services  automobile  receivables  acquired in
connection with the Credit Union loan participation program. Six of these Credit
Union  loan  participation   program  transactions  are  with  recourse.   These
receivables  are payable by customers  with non-prime  credit.  Loans to persons
with  non-prime  credit involve an increased  probability of delinquency  and/or
default 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 credit  worthiness 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 further
increasing the Company's  losses.  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.  Further,  any default that is with  recourse to a Credit
Union may require  the  Company to  repurchase  the  receivable  from the Credit
Union.


                                      F-12

<PAGE>

NOTE 2. GOING CONCERN UNCERTAINTY

The Company has incurred  significant losses from operations and currently has a
working  capital  deficit  which raises  substantial  doubt about the  Company's
ability to continue as a going concern.

Various  types of additional  funding such as issuance of  additional  common or
preferred  stock,  additional  lines of  credit,  or  issuance  of  subordinated
debentures on other forms of debt will be pursued.

It is not  possible to predict the  success of  management's  efforts to achieve
profitability.  Also, there can be no assurance that additional  funding will be
available  when needed or, if  available,  that its terms will be  favorable  or
acceptable.

On May 4, 2004, the Company  entered into a series of  transactions,  certain of
which  may have an  impact on  the capital  structure of the  Company.  However,
these transactions are subject to rescission as described in Footnote 19.

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 as a going concern.


Note 3: RECENT ACCOUNTING PRONOUNCEMENTS

In July 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal Activities".  The standard requires companies to recognize
costs associated with exit or disposal  activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan.  Examples of costs
covered by the standard  include lease  termination  costs and certain  employee
severance  costs  that  are  associated  with  a   restructuring,   discontinued
operation, plant closing or other exit or disposal activity. Previous accounting
guidance was provided by EITF 94-3, "Liability  Recognition for Certain Employee
Termination  Benefits  and Other  Costs to Exit an Activity  (including  Certain
Costs Incurred in a  Restructuring)".  SFAS No. 146 replaces EITF 94-3. SFAS 146
is to be applied  prospectively to exit or disposal  activities  initiated after
December  31, 2002.  The Company  adopted SFAS No. 146 as of January 1, 2003 and
this  adoption  had no  material  impact  on the  Company's  combined  financial
statements for the year ended December 31, 2003.

In November 2002, the EITF reached consensus on EITF No. 00-21,  "Accounting for
Revenue Arrangements with Multiple  Deliverables".  This consensus requires that
revenue  arrangements with multiple  deliverables be divided into separate units
of accounting if the deliverables in the arrangement meet specific criteria.  In
addition,  arrangement  consideration must be allocated among the separate units
of accounting based on their relative fair values, with certain limitations. The
Company will be required to adopt the  provisions of this  consensus for revenue
arrangements  entered into after June 30,  2003,  and the Company has decided to
apply  it on a  prospective  basis.  The  Company  does  not  have  any  revenue
arrangements that would have a material impact on its financial  statements with
respect to EITF No. 00-21.


                                      F-13

<PAGE>

In  November  2002,  the  FASB  issued  FASB  Interpretation,  or  FIN  No.  45,
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees of  Indebtedness  of Others".  FIN No. 45 elaborates on the
disclosures  to be made by a  guarantor  in its  interim  and  annual  financial
statements about its obligations under certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize,  at the inception of a
guarantee,  a  liability  for the fair  value of the  obligation  undertaken  in
issuing the guarantee. However, a liability does not have to be recognized for a
parent's  guarantee of its subsidiary's  debt to a third party or a subsidiary's
guarantee  of the debt owed to a third  party by either  its  parent or  another
subsidiary of that parent. The initial recognition and measurement provisions of
FIN No.  45 are  applicable  on a  prospective  basis to  guarantees  issued  or
modified after December 31, 2002  irrespective  of the  guarantor's  fiscal year
end. The  disclosure  requirements  of FIN No. 45 are  effective  for  financial
statements  with annual periods ending after December 15, 2002. The Company does
not have any guarantees that would require disclosure under FIN No. 45.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-based
Compensation - Transition  and Disclosure - an Amendment to SFAS No. 123".  SFAS
No. 148 provides alternative methods of transition for a voluntary change to the
fair value-based method of accounting for stock-based employee compensation.  In
addition,  this statement amends the disclosure requirements of SFAS No. 123 for
public  companies.  This statement is effective for fiscal years beginning after
December 15, 2002. The Company  adopted the disclosure  requirements of SFAS No.
148 as of January 1, 2003 and plans to follow the  provisions of APB Opinion No.
25 for accounting for stock based compensation.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities -- An Interpretation of ARB No. 51", which clarifies the application of
Accounting  Research Bulletin No. 51,  "Consolidated  Financial  Statements," to
certain entities in which equity investors do not have the  characteristics of a
controlling  financial interest or do not have sufficient equity at risk for the
entity to finance  its  activities  without  additional  subordinated  financial
support from other parties.  FIN No. 46 provides guidance related to identifying
variable  interest  entities  (previously  known  generally  as special  purpose
entities, or SPEs) and determining whether such entities should be consolidated.
FIN No. 46 must be applied  immediately to variable interest entities created or
interests in variable  interest entities  obtained,  after January 31, 2003. For
those  variable  interest  entities  created or interests  in variable  interest
entities obtained on or before January 31, 2003, the guidance in FIN No. 46 must
be applied in the first fiscal year or interim period  beginning  after June 15,
2003. The Company adopted FIN No. 46 as of January 1, 2003 and this adoption had
no material impact on the Company's combined  financial  statements for the year
ended December 31, 2003.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with Characteristics of Both Liabilities and Equity". This statement
establishes standards for how an issuer classifies and measures in its statement
of financial position certain financial instruments with characteristics of both
liabilities  and  equity.  It  requires  that an  issuer  classify  a  financial
instrument  that is  within  its  scope  as a  liability  (or an  asset  in some
circumstances) because that financial instrument embodies the characteristics of
an  obligation  of  the  issuer.   This  standard  is  effective  for  financial
instruments  entered  into or modified  after May 31,  2003,  and  otherwise  is
effective at the beginning of the first interim period  beginning after June 15,
2003. The Company has determined that it did not have any financial  instruments
that are impacted by SFAS No. 150.


                                      F-14

<PAGE>

NOTE 4. FINANCE RECEIVABLES

Finance receivables consist of the following:

                                       2003
----------------------------------------------
Finance receivables                $ 2,472,903

Allowance for credit losses           (974,188)
----------------------------------------------
Finance receivables, net           $ 1,498,715
==============================================

At December 31, 2003,  contractual  maturities  of finance  receivables  were as
follows:

2003             $   60,590
2004                541,164
2005              1,230,418
2006                884,765
2007                448,284
                 ----------
                  3,165,221
Less interest      (692,318)
                 ----------
      Total      $2,472,903
                 ==========

It is the Company's  experience that a substantial  portion of the consumer loan
portfolio  generally is collected before  contractual  maturity dates. The above
tabulation,  therefore,  is not to be  regarded  as a  forecast  of future  cash
collections.  Cash  collection  of principal  amounts of consumer  loans totaled
$3,714,362 in 2003.

Note 5. PROPERTY AND EQUIPMENT

The components of property and equipment as of December 31, 2003 are as follows:

-----------------------------------------------------
Furniture and office equipment             $  372,802
Software                                       92,278
-----------------------------------------------------
                                              465,080
Accumulated depreciation                     (382,710)
-----------------------------------------------------
                                           $   82,370
=====================================================



                                      F-15

<PAGE>

NOTE 6. INTANGIBLE ASSETS

Software development costs, recorded at cost, are amortized over five years, the
expected useful life of the asset. Intangible assets are reviewed for impairment
whenever events or  circumstances  indicate  impairment might exist, or at least
annually.  The Company assesses the  recoverability  of its assets in accordance
with SFAS No. 142 "Goodwill and Other Intangible  Assets,"  comparing  projected
undiscounted  cash flows  associated with those assets against their  respective
carrying  amounts.  Impairment,  if any, is based on the excess of the  carrying
amount over the fair value of those assets. The Company determined that there is
no impairment of these assets.

Intangible assets consist of the following:

        Software Development Costs   $ 1,325,362

        Accumulated amortization        (514,014)
                                     -----------

    Intangible assets, net           $   811,348
                                     ===========



    Capitalized software will be amortized as follows:


          Year ending December 31,                                    Amount
          ----------------------------------------------------------------------

                2004                                                  264,732
                2005                                                  264,732
                2006                                                  264,732
                2007                                                   17,152
          ----------------------------------------------------------------------
                                                                    $ 811,348
          ----------------------------------------------------------------------


NOTE 7. UNDIVIDED INTEREST IN SECURITIZATION ASSETS

At January 1, 2003,  the Company  had an  undivided  interest in  securitization
assets totally  $9,000,000.  The rights to these assets were  contributed to the
Company by its major shareholder, PHG in October 2001 and December 2001. In May,
2003, PAG returned an undivided  interest of $4,000,000 of this asset to PHG. In
June,  2003,  PAG  sold  $3,000,000  to a  third  party  at  no gain or loss. At
December 31, 2003, the total securitization  asset held by all related  entities
was valued at  approximately $16,721,000. This securitization  asset is  pledged
as  collateral  on certain obligations of PUSA.

NOTE 8. LINE OF CREDIT

In November 2003, the Company  executed a new revolving  credit  facility in the
amount of $10,000,000 with a financial institution that bears interest at a rate
of prime plus 2% and  matures on in  November  2004.  The  purpose of the credit
facility is to provide funding for the purchase of automobile  finance contracts
(which  will  serve as  collateral)  for sale to banks and  credit  unions.  The
Company,  and  PUSA's  ultimate  parent  company,  which  is  based  in  Taiwan,
guaranteed  this  obligation.  At December 31, 2003,  there were no  outstanding
advances on the line of credit.  At December 31, 2003,  the financial  covenants
were: (a) the adjusted tangible net worth shall not be less than ($250,000), (b)
the Company shall  maintain a ratio of net worth to tangible  assets of not less
than 0.15:1.00,  (c) the cumulative  charge-off ratio of the finance receivables
shall be not more than 10%, and (d) the trailing three month average delinquency
rate of finance  receivables  pledged as collateral shall be not more than 7.5%.
The Company is in default of the adjusted  tangible  net worth  covenant and the
net worth to tangible  asset  covenant.  At  December  31,  2003,  there were no
borrowings under this line of credit.

On May 4, 2004, the Company  entered into a series of  transactions,  certain of
which  may  have  an  impact  on  the  Company's  compliance  with  certain debt
covenants. However, these transactions are  subject to  rescission  as described
in Footnote 19.

At December  31,  2003,  the Company  had a line of credit of  $2,000,000  which
matured in December,  2002 with an institutional lender. During 2003, there were
no advances  under the line and the balance due totaling $9,996 at December  31,
2003 and was repaid in January 2004.


                                      F-16

<PAGE>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 9. NOTES PAYABLE TO DIRECTORS

Notes Payable consist of the following:

Note payable to a director, original principal
   amount of $125,000, Interest payable at 12%,
   principal due on October 1, 2004. The obligation
   is secured by certain installment contracts. At
   maturity,   the director has the right to convert
   the balance due into 181,159 shares of Common Stock               $    79,288

Note payable to a director, original principal
   amount of $200,000, interest payable at 12%,
   principal due on October 11, 2004. The note is secured
   by installment contracts automobiles purchased with
   the proceeds of the note.                                             195,000

Note payable to a company owned by a director,
   original principal amount of $88,750, interest
   payable at 12% (subsequently increased to 18%),
   principal due on July, 1, 2004. This note is
   collateralized by certain automobile Contracts.                        76,250

                                                                      ----------
                                                                      $  350,538
                                                                      ==========






















                                      F-17

<PAGE>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. ACQUISITION AND GOODWILL
On June 30, 2003,  AutoCorp and PAG entered into a merger agreement (the "Merger
Agreement").  On  June  30,  2003  ("Merger  Closing  Date"),  a  newly  created
wholly-owned  subsidiary  of  AutoCorp  was  merged  with  and into PAG with PAG
surviving as a wholly- owned subsidiary of AutoCorp.  AutoCorp  acquired 100% of
the  outstanding  shares  of PAG in  exchange  for  issuance  of  securities  of
AutoCorp. The securities consisted of: (1) 100,000,000 shares of AutoCorp common
stock,  par value  $.001 per  share  (the  "AutoCorp  Common  Shares"),  and (2)
4,086,856 shares of a new Series A Convertible  Preferred Stock, par value $.001
per share of AutoCorp (the "Series A Preferred  Shares") that are convertible at
any time, at the option of the holder,  into not less than  40,868,560  AutoCorp
common shares.

The acquisition  was accounted for using the purchase  method of accounting.  As
such,  the  assets and  liabilities  of  AutoCorp  have been  recorded  at their
estimated  fair value and the results of  operations  have been  included in the
consolidated  results of  operations  from the date of  acquisition.  The excess
purchase  price  over  the fair  value of the  tangible  and  intangible  assets
acquired in the acquisition totaled $1,185,907 and was allocated to goodwill.

The  following  is a sum  mary  of  the  amounts  assigned  to  the  assets  and
liabilities of AutoCorp at June 30, 2003:

Net Assets Acquired

Cash                                                                $    56,940
Accounts receivable                                                       3,000
Finance receivables,net                                               2,200,028
Property and equipment,net                                               35,741
Other assets                                                             41,849
                                                                    -----------
Total assets acquired                                                 2,337,558
                                                                    -----------
Accounts payable and accrued expenses                                   180,868
Notes payable                                                           532,830
Loan participation payable                                            2,809,767
                                                                    -----------
Total liabilities assumed                                             3,523,465
                                                                    -----------
Net assets/liabilities acquired                                      (1,185,907)
                                                                    ===========
Total consideration given                                             1,185,907
                                                                    ===========
Total consideration over net assets/
 Liabilities acquired                                               $ 1,185,907
                                                                    ===========







                                      F-18

<PAGE>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Because  the  former  stockholder  of PAG  owns a  majority  of the  issued  and
outstanding  shares of the  common  stock of  AutoCorp  after the  merger,  this
transaction  was accounted for as a reverse  merger  whereby PAG is deemed to be
the acquirer of AutoCorp.  Therefore, all financial information included in this
report prior to the Merger  Closing Date are those of PAG as if PAG had been the
registrant.  The  financial  information  since the Merger  Closing Date will be
those of AutoCorp and PAG on a consolidated basis.

As a result of the merger,  AutoCorp triggered a change in control which now has
limited its ability to utilize all of its cumulative  net operating  losses used
to offset future taxable income for Federal and State income tax reporting.  The
tax benefit lost was approximately $2.3 million. See Note 13.

In preparing the Form 10QSB for the nine months ended  September  30, 2003,  the
Company has determined  that the original  calculation of goodwill was incorrect
as previously disclosed in the Form 10QSB which was filed with the commission on
September 24, 2003.

Management has determined  using the market price of its equity  securities (the
market  capitalization  used in  connection  in valuing  publicly  traded equity
securities)  was  not  representative  of  the  fair  value  of the  net  assets
(deficiency)  acquired. The quoted market price of the Company's equity security
should not be the sole measurement basis of the fair value of this transaction.

Management  adjusted  the value of goodwill  recorded at June 30, 2003  totaling
$3,155,562, and restated it to $1,185,907 at September 30, 2003.

Accordingly,  the Form 10QSB as filed with the  Commission on September 24, 2003
will be amended for this change.

In December  2003,  Goodwill was tested by management  for impairment due to the
continuing significant losses of AutoCorp and the expectations that AutoCorp may
undergo a change of control. See Notes 2 and 19.

As a result of the foregoing,  management  has  determined  Goodwill to be fully
impaired and wrote off the balance in its entirety.

Pro Forma Results

The following  unaudited pro forma consolidated  results of operations have been
prepared as if the acquisition discussed above had occurred January 1, 2002:

                                                      Twelve Months Ended
                                                          December 31,
                                                      2003             2002
                                                 -------------    -------------

Revenue                                          $   1,937,449    $   4,765,905
Net loss attributed to common                    $   8,111,884    $   5,026,424
stockholders

Net loss per share,
basic and diluted                                $        (.08)   $        (.05)
                                                 =============    =============

Weighted average number of
Shares outstanding,
basic and diluted                                  106,452,986      105,677,651
                                                 =============    =============






                                      F-19


<PAGE>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11.  AMOUNTS PAYABLE TO CREDIT UNIONS

Loan  participations  payable to credit  unions of  $2,284,030  represent  a 90%
interest  purchased  by credit  unions in six loan pools of  automobile  finance
contracts which were sold to the credit unions by the Company. The principal and
interest of these loan participations  purchased by credit unions are guaranteed
by the Company. The loan participation yields to the credit unions range from 7%
to  8%.  The  Company  provides  collection,  asset  management,  and  servicing
activities  for  the  underlying  finance  receivables  on a fee  basis  for the
participating credit unions.

The Company also provides collection and servicing activities on a fee basis for
finance receivables sold to credit unions on a non-guaranteed basis, in addition
to providing such services to credit unions for financing receivables which were
not  purchased  from the Company.  At December 31, 2003,  the total  outstanding
balance of finance  receivables  for which  collection,  asset  management,  and
servicing activities were performed was $1,027,149.
































                                      F-20


<PAGE>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 12. LONG-TERM DEBT

Long-term debt consists of the following:

Open account advances received from Pacific Holdings
 Group, Inc. (PHG), the parent company of this
 Company. The advances bear no interest and will not be repaid
 before January 1, 2005.                                            $ 3,040,197

An obligation due to PHG matures in December 2005
 and bears interest at 5% per annum. This note is
 subordinated To obligations due financial institutions.
 At maturity, PHG may request the balance be converted
 into Common Stock of the  Company at $0.12 per share.                  400,000
                                                                    -----------
    Long-Term Debt due to Affiliated Entities                         3,440,197
                                                                    ===========

A note due a credit union, which matures in January 2007,
 Requires monthly payments of $1,728 includes interest at
 8% per annum and is collateralized by certain installment
 contracts                                                          $    78,606

Less current portion due to third parties                               (13,675)
                                                                    -----------
   Long-Term Debt due to Third Parties                                   64,931
                                                                    ===========

Annual principal payments are payable as follows:

Year ended December 31,:
2004                                                                $    13,675
2005                                                                  3,456,321
2006                                                                     17,463
2007                                                                     31,344
                                                                    -----------
        Total                                                       $ 3,518,803
                                                                    ===========
Note 13. INCOME TAXES

The Company has remaining cumulative Federal tax net operating losses (NOL's) on
a separate company basis of approximately $11.6 million at December 31, 2003 for
tax purposes expiring through 2023. These NOL's were generated, principally as a
result of the tax losses resulting from the operations of the Company.

Due to the  current  uncertainty  of  realizing  the  benefits  of the  tax  NOL
carry-forward,  a valuation allowance equal to the tax benefits for the deferred
taxes has been established.  The full realization of the tax benefit  associated
with the  carry-forward  depends  predominately  upon the  Company's  ability to
generate  taxable  income  during the carry  forward  period.  The  Company  has
provided a full valuation allowance for the deferred tax assets since management
has not been able to adequately  determine that the  realization of the asset is
more likely than not.



                                      F-21

<PAGE>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The components of income taxes are comprised as follows:

Year Ended December 31,                                 2003            2002
--------------------------------------------------------------------------------
Deferred

     Federal                                       $   (138,800)   $  1,146,000
     State                                              (51,400)        178,000
-------------------------------------------------------------------------------
                                                       (190,200)      1,324,000
     Effect of Valuation Allowance                      190,200      (1,324,000)
--------------------------------------------------------------------------------
                                                   $       --      $       --
================================================================================

The  difference  between  the U.S.  Federal  statutory  rate  and the  Company's
effective rate is:

Year Ended December 31,                                 2003            2002
--------------------------------------------------------------------------------
Federal statutory tax rate                             34.0%            34.0%
Valuation allowance                                   (34.0%)          (34.0%)
--------------------------------------------------------------------------------
Effective tax rate                                      0.0%             0.0%
================================================================================

Deferred tax assets are comprised of the following:

Year Ended December 31,                                 2003            2002
--------------------------------------------------------------------------------
Deferred

Net operating loss carryforward                    $ 7,128,000     $ 2,064,000
Less; Effect of IRS Section 382 Limitation          (2,322,000)          --
                                                     ---------       ---------
                                                     4,806,000       2,064,000
Impairment of goodwill                                 428,000           --
Provision for finance receivable losses                123,000           --
                                                     ---------       ---------
                                                     5,357,000       2,064,000
Valuation allowance                                 (5,357,000)     (2,064,000)
--------------------------------------------------------------------------------
                                                   $     --        $      --
================================================================================

Note 14.  RELATED PARTY TRANSACTIONS

The  Company  has trade  payables  to  related  entities  totaling  $28,589  and
receivables of $43,093. See notes 7, 8, 9, 12 and 19 for the other related party
transactions.



                                      F-22

<PAGE>

                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 15. LOSS PER SHARE

For the years ended December 31, 2003 and 2002, due to net losses, all shares of
Common  Stock  issuable  upon   conversion  of  convertible   preferred   stock,
convertible debt and the exercise of outstanding  options and warrants have been
excluded  from the  computation  of diluted  loss per share in the  accompanying
statements of operations as their impact would be antidilutive.

Note 16. 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.

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 December 31, 2003,
1,966,158   shares  had  been  issued  under  the  Plan,   75,869  options  were
outstanding, and 33,842 shares were available for future issuance.

No options were granted during 2003.  There were no warrants  authorized  during
2003.

The following  table  summarizes  stock options  outstanding  and exercisable at
December, 31, 2003:

                                   Weighted
                                   Average                 Average    Expired
   Exercise            Options    Remaining   Options     Exercise    Options
  Price Range                       Life                   Price
--------------------------------------------------------------------------------
Outstanding, beginning of year
  $ 0.03   $ 0.03      75,869    7 years       75,869    $  0.03         --
Granted
    --       --          --         --            --        --           --
Forfeited
    --       --          --         --            --        --           --
Exercised
    --       --          --         --            --        --           --
--------------------------------------------------------------------------------
Options, end of year  75,869     7 years       75,869    $  0.03         --
================================================================================

The Company has granted  85,000  stock options  related to AFCO stock to certain
employees  effective May 1, 2001, at an exercise price of $10.00 per share,  and
vesting over a five-year period from May 2002 through  May 2006.  The  Board  of
Directors  of  AutoCorp  may  assume  these  options or substitute an equivalent
option or right.




                                      F-23

<PAGE>

Note 17. COMMITMENTS AND CONTINGENCIES

Litigation

The Company is a  defendant  in a lawsuit for  non-payment  of a total  purchase
price paid for certain  retail  motor  vehicle loan  contracts.  The Company has
accrued approximately $116,000 for this potential liability.

The Company is also a defendant  in a lawsuit for breach of lease under a theory
of Alter ego. A motion for Summary Judgement has been filed against the Company.
Management  believes  there will be a  settlement and  contends ultimately there
will be no material liability.

The Company and its  subsidiaries  are also subject to  litigation in the normal
course of business.  Management  considers  the  aggregate  liability  which may
result from such litigation not material at December 31, 2003.

Operating Leases

The Company leases two office facilities under operating leases, which expire in
September  2004 and May 2007.  The  Company  also leases two  automobile  retail
facilities  under operating  leases which expire in February 2004 and June 2004.
Rent  expense  totaled  $248,627,  net of  sub-leasing  income of  $15,000,  and
$184,859 in 2003 and 2002.  Future minimum  annual  payments under the operating
leases are as follows:

Year Ending December 31,                        Amount
-------------------------------------------------------
2004                                         $  254,691
2005                                            136,918
2006                                            136,918
2007                                             57,049
-------------------------------------------------------
Total                                        $  585,576
=======================================================



                                      F-24

<PAGE>


                    AutoCorp EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 18. Retirement Plans

The  employees  of AFCO are covered  under the PUSA 401(K)  Savings  Plan.  Upon
completion  of  certain  eligibility  requirements,  employees  are  allowed  to
contribute  up to 15% of their  annual  compensation.  AFCO  matches 50% of such
contributions  up to 6%.  Contributions  by AFCO totaled  $20,681 and $33,983 at
December 31, 2003 and 2002, respectively.

The  employees  of  AutoCorp  Equities,  Inc.  and AFS  are  covered  under  the
Administaff  401(K)  Savings  Plan.  Upon  completion  of  certain   eligibility
requirements,  employees  are allowed to  contribute  up to 80% of their  annual
compensation. There is no matching contribution provision in this plan.

Note 19. Subsequent Events

As of May 13,  2004,  Company  draws on the  $10,000,000  line of credit  were
approximately $959,894 for the purchase of automobile contracts.

Subject to certain  rescission rights described below, on May 4, 2004,  AutoCorp
entered  into an agreement to repurchase 94 million shares  of  AutoCorp  common
stock  from  PHG,  a wholly-owned subsidiary of PUSA, in exchange for a $940,000
Subordinated  Note.  (PUSA is a  indirect  wholly-owned  subsidiary  of  Pacific
Electric Wire & Cable Co., Ltd., a Republic of China company.)

Subject to certain  rescission rights described below,  AutoCorp also has agreed
to purchase  from PHG 7 million  shares of common  stock of nStor  Technologies,
Inc. (AMEX: NSO) in exchange for a $2.8 million Subordinated Note. Additionally,
the Company has agreed to convert a $3 million open account loan payable to  PHG
into a Subordinated Note (Note 12).  All of the above  Notes mature through May,
2007.

Subject  to certain  rescission  rights  described  below,  AutoCorp's  Board of
Directors,  together with PHG, and Pacific  Financial  Group,  Inc.  ("PFG") (an
affiliate of PHG),  as the holders of all the Series A and Series B  Convertible
Preferred Stock,  have agreed to change the conversion  rights of both series so
they  are  not  convertible  at  the  option  of  the  holder  until  May, 2006.
Accordingly,  until  May  2006,  PHG, PFG, PUSA and PEWC will not be controlling
entities.

In April 2004, subject to certain  rescission  rights, AFCO  sold  a  subsidiary
where the $10,000,000  revolving credit  facility   (Note 8)  was   domiciled to
Legacy Receivables Corporation, a related entity controlled by certain executive
officers of AutoCorp, for $300,000.  AFCO will  continue to have the  ability to
draw from this  facility in its entirety. The sale agreement is subject to right
of rescission.

PUSA is debtor-in-possession in Chapter 11 bankruptcy Cause No. 02-80906-SAF, in
United States  District  Court,  Northern  District of Texas,  filed December 2,
2002. Although AutoCorp, PHG and PFG are not filing entities in  the  bankruptcy
proceedings,  AutoCorp  and  PHG  have  agreed that PHG has the right to rescind
the transactions  through June 15, 2004, if requested to do so by the bankruptcy
court, the creditor's committee, or a representative of the court.

If these transactions are not rescinded, the number of outstanding common shares
will be reduced from 106 million to approximately 12 million.





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