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FORM 10-Q

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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES ACT OF 1934

For Quarter Ended: December 31, 2000

Commission File Number: 2-95465-S

WESTAR FINANCIAL SERVICES INCORPORATED(Exact name of registrant as specified in its charter)

Washington(State or other jurisdiction of
Incorporation or organization)

91-1715252(IRS Employer Identification Number)The Financial Center; Tumwater, WA(Address of principal executive office)

98501(Zip Code)


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

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

Common Stock

2,348,170Class

Number of Shares Issued at February 9, 2001


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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Westar Financial Services Incorporated and Subsidiaries  Consolidated Balance Sheets  As Of December 31, 2000 and March 31, 2000

|                                                                                          |  | December 31 |             | March 31 |  
|----------------------------------------------------------------------------------------- |  | ----------- | ----------- | -------- | -
|
|Cash                                                                                      |  | $           | 4,088,868   |          | $
|Accounts receivable, net of allowance for credit losses                                   |  |             | 1,546,731   |          |  
|Credit enhancement receivable, net of allowance for credit losses                         |  |             | 2,613,503   |          |  
|Operating leases held for sale, net of allowance for credit losses                        |  |             | 1,944,687   |          |  
|Direct financing receivable, net of allowance for credit losses                           |  |             | 2,265,192   |          |  
|Deferred tax asset, net of valuation allowance of $5,849,719 and $4,709,778, respectively |  |             |             |          |  
|Fixed and other assets                                                                    |  |             | 2,043,804   |          |  
|                                                                                          |  |             |             |          |  
|                                                                                          |  | $           | 14,502,785  |          | $
|                                                                                          |  |             |             |          |  
|Accounts payable                                                                          |  | $           | 7,070,532   |          | $
|Notes payable to banks                                                                    |  |             | 3,562,467   |          |  
|Notes payable to affiliates                                                               |  |             | 11,899,226  |          |  
|Other liabilities                                                                         |  |             | 6,436,062   |          |  
|                                                                                          |  |             |             |          |  
|                                                                                          |  | $           | 28,968,287  |          |  
|                                                                                          |  |             |             |          |  
|Redeemable preferred stock                                                                |  |             | 1,250,000   |          |  
|                                                                                          |  |             |             |          |  
|Common stock, no par value                                                                |  |             | 3,716,427   |          |  
|Paid in capital  stock warrants                                                          |  |             | 371,495     |          |  
|Accumulated deficit                                                                       |  |             | (19,803,424 | )        |  
|                                                                                          |  |             |             |          |  
|                                                                                          |  |             | (15,715,502 | )        |  
|                                                                                          |  |             |             |          |  
|                                                                                          |  | $           | 14,502,785  |          | $
|                                                                                          |  |             |             |          |  

See
accompanying notes to consolidated financial statements.

2

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Westar Financial Services Incorporated and Subsidiaries  Consolidated Statements of Operations  For the three months and nine months ended December 31, 2000 and 1999  (Unaudited)

|                                                         |  | Three Months Ended |             | Nine Months Ended |  
|-------------------------------------------------------- |  | ------------------ | ----------- | ----------------- | -
|
|Revenues:                                                |  |                    |             |                   |  
|Revenues from originations, sales and securitizations    |  | $                  | 108,097,656 |                   | $
|Earned interest on direct financing assets               |  |                    | 48,003      |                   |  
|Revenues from operating leases                           |  |                    | 1,829,611   |                   |  
|Service fee income                                       |  |                    | 187,554     |                   |  
|Other income                                             |  |                    | 14,434      |                   |  
|                                                         |  |                    |             |                   |  
|Gross revenues                                           |  |                    | 110,177,258 |                   |  
|Direct Costs:                                            |  |                    |             |                   |  
|Costs related to originations, sales and securitizations |  |                    | 104,775,922 |                   |  
|Interest                                                 |  |                    | 352,973     |                   |  
|Depreciation expense on operating leases                 |  |                    | 1,087,130   |                   |  
|Origination fees                                         |  |                    | 655,590     |                   |  
|Provision for credit losses                              |  |                    | 7,500       |                   |  
|Other                                                    |  |                    | 635,764     |                   |  
|                                                         |  |                    |             |                   |  
|Total direct costs                                       |  |                    | 107,514,879 |                   |  
|                                                         |  |                    |             |                   |  
|Gross margin                                             |  |                    | 2,662,379   |                   |  
|General and administrative expenses                      |  |                    | 1,936,357   |                   |  
|                                                         |  |                    |             |                   |  
|Operating Income (loss)                                  |  |                    | 726,022     |                   |  
|Subordinated debt interest expense                       |  |                    | (277,179    | )                 |  
|                                                         |  |                    |             |                   |  
|Income (loss) before federal income tax benefit          |  |                    | 448,843     |                   |  
|Deferred Federal income tax benefit                      |  |                    | (152,607    | )                 |  
|Less: change in valuation allowance                      |  |                    | 152,607     |                   |  
|                                                         |  |                    |             |                   |  
|Net income (loss)                                        |  |                    | 448,843     |                   |  
|Dividends on redeemable preferred stock                  |  |                    | (28,906     | )                 |  
|                                                         |  |                    |             |                   |  
|Net income (loss) applicable to common stock             |  | $                  | 419,937     |                   | $
|                                                         |  |                    |             |                   |  
|Weighted average number of shares                        |  |                    | 2,348,170   |                   |  
|                                                         |  |                    |             |                   |  
|Net income (loss) per common share                       |  | $                  | 0.18        |                   | $
|                                                         |  |                    |             |                   |  
|Fully diluted earnings (loss) per share                  |  | $                  | 0.15        |                   | $
|                                                         |  |                    |             |                   |  

See
accompanying notes to consolidated financial statements.

3

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Westar Financial Services Incorporated and Subsidiaries  Consolidated Statements of Cash Flows  For the nine months ended December 31, 2000 and 1999  (Unaudited)  Increase (Decrease)
in Cash

|                                                    |  | 2000 |              | 1999 |  
|--------------------------------------------------- |  | ---- | ------------ | ---- | -
|Net cash provided by       operating activities     |  | $    | 1,366,057    |      | $
|                                                    |  |      |              |      |  
|Cash flows used in investing activities:            |  |      |              |      |  
|Other                                               |  |      | (1,475,390   | )    |  
|                                                    |  |      |              |      |  
|Net cash used in investing activities               |  |      | (1,475,390   | )    |  
|                                                    |  |      |              |      |  
|Cash flows from financing activities:               |  |      |              |      |  
|Proceeds from issuance of common stock              |  |      | 250          |      |  
|Additions to notes payable to banks                 |  |      | 191,418,543  |      |  
|Payments on notes payable to banks                  |  |      | (191,698,547 | )    |  
|Additions to notes payable  subordinated debt      |  |      | 4,070,007    |      |  
|Payments on notes payable  subordinated debt       |  |      | (993,295     | )    |  
|                                                    |  |      |              |      |  
|Net cash provided (used in) by financing activities |  |      | 2,796,958    |      |  
|                                                    |  |      |              |      |  
|Net increase (decrease) in cash                     |  |      | 2,687,625    |      |  
|Cash:                                               |  |      |              |      |  
|Beginning of period                                 |  |      | 1,401,243    |      |  
|                                                    |  |      |              |      |  
|End of period                                       |  |      | 4,088,868    |      | $
|                                                    |  |      |              |      |  

See
accompanying notes to consolidated financial statements.

4

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

The Company's consolidated annual financial statements presented in the 2000 Annual Report on Form 10-K of the Company includes a summary of significant
accounting policies and should be read in conjunction with this Form 10-Q. The consolidated financial statements include the accounts of Westar Auto Holding Co., Inc. ("WestAH"), a 100%-owned
subsidiary of the Company, Westar Finance Holding Co. ("WestFH"), a 100%-owned subsidiary of the Company, Westar Auto Finance L.L.C. ("WestAF"), a limited liability company owned 99% by the Company
and 1% by WestAH, and Westar Lease Origination Trust, a Massachusetts business trust registered in the state of Washington, beneficially owned by WestAF. The statements for the nine months ended
December 31, 2000 and 1999, are unaudited, condensed and do not contain all information required by generally accepted accounting principles to be included in a full set of annual financial
statements. In the opinion of Management, all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the results of operations for such periods are included. All
significant inter-company accounts and transactions have been eliminated. The results of operations for the nine months ended December 31, 2000, are not necessarily indicative of the results of
operations for the entire year. This information included in this Form 10-Q should be read in conjunction with Management's Discussion and Analysis and the consolidated financial statements and notes
thereto included in Westar Financial Services Incorporated's 2000 Annual Report on Form 10-K.

Forward-Looking Statements

Although most of the information contained in this report is historical, certain statements contain forwardlooking 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 forwardlooking 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 forwardlooking 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.

Interest Paid

The Company paid cash for interest of $555,361 and $221,609 for the three months ended and $1,305,361 and $768,068 for the nine months ended
December 31, 2000 and 1999, respectively. The change is due to increased volumes of assets warehoused.

Income (Loss) Per Common Share

Basic net income (loss) per common share is net income (loss) less preferred stock dividend requirements dividend by the average number of common shares
outstanding. Diluted net income (loss) per common share assumes issuance of the net incremental shares from stock options, warrants and full conversion of all dilutive convertible securities at the
later of the beginning of the year or date of issuance.

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A reconciliation of the data used in the calculation of basic and diluted earnings per share computations for income (loss) from continuing operations is as follows:

|                                                                      |                                               | 3 Months
Ended 12/31/00                  |           | 3 Months
Ended 12/31/99 |         | 9 Months
Ended 12/31/00 |           | 9 Months
Ended 12/31/99 |           
|--------------------------------------------------------------------- | --------------------------------------------- | ---------------------------------------- | --------- | ----------------------- | ------- | ----------------------- | --------- | ----------------------- | ----------
|Basic Earnings (Loss) Per Share                                       |                                               |                                          |           |                         |         |                         |           |                         |           
|                                                                      | Net income (loss) applicable to common stock  |                                          | $         | 419,937                 |         | $                       | (575,491  | )                       | $         
|                                                                      | Average common shares outstanding stock       |                                          |           | 2,348,170               |         |                         | 2,252,961 |                         |           
|Basic earnings (loss) per share                                       |                                               | $                                        | .18       |                         | $       | (.26                    | )         | $                       | (1.43     
|Dilutive Earnings (Loss) Per Share                                    |                                               |                                          |           |                         |         |                         |           |                         |           
|                                                                      | Net income (loss) applicable to common stock  |                                          | $         | 419,937                 |         | $                       | (575,491  | )                       | $         
|                                                                      | Add: Dividends on convertible preferred stock |                                          |           | 1,387                   |         |                         |           |                         |           
|                                                                      |                                               | Interest on 10.5% convertible notes debt |           |                         | 105,863 |                         |           |                         |           
|Net income (loss) applicable to common stock plus assumed conversions |                                               | $                                        | 527,187   |                         | $       | (575,491                | )         | $                       | (3,352,768
|                                                                      | Average common shares outstanding stock       |                                          |           | 2,348,170               |         |                         | 2,252,961 |                         |           
|                                                                      | Add: Stock Options                            |                                          |           | 91,500                  |         |                         |           |                         |           
|                                                                      |                                               | Stock Warrants                           |           |                         | 159,056 |                         |           |                         |           
|                                                                      |                                               | Convertible preferred stock              |           |                         | 259,873 |                         |           |                         |           
|                                                                      |                                               | Convertible notes payable                |           |                         | 571,720 |                         |           |                         |           
|Average common shares outstanding stock on a fully diluted basis      |                                               |                                          | 3,430,319 |                         |         | 2,252,961               |           |                         | 2,348,138 
|Diluted earnings (loss) per share                                     |                                               | $                                        | .15       |                         | $       | (.26                    | )         | $                       | (1.43     

Direct Financing Receivables

The Company repurchased the remaining stream of cash flows from the 1996-A and 1996-B Securitization from the Industrial Bank of Japan in August 2000. The
Company expects collection of the estimated future cash flows of $2,310,777 over the next 11 months. The Company has an allowance for uncollectable future cash flows in the amount of $55,585.

Federal Income Tax

The Company provides a 100% valuation allowance against increases in the deferred tax asset balance. Increases in the deferred tax asset allowance offset the
tax benefit related to the temporary differences creating the deferred tax asset and result in no federal income tax benefit for the corresponding period. Likewise, decreases in the deferred tax asset
and related valuation allowances are offset by the tax expense on the book income and results in no federal income tax expense for the corresponding period. The deferred tax asset is primarily
comprised of tax net operating losses, which are available for an average of 13 years to offset future reported tax liabilities.

Notes Payable Banks

In January 1997, the Company entered into a working capital loan for $750,000 with Bank One. The loan was collateralized by a perfected first security position
in the Company's interest in 1996 PIC-A & 1996 PIC-B. The Company repurchased the 1996 PIC-A and 1996 PIC-B in August 2000. The

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Company replaced the collateral with a perfected first security position in the1999C PIC-B. The loan balance now totals $500,000 and is due March 31, 2002.

Notes Payable Affiliates

In June 2000, the Company entered into an agreement with & Capital to borrow $1,000,000 as subordinated debt. The note came due January 05, 2001 and is
payable on demand.

In
June 2000, the Company entered into an agreement with Navidec Inc. to borrow $1,000,000 as subordinated debt. The note is due June 5, 2001 and bears interest at the rate of
9%.

In
July 2000, the Company entered into an agreement with Navidec, Inc. to borrow $1,000,000 as subordinated debt. The note is due July 5, 2001 and bears interest at the rate of
9%.

In
August 2000, the Company entered into an agreement with Navidec, Inc. to borrow $500,000 as subordinated debt. The note is due August 25, 2001 and bears interest at the rate
of 9%.

Other Liabilities

Other liabilities include cash and accounts receivable that are payable to the portfolio investors.

Securitization (ABS) or SBAS Transactions

The Company completed eight Securities Based Asset Sales (SBAS) in the third quarter of fiscal 2001 for the total proceeds of $105.9M. The Company established
servicing cash reserves in the amount of $726,771, which is to be received in 60 monthly payments. The Company continues to service the leases securitized.

The
Company completed 15 SBASs or Asset Backed Securitizations (ABSs) in the nine months ended December 31, 2000 in an aggregate amount of $198M. The Company's proceeds from sales or
securitizations were reduced by a credit enhancement in the amount of $1.3M and servicing cash reserves in the amount of $1.2M, which are to be received in 60 monthly payments. The Company continues
to service the leases securitized. The Company's proprietary origination/titling securitization structure, Westar Lease Origination Trust, has completed thirty-three securitizations and sales of
automobile lease-backed securities in private-placement offerings to date.

The
leases sold in the above transactions were operating leases and they were accounted for in accordance with SFAS 13 until the time of sale. Accordingly, rental payments
collected before the sale of the operating leases were recognized as revenues from operating leases and depreciation on equipment subject to these operating leases was recorded through the date of
sale.

Subsequent Events

In January 2001, the Company's origination/issuer/titling securitization structure, Westar Lease Origination Trust, completed its thirty-forth and thirty-fifth
security based asset sales involving $28.5M of automobile lease-backed securities in private-placement offerings. The Company's proceeds from the securitization were reduced by a cash reserve in the
amount of $196,684, which is to be received in 60 monthly payments. The Company continues to service the leases securitized. The leases sold in the above transactions were operating leases and they
were accounted for in accordance with SFAS 13 until the time of sale.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BUSINESS OVERVIEW

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, 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 has created a business model where it is relatively indifferent as to the nature of both the originator and
the ultimate investor.

Westar
Financial Services Incorporated and its Subsidiaries provide prime credit quality consumer automobile lease financing through franchised automobile dealers in the western
states 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. It is
Management's opinion that Westar's proprietary decisioning and fulfillment capabilities are among the most scalable and marketable programs currently available and a valued investment in the Company's
future. It is these capabilities that Management believes will lead to continued improvement in financial operations.

ORIGINATION

Dealer Direct Retail Leasing

Westar acquires automobile leases through its Dealer Direct Retail Leasing (DDRL) program. Westar offers DDRL to selected manufacturer-franchised automobile
dealerships based on reputation, location and size. 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 through competitive pricing. The Company maintains relationships with more than 400 dealers, or 2% of the national dealer body.

Internet

The Company has formed a strategic alliance with DriveOff.com, Inc., in which WEST was 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. The focus of this 3rd generation Internet automobile acquisition channel
was to significantly increase consumer satisfaction with the process while decreasing prices. The program empowered consumers to negotiate new car purchases and financing 100% online. Consumers could
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. Westar proved its ability to originate, decision, commit
to and fulfill loans and leases in a near-real time and with high degrees of consumer satisfaction.

DriveOff.com,
Inc. was purchased by Microsoft's CarPoint, Inc. in September 2000 and closed in February 2001. The revenues generated through DriveOff.com, Inc. were approximately 1%
of Westar's total revenues during the alliance period, less than the related expenses.

Intranet

The Intranet conduit duplicates the operation of Westar's Internet channel except that the business model and technology are placed within the webspace of
another organization, only visible to and usable by members of the host organization. This business model aligns itself with organizations that have extraordinary consumer credibility and intensely
loyal constituents. It seeks organizations that wish

8

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to deliver value through a positive auto experience. Likely candidates for Intranet alliances include affinity membership organizations, banks or insurance companies. Westar would earn a fee each time
a consumer transaction passes through its decisioning process.

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

Private Label

Westar's Private Label channel is designed to offer other financial services firms access to Westar's LASIRpro< decisioning technology and processes. With
LASIRpro, a bank with a consumer automobile leasing need, but without its own capability, can use Westar's technology and processes for real-time, real-world decisioning and commitments. This allows
the originating entity to preserve its market presence by serving its dealers and consumers while making nearly instantaneous credit, asset and pricing decisions. Westar receives either fee income on
all, or a portion of the originated assets for its services. Westar initiated Private Label activities with AmSouth Bancorporation (NYSE: ASO) and has begun the service in all of AmSouth's markets.
Westar also began to provide Mellon Bank (NYSE: MEL) Private Label services in August 2000 in the Mid-Atlantic States.

The
Company is negotiating with other financial institutions in both the Intranet and Private Label channels.

Management
believes the diversification provided by multiple 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 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 its origination channels 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.

RESULTS OF OPERATIONS AND CHANGES IN FINANCIAL POSITION

Three months and nine months ended December 31, 2000 compared to three months and nine months ended December 31, 1999.

The
Company's statement of operations reports net income in the third quarter of approximately $449,000, up $1.9M from a net loss of $1.5M in the prior quarter. The Company's
statements of operations report a net loss of approximately $3.3M and $2.1M for the nine months ended December 31, 2000 and 1999, respectively.

Lease
originations increased from 817 leases costing $25M to 3,582 leases costing $105M for the three months ended December 31, 1999 and 2000 and increased from 2,541 leases costing
$80M to 6,942 leases costing $199M for the nine months ended December 31, 1999 and 2000. The outstanding face value of leases serviced totaled 12,483 accounts for $317M. The credit quality of
originated leases remained steady, with average FICO scores of 740 in the current period.

Gross
revenues for the quarter ended December 31, 2000 increased 327% from $25.8M in the comparable quarter to $110.2M and increased 146% for the nine months ended December 31, 2000
from $84.0M in the comparable period to $207.0M. The increase in total gross revenues was directly related to the 338% increase in lease volumes for the three months and the 173% increase for the nine
months ended December 31, 2000. The significant increase in volumes enabled WEST to complete

9

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$35.5M, $57.1M and $108.1M in Origination's, Securitizations and Security Based Asset Sales in the first, second and third quarters of fiscal 2001, respectively. Origination fee income increased $1.7M
or 370% for the quarter from $460K in the comparable quarter to $2.2M and increased $2.7M or 193% for the nine months ended from $1.4M in the comparable period to $4.1M. Also as a result of the
increased volumes, revenues from operating leases increased $1.4M or 331% for the quarter ended December 31, 2000 from $423K in the comparable quarter to $1.8M and increased $2.6M or 200% for the nine
months ended from $1.2M in the comparable period to $3.8M. As Westar retains all servicing rights to the assets sold, servicing income has increased $90K or 92% for the quarter from $98K in the
comparable quarter to $188K and increased $276K or 114% for the nine months from $242K in the comparable period to $518K.

Direct
costs increased $82.5M or 330% for the quarter ended December 31, 2000 from $25.0M in the comparable quarter to $107.5M and increased $122.2M or 149% for the nine months ended
December 31, 2000 from $82.1M in the comparable period to $204.3M primarily due to the increase in lease origination volumes. As a result of the increased volumes, costs from sales and securitizations
increased $80.3M or 328% for the quarter from $24.5M in the comparable quarter to $104.8M and increased $118.2M or 147% for the nine months from $80.5M in the comparable period to $198.7M.
Depreciation expense also increased $822K or 296% for the three months from $278K in the comparable quarter to $1.1M and increased $1.4M or 162% for the nine months from $866K in the comparable period
to $2.3M. Due to the increase in lease volumes being warehoused prior to securitization or sales, interest costs increased $270K or 325% for the quarter from $83K in the comparable quarter to $353K
and increased $712K or 247% for the nine months ended December 31, 2000 from $288K in the comparable period to $1.0M. Origination fees are a new expense directly related to the Private Label
origination channel.

Gross
margins increased approximately $1.9M or 235%, from $808K to $2.7M from the quarter ended December 31, 1999 and increased approximately $800K or 42% from $1.9M to $2.7M
from the nine months ended December 31, 1999. The increase is primarily due to three reasons. First, the Company implemented price increases just prior to the beginning of the third quarter.
Second, the Company increased its origination volume, particularly in its Private Label business. Finally, the Company's cost of funds decreased, particularly towards the end of the third quarter.

General
and administrative expenses increased by approximately $700K or 58%, from $1.2M in the third quarter of 1999 to $1.9M and increased $1.8M or 53% from $3.4M for the nine months
ended December 31, 1999 to $5.2M for the nine months ended December 31, 2000. This is primarily due to opening three new distribution channels for financial transaction originations, combined with
staffing to meet future growth expectations. The most significant increases in general and administrative expenses occurred in salaries and benefits, rent expense and depreciation expense.

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 more rapidly than volumes. A significant portion of the difference will be the result of 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.

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

10

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LIQUIDITY AND CAPITAL RESOURCES

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, credit enhancement receivables and servicing cash reserves; (iv) pay operating expenses; (v) satisfy debt
service; (vi) pay preferred stock dividends; (vii) implement its 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 (ABSs) and SBASs, portfolio
sales and sales of equity and debt securities.

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 December 31, 2000, the Company has completed thirty-three securitizations and sales while retaining 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 $12M limit to $25M. In November 2000, Management
renewed the financing facility at $25M until November 2001. At December 31, 2000 the Company had received a waiver of certain loan covenants through March 31, 2001.

This
revolving credit warehouse facility is 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. The net proceeds from the sales of originated leases provide a source of cash for repayment of related borrowings under the warehouse line thus providing additional availability
of credit to fund future vehicle purchases. Remaining proceeds not used to repay the warehouse line provide a source of cash for payment of 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 December 31, 2000 the
unused portion of the warehouse line was $21M.

It
is the opinion of Management that, as of December 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 may elect to obtain additional capital through both private and public financing in order to
provide for the Company's planned growth over the next several years. There can be no assurance that such capital will be available to the Company.

ITEM 3. 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 affect 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

11

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applied to all leased assets pooled in a typical $30M 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.

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 values. The Company minimizes credit loss exposure through its SBAS transactions and minimizes residual exposure through a residual value insurance program.

In
June 1998, the FASB issued Statement of Financial Accounting Standard No. 133, (SFAS No. 133), Accounting for Derivative Instruments and Hedging Activities. SFAS
No. 133 establishes accounting and reporting standards for derivative instruments, including derivative instruments embedded in other contracts, and hedging activities. SFAS No. 133, as
amended, is effective for the Company's fiscal year
ending March 2002. Westar does not expect SFAS No. 133 to have significant effect on its financial condition or results of operations.

In
September 2000, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 140, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilitiesa replacement for FASB Statement no. 125 ("FAS 140"). The new statement, FAS 140, revises the standards for accounting for
securitizations and for other transfers of financial assets and collateral. FAS 140 also requires certain disclosures that were not required under FASB Statement No. 125. Because Westar originations
are operating leases and are accounted for in accordance with SFAS 13 the Company does not expect the adoption and implementation to effect its results of operations or financial condition.

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.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 2. CHANGES IN SECURITIES

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

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

None.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Index to Exhibits





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|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 10K 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 10K 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 10K 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 10K 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 10K 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 10Q 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.                                                    
|1.14  |  | 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.                                                 
|1.15  |  | 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.                                     

14

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|1.16 |  | 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.                      
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.17 |  | 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.                                         
|1.18 |  | 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.                            
|1.19 |  | 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.                          
|1.20 |  | 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.                 
|1.21 |  | 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.            
|1.22 |  | 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.                            
|1.23 |  | 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.                          
|1.24 |  | 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.                 
|1.25 |  | 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.                 
|1.26 |  | 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.                       
|1.27 |  | 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.                    
|1.28 |  | 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.
|1.29 |  | 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.
|1.30 |  | 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.                

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|1.31   |  | The amended agreement between Westar Financial Services Incorporated and Puget Sound Investors, dated December 1, 1999 incorporated by reference to the Exhibit to Form 10-Q dated January 28, 2000.             
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.32   |  | 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.                          
|1.33   |  | The amended agreement between Westar Financial Services Incorporated and & Capital, Partners, L.P., as the lender dated March 10, 2000 incorporated by reference to the Exhibit to Form 10-K dated July 14,
2000.
|1.34   |  | The amended agreement between Westar Financial Services Incorporated and & Capital, Partners, L.P., as the lender dated March 10, 2000 incorporated by reference to the Exhibit to Form 10-K dated July 14,
2000.
|1.35   |  | The amended agreement between Westar Financial Services Incorporated and a director, as the lender dated March 10, 2000 incorporated by reference to the Exhibit to Form 10-K dated July 14, 2000.               
|1.36   |  | The amended agreement between Westar Financial Services Incorporated and Puget Sound Investors, dated March 10, 2000 incorporated by reference to the Exhibit to Form 10-K dated July 14, 2000.                  
|1.37   |  | The amended agreement between Westar Financial Services Incorporated and Bank One, dated March 10, 2000 incorporated by reference to the Exhibit to Form 10-K dated July 14, 2000.                               
|1.38   |  | The amended agreement between Westar Financial Services Incorporated and Bank One, as the lender dated July 31, 1999 incorporated by reference to the Exhibit to Form 10-K dated July 14, 2000.                  
|1.39   |  | The agreement between Westar Financial Services Incorporated and Navidec, Inc., as the lender dated January 7, 2000 incorporated by reference to the Exhibit to Form 10-K dated July 14, 2000.                   
|1.40   |  | The amended agreement between Westar Financial Services Incorporated and Navidec, Inc., as the lender dated March 31, 2000 incorporated by reference to the Exhibit to Form 10-K dated July 14, 2000.            
|1.41   |  | The agreement between Westar Financial Services Incorporated and & Capital, Partners L.P., as the lender dated June 5, 2000, incorporated by reference to the Exhibit to form 10-Q dated August, 21,
2000.       
|1.42   |  | The amended agreement between Westar Financial Services Incorporated and Bank One, as the lender dated November 30, 2000. [include agreement]                                                                    
|14 (b) |  | Reports on Form 8-K
None                                                                                                                                                                                         

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SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the under-signed,
thereunto duly authorized.



|February 9, 2001
(Date) |  | R. W. Christensen, Jr., President
(Signature)        
|----------------------- |  | -----------------------------------------------------
|February 9, 2001
(Date) |  | Cindy A. Kay, Vice President & Controller
(Signature)

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