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

                                   Form 10-KSB

(Mark One)

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

                  For the fiscal year ended September 30, 1999

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

           For the transition period from ___________ to ____________


                        Commission file number 000-15216


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


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


2740 North Dallas Parkway,  Suite 110
Plano, Texas                                               75093
(Address of principal executive offices)                 (Zip Code)


                    Issuer's telephone number: (972) 378-5355
Securities registered under Section 12(b) of the Exchange Act:

          Title of each class          Name of each exchange on which registered

            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

     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 its most recent fiscal year: $13,356,609.

     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:  $1,575,675,  based on the $0.53 per
share price at which common equity was sold on December 6, 1999.

     State the number of shares  outstanding of each of the issuer's  classes of
common equity,  as of the latest  practicable  date:  6,189,971 shares of Common
stock, $0.001 par value, as of December 9, 1999.

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



                                       i

<PAGE>


<TABLE>

<CAPTION>

TABLE OF CONTENTS
<S>                                                                             <C>                               <C>
THE COMPANY.........................................................................................................1

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

PART I   ...........................................................................................................8
         Item 1.  Description of Business...........................................................................8
         Item 2.  Description of Property...........................................................................14
         Item 3.  Legal Proceedings.................................................................................15

PART II  ...........................................................................................................15
         Item 5.  Market for Common Equity and Related Stockholder Matters..........................................17
         Item 6.  Management's Discussion and Analysis or Plan of Operation.........................................21
         Item 7.  Financial Statements..............................................................................22
         Item 7A.  Quantitative and Qualitative Disclosure about Market Risk
         Item 8.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..............22

PART III ...........................................................................................................22
         Item 9.  Directors, Executive Officers, Promoters and Control Persons; Compliance with
                  Section 16(a) of the Exchange Act.................................................................22

         Item 10. Executive Compensation............................................................................24
         Item 11. Security Ownership of Certain Beneficial Owners and Management....................................25
         Item 12. Certain Relationships and Related Transactions....................................................27
         Item 13. Exhibits and Reports on Form 8-K..................................................................28

SIGNATURES..........................................................................................................30

INDEX TO FINANCIAL STATEMENTS.......................................................................................F1

</TABLE>









                                       ii

<PAGE>



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


THE COMPANY

         AutoCorp  Equities,  Inc. ("the  Company"),  which is  headquartered in
Plano, Texas, owns and operates five independent automobile dealerships in Texas
and four loan servicing  centers in Texas and Kentucky.  Through used car sales,
the dealerships  originate  non-prime retail  installment  contracts  secured by
automobiles  and light-duty  trucks.  The Company also  purchases  portfolios of
non-prime automobile receivables.  In both cases, the loan servicing function is
retained  (see  Item  1,  Description  of  Business  -  Development  of  Current
Business).

         During the fiscal  year ended  September  30,  1998,  the  Company  was
headquartered in Phoenix,  Arizona,  and had business  operations in Arizona and
New  Mexico.  Effective  at the  end  of  fiscal  1998,  these  businesses  were
transferred  to the  controlling  shareholders,  as part of a change of control,
which was  formalized on December 30, 1998. On that date, the ownership of those
businesses  was  transferred  to  the  controlling  shareholders  as  part  of a
restructuring  transaction  and  related  business  reorganization  (see Item 1,
Description of Business  Business  Operations  Owned and Operated  During Fiscal
1998). In addition, at December 30, 1998, the Company was financially distressed
 . A restructuring was effected on that date in order to create an organizational
structure that is efficient and reflects the revised business plans (see Item 1,
Description of Business - Recent Restructuring Transaction).

RISK FACTORS

         Limited  Operating  History  of  Present  Business;   No  Assurance  of
Profitability.  The  Company's  significantly  restructured  current  operations
commenced on December 30, 1998. The relatively  brief  operating  history of the
restructured  operations  provides  only a  limited  basis for  evaluation.  The
prospects must be considered in light of the risks,  expenses,  difficulties and
problems  frequently   encountered  in  an  industry  characterized  by  intense
competition.  For the years ended  September 30, 1997,  1998,  and 1999, the net
losses were $1,520,359, $12,504,470 and $3,439,566, respectively.

         There can be no  assurance  of future  profitability.  The  ability  to
operate profitably will depend primarily on management's ability to:

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

o    reduce the overall cost structure of the organization;

o    purchase and resell pools of automobile receivables in an effective manner;

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

o    effectively   collect   payments  due  on  the   portfolios  of  automobile
     receivables  serviced (recourse  liability on these receivables is retained
     even though they are no longer owned) and control  delinquencies and losses
     on the automobile receivables portfolio;

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

o    continue  to sell,  on a loan by loan  basis,  the  automobile  receivables
     generated at owned used car dealership operations;

o    adapt to an increasingly competitive marketplace.

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

                                       1

<PAGE>

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

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

         Substantial  Leverage. To meet the ongoing working capital requirements
of the  Company,  substantial  indebtedness  has been  incurred,  resulting in a
highly leveraged capital structure.  Substantial indebtedness related to holding
additional  automobile  receivables  may be incurred in the future.  The current
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 ability to realize some or all of the benefits of  significant
     business opportunities.

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

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

         Poor  Creditworthiness  of Borrowers;  High Risk of Credit Losses.  The
Company  currently  sells  and  services  automobile  receivables  generated  in
connection  with the sale of used cars at the Dallas,  Lufkin and Austin,  Texas
dealerships.  In addition, a portfolio of automobile  receivables that have been
acquired are also  serviced.  These  receivables  are payable by customers  with
non-prime  credit.  Loans to persons with non-prime  credit involve an increased
probability of default and/or  delinquency and involve  greater  servicing costs
than loans made to borrowers with prime credit profiles.  The ability to operate
profitably depends,  in part, on an accurate evaluation of the  creditworthiness
of customers and the minimization of losses following defaults.  As a result, it
is likely  that  delinquency  and loss  rates in the  Company's  portfolio  will
fluctuate  in the  near  term  and may  increase  as a  greater  portion  of the
portfolio of automobile  receivables  matures.  A  significant  variation in the
timing  of or  increases  in  credit  losses  experienced  on the  portfolio  of
automobile receivables could have a materially adverse effect on the Company. If
greater  credit losses are  experienced  in the future,  it will be necessary to
increase reserves for bad debts, thereby reducing overall  profitability.  There
can be no assurance  that any loans made to customers will be repaid in whole or
in part or that reserves for such credit risks will be adequate.  Any loans that
are in default may need to be charged off against the reserves.


                                       2

<PAGE>


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

         Risks Inherent in Automobile Finance Business.  It is the intent of the
Company to purchase  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  tortious  conversion  in an attempt to
repossess the vehicle.

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

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

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

                                       3

<PAGE>

         Risk  Associated  with  Expansion.  As  part  of the  Company's  growth
strategy,  the  intent  is  to  seek  to  establish  and/or  acquire  additional
dealerships and finance offices.  There can be no assurance that management will
successfully  integrate the operations of the  dealerships  currently owned 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.  Although no agreements or understandings to
acquire any specific  dealerships  currently exist, it is the intent to actively
seek and investigate such  opportunities on a limited basis.  Such  acquisitions
would likely be financed with cash;  the issuance of equity or debt  securities;
by incurring additional indebtedness or any combination of the foregoing.  There
is no assurance  that any  acquisitions  will be made. If any  acquisitions  are
made,  there is no assurance  they can be made on favorable  terms,  or that the
acquisition  will prove to be  profitable.  Failure to make future  acquisitions
would limit the growth potential of the Company.

         Geographic  Concentration.  Currently the Company  conducts direct used
car sales in the Dallas,  Austin and Lufkin,  Texas metropolitan areas. The used
car financing and servicing operations are located in Dallas, Austin and Lufkin,
Texas,  and in Louisville,  Kentucky.  Because of this  concentration,  business
levels  may be  adversely  affected  in the event of a downturn  in the  general
economic conditions existing in either Texas or Kentucky.

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

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

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

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

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


                                       4

<PAGE>

         General Economic Conditions. The Company's business is directly related
to sales of used  cars.  These are  affected  by  employment  rates,  prevailing
interest rates, and other general economic  conditions.  Management believes the
current  economic  conditions  favor  continued  growth in the  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 sales and
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 are purchased.

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

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

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

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


                                      5

<PAGE>

         Consumer Protection and Usury Laws. Numerous federal and state consumer
protection  laws impose  requirements  upon the  origination  and  collection of
retail  installment  contracts.  State laws impose finance  charge  ceilings and
other  restrictions on consumer  transactions  and may require certain  contract
disclosures in addition to those required under federal law. These  requirements
impose  specific  statutory  liabilities  upon creditors who fail to comply with
these  provisions.  Further,  to the extent  that the  Company  acquires  retail
installment  contracts  from  third  parties,  there  may be  liability  for any
violations of law  committed by such third  parties as a  successor-in-interest.
Currently,  a maximum  fixed  interest  rate of  approximately  26% per annum is
charged on contracts originated at the Company's dealerships. The state of Texas
imposes  limits  on the  interest  rate a lender  may  charge.  There  can be no
assurance that Texas and any other applicable  states will not lower their usury
limits or that these  states or other  jurisdictions  into which the Company may
expand will not (i) by judicial  decision change the  interpretation of existing
precedents  and/or (ii) adopt  additional laws, rules and regulations that could
adversely effect the business,  financial condition and results of operations of
the Company.

         Dependence on Management Information Systems; Year 2000 Compliance. The
Company's  future  success  depends in part on the  ability to continue to adapt
technology,  on a timely and cost-effective basis, to meet changing customer and
industry standards and requirements.  The loan servicing and collection software
is depended on to monitor the portfolio of automobile  receivables.  Any failure
in this loan servicing hardware or software could cause a lapse in the Company's
ability to promptly address delinquent  accounts.  The failure by the Company to
meet changing  customer and industry  requirements,  or to promptly  resolve all
technology  issues,  could have a  materially  adverse  effect on the  business,
operations and financial  condition.  In addition,  the Company has assessed its
need to address  and prepare  for the  potential  impact of the year 2000 on the
ability  of  its  computerized   information   systems  to  accurately   process
information that may be date-sensitive. Any programs that recognize a date using
"00" as the year 1900 rather than the year 2000 could result in errors or system
failures.  Modifications  to and  replacements  of  portions  of  the  Company's
software have been made to address this issue. In the opinion of management, the
changes  made will result in its  computer  systems  functioning  properly  with
respect to dates in the year 2000 and thereafter.

         Continued Control by an Insider.  Approximately  52.0% of the Company's
outstanding  voting  securities  are  controlled  by Mr.  Charles W. Norman,  as
Trustee  under three voting trusts (see Item 11,  Security  Ownership of Certain
Beneficial  Owners  and  Management).  Mr.  Norman  is the  President  and Chief
Executive  Officer and a Director of the Company.  Accordingly,  Mr. Norman will
retain the power to approve or  disapprove  matters  submitted  to a vote of the
shareholders and to elect the entire Board of Directors who shall, in turn, have
the power to appoint the officers of the Company and to determine the direction,
objectives and policies of the Company.

         Dependence  on Key  Personnel.  The Company is highly  dependent on the
services of Mr. Charles W. Norman,  the Company's  President and Chief Executive
Officer.  The Company  has not entered  into an  employment  agreement  with Mr.
Norman,  nor is there any key-man life insurance on Mr. Norman.  The loss of Mr.
Norman's  services  could have a materially  adverse  effect on the business and
operations of the Company (see Item 9, Directors,  Executive Officers, Promoters
and Control  Persons;  Compliance  With Section  16(a) of the Exchange  Act). In
addition,  the future success of the Company depends upon its ability to attract
and  retain  qualified  personnel,   including  managers  for  each  dealership.

Competition  to attract  and retain  such  personnel  within the  vehicle  sales
industry is intense.  There can be no  assurance  of success in  attracting  and
retaining qualified personnel in the future.

         Risks From Commitment to Maintain Value on Certain  Preferred Stock. On
December 30, 1998, as part of the Transaction  described in Item 1, "Description
of Business - Recent  Restructuring  Transaction,"  the Company issued 3,500,000
shares of a new issue of" Series A" Preferred Stock. These shares were issued at
a value of $1.00 per share and the Company agreed to maintain their value at not
less than that amount. This agreement could result in the issuance of additional
shares of Series A Preferred Stock or issuing other securities without receiving
any  additional  consideration.  This would  dilute the holders of Common  Stock
accordingly and could dilute them  substantially.  The Company might also choose
to  provide  additional  value by paying  cash or  transferring  assets  without
receiving any additional consideration.  This could theoretically deplete assets
by as much as $3,500,000.

                                       6

<PAGE>


         The December 30, 1998 Transaction.  Certain of the Company's  Preferred
and Common Shares were tendered to AutoPrime,Inc.  ("AutoPrime") in the December
30, 1998,  Transaction (see Item 1, Description of Business - How the Purpose of
the  Restructuring  Was  Achieved).  AutoPrime is majority  owned by a regulated
financial  institution  and can  lawfully  own the  Company's  stock  only after
receiving  approval  from the Office of Thrift  Supervision  and  perhaps  other
governmental  regulatory  agencies.  The Transaction  also allowed  AutoPrime to
defer taking  ownership of any of the Company's  stock until receipt of approval
from the Office of Thrift Supervision and any other  governmental  approval that
may be necessary.

         Initially  the  parties  agreed  that if  approval  is not  received by
December 31, 1999, and AutoPrime  determines not to accept the tender,  then the
tender is rejected.  On December 31, 1999, the parties agreed to an extension of
the required approval date from December 31, 1999 to January 1, 2001.

         If the tender is ultimately rejected, then the credits AutoPrime issued
on  December  30,  1998,  as part of the  Transaction,  will  be  withdrawn.  In
addition,  the debts for which credit was given will be  reinstated  and will be
immediately  due and payable,  with  interest at 10% per year from  December 31,
1998.

         The Company and AutoPrime have  agreed to renegotiate  the  Transaction
if this  event  occurs.  There is no  assurance  as to the  outcome  of any such
renegotiation, and it could have a materially adverse effect on the Company.

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

         Lack of Prospective  Dividends.  The Company has not paid any dividends
on its Common Stock and anticipates that future  earnings,  if any, will be used
to reduce debt or finance  future growth and that  dividends will not be paid to
shareholders.  There  can  be  no  assurance  that  operations  will  result  in
sufficient  revenues to enable the Company to operate at profitable levels or to
generate a positive cash flow. In addition,  the 6,578,485  shares of Series "A"
Preferred  Stock  tendered on December 30, 1998,  have an annual  non-cumulative
dividend  preference of $328,924 (5% of  $6,578,485).  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 by and 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 and sales  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.



                                     7

<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.

PART I

Item 1. Description of Business

        Organization and History

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

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

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

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

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

         During the fiscal  year ended  September  30,  1998,  the  Company  was
headquartered  in Phoenix,  Arizona and operated a combined used car finance and
sales business in Arizona and New Mexico.  Business operations were concentrated
on used cars purchased by non-prime credit purchasers  (persons with low incomes
and  previous  credit  problems)  and the  retail  installment  sales  contracts
evidencing  non-prime  used car loans  (see Item 1,  Description  of  Business -
Business Operations During Fiscal 1998).

         Effective  at the end of fiscal  1998,  the  Company  ceased to operate
those  locations and transferred the management and operation of them to  all or
some of the Merritt Group. Ownership of those businesses was transferred to them
on  December  30,  1998,  as part of a  restructuring  Transaction  and  related
business   reorganization   (see  Item  1,  Description  of  Business  -  Recent
Restructuring Transaction).

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

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


                                       8

<PAGE>

         ACE  acquired  certain  assets  related to the  present  Austin,  Texas
dealership on December 30, 1998, from a corporation  owned by William O. Merritt
and Dennis W. Miller.  This  transaction  was separate from, but related to, the
restructuring  Transaction that took place on the same date. This transaction is
a related party transaction and is described in Item 12, "Certain  Relationships
and Related Transactions."

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

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

         In June, 1999, the Company  relocated its headquarters to Plano,  Texas
and is renting approximately 2,600 square feet of office space from AutoPrime.

         Through ACE, the Company  currently  owns  and  operates  five used car
dealerships in Texas - three in Dallas, one in Lufkin and one in Austin. Through
used car sales, these dealerships  originate  non-prime used car loan contracts.
In addition,  through AFS,  portfolios of non-prime  used car loan contracts are
purchased  and four loan  servicing  centers  are  operated.  In all cases,  the
Company  retains the loan servicing  function of all of the loans  originated or
purchased.

         Recent Restructuring Transaction

         At  December  30,  1998,  the  Company was  financially  distressed.  A
restructuring  took  place on that  date in order to  create  an  organizational
structure  that is  efficient  and reflects  the current  business  plans of the
Company.

The following was accomplished through the restructuring:

o    disposed of non-productive subsidiaries not consistent with future plans.

o    substantially  reduced  debt and made  arrangements  to reduce  exposure to
     further liability.

o    acquired new  management  systems and  software to enhance  loan  servicing
     ability.

o    changed the control of the Company.

         In this report,  the  restructuring is referred to as the "Transaction"
because it is defined that way in the documents providing for it.

         How the Purpose of the Restructuring Was Achieved

         The purpose of the restructuring was achieved by the following:

o    The disposition of  non-productive  subsidiaries not consistent with future
     plans

     This was achieved by  transferring  them,  along with other  interests,  to
     Merritt and Miller in  exchange  for the  redemption  of  2,653,500  Common
     Shares. These represent 42.9% of the Common Shares now outstanding. Merritt
     and Miller (or their  assignees)  combined  still own 600,000 Common Shares
     (9.7% of the outstanding).


o    The substantial  reduction of debt and the  arrangements to reduce exposure
     to further liability

         This was  accomplished  in the manner  described  in  detail in Item 1,
"How the Purpose of the  Restructuring Was Achieved" of Form 8-K which was filed
on March 11, 1999.

o    The  acquisition  of new  management  systems and  software to enhance loan
     servicing ability

         After assessing the needs of operations for both sales and collections,
and addressing  concerns for Year 2000  compliance,  it was determined  that the
AutoStar 2000 system would meet the needs of all aspects of operations.

                                       9

<PAGE>

o    The change of control of the Company

     This took place through:

     (a)  The  redemption of the 2,653,500  Common  Shares  previously  owned by
          Merritt and Miller

     (b)  The  re-issuance  of the redeemed  Common  Shares,  as well as another
          563,500 Common Shares that were already in the treasury.

     (c)  The establishment of the three trusts, and the transfer to them of the
          reissued 3,217,000 Common Shares.  These represent 52.0% of the Common
          Shares now outstanding.

     (d)  AutoPrime is majority owned by a regulated  financial  institution and
          can lawfully own stock of the Company  only after  receiving  approval
          from the Office of Thrift  Supervision and perhaps other  governmental
          regulatory  agencies.  The Transaction also allowed AutoPrime to defer
          taking  ownership  of any stock  until  receipt of  approval  from the
          Office of Thrift Supervision and any other governmental  approval that
          may be necessary.  The Transaction is based on the assumption that any
          necessary  approval can be obtained.  The deferral was accomplished by
          the following:

          The  tendering of Preferred and Common Shares to AutoPrime in exchange
          for AutoPrime  releasing  the Company from  liability on a substantial
          portion of its indebtedness.

     o    AutoPrime  declined to accept the tender  until  after  receipt of any
          necessary  regulatory  approvals  (there is no assurance  they will be
          received);

     o    These securities were placed in the Exchange Trust pending the outcome
          of the  tender.  If the  necessary  approvals  are not  received,  the
          parties to the Transaction presently intend to renegotiate some of the
          debt release portions of its terms.

          In addition,  the parties anticipate that some number of Common Shares
          will  remain in the  Exchange  Trust after the earlier to occur of the
          retirement  of the CIC notes or January 30,  2000.  These  shares will
          first be available  to AutoPrime  for  satisfaction  of the  Company's
          and/or CIC's obligations to AutoPrime.  However,  the Trustee will not
          transfer  these  shares  to  AutoPrime  unless  the  tender  has  been
          accepted.

         Initially the parties  agreed  that  if  approval  is  not received  by
December 31, 1999, and AutoPrime  determines not to accept the tender,  then the
tender is rejected.  On December 31, 1999, the parties agreed to an extension of
the required  approval  date from  December 31, 1999 to January 1, 2001.  If the
tender is ultimately rejected, then the credits AutoPrime issued on December 30,
1998, as part of the Transaction,  will be withdrawn. In addition, the debts for
which  credit  was given  will be  reinstated  and will be  immediately  due and
payable,  with interest at 10% per year from December 31, 1998.  The Company and
AutoPrime have agreed to renegotiate the Transaction if this event occurs. There
is no assurance as to the outcome of any such renegotiation, and it could have a
materially adverse effect on the Company.

         Present Business Operations

         At the  present  time,  the  Company  owns and  operates  five used car
dealerships  in Texas.  Through  used car  sales,  these  dealerships  originate
non-prime used car loan contracts. The Company also buys portfolios of non-prime
used car loan contracts.  In both cases, the loan servicing function is retained
and as the loan servicer,  record keeping and collection of payments and general
enforcement of the used car loan contracts is assumed.

         ACE  Motor  Company,  Inc.("ACE")  owns  and  operates  five  used  car
dealerships in Texas-three in Dallas,  one in Lufkin and one in Austin. It sells
used cars to non-prime  purchasers and originates  non-prime used car loans as a
result of those sales. Non-prime purchasers are usually persons with low incomes
and a poor credit history.  AFS then retains the loan servicing  function on the
portfolios.


                                       10

<PAGE>

         Another  subsidiary  of the  Company,  AFS,  buys  portfolios  of  loan
contracts at a discount from net principal balance,  usually ranging between 35%
and 45%.  Since  the  Company  does not have the  necessary  capital  to carry a
portfolio of contracts, AFS re-sells the loans, with recourse, to AutoPrime at a
lower discount from net principal  value. A sale "with recourse" means that if a
loan  contract  becomes  delinquent,  the seller  becomes  obligated  to pay the
purchaser an amount equal to the purchaser's  unrecovered  purchase price,  plus
accrued interest on that amount.  AFS also retains the loan servicing  function.
AFS operates four loan servicing centers - three in Texas and one in Kentucky.

         ACE and AFS  have  each  entered  into a  Master  Purchase   and   Sale
Agreement  with  AutoPrime.  ACE entered into this on January 12, 1999,  and AFS
also  entered  into  their  agreement  on January  12,  1999.  The  Company is a
guarantor on both agreements to AutoPrime.  AutoPrime is engaged in the business
of purchasing  retail  installment  contracts  secured by automobiles  and light
duty-trucks, which include contracts for non-prime credit customers. Under these
agreements,  ACE and AFS sell contracts to AutoPrime,  with recourse, at a price
generally  ranging from 55% to 70% of the current net  principal  balance of the
contract. The Company and its subsidiaries,  ACE and AFS, have joint and several
liability to  AutoPrime  for the recourse  liability  on all  contracts  sold to
AutoPrime. Like many investors, AutoPrime does not want to be in the business of
servicing the contract loans in its investment portfolio. Therefore, the Company
and its subsidiaries,  ACE and AFS, have each entered into a Servicing Agreement
with AutoPrime.  This was done on the same dates as the Master Purchase and Sale
Agreements  were  signed.  Under these  agreements,  ACE and AFS each retain the
servicing of the contracts sold to AutoPrime.  This is done for a fee of between
10%  and  37% of the  cash  collected  from  servicing  contracts.  As the  loan
servicer, payments are collected, the servicing fee is retained, and the balance
is remitted to AutoPrime.

         In the  event  payments  on a  contract  become  delinquent,  the  loan
servicer is responsible to make the collections and, if necessary, repossess the
used car  involved.  After  repossession,  the Company  either (1) floor  plans,
reconditions  and attempts to resell the car through one of its five dealerships
or, (2) sells the car at wholesale.  If the net  recoupment on this  delinquency
collection/recovery   process   (collection   efforts  on  the  contract   after
delinquency, repossessing the used car and wholesaling of it) is less  than what
AutoPrime  is owed  on the  contract  balance,  a loss is  applied  against  the
Company's recourse liability obligation.

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

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

         At  September  30,  1999,  the  Company  was the  servicing  agent  for
approximately $11,536,000 of automobile receivables. Accordingly, the results of
operations and financial  condition depends, in part, on the ability to properly
service automobile receivables in order to reduce credit losses.

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


                                       11

<PAGE>


         If a customer's  account  becomes more than 30 days past due, a process
begins to protect the  collateral.  In certain  instances,  a customer will work
with the Company to coordinate a "voluntary repossession" of the vehicle. In the
case of an  "involuntary  repossession,"  an  independent  firm is  retained  to
repossess the vehicles pursuant to prescribed legal procedures.  If a vehicle is
repossessed,  the  customer is allowed a minimum ten days to redeem the vehicle.
In some circumstances,  the customer may be allowed the opportunity to redeem at
any time until the vehicle has been sold to a third party.  After repossessing a
vehicle,  the vehicle will be  reconditioned  by a third party.  It will then be
sold at retail  through one of the  Company's  dealerships  or in the  wholesale
market.

         Having retail  capability allows the Company to quickly resell vehicles
that are  repossessed  and avoid certain  expenses  that a  stand-alone  finance
company would incur in  connection  with  repossessing  and reselling a vehicle.
Vehicles that cannot be sold retail are sold at auction or to wholesalers.

         ACE has a revolving line of  credit  with AutoPrime for the  purpose of
purchasing  inventory of used  vehicles,  a "floor plan," which is guaranteed by
AutoCorp Equities,  Inc. The floor plan with AutoPrime was initially established
on October 26, 1998, with a limit of $750,000 and a variable rate of interest of
6.5% over the index known as the Wall Street  Journal  Prime Rate.  The rate was
initially  set at 15%.  The floor  plan note was a demand  note that  matured on
April 26, 1999.  On that date it was renewed and  extended at the same  variable
rate of interest, initially 14.25%.

         The amount of the floor plan was  increased to  $1,000,000  on June 17,
1999, at the same variable rate of interest,  initially  14.25%. On September 8,
1999,  this latter note was replaced  with three notes  totaling  $1,400,000  in
commitments.  The  floor  plan  notes  are all due on  demand,  however,  if not
demanded they then all mature on March 8, 2000.  One note amounting to $400,000,
has a fixed  interest rate of 12%. The other two notes carry  variable  rates at
6.5% over the Wall  Street  Journal  Prime  Rate,  with the  initial  rate being
14.75%.


Competition

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


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

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

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


                                       12


<PAGE>

         Business Operations Owned and Operated During Fiscal 1998

         Effective at the end of fiscal 1998, the Company ceased to operate most
of the  locations  it had  operated  during  fiscal  1998.  The  management  and
operation  of those  businesses  was  transferred  to all or part of the Merritt
Group on September 30, 1998. The ownership of those  businesses was  transferred
to them on December 30, 1998 as part of the restructuring via the Transaction.

         During  fiscal 1998,  the Company  operated a combined used car finance
and sales  business,  concentrating  on used cars purchased by non-prime  credit
purchasers.  Through a subsidiary,  Consumer Investment Corporation ("CIC"), the
Company  engaged  in  non-prime  used  car  financing   activities.   Through  a
subsidiary,   Lenders   Liquidation   Centers,   Inc.   ("LLCI"),   the  Company
reconditioned and marketed repossessed used cars.

         Consumer  Investment  Corporation.  CIC was licensed in Arizona and New
Mexico as a sales  finance  company.  During  fiscal  1998,  it  engaged  in the
business of originating, purchasing, reselling and servicing used car loans.

         CIC primarily purchased contracts originated by LLCI in Arizona and New
Mexico.  CIC  purchased  them at a discount  from face  value,  usually  ranging
between 15% and 35%.  Since the Company  did not have the  necessary  capital to
carry a portfolio of contracts,  CIC typically re-sold the loans, with recourse,
at a discount to investors. CIC sold the contracts to investors who did not want
to service  the loans in the  portfolio  themselves  and CIC then  serviced  the
loans.

         Lenders  Liquidation  Centers,  Inc. LLCI was originally formed late in
January,  1997, by the Merritt Group for the  remarketing  of  repossessed  used
cars.  LLCI acted as a  reconditioning  center  and resale  outlet for used cars
repossessed by CIC and other lenders on a consignment basis. LLCI was to operate
in coordination with the Company's loan insurance program (which was intended to
remedy  defaulted  CIC  loans).  The  concept  of  LLCI  was to  have  a  single
reconditioning  center that served all of the Company-owned  resale lots. During
fiscal 1998,  LLCI  operated  four  facilities  located in the Maricopa  County,
Arizona, cities of Mesa, Phoenix,  Scottsdale and Glendale. It also operated one
facility in Albuquerque, New Mexico and another one in Santa Fe, New Mexico.

         CIC entered into a Master Purchase and Sale Agreement with AutoPrime on
October 6, 1997.  Under this  agreement,  LLCI would sell  contracts to CIC. CIC
would in turn sell those  contracts to AutoPrime,  with recourse,  at an average
price equal to approximately 70% of the outstanding  contract balance.  AutoCorp
Equities,  Inc.,  LLCI and CIC had joint and several  liability to AutoPrime for
the recourse liability on all contracts sold to AutoPrime.

         CIC would  service  the loans for a  servicing  fee of 20% of the gross
amounts collected.  In the event payments on a contract would become delinquent,
CIC was  responsible to make the  collections  and, if necessary,  repossess the
financed  vehicle  involved.  This  relationship  was  governed  by a  Servicing
Agreement dated October 6, 1997, between CIC and AutoPrime.

         After  payment to AutoPrime of its  unrecovered  purchase  price,  plus
accrued  interest  on that  amount,  the Company  would  become the owner of the
repossessed  used car. LLCI would  recondition the car and attempt to resell it,
generally, through one of LLCI's resale centers.

         CIC had also purchased, and assumed recourse liability with respect to,
a portfolio of non-prime loan  contracts  from AutoPrime in October 1997,  which
had been originated by a dealer that had gone out of business.  AutoPrime had no
mechanism  to  service  or  collect  these  loans.  The loan  contracts  in that
portfolio had originated  from sales of used cars in Austin,  Texas.  Due to the
recourse  obligation,  CIC then needed an operation in Austin similar to the one
provided  by LLCI in Arizona and New  Mexico.  Some or all of the Merritt  Group
formed a corporation  that  established a similar business in Austin to act as a
reconditioning center and resale outlet for used cars repossessed by CIC as well
as sell other used cars.  The  corporation  was Lenders  Auto Resale  Centers of
Texas,  Inc., and it did business under the assumed name of "Lenders Auto Resale
Centers" ("Lenders of Texas").  During fiscal 1998, Lenders of Texas established
and  operated  four  dealerships  and one  reconditioning  center  in  Austin to
re-market  used  cars  repossessed  as a  result  of  delinquent  loans  in that
portfolio as well as to originate its own automobile receivables.

         Lenders  also entered into a Master  Purchase and Sale  Agreement  with
AutoPrime  dated  January 22, 1998,  for the sale of contracts,  with  recourse,
generated  by the retail  sales of Lenders.  The terms of the sales to AutoPrime
under this Master  Agreement  were the same as under the other Master  Agreement
CIC had with  AutoPrime.  The Company and  Lenders  undertook  joint and several
liability to  AutoPrime  for the recourse  liability  on all  contracts  sold to
AutoPrime.

                                       13

<PAGE>


         These contract loans were  originated and serviced by Lenders of Texas.
This relationship was governed by a Servicing  Agreement dated January 22, 1998,
between Lenders and AutoPrime.

         ACE  Motor  Company  acquired  certain  assets of  Lenders  of Texas on
December 30, 1998.  This  transaction  was  separate  from,  but related to, the
restructuring  Transaction that took place on the same date. This transaction is
a related party transaction and is described in Item 12, "Certain  Relationships
and Related  Transactions." The Company subsequently closed the Austin locations
that were not  profitable and  consolidated  the sales staff into one dealership
location  sufficient to also house the collection staff, thus reducing operating
overhead.  In addition,  as the portfolio  stabilized,  this allowed the service
center  operating  in Austin to be closed,  and instead  contract  with  outside
service vendors to service and recondition repossessed vehicles at a lower cost.

         Employees.  At November  26,  1999 the  Company  employed a total of 71
people; 39 in ACE Motors, 22 in AFS and 10 at the headquarters in Plano,  Texas.
No employees are covered by a collective bargaining agreement.
The Company considers its relations with its employees to be good.

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

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


Item 2.  Description of Property

         The  principal  executive  offices of the  Company  are located at 2740
North Dallas Parkway, Suite 110, Plano, Texas 75093.  Approximately 2,600 square
feet of leased premises are at this location. The rent is approximately $ 60,000
per year on a month to month rental  agreement with AutoPrime,  which represents
AutoPrime's cost for the space.



         As of November 26, 1999,  The Company has  eight leased  properties  in
addition  to the  corporate  headquarters.  They  are  leased  for  ACE  and AFS
operations,  and are listed in the  following  table  together with the year the
lease expires:


         1.  3821 So. Buckner Blvd., Dallas, Texas          2,500 sq ft     2000
         2.  212 So. Buckner Blvd., Dallas, Texas           3,300 sq ft     2000
         3.  6318 Burnet Rd., Austin, Texas                 2,800 sq ft     2004
         4.  9922 Linn Station Rd., Louisville, Kentucky    3,025 sq ft     2004
         5.  2101 First Street, Lufkin, Texas               4,000 sq ft     2001
         6.  624 So. Buckner Blvd., Dallas, Texas           5,600 sq ft     2004
         7.  911 Parker Road, Suite 306, Plano, Texas       3,374 sq ft     2002
         8.  1001 E. Jefferson, Dallas, Texas               3,250 sq ft     2002







                                       14

<PAGE>

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


Item 3.  Legal Proceedings

         It  was  previously   reported  that   the   Securities  and   Exchange
Commission  (the "SEC")  filed suit on August 10,  1998,  against  the  Company,
Michael  Carnicle,  Robert Cord  Beatty,  Hillel Sher,  Amotz  Frenkel and Nilli
Frenkel.  The suit does not name,  as a  defendant,  anyone who is an officer or
director of the Company.  The complaint was filed in the United States  District
Court for the District of Utah. The Docket number is:
2:98CV-0562S.

         The SEC  dismissed  the Company  from  the  suit  without  prejudice on
October 7, 1999, so it is no longer a pending legal proceeding.

         There are no other material legal proceedings.

Item 4. Submission of Matter to Vote on 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 1999:
                  First Quarter              $0.25             $0.63
                  Second Quarter              0.56              1.75
                  Third Quarter               0.50              0.81
                  Fourth Quarter              0.21              0.81


           Fiscal 1998:
                 First Quarter                0.72              2.88
                 Second  Quarter              0.88              2.38
                 Third Quarter                0.88              2.63
                 Fourth Quarter               0.38              0.81







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

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

         At September 30 , 1999,  there were approximately 380 holders of record
of the Common Shares of the Company.

         The  Company  has not  paid  any  dividends  on its  Common  Stock  and
anticipates  that future  earnings,  if any, will be retained to finance  future
growth. In addition,  the 6,578,485 shares of Series "A" Preferred Stock, issued
on December 30,  1998,  have an annual  non-cumulative  dividend  preference  of
$328,924 (5% of $6,578,485). Accordingly, the Company does not anticipate paying
any dividends on Common Stock for the foreseeable future.

                                       15

<PAGE>


         From October 1, 1997 through  September 30, 1999,  the Company sold the
following securities without registration under the Securities Act of 1933:


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

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

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

     (4)  52,787 Common  Shares on November 4, 1999,  to George  Mueller for his
          services  (and  agreement  to render  services)  to the  Company as an
          independent  consultant from April 1 through December 31, 1999, on the
          terms set forth in a Business Consulting Agreement.  These shares were
          issued under the Section 4(2) exemption of the Securities Act.


                                       16

<PAGE>

Summary of the  Terms of  Convertibility  of  the  Series "A" Preferred  Shares.
As part of the Transaction,  a series of 9,000,000  authorized  shares of Series
"A" Non-Cumulative Convertible Preferred Stock was established. Then, a total of
6,578,485 new Preferred Shares as part of the Transaction were issued.

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

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

          o    They have a liquidation preference of $1.00 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 starting January 1, 2002. They will also become  convertible
               prior to that date if any of certain specified events take place.
               Here  is  a   summary   of  the   events   that  can   accelerate
               convertibility:

               (a)  The issuance,  by the Company,  of any shares of any kind of
                    capital   stock,   or  any  securities   convertible   into,
                    exchangeable  for, or  exercisable to purchase any shares of
                    capital stock, without AutoPrime's consent. (There is also a
                    specific  covenant  not  to do any of  these  things  before
                    January 1, 2002, without AutoPrime's consent.)

               (b)  If any  individual  other  than the  current  members of the
                    Board of  Directors  is elected  to the Board of  Directors,
                    without AutoPrime's consent.

               (c)  If CIC or LLCI default in the payment or  performance of any
                    of a number  of  obligations  to  AutoPrime  or to  AutoCorp
                    Equities, Inc.

               (d)  If Merritt or Miller breach any  representation  or warranty
                    made by them.

         The Company issued 3,237,956 (of the 6,578,485) new Preferred Shares to
CIC as  part of the  December  30,  1998,  Transaction.  CIC  then  pledged  the
3,237,956  Preferred  Shares to AutoPrime to secure  certain  debt. So that Auto
Prime's pledge is protected,  the Company also agreed in the "Agreement to Issue
Additional  Preferred  Stock" that it will not issue any kind of preferred stock
to any one other than CIC/LLCI until after  February 1, 2002.  Before that date,
only  Preferred  Shares to CIC/LLCI in amounts  required by the Agreement can be
issued, and they can only be issued for the benefit of AutoPrime,  the Company's
primary creditor.


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.


                                      17

<PAGE>

Results of Operations

         Overview. The Company operates "Buy Here-Pay Here" used car dealerships
and underwrites, finances and services retail installment contracts generated by
sales of used  cars by the  Company's  dealerships.  In  addition,  the  Company
purchases portfolios of loan contracts from third party dealerships and services
these loan portfolios.  The Company targets the non-prime  borrowing  segment of
the automobile  financing industry.  The Company finances much of its operations
by selling the contracts to various  lending  sources on a full recourse  basis.
The contracts are sold at a 20% to 45% discount and the Company  retains certain
servicing income from collection of the contracts.

         The Company began its used car operations in 1996 with the  acquisition
of a car lot in Phoenix,  Arizona. By 1997, the Company had seven car lots, five
in Arizona and two in New Mexico. The Company had operating difficulties in 1997
and fiscal  1998 and by the first  quarter of fiscal  1999 had  decided to close
down some lots and find a more permanent solution to its cash flow needs. At the
end of December 1998,  there was a change in control of the Company.  As part of
this, the Company reached an agreement with its primary lender,  AutoPrime,  and
certain of its officers at the time. The officers  returned most of their shares
of the Company's common stock in exchange for the Company  transferring  certain
assets and  liabilities to the officers.  The Company  tendered shares of common
and  preferred  stock to AutoPrime in exchange for agreeing to transfer  certain
liabilities  to the former  officers  and the  agreement to provide a new credit
facility.

         In fiscal 1999 the Company  experienced a complete  transformation from
1998. The operations and management were dramatically  changed. Most of the used
car lots operated in 1998 were closed and new lots were added so that at the end
of fiscal 1999 the Company was operating  five lots in total,  all of which were
in Texas.  Three are in Dallas,  one in Austin  and one in  Lufkin.  A change of
control took place and a new Chief Executive Officer was hired who has put a new
management team in place. A loan servicing  operation was established  with four
offices, one in Kentucky and three in Texas. Both the level of car sales and the
volume  of  retail  installment  contracts  serviced  increased   significantly.
Although the Company is in the same business in 1999 as in 1998, the size, focus
and direction of the Company bears little  resemblance at the end of fiscal 1999
to what existed in 1998.

1998

         With all lots operating at the beginning of 1998,  the Company's  sales
increased  significantly  during the first nine months of fiscal 1998. Sales for
the entire fiscal year increased by approximately  $960,000.  Substantially  all
notes were sold to AutoPrime during 1998, with full recourse. Due to poor credit
underwriting,  the Company  continued  to  experience  a high rate of default on
these  notes.  The  Company  was unable to meet the  lenders'  requirements  for
repurchasing  the defaulted notes and was unable to increase sales  sufficiently
to replace the defaulted loans with performing contracts.

         With  increasing  losses,  the  Company  obtained  additional  funds by
incurring debt of  approximately  $990,000  during 1998.  Funds were advanced by
AutoPrime  and  individual  outside  investors.  Interest  expense  on the  debt
increased by approximately  $195,000 to over $475,000. The resulting losses also
prevented the Company from paying its vendors in a timely  manner.  As a result,
trade payables and accrued expenses  increased by over $900,000 by September 30,
1998.  By June  1998,  Management  had  decided  to close  the sales  lots.  The
reconditioning  facility and the  insurance  subsidiary  were also closed.  Upon
closure of the lots,  a small  staff was left in Phoenix to  continue to service
and collect on the notes for AutoPrime and transition the record keeping.

         Effective at the end of fiscal 1998,  the Company ceased to operate the
businesses  operated  during fiscal 1998.  The management and operation of those
businesses was  transferred to some or all of the Merritt Group on September 30,
1998. In August,1998,  Charles Norman was asked to assume day-to-day  management
of the  Company.  The  Board of  Directors  hired  Mr.  Norman,  elected  him as
President and a Director,  and gave him the necessary  authority to  restructure
the Company.  In addition,  during  August 1998,  the Company  acquired  certain
assets of Suburba  Auto  Sales,  an  independent  automobile  dealer  located in
Dallas,  Texas.  As  a  result,  assets,  inventory,  equipment  and  automobile
receivables owned by Suburba were acquired and the Suburba  Acquisition  Company
was formed to  facilitate  the sale of used cars and the servicing of automobile
receivables.  In November,  1998,  Suburba split its finance servicing  business
into a new  corporation  named AutoCorp  Financial  Services,  Inc.  ("AFS") and
changed the name of the used  automobile  retail  sales  operation  to ACE Motor
Company  ("ACE").  ACE Motor Company  continued to operate the vehicle sales and
finance  operation of the dealership,  and the existing and resulting loans were
serviced by AFS.

                                       18

<PAGE>


         Effective  October 1, 1998,  AFS began its business of buying,  selling
and servicing non-prime retail installment loan contracts secured by automobiles
and light-duty trucks. ACE owns and operates independent  automobile dealerships
and originates  retail  installment  contracts  secured by used  automobiles and
light-duty trucks.

         The Company's  subsidiary,  ACE Motor Company,  acquired certain assets
related to the Austin  dealership on December 30, 1998, from Lenders Auto Resale
Centers of Texas,  Inc., a corporation owned by William O. Merritt and Dennis W.
Miller.

         As a result of the  uncertainty of the  collections and the recent weak
history of the portfolios,  the Company recorded a contingency reserve of 30% of
the total  recourse  portfolio  outstanding.  Management  expected  that rate to
decline as better  collection  efforts are made and controls are tightened  over
delinquency reporting and repossession efforts.


1999

         Net sales  of used  automobiles  increased  from $3,881,748 in  1998 to
$11,580,947  in 1999,  an increase of  $7,699,199,  or 198%.  As the Company has
completely  changed its retail automobile sales operations as described earlier,
its sales volumes have  consistently  increased quarter over quarter as new lots
have been added and become productive. The sales amounts by quarter for 1999 are
as follows:

                      Quarter 1                  $  812,383
                      Quarter 2                  $1,576,638
                      Quarter 3                  $3,716,030
                      Quarter 4                  $5,475,896

The last  quarter  of 1999  reflects  the five used car lots in  operation  that
currently make up the retail sales activity of the Company.

         The other major  elements of revenue for the Company in 1999 consist of
service  fees  from loan  servicing  activity  and the  difference  between  the
purchase price paid and the sale price received ("the spread") from the purchase
and resale of bulk loan  portfolios.  Service  fee  revenue in 1999  amounted to
approximately  $1,150,000,  up substantially  from 1998. This increase  resulted
from a  significant  increase in the loan  servicing  activity of the Company in
1999.  Revenue from the spread on bulk purchases was  approximately  $626,000 in
1999, significantly greater than the comparable amount in 1998.

         Cost of sales as a percentage of automobile sales decreased  from 90.6%
in 1998 to 78.1% in 1999, an  improvement of 13.8%.  In  particular,  the fourth
quarter of 1999 experienced a cost of sales percentage of approximately  66%, an
improved  performance  over that of the  earlier  quarters  in 1999.  Management
improvements in general cost control and profit margin management contributed to
the overall improvement.

         Selling, administrative and other operating expenses for  1999 amounted
to $4,449,155,  substantially  less than the comparable number for 1998. In 1998
the  Company  made  a  number  of  significant  changes  to its  operations  and
management.  These  changes  resulted in  expenses  in this area which  create a
non-meaningful year to year comparison. Looking only at performance within 1999,
these expenses  improved during the year as a percentage of sales.  Year to date
through June 30, 1999  selling,  administrative  and other  expense was 34.0% of
sales.  In the fourth quarter the comparable percentage was 32.4%, with the full
year  percentage   averaging   33.3%.   Given  that  many  of  these  costs  are
discretionary  in  nature,  general  cost  control  efforts  contributed  to the
improvement in this area.

         Bad debt expense was the result of the purchase of two installment note
portfolios  from  Angelina  Motor  Company in Lufkin,  Texas.  These  notes have
ultimately been sold to AutoPrime, however the Company held them for a period of
time before  selling  them and a provision  for bad debt expense was made during
that time. No similar item occurred in 1998.


                                       19

<PAGE>


         The provision  for recourse  liability increased  to $2,726,918 in 1999
from  $2,320,000  in  1998.  This  increase  was  primarily  impacted  by:

     -    an  approximate  $2.2 million  charge to the reserve at year-end  1999
          resulting  from bad  debts  created  by  systems change-over  problems
          including  inadequate  management  oversight  of  collection  activity
          during the  change-over.  The systems problems have been corrected and
          appropriate personnel changes have been made.

     -    purchase  and  resale  of  large  installment  loan  portfolios.  This
          activity  results in a negative  short  term  impact to the  financial
          results. Portfolios are purchased at a substantial discount and resold
          to AutoPrime at a smaller  discount,  yielding a profit on the resale.
          However, since the Company retains recourse liability on the notes and
          sets a reserve  against  possible  defaults  at a level that is higher
          than the profit on the resale,  the immediate result is negative.  The
          ultimate  profit on these is recognized over time as the notes perform
          and the recourse  liability is reduced,  and the service fee income is
          recognized as the notes are collected
     -    improved  performance of newer installment notes. Based on a review of
          empirical  data it  appears  that  newer  notes  with  more  stringent
          underwriting  criteria  have a  better  collection  performance.  As a
          result,  the  overall  reserve  ratio  has been  adjusted  to 25%,  an
          improvement from the rate that was used in 1998.


         Interest expense is incurred by the Company in connection with its line
of credit that is used to floor purchased and  repossessed  automobiles and from
the outstanding  note payable to AutoPrime.  The amount of interest  expense for
1999 is less than incurred in 1998 because 1998 included expense related to debt
to be exchanged  for Common and  Preferred  shares of the Company as a result of
the December 30, 1998 Transaction.


         In December 1998, an agreement was reached  between  two  officers (and
largest  shareholders)  of the Company and the largest  creditor of the Company.
The Company  agreed to take back  2,653,500  shares of Common stock owned by the
officers.  In  exchange,  the Company  transferred  and disposed of control over
certain  operations of the Company to the officers and a gain on disposition was
recorded as a result


Liquidity

            The Company  continues to be in a negative  working capital position
and to be  dependent  on  AutoPrime  to provide  the needed  working  capital to
supplement  internally generated cash flow in funding the operating needs of the
Company.  As a  result  of  the  significant  changes  made  to  operations  and
management,   there  has  been  a  substantial  improvement  in  the  cash  flow
performance of the Company.  It is anticipated  that operations will become cash
flow positive on a monthly basis during  fiscal 2000.  Management  believes that
AutoPrime  will  continue to support the  working  capital  needs of the Company
until such time as the Company becomes cash self-sufficient.

Effect of Inflation

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



Year 2000 Compliance

            The  Company  has  assessed  its need to address and prepare for the
potential impact of the year 2000 on the ability of its computerized  systems to
accurately  process  information  that may be date sensitive.  Any programs that
recognize  a date  using "00" as the year 1900  rather  than the year 2000 could
result in  errors  or system  failures.  Modifications  to and  replacements  of
portions of the Company's  software have been made to address this issue. In the
opinion of  management,  the changes  made will result in its  computer  systems
functioning properly with respect to dates in the year 2000 and thereafter.




                                       20

<PAGE>


Item 7. Financial Statements

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

           Consolidated Balance Sheets - September 30, 1999 and 1998

           Consolidated  Statements  of  Operations  For the Years  Ended
           September 30, 1999, 1998 and 1997

           Consolidated  Statement of Changes in Shareholders' Equity For
           the Years Ended September 30, 1999, 1998 and 1997

           Consolidated  Statements  of Cash  Flows For the  Years  Ended
           September 30, 1999, 1998 and 1997

           Notes to Consolidated Financial Statements






                                       21

<PAGE>


Item 7A. Quantitative and Qualitative Disclosure about Market Risk

         The Company has market risk  exposure related  to its interest  bearing
liabilities.   Interest  rates  with  respect  to  outstanding  indebtedness  or
indebtedness that may be incurred in the future is, or would be, as the case may
be, based on the 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  of the  Company  would have an adverse
effect on the Company's profitability.

         Current levels of indebtedness of the Company as of  September 30, 1999
and the related interest rates are as follows:

<TABLE>
<S>      <C>                                                                   <C>

         Notes payable, fixed interest rate of 9%, due May 1, 2000             $4,590,617

         Borrowings under line of credit, fixed interest rate of 12%,
         due March 8, 2000                                                     $  187,800

         Borrowings under line of credit, variable interest rate of 6.5%
         over the Wall Street Journal Index (8.25% at September 30,
         1999), due March 8, 2000                                              $1,009,121

</TABLE>


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

         On February  2, 1999,  the  Company  engaged  Hurley & Company as their
independent auditors to conduct audits of its consolidated  financial statements
for the fiscal years ended  September 30, 1996, 1997 and 1998. On the same date,
the  Company  and  Evers  &  Company,   LTD,  terminated  their  previous  audit
relationship,  and Evers & Company, LTD. was engaged to assist with the internal
accounting for the audits.

         There were no disagreements with Evers & Company, LTD. on any matter of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedure during the periods preceding their resignation.

         This has  previously  been reported in the Company's  Form 8-K filed on
February 17, 1999.


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 November 26,
1999, are:

<TABLE>

    Name                 Age           Position                               Director Since
    ----                 ---           --------                               --------------
<S>                      <C>           <C>                                         <C>

Charles Norman           41            President and Chief Executive               1998
                                       Officer; Director*

Darr Heath               39            Director**                                  1999

Hunter Ennis             29            Secretary and Treasurer; Director***        1999
</TABLE>

-----------------
*       Elected President and a Director in August 1998.
**      Elected a Director in April 1999.
***     Elected Secretary and Treasurer in December 1998 and a Director in April
        1999.

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


                                     22

<PAGE>

         Charles Norman has been engaged in various  aspects of working with and
making successful, financially distressed companies. Mr. Norman was formerly the
Director of Asset Management for AutoPrime from March 1998 until September 1998.
In this  capacity,  he  developed  a  risk-management  department  to design and
implement work-out and exit strategies for distressed dealer portfolios owned by
AutoPrime.  From January,  1997,  until March,  1998, he was the Chief Executive
Officer of  Windsor  Holdings,  Inc.,  a  non-prime  indirect  consumer  lending
institution.  As CEO, Mr. Norman  negotiated with financing  sources and secured
outside  financing  for  the  company's  operations,  wrote  and  developed  all
underwriting criteria and marketing materials,  and was directly involved in the
direction of all administrative and executive staff. Before 1997, Mr. Norman was
the  President of Allied Auto Credit from 1995 until 1997.  His duties  included
working  directly  with  the  company  ownership  to  develop  programs,  design
procedures and oversee all phases of  operations.  In 1994, Mr. Norman owned and
operated a non-prime finance consulting  company,  Dumont,  Norman & Associates.
This company was  contracted  by multiple  non-prime  lenders to design  finance
models,  train finance staff, and write marketing materials for numerous lending
programs.  Also during 1994 and 1995,  Mr.  Norman was  President  of a group of
non-prime  finance offices under the name Auto Express Financial and managed all
sales/leasing  operations on a daily basis. From 1993 until 1994, Mr. Norman was
the Vice President of Operations for Leadership Financial,  a non-prime indirect
lender. He was responsible for implementing the company's underwriting criteria,
hiring and training all key personnel and developing all marketing materials.

           A detailed  resume of Mr. Norman's experience is attached as  Exhibit
99.1 to Form 8-K filed March 11, 1999. Certain additional information concerning
Mr. Norman is set forth in Item 11,  "Security  Ownership of Certain  Beneficial
Owners and Management."

         Hunter Ennis has been with the Company  since August 1998.  He has been
Secretary and Treasurer since December 1998, and also the Director of Operations
for Auto Corp Financial Services.  Prior to joining the Company, Mr. Ennis was a
Dealer Auditor with AutoPrime from July, 1998 to August,  1998.  Before that, he
was Vice  President of  Accounting  and Finance,  of Windsor  Holdings,  Inc., a
Dallas non-prime,  indirect consumer lender,  from May, 1997 to July, 1998. From
June 1996 to May 1997,  Mr. Ennis was Director of Accounting  for Allied Funding
Corporation,  a Dallas non-prime finance lender.  During 1994 until mid 1996, he
was a Senior Analyst with Alltel, a telecommunications company. Mr. Ennis worked
in the Little Rock, Arkansas office of Alltel.

         Darr Heath has been with the  Company  since  October  1998.  He became
Director  of  Operations  for ACE  Motor  Company  in  November,  1998.  In this
capacity,  he is responsible for the supervision of all day-to-day operations in
sales and  servicing.  From  November,  1996 to 1998,  Mr. Heath was Director of
Operations and General  Manager of Fiesta Motors,  a Dallas,  Texas,  automobile
dealership and subsidiary of Sovereign Finance Corporation.  From February, 1994
to the end of 1996,  Mr. Heath served as Director of  Operations  of Public Auto
Sales, which is engaged in used automobile sales and financing in Dallas, Texas.

         During  fiscal  1998,  Messrs.  William O. Merritt and Dennis N. Miller
were the Company's controlling shareholders.  In August 1998, they asked Charles
Norman to assume day-to-day management control of the Company.

         Mr. Norman agreed to do this and assist in the  re-structuring  effort,
but only if he had control of all major  decisions.  Based on Mr.  Norman's past
experience, and his knowledge of the non-prime automobile business, the Board of
Directors,  in August,  1998, hired Mr. Norman,  elected him as a Director,  and
gave him the necessary  authority to restructure  the Company.  He  beneficially
became the controlling shareholder of the Company on December 30, 1998.

         On December 30, 1998, Mr. Miller resigned as a Director. From that date
until April 28, 1999, the Directors of the Company were:

         o    Charles Norman
         o    William O. Merritt

         On April 29, 1999, Merritt and Norman elected  Mr. Ennis as a  Director
and Mr. Merritt resigned.  Messrs. Norman and Ennis then elected Darr Heath as a
Director.  Messrs. Ennis and Heath were and continue to be employees of AutoCorp
Financial  and/or ACE Motor  Company.  The Board of  Directors  held one meeting
during  fiscal  year  1999.  The  Board of  Directors  had no  Audit  Committee,
Compensation or Nomination  Committees during fiscal 1999 and does not currently
have any committees.



                                       23

<PAGE>

         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.


         The term of the present  Directors  will expire  concurrently  with the
election of Directors  at the next Annual  Meeting of  Shareholders.  Management
presently  intends to propose at that  meeting that  Messrs.  Norman,  Heath and
Ennis be  re-elected  as Directors  for the ensuing  year.  Mr.  Norman,  in his
capacity  as  Trustee  of  the  three  voting  trusts,  controls  52.0%  of  the
outstanding Common Shares. He presently intends to vote these shares in favor of
the  re-election  of these three  Directors.  The Directors  elected at the next
Annual Meeting of Shareholders  will serve until the following Annual Meeting of
Shareholders and until their successors have been duly elected and qualified.

         We  presently  contemplate  that  after  the  1999  Annual  Meeting  of
Shareholders,  the newly elected Directors will hold a regular annual meeting of
the Board of Directors.  If a regular  meeting is not held,  the Directors  will
sign a unanimous  consent in lieu of holding the meeting and will  re-elect  the
current officers to the same positions for the coming year.


Item 10.  Executive Compensation

         Executive  Officers.  The table below shows cash and stock compensation
paid  during the last  three  years to each of the three  persons  who served as
Chief  Executive  Officer during fiscal 1999.  None of the next four most highly
compensated  officers serving on September 30, 1999, received more than $100,000
for fiscal 1999.

<TABLE>


Name and                            Fiscal Year          Salary          Consulting         Other Annual
Principal Position                                                       Fees               Compensation
<S>                                        <C>           <C>             <C>                <C>


Charles Norman, President and              1999          $123,689        $0                 $11,520
Chief  Executive Officer                   1998          $ 0             $0                 $ 0
(August 1998 to Present)


Andrew Kacic* - President and              1999          $0              $0                 $0
Chief Executive Officer                    1998          $6,600          $43,564            $110,200**
(December 1997 to June 1998)               1999          $0              $0                 $0

William O. Merritt - President             1998          $16,350         $ 0                $ 0
and Chief Executive Officer (July
to December 1997) (June 1998 to            1997          $63,900         $ 0                $0
August 1998)
</TABLE>


*    See  Item  12,  "Certain  Relationships  and  Related  Transactions",   for
     information  as to  equipment  purchased  and leased from Mr.  Kacic during
     fiscal 1998 and 1999.


**   Consists  of  110,200  Common  Shares  valued at $1.00 per  share,  paid to
     Advisory Services, Inc. for consulting services rendered by Mr. Kacic.


         On December 30, 1998, the Company  established  Voting Trust I with Mr.
Norman as Trustee,  and placed  350,000  Common  Shares in it for the benefit of
officers of the Company to be named in the future.  The Board of  Directors  has
not yet determined  which officers will participate in these shares or the terms
on which the shares will be made available to them.  For additional  information
about Voting  Trust I see Item 11,  "Security  Ownership  of Certain  Beneficial
Owners and Management."


                                       24

<PAGE>

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 September  30,  1999,  981,857  shares had been issued under the Plan,  no
options  were  outstanding,  and  1,018,143  shares  were  available  for future
issuance.


         Compensation of Directors. Directors received a fee of $300 per meeting
for serving as Directors  during  fiscal 1998.  No fees were paid during  fiscal
1999.

         Section 16(a) Beneficial Ownership Reporting Compliance.  Section 16(a)
of the  Securities  Exchange  Act of 1934 and the rules  promulgated  thereunder
require that  directors  and  executive  officers of the Company and  beneficial
owners of greater than 10% of the  Company's  Common Stock file various  reports
with the  Securities  and  Exchange  Commission  (the  "SEC").  The  Company has
reviewed its files with respect to fiscal 1999. The following persons and trusts
did not file a Form 3 but did report the same  information  on a Form 5 that was
timely filed: Hunter Ennis when he became an officer;  Darr Heath when he became
a Director;  and Voting Trust I, Voting  Trust II and  Exchange  Trust when they
became a beneficial owner of greater than 10% of the Company's Common Stock.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

         On December  30, 1998,  the Company  established  three  trusts  naming
Charles  Norman  as  Trustee  of  each of  them.  This  was  done as part of the
Transaction  and  certain  shares  of stock  were  placed  in each of the  three
trusts.. As a result, Mr. Norman acquired control of our Company from William O.
Merritt,  Dennis W. Miller and others in the  Transaction.  Messrs.  Merritt and
Miller continue to have beneficial  ownership of a total of 600,000 (or 9.7%) of
the outstanding Common Shares.

         As of December 6, 1999, Mr.  Norman,  in his capacity as Trustee of the
three trusts,  beneficially  owns a total of 3,217,000  Common  Shares.  This is
52.0% of the  6,189,971  Common Shares that,  according to the  Company's  stock
transfer agent, were outstanding as of December 6, 1999.

         As part of the December 30, 1998, Transaction,  1,091,113 Common Shares
were  tendered to  AutoPrime,  as  described  above in Item 1,  "Description  of
Business - How the Purpose of the  Restructuring  Was  Achieved."  AutoPrime can
accept  the tender  only after  approval  has been  received  from the Office of
Thrift  Supervision.  There  is no  assurance  the  approval  can  be  obtained.
AutoPrime disclaims any beneficial  ownership of the 1,091,113 shares as long as
it cannot accept the tender.

         The following table sets forth certain  information,  as of December 6,
1999,  concerning the beneficial  ownership of Common Stock by all Directors and
nominees,  certain executive  officers,  all Directors and executive officers of
the Company,  as a group, and each person who beneficially  owns more than 5% of
the  6,189,971  outstanding  shares of Common  Stock,  $.001 par  value.  Unless
otherwise indicated, each person named has sole voting and investment power over
the shares indicated.

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

         Charles Norman, Trustee            3,217,000 (1)(2)           52.0%
         2740 North Dallas Parkway
         Suite 110
         Plano, Texas 75093

                                      25

<PAGE>


         All directors and officers         3,217,000 (1)(2)           52.0%
         as a group (3 persons)


(1)  As part of the transaction  described in Item 1, above, the Company entered
     into three trust agreements dated as of December 30, 1998, with Mr. Norman,
     as Trustee  under Voting Trust  Agreement I, Voting Trust  Agreement II and
     Exchange Trust Agreement.  Certain shares were placed in each trust on that
     date. As of April 12, 1999, the parties  created an additional  purpose for
     Exchange Trust and allocated certain of the shares in Exchange Trust to it.
     Mr. Norman is the sole trustee and has sole voting power. The beneficiaries
     of the three trusts and the  securities  in each trust as of September  30,
     1999, are:

<TABLE>

Name of Trust                 Beneficiaries                                 Securities Held

<S>                           <C>                                           <C>

Voting Trust I                Executive officers of the Company             350,000 Common Shares
                              to be named in the future

Voting Trust II               Executive officers of AutoPrime,              350,000 Common Shares
                              Inc. ("Auto Prime") to be named
                              in the future

The Exchange Trust            (a) Consumer Investment Corporation           up to 700,000 Common
                              ("CIC") (for the benefit of the               Shares (all unused shares
                               holders of the CIC notes)                    will first be available to
                                                                            AutoPrime for satisfaction
                                                                            of the Company's and/or CIC's
                                                                            obligations to them.)

                              (b) AutoPrime (for the purpose of             3,340,529 Preferred Shares
                              holding  the securities tendered              and 1,091,113 Common Shares
                              to AutoPrime and that it cannot
                              lawfully accept prior to receipt
                              of approval from the Office
                              of Thrift Supervision)

                              (c) AutoPrime (for the purpose of             up to 725,887 Common Shares
                              satisfying the Company's and/or
                              CIC's obligation to AutoPrime.)

</TABLE>

(2)  Does not include  3,340,529  Common  Shares  issuable  upon  conversion  of
     3,340,529  Series "A" Preferred Shares held by Mr. Norman as Trustee of the
     Exchange Trust. The Series "A" Preferred  Shares are not convertible  until
     January 1, 2001,  unless certain events occur. The terms of  convertibility
     are  described  in more  detail in "Item 5.  Market for  Common  Equity and
     Related Stockholder Matters."

         By virtue of his beneficial  ownership of Common Stock,  Mr. Norman may
be deemed to be a "parent"  of the  Company as such term is defined in the rules
and regulations of the Securities and Exchange Commission.


         Possible Change of Control.  The 700,000 Common Shares held in Exchange
Trust for the  benefit  of the  holders of the CIC notes are  anticipated  to be
released from Exchange Trust and  transferred to the holders of the CIC notes by
January 30, 2000. In addition,  prior to January 1, 2001,  AutoPrime may be able
to lawfully  accept the tender of the  1,091,113  Common Shares held in Exchange
Trust for its benefit.  Further,  the 725,887  Common Shares held to satisfy the
Company's  and/or CIC's  obligations  to AutoPrime may be utilized by January 1,
2001.

         The  occurrence  of these events would reduce Mr.  Norman's  beneficial
ownership  to  700,000  Common  Shares  (11.3% of the  6,189,971  Common  Shares
outstanding  at December 6, 1999).  These  shares  would still be held in Voting
Trust  I and  Voting  Trust  II.  Simultaneously,  AutoPrime  would  become  the
beneficial  owner of at least 1,091,113  Common Shares (17.6% of the outstanding
Common  Shares),  and perhaps the  additional  725,887  shares,  as well. In the
latter  case,   AutoPrime  would  beneficially  own  1,817,000  (29.4%)  of  the
outstanding Common Shares.

                                       26

<PAGE>

Item 12.  Certain Relationships and Related Transactions

         During  fiscal  1998,  CIC, a subsidiary  of the  Company,  purchased a
telephone system from Advisory Services, Inc., an affiliate of Andrew Kacic. The
purchase price was $4,500 cash. The Company  believes that amount did not exceed
its fair market value,  however, the Company has no knowledge of the cost of the
equipment to Mr. Kacic. At the time, Mr. Kacic was the Company's President and a
Director.  He held these  positions  from December 1997 to August 1998.  CIC was
disposed of in the December 30, 1998 Transaction.

         In addition,  in September,  1998,  CIC leased  computer  equipment and
software  from Mr. Kacic on a lease that expired in September,  1999.  The lease
payments totaled $37,603 and $28,800 during fiscal 1999 and 1998,  respectively.
The equipment was returned to Mr. Kacic at the end of the lease.

         Prior to September 30, 1998, the Company  received  advances  from  and
made payments for a company known as "CIC Fund V." During that time,  CIC Fund V
was an affiliate of AutoCorp Equities,  Inc. . It is owned by William O. Merritt
and Dennis  Miller,  who were, at that time,  also Directors and officers of the
Company. There were no amounts outstanding between the Company and CIC Fund V at
September 30, 1998.

         AutoPrime  is a third  party  creditor  that  purchased  a  substantial
portion of the installment  contracts of the subsidiaries the Company had at the
time.  These were purchased  under an agreement by which the amounts  receivable
were derecognized, but the Company continued to service the contracts for a fee.
AutoPrime,  the note holder,  also sold  contracts  originated  by a third party
dealer  to CIC and the  Merritt  Group  for a  purchase  price of  approximately
$3,000,000, represented by a note bearing interest at 10% per annum.

         In March and June 1998 a total of 172,000  Common Shares of the Company
were issued to Stanley F. Wilson as part of the  severance  agreement  with him.
Mr.  Wilson had served as a Vice  President and a Director from December 1997 to
August 1998.

         On December  30, 1998,  as part of the  Transaction,  2,653,500  Common
Shares of the Company were  redeemed  from the Merritt Group in exchange for the
stock of CIC, LLCI and other  subsidiaries of the Company,  which were deemed to
be non-productive  and not consistent with future plans (see Item 1, Description
of Business-Recent Restructuring Transaction).

         On that same date,  December  30,  1998,  ACE Motor  Company,  acquired
certain assets of Lenders Resale Centers of Texas,  Inc., a corporation owned by
Messrs.  Miller and  Merritt.  This  corporation  is  referred as as "Lenders of
Texas." The purchase price was $50,000. Simultaneously,  ACE Financial Services,
Inc.  ("AFS") assumed the rights and obligations of Lenders of Texas  pertaining
to a note portfolio with a remaining gross balance of $1,400,000.

         The portfolio had previously  been sold to AutoPrime.  The  obligations
ACE assumed contained recourse as to the contracts in that portfolio. In return,
Lenders of Texas gave its note in the amount of  $2,205,919  to ACE. The Company
has attributed no value to that note in its financial records.




                                       27

<PAGE>


Item 13. Exhibits and Reports on Form 8-K

     (a)  Exhibits

         The  following  documents are attached to and filed with this report as
Exhibits:

     2.1       Master  Agreement  dated as of  December  30,  1998 by and  among
               AutoPrime,  Inc.,  AutoCorp Equities,  Inc.,  Consumer Investment
               Corporation,   Lenders  Liquidation  Centers,  Inc.,  William  O.
               Merritt,  Dennis W. Miller, Andrew J. Kacic, Vincent W. Bustillo,
               Wayne McLaws and Efrain Diaz.*
     2.2       Unconditional  Tender of  AutoCorp  Preferred  and Common  Stock,
               effective  December 30, 1998, by and between  AutoCorp  Equities,
               Inc. and AutoPrime, Inc.*
     2.3       Agreement to Issue  Additional  Preferred Stock between  AutoCorp
               Equities, Inc., AutoPrime, Inc., Consumer Investment Corporation,
               and Lenders  Liquidation  Centers,  Inc.  effective  December 30,
               1998.*
     2.4       Pledge  Agreement  dated as of December 30, 1998,  from  Consumer
               Investment  Corporation and Lenders Liquidation Centers,  Inc. to
               AutoPrime, Inc.*
     2.5       Pledge  Agreement  dated as of December 30, 1998, from William O.
               Merritt and Dennis W. Miller to AutoPrime, Inc.*
     2.6       General  Indemnity  Agreement dated as of December 30, 1998, from
               Consumer Investment  Corporation and Lenders Liquidation Centers,
               Inc. to AutoCorp Equities, Inc.*
     2.7       Ratification  of Obligations  dated as of December 30, 1998, from
               Consumer Investment  Corporation and Lenders Liquidation Centers,
               Inc. to AutoPrime, Inc.*
     2.8       Release of Pledge  Agreement  dated as of December 30, 1998, from
               AutoPrime, Inc. to the Merritt Group.*
     2.9       Supplemental Stock Pledge  dated  April 12, 1999  between Charles
               Norman and AutoCorp Equities, Inc. and AutoPrime, Inc.
     3.1       Certificate  of  Designation  of the  Series  "A"  Non-Cumulative
               Convertible Preferred Stock of AutoCorp Equities, Inc.*
     9.1       Voting Trust  Agreement I dated as of December 30, 1998,  Charles
               Norman,  Trustee  (When  this  document  has  been  appropriately
               amended,  it  will  contain  a  management  compensatory  plan or
               arrangement).*
     9.2       Voting Trust Agreement II dated as of December 30, 1998,  Charles
               Norman, Trustee.*
     9.3       Exchange Trust Agreement dated as of December 30,  1998,  Charles
               Norman, Trustee.*
     10.1      Master Purchase and Sale Agreement dated October 6, 1997, between
               AutoPrime, Inc. and Consumer Investment Corporation.**
     10.2      Guaranty  dated October 6, 1997,  executed by AutoCorp  Equities,
               Inc.  with respect to Master  Purchase and Sale  Agreement  dated
               October 6, 1997.**
     10.3      Servicing  Agreement  dated October 6, 1997,  between  AutoPrime,
               Inc. and Consumer Investment Corporation.**
     10.4      Master  Purchase  and Sale  Agreement  dated  January  22,  1998,
               between AutoPrime, Inc. and Lenders Auto Resale Centers of Texas,
               Inc.**
     10.5      Servicing  Agreement dated January 22, 1998,  between  AutoPrime,
               Inc. and Lenders Auto Resale Centers of Texas, Inc.**
     10.6      Master  Purchase  and Sale  Agreement  dated  January  12,  1999,
               between AutoPrime, Inc. and ACE Motor Company.**
     10.7      Guaranty dated January 12, 1999,  executed by AutoCorp  Equities,
               Inc., ACE Motor Company,  and AutoCorp Financial Services,  Inc.,
               with respect to Master  Purchase and Sale Agreement dated January
               12, 1999.**
     10.8      Servicing  Agreement dated January 12, 1999,  between  AutoPrime,
               Inc. and ACE Motor Company.**
     10.9      Master  Purchase  and Sale  Agreement  dated  January  12,  1999,
               between AutoPrime, Inc. and AutoCorp Financial Services, Inc.**
     10.10     Guaranty dated January 12, 1999,  executed by AutoCorp  Equities,
               Inc., ACE Motor Company,  and AutoCorp Financial Services,  Inc.,
               with respect to Master  Purchase and Sale Agreement dated January
               12, 1999.**
     10.11     Servicing  Agreement dated January 12, 1999,  between  AutoPrime,
               Inc. and AutoCorp Financial Services.**
     10.12     Business Loan  Agreement  dated October 26, 1998 between  Suburba
               Acquisition  Company, Inc.  d/b/a  ACE  Motor Co.  and AutoPrime,
               Inc.**
     10.13     Promissory  Note dated October 26, 1998, in the principal  amount
               of $750,000 executed by Suburba Acquisition  Company,  Inc. d/b/a
               ACE Motor Co. in favor of AutoPrime, Inc.**
     10.14     Commercial  Security  Agreement  dated October 26, 1998,  between
               Suburba Acquisition Company, Inc. and AutoPrime, Inc.**
     10.15     Promissory Note dated April 26, 1999, in the principal  amount of
               $750,000 executed by Suburba Acquisition Company,  Inc. d/b/a ACE
               Motor Co. in favor of AutoPrime, Inc.**


                                       28

<PAGE>

     10.16     Business Loan  Agreement  dated June 17, 1999,  between ACE Motor
               Co. (formerly known as Suburba  Acquisition  Company,  Inc. d/b/a
               ACE Motor Co.) and AutoPrime, Inc.**
     10.17     Promissory  Note dated June 17, 1999, in the principal  amount of
               $1,000,000,  executed by ACE Motor Co. (formerly known as Suburba
               Acquisition  Company,  Inc.  d/b/a  ACE  Motor  Co.) in  favor or
               AutoPrime, Inc.**
     10.18     Commercial  Security  Agreement dated June 17, 1999,  between ACE
               Motor Co. (formerly known as Suburba  Acquisition  Company,  Inc.
               d/b/a ACE Motor Co.) and AutoPrime, Inc.**
     10.19     Asset  Purchase   Agreement   dated  December  30,  1998  between
               AutoCorp  Financial  Services,  Inc.  and ACE Motor  Company,  as
               Buyer, and Lenders Auto Resale Center of Texas,  Inc. and Lenders
               Liquidation Centers, Inc., as Seller.**
     10.20     Addendum to Promissory Note dated September 30, 1999  executed by
               AutoCorp Equities,Inc. in favor of AutoPrime, Inc.
     10.21     Promissory  Note   dated  April 16,  1999  executed  by  AutoCorp
               Equities, Inc. in favor of AutoPrime, Inc.
     10.22     Addendum to Promissory Note dated September 30, 1999  executed by
               AutoCorp Equities, Inc. in favor of AutoPrime, Inc.
     10.23     Promissory  Note   dated  April 16, 1999  executed   by  AutoCorp
               Equities,  Inc in favor of  AutoPrime,  Inc.
     10.24     Amendment  to  Unconditional  Tender  of AutoCorp  Preferred  and
               Common Stock dated  December 31, 1999  between AutoCorp Equities,
               Inc. and  AutoPrime, Inc.
     10.25     Promissory Note dated September 8, 1999 in the amount of $400,000
               executed by ACE Motor Company in favor of AutoPrime, Inc.
     10.26     Promissory Note dated September 8, 1999 in the amount of $250,000
               executed by ACE Motor Company in favor of AutoPrime, Inc.
     10.27     Promissory Note dated September 8, 1999 in the amount of $750,000
               executed by ACE Motor Company in favor of AutoPrime, Inc.
     10.28      Business Loan Agreement dated September 8, 1999 in the amount of
               $400,000 executed by ACE Motor Company in favor of AutoPrime,
               Inc.
     10.29     Business Loan Agreement dated September 8, 1999 in the  amount of
               $250,000 executed by ACE Motor Company in favor of AutoPrime,
               Inc.
     10.30     Business Loan Agreement dated September 8, 1999 in the  amount of
               $750,000 executed by ACE Motor Company in favor of AutoPrime,
               Inc.
     21        List of Subsidiaries.
     27        Financial Data Schedule.
     99.1      Resume of Experience of Charles  Norman (This relates to "Item 9.
               Directors,  Executive  Officers,  Promoters and Control  Persons;
               Compliance  With Section  16(a) of the Exchange Act" in this Form
               10-KSB).*
----------------------------------------------------
     *    Incorporated by reference to the exhibit with the same name and number
          attached to the Form 8-K filed by AutoCorp Equities, Inc. on March 11,
          1999.

     (b)  Reports on form 8-K

         No report on Form 8-K was filed during the fourth (last) quarter of the
fiscal year ended September 30, 1999.




                                      29


<PAGE>


SIGNATURES

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


                                   AUTOCORP EQUITIES, INC.
                                   Registrant



Date: January 13, 2000             By: /s/  Hunter Ennis
                                       -----------------------------
                                            Secretary, Treasurer
                                            and Director (Principal Financial
                                            Officer


         In accordance with 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.



Date: January 13, 2000            By: /s/  Charles Norman
                                      -----------------------------
                                           Charles Norman
                                           President and Chief Executive Officer
                                           (Principal Financial Officer


Date: January 13, 2000            By: /s/  Darr Heath
                                      -----------------------------
                                           Darr Heath, Director



















                                       30



<PAGE>


                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                           September 30, 1999 and 1998

                                                                     Page No.

INDEPENDENT AUDITORS' REPORT                                               1

CONSOLIDATED FINANCIAL STATEMENTS

         Consolidated Balance Sheets                                       2

         Consolidated Statements of Operations                             4

         Consolidated Statements of Changes in
          Shareholders' Equity (Deficit)                                   5

         Consolidated Statements of Cash Flows                             7

         Notes to Consolidated Financial Statements                       10
















                                                                              F1


<PAGE>


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

The Board of Directors
AutoCorp Equities, Inc.:

We have  audited  the  accompanying  consolidated  balance  sheets  of  AutoCorp
Equities,  Inc. and  subsidiaries  (the  "Company") as of September 30, 1999 and
1998,  and  the  related  consolidated  statements  of  operations,  changes  in
shareholders'  equity  (deficit),  and cash flows for each of the three years in
the period ended September 30, 1999. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits 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 consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
AutoCorp Equities,  Inc. and subsidiaries as of September 30, 1999 and 1998, and
the  results  of its  operations  and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

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
financial statements,  the Company has suffered recurring losses from operations
and has negative  working  capital at September 30, 1999 that raise  substantial
doubt about its 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.





                                         Hurley & Company


Granada Hills, California
December 9, 1999
                                        1


<PAGE>



                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           September 30, 1999 and 1998

                                                            1999         1998
                                                         ----------   ----------
ASSETS

CURRENT ASSETS:
         Cash and cash equivalents                       $  347,046   $   51,979
         Notes receivable, net of allowance
          for doubtful accounts of $479,926
          and $0, respectively (Note 4)                     737,391         --
         Other receivable                                     5,783          468
         Inventory                                        1,607,538       95,297
         Prepaid expenses                                    59,066         --
                                                         ----------   ----------
                  Total current assets                    2,756,824      147,744

PROPERTY AND EQUIPMENT
         Furniture and fixtures                              11,295        5,500
         Office equipment                                   208,513        4,220
         Computer equipment                                  42,134         --
         Automobiles                                          2,500       14,500
         Machinery and equipment                             91,865       10,780
         Leasehold improvements                              21,674         --
                                                         ----------   ----------
                                                            377,981       35,000
         Less accumulated depreciation                       36,216        1,361
                                                         ----------   ----------
                                                            341,765       33,639

OTHER ASSETS
         Deposits                                             7,743         --
                                                         ----------   ----------
         Total assets                                    $3,106,332   $  181,383
                                                         ==========   ==========











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

                                        2


<PAGE>


                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           September 30, 1999 and 1998

                                                     1999            1998
                                                 ------------    ------------
LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES:
  Current portion, long-term debt                $    683,001    $    987,153
  Accounts payable                                    292,772         346,625
  Accrued expenses                                    529,302       1,143,336
  Sales tax payable (Note 5)                          641,824            --
  Line of credit (Note 7)                           1,196,921            --
  Related party payable (Note 13)                     538,847       5,678,208
  Note payable, related party (Note 13)             4,590,617            --
  Other current liabilities                           219,077         188,943
                                                 ------------    ------------
     Total current liabilities                      8,692,361       8,344,265

Long-term debt, net of current portion and net
 of discounts of $0 and $5,733, respectively             --         1,534,606

Provision for recourse liability (Note 9)           2,884,000       2,320,000

Related party payable (Note 13)                     6,578,485            --

Commitments and contingencies                            --              --

SHAREHOLDERS' DEFICIT:
Convertible preferred stock, no par value,
 5% non-cumulative; liquidation preference
 of $1.00 per share; 10,000,000 shares
 authorized, 0 shares issued and outstanding
 at September 30, 1999                                   --              --
Common stock, par value $.001; 110,000,000
 shares authorized, 6,137,184 and 6,099,435
 shares issued and outstanding at September
 30, 1999 and 1998, respectively                        6,137           6,099
Additional paid-in-capital                         11,536,718      11,469,716
Accumulated deficit                               (26,353,869)    (22,914,303)
Less treasury stock                                      --          (569,000)
Less shares in trust (Note 15)                       (227,500)           --
Less stock subscriptions receivable                   (10,000)        (10,000)
                                                 ------------    ------------
     Total shareholders' deficit                  (15,048,514)    (12,017,488)
                                                 ------------    ------------
     Total liabilities and
      shareholders' deficit                      $  3,106,332    $    181,383
                                                 ============    ============



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


                                        3




<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              For the Years Ended September 30, 1999, 1998 and 1997


                                         1999         1998         1997
                                     ------------ ------------ ------------
Net Revenues                         $ 13,356,609 $  4,098,074 $  3,177,217

Cost of sales                           9,440,944    3,517,643    2,370,098
                                     ------------ ------------ ------------
      Gross profit                      3,915,665      580,431      807,119

Selling, administrative
 and other operating expenses           4,449,155    9,952,292    2,023,249
Bad debt expense                          465,042
Provision for recourse liability        2,726,918    2,320,000         --
                                     ------------ ------------ ------------
Operating loss                         (3,725,450) (11,691,861)  (1,216,130)

Other expense:
  Interest expense                       (280,167)    (478,621)    (283,479)
  Miscellaneous                              --         (5,225)        --
  Costs of abandoned business
   combination agreements                    --           --        (20,750)
  Gain on disposition of subsidiaries     565,648         --           --
  Gain on disposal of asset                   403         --           --
  Loss on lot closings                       --       (144,740)        --
  Loss on conversion of
   debt to equity                            --       (184,023)        --
                                     ------------ ------------ ------------

Net loss                             $ (3,439,566)$(12,504,470)$ (1,520,359)
                                     ============ ============ ============

Net loss per share,
 basic and diluted                   $       (.56)$      (2.28)$       (.30)
                                     ============ ============ ============

Weighted average number
 of shares outstanding,
 basic and diluted                      6,122,328    5,484,807    5,098,584
                                     ============ ============ ============







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

                                        4


<PAGE>

<TABLE>
<CAPTION>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
              For the Years Ended September 30, 1999, 1998 and 1997

                              Common Stock     Additional      Stock
                                        Par      Paid-In   Subscriptions  Shares in   Treasury    Accumulated
                             Shares    Value     Capital     Receivable    Trust      Stock        Deficit        Total
                           ---------  -------  -----------  ------------  ---------  ----------- ------------   -----------
<S>                          <C>        <C>      <C>            <C>            <C>   <C>          <C>           <C>

Balance at
 September 30, 1996          156,532      156    8,931,793      (652,000)      --           --      (8,889,474)    (609,525)

Issuance of stock for
 cash and subscription       130,666      131       81,869       (12,000)      --           --            --         70,000

Issuance of stock to former
 officer for reduction
 of note payable             405,000      405      149,445          --         --           --           --         149,850

Shares issued for services   126,820      127      146,872          --         --           --           --         146,999

Cancellation of stock
 subscription agreement         --       --           --         652,000       --       (569,000)        --          83,000

Stock issued in acquisition
 of subsidiaries           4,281,000    4,281         --            --         --           --           --           4,281

Net loss for the year
 ended September 30, 1997       --       --           --            --         --           --      (1,520,359)  (1,520,359)
                           ---------  -------  -----------  ------------  ---------  -----------  ------------  ------------
Balance at
 September 30, 1997        5,100,018  $ 5,100  $ 9,309,979  $    (12,000) $    --    $  (569,000) $(10,409,833) $(1,675,754)

Shares issued to
 convert debt
 to equity                   490,076      490    1,839,400          --         --           --            --      1,839,890

Shares issued for services   227,141      227      212,227          --         --           --            --        212,454

Cancellation of stock
 subscription agreement      (20,000)     (20)      (1,980)        2,000       --           --            --           --

Shares issued to former
 officer per agreement       192,000      192         --            --         --           --            --           192

</TABLE>

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

                                        5

<PAGE>

<TABLE>
<CAPTION>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)(CONTINUED)
              For the Years Ended September 30, 1999, 1998 and 1997

                              Common Stock     Additional      Stock
                                        Par      Paid-In   Subscriptions Shares in   Treasury    Accumulated
                             Shares    Value     Capital     Receivable    Trust      Stock        Deficit         Total
                           ---------  -------  -----------  ------------  ---------  ----------- ------------   -----------
<S>                        <C>        <C>      <C>          <C>           <C>       <C>         <C>             <C>

Shares issued to former
 officer for services        110,200  $   110  $   110,090  $       --    $    --    $      --   $       --     $   110,200

Net loss for the year
 ended September 30, 1998       --       --           --            --         --           --    (12,504,470)  (12,504,470)
                           ---------  -------  -----------  ------------  ---------  ----------- ------------   ------------
Balance at
 September 30, 1998        6,099,435    6,099   11,469,716       (10,000)      --       (569,000) (22,914,303)  (12,017,488)

Shares issued for services     2,737        3        2,734          --         --           --           --           2,737

Shares issued to convert
 debt to equity               22,000       22         --            --         --           --           --              22

Shares issued to
 acquire subsidiary           50,000       50       49,950          --         --           --           --          50,000

Shares cancelled
 per agreement               (36,988)     (37)        --            --         --           --           --             (37)

Shares received from
 former officers in
 debt relief              (2,653,500)     --          --            --         --     (1,724,775)        --      (1,724,775)

Shares issued to
 trust in disposition
 of subsidiaries           2,653,500      --        14,318          --     (227,500)   2,293,775         --       2,080,593

Net loss for the year ended
 September 30, 1999             --        --          --            --         --           --     (3,439,566)   (3,439,566)
                           ---------  -------  -----------  ------------  ---------  ----------- ------------   ------------
Balance at
 September 30, 1999        6,137,184  $ 6,137  $11,536,718  $    (10,000) $(227,500) $      --   $(26,353,869)  $(15,048,514)
                           =========  =======  ===========  ============  =========  =========== ============   ============

</TABLE>

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

                                        6


<PAGE>


                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Years Ended September 30, 1999, 1998 and 1997

                                         1999          1998          1997
                                     ------------  ------------  -----------

Net loss                             $ (3,439,566) $(12,504,470) $(1,520,359)

Adjustments to reconcile net loss to net cash used in operating activities:


   Depreciation and
    amortization                           35,966       147,889       58,649
   Deferred income                           --         (74,099)    (352,799)
   Gain on disposal of asset                 (403)         --           --
   Gain on disposition of subsidiaries   (565,648)         --           --
   Loss on lot closings                      --         144,740         --
   Loss on conversion of
    debt to equity                           --         184,023         --
   Interest on related party debt          66,433        69,230         --
   Provision for Recourse Liability       564,000     2,320,000         --
   Provision for Doubtful Accounts        479,926          --           --
 Changes in:
   Accounts receivable                   (749,655)      816,856      360,155
   Related party payables               1,439,124     5,563,269       45,709
   Receivables from officers                  468        47,677      (37,652)
   Prepaid expenses                       (59,066)      406,685       (6,685)
   Inventory                           (1,497,741)      851,081     (902,677)
   Accounts payable                      (118,353)      575,425       47,669
   Accrued expenses                       300,308       898,573     (235,200)
   Sales tax payable                      641,824          --           --
   Line of credit                       1,196,921          --           --
   Other                                   22,391       26,976      (94,066)
                                     ------------  -----------  -----------
       Total adjustments                1,756,495   11,978,325   (1,116,897)
                                     ------------  -----------  -----------
       Net cash used in
        operating activities           (1,683,071)    (526,145)  (2,637,256)
                                     ------------  -----------  -----------

Cash flows from investing activities:
  Capital expenditures                   (300,276)    (102,072)    (102,667)
                                     ------------  -----------  -----------
     Net cash used in
      investing activities               (300,276)    (102,072)    (102,667)
                                     ------------  -----------  -----------





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

                                        7

<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
              For the Years Ended September 30, 1999, 1998 and 1997


                                         1999          1998          1997
                                    ------------   -----------   -----------
Cash flows from financing activities:

  Principal payments
   on long-term debt                $ (2,827,207)  $  (466,767)  $   (54,080)
  Additional borrowings                5,105,621       993,124     2,751,575
  Proceeds from issuance
   of common stock                          --             192          --
  Cancellation of stock
   subscription agreement                                  (20)         --
                                    ------------   -----------   -----------
     Net cash provided by
      financing activities             2,278,414       526,529     2,697,495
                                    ------------   -----------   -----------
Net increase/(decrease) in
  cash and cash equivalents              295,067      (101,688)      (42,428)

Cash and cash equivalents
  at beginning of period                  51,979       153,667       196,095
                                    ------------   -----------   -----------
Cash and cash equivalents
  at end of period                  $    347,046   $    51,979   $   153,667
                                    ============   ===========   ===========

Supplemental disclosures of cash flow information:

  Cash paid for interest            $    149,424   $   215,143   $    25,319
                                    ============   ===========   ===========

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














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

                                        8


<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
              For the Years Ended September 30, 1999, 1998 and 1997


                                  1999         1998          1997
                             ------------  -----------   -----------
Non-cash transactions

  Stock issued for services  $      2,737  $   212,454   $   146,999
  Stock issued to former
   officer for services              --        110,200          --
  Stock issued to former
   officer for reduction
   of note payable                   --           --         149,850
  Stock issued to convert
   debt to equity, net of
   $119,584 of costs relating
   to conversion                     --      1,839,890          --
  Treasury stock obtained
   in cancellation of
   subscription agreement            --           --         569,000
  Services provided for
   cancellation of stock
   subscription agreement            --           --          83,000
  Stock subscription
   issued for stock                  --           --          12,000
  Company cars transferred
   to inventory                    14,500         --            --
  Debt issued to acquire
   notes receivable               473,445         --            --
  Stock issued to acquire
   fixed assets                    50,000         --            --

During December 1998, the Company combined certain  liabilities to AutoPrime and
tendered preferred stock (see Notes 2 and 15) totaling  $6,578,448 and net other
equity of $355,803 in exchange for the  extinguishments  of  $2,223,159 of debt,
$4,278,068  of  related  party  payables  and  $1,028,306  of other  liabilities
resulting in a net gain on disposition of  subsidiaries  of $565,648.  The other
equity  consisted of $1,724,775 in treasury stock obtained in the disposition of
the Company's  subsidiaries,  $227,500 of treasury  stock received into a trust,
other  treasury  stock  of  $2,293,775  issued  in  extinguishments  of debt and
liabilities and $14,303 for 22,000 shares of common stock converted from debt at
$0.65 per share.



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

                                        9

<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


Note 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Organization
 ------------

         AutoCorp Equities, Inc. (the "Company") was incorporated in Colorado on
         January 2, 1986 under the name Vivatae, Inc. and completed its  initial
         public offering in May, 1986.  In November 1986, the Company   acquired
         all of the outstanding  stock of Eagle Entertainment, Inc. and  changed
         its   name  t o  Eagle  Entertainment,   Inc.   ("EEI").  Through   its
         subsidiaries,  EEI  provided performance guarantees for motion  picture
         productions.

         In September 1990, the Company  divested its  subsidiaries and acquired
         Arizona based corporations  engaged in retailing and financing of motor
         vehicles.

         On January 3, 1992,  the Company  changed  its name to Eagle  Holdings,
         Inc. On October 20, 1993, the Company formed a Nevada Corporation named
         Eagle Automotive Enterprises, Inc. Eagle Holdings, Inc. was then merged
         into Eagle Automotive  Enterprises,  Inc., a shell corporation  without
         any substantial assets or equity.

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

         On December 31, 1994,  the licensing  agreement with the Samuel Goldwyn
         Company  expired  and the Company  divested  its  subsidiaries  to seek
         business   combination   candidates  as  it  re-entered   the  business
         development stage.

         On  September  30,  1996,  the  Company  changed  its name to  AutoCorp
         Equities, Inc. and began selling and financing automobiles.  In January
         1997, the Company organized a subsidiary,  Lenders  Liquidation  Center
         Reconditioning  ("Recon"),  to provide reconditioning  services to used
         cars  obtained by  purchase  and trade in at the  Company's  automobile
         lots. In July 1997, the Company acquired 100% of the outstanding  stock
         of  Consumer  Investment   Corporation   ("CIC"),   Consumer  Insurance
         Services,  Inc.("CIS") (including Consumer Insurance Company (Cayman)),
         and Lenders Liquidation Centers, Inc. ("LLC") in exchange for stock.

                                       10


<PAGE>

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

                               September 30, 1999

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 Organization (continued)
 ------------

         This transaction resulted in the shareholders of the acquired companies
         becoming  the  majority  shareholders  of AutoCorp  Equities,  Inc. The
         acquired companies are engaged in the sales, financing and insurance of
         used cars.

         In August 1998, the Company purchased the assets of Suburba Acquisition
         Company, which sells and finances used automobiles,  for cash and notes
         in  conjunction  with  the  acquisition.   In  November  1998,  Suburba
         Acquisition  Company separated the finance servicing arm of the company
         into a new corporation named AutoCorp Financial  Services,  and changed
         the name of the used  automobile  purchase  and  sales arm to Ace Motor
         Company.

         In December 1998, the Company  disposed of its  subsidiaries  CIC, CIS,
         LLC and Recon in exchange for the Company's common stock and assumption
         of debt.

         In April 1999, the Company  acquired  certain  assets  of  Horizon Auto
         Sales for stock.

         In June 1999, the Company acquired a retail installment  contracts from
         a dealer in Lufkin, Texas notes in conjunction with the acquisition. In
         July 1999, the Company started a car lot in Lufkin as Circus Motors.

 Consolidated basis
 ------------------

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

 Use of estimates
 ----------------

         The preparation of the Company's  consolidated  financial statements in
         conformity with generally accepted  accounting  principles  necessarily
         requires  management to make estimates and assumptions  that affect the




                                       11


<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


Note 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 Use of estimates (continued)
 ----------------

         reported amounts of assets and liabities and  disclosure of  contingent
         assets  and  liabilities  at the  date of  the  consolidated  financial
         statements and the reported amounts of revenues and expenses during the
         reporting period.  Actual results could differ from those estimates.

 Fair value of financial instruments
 -----------------------------------

         Statement of Financial  Accounting Standards No. 107, Disclosures about
         Fair Value of Financial Instruments, requires that the Company disclose
         estimated  fair values for its  financial  instruments.  The  following
         summary  presents a description of the  methodologies  and  assumptions
         used to determine such amounts.

         Fair value estimates are made at a specific point in time and are based
         on relevant  market  information  and  information  about the financial
         instrument; they are subjective in nature and involve uncertainties and
         matters  of  judgment  and,   therefore,   cannot  be  determined  with
         precision.  These estimates do not reflect any premium or discount that
         could result from  offering for sale at one time the  Company's  entire
         holdings  of a  particular  instrument.  Changes in  assumptions  could
         significantly affect the estimates.

         Since the fair value is estimated at  September  30, 1999,  the amounts
         that will actually be realized or paid at settlement of the instruments
         could be significantly different.

         The carrying  amount of cash and cash  equivalents is assumed to be the
         fair value  because of the  liquidity  of these  instruments.  Accounts
         receivable,  accounts  payable and accrued  expenses  approximate  fair
         value because of the short maturity of these instruments.  The recorded
         balance of notes  payable  less the amount  discounted  at  issuance is
         estimated  to be the fair value since the rates  specified in the notes
         approximate current market rates.

 Revenue recognition
 -------------------

         Revenue from automobile  sales is generally  recognized when possession
         of the  automobile  changes.  Service fees are based on a percentage of
         collections and  are earned  over the  life of the notes.  Service  fee
         revenue is recognized as notes are collected.

                                       12

<PAGE>


                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


Note 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 Cash and cash equivalents
 -------------------------

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

 Property and equipment
 ----------------------

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

 Inventory
 ---------

         Inventories  consist  principally  of cars  available  for sale and are
         stated at the lower of cost (specific identification method) or market.

 Income taxes
 ------------

         The Company records its taxes in accordance with Statement of Financial
         Accounting  Standards No. 109 "Accounting for Income Taxes". Under this
         method,  deferred tax assets and  liabilities  are  recognized  for the
         future  tax  consequences   attributable  to  differences  between  the
         financial  statement carrying amount of existing assets and liabilities
         and their respective tax bases, including operating loss and tax credit
         carryforwards.  Deferred tax assets and  liabilities are measured using
         enacted tax rates  expected to apply to taxable  income in the years in
         which those  temporary  differences  are  expected to be  recovered  or
         settled.

         The effect in deferred  tax assets and  liabilities  of a change in tax
         rates is recognized in income in the period that includes the enactment
         date.  Valuation  allowances are  established  when necessary to reduce
         deferred tax assets to the amount expected to be realized.




                                       13


<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


Note 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 Advertising and promotional costs
 ---------------------------------

         Advertising and promotional costs are expensed as incurred. Advertising
         and  promotional  expenses  were $47,699 and $680,058 in 1999 and 1998,
         respectively.

 Loss per common share
 ---------------------

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

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

         Certain prior year amounts in the accompanying  consolidated  financial
         statements  have been  reclassified  to conform to the  current  year's
         presentation.


NOTE 2.  BASIS OF PRESENTATION

         During the two years ended  September 30, 1999 and 1998,  the Company's
         operations  were  negatively  impacted by the poor  performance  of the
         automobile  sales  and  financing  subsidiaries.   The  Company  has  a
         shareholders'  deficit of  approximately  $15,000,000  at September 30,
         1999 and a history of  operating  losses.  At September  30, 1999,  the
         Company also had negative working capital of approximately $6,000,000.

         Management's plans to return to profitability are three-fold. First, to
         divest itself of the  non-productive  subsidiaries.  Second,  to reduce
         debt and make arrangements to reduce the Company's  exposure to further
         liability.  Third, to achieve  operational  profitability by generating
         higher quality notes  receivable.  The Company has no plans to purchase
         portfolios in the near term.




                                       14


<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


NOTE 2.  BASIS OF PRESENTATION (continued)

         The  Company  completed  the first part of its plan by  exchanging  its
         non-producing subsidiaries CIC, CIS, LLC and Recon for 2,653,500 shares
         of the Company's common stock from the Merritt Group (a group comprised
         of former officers of the Company).

         The  second  part of  management's  plan  is in  process.  The  Company
         tendered  6,578,485  shares of preferred  stock to AutoPrime (a related
         party) in satisfaction of the Company's liability at December 30, 1998.
         This transaction has not yet been finalized as the shares have not been
         accepted by AutoPrime.

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

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


NOTE 3.  RECENT PRONOUNCEMENTS

         In March 1995, the Financial Accounting Standards Board ("FASB") issued
         Statement  of  Financial   Accounting   Standards   ("SFAS")  No.  121,
         "Accounting for the Impairment of Long-Lived  Assets and for Long-Lived
         Assets to be Disposed of". SFAS 121 requires that long-lived assets and
         certain  identifiable  intangibles  to be held and used by an entity be
         reviewed for  impairment  whenever  events or changes in  circumstances
         indicate that the carrying  amount of an asset may not be  recoverable.
         The Company has adopted SFAS 121, and reviews its long-lived assets for
         recoverability   to  determine  if  an  impairment  loss  needs  to  be
         recognized.

         In June 1998, the FASB  issued SFAS No. 133, "Accounting for Derivative
         Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 estabilishes
         new accounting and reporting standards for derivative financial
         instruments and for hedging activities. The Company will adopt SFAS 133
         in fiscal year 2001, the effective date of SFAS 133.



                                       15


<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


NOTE 4.  NOTES RECEIVABLE

         Notes receivable consist of the following at September 30, 1999
         and 1998:
                                                  1999             1998
                                             ------------      -----------
         Notes receivable, secured by autos,
          interest from 24% to 27% in 36
          month terms.  Maturing by 2002.    $  1,217,317      $       -
         Allowance for doubtful accounts           79,926              -
         Provision for discount on
          sale of notes receivable                400,000              -
                                             ------------      ----------
                                             $    737,391      $       -
                                             ============      ==========

         The Company expects to sell its notes receivable within one year.

NOTE 5.  SALES TAX PAYABLE

         In the  process of selling  cars,  sales tax is added to the  financing
         agreement for its customers.  The Company currently estimates,  and has
         recorded,  a sales tax  liability  of  approximately  $433,000  for the
         remaining  balances  on the related  installment  note  portfolio.  The
         Company  currently  pays sales taxes as proceeds are collected from the
         financing agreements. An additional amount has been accrued against any
         contingent liabilities which may arise from the sale of its installment
         notes and any acceleration of the sales taxes due.

NOTE 6.  INCOME TAXES

         The Company has incurred  net book  operating  losses of  approximately
         $26,000,000 and corresponding tax net operating losses of approximately
         $26,000,000 since inception.  The Company has not yet filed tax returns
         and therefore has not  determined  the amount of those losses which may
         be used to offset future taxable income.  The Company plans to file all
         tax returns that are delinquent.

         The  deferred  tax  benefit  at   statutory   rates  is   approximately
         $8,000,000 and expires by 2013.   This amount is offset  by  a  reserve
         for doubtful utilization.  Any changes of stock ownership exceeding 50%
         would limit the Company's ability to use the loss carryforwards.  Since
         the Company has not yet developed a  history of profitable  operations,
         utilization of the loss carryforwards cannot be reasonably assured.



                                       16


<PAGE>


                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999

NOTE 7.  LINE OF CREDIT

         The Company currently has two lines of credit totaling  $1,400,000 with
         AutoPrime  to  purchase  used and  repossessed  cars for  resale on the
         Company lots. Both lines of credit, or flooring plans, are secured 100%
         by the  vehicle  inventory.  The  line  to  purchase  used  cars is for
         $1,000,000 and bears  interest at a rate of 14.75% per annum.  The line
         to purchase  repossessed cars is for $400,000 and bears interest at 12%
         per annum.  The  current  agreements  expire  March 8, 2000.  There are
         certain  covenants in the agreement that allow for an earlier due date.
         At September 30, 1999, $995,745 of the line had been used with $404,255
         available.  Also,  at September  30, 1999 there were drafts on the line
         totaling  $201,176  which had not yet been paid by AutoPrime,  bringing
         the total line payable to $1,196,921.

NOTE 8.  LONG-TERM DEBT

         Long-term debt at September 30, 1999 and 1998 consisted of the
         following:
                                           September 30,    September 30,
                                               1999             1998
                                           ------------     -------------
         Note payable, unsecured, for
          acquisition of car lot, payable
          in quarterly installments of
          $50,000.  No interest is charged
          on note.  Matures March 2000     $     134,000     $    284,000

         Note payable, secured by retail
          installment notes, payable at
          maturity.  Interest on matured,
          unpaid principal at 12% per annum.
          Matures December 1999                 473,445              --

         Note payable, unsecured, for
          acquisition of finance servicing
          facility,  payable in monthly
          installments of $9,444.  No
          interest is charged on note.
          Matures May 2000.                      75,556              --

         Notes payable, unsecured, payable
          at maturity plus accrued interest at
          rates from 10% to 24% per annum.
          Converted to stock December 1998         --           2,197,392


                                       17



<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


NOTE 8.  LONG-TERM DEBT (Continued)
                                           September 30,    September 30,
                                               1999             1998
                                           ------------     -------------
         Note payable, unsecured, payable
          at maturity plus interest
          at 8% per annum.  Fully due and
          payable, matured September 1998          --              20,492

         Capital lease, secured by
          equipment, payable in monthly
          installments of $848 plus
          interest at 14% per annum.
          Transferred to former officers in
          December 1998                            --              16,685

         Capital lease, secured by
          equipment, payable in
          monthly installments of $277
          plus interest at 16% per annum.
          Transferred to former officers
          in December 1998                 $       --        $      8,923
         Unamortized discounts                     --              (5,733)
                                           ------------      ------------
                                                683,001         2,521,759
         Less current portion                   683,001           987,153
                                           ------------      ------------
                                           $       --        $  1,534,606
                                           ============      ============

NOTE 9.  COMMITMENTS AND CONTINGENCIES

         The  Company  leases  office  space and auto lots under  noncancellable
         operating lease  agreements which require payments of $17,109 per month
         and expire in June 2004.  Future minimum annual payments required under
         the leases are as follows:

                        September 30, 2000                $ 189,584
                        September 30, 2001                  115,997
                        September 30, 2002                   96,164
                        September 30, 2003                   42,000
                        September 30, 2004                   31,500
                                                          ---------
                                                          $ 475,245
                                                          =========


                                       18


<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


NOTE 9.  COMMITMENTS AND CONTINGENCIES (continued)

         The Company sells used automobiles using auto financing contracts.  The
         Company then sells the contracts to a finance company,  generally under
         a recourse  agreement,  whereby the Company guarantees the repayment of
         the note. If the note holder  defaults,  the Company is responsible for
         repossessing  the  automobile and then either paying the amount due the
         finance company or substituting a new loan for the one in default.

         In  December  1995,  the  Company's  subsidiary,  CIC,  entered  into a
         factoring agreement with Travelers Acceptance  Corporation ("TAC"). The
         agreement  allowed TAC to buy the Company's notes  receivable at 70% of
         the face value of the notes. TAC would then remit to the Company 20% of
         the customer payments received. The Company stopped submitting notes to
         TAC in October  1997. At September  30, 1998,  TAC held notes  totaling
         $681,141,  of which the Company would be  contingently  liable to repay
         approximately   $480,000  to  TAC  if  the  various  note  holders  all
         defaulted.   As  of  December  30,  1998,  the  Merritt  Group  assumed
         responsibility for this liability.

         In October 1997,  the Company  entered into an agreement with AutoPrime
         to provide  financing for the Company's  automobile  transactions.  The
         agreement  allows  AutoPrime to buy the notes at a  percentage  of face
         value  (ranging  from  55% to  70%)  and  then to pay  the  Company  an
         additional percentage less the service fee (ranging from 20% to 37%) on
         all principal collections.  The loss ratios of the notes sold have been
         much  greater  than  expected  to  date.  However,  with  a  change  in
         management and changes in the Company's  lending  criteria,  management
         expects to have better loan collection  results in future periods.  The
         loan balances and contingent losses reserved are as follows:

                                         September 30,       September 30,
                                            1999                 1998
                                         ------------        ------------
         Total liability, including
          the contracts sold by
          related parties.               $ 11,536,000        $  7,730,000
         Recorded provision for
          recourse liability, estimated
          at 25% and 30% of total contracts
          outstanding, respectively      $  2,884,000        $  2,320,000



                                       19


<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


NOTE 10. 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.

         Accounting for the stock option plan is in accordance  with  Accounting
         Principles Board Opinion 25,  Accounting for Stock Issued to Employees.
         Since common stock, rather than stock options,  has been issued for the
         full value of services rendered, there is no additional compensation to
         be disclosed  under the  Company's  stock-based  compensation  plan, as
         required by the disclosure  provisions of SFAS No. 123,  Accounting for
         Stock-Based Compensation. As of September 30, 1999 and 1998, there were
         no  options  outstanding  and  979,120  shares,  had  been  issued.  At
         September 30, 1999 and 1998,  there were 1,020,880 shares available for
         future issuance.


NOTE 11. CONCENTRATION OF CREDIT RISK

         The  Company is reliant on the  financing  supplied  by  AutoPrime.  At
         September 30, 1999 and 1998,  substantially  all of the auto loans made
         by the Company and its flooring  line were  financed by  AutoPrime.  In
         December   1998,   AutoPrime   was   tendered   preferred   shares  and
         approximately 18% of the Company's common stock outstanding in exchange
         for certain  debts and other  consideration.  Management  believes that
         because of the related party relationship,  the Company will be able to
         continue to finance its automobile transactions.

                                       20


<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


NOTE 12. STOCK TRANSACTIONS

         The Company  issued  2,737 and 227,141  shares of common stock at $1.00
         and  $0.94,  respectively,   for  accounting  and  consulting  services
         totaling   $2,737  and  $212,454  at  September   30,  1999  and  1998,
         respectively.

         During 1999,  the Company issued 50,000 shares of common stock at $1.00
         per share for the acquisition of a car lot.

         In January 1998, CIC started  delivering  shares of AutoCorp  Equities,
         Inc.  common  stock to holders of its  unsecured  notes  payable as the
         unsecured  notes began to mature.  As of  September  30,  1999,  22,000
         shares had been issued for $57,200,  which  converted  $88,000 of CIC's
         notes.  As of September  30, 1998,  490,076  shares had been issued for
         $1,839,890  which  converted  $1,400,570 of CIC's notes,  which were in
         default,  $255,297  of  accrued  interest,  and  resulted  in a loss on
         conversion of $184,023.  The Company expects all of the CIC notes to be
         converted to stock by January 31, 2000, and has set aside approximately
         654,000 shares of common stock for this conversion of notes.

         Also during 1998,  the Company issued 172,000 shares of common stock at
         par value ($.001 per share) to a former  officer of the Company as part
         of his  severance  agreement  with the Company  and  110,200  shares of
         common stock at $1.00 per share to another  former officer as part of a
         separate agreement.


NOTE 13. RELATED PARTY TRANSACTIONS

         The Company has received  advances from and made payments for a company
         that was related  during the period known as CIC Fund V, which is owned
         by the Merritt Group (see Note 2 above).  AutoPrime also sold contracts
         to  the  Merritt  Group  and  affiliates  in  an  aggregate  amount  of
         approximately  $3,000,000,  and advanced certain  additional funds, all
         represented by promissory notes accruing interest at 10% per annum. The
         Company was a co-maker of the notes and AutoPrime  offset  interest due
         on the loans and principal  payments due from the Merritt Group and CIC
         Fund V with funds due to the Company.  The amounts advanced by CIC Fund
         V at September 30, 1998 and 1997 were $0 and $45,709, respectively.


                                       21

<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


NOTE 13. RELATED PARTY TRANSACTIONS (Continued)

         The  balances of amounts  owed to  AutoPrime,  primarily as a result of
         repurchase  obligations,  at September  30, 1999 and 1998 were $538,847
         and $5,678,208, respectively.

         In April and September  1999,  the Company issued  promissory  notes to
         AutoPrime  totaling  $4,935,620 to  restructure  payables to AutoPrime.
         These notes require monthly payments totaling $100,000, are due June 1,
         2000 and incur  interest  at 9% per annum.  At  September  30, 1999 the
         balance on these notes was $4,590,617.

         Certain  former   officers  of  the  Company  had  various   contingent
         agreements  with the Company.  Management  believes  that no additional
         payments  will be made on these  agreements  in excess of what has been
         accrued.

         In June 1999,  the Company moved into offices as a tenant of AutoPrime.
         Currently  the  Company has a month to month  lease with  monthly  rent
         payment of $4,743.


NOTE 14. LITIGATION

         The  Company  was a  defendant  in a civil  action  filed  by the  U.S.
         Securities and Exchange  Commission for securities law violations  from
         January  1993 to August 1994 by certain  persons  using a prior name of
         the Company.  The Company was dismissed as a defendant in the action on
         October 7, 1999, and no further action is anticipated at this date.

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


NOTE 15. SHARES HELD IN TRUST

         The Company  created three trusts to distribute  the shares  previously
         held in  treasury  and the  shares  obtained  from  the  Merritt  group
         executives. One trust, with 2,517,000 shares, was

                                       22


<PAGE>

                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


NOTE 15. SHARES HELD IN TRUST (Continued)

         designated to assist in satisfying portions of the debts of the Merritt
         Group and the Company.  1,091,113  shares of common stock were tendered
         to AutoPrime  as  compensation  for certain debt relief.  Approximately
         654,000 of the  remaining  trust shares are  designated to allow CIC to
         convert  notes to equity (see note 12 above).  The  treasury  shares in
         this trust are part of the cost of the disposition of the subsidiaries.

         The second trust  account was granted  350,000  shares of voting common
         stock,  valued at cost, which approximates market price at December 31,
         1998 of $0.65 per share,  to be  distributed  to employees of AutoPrime
         for past services. These shares are considered part of the compensation
         to AutoPrime in exchange for the debt relief.

         The third trust  account was granted  350,000  shares of voting  common
         stock to be distributed to current or future  employees of the Company.
         These shares are also valued at cost, which  approximates  market price
         at  December  31,  1998 of $0.65 per  share.  Management  has a plan to
         distribute  these  shares  within the current  fiscal  year,  but until
         distributed, the shares will remain as a contra equity account.

         All three trusts are controlled by the president of the Company.


NOTE 16. SUBSEQUENT EVENTS

         In October 1999, the former owner of Angelina Motor Cars, who  sold the
         Company  installment  notes for a note  totaling  $473,445  payable  by
         December  1999,  agreed with the Company to accelerate  payment  terms.
         The Company paid the note in three installments  ($300,000 in  November
         1999, and two installments $96,500 each in December 1999).  As a result
         of these  payments,  the Company  acquired the stock of  Angelina Motor
         Cars, which was not a part of the original agreement.







                                       23


<PAGE>


                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


NOTE 17. BUSINESS SEGMENTS

         The  principal  business of the Company is the selling and financing of
         automobiles.  At September 30, 1999 and 1998, the Company had three and
         five  subsidiaries,  respectively.  (1) ACE Motor  Company,  (2) Circus
         Motors,  (3) Consumer  Investment  Company and (4) Lenders  Liquidation
         Centers  which all sell  automobiles,  (5) Lenders  Liquidation  Center
         Reconditioning  which  reconditioned  and made  ready for  resale  cars
         acquired by trade in, repossession or purchase at auction, (6) Consumer
         Insurance  Services,  Inc. which offered  insurance to customers of its
         automobile  retail  lots and (7)  AutoCorp  Financial  Services,  which
         serves as the financing and servicing arm of the Company.

<TABLE>
                                                                                          Capital       Depreciation/
                                              Revenues        Net Loss        Assets    Expenditures    Amortization
<S>                                         <C>            <C>            <C>           <C>             <C>
         Year ended September 30, 1999:
           Automobile retail lots           $11,580,947    $ (3,328,698)  $ 2,554,156   $    102,758    $    14,839
           Financing and servicing            1,775,662        (396,752)      552,176        197,518         21,127
                                            -----------    ------------   -----------   ------------    -----------
                                            $13,356,609      (3,725,450)  $ 3,106,332   $    300,276    $    35,966
                                            ===========                   ===========   ============    ===========
         Net interest expense and other                         285,884
                                                           ------------
                                                           $ (3,439,566)
                                                           ============
         Year ended September 30, 1998:
           Automobile retail lots            $3,881,748    $(11,415,610)  $   177,066   $    102,072    $   147,191
           Reconditioning center                213,349        (134,450)        4,146           --              698
           Insurance service                      2,977        (141,801)          171           --             --
                                             ----------    ------------   -----------   ------------    -----------
                                             $4,098,074     (11,691,861)  $   181,383   $    102,072    $   147,889
                                             ==========                   ===========   ============    ===========
         Net interest expense and other                        (812,609)
                                                           ------------
                                                           $(12,504,470)
                                                           ============
         Year ended September 30, 1997:
           Automobile retail lots            $2,988,073    $ (1,024,794)  $ 2,330,926   $     99,042    $    58,649
           Reconditioning center                 96,416        (172,271)       15,820          3,625           --
           Insurance service                     92,728         (19,065)      269,719           --             --
                                             ----------    ------------   -----------   ------------    -----------
                                             $3,177,217      (1,216,130)  $ 2,616,465   $    102,667    $    58,649
                                             ==========                   ===========   ============    ===========
         Net interest expense and discontinued operations      (304,229)
                                                           ------------
                                                           $ (1,520,359)
                                                           ============
</TABLE>

                                       24

<PAGE>



                    AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


NOTE 18. BUSINESS PURCHASES

         During the year ended September 30, 1999, a  subsidiary of the Company,
         ACE Motors,  acquired  the assets of a car lot,  Horizon,  and  started
         business at a location  from which the Company  had  previously  bought
         note portfolios,  Circus Motors.  The audited financial statements were
         prepared  including the six and four months of operations  for  Horizon
         and Circus, respectively, adjusted to reflect purchase accounting.  The
         Company's   pro  forma  results  from  operations  is  not  necessarily
         indicative of the  consolidated  results for the  year  ended September
         30, 1999, nor is it necessarily indicative  of future operating results
         of the  Company.  The  following  table shows  data from the  Company's
         continuing businesses and annualized data from the two new entities.




                    Continuing                                   Pro Forma
                    Businesses       Circus        Horizon         Total
                   ------------   ------------   ------------   ------------

Revenues            $6,284,439     $9,069,320     $8,098,127     $23,451,886

Net (loss)/income   (3,293,530)        54,304       (234,939)     (3,474,165)

(Loss/Earnings
   per share        $    (0.54)          0.01     $    (0.04)          (0.57)












                                       25