<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

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

                    For the fiscal year ended MARCH 31, 2000

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                For the transition period from _______ to _______

                        Commission File Number 2-95465-S

                     WESTAR FINANCIAL SERVICES INCORPORATED
                  (successor to REPUBLIC LEASING INCORPORATED)

             (Exact name of registrant as specified in its charter)


                Washington                             91-1715252
      (State or other jurisdiction of      (IRS Employer Identification Number)
      Incorporation or organization)


                    The Financial Center, Tumwater, WA 98501
                (address of principal executive office, zip code)

        Registrant's telephone number, including area code (360) 754-6227

           Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, no par value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X  No
                                      ---   ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [X]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.

           Aggregate market value of voting and non-voting stock held
              by non-affiliates of the registrant at July 12, 2000

                                   $6,853,001

  2,348,120 shares of no par value Common Stock outstanding as of July 12, 2000

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Proxy Statement relating to its September 25, 2000,
Annual Meeting of Shareholders are incorporated into Parts II and III of this
annual report on Form 10-K.


                                     Page 1
<PAGE>

                     WESTAR FINANCIAL SERVICES INCORPORATED

                                    FORM 10-K
                    FOR THE FISCAL YEAR ENDED MARCH 31, 2000

                                      INDEX
<TABLE>
<CAPTION>

PART 1

<S>         <C>                                                                                  <C>
ITEM 1.     BUSINESS
   - General                                                                                     Page 3
   - Forward Looking Statements                                                                  Page 4
   - Business Strategy                                                                           Page 4
   - Business Overview                                                                           Page 5
   - Dealer Direct Retail Leasing                                                                Page 5
   - E-Commerce Origination Channels                                                             Page 6
   - Seasonal Trends                                                                             Page 7
   - Competition                                                                                 Page 7
   - Risk Management                                                                             Page 7
   - Credit Practices, Delinquency and Credit Loss Experience                                    Page 8
   - Financing                                                                                   Page 10
   - Regulatory Matters                                                                          Page 10
   - Employees                                                                                   Page 11
   - Executive Officers                                                                          Page 11

ITEM 2.     PROPERTIES                                                                           Page 12
ITEM 3.     LEGAL PROCEEDINGS                                                                    Page 12
ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  Page 12

PART 11

ITEM 5.     MARKET FOR THE COMPANY'S STOCK AND DIVIDEND POLICY                                   Page 12
ITEM 6.     SELECTED CONSOLIDATED FINANCIAL DATA                                                 Page 13
ITEM 7A     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           Page 13
ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS                                                                Page 14
   - Forward-Looking Statements                                                                  Page 14
   - Results of Operations and Changes in Financial Conditions                                   Page 14
   - Technology                                                                                  Page 15
   - Computer/Year 2000                                                                          Page 15
   - Liquidity and Capital Resources                                                             Page 15
   - Subsequent Events                                                                           Page 16
   - Recent Accounting Pronouncements                                                            Page 17

REPORTS OF INDEPENDENT ACCOUNTANTS                                                               Page 18
FINANCIAL STATEMENTS                                                                             Page 19-22
NOTES TO FINANCIAL STATEMENTS                                                                    Page 23-29

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE                                                                   Page 29

PART 111

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY                                        Page 30
ITEM 11.  EXECUTIVE COMPENSATION                                                                 Page 30
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                         Page 30
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                         Page 30

PART 1V

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K                        Page 31

</TABLE>


                                     Page 2
<PAGE>

                                     [LOGO]

                                ITEM 1. BUSINESS

                                     GENERAL

Westar Financial Services Incorporated (OTC:WEST) originates, decisions, commits
to and fulfills consumer financings for itself and others, using sophisticated
decision tools and high speed communications to assure transparency to all
parties to the process. Westar currently originates financial transactions
through four channels: Dealer Direct Retail Leasing (DDRL), Internet, Intranet
and Private Label. In its DDRL model, the Company competes against traditional
financial sources in automobile dealerships for prime credit consumer auto
leases for its own account. In September 1999, the Company began originating
prime credit leases and loans and cash transactions over the Internet through
DriveOff.com, Inc., a wholly owned subsidiary of Navidec, Inc. (NASD:NVDC) which
has agreed to its acquisition by MSN CarPoint, a division of Microsoft
(NASD:MSFT). In this Internet model, the Company originates, decisions, commits
to and fulfills all transactions, then retains the prime credit leases for its
own account and sells the prime credit loans and all non-prime transactions to
others. The company earns a fee for its decisioning and fulfillment efforts. In
January, the Company agreed with AmSouth Bancorporation to launch in April
Westar's Private Label product, where the institutional client for a fee
originates leases for Westar's account. In February, the Company agreed with
DriveOff to offer bundled-acquisitions and financing-automobile transactions on
a price-advantaged basis to members of large affinity groups (the Intranet
model) and launched a pilot effort with Costco Wholesale (NASD:COST) in May.


                      [GRAPHICS]


                                     Page 3
<PAGE>

Lease volumes from Westar's traditional dealer distribution channel grew at a
rate of 82% over the previous year due to demand from the Company's established
dealer network, growth in new dealer relationships and geographic expansion. The
substantial increase in volumes contributed to the 74% increase in revenues over
the prior fiscal year. While Westar's e-commerce origination channels did not
contribute significant volumes in the year ended March 31, 2000 they have shown
tremendous growth since inception and are expected to add substantial volumes
beginning in fiscal 2001. Since the Company had no e-commerce originations in
the prior year, all of its originations this year from the three e-commerce
channels have contributed to its growth.

Westar Financial Services Incorporated ("WEST") is a Washington corporation
headquartered in Tumwater, Washington with offices in Phoenix, Arizona and
Houston, Texas.

WEST's management team has extensive experience in the auto financing industry,
as well as the commercial and financial services industries. Applying this
knowledge, Westar has developed a number of decisioning, fulfillment, financing,
lease servicing and risk management innovations which, in management's opinion,
allow it to compete effectively with major financial institutions and
manufacturer's captive financing companies.

                           FORWARD-LOOKING STATEMENTS

Although most of the information contained in this report is historical, certain
statements contain forward-looking information. To the extent these statements
involve, without limitation, product development and introduction plans, the
Company's expectations for growth, estimates of future revenues, expenses,
profit, cash flow, balance sheet items, forecasts of demand or market trends for
the Company's products and for the auto finance industry or any other guidance
on future periods, these statements are forward-looking and involve matters
which are subject to a number of risks and uncertainties that could cause actual
results to differ materially from those expressed in such forward-looking
statements. Readers of this report should consider, along with other relevant
information, the risks identified in this report, and other risks identified
from time to time in the Company's filings with the Securities and Exchange
Commission, press releases and other communications.

                                BUSINESS STRATEGY


THE COMPANY'S BUSINESS STRATEGY IS TO:

              -  Expand its portal flow though business alliances
              -  Increase its decisioning and fulfillment roles for fee income
              -  Provide its strategic and consumer clients with high touch
                 service and high tech elegance
              -  Attempt to attain industry leadership
              -  Continuously balance its own risks and rewards through pricing
              -  Employ sophisticated analytic approaches to decisioning
              -  Increase shareholder value
              -  Recruit, train, retain and motivate high caliber employees
              -  Pro-actively manage all residual risks on transactions

THE COMPANY'S PRIMARY STRENGTHS ARE ITS:

              -  Unique market position as a financial portal
              -  Substantial investments in intellectual capital
              -  Strategic alliances
              -  Dynamic and innovative business models
              -  Operating leverage through technology
              -  Geographic diversity
              -  Proprietary risk management systems
              -  Sophisticated innovations including the Carlson Trust, Tax
                 Benefit Transfer ("TBT"), Securities-Based Asset Sales
                 ("SBAS"), and Lease Accounting, Securitization and Income
                 Reporting "LASIRpro" technology


                                     Page 4
<PAGE>

                                BUSINESS OVERVIEW

Westar Financial Services Incorporated, historically a prime credit auto lessor
with over 20 years of experience, has applied 21st century innovations to create
a new business model to utilize its technology and success to position itself as
a financial portal. The business model, which includes a strategic partnership
with DriveOff.com, allows Westar the ability to take a physical transaction such
as the acquisition of a vehicle, translate it into a financial instrument and
place it with the appropriate ultimate investor.

Westar's business models operate as a financial portal for multiple entities.
The model has four significant functions:

              -  Origination -- Westar assists its partners in the development
                 and execution of business strategies, tactics, technologies and
                 processes designed to create consumer transactions, such as the
                 acquisition of an automobile, which will lead to a financial
                 instrument such as a loan or lease. Westar is the co-creator of
                 the DriveOff.com bundled transaction Internet concept, the
                 first where consumers are empowered to simultaneously design
                 and decide their auto acquisition and financing, in real time,
                 with real numbers.

              -  Decisioning -- In less than one minute, Westar can accept a
                 consumer credit application, query the appropriate credit
                 bureau(s), and approve and price or decline the application.
                 Westar has developed proprietary decision tree logic with which
                 to make its own decisions, has consulted with other financial
                 institutions to develop theirs, and is capable of using
                 independently generated scorecards or decision trees for still
                 others, all simultaneously and discretely.

              -  Commitment -- With the confidence inherent in its systems and
                 in its strategic relationships, Westar commits to fund leases
                 or loans in real time, whether for its own account or for the
                 accounts of others.

              -  Fulfillment -- In less than eight minutes Westar can
                 automatically create completely personalized `Deal Kits'
                 specifically tuned to each tax and regulatory jurisdiction in
                 the U. S. Each Deal Kit contains all of the documents required
                 to complete the transaction: buyer's order and bill of sale,
                 license and registration, tax, environmental statements, lease,
                 loan and lien financing documents, and dealer payment. No
                 ancillary documents are necessary to be supplied by dealer or
                 financial institution for completion of the transaction.


Senior management has almost 75 years of experience in automobile finance. In
addition, management has extensive experience in the commercial and investment
banking industries. Westar is able to attract the highest quality personnel and
dedicate them to the auto finance market. This focus is designed to produce high
quality portfolios and corporate profitability. This knowledge and experience
enables WEST to compete effectively in its industry and to capitalize on
opportunities as they arise.

Westar will continue to employ a diversified funding strategy utilizing
traditional securitizations and SBASs as well as interim debt financing to fund
its growth. WEST believes that the largest part of its funding needs will be
satisfied through term and commercial paper securitizations (traditional asset
backed securitizations "ABS" and asset backed commercial paper "ABCP" programs).
In addition to securitizations, Westar intends to periodically utilize SBASs on
a flow and on a portfolio basis. While SBASs are typically not as profitable as
securitizations, they do generally result in more up-front cash. In addition to
utilizing a variety of different financing methodologies the Company will seek
to diversify its financing sources.


                          DEALER DIRECT RETAIL LEASING

The Company acquires automobile leases through its DDRL program. DDRL is offered
to selected automobile dealerships based on reputation, location and size. Each
participating dealer is required to sign a non-exclusive dealer agreement which
is primarily designed to protect WEST against potential dealer
misrepresentations and some forms of fraud.

The Company attempts to meet the needs of its dealers through responsive
customer service, extended hours operating across 361 business days a year,
rapid funding, consistent buying practices and competitive pricing. At March 31,
2000 and 1999 the Company had 493 and 358 signed dealers, respectively.


                                     Page 5
<PAGE>

                         E-COMMERCE ORIGINATION CHANNELS

INTERNET

The Company has formed a strategic alliance with DriveOff.com, Inc. in which
WEST is the exclusive financial portal for all of the transactions generated
through the Driveoff.com site. The Company began originating transactions
through DriveOff.com on September 28, 1999. Driveoff.com began its service in
the Rocky Mountain Region and operates in 35 states as of March 31, 2000.
DriveOff.com plans to operate nationwide in the third quarter of calendar 2000.

This 3rd generation Internet automobile acquisition channel is focused on
significantly increasing consumer satisfaction with the process while decreasing
prices to the consumer. The program empowers consumers to negotiate new car
purchases and financing 100% online. Consumers are able to design and "build" a
vehicle at a firm price, arrange the financing and schedule an appointment to
accept delivery of the vehicle from a dealer.

INTRANET

Westar's Intranet origination channel enables the Company to offer in
conjunction with Driveoff.com a bundled vehicle acquisition and financing
solution on a complete turnkey basis to unrelated affinity organizations. The
Intranet program allows each organization to customize its automotive Intranet
site to reflect branding as well as proprietary or exclusive options. This
service is expected to generate both fee income and lease originations for
Westar.

In March 2000, the Company agreed with Costco Wholesale, a member warehouse
company, to provide decisioning, fulfillment and origination services to
Costco's members through DriveOff.com. The six month pilot program was launched
in Denver in May 2000.

Westar has an agreement with First Union Capital Markets Group ("First Union"),
which provides for its support of Westar's Internet and Intranet operations
through a loan purchase arrangement with WEST for up to $1 billion annually of
loans originated through DriveOff.com. Westar is negotiating with several
potential sub-prime lenders for placement of lower credit transactions using
Westar decisioning and technology.

Westar retains for its own account the prime credit leases originated by the
Internet and Intranet channels.

PRIVATE LABEL

Westar's unique Private Label origination channel allows financial institutions
to offer competitive pricing and high quality service for auto leases or loans
through outsourcing. The Company's hardware and/or proprietary software
technologies are physically integrated into a bank's origination process,
providing the financial institution instant approvals, real time reviews and
immediate access to the Company's auto finance specialists.

In January 2000, Westar signed an agreement with AmSouth Bank to provide label
services to a portion of AmSouth's client base. The AmSouth program was launched
in May and the companies agreed in July to expand its coverage to all AmSouth
markets.

Management believes the diversification provided by four origination channels
allows the Company to build a sustainable competitive advantage by using its
proprietary leading edge decisioning and communications technologies and its
proprietary lease securitization capabilities.

Westar's proprietary LASIRpro-C- system, risk management techniques, innovative
decisioning and communications technology and diversified funding strategy are
designed to allow the Company to price its products to yield an above-average
return on investment while offering the most credit worthy consumers lower
effective finance rates.

The Company intends to increase its client base in each of the e-commerce
origination channels as well as lease originations by continuing to expand its
existing dealer relationships within its current geographic market and to engage
additional institutional clients in the e-commerce origination channels.


                                     Page 6
<PAGE>

                                 SEASONAL TRENDS

The automobile finance industry typically experiences lower volumes during
periods of extreme weather. To mitigate the effect of seasonal changes in
regional lease production, the Company implemented a strategic growth and
expansion plan to compensate for geographic fluctuations. The Company has
established a strong market presence in 12 western states, entered into multiple
strategic alliances throughout the United States and achieved near-national
coverage through its alliance with DriveOff.com. These efforts have positioned
the Company to steadily increase volume while offsetting seasonal effects unique
to different regions in the country.

                                   COMPETITION

The vehicle financing market is a large, highly competitive and cyclical
business. Approximately $400 billion dollars of new automobile and truck
purchases are financed each year of which leasing represents a $110 billion
dollar segment. The number of new vehicles financed in the United States can
vary substantially from year to year. In any year, industry demand depends
largely on general economic conditions, the cost of purchasing and operating an
automobile or truck, and the availability and cost of credit. Demand also is
influenced by the fact that automobiles and trucks are durable items that people
can wait to replace.

The Company's principal competitors in the prime vehicle financing market are
the captive finance subsidiaries of the vehicle manufacturers, large money
center banks, credit unions, independent finance companies, as well as several
e-commerce sites. A few large banks and the captive finance subsidiaries of the
vehicle manufacturers currently dominate the industry. Internet management is a
complex issue for the large banks and captive finance subsidiaries--the allure
of direct finance offset by product complexity, the sensitivity of existing
dealer relationships and product delivery logistics. For these reasons most auto
finance providers' web activities are limited and are mostly utilized simply for
advertising purposes. The remaining competitors--independent finance companies,
small banks, credit unions and Internet referral sites split the remaining
market among themselves and exercise neither significant leadership or
dominance.

The Company believes that the most important competitive advantage in the near
future is technological innovation as a source of cost reduction and meeting
consumer demand. Many banks compete either on price or by enhancing residuals.
Manufacturers typically sponsor either a subsidiary finance program or a
bank-sponsored program. They can and do compete aggressively on price, but on a
very selective basis, typically promoting a particular model at price levels
roughly equivalent to, or even below, their costs of funds. These are known as
"subvention" programs and are used by the manufactures primarily to manage
inventory or market share. Other auto models are priced at competitive rather
than super-competitive levels.

Westar has positioned itself as the first `financial portal' in the industry,
competing for transactions through four separate origination channels, including
three unique e-commerce paths. The Company competes for lease customers in each
channel by offering competitive pricing and outstanding service. In addition,
our innovative e-commerce decisioning technology provides our strategic allies
the ability to make the right credit decision in seconds, freeing the time and
costs normally associated with installation, implementation, upgrade and
maintenance of credit decisioning software and analytics. Real-time decisioning
helps our e-commerce partners focus on more customer-oriented activities and
makes volume growth significantly less challenging in terms of building systems
and infrastructure.

The Company's competitive advantages are its technological sophistication and
innovation; risk-based management; operating leverage and scalability; the lower
costs made possible by its multiple-use securitization structure and funding
strategies; as well as lower overhead, regulatory burdens and transaction costs;
all coupled with an emphasis on superior consumer and dealer satisfaction.
Management believes that the Company is fully competitive with its largest
competitors and that it exceeds them in terms of service, innovation and
responsiveness. In addition, we believe that the auto financing industry will
see increased consolidation and more strategic alliances. Because of the high
cost of developing new technology and replacing existing legacy systems,
strategic alliances offer financial institutions a less expensive, more flexible
means to better serve their customers' needs.

                                 RISK MANAGEMENT

Credit discipline is, and will continue to be, a key component to our success.
The Company views its ability to manage risk intelligently and pro-actively as a
core competency which allows it significant strategic advantages. The key is
diversification and the development of systems and tests that allows management
to anticipate and react to the unexpected, whether it is financial market
fluctuations or new e-commerce opportunities.


                                     Page 7
<PAGE>

The risk management techniques, models and reporting tools employed by the
Company, including its proprietary Lease Accounting, Securitization and Income
Reporting "LASIRpro" system, enable competitive pricing while enhancing
profitability. Furthermore, by financing only prime credits the Company realizes
efficiencies and cost benefits throughout the entire organization while lowering
its portfolio volatility and overall business risk. Our proven ability to
originate lease portfolios with minimal delinquency, volatility and credit loss
experience affords the Company liquidity and access to low-cost capital
resources.

The Company's risk models incorporate a wide variety of different variables that
focus on the life cycle performance of its assets. In addition, the Company
analyzes the quality and composition of its new originations on a daily basis.
Performance reports are continually analyzed by distribution channel for
risk-based performance. The Company constantly analyzes demographics, credit and
portfolio performance correlation and trends to further refine its risk
management.

As a result of its risk management, the Company has been able to establish new
distribution channels while using scoring, leading-edge decision tree
methodologies and models to measure, manage and control credit risk. The
Company's prices are based on the complete life cycle of a contract and take
into account both the credit risks and the cost of servicing over its term in
order to achieve the desired margin. The Company believes that this is the most
sophisticated approach to pricing and risk management employed in the market
today.


            CREDIT PRACTICES, DELINQUENCY AND CREDIT LOSS EXPERIENCE

The Company's success is, in part, dependent on its ability to develop a
portfolio of prime-credit leases so as to minimize delinquency and credit loss
experience. To this end, the Company has developed sophisticated, automated
decision trees and comprehensive credit buying procedures. Each lease applicant
must pass the scrutiny of the Company's credit evaluation systems and/or the
review of its experienced lease production personnel, both of which are
components of Westar's proprietary LASIRpro system.

In addition to servicing the portfolio, the Company is responsible for
collecting delinquent accounts and, when necessary, repossessing and selling
automobiles. Our collection strategy centers on customer service and retention
with a take-ownership collection process, which means the collection specialist
handles the delinquent customer from the day they become past due to resolution.
We find that this not only provides for better service, but is also the most
efficient use of resources.

The collection process begins when a customer misses their due date. Calling
campaigns begin when a lease becomes 15 days late and continue until all issues
are resolved. Letters are sent when legally required or when all calling
activity has been exhausted. The collection specialists are trained to make
recommendations to continue efforts with a customer or to repossess. Deferments
are not offered. During fiscal year 2001 the Company plans to install an
automated telephone dialing system and enhance an existing automated collection
system to maximize efficiency and integrate all areas of the collection
operation.

If satisfactory payment arrangements are not made the Company employs a general
contractor to repossess the automobile, generally within 60 to 90 days from the
date of delinquency, subject to compliance with applicable law. The Company
follows legal procedures for repossessions, which include peaceful repossession,
one or more consumer notifications, and a prescribed waiting period prior to
disposition of the repossessed vehicle. Upon repossession and after any
prescribed waiting period, the repossessed vehicle is sold, primarily through
wholesale auto auctions. Proceeds from the sale of repossessed vehicles and
other recoveries are usually not sufficient to cover the outstanding balance of
the contract, and the resulting deficiency is charged-off against the applicable
allowance. After charge-off, the Company seeks to collect the deficiency
balances through its recovery department. These efforts include contacting the
borrower directly, seeking judicial action, or, where recovery is less likely,
the account maybe be assigned to a collection agency.

The credit loss and repossession experience on the Company's DDRL leases
serviced for the years ended March 31, 2000, is as follows:


                                     Page 8
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<TABLE>
<CAPTION>

DELINQUENCY EXPERIENCE:
   (In thousands except percentages)
                                      Originated  Originated Originated   Originated  Originated
                                        in 2000    in 1999     in 1998     in 1997      in 1996     Total Portfolio
                                      -----------------------------------------------------------   ---------------

<S>                                   <C>         <C>        <C>          <C>         <C>           <C>
Ending net lease receivables serviced     $98,073    $41,420      $6,936       $6,446        $561          $153,436
Delinquencies Summary: (1)
     31-60 days                              $688       $562         $61          $58          $0            $1,369
     61-90 days                               316        233          23            0           0               572
     91 or more days                          201        449          21           12           0               683
                                              ---        ---          --           --           -               ---
Total delinquent 31 or more days           $1,205     $1,244        $105          $70          $0            $2,624
                                           ======     ======        ====          ===          ==            ======
%Total delinquent 30+ days                  1.23%      3.00%       1.52%        1.09%       0.00%             1.71%

CREDIT LOSS SUMMARY:
 (In thousands except percentages)

Static pool (2)                          $106,745    $55,516     $12,849      $23,131      $5,295          $203,536

Gross charge-offs                            $209     $1,916        $264       $1,144        $305            $3,838
Recoveries                                    150      1,295         187          839         226             2,697
                                              ---      -----         ---          ---         ---             -----

  Net Credit Losses                           $59       $621         $77         $305         $79            $1,141
                                              ===       ====         ===         ====         ===            ======

Net losses as a % of static pool (3)        0.06%      1,12%       0.60%        1.32%       1.49%             0.56%
Annualized lifetime static pool
losses at 3-31-00  (4)                      0.11%      0.75%       0.24%        0.38%       0.33%          0.33%(5)

</TABLE>

(1) Delinquency figures include assets held in repossession inventory
(2) Total volume originated during the period.
(3) Cumulative net credit losses expressed as a percentage of total volume
    originated during the period.
(4) Assumes all leases originated mid-fiscal year, September 1 of each year.
(5) Weighted average by leases originated in each period.

The typical end of lease termination strategy utilized by many leasing companies
is a risk avoidance strategy which says the company does not want any vehicles
returned, thus attempting to avoid residual risk. This strategy is neither
customer friendly nor the most profitable approach. The Company uses a profit
maximization strategy, which focuses on residual values in relation to actual
market values and is customer friendly and optimizes the financial result.

The end of lease termination specialist completes an initial valuation of the
vehicle based upon on-line resources, used vehicle valuation guides and local
knowledge of used car markets. The valuation assists in making the best decision
for the customer and WEST. End of termination specialists begin contacting
clients 120 days from their scheduled maturity date to determine the client's
end of termination choices which include refinancing the residual, paying off
the residual, and returning the vehicle to the Company.

End of termination fees are collected as vehicles are returned to the Company.
These fees include disposition, excess mileage, and wear and tear. Excess miles
and wear and tear are confirmed by an independent third party.

The residual gain/(loss) experience on the Company's leases serviced for the
year ended March 31, 2000, is as follows:

<TABLE>
<CAPTION>

                                                                                                        Avg. Gain /
   Contractual Term      Residual Value     Sales Proceeds      Sales Expense      Collected Fees     (Loss) per Sale
   ----------------      --------------     --------------      -------------      --------------     ---------------
   <S>                   <C>                <C>                 <C>                <C>                <C>
     < 27 Months            $487,856           $465,913               $998             $10,214             $(530)
   28 to 39 Months          $752,257           $717,387             $5,450             $28,006             $(268)
     > 40 Months              $6,416             $6,000               $340              $1,000              $244

        Total             $1,246,529         $1,189,300             $6,788             $39,220             $(349)

</TABLE>

The overall result indicates a residual loss of $349 per returned vehicle. This
compares very favorably to the industry average residual loss of $2,516 per
vehicle ("Consumer's Bankers Association's 2000 Automotive Finance Study", page
IV-17). The Company's residual success reflects its front end strategy of not
enhancing residual values coupled with longer term leases and utilizing a
proactive, profit maximization back-end strategy.


                                     Page 9
<PAGE>

                                    FINANCING

Westar has and will continue to employ a diversified funding strategy which
balances the advantages of securitizations, SBASs and interim debt warehouse
financing. The Company completed eleven SBAS or ABS transactions totaling $112
million during fiscal 2000. Each transaction was cash positive. The Company
retains all servicing rights and responsibilities through the life of the sold
portfolios.

In addition to completing periodic term securitizations, the Company intends to
set up several asset backed commercial paper ("ABCP") facilities with a number
of banks. Such ABCP facilities are intended to reduce costs, diversify the
Company's funding sources and provide the Company the flexibility to draw down
on such facilities both as assets are originated as well as on a pooled basis.

The Company entered into an agreement in November 1997 with Bank One, Columbus
NA for a warehouse facility in the amount of $25 million. On an annual basis,
the Company re-evaluates its interim financing needs considering the expected
future timing of sales and securitizations. In September 1999, the Company
renewed the financing facility for $25 million. This revolving credit warehouse
facility is utilized as interim financing for the acquisition of vehicle leases
until sufficient volume is achieved to securitize such leases or to sell them in
a SBAS.

The warehouse facility allows short-term borrowing of 95% to 97% of the cost of
the leased vehicles and is secured by a security interest in the lease and the
related vehicle. The interest rate is LIBOR plus 300bps, which approximates the
prime rate. Under the terms of the agreement, Bank One has the option of
reviewing each credit and rejecting any lease which it, in its sole discretion,
believes does not meet standards appropriate to prime credits.

Cash for principal and interest payments on the warehouse credit facility are
generated by the monthly lease payments. All leases included in a securitization
or sale and any non-performing leases covered by the credit facility are repaid
by the Company.

                               REGULATORY MATTERS

Business opportunities created by the Company's entry into e-commerce have
greatly expanded its area of operations to essentially a national footprint. The
Company is subject to regulation under federal, state and local laws, in all
states in which it operates.

The Company's entry into Internet financing accelerated the need to understand
specific state and local taxation and registration regulations. Through
extensive internal research, validated by external sources, the Company is a
registered lessor in 44 states. Of the remaining six states, the Company
anticipates completion of the registration process in Rhode Island and West
Virginia over the next 120 days and chooses not to enter into Louisiana,
Arkansas, Alaska and Hawaii at this time.

Several states and the federal government have enacted `lemon laws' and similar
statutes containing warranty protections for consumers who purchase or lease new
or used motor vehicles. The application of these statutes may give rise to a
claim or defense by a consumer against the manufacturer of a purchased vehicle
or the dealer from or through whom such consumer leased such vehicle. The
Company may be required to cancel a lease contract with a consumer who
successfully asserts such a claim or defense, and, while the Company would have
a claim against the manufacturer or such dealer, there can be no assurance that
the Company will be made whole in every case in which the consumer successfully
asserts such rights.

The Company is also subject to the Consumer Leasing Act, the Equal Credit
Opportunity Act and the Fair Credit Reporting Act and the rules and regulations
promulgated thereunder, and certain rules of the Federal Reserve Board and the
Federal Trade Commission. These laws require the Company to provide certain
disclosures to prospective lessees, prohibit misleading advertising and protect
against discriminatory financing or unfair credit practices.

Violations of the federal and state laws, rules and regulations described above
may result in actions for damages, claims for refunds of payments made, fines
and penalties, injunctions against illegal practices, license revocation or the
potential forfeiture of rights to repayment of amounts due under leases. The
Company has established internal controls to ensure that it is in compliance
with all legal and regulatory requirements. Further, the Company maintains
internal systems and controls to monitor, respond to and resolve informal and
formal complaints raised by the lessees of its vehicles.


                                    Page 10
<PAGE>

                                    EMPLOYEES

As of March 31, 2000 and 1999 the Company had 52 and 30 regular employees,
respectively. Competition for qualified personnel is intense and the Company
believes that its future success depends in part on its continued ability to
attract and retain qualified Team Members. To date, the Company has been
successful in these efforts. The Company offers a competitive compensation
package including salaries, insurance, incentive stock options and growth
opportunities within the organization. The Company's employees are not
represented by a collective bargaining unit and the Company believes relations
with its employees are favorable.


                               EXECUTIVE OFFICERS

The Company's executive officers are key to the smooth operation of the
business. Information concerning these officers is contained below:

<TABLE>
<CAPTION>

      NAME                      AGE   POSITION(S) HELD
      --------------------------------------------------------------------------
      <S>                       <C>   <C>
      R. W. Christensen, Jr.    51    Chairman and Chief Executive Officer
      Robert E. Kanatzar, Jr.   48    Sr. Vice President--Risk Management
      Scott G. Cavanaugh        34    Vice President--Collections
      Vicki Christensen         51    Vice President--Information Systems
      Cindy A. Kay              35    Vice President & Controller

</TABLE>

R. W. CHRISTENSEN, JR., age 51, is the President and Chairman of the Board of
Directors of the Company. Prior to 1978 he held positions as a financial analyst
with Olympia Brewing Company, Assistant to the President of Pacific Hide & Fur,
a natural resources and steel distribution firm, and as Corporate Pilot with
Buttrey Food Stores. Mr. Christensen served as Vice Chairman (1989-1990) and a
member of the Board of Directors (1987-1990) of Heritage Federal Savings & Loan
Association. He was President and director of PacWest Financial Corporation, a
privately held investment firm. Mr. Christensen is President and a member of the
Board of Directors of Mud Bay Holdings, Ltd., a privately held investment
company. Mr. Christensen has previously served as an officer, director and
President of the National Vehicle Leasing Association (1981-1988) in which
capacities he presented dozens of articles and scores of speeches on the state
and future of the automobile leasing industry, subjects in which he is regarded
as expert. He was awarded the industry's most prestigious recognition, the
Clemens-Pender Award, in 1988. He has served as director of Washington
Independent Bankshares (1982). Mr. Christensen serves as the court-appointed
Trustee of CASR Trust, a multi-year, multi-million dollar fund established by
the bankruptcy court for the benefit of the creditors of All Seasons Resorts. He
graduated from the College of Great Falls (B.A. with Honors, Management and
Economics) and received an MBA from the University of Puget Sound. He serves as
a Director (since 1978) and as Chairman (since 1995).

ROBERT E. KANATZAR, JR., age 48, is Senior Vice President-Risk Management with
responsibilities for the design and implementation of its risk/reward criteria,
strategies, policies and procedures; the supervision of Lease Production
Officers; the development of credit and collection policies and procedures; and
the supervision of personnel engaged in risk, credit or collection activities
(since 1997). Prior to joining the Company he was Senior Vice President of
Credit Policy and Risk Management for NationsCredit Corporation, with a $10
billion consumer portfolio, a part of the Financial Services Group of
NationsBank Corporation (1996). Previously, he served as Vice President-Manager
of Risk Management for Bank One Credit Company and managed its $10 billion
consumer portfolio (1992). Mr. Kanatzar has served in areas of similar and
increasing responsibilities with Texas Commerce Bank, Citicorp Acceptance
Company and Citicorp Mortgage Inc. He graduated from the University of Kansas
and received an MBA from the University of Kansas Graduate School of Business.

SCOTT G. CAVANAUGH, age 34, is Vice President-Collections with responsibilities
for collection, asset disposal, remarketing, and recovery activities (since
1999). Prior to joining the company, he was Vice President & Collection Manager
for Seafirst Bank (Bank of America) and was responsible for a $6.5 billion
dollar consumer portfolio, including a $2.7 billion auto dealer segment (1995 -
1999). Previously, he served in areas of similar and increasing responsibilities
with Ford Motor Credit Company (1988 - 1995). He graduated from the George
Washington University and received a B.A. in International Economics.


                                    Page 11
<PAGE>

VICKI CHRISTENSEN, age 51, is Vice President-Information Systems. Prior to
joining the Company in 1998, Ms. Christensen spent 17 years in progressively
more responsible positions in the information management industry. She was a
member of the Information Technology Team at Abitibi Consolidated, where she
supervised LAN/WAN and IBM AS400 activities. She was Information Systems Manager
for Kitsap Federal Credit Union and implemented an AS 400 conversion at Rainier
Mortgage, a division of Rainier Bank. Ms. Christensen is not related to Westar's
CEO.

CINDY A. KAY, age 35, is Vice President & Controller with responsibilities for
all accounting functions (since 1996). Prior to joining the Company, she was a
Partner in Kay and Company, CPA's, responsible for financial management
consulting, taxation and audit engagements (since 1990). Prior to joining Kay
and Company, CPA's, she began her career with Coopers and Lybrand in Tucson,
Arizona. Ms. Kay is a Certified Public Accountant and is a member of the
Washington Society of CPA's and the American Institute of CPA's. Ms. Kay
received her B.A. in Accounting from Saint Martin's College.

                               ITEM 2. PROPERTIES

The Company's growth required a five-fold expansion of its headquarters and data
center this year. The Company moved its offices to The Financial Center, 150
Israel Road SW, Tumwater, Washington 98501, on leased premises with
approximately 25,000 square feet. The lease term expires March 31, 2005 but may
be renewed, at the option of the Company, for an additional five years. Future
expansion may require additional space and The Financial Center affords the
Company the ability to double its floorspace.

                            ITEM 3. LEGAL PROCEEDINGS

There are no reportable events.

           ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None
                                     PART II

           ITEM 5. MARKET FOR THE COMPANY'S STOCK AND DIVIDEND POLICY

Trading of the Company's common stock began on November 28, 1995, and is
facilitated through the NASD OTC Bulletin Board (OTC:WEST). As of July 14, 2000,
the Company had 334 stockholders of record. As a matter of policy, the Company
has not paid any dividends on the common stock. Additionally, the borrowing
agreement with Bank One, discussed previously, and the redeemable preferred
stock agreements (see note 7 to the Financial Statements) restrict the payment
of dividends on the common stock. The Company intends to retain its earnings for
use in its business and therefore, does not plan to pay dividends on the common
stock in the foreseeable future.

The following table summarizes the high and low prices of the Company's stock
for fiscal years ended March 31, 2000 and 1999.

<TABLE>
<CAPTION>
                                                             High            Low
        Fiscal 2000                                          ----            ---
        -----------

        <S>                                                 <C>              <C>
           First quarter ended June 30, 1999                $6.38            $1.50
           Second quarter ended September 30, 1999           6.38             3.25
           Third quarter ended December 31, 1999             6.69             4.00
           Fourth quarter ended March 31, 2000               5.13             4.00

        Fiscal 1999
        -----------

           First quarter ended June 30, 1998                $3.50            $2.25
           Second quarter ended September 30, 1998           3.38             1.75
           Third quarter ended December 31, 1998             3.25             2.00
           Fourth quarter ended March 31, 1999               3.00             1.50

</TABLE>

The above over-the-counter market quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.


                                    Page 12
<PAGE>

                  ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

Selected consolidated financial data as of and for the five years ended March
31, is as follows:

<TABLE>
<CAPTION>

    In thousands except per share data
                                                      2000         1999        1998         1997        1996
                                                    ------------------------------------------------------------

    <S>                                              <C>           <C>          <C>         <C>          <C>
    Total revenues                                   $116,827      $67,103      $2,246      $20,743      $1,629

    Loss before cumulative effect of change in
    accounting principle & extraordinary item          (3,922)      (1,824)     (5,062)      (1,898)       (895)

    Loss per common share before cumulative
    effect of change in accounting principle &
    extraordinary item per common share, basic          (1.79)        (.91)      (2.99)       (1.48)       (.85)

    Net loss                                           (3,922)      (1,824)     (5,062)      (1,898)       (852)

    Net loss per common share, basic & diluted          (1.79)        (.91)      (2.99)       (1.48)       (.82)

    Total assets                                        7,876       12,495      20,495       12,292       8,210

    Total liabilities                                  18,989       19,739      23,228       10,134       5,813

    Redeemable preferred stock                          1,250        1,548       4,073        4,248       4,250

    Shareholders' equity /(deficit)                   (12,363)      (8,792)     (6,806)      (2,090)     (1,853)

</TABLE>

The loss per common share for 2000, 1999, 1998, 1997 and 1996 has been
calculated after giving effect to preferred stock dividends of $126,181,
$161,274, $390,673, $392,940 and $275,324, respectively and have been adjusted
for the 2-for-1 stock split in June 1996.


             ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                                  MARKET RISK

The Company is exposed to a variety of market risks, including the effects of
changes in interest rates, inflation and used automobile valuations. The Company
monitors the effect of changes in interest rates relative to other factors that
also effect earnings, such as unit lease production. The Company monitors and
manages these financial exposures as an integral part of its overall risk
management program.

The Company originates and warehouses, until sufficient volumes are pooled for
securitization or sold through portfolio sale transactions, fixed-rate assets.
The Company is at risk from interest rate fluctuations while the assets are
being warehoused. The Company recognizes the unpredictability of financial
markets and seeks to reduce the potentially adverse effect of interest rate
fluctuations on earnings. Assuming an instantaneous increase or decrease of one
percentage point in interest rates applied to all leased assets pooled in a
typical $30 million securitization, the Company's after-tax earnings on the
transaction would change by approximately $700,000. The Company has developed
sophisticated models to assess the sensitivity of its earnings to changes in
market interest rates and will be able to use various tools available, such as
interest rate swaps and pre-funding rate caps, to minimize the risks associated
with the effect of changing prices. These models and tools provide management
both the information needed to make timely pricing decisions as well as market
alternatives to manage and minimize risk. In a rising rate environment the
Company's gross margin will tend to narrow. Although the Company has the ability
to re-price quickly, competitors in the industry are typically slow to re-price
their offerings.

Fluctuations in used vehicle prices are another market risk to which the Company
is exposed. Unexpected changes in the used vehicle market not only impact credit
losses, but also residual losses. The Company minimizes credit loss exposure
through its SBAS transactions and minimizes residual exposure through a residual
value assurance program.

The effect of inflation on general and administrative expenses over the past
several years has been negligible. Inflation is not expected to impact earnings
in the ensuing twelve-month period.


                                    Page 13
<PAGE>

                 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                           FORWARD-LOOKING STATEMENTS

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation reform Act of 1995

The foregoing business description and Management's Discussion and Analysis
contain various "forward looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended, and section 21E of the Securities
Exchange Act of 1934, as amended, which represent the Company's expectations or
beliefs concerning future extents, including the following: that the Company
considers its employee relations to be good; that Westar anticipates continued
growth in operating and administrative expenses reflecting costs associated with
portfolio growth and technology initiatives; that allowances for credit losses
are considered adequate to cover expected credit losses; that the decline in the
ratio of earnings to fixed charges has not affected its ability to maintain
liquidity or access to outside funding sources; that cash provided by operating
and investing activities as well as access to domestic capital markets, the
issuance of Securities Based Asset Sales and Asset Backed Securitization
transactions will provide sufficient liquidity to meet its future funding
requirements; that Westar expects adequate and stable capital markets, that
there will be a stable interest rate environment; that consumer confidence
levels will be good; that consumers will have confidence in e-commerce; that car
sales levels will be good; that Westar will have continued scalability; that
Westar will maintain good relationships with our strategic allies; and that
Westar will have the continued ability to automate our manual processes to take
advantage of technology.

             RESULTS OF OPERATIONS AND CHANGES IN FINANCIAL POSITION

Westar Financial Services Incorporated and its Subsidiaries provide prime credit
quality consumer automobile lease financing through franchised automobile
dealers in the Northwest, Southwest and California and through its e-commerce
origination channels throughout the United States. Westar has designed and
developed a number of financing, lease servicing and risk management
innovations. The Company has invested significant personnel, time and resources
in its Dealer Direct Retail Leasing ("DDRL") program and e-commerce channels.
While the Company's statement of operations reports a net loss of approximately
$3,922,000 and $1,824,000 for fiscal years 2000 and 1999, respectively, it is
management's opinion that Westar's proprietary decisioning and fulfillment
capabilities are one of the most scalable and marketable programs currently
available and a valued investment in the Company's future.

Volumes of lease originations increased 92% over the prior year, from 1,999
leases costing $56 million in the prior year to 3,668 leases costing $107
million in fiscal 2000. The credit quality of originated leases improved, with
average FICO scores of 695 in the prior period compared to 714 in the current
period. The face value of leases serviced increased $106 million (112%), from
$95 million to $201 million at March 31, 1999 and 2000, respectively.

Total gross revenue increased $49,724,000 (74%), from $67,103,000 to
$116,827,000 from fiscal 1999 to 2000. The increase in total gross revenue was
directly related to the 92% increase in lease volumes. As a result of the
increased volumes, administration fee income also increased by $1,102,000 (119%)
over the prior period. The increase in revenues of $64,858,000 (2,888%) from
fiscal 1998 to 1999 was primarily due to increased lease origination volumes.

Gross margins decreased $294,000 (15%) from $1,987,000 to $1,693,000 from fiscal
1999 to 2000 primarily due to timing of securitizations and asset sales. Gross
margins increased $2,042,000 from $(55,000) to $1,987,000 in fiscal 1998 to 1999
primarily due to the gain of $1,420,000 recognized on the five securitizations
completed in fiscal 1999.

General and administrative expenses increased $1,626,000 (50%) from fiscal 1999
to 2000 primarily due to efforts to open three new distribution channels for
financial transaction originations. The prior year increase in general and
administrative expenses of $1,005,000 (45%) from fiscal 1998 to 1999 was
primarily due to the anticipation of greater lease origination volumes and
geographic expansion of the Company's operations outside the Northwestern
Region.


                                    Page 14
<PAGE>

In the last five years, Westar has recreated itself from a traditional
commercial equipment lessor, to a prime credit consumer auto lessor competing
within auto dealerships, to a leading Internet financier, and, presently, to a
four-channel financial portal.

As a financial portal, Westar originates, decisions, commits to and fulfills
consumer financings for its own account or the accounts of others, using
sophisticated decisioning tools and high speed communications to assure
transparency to all parties in the process. Westar is creating a business model
where it will be relatively indifferent as to the identity of the ultimate
investor.

While Westar expects to continue to face intense competition from other firms,
particularly the largest banks, financial services companies, the financial
subsidiaries of automobile manufacturers and various types of `dot.com'
startups, the Company is presently unaware of any direct competitor with the
same breadth of enterprise as the Company.

During the next year, the Company expects to create relatively substantial
growth in originations, decisionings, commitments and fulfillments as well as in
managed assets. Management expects margins from fee income and income earned
from its portfolio to increase at least as rapidly as volumes. A significant
portion of the difference will be the result of the scalability which Management
believes Westar will realize from its significant investments in technology,
innovative processes and alliance channels and its highly skilled and motivated
Team Members.


                                   TECHNOLOGY

The Company's technical focus has been on the migration from a Macintosh
personal computer system to an enhanced solution that resides on IBM AS/400s
with a Macintosh network front end. Westar's LASIRpro-C- (Lease Accounting
Securitization and Income Reporting) software is a custom package that provides
a high level of functional integration using up to date relational technology,
automated risk analysis and decisioning, credit reporting, sales and use tax
integration and state of the art document generation. The system has been
designed with an e-commerce component and the ability to handle large volumes of
transactions, yet is easily adaptable for additional Intranet or Private Label
business partners.

We mirror data and programs between two AS/400s on a real time basis,
eliminating the need to take systems and users down to perform backups, IPLs
(Initial Program Loads), PTF application (Program Temporary Fixes to the OS/400
operating system), or hardware/software upgrades. This also satisfies a major
component of our disaster recovery and contingency plan by supplying us with the
ability to automatically switch from our primary to our secondary AS/400 with
very little disruption of service to our users. The two AS/400s are now housed
in a key card access controlled room at our new location, along with our other
business servers. The data center is protected by dual uninteruptable power
supplies and is powered by a diesel generator in the event of a long-term power
outage.

Over the next few months we will be finalizing our disaster recovery and
contingency plan by selecting the site for a third AS/400 in an out of state
location, completing the standardization of our networking equipment to Cisco
products and evaluating several AS/400 imaging and storage solutions.


                               COMPUTER/YEAR 2000

We entered into the year 2000 smoothly and without disruption to the business
due to Y2K. We did not experience any significant malfunctions or errors in our
computer systems, software, other property and equipment when the date changed
from 1999 to 2000 or with any leap year related calculations, nor did any of
Westar's suppliers and vendors. Based on operations since the date change, we do
not expect any significant impact to our business as a result of Y2K. All of our
business systems and technical infrastructure are processing normally.

                         LIQUIDITY AND CAPITAL RESOURCES

The Company generated $5.0 million in cash flow from operations during the year
as compared to $8.9 million in the prior year. This represents the Company's
principal source of cash. The decrease in 2000 of $3.9 million was driven
primarily by the decrease in assets warehoused. The increased lease origination
volume also affected cash flow in fiscal 2000. The Company invested $.9 million
in property and equipment during fiscal 2000, the majority of which is focussed
on e-commerce and facilities expansion. Total liabilities at March 31, 2000 were
$19.0 million, down $.8 million from the prior fiscal year. This reduction
reflects decreased holdings of leases which are funded using the warehousing
facility. Increasing the number of SBAS transactions or securitizations during
the year affords the company additional opportunities to fund leases and reduce
interest expense on the warehouse line while


                                    Page 15
<PAGE>

maintaining lower average balances in the warehousing facility.

Capital spending plans currently provide for outlays of approximately $1.5
million in fiscal 2001. Following the Company's growth strategy, the plan
outlines a significant percentage of the fiscal 2001 capital outlays to be used
for e-commerce expansion. We expect that funds necessary for these expenditures
will be generated internally, through Private Placements and/or credit
facilities.

The Company requires substantial cash to implement its business strategy,
including cash to: (i) acquire vehicles; (ii) pay sales or securitization costs;
(iii) satisfy requirements for working capital; (iv) pay operating expenses; (v)
satisfy debt service; (vi) pay preferred stock dividends; (vii) implement its
e-commerce expansion; and, (viii) invest in technology, systems and personnel. A
substantial portion of the Company's revenues in any period results from sales
or securitizations of leases in such period but in a securitization transaction
a portion of the cash underlying such revenues is received over the life of the
leases. The Company has historically been successful in meeting its liquidity
needs through internal cash flow, borrowings from financial institutions,
securitizations and SBASs, portfolio sales and sales of equity and debt
securities.

In June and July 2000, the Company received $3.0 million from subordinated
promissory notes. The notes have no prepayment penalties and are to be repaid
with interest, calculated at 9%. These funds are being utilized for working
capital requirements and will be repaid with future proceeds from additional
equity or debt financing transactions, if any. Currently these notes mature
over the next 12 months with $1.0 million due on September 4, 2000, $1.0
million due on June 4, 2001 and $1.0 million due on July 4, 2001. The Company
anticipates additional funds to be received prior to fiscal 2001 year end.

To diversify funding strategies, the Company is negotiating several Asset Backed
Commercial Paper ("ABCP") facilities with a number of banks. The diversification
of funding strategies will improve long-term business performance, strengthen
the Company's competitive position and build a sustainable competitive
advantage.

Westar was the third Company in the nation to structure a free standing lease
securitization and the first to originate multiple securitizations from within a
single bankruptcy remote structure and to originate a tax benefit transfer from
within a securitization. As of March 31, 2000, the Company has completed
eighteen securitizations and sales while it retains the servicing of the
portfolios and receives servicing income through the life of the lease.

The Company entered into an agreement with Bank One, Columbus NA in July 1995
which was expanded in November 1996 from the initial $12 million limit to $25
million. In September 1999, the Company re-evaluated its interim financing needs
considering the expected future timing of sales and securitizations. Based on
this information, Management renewed the financing facility at $25 million. The
Company must comply with certain loan covenants. At March 31, 2000, the Company
exceeded certain covenants and the lender has waived them through August 1,
2000.

This revolving credit warehouse facility is to be utilized as interim financing
for the acquisition of vehicle leases until sufficient volume is achieved to
sell such leases through an ABS or SBAS transaction. After repayment of the
related borrowings from Bank One, the net proceeds from the sales of originated
leases provide a source of cash for future originations of vehicle leases,
short-term liabilities and general and administrative expenses. Management
anticipates increased originations coupled with higher margins will generate
additional cash flows to be utilized for working capital requirements. At March
31, 2000 the unused portion of the warehouse line is $21.7 million.

Since 1994, the Company has raised $4,250,000 from redeemable preferred stock
offerings. The proceeds were used for the development of DDRL and to fund
current operations and initial lease acquisitions. During the year ended March
31, 2000 the Company redeemed 23 shares of preferred stock for $23,000 and
converted 275 shares of preferred stock into 55,000 shares of the Company's no
par common stock.

It is the opinion of Management that, as of March 31, 2000, the liquidity
sources discussed above in conjunction with subsequent events noted below are
sufficient to meet the Company's immediate cash flow needs for operations and
for the acquisition of leases in the normal course of business. The Company is
currently in negotiations to obtain additional capital through both private and
public financings to provide for the Company's planned growth over the next
several years. There can be no assurance that such negotiations will be
successful.

                                SUBSEQUENT EVENTS

In April 2000, the Company entered into a sale/leaseback with Banc One Leasing
Corporation in the amount of $514,944. The contract is to be repaid in 60 equal
payments of $10,821.84.

In May 2000, the Company's origination/issuer trust, Westar Lease Origination
Trust, completed its nineteenth ABS or SBAS of $11.8 million of automobile
lease-backed securities in a private-placement offering. The Company's proceeds
were reduced by a reserve in the amount of $83,400, which is to be received in
60 monthly


                                    Page 16
<PAGE>

payments. The Company continues to service the leases sold.

In June 2000, CarPoint, a subsidiary of Microsoft, purchased DriveOff.com in
which the Company is the exclusive financial administrator.

In June 2000, the Company's origination/issuer trust, Westar Lease Origination
Trust, completed its twentieth ABS or SBAS of $11.2 million of automobile
lease-backed securities in a private-placement offering. The Company's proceeds
were reduced by a reserve in the amount of $80,000, which is to be received in
60 monthly payments. The Company continues to service the leases sold.

In June 2000, the Company's origination/issuer/titling securitization structure,
Westar Lease Origination Trust, completed its twenty-first ABS or SBAS. The
Company directly placed bonds backed by $28.8 million of automobile lease
receivables with a group of insurance companies managed by ING Investment
Management. The transaction includes a one-month pre-funding period. The Company
funded $12.9 million of leases as of June 30, 2000, which included a $623,000
credit enhancement receivable that the Company expects to receive over the life
of the portfolio. The Company continues to service the leases securitized.

In June and July 2000, the Company received $3.0 million of promissory notes.
The short-term notes have no prepayment penalty and are to be repaid with
interest, calculated at 9%. Currently these notes mature over the next 12
months with $1.0 million due on September 4, 2000, $1.0 million due on June
4, 2001 and $1.0 million due on July 4, 2001.

                        RECENT ACCOUNTING PRONOUNCEMENTS


In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments and for hedging activities. The Company
does not currently or intend to engage in any derivative or hedging activities.
As such, the accounting and disclosure prescribed by SFAS No. 133 are not
expected to have a material impact on the Company.

In December 1999, the SEC staff released Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 provides
interpretive guidance on the recognition, presentation and disclosure of revenue
in the financial statements. SAB 101 must be applied to the financial statements
no later than the quarter ending September 30, 2001. The Company does not
believe that the adoption of SAB 101 will have a material affect on the
Company's financial results.

In March 2000, the Financial Accounting Standards Board issued Interpretation
No. 44 ("FIN 44") Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB Opinion No. 25. FIN 44 clarifies the
application of Opinion No. 25 for (a) the definition of employee for purposes of
applying Opinion No. 25, (b) the criteria for determining whether a plan
qualifies as a non-compensatory plan, (c) the accounting consequences of various
modifications to the terms of a previously fixed stock option or award, and (d)
the accounting for an exchange of stock compensation awards in a business
combination. FIN 44 is effective July 1, 2000, but certain conclusions cover
specific events that occur after either December 15, 1998, or January 12, 2000.
The Company does not believe that FIN 44 would have a material effect on the
Company's financial position and results of operations.


                                    Page 17
<PAGE>

REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------

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

Board of Directors and Shareholders
Westar Financial Services Incorporated

We have audited the accompanying consolidated balance sheets of Westar Financial
Services Incorporated and its subsidiaries as of March 31, 2000 and 1999 and the
related consolidated statements of operations, shareholders' equity (deficit),
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Westar Financial
Services Incorporated and its subsidiaries as of March 31, 2000 and 1999 and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.


BDO Seidman, LLP
Seattle, Washington
May 24, 2000, (except for Note 10 which is as of July 5, 2000)



Board of Directors and Shareholders
Westar Financial Services Incorporated

We have audited the accompanying consolidated statements of operations,
shareholders' equity (deficit), and cash flows of Westar Financial Services
Incorporated and subsidiaries for the year ended March 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement based on
our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Westar Financial Services Incorporated and subsidiaries for the year ended
March 31, 1998 in conformity with generally accepted accounting principles.

KPMG LLP
Seattle, Washington
February 17, 1999


                                    Page 18
<PAGE>

WESTAR FINANCIAL SERVICES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                 2000                   1999
                                                                                 ----                   ----
<S>                                                                          <C>                    <C>
Cash and cash equivalents                                                    $  1,401,243           $    925,204
Accounts and other receivables, net of allowance for credit losses
  of $20,621 for both years (Notes 2 & 9)                                         385,602                253,697
Credit enhancement receivable, net of allowance for credit
  losses of $90,894 for both years (Note 3)                                     2,218,897              1,039,895
Net investment in direct financing leases (Notes 4 & 5)                                                  102,539
Operating leases held for sale (Notes 4 & 5)                                    2,827,830              9,640,013
Deferred tax asset, net of valuation allowance of $4,709,778 and
$3,482,518 (Note 6)
Fixed assets and other                                                          1,042,118                533,937
                                                                                ---------                -------

                                                                             $  7,875,690           $ 12,495,285
                                                                                =========             ==========


Accounts payable                                                             $  4,141,841           $  1,670,233
Notes payable to banks (Note 5)                                                 3,842,471              9,942,938
Notes payable affiliates (Note 5)                                               8,822,514              6,438,359
Other liabilities                                                               2,181,848              1,687,211
                                                                               ----------             ----------
                                                                               18,988,674             19,738,741
                                                                               ----------             ----------


Redeemable preferred stock (Notes 7 & 8)                                        1,250,000              1,548,000
                                                                                ---------              ---------
Shareholders' Equity (Deficit):
   Common stock, no par value; 35,000,000 shares authorized;
     2,348,120 and 2,187,300 shares issued and outstanding (Note 8)             3,716,177              3,239,795
   Paid in capital - stock warrants (Notes 5 & 8)                                 371,495                371,495
   Accumulated deficit                                                        (16,450,656)           (12,402,746)
                                                                               ----------             ----------

                                                                              (12,362,984)            (8,791,456)
                                                                               ----------              ---------

                                                                             $  7,875,690           $ 12,495,285
                                                                                =========             ==========

</TABLE>


See accompanying notes to consolidated financial statements.


                                    Page 19
<PAGE>

WESTAR FINANCIAL SERVICES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED MARCH 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>

                                                                2000                1999                1998
                                                                ----                ----                ----
<S>                                                           <C>                <C>              <C>
Revenues:
   Revenues from sales and securitizations
    (Note 3)                                                  $ 112,416,055      $  64,210,552     $     804,160
   Earned income on direct financing leases                             494            631,102         1,114,050
   Revenues from operating leases                                 1,851,806          1,112,845
   Administrative fee income                                      2,029,522            927,364           151,353
   Service fee income                                               381,958            132,888           100,114
   Other                                                            147,100             88,746            75,912
                                                                    -------             ------            ------
Total Revenues                                                  116,826,935         67,103,497         2,245,589
Direct costs:                                                   -----------         ----------         ---------
   Costs related to sales and securitizations                   112,713,557         62,790,337           766,589
   Interest                                                         453,818          1,086,983         1,296,261
   Depreciation on operating leases                               1,302,289            737,436
   Provision for credit losses                                       65,500             62,289            65,000
   Other                                                            598,765            439,923           173,009
                                                                    -------            -------           -------

Total Direct Costs                                              115,133,929         65,116,968         2,300,859
                                                                -----------         ----------         ---------

Gross margin                                                      1,693,006          1,986,529           (55,270)

General and administrative expenses                               4,864,500          3,238,639         2,233,612
                                                                  ---------          ---------         ---------
Loss before non-cash interest expense & subordinated
  debt                                                           (3,171,494)        (1,252,110)       (2,288,882)


Non-cash (Note 5) and Subordinated debt interest expense            750,235            571,586           510,170
                                                                    -------            -------           -------
Loss before federal income tax benefit                           (3,921,729)        (1,823,696)       (2,799,052)

Income tax benefit (expense) (Note 6)                                                                 (2,263,073)
                                                                 ----------         ----------        ----------
Net loss                                                         (3,921,729)        (1,823,696)       (5,062,125)

Dividends on redeemable preferred stock                            (126,181)          (161,274)         (390,673)
                                                                    -------            -------           -------
Net loss applicable to common stock                           $  (4,047,910)     $  (1,984,970)    $  (5,452,798)
                                                                  =========          =========         =========
Net loss per basic and diluted common share                   $       (1.79)     $       (0.91)    $       (2.99)
                                                                       ====               ====              ====
Weighted average number of basic and diluted shares
outstanding                                                       2,264,284          2,187,300         1,825,400
                                                                  =========          =========         =========

</TABLE>

See accompanying notes to consolidated financial statements.


                                    Page 20
<PAGE>

WESTAR FINANCIAL SERVICES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED MARCH 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>

                                                     Common Stock
                                                     ------------             Paid in        Accumulated
                                               Shares         Amount          Capital           Deficit             Total
                                               ------         ------          -------           -------             -----

<S>                                          <C>             <C>            <C>               <C>                <C>
Balance, March 31, 1997                      1,712,300       $  2,874,795   $                  $ (4,964,978)     $ (2,090,183)

Dividends on redeemable preferred stock                                                            (390,673)         (390,673)

Net loss                                                                                         (5,062,125)       (5,062,125)

Exercise of common stock warrants              475,000            365,000                                             365,000

Paid in capital-detachable stock warrants                                          371,495                            371,495
                                             ---------          ---------          -------      -----------        ----------

Balance, March 31, 1998                      2,187,300          3,239,795          371,495      (10,417,776)       (6,806,486)

Dividends on redeemable preferred stock                                                            (161,274)         (161,274)

Net loss                                                                                         (1,823,696)       (1,823,696)
                                             ---------          ---------          -------      -----------        ----------

Balance, March 31, 1999                      2,187,300          3,239,795          371,495      (12,402,746)       (8,791,456)

Exercise of common stock options               115,000            230,000                                             230,000

Conversion of preferred stock to common         55,000            275,000                                             275,000
Stock

Issuance of common stock                        16,420             82,100                                              82,100

Redemption and retirement of common stock      (25,600)          (160,256)                                           (160,256)

Issuance of compensatory stock options                             49,538                                              49,538

Dividends on redeemable preferred stock                                                            (126,181)         (126,181)

Net loss                                                                                         (3,921,729)       (3,921,729)
                                             ---------          ---------          -------      -----------        ----------

Balance, March 31, 2000                      2,348,120       $  3,716,177     $    371,495     $(16,450,656)     $(12,362,984)
                                             =========          =========          =======       ==========        ==========

</TABLE>

See accompanying notes to consolidated financial statements.


                                    Page 21
<PAGE>

WESTAR FINANCIAL SERVICES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED MARCH 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>

Increase (Decrease) in Cash and Cash Equivalents
                                                                            2000            1999           1998
                                                                            ----            ----           ----
<S>                                                                     <C>             <C>            <C>
Cash flows from operating activities:
   Net loss                                                             $(3,921,729)    $(1,823,696)   $(5,062,125)
   Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
       Deferred tax provision                                                                            2,263,075
       Depreciation and amortization                                      1,682,694       1,083,841        480,106
       Compensation expense on stock options                                 49,538
       Provision for and write-off of credit losses                          65,499          62,289         65,000
       Changes in assets and liabilities:
          Accounts and other receivables                                   (131,905)       (106,226)       186,405
          Credit enhancement receivable                                  (1,179,003)       (184,047)       210,167
          Net investment in direct financing leases                          65,148      18,430,650    (10,603,596)
          Operating leases held for sale                                  5,481,403     (10,440,209)
          Accounts payable                                                2,349,150         932,626         38,291
          Other liabilities                                                 494,638         964,812        463,324
          Other                                                                (622)         24,621        (43,764)
                                                                               ----          ------     ----------
          Net cash provided by (used in) operating activities             4,954,811       8,944,661    (12,003,117)
                                                                          ---------       ---------     ----------
Cash flows from investing activities:
   Purchase of furniture, fixtures and equipment                           (887,836)       (308,069)      (105,465)
                                                                           ---------       ---------      ---------

          Net cash used in investing activities                            (887,836)       (308,069)      (105,465)
                                                                           --------        ---------      ---------
Cash flows from financing activities:
   Redemption of redeemable preferred stock                                 (23,000)     (2,525,000)      (175,000)
   Exercise of common stock warrants                                                                       365,000
   Exercise of common stock options                                         230,000
   Redemption and retirement of common stock                               (160,000)
   Issuance of common stock                                                  82,100
   Additions to notes payable to banks                                  101,469,038      58,150,281     16,043,943
   Payments on notes payable to banks                                  (107,569,506)    (63,583,319)    (3,544,274)
   Additions to notes payable subordinated debt                           2,845,771
   Dividends paid on redeemable preferred stock                              (3,723)       (115,793)      (297,192)
   Other                                                                   (461,616)       (112,832)
                                                                            --------        --------     ----------

          Net cash provided by (used in) financing activities            (3,590,936)     (8,186,663)    12,392,477
                                                                          ----------      ---------     ----------

Net increase in cash and cash equivalents                                   476,039         449,929        283,895

Cash and cash equivalents:
   Beginning of year                                                        925,204         475,275        191,380
                                                                            -------          ------        -------

   End of year                                                           $1,401,243      $  925,204       $475,275
                                                                          =========         =======        =======
Supplemental disclosure of cash flow information:
   Cash paid for interest                                                $1,023,005      $1,713,829       $723,203
                                                                          =========       =========        =======

Supplemental schedule of non-cash financing activity:
   Conversion of preferred stock to common stock                         $  275,000      $                 $
                                                                          =========       =========        =======


</TABLE>

See accompanying notes to consolidated financial statements.


                                    Page 22
<PAGE>

--------------------------------------------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

                                  -  GENERAL

Westar Financial Services Incorporated ("WEST" or "the Company") was originally
formed in 1985 as Republic Leasing VI, a limited partnership, and incorporated
in 1989 in the state of Delaware. At a special shareholders' meeting held on
March 25, 1996, the shareholders of RLI approved a plan of merger between WEST
and RLI. The merger effected the reincorporation of RLI in the State of
Washington and the change of name to Westar Financial Services Incorporated.

                                 -  OPERATIONS

Westar Financial Services Incorporated (OTC:WEST) originates, decisions, commits
to and fulfills consumer financings for itself and others. Westar currently
originates financial transactions through four channels: Dealer Direct Retail
Leasing (DDRL), Internet, Intranet and Private Label. The Company employs
diversified funding strategies utilizing securitizations and Securities Based
Asset Sales ("SBAS") as well as interim warehouse financing. The Company
services leases during their term and remarkets used automobiles upon the
expiration of the leases. At March 31, 2000, the Company holds a lease servicing
portfolio in excess of $201 million. The Company earns fees for decisioning and
fulfilling financial transactions for others.

                        -  PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the results of operations of
Westar Financial Services Incorporated (WEST), its 100% owned subsidiary Westar
Finance Holding Co., Westar's 100% owned subsidiary Westar Auto Holding Company,
Inc. (WestAH), their 100% owned subsidiary Westar Auto Finance, LLC (WestAF) and
the Westar Lease Origination Trust (WestLOT), a Massachusetts business trust
registered in the State of Washington, beneficially owned by WestAF. All
intercompany accounts and transactions have been eliminated in consolidation.

              CONCENTRATION OF CREDIT AND FINANCIAL INSTRUMENT RISK

The Company controls its credit risk through credit standards, limits on
exposure, and by monitoring the financial condition of its lessees. The Company
uses a proprietary credit scoring system to evaluate the credit risk of
applicants in the all Dealer Direct Retail Leasing Program ("DDRL") program. The
Company retains the servicing of the leases sold.

One dealer accounts for 12% of lease originations in the current year. One
dealer accounted for 22% of lease originations in 1999. No dealers accounted for
more than 10% of lease volume in 1998.

The Company requires all lessees to provide adequate collateral protection and
liability insurance throughout the term of the lease contracts. The Company also
has contingent collateral and liability insurance which protects the Company
from lapses in the lessee's insurance and it maintains lease value deficiency
("GAP") insurance on "DDRL" contracts originated prior to 1999, which protects
the lessee and the Company from all or a portion of losses associated with
deficiencies between the leased vehicle's value and the balance on the related
lease contract. Since loss experience has been low, the Company presently
self-insures against GAP loss.

A significant portion of the Company's business activity is with customers
located in the states of Oregon, Arizona, Washington and California. There were
no other significant regional, industrial or group concentrations during any of
the three years ended March 31, 2000.

                         -  CASH AND CASH EQUIVALENTS

The Company considers all investments with an original maturity of three months
or less when purchased to be cash equivalents.

                       -  CREDIT ENHANCEMENT RECEIVABLE

The Company may be required to maintain spread accounts to protect investors and
credit enhancers in securitization transactions against credit losses. The
initial deposit, if required, and excess cash flows from securitization
transactions are typically retained for each securitization until the spread
account balance reaches a specified percentage of the underlying minimum lease
payments included in the securitization. Funds in excess of specified
percentages are remitted to the Company over the remaining life of the
securitization. For each securitization, there is no recourse to the Company
beyond the balance in the spread accounts.

                                  -  LEASES

For contracts determined to be operating leases, rental income on operating
leases is recognized as revenue as it becomes due. Depreciation on operating
leases is provided over the term of the lease in an amount necessary to reduce
the cost of the leased vehicle to its estimated residual value at the end of the
lease term. Residual values are at levels set by the Automotive Lease Guide
("ALG").

For direct financing leases, unearned lease income (representing total minimum
lease payments receivable, including the residual value of the leased asset, in
excess of the cost of the leased asset) is amortized to income using the
interest method over the term of the lease.

At the end of the lease term or upon premature termination of the lease, the
leased asset is sold. Proceeds from the sales of warehoused leased assets are
included in revenues and the carrying costs of warehoused leased assets at time
of sale are included in direct costs.


                                    Page 23
<PAGE>

                     -  FURNITURE, FIXTURES AND EQUIPMENT

At March 31, 2000 and 1999, furniture, fixtures and equipment of $949,953 (net
of accumulated depreciation of $808,739) and $419,573 (net of accumulated
depreciation of $451,282), respectively, are included in other assets. They are
stated at cost less accumulated depreciation and are depreciated on a
straight-line basis over their estimated useful lives of 2 to 5 years. Included
in this total are assets subject to capital leases in the amount of $247,376
(net of accumulated amortization of $402,741) and $177,842 (net of accumulated
amortization of $228,218) for the years ended March 31, 2000 and 1999,
respectively. These assets are stated at cost less accumulated amortization and
are amortized over the term of the lease.

                             -  INTANGIBLE ASSETS

At March 31, 2000 and 1999, intangible assets of $8,403 (net of accumulated
amortization of $142,640) and $11,312 (net of accumulated amortization of
$129,423), respectively are included in other assets, and consist of unamortized
debt origination costs. The debt origination costs incurred in relation to the
revolving credit agreement with Bank One and a private placement are amortized
on a straight-line basis over the remaining term of the agreements.

                         -  STOCK BASED COMPENSATION

During 1995, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation, effective for years beginning after December 15, 1995. The
statement requires expanded disclosure of stock-based compensation arrangements
and encourages (but does not require) application of the fair value recognition
provision in the statement. SFAS No. 123 does not require alteration of the
existing accounting rules for employee stock-based programs. Companies may
continue to follow rules outlined in APB Opinion No. 25, but are now required to
disclose the pro forma amounts of net income (loss) and earnings (loss) per
share that would have been reported had they elected to follow the fair value
recognition provision of SFAS No. 123. Effective January 1, 1996, the Company
adopted the disclosure requirements of SFAS No. 123, but has determined that it
will continue to measure its employee stock-based compensation arrangements
under the provisions of APB Opinion No. 25. As the Company continues to apply
APB Opinion No. 25 and related interpretations.

                           -  FEDERAL INCOME TAXES

Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry-forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
Valuation allowances are established to the extent that recovery of net deferred
tax assets fail to meet the more likely than not standard imposed by FAS 109.

                            -  EARNINGS PER SHARE

Effective December 31, 1997, the Company adopted SFAS No. 128, which establishes
standards for computing and presenting earnings (loss) per share ("EPS") and has
the effect of simplifying the standards for computing earnings (loss) per share
and makes them comparable to international EPS standards. It replaces
presentation of primary EPS with a presentation of basic EPS. Basic EPS excludes
dilution for the effect of common stock equivalents such as options or warrants.
SFAS No. 128 was effective for financial statements issued for periods ending
after December 15, 1997 (earlier application was not permitted) and required
restatement of all prior period EPS data presented.

Loss per share is computed using the weighted-average number of common shares
outstanding. Net loss used in the computation of loss per share has been
increased to include the required amount of dividends on the redeemable
preferred stock of $126,181, $161,274 and $390,673 for the years ended March 31,
2000, 1999 and 1998, respectively. Dilutive loss per share calculations do not
include 630,900, 399,833 and 242,000 shares for fiscal years 2000, 1999 and
1998, respectively of common stock options as the effect would be anti-dilutive.

                           -  ACCOUNTING ESTIMATES

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

                           -  COMPREHENSIVE INCOME

In February 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which is effective for annual and interim periods beginning after
December 15, 1997. This statement requires that all items that are required to
be recognized under accounting standards as comprehensive income be reported in
a financial statement displayed with the same prominence as other financial
statements. Currently, the Company does not have any items which would be
required to be reported under SFAS No. 130.

                    -  FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments include cash, accounts receivable, credit
enhancement receivables and notes payable, which due to the nature and duration
of these financial instruments, approximates fair value.

              -  EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments and for hedging activities. The Company
does not currently or intend to engage in any derivative or hedging activities.
As such, the


                                    Page 24
<PAGE>

accounting and disclosure prescribed by SFAS No. 133 are not expected to have a
material impact on the Company.

 In December 1999, the SEC staff released Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 provides
interpretive guidance on the recognition, presentation and disclosure of revenue
in the financial statements. SAB 101 must be applied to the financial statements
no later than the quarter ending September 30, 2000. The Company does not
believe that the adoption of SAB 101 will have a material affect on the
Company's financial results.

In March 2000, the Financial Accounting Standards Board issued Interpretation
No. 44 ("FIN 44") Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB Opinion No. 25. FIN 44 clarifies the
application of Opinion No. 25 for (a) the definition of employee for purposes of
applying Opinion No. 25, (b) the criteria for determining whether a plan
qualifies as a non-compensatory plan, (c) the accounting consequences of various
modifications to the terms of a previously fixed stock option or award, and (d)
the accounting for an exchange of stock compensation awards in a business
combination. FIN 44 is effective July 2, 2000, but certain conclusions cover
specific events that occur after either December 15, 1998, or January 12, 2000.
The Company does not believe that FIN 44 would have a material effect on the
Company's financial position and results of operations.

2  ACCOUNTS AND OTHER RECEIVABLES:

Under terms of its leases, the Company, as lessor, is entitled to recover from
the lessee certain costs incurred upon termination of such leases prior to
expiration of the initial lease term. It is the Company's policy to aggressively
pursue collection under these provisions. Those costs include past due lease
payments, late charges, applicable taxes, losses realized on disposition of
repossessed equipment, and legal and administrative costs incurred to pursue
recovery. Such costs are included in accounts receivable. If successful recovery
of an amount is uncertain, a provision is made in the allowance for credit
losses.

At March 31, 2000 and 1999, accounts receivable includes a remaining balance of
approximately $94,000 and $155,000, respectively, associated with a customer
which is now operating under Chapter 11 of the Federal Bankruptcy Act. The
court-appointed Trustee in that case managing that company proposed to the
Unsecured Creditors' Committee a plan which provides for full recovery of the
Company's remaining balance plus interest over an extended term. That plan was
approved on October 15, 1993. A trust was formed on behalf of the Unsecured
Creditors' benefiting from the plan (of which the Company is a participating
beneficiary). The Trustee appointed for the reorganizing company is a related
party (see note 9). The Company expects full recovery as a result of the plan.
The Trust is presently liquidating and preparing to distribute cash.

3  SECURITIZATIONS AND SBAS:

The Company relies upon sales of leases into various forms of traditional
securitizations, Securities Based Asset Sales ("SBASs") and Asset Backed
Commercial Paper ("ABCP") facilities to generate cash proceeds for repayment of
its warehouse credit facility and to create the availability of capital to
originate additional leases. Revenues generated by the Company's securitizations
are likely to represent a significant portion of the Company's revenues.

During the fiscal year ended March 31, 2000, the Company completed eleven SBAS
or ABS transactions which generated approximately $112.2 million of proceeds
from private-placement offerings referred to as 1999 PIC-B to 1999 PIC-J
(excluding 1999 PIC-G) and 2000 PIC-A to 2000 PIC-C. The Company's proceeds were
reduced by a portion of future cash flows related to the pool of contracts sold.
Such un-remitted portion of proceeds represents servicing income and a credit
enhancement to the purchase of trust certificates, as it provides additional
collateral. Recourse to the Company is limited to the extent of the credit
enhancement. The Company anticipates receiving the unremitted proceeds over the
term of the securitizations, which have a maximum term of 63 months. As part of
the transaction, the Company sells the tax benefit related to depreciation of
the leased equipment to a third party. The Company retains all servicing rights
and responsibilities through the life of the portfolio.

The Company's proprietary Carlson Trust Structure is a multi-use, reusable,
"titling trust" structure used to facilitate auto lease securitizations,
warehouse financing, pooled SBASs and flow funding facilities. Additionally, the
simplified trust structure reduces costs by eliminating the need to establish
new trusts for each securitization. The Carlson Trust is a "titling trust"
whereby the vehicles are titled once and only once in the name of the trust
regardless of how the lease and vehicle will be ultimately financed.

4  LEASES:

Components of the operating leases held for sale as of March 31, 2000 and 1999
are as follows:

<TABLE>
<CAPTION>

                                         2000         1999
                                         ----         ----
<S>                                    <C>          <C>
Operating Leases Held For Sale         $2,954,105   $9,845,103
     Less:  accumulated depreciation       35,407      142,330
                                           ------      -------
Sub-total                               2,918,698    9,702,773
     Allowance for losses                (90,868)     (62,760)
                                          ------       ------
Net operating leases                   $2,827,830   $9,640,013
                                       ==========   ==========

</TABLE>

Components of the net investment in direct financing leases as of March 31,
including guaranteed residual values, are as follows:

<TABLE>
<CAPTION>

                                    1999
                                    ----
<S>                              <C>
Total minimum lease payments
receivable                       $119,418
      Unearned income             (15,599)
                                   ------
Sub-total                         103,819
     Allowance for losses          (1,280)
                                    -----
Net investment in direct         $102,539
financing leases                 ========

</TABLE>

At March 31, 2000, the net investment in direct financing leases is $0.

The future annual minimum lease payments at March 31, 2000,


                                    Page 25
<PAGE>

including guaranteed residual values, approximated $0.5, $0.5, $1.0, $0.9 and
$0.5 million for the five years ending 2004. The remaining balance of $0.3
million is to be received thereafter.

The lessees have options to purchase the underlying asset at the end of the
lease term at the stated residual, which is not less than the book value at
termination.

A summary of activity in the Company's allowance for credit losses which relates
to operating leases, direct financing leases and other receivables for each of
the years in periods ended March 31, are as follows:

<TABLE>
<CAPTION>

                                        2000        1999
                                        ----        ----
<S>                                    <C>         <C>
Beginning balance                      $175,555    $198,410

Provision:
         Operating leases                65,500      61,008
         Direct financing leases                      1,281
                                         ------       -----
                                         65,500      62,289
Net charge-offs:
         Operating leases              (14,433)     (6,048)
         Direct financing leases       (24,239)    (79,096)
                                        ------      ------
Balance, end of year                   $202,383    $175,555
                                        =======     =======

</TABLE>

5  NOTES PAYABLE BANKS AND OTHERS

                            -  NOTES PAYABLE BANKS

The Company entered into a credit facility agreement ("credit facility") with
Bank One, Columbus, NA in August 1998 which set the warehouse credit facility of
$26 million. The credit facility provides short term borrowing from 95% to 97%
of the cost of the leased equipment and is secured only by the pledge of the
Asset Specific Trust Instrument ("ASTI") generated upon the origination of the
lease. The credit facility calls for principal reductions on amounts borrowed
corresponding to the payment due dates of the underlying lease contracts.
Repayment of amounts borrowed is required from the proceeds upon securitization
or SBAS of the underlying lease contracts. The credit facility calls for
interest, payable quarterly, at three percent (3%) above the 30-day LIBOR rate.
The credit facility requires the Company to comply with quarterly debt/equity
ratios, net worth minimums (as defined) and prohibits the payment of dividends
on common stock. At March 31, 2000, the Company exceeded certain covenants and
the lender has waived these breached covenants through August 1, 2000.

At March 31, 2000 and 1999, $3.3 million and $9.4 million was outstanding under
the line, respectively. The highest outstanding balance throughout the year was
$15.5 million in April of 1999. The weighted average rate of interest paid under
the credit facility was 8.35% and 8.43% during the years ended March 31, 2000
and 1999, respectively (calculated using the number of days each rate was
outstanding for the fiscal year). The interest rate at March 31, 2000 and 1999
was 8.93% and 7.96%, respectively. Additionally, the credit facility requires
payment of a quarterly non-utilization fee of .125% on the unused portion of the
line, which at March 31, 2000 was $21.7 million. In July 1998, a new amended and
restated agreement, with terms and conditions similar to the original agreement,
was reached which set the warehouse line at $15 million. This amended and
restated agreement was renewed in September 1999 at $25 million. The note is due
September 30, 2000.

In August 1997, the Company entered into a working capital loan for $750,000
with Bank One. The loan is collateralized by a perfected first security position
in the Company's interest in 1996 PIC-A & 1996 PIC-B. The interest rate is three
percent (3%) above the 30-day LIBOR rate. The note was due September 30, 1999
and was extended to August 21, 2000 with a maximum balance of $500,000. The
balance at March 31, 2000 and 1999 was $500,000.

The Company paid cash for interest on notes payable to banks of $455,409,
$1,348,684 and $698,801 for the years ended March 31, 2000, 1999 and 1998,
respectively.

The future annual repayments related to notes payable to banks approximated $3.8
million and are due in fiscal year 2001.

                          -  NOTES PAYABLE AFFILIATES

LINE OF CREDIT: In January 1997, the Company entered into a subordinated note
agreement to borrow up to $750,000 due to a related party. The note is
subordinated to the bank borrowings and was due June 15, 2000 and was paid in
full on May 12, 1999. Interest is payable at the rate of 8%. The balance at
March 31, 2000 and 1999 was $0 and $4,040, respectively.

SUBORDINATED CONVERTIBLE DEBT: In April 1997, the Company entered into an
agreement to borrow $1,500,000 from a related party. The loan is due at the
earlier of (i) April 30, 2001 or (ii) receipt by the Company of not less than
$5,000,000 in proceeds from one or more closings of its current offerings of
Units, consisting of convertible subordinated notes or any other similar
financing. The note bears interest at the rate of 9%. The borrowings are
subordinated to bank borrowings, guaranteed by one of the Company's executive
officers and are secured by certain Company assets. The agreement grants the
lender warrants exercisable for five years to purchase 3.75% of the Company's
then outstanding common stock for $.01 a share. The difference between the fair
market value of the then outstanding common stock and the strike price of the
warrants was recorded as non-cash interest and amortized over the original term
of the note. The note balance at March 31, 2000 and 1999 was $1,500,000.

SUBORDINATED DEBT: In January 1998, the Company entered into an agreement to
borrow $500,000 from a related party. The note is due April 30, 2001. The note
bears interest at the rate of 9.5%. The borrowings are subordinated to bank
borrowings. The balance at March 31, 2000 and 1999 was $500,000 and $250,000,
respectively.

SUBORDINATED DEBT: In January 2000, the Company entered into an agreement to
borrow $1,200,000 from a related party. The note is due April 30, 2001. The note
bears interest at the rate of 6%. The borrowings are subordinated to bank
borrowings. The balance at March 31, 2000 was $1,450,000.

SUBORDINATED DEBT: In May 2000, the Company entered into an agreement to borrow
$250,000 from a related party. The note is due


                                    Page 26
<PAGE>

April 30, 2001. The note bears interest at the rate of 9%. The borrowings are
subordinated to bank borrowings. The balance at March 31, 2000 was $250,000.

SUBORDINATED DEBT: In June 2000, the Company entered into an agreement to borrow
$600,000 from a related party. The note is due April 30, 2001. The note bears a
variable rate of interest, currently at the rate of 10%. The borrowings are
subordinated to bank borrowings. The balance at March 31, 2000 was $600,000.

SUBORDINATED CONVERTIBLE DEBT: In May 1998, the Company entered into an
agreement with a related party to borrow $4,000,000 subordinated convertible
debt. A portion of the proceeds were used to redeem Preferred Stock. The note is
convertible into 20% of the Company's common stock. The note is to be repaid no
later than May 2003 and bears interest at the rate of 10.5%. The balance at
March 31, 2000 was $4,000,000.

NOTE PAYABLE: In May 1998, the Company entered into an agreement with a related
party to redeem its Series 3 Preferred Stock with a par value of $500,000 for a
note payable in the amount of $500,000. The note bears interest at the rate of
9.25% which is paid quarterly. The note matured April 1, 1999. The note was
amended on March 31, 1999 and reflects the maturity date to be one-eighth of the
principal balance paid quarterly, beginning fourth quarter of fiscal 1999. The
balance at March 31, 2000 was $187,605.

The future annual repayments related to notes payable affiliates approximated
$1.6, $2.9, $4.0, $0 and $0 million for the five years ending 2005.

OBLIGATIONS UNDER CAPITAL LEASES:

At March 31, 2000 the Company had several sale/leaseback transactions with T&W
Financial Corporation, a related party (see note 9). Payments of principal and
interest are due in monthly installments of $15,609. Interest is imputed at the
rate of approximately 9.3%. The balance at March 31, 2000 and 1999 was $334,909
and $184,317, respectively.

At March 31, 2000 the future minimum lease payments are as follows:

<TABLE>
<CAPTION>

                  <S>                                <C>
                  March 31, 2001                     $ 149,374
                  March 31, 2002                       103,314
                  March 31, 2003                        52,848
                  March 31, 2004                        24,981
                  March 31, 2005                         4,392
                                                         -----
                           Total                     $ 334,909
                                                       =======

</TABLE>

The Company paid cash for interest on notes payable affiliates, repurchase
credit facility and obligations under capital leases of $529,932 and $355,626
for the years ended March 31, 2000 and 1999, respectively.

OBLIGATIONS UNDER OPERATING LEASES:

At March 31, 2000 the Company had several operating leases for offices and
office equipment. These obligations extend through 2005. Rental expense for
these operating leases is $239,296 and $94,491 for the years ended March 31,
2000, and 1999.

At March 31, 2000 the future minimum lease payments are as follows:

<TABLE>
<CAPTION>

                  <S>                                <C>
                  March 31, 2001                    $  669,805
                  March 31, 2002                       625,205
                  March 31, 2003                       555,437
                  March 31, 2004                       522,578
                  March 31, 2005                       502,224
                                                    ----------
                           Total                    $2,875,249
                                                    ==========

</TABLE>

6  FEDERAL INCOME TAXES:

The provision for income tax expense (benefit) consists of the following for the
years ended March 31, 2000, 1999 and 1998:

<TABLE>
<CAPTION>

<S>                             <C>         <C>         <C>
Deferred - Federal:             $70,263     $63,164     $2,263,073

</TABLE>

The components of deferred taxes were as follows for the years ended March 31,
2000, 1999 and 1998:

<TABLE>
<CAPTION>

                                2000         1999          1998
                                ----         ----          ----
<S>                           <C>           <C>           <C>
Deferred tax assets:
 NOL carryforward             $4,674,039    $3,340,979    $2,753,523
 Bad debt allowance               37,915        59,689        67,459
 Other                           114,066       104,314       146,990
                                 -------       -------       -------
 Total gross deferred
  tax assets                   4,826,020     3,504,982     2,967,972
 Less: valuation
  allowance                    4,709,778     3,482,518     2,936,206
                               ---------     ---------     ---------
                                 116,242        22,464        31,766

 Direct financing leasing                      (8,160)      (16,399)
 Accelerated depreciation
   and other                   (116,242)      (14,304)      (15,367)
                                -------        ------        ------
 Total gross deferred tax
  liabilities                  (116,242)      (22,464)      (31,766)
                                -------        ------        ------
Net deferred tax assets       $       0     $       0     $       0
                              ---------     ---------     ---------

</TABLE>

The valuation allowance for deferred tax assets as of March 31, 2000, 1999 and
1998 was $4,709,778 $3,482,518 and $2,936,206, respectively.

At March 31, 1999, the Company has net operating loss carryforwards for federal
income tax purposes of approximately $14 million. These are available to offset
future federal taxable income through 2009. The Company recorded a 100%
valuation allowance against the deferred tax asset in fiscal 2000, 1999 and
1998.

7  REDEEMABLE PREFERRED STOCK:

The Company's authorized capital stock includes 2,000,000 shares of preferred
stock; current designations consist of redeemable preferred stock. The
redeemable preferred stock series has a $1,000 per share face value and pays a
cumulative quarterly dividend of $23.125 per share.

Originally the shares of Series 1, 2 and 3 Preferred Stock were to be redeemed
by December 31, 2000. In May 1998, shareholders accepted the Company's offer to
redeem or exchange their shares of Series 1, 2 and 3 Preferred Stock at face
value for cash. As part of the redemption, the preferred shareholders exercised
their warrants to purchase Westar's common stock.

The following represents the Company's preferred stock activity for the years
ended:

<TABLE>
<CAPTION>

                              Series
                              ------
                         1        2       3        4      Total

<S>                    <C>       <C>    <C>      <C>      <C>
March 31, 1997         1,500     300    1,198    1,250    4,248
Shares redeemed         (100)    (69)      (6)             (175)
                         ---      --        -    -----      ---
March 31, 1998         1,400     231    1,191    1,250    4,073
Shares redeemed       (1,125)   (231)  (1,169)           (2,525)
                       -----     ---    -----    -----    -----
March 31, 1999           275       0       23    1,250    1,548
Shares redeemed         (275)             (23)             (298)
                         ===               ==               ===
March 31, 2000             0       0        0    1,250    1,250
                           =       =        =    =====    =====
Shares authorized      1,500     300    1,200    1,250    4,250
 & issued

</TABLE>


                                    Page 27

<PAGE>

In the event of any liquidation, dissolution or winding up of the Company, the
holders of the outstanding shares of Redeemable Preferred Stock shall be
entitled to be paid an amount equal to the face value per share held before any
sums shall be paid or assets distributed to the holders of the common stock. If
assets are insufficient to fully liquidate the Redeemable Preferred Stock, then
a pro-rata liquidation will be made.

Holders of Redeemable Preferred Stock are not entitled to vote on matters
submitted to the common shareholders unless required by Washington state law, a
proposed amendment to the Company's Articles of Incorporation that materially
alters the Redeemable Preferred Stock shareholders' rights or authorizes a class
of stock senior to the Redeemable Preferred Stock, or any proposed amendment to
the Company's By-Laws which materially alters the rights and preferences of the
Redeemable Preferred Stock shareholders. As long as 25% of the Series 4
Preferred Stock remains issued and outstanding, the holders of the outstanding
Series 4 Preferred Stock, voting as a class, are entitled to elect one member to
the Company's Board of Directors.

At the option of the holder, 60 shares of the Series 4 Preferred Stock are
convertible into 10% of the outstanding common stock of the Company. The shares
are convertible at any time and are automatically convertible at such time that
the Company participates in a public offering, as defined.



8 COMMON STOCK, OPTIONS AND WARRANTS:

                                 -  WARRANTS

Warrants for the purchase of 480,000 shares of the Company's common stock were
attached to the Series 1, 2 and 3 Preferred Stock offerings. Upon the redemption
of the Company's Preferred Stock the Preferred Stockholders exercised their
warrants. The warrants carried an exercise price of $.50 per common share.
Warrants to purchase 390,000 shares of common stock were exercised in March
1998. The remaining warrants expired at March 31, 1998.

In March 1995, the Company entered into an agreement with The Industrial Bank of
Japan, Limited ("IBJ") related to the placement of securities backed by auto
lease receivables. The agreement also entitles IBJ to warrants for the purchase
of 71,000 shares @ $.50 per share of the Company's common stock. The warrants
have no expiration date.

The Company entered into a note agreement with & Capital, Inc., a related party
(see Note 5 and Note 9) that grants to the lender warrants exercisable for five
years to purchase 3.75% of the Company's then outstanding common stock for $.01
a share. The Company recorded a discount of $371,496 for the fair value of the
warrants, which is the difference between the fair value of the common stock and
the exercise price. This difference was amortized over the life of the note and
charged to non-cash interest expense.


                               -  STOCK OPTIONS

In April 1994, the Board of Directors approved the adoption of the 1994 Stock
Option Plan (the "Plan") for employees, outside directors and certain
independent contractors of the Company. The Plan was amended by the Shareholders
in April 1999 to increase the number of shares of the Company's common stock
reserved for issuance from 600,000 shares to 1,350,000 shares. For each grant,
exercise prices approximated or exceeded fair market value on the date of grant.

The following summarizes the activity related to options and warrants excluding
IBJ warrants and the & Capital, Inc. warrants (see Note 5 and Note 9):

<TABLE>
<CAPTION>

                                                      Weighted
                                                       Average
                     Shares      Price Per Share    Exercise Price

<S>                  <C>         <C>                <C>
March 31, 1997         690,800   $0.50 to $7.25          $1.25

     Granted            37,000   $5.00 to $11.00         $8.24
     Exercised       (475,000)   $0.50 to $2.00          $0.77
     Expired          (10,800)   $0.50 to $2.00          $1.44
                       ------

March 31, 1998         242,000   $0.50 to $11.00         $3.26

     Granted           237,833    $2.625-$4.00           $3.41
     Exercised
     Expired          (80,000)    $.50 to $7.25          $2.94
                       ------
March 31, 1999         399,833   $2.00 to $11.00         $3.41
                       =======
     Granted           500,400    $2.625-$8.00           $5.78
     Exercised       (115,000)        $2.00              $2.00
     Expired         (154,333)   $2.625-$5.6875          $4.13
                      -------

March 31, 2000         630,900   $2.00 to $11.00         $5.375
                       =======

</TABLE>

Information relating to stock options at March 31, 2000 summarized by exercise
price is as follows:

<TABLE>
<CAPTION>

-------------------------------------------------------------------
                Outstanding                       Exercisable
-------------------------------------------------------------------
                        Weighted Average
-------------------------------------------------------------------
 Exercise                                             Weighted
 Price Per                       Exercise             Average
   Share     Shares  Life (Years)  Price   Shares  Exercise Price
   -----     ------  -----------   -----   ------  --------------
<S>         <C>      <C>         <C>       <C>     <C>
   $2.00     10,000      2.667    $2.00    10,000      $2.00
   $2.625    81,500      9.000    $2.625   16,900
   $2.75     20,000      3.208    $2.75    20,000      $2.75
   $4.00     30,000      2.542    $4.00    30,000      $4.00
   $5.00    134,400      7.998    $5.00    10,000      $5.00
   $6.00    265,000      4.722    $6.00   235,000      $6.00
   $7.00     40,000      2.250    $7.00
   $8.00     30,000      2.542    $8.00
   $9.00     10,000      2.375    $9.00
  $11.00     10,000      2.375   $11.00

-------------------------------------------------------------------
            630,900      5.45     $5.37   321,900      $5.14
-------------------------------------------------------------------

</TABLE>

All stock options issued to employees have an exercise price not


                                    Page 28
<PAGE>

less than the fair market value of the Company's common stock on the date of
grant. In accordance with accounting for such options utilizing the intrinsic
value method there is no related compensation expense recorded in the Company's
financial statements. Effective for fiscal 1996, the Company adopted the
disclosure requirements of SFAS 123 "Accounting for Stock Based Compensation."
SFAS 123 requires that compensation under a fair value method be determined and
disclosed in a pro forma effect on earnings and earnings per share. The fair
value of the options granted during fiscal years 2000, 1999 and 1998 is
estimated using the Black-Scholes option pricing model. Had compensation cost
for stock based compensation been determined based on the fair value at the
grant dates beginning in 1996, consistent with the method of SFAS 123, the
Company's net loss applicable to common stock and loss per common share for the
years ended March 31, 2000, 1999 and 1998, would have been increased to the pro
forma amounts presented below:

<TABLE>
<CAPTION>

(in thousands, except per share data):
                                                 2000      1999      1998
                                                 ----      ----      ----
 Net loss applicable to common stock
 -----------------------------------
<S>                                            <C>       <C>       <C>
As reported                                    $(4,048)  $(1,985)  $(5,453)
Pro Forma                                      $(4,280)  $(2,032)  $(5,543)

 Loss per common share, basic
 ----------------------------
As reported                                     $(1.79)    $(.91)   $(2.99)
Pro Forma                                       $(1.89)    $(.93)   $(3.03)

</TABLE>

The fair value of option grants is estimated on the date of grant utilizing the
Black-Scholes option-pricing model with the following weighted average
assumptions for grants in 2000, 1999 and 1998, respectively: expected life of
the options 6, 4 and 5 years for 2000, 1999 and 1998, respectively, risk-free
interest rate of approximately 5.60%, 5.43% and 6.2%, no dividend yield, and
volatility of 122%, 2.45% and 136%. The weighted average fair value at date of
grant for options granted during 2000, 1999 and 1998 approximated $3.35, $2.35
and $4.05 per option, respectively.

9 OTHER RELATED PARTY TRANSACTIONS:

The Company entered into certain related party transactions related to debt and
other transactions (See Note 5).

The Company holds a receivable in the amount of approximately $94,000 and
$155,000 as of March 31, 2000 and 1999, respectively, from CASR Trust. An
officer/director of the Company is the court appointed trustee of CASR Trust.
The trust was established by the bankruptcy court for the benefit of the
creditors of All Season's Resort.

10 SUBSEQUENT EVENTS:

In April 2000, the Company entered into a sale/leaseback with Banc One Leasing
Corporation in the amount of $514,944. The contract is to be repaid in 60 equal
payments of $10,821.84.

In May 2000, the Company's origination/issuer trust, Westar Lease Origination
Trust, completed its nineteenth SBAS or ABS placement of $11.8 million of
automobile lease-backed securities in a private-placement offering. The
Company's proceeds were reduced by a reserve in the amount of $83,400, which is
to be received in 60 monthly payments. The Company continues to service the
leases sold.

In June 2000, CarPoint, a subsidiary of Microsoft, purchased DriveOff.com in
which the Company is the exclusive financial administrator and fulfillment
agent.

In June 2000, the Company's origination/issuer trust, Westar Lease Origination
Trust, completed its 20th SBAS or ABS placement of $11.2 million of automobile
lease-backed securities in a private-placement offering. The Company's proceeds
were reduced by a reserve in the amount of $80,000, which is to be received in
60 monthly payments. The Company continues to service the leases sold.

In June 2000, the Company's origination/issuer/titling securitization structure,
Westar Lease Origination Trust, completed its twenty-first securitization. The
Company directly placed bonds backed by $28.8 million of automobile lease
receivables with a group of insurance companies managed by ING Investment
Management. The transaction includes a pre-funding period. The Company funded
$12.9 million of leases as of June 30, 2000, which included a $623,000 credit
enhancement receivable that the Company expects to receive over the life of the
portfolio. The Company continues to service the leases securitized.

In June and July 2000, the Company received $3.0 million of promissory notes.
The short-term notes have no prepayment penalty and are to be repaid with
interest, calculated at 9%. Currently these notes mature over the next 12
months with $1.0 million due on September 4, 2000, $1.0 million due on June
4, 2001 and $1.0 million due on July 4, 2001.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Information called for by Part II, Item 9, was included in the Company's Proxy
Statement relating to the Company's annual meeting of shareholders held on
September 27, 1999, and is incorporated herein by reference. The information
appears in the Proxy Statement under the caption "Other Matters." Such Proxy
Statement was filed within 120 days of the Company's year end.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

Information regarding the Company's directors is set forth under "Information
About the Board of Directors and Committees of the Board" in the Company's Proxy
Statement relating to the Company's annual meeting of shareholders to be held on
September 25, 2000, and is incorporated herein by reference. Such Proxy
Statement will be filed within 120 days of the Company's year end. Information
regarding the Company's executive officers is set forth in Item 1 of Part I
herein under the caption "Executive Officers of the Company."

ITEM 11. EXECUTIVE COMPENSATION

Information called for by Part III, Item 11, is included in the Company's Proxy
Statement relating to the Company's annual meeting of shareholders to be held on
September 25, 2000, and is incorporated herein by reference. The information
appears in the Proxy Statement under the caption "Executive Compensation."


                                    Page 29
<PAGE>

Such Proxy Statement will be filed within 120 days of the Company's year end.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information called for by Part III, Item 12, is included in the Company's Proxy
Statement relating to the Company's annual meeting of shareholders to be held on
September 25, 2000, and is incorporated herein by reference. The information
appears in the Proxy Statement under the caption "Security Ownership of Certain
Beneficial Owners and Management." Such Proxy Statement will be filed within 120
days of the Company's year end.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See Notes 5 and 9 to the Consolidated Financial Statements.


                                    Page 30
<PAGE>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
              AND REPORTS ON FORM 8-K

         14 (a) DOCUMENTS FILED AS PART OF THIS REPORT:

                  (1) FINANCIAL STATEMENTS (PAGES 10 TO 23)

                      Reports of Independent Certified Public Accountants
                      Consolidated Balance Sheets as of March 31, 1999 and 1998
                      Consolidated Statements of Operations for the years ended
                      March 31, 1999, 1998 and 1997
                      Consolidated Statement of Shareholder's Equity (Deficit)
                      for the years ended March 31, 1999, 1998 and 1997
                      Consolidated Statements of Cash Flows for the years ended
                      March 31, 1999, 1998 and 1997
                      Notes to Consolidated Financial Statements

                  (2) INDEX TO FINANCIAL STATEMENT SCHEDULES

                      All schedules are omitted since the required information
                      is not present in amounts sufficient to require submission
                      of the schedule, or because the information required is
                      included in the financial statements and notes thereto.

                  (3) INDEX TO EXHIBITS

                      2.     Plan of acquisition, reorganization, arrangement,
                             liquidation or succession

                             2.1    Plan and Agreement of Merger between Westar
                                    Financial Services Incorporated and Republic
                                    Leasing Incorporated incorporated by
                                    reference to the Exhibit to Form 10-K dated
                                    June 11, 1996.

                      3.     Articles of Incorporation and Bylaws

                             3.1    The Articles of Incorporation of Westar
                                    Financial Services Incorporated filed on
                                    February 13, 1996 incorporated by reference
                                    to the Exhibit to Form 10-K dated June 11,
                                    1996.

                             3.2    The Bylaws of Westar Financial Services
                                    Incorporated adopted on February 21, 1996
                                    incorporated by reference to the Exhibit to
                                    Form 10-K dated June 11, 1996.


                      4.     Instruments defining the rights of security
                             holders, including indentures

                             4.1    Designation of Rights and Preferences of
                                    Republic Leasing Incorporated Series 1
                                    Preferred Stock incorporated by reference to
                                    the Exhibit to Form 10-K dated June 11,
                                    1996.

                             4.2    Designation of Rights and Preferences of
                                    Republic Leasing Incorporated Series 2
                                    Preferred Stock incorporated by reference to
                                    the Exhibit to Form 10-K dated June 11,
                                    1996.

                             4.3    Designation of Rights and Preferences of
                                    Republic Leasing Incorporated Series 3
                                    Preferred Stock incorporated by reference to
                                    the Exhibit to Form 10-K dated June 11,
                                    1996.

                             4.4    Designation of Rights and Preferences of
                                    Republic Leasing Incorporated Series 4
                                    Preferred Stock incorporated by reference to
                                    the Exhibit to Form 10-K dated June 11,
                                    1996.


                                    Page 31
<PAGE>

                      10.    Material Contracts

                             10.1   Republic Leasing Incorporated 1994 Stock
                                    Option Plan incorporated by reference to the
                                    Exhibit to Form 10-K dated June 11, 1996.

                             10.2   The Letter Agreement between Republic
                                    Leasing Incorporated and The Industrial Bank
                                    of Japan, Limited dated March 3, 1995
                                    incorporated by reference to the Exhibit to
                                    Form 10-K dated June 11, 1996.

                             10.3   Revolving Credit Agreement among Westar Auto
                                    Finance, LLC. as Borrower, Republic Leasing
                                    Incorporated as Guarantor and Bank One,
                                    Columbus, N.A., as the lender dated July 12,
                                    1995 incorporated by reference to the
                                    Exhibit to Form 10-K dated June 11, 1996.

                             10.4   Amendment, dated February 15, 1996, to the
                                    Revolving Credit Agreement with Bank One,
                                    Columbus, N.A., dated July 12, 1995
                                    incorporated by reference to the Exhibit to
                                    Form 10-K dated June 11, 1996.

                             10.5   The Promissory Note between Westar Financial
                                    Services Incorporated and Mud Bay Holdings
                                    Ltd., as a lender dated January 15, 1997
                                    incorporated by reference to the Exhibit to
                                    Form 10-K dated September 19, 1997.

                             10.6   The Promissory Note between Westar Financial
                                    Services Incorporated and & Capital Inc., as
                                    a lender dated April 15, 1997 incorporated
                                    by reference to the Exhibit to Form 10-K
                                    dated September 22, 1997.

                             10.7   The Amended and Restated Revolving Credit
                                    Loan Agreement between Westar Financial
                                    Services Incorporated and Bank One, as the
                                    lender dated July 22, 1997 incorporated by
                                    reference to the Exhibit to Form 10-K dated
                                    November 13, 1997.

                             10.8   The Amended agreement between Westar
                                    Financial Services Incorporated and &
                                    Capital, Inc., as the lender dated October
                                    20, 1997 incorporated by reference to the
                                    Exhibit to Form 10-K dated November 13,
                                    1997.

                             10.9   The Amended agreement between Westar
                                    Financial Services Incorporated and &
                                    Capital, Inc., as the lender dated February
                                    9, 1998 incorporated by reference to the
                                    Exhibit to Form 10-Q dated February 17,
                                    1998.

                             10.10  The Amended agreement between Westar
                                    Financial Services Incorporated and Bank
                                    One, as the lender dated October 27, 1997
                                    incorporated by reference to the Exhibit to
                                    Form 10-Q dated February 17, 1998.

                             10.11  The Amended agreement between Westar
                                    Financial Services Incorporated and Bank
                                    One, as the lender dated March 31, 1998
                                    incorporated by reference to the Exhibit to
                                    Form 10-K dated February 17, 1999.

                             10.12  The Amended agreement between Westar
                                    Financial Services Incorporated and Mud Bay,
                                    as the lender dated August 31, 1998
                                    incorporated by reference to the Exhibit to
                                    Form 10-K dated February 17, 1999.

                             10.13  The Amended agreement between Westar
                                    Financial Services Incorporated and Cathy
                                    Carlson, as the lender dated April 30, 1998
                                    incorporated by reference to the Exhibit to
                                    Form 10-K dated February 17, 1999.

                             10.14  The Amended agreement between Westar
                                    Financial Services Incorporated and &
                                    Capital, Inc., as the lender dated August
                                    31, 1998 incorporated by reference to the
                                    Exhibit to Form 10-K dated February 17,
                                    1999.

                             10.15  The Amended agreement between Westar
                                    Financial Services Incorporated and &
                                    Capital, Inc., as the lender dated August
                                    31, 1998 incorporated by reference
                                    incorporated by reference to Form 10-K dated
                                    February 17, 1999.


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<PAGE>

                             10.16  The Amended agreement between Westar
                                    Financial Services Incorporated and Summit
                                    Capital Resources as the lender dated May 1,
                                    1998 incorporated by reference to Form 10-K
                                    dated February 17, 1999.

                             10.17  The promissory note between Westar Financial
                                    Services Incorporated and PLMC, LLC, as a
                                    lender dated April 30, 1998 incorporated in
                                    reference to Form 10-Q dated March 1, 1999.

                             10.18  The promissory note between Westar Financial
                                    Services Incorporated and PLMC, LLC, as a
                                    lender dated May 11, 1998 incorporated by
                                    reference to the Exhibit to Form 10-Q dated
                                    March 1, 1999.

                             10.19  The Amended agreement between Westar
                                    Financial Services Incorporated and Bank
                                    One, as a lender dated June 25, 1998
                                    incorporated by reference to the Exhibit to
                                    Form 10-Q dated March 1, 1999.

                             10.20  The Second Amended agreement between Westar
                                    Financial Services Incorporated and Bank
                                    One, as the lender dated July 22, 1998
                                    incorporated by reference to the Exhibit to
                                    Form 10-Q dated March 1, 1999.

                             10.21  The purchase/repurchase agreement between
                                    Westar Financial Services Incorporated and
                                    T&W Financial Services, dated July 23, 1998
                                    incorporated by reference to the Exhibit to
                                    Form 10-Q dated March 1, 1999.

                             10.22  The amended agreement for the Westar
                                    Financial Services Incorporated 1994 Stock
                                    Option Plan dated April 26, 1999
                                    incorporated by reference to the Exhibit to
                                    Form 10-K dated June 25, 1999.

                             10.23  The amended agreement between Westar
                                    Financial Services Incorporated and Bank
                                    One, as the lender dated May 1, 1999
                                    incorporated by reference to the Exhibit to
                                    Form 10-K dated June 25, 1999.

                             10.24  The amended agreement between Westar
                                    Financial Services Incorporated and &
                                    Capital, Inc., as the lender dated April 1,
                                    1999 incorporated by reference to the
                                    Exhibit to Form 10-K dated June 25, 1999.

                             10.25  The amended agreement between Westar
                                    Financial Services Incorporated and &
                                    Capital, Inc., as the lender dated April 1,
                                    1999 incorporated by reference to the
                                    Exhibit to Form 10-K dated June 25, 1999.

                             10.26  The amended agreement between Westar
                                    Financial Services Incorporated and a
                                    director, as the lender dated May 24, 1999
                                    incorporated by reference to the Exhibit to
                                    Form 10-K dated June 25, 1999.

                             10.27  The agreement between Westar Financial
                                    Services Incorporated and Puget Sound
                                    Investors, as the lender dated June 1, 1999
                                    incorporated by reference to the Exhibit to
                                    Form 10-K dated June 25, 1999.

                             10.28  The amended agreement between Westar
                                    Financial Services Incorporated and &
                                    Capital, Partners, L.P., as the lender dated
                                    December 1, 1999 incorporated by reference
                                    to the Exhibit to Form 10-Q dated January
                                    28, 2000.

                             10.29  The amended agreement between Westar
                                    Financial Services Incorporated and &
                                    Capital, Partners, L.P., as the lender dated
                                    December 1, 1999 incorporated by reference
                                    to the Exhibit to Form 10-Q dated January
                                    28, 2000.

                             10.30  The amended agreement between Westar
                                    Financial Services Incorporated and a
                                    director, as the lender dated December 1,
                                    1999 incorporated by reference to the
                                    Exhibit to Form 10-Q dated January 28, 2000.

                             10.31  The amended agreement between Westar
                                    Financial Services Incorporated and


                                    Page 33
<PAGE>

                                    Puget Sound Investors, dated December 1,
                                    1999 incorporated by reference to the
                                    Exhibit to Form 10-Q dated January 28, 2000.

                             10.32  The amended agreement between Westar
                                    Financial Services Incorporated and Bank
                                    One, dated December 1, 1999 incorporated by
                                    reference to the Exhibit to Form 10-Q dated
                                    January 28, 2000.


                             10.33  The amended agreement between Westar
                                    Financial Services Incorporated and &
                                    Capital, Partners, L.P., as the lender dated
                                    March 10, 2000.

                             10.34  The amended agreement between Westar
                                    Financial Services Incorporated and &
                                    Capital, Partners, L.P., as the lender dated
                                    March 10, 2000.


                             10.35  The amended agreement between Westar
                                    Financial Services Incorporated and a
                                    director, as the lender dated March 10,
                                    2000.

                             10.36  The amended agreement between Westar
                                    Financial Services Incorporated and Puget
                                    Sound Investors, dated March 10, 2000.

                             10.37  The amended agreement between Westar
                                    Financial Services Incorporated and Bank
                                    One, dated March 10, 2000.

                             10.38  The amended agreement between Westar
                                    Financial Services Incorporated and Bank
                                    One, as the lender dated July 31, 1999.

                             10.39  The agreement between Westar Financial
                                    Services Incorporated and Navidec, Inc., as
                                    the lender dated January 7, 2000.

                             10.40  The amended agreement between Westar
                                    Financial Services Incorporated and Navidec,
                                    Inc., as the lender dated March 31, 2000.

                      16.    Letter regarding change in Certifying Accountant

                             16.1   Letter dated May 21, 1998, incorporated by
                                    reference to the Exhibit to the Current
                                    Report on Form 8-K dated May 18, 1998.

                             16.2   Letter dated May 14, 1999, incorporated by
                                    reference to the Exhibit to the Current
                                    Report on Form 8-K(A) dated March 11, 1999
                                    and filed May 25, 1999.

                      21.    Subsidiaries of the Registrant

                             21.1   Schedule of Subsidiaries incorporated by
                                    reference to the Exhibit for Form 10-K dated
                                    June 11, 1996.


         14 (b)   REPORTS ON FORM 8-K

                  Form 8-K(A) with respect to change in and disagreements with
                  predecessor accountants was filed with the Securities and
                  Exchange Commission on May 25, 1999.


                                    Page 34
<PAGE>

                                   SIGNATURES

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

Dated:  July 14, 2000              WESTAR FINANCIAL SERVICES INCORPORATED
                                   (successor to Republic Leasing Incorporated)


                                   /s/ R.W. Christensen, Jr.
                                   ---------------------------------------------
                                   By:  R.W. Christensen, Jr., President


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


Dated: July 14, 2000               /s/ R.W. Christensen, Jr.
                                   ---------------------------------------------
                                   R.W. Christensen, Jr., Director and
                                   Principal Executive Officer


Dated: July 14, 2000               /s/ Cindy A. Kay
                                   ---------------------------------------------
                                   Cindy A. Kay, Vice President & Controller


Dated: July 14, 2000               /s/ Joel I. Davis
                                   ---------------------------------------------
                                   Joel I. Davis, Director and
                                   Assistant Secretary


Dated July 14, 2000                /s/ Robert L. Lovely
                                   ---------------------------------------------
                                   Robert L. Lovely, Director


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